The 'Peak Oil' Myth: New Oil Is Plentiful 92 comments
-
Font Size:
-
Print
- TweetThis
The data is becoming conclusive that peak oil is a myth. High oil prices (USO) (OIL) are doing their job as oil exploration is flush with new finds:
1. An offshore find by Brazilian state oil company Petrobras (PBR) in partnership with BG Group (BRGYY.PK) and Repsol-YPF may be the world's biggest discovery in 30 years, the head of the National Petroleum Agency said. A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil's reserves and make the offshore bloc the world's third-largest known oil reserve. "This would lay to rest some of the peak oil pronouncements that we were out of oil, that we weren't going to find any more and that we have to change our way of life," said Roger Read, an energy analyst and managing director at New York-based investment bank Natixis Bleichroeder Inc.
2. A trio of oil companies led by Chevron Corp. (CVX) has tapped a petroleum pool deep beneath the Gulf of Mexico that could boost U.S. reserves by more than 50 percent. A test well indicates it could be the biggest new domestic oil discovery since Alaska's Prudhoe Bay a generation ago. Chevron estimated the 300-square-mile region where its test well sits could hold up to 15 billion barrels of oil and natural gas
3. Kosmos Energy says its oil field at West Cape Three Points is the largest discovery in deep water West Africa and potentially the largest single field discovery in the region.
4. A new oil discovery has been made by Statoil (STO) in the Ragnarrock prospect near the Sleipner area in the North Sea. "It is encouraging that Statoil has made an oil discovery in a little-explored exploration model that is close to our North Sea infrastructure," says Frode Fasteland, acting exploration manager for the North Sea.
5. Shell (RDS.A) is currently analyzing and evaluating the well data of their own find in the Gulf of mexico to determine next steps. This find is rumored to be capable of producing 100 billion barrels. Operating in ultra-deep waters of the Gulf of Mexico, the Perdido spar will float on the surface in nearly 8,000 ft of water and is capable of producing as much as 130,000 barrels of oil equivalent per day.
6. In Iraq, excavators have struck three oil fields with reserves estimated at about 2 billion barrels, Kurdish region's Oil Minister Ashti Horami said.
7. Iran has discovered an oil field within its southwest Jofeir oilfield that is expected to boost Jofeir's oil output to 33,000 barrels per day. Iran's new discovery is estimated to have reserves of 750 million barrels, according to Iran's Oil Minister, Gholamhossein Nozari.
8. The United States holds significant oil shale resources underlying a total area of 16,000 square miles. This represents the largest known concentration of oil shale in the world and holds an estimated 1.5 trillion barrels of oil with 800 billion recoverable barrells – enough to meet U.S. demand for oil at current levels for 110 years. More than 70 percent of American oil shale is on Federal land, primarily in Colorado, Utah, and Wyoming. In Utah, a developer says his company already has the technology to produce 4,000 barrels a day using a furnace that can heat up rock using its own fuel. ``This is not a science project,'' said Daniel G. Elcan, managing director of Oil Shale Exploration Corp. ``For many years, the high cost of extracting oil from shale exceeded the benefit. But today the calculus is changing,'' President George Bush said. Sen. Orrin Hatch, R-Utah, said the country has to do everything it can to boost energy production. ``We have as much oil in oil shale in Utah, Wyoming and Colorado as the rest of the world combined,'' he said.
9. In western North Dakota there is a formation known as the Bakken Shale. The formation extends into Montana and Canada. Geologists have estimated the area holds hundreds of billions of barrels of oil. In an interview provided by USGS, scientist Brenda Pierce put the North Dakota oil in context. "Of the current USGS estimates, this is the largest oil accumulation in the lower 48," Pierce says. "It is also the largest continuous type of oil accumulation that we have ever assessed." The USGS study says with todays technology, about 4 billion barrels of oil can be pumped from the Bakken formation. By comparison, the 4 billion barrels in North Dakota represent less than half the oil in the Arctic National Wildlife refuge which has an estimated 10 billion barrels of recoverable oil.
The peak oil theory is a money making scam put out by the speculators looking for high commodity returns in a challenging market environment. Most of the above mentioned finds have occurred in the last two years alone. I didn't even mention the untapped Alaskan oil fields or the recent Danish and Australian finds. In the long term, crude prices will find stability at historic norms because there is no supply problem. How much longer will investors ignore these new oil finds? Probably until they can find other investment alternatives which won't happen in the broad market until financials (XLF) stop hemorrhaging. Respect the trend but understand that this is a bubble preparing to burst. When oil hit it's high of $139 it represented more than a 600% increase in crude since the bull market began, returns eerily similar to the dot.com craze.
There are many theories that sound good but just aren't true. Take Al Gore's global warming crusade. It sounded great, it made perfect sense but there was just one problem, the facts didn't support it. It seems that the masses who were loudly calling for a global warming crisis have shifted their energies to oil. We are bombarded on a daily basis by those who tell us that we should be fearful. They spin good news into bad. The latest absurdity had Goldman Sachs telling investors that China's 18% price increase will actually increase demand! That's a new one. Just like global warming, the rationale for peak oil sounds great, it makes sense, but there is just one small problem, the facts don't support it.
Disclosure: None
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 92 comments:
Frankly, I find myself somewhere between the polar positions. We have a liquid fuels problem--and solar, wind, geothermal, and wave energies (and the like) will not solve that problem. I suspect in the near term oil will go higher (maybe much higher), but in the longer term oil will fall as both new oil fields and liquid coal (or new technologies) come on-stream.
For a peak oil denier, first let me give you credit for providing proper data and sources to support your argument.
Peak Oil is a term that is misused often.
I believe conventional oil (sweet crude) has peaked.
Non-conventional oil is a different story.
Conventional oil production has reached a peak recently.
The EIA data shows global production peaking and plateauing at 85 mbls/day in 2003/2004. Increased demand has increased oil prices 6 times as a consequence.
All the data you provided confirms conventional peak oil. Why would we go through 2 kms of ocean, 2 kms of unstable salt and another 2 km of hard rock to get oil from Tupi oil fields off the coast of Brazil, if easier alternatives exist ?
Same arguement for the oil sands, why mine oil sands, boil them in water and them dilute it with naptha, if easier alternatives exist ?
The extraction of oil from oil shale is possible (when oil > $100/bl), but is even more painful.
Deep Sea, Oil Sands and Gas-to-Liquids all confirm conventional peak oil, but also show with human ingenuity non-conventional peak oil can be pushed out for a while
If we ran out of deep sea oil, oil sands and oil shale as well, I am sure we can convert road asphalt, rubber tires and plastic waste into oil if the economics justified it.
The rest of the "facts" just confirm that "cheap" - "easy" - oil is behind us. Therefore "confirming" not "refuting" the so called peak oil myth.
Peak oil means production has reached zenith, not that we are running out. So get the definition right, please. Otherwise it's just another "straw man" argument.
It's great to list all of the new projects. That gives people some ideas about investment possibilites. But how about including the concepts of demand, decline and depletion? The world is burning 30 billion barrels per year. Demand has proven to be very inelastic as price approaches $150 per barrel. Existing fields are being depleted and their rates of production are declining. Are we finding 30 billion barrels per year? How fast are the new fields being brought to production and at what cost?
SavingAlpha keeps publishing shallow, cheerleader type pieces that demonstrate a poor grasp of the subject. Try the oil drum or one of the Investor Village boards (brys, cwei) for some depth. www.theoildrum.com/
I would agree with your argument if infrastructure to produce oil required no effort and no time. The fact is that almost all these large oil reserves you mentioned require great human effort to produce. For example Canadian Oil Sands will go from 1mbd to 3mbd by 2015. That is 7 years to add the infrastructure for an additional 3mbd. This is what peak oil is about. It is not about what is in the ground it is about what rate you can produce at.
Also your comment "The peak oil theory is a money making scam put out by the speculators looking for high commodity returns in a challenging market environment."
As a person who trades commodities, and has researched and read articles from other traders I can tell you your comment is false. Some things you should know about commodities trades:
They sell short - not just go long.
They look at supply and demand fundamentals - if they are betting in medium and long term.
There are many traders that are SHORT oil.
If traders thaought that there was plenty of (producable oil) around they would short oil.
I also noticed you failed to provide any material data that speculators have made up peak oil theory. On the contrary in 1998 Jean Lehare and Colin Campbell wrote a Scientific American Article called "The End of Cheap Oil." These people are seasoned geologists not oil speculators and their prognostication that we would be having serious consequences in 10 years time - 2008 - turned out to be correct.
Please do a little more study of the subject because you don't seem to "get it"
To assume that is will never run dry is absurd.
65% of all Saudi oil produced between 1948 and 2000 came came from this ONE field. If Matt Simmons thinks Ghawar is begining to water out... I'm listening. He worked for Aramco for years.
The finds you list in your article are great and are needed to replace the decling fields around the world. I am reading that Briatan is about to become a net importer of Oil. Mexican production is falling quickly. You seem to assume that production one established remains in place forever.
As for oil shale, tar sands.... they are not something pumped to the surface. If we are unwilling to produce oil on the East Coast of the U.S. are we really going to strip mine Colorado Utah and Wyoming? Interesting. I'll be watching for that.
I think its kind of funny that some people think the entire world market is in some deep comspiracy to screw the poor. Note some of the major oil companies had DECLINING production in recent quarters. With all time highs in the oil market.....how can that be?
Propaganda.
Edward Roche, Freedom Mountain Investments
Several even suggest the author go do some more research but offer little else.
My golden rule- " What can be asserted without evidence can be dismissed without evidence."
Present your facts or get out of the way and don't dirty up the boards.
Four Billion of that is imported from outside the country.
An hypothetical 40 Billion barrel oil discovery would represent what the U.S. imports -- imports -- in ten years. The most optimistic estimates of the Alaska and Bakken reserves totals 40 Billion barrels.
Okay, we drill in Alaska and we drill in Montana and North Dakota. How much do we pump and deliver from those fields? Maybe six million barrels per day at best (total production from all Saudi fields combined is ~11 million barrels per day). At that rate those Alaska and Bakken fields would be exhausted in twenty years and during that time the oil produced would cover far less than one third of our daily consumption and less than half of our daily imports. In addition, Alaska and Bakken oil would cost money just as oil from Canada and Saudi Arabia costs money. So what would be the price reduction in gasoline and why would Alaska and Bakken and offshore oil be cheaper than Canadian oil? We'd still be importing 7-8 million barrels of oil per day from foreign sources even if the Alaska and Bakken and offshore fields were delivering an additional (highly unlikely) 6 million barrels per day.
After twenty years when the Alaska and Bakken deposits are dry, and we're still importing a significant percentage of our oil from outside the country, then what? Do we just keep our fingers crossed during that time and hope for a magical 800 Billion barrel oil discovery on U.S. territory that would allow us to be energy self-sufficient for 100 years? Or do we launch an Apollo Moon Project-type alternative and renewable fuels program tomorrow -- as in 23 June 2008 -- to get the United States away from a petroleum-fueled economy?
Ref:
* U.S oil consumption - 2007
www.indexmundi.com/uni...
* U.S. net petroleum imports - 2006
www.eia.doe.gov/basics...
* Alaska North Slope may hold 36 bln bbl oil - U.S. Department of Energy - 29 Jan 2008
uk.reuters.com/article...
* 3 to 4.3 Billion Barrels of Technically Recoverable Oil Assessed in North Dakota and Montana’s Bakken Formation - 10 April 2008
www.usgs.gov/newsroom/...
* Saudi Arabia daily oil production - 2006 - 10.7 million barrels
tonto.eia.doe.gov/coun...
1) A huge find no doubt, the biggest for decades. But only enough to meet 1 years demand.
2) 15 billion barrels of oil and gas. So less then six months world supply here, maybe 3 months depending on how much of that is oil and how much gas.
3) No information is given on size, so it's impossible to comment on this one.
4) Norway. Again no sizes given, but Norway has announced their oil production will be in decline for the foreseeable future, so it's unlikely to be that large.
5) 130k barrels/day against world demand of 85 billion - so this field will meet 0.15% of world demand. Yup, that will make all the difference.
6) The Iraq find is 2 billion barrels, enough to supply the world for 20 days.
7) Iran 750 million barrels, 9 days world supply.
8/9) Shale - extremely hard to extract, so very low production rates. Not going to help in the short or medium term.
Then the author writes: "Most of the above mentioned finds have occurred in the last two years alone." Well for two years you need to find 65 billion barrels to cover depletion. These discoveries are insufficient. The author actually does an excellent job of making the peak oil case. The misunderstanding is, as usual, the scale of the problem. Yes lots of oil is being discovered, and will continue to be discovered. Just not enough to meet demand.
1. At what RATE? Reserve size does not necessarily translate into high flow rates.
2. At what COST? Costs are incurred in terms of energy inputs as well as capital. If the energy inputs are too great in relation to the energy outputs, then no matter the size of the "reserve," it's pointless to develop.
3. At what TIME? Many of these discoveries will not be producing oil for 6, 10, 12 years. By that time the underlying decline rates from existing fields will have eaten away at baseline production.
Then there's this quote:
"This find is rumored to be capable of producing 100 billion barrels."
RUMORED? What kind of analysis is that?
Peak oil (which is really about Peak production) is anything but a myth..In fact..it's a current reality and part of the reason we haven't had output beyond 2006s 87 million barrels a day. It's hardly a money making scam...now, if Schwarz wants to discuss disasters and scams we can go into oil sands and shale. Oil sands will NEVER contribute more than a few million barrels of oil per day..it's akin to setting off a nuclear device just to mine (yes MINE..not DRILL) and process this extremely heavy, sulfur ridden mess. Just ask the people in Alberta how thrilled they are with the stuff...and what processing has done to their water supply not to mention the landscape.
Shale is plentiful..and always will be! Largely because developing it is a huge economic pipedream. Mr. Schwarz is a lightweight..in the same way Engdahl (a former Middle East oil state employee) is an unmitigated shill...another Alpha nutburger crawls out of his Mom's basement!!
youtube.com/watch?v=u5...
the person said this in 2005.
"The International Energy Agency (IEA) are forecasting 1.6% increase in oil demand. Last year it was over 3%, and this year it's forecast at 1.9%. This demand is coming from China, India, and as with the world, the world grows and develops. So if you extrapolate those numbers from where we are today, the world needs 130 million barrels a day. More than 50% more than what it's producing today within the next 25 years. At the same time the world is being consuming more oil since 1985 than what it's been finding. It's been catching up by revising the reserves of existing fields. That simply cannot continue, and if you take a very conservative 6% decline rate on the existing 85 million barrels a day of production and assume we don't develop any new oil or find any new oil, which is obviously not correct, but then the production which we currently have will drop to 15 million barrels a day in that 25 year period. This basically means that we need to find over 100 million barrels a day of new inverted common oil. In my view, sitting where I am in the industry at the moment, and looking how difficult it is to find oil; the big oilfields have been found, I firmly believe that is not possible. "
Basically we need to find 100 MPD of new oil.....and according to the CEO of Linden oil in sweden.....its not possible.
Oil:)
If I put a billion dollars in your bank, you have lots of monetary reserves. But if I tell you you can only get and spend $10/day, you are not rich. What you can spend is production capacity and that is what peak oil is all about.
drilling the deep water find off Brazil. US Gov analyis from last year states that if any new US offshore leasing, exploration and drilling were to begin today, if would be 2030 before the new oil would be available for use.
Dude, you might want to trade in that Hummer or Winnebago.
The second problem is that you completely ignore the problem of overcoming the global decline rate, which is about 5% annually, and advancing. We are losing the war on this actuarial inconvenient truth, as we are finding fewer and fewer major (over 500,000 bbls.day) fields each decade, despite advances in technology, and the fields we do find yield a smaller daily production contribution to global supply. The world has found the easy oil; as production now inexorably declines, we are trying to replace it with fields not nearly, on average, so abundant on a daily basis.
But the biggest problem with your writing is to include oil shale as a major future contributor of oil supply with only a passing comment to the difficulties involved with its production (and none to the environmental problems). In any event, the amount involved could be 800 trillion barrels of recoverable oil, for all the good it will do us. Even assuming Shell can prove up its technology, overcome the rabid environmentalists opposed to shale development, and ramp up the scale of production, it will be decades before any such volumes will be meaningful, e.g. 2 million bbls/day, if ever. We have been after shale (kerogen) production for over half a century, and despite the increase in world oil price over that period, shale has always cost more to produce than the exisiting price. I will believe it has changed when it happens. In the interim, the global decline rate will have gone up well past 5%, daily demand will be much higher, and resources (such as water) to use in the production process will be much scarcer. I consider using shale as an argument against Peak Oil, without at least a conscious acknowledgement of the inherent problems, to be intellectually questionable.
Finally, your peice throws out big possile reserve numbers without laying bare the time horizons involved. Brazil may indeed have found 33 billion barrels of oil in the pre-salt Carioca, but it will be a perhaps a decade, probably much more, until meaningful volumes are forthcoming. The same goes for your other examples. And for anyone who denies this as a huge issue, I have two words: Thunderhorse and Kashagan.
A bird in the hand is worth two birds in the bush. Unfortunately, regardless of how many birds are in the bush or how big the bush is; you have to look harder each time and you'll find you can't catch birds as quickly as you used to... and when you've got 6.7 billion hungry mouths to feed and there's 200,000+ new mouths to feed every day... and the birds aren't breeding for some reason?
... and when new guns and shot are getting more expensive
... and when all your hunting pals are getting older
... and when the weather's getting hard to forecast
... and when nobody's really keen on changing their diet
... or tightening their belts...
maybe you should be telling people that everything's fine...
We are consuming over 30 Billion Barrels of oil per year. The Brazillian find - if it ever produces anything near 30 Billion Barrels total - is only one years worth of world consumption. And we will have to wait probably a decade before the first trickles of oil from there come our way. Same for the other new ultra deep sites you mention. In the meanwhile most existing fields have entered decline. At an anticipated global decline rate of 8% pa. of old existing fields, you must bring online 2.4 Billion Barrels of annual production from new fields, just to hold production even, let alone increase.
Well then dream on! This is not possible.
And even if your concept was true, it seems that if there was any replenishing of oil from A-biotic processes, this would obviously be a very slow process taking millions of years to produce something. Only if your theory could argue that billions of new barrels of oil are made somehow every year, would any of these fable tales have any impact on the peak oil discussion.
peak oil is starting to be understood by most everyone on the net who reads the financial sections.
Good job to everyone.
Sure, ultra-deepwater, deep-drilling is expensive, averaging $70 a barrel to "lift." But the oil is here, there, everywhere.
Fact: proven reserves are at an all-time high.
Fact: Continental shelf and margin oil exploration is in its infancy.
Fact: "Somebody" thinks there's oil down there and is spending big bucks to get it.
Fact: For years, Iraq was "officially" set at 115 billion barrels, now it turns out Iraq has at least 300 billion, more than Saudi Arabia, which inturn probably has more yet.
Fact: Colin Campbell and the other shill mentioned have been caught in so many lies, its sick. And both have been crying "Peak" oil for years -- always wrong, along with Simmons and Pickens. A pack of hacks.
Fact: Most areas haven't been explored "At Depth" when it seems "everyday" oil is coming in at beyond 25,000 feet TVD.
Fact: The west coast of the Americas is virtually unexplored.
Fact: Demand destruction is happening in America, as this writer types. Gasoline demand has gone down in the first world.
Prediction: Demand destruction will happen in the second world -- as they are less able to absorb the cost -- and governments can't subsidize consumption indefinitely.
Sure, oil will never be "cheap" again. There are too many consumers outside the United States, but "Peak" oil was not here, is not here, and won't be here, anytime soon.
Sometimes, you "Peak" oil freaks are too much.
But, hey if you're long on oil and you made your contribution to "The Oil Drum" and the rest of the scare mongers -- this writer understands why your're shilling -- big time -- because $20 off the high and you're in Palookaville.
Better cover your position because there will be a "correction," not big, but down just the same.
Too high a price does cut demand. That's a law of economics that some shills forget!
You know what they say: "you can always con a con, because they start to believe their own schtick."
No "peak" for you charlatons. The 'game' is over.
Oil Is Mastery
As if.... dream on. Only a fool ignores the hard data on production declines world wide.
Based on the evidence, I'm long on renewable energy and electric vehicle manufacturers, not oil. Why speculate on oil, which will be increasingly volitile as the results of constrained oil production play out, when you can invest in the certainty of that demand destruction you mentioned?
"Sure, oil will never be "cheap" again"
Why not if there's so much supply? Isn't there some economic relation between supply and demand called price? Lots of supply = low price? Less supply = high price.
Anyway, I'm glad you don't believe in it, because if you did you might be bidding against me in my investments, and as long as people don't know about the oil situation, the longer I can pick up growth companies at a discount to their real future value.
a better bet is highly aromatic syncrude (look ma no resid !) from illinois/west kentucky high volatile bituminous via 2-stage liquefaction as practiced at wilsonville AL during 1982-85. the houston oil millionaires didn't want competition from synthetics so the project was killed. the cost estimate per bbl for production in a commercial plant was 38.00.
the outlook for colorado shale oil in 1927 was bountiful. then east texas came on stream & shale was dead. there has been no further development of the various retorting processes for 80 yrs
> jack
(Billions of $ have poured into this ETF ... are we all wrong?)
I wonder who will end up with the bill?
www.frostic.com/co2and.../
It's not from dead dinos!
Sorry to disappoint you environmental marxists, you'll need to find another way to enslave mankind.
All of the informed comments add up to saying future oil is available. Supply/demand imbalances suggest difficult times in the future. While it's uncertain that oil will always be able to serve world expansion of its current energy market sectors. Moving forward, alternatives will replace some of oil's energy sectors. Every year allows more opportunities to evolve to help recover the balance. Consumption will be pressured by supply imbalances which will help recover the balance. The next 5 years could be difficult but doing nothing is probably a death sentance.
Demand for gas and such is dropping faster and further than ever before. Time will tell where it goes. Look at the options already available at local level:
* $3K to $5K solar water heater saving about $200 to $400 per year. China is using thousands of them.
* 40 to 50 mpg cars compared to typical 25 mpg cars. Making the switch brings the effective price of gas down from $4 to $2.5.
And known but a little further down the road:
* Suppliers of big industrial wind turbines are sold out with 4 year lead times. A weak estimate of new annual capacity is the equivalent of 2400 bbl/day/year of oil. I would love to hear of an accurate estimate if someone can provide. Maybe in 5 years they can get to 25,000 bbl/day/year.
* Nuclear and coal to electric have lots of additional capacity potential to service evolving electric transportation and geothermal heat pumps displacing those energy demands from the gas/oil side.
* Coal to gas.
And still out of sight but maybe someday:
PhotoVoltaic and who knows what else.
I think the presented static review of the oil numbers is less than half the picture. Improvements in oil with whatever lead time will simply be part of the basket of solutions. But I agree the future looks to have some difficult times to compensate for the complacency of the past.
No amount of new oil discoveries can disprove the theory itself.
They can only provide new data to feed into those models. Proving the theory a myth, I'm afriad, would require a better conceptual model for understanding and predicting oil production. I've not seen any viable contenders in Hubbert's class.
Just like "food" or "air" or "water", oil has become a "necessity".
It's like saying if we just raise the price of chemotherapy high enough people will stop getting cancer.
Aids didn't stop people from having unprotected sex, emphysema does not stop people from smoking cigarettes and high oil prices will not stop people from using it.
The Oil Drum is not an investing website. It is an "Oil" website, run by folks that believe in "peak" oil. Who underwrites the website is the question, not that they advise where to invest, besides if the charge is true, do you think "speculators" would be so 'ham' handed as to advertise its "purpose."
Second, of course, demand effects the price. But any dramatic drops in price will drive demand back up because oil is inherently is a productive substance. There will always be demand for oil -- unless it is banned.
-------------
To martinpw: Abiotic oil is real. The hard science supporting Abiotic oil is copious. At what rate petroleum is regenerated is unknown.
"Fossil" theory literally has NO HARD SCIENCE supporting it.
Google the website Oil Is Mastery. The website has direct links to scientific papers that support Abiotic oil and contradict "fossil" theory.
Why do you think Russia is the #1 oil producer in the world, more than Saudi Arabia. How? By using Abiotic Principles in their exploration strategies. Laugh if you want, but Russia is laughing all the way to the bank.
The science supporting Abiotic Oil is based on chemical and physical laws, "fossil" theory ignores the numerous violations of chemical and physical laws.
Oil is Mastery is the most complete Abiotic Oil website in the world.
Check it out and don't let stupwitts like martinpw spew ignorance.
It seems that a critical issue is determining an estimate of the rate of production of Abiotic Oil. Possibly some function of the size of the reaction zone, the kinetics of the materials finding each other, the velocity of products to within reach of the surface, etc.
That would establish an ongoing expectation of new oil supply (with additional drilling as necessary.) If it's lower than forecasted demand that would explain oil fields being depleted (the peak oil crowd.) The amount that it is lower becomes the basis for the future energy build out program for the world. There would be a target for timing of various amounts of additional energy supply going forward. Based on confidence of technology, economics and lead time you can choose from: Nuclear, Coal, Wind, and others.
Astrology types make predictions about when a star is going to burn out. Seems like a similar system to model. The reaction has already been demonstrated in the lab. Do you know if the Abiotic Oil crowd is working on that estimate?
peak oil is not a theory but a fact.
you can only produce as much oil as the rate of regeneration. The regeneration can form pools of oil in pockets under the earth's crust....but if we could extract at infinite rates....we would hit a peak at some point (when the pools are drained) and decline to the rate of the regeneration source.
In order for peak oil to be incorrect....we would need to be able to extract a resource at infinites rates from an infinite source...otherwise peak oil is true. nothing really to argue about.
ergo sum Peak oil is fact....its just a matter of when.
and we may never hit the peak rate of extraction in terms of physical limitation of equipment.....because most of the oil becomes uneconomical to produce at some point....and alternatives come online to make oil outdated.
Now is it possible to find another source of energy to outdate oil? is it possible to make renewable technology solely on renewables....I dunno......but we will find out at some point.
That is a thoughtful response. This writer suspects that regeneration is a function of crustal activity level. And it's possible that now is a moderate to quiet period, so there may not be a large regeneration rate at present.
------------------
AndyMan: If you put if that way, then there is peak. But let's talk "meaningful" peak. This writer maintains that "Peak" a hundred years from now is not meaningful in an economically quantifiable way, today.
When does it become an economically quantifiable factor?
30 years, 40 years, only 20 years? No, if "Peak" happens in 20 years in 2028, at some minor level it will be able to be quantified in the economics of today.
But 30 years, so "peak" in 2038? This writer suspects that is economically too remote.
But this writer is convinced there will be no "Peak" for at least 50 years, if not farther out than that.
"Peak" is when half of all oil supplies have been consumed by textbook definition, but "Peak" as a slang word most definitely means imminent, likely to happen soon, if some are to be believed, already has happened.
This is a far cry from someday there will be "peak."
I think the argument for peak oil happening right now is legit. let's review some things happening in the industry.
1) Conventional sources are depleting...they have been since the first well ever drilled. But the flow rates of convential oil are flat at best....and most likely declining.
2) The decline rates need to be absorbed and reversed for peak oil to be only a theory, therefore unconventional sources need to be developed in order to reverse the decline of conventional oil.
3) Each year oil production goes higher.....the declines also go higher from the existing base. Let's say you have a steady decline rate of 6% on the existing fields....if you produce 85 MBPD...you need 5.1 MBPD just to remain flat. if you produce 100MBPD...you need 6 MBPD to remain flat....and this number grows exponentially on the way up. its almost like trying to travel the speed of light and your mass approaches infinity the faster you travel.
4) Each passing year high EROEI oil is being replaced with lower EROEI oil. this can be from the same exact oil field (heavier oils are at the bottom of the well and need water + pressure to be lifted) and the low hanging fruit is taken first from the oil sands or anywhere else....and replaced with harder to extract or mining operations.
5) lower EROEI projects yield less return and make it less economical to produce....raising production costs.
6) Less free energy to do work results from all the above....either decreased total production, replacing high EROEI oil with low EROEI oil with flat production, etc.
We are seeing the industry bomb rushing oil shales, oil sands, and deep sea deposits. This indicates that all conventional oil open to major oil companies and most national oil companies are found....otherwise the high margin easy to pump oil would be developed....and is being developed. This is proof in itself....although I believe world oil production could be lifted to higher levels if the major private oil companies had access to all area's....although the decline rates on the backside of the curve would be much more viscious.
I think peak oil is much easier to see once its in the rear view mirror.....but replacing 5 MBPD year after year for every single year is pretty difficult to do. look at the projects coming online....and we aren't seeing anywhere close to that number coming online.
We would need to add a cumulative 25 MBPD production of new oil the next 5 years to remain flat.......where is this going to come from? I don't see this happening with oil sands or shales....as the above ground infastructure isn't in place to grow that quickly.....furthermor... are replacing high EROEI oil....so the number is more like 31-32MBPD since the EROEI is lower....thats 36MBPD more than what we are producing today.....and if you want to reach 100MBPD in 5 yrs...we would need to find 50 MBPD. Thats not possible in my view.
I checked out the website you mentioned, it is embarrassingly unconvincing. If the Russian companies really are drilling based on abiotic principles, please point out some links where the current CEOs of Russian oil companies state this unambiguously. And since they are working with western companies like BP, please also point out quotes from BP as well where they comment on the way they use the abiotic theory to find more oil. The onus is on you to make your case as the vast majority of oil geologists subscribe to the standard biogenic theory.
As to your contention that we are now in a "moderate to quiet period of regeneration", if the regeneration does not provide the oil flows we need today, and the over 100 we need in the future, then we have "peak oil", i.e. peak flow rates and a shortage.
Same way with not being able to drill the west coast. With your slow generation rate and the delays in drilling...same thing not enough flow.
Demand destruction will help, of course, but remember those overseas consumers don't have the same (well mostly) cheapened currency that we do.
And by the way I am not a shill for anything. So don't include everyone who thinks we have reached peak flow rates as being in on the "conspiracy".
Somebody else mentioned declining production in Russia, without noting that Putin had applied punitive tax rates on the oil industry there (which are being lowered to help "stimulate" production).
In short, there's a WHOLE lot of stuff involved in the price of oil, regardless of whether one believes oil comes from dead dinosaurs, or whether the "oil fairy" comes along every so often to slip more in the resevoirs.
jan
FYI it's been stuck at 86mbd for the last 4 years and hasn't gone any higher. That sure sounds like a peak to me.
These new big fields are not the good ol' Texan or Saudi gushers under ya feet.
There may be more oil - there is no more easy or fast or cheap oil.
As the EROEI declines....More NG will be used.....you can see that NG inventories are building less slowly than proceeding years.....either from more demand from the public, more from oil companies, or a mixture of both. Should be interesting if we produce vast quantities from oil sands in the future...what effect that will have on NG prices...and the inventory of NG. NG production is declining in the USA....and I am willing to bet Mexico and Canada will start declining soon. LNG prices are higher than $13/MCF....going higher.
Nice "trick." Use a theoretical argument to squeeze "Peak" under the tent flap, like the perverbial camel's nose. Then, once an acknowledgement is given to the theoretical, bulldoze on to your real point: "Peak" is now, sorry charlie, it still doesn't wash.
And you crap in your own nest. You get greedy, which makes this writer look at your original reasoning more closely. And after doing so, it is clear your theoretical argument about "peak" is garbage too.
If oil is regenerating faster than it is being consumed -- "Peak" will NEVER happen.
Now this writer doesn't know if it is or not -- but for you to declare "peak" as a fact based on that fraudulent -- yes, fraudulent reasoning, makes this writer question all your other spin.
So lets look at it.
1) "[T]hey have been [depleting] since the first well ever drilled."
Sorry, but this type of argumentation is as fraudulent as your openning original line of about "theoretical peak."
The rational is false. Were they worried about "Peak" at the time of the first oil well? Actually, they were, as the history of the oil industry is repleat with warnings of "Peak." EACH TIME WRONG!
"Flat or most likely declining" This is PURE speculation on your part.
Your style: distract and then frame argument from your perspective.
But this writer put out the first facts: The continental shelf and margin are unexplored. The total verticle depth is reaching Abiotic oil that "fossil" theory said wasn't even there.
There are plenty of areas to explore and increase "flow rate," also we have no idea if these nationalized oil companies are maxed out on "flow rate" or not. This writer suspects there is a combination of under-investment and wanting to "squeeze" the market.
Oil is oil -- there is "easy" and "hard" oil, but the basic commodity is the same -- it's all Abiotic hydrocarbons.
Which from the very first comment, this writer acknowledged deep offshore oil, is expensive oil: $70 a barrel to "lift."
That has nothing to do with physical "Peak." When oil dipped briefly below $10 in the late 90's, the oil companies quit investing. That has effected the was is happening now. So, while this writer agrees you need to increase oil production, there is a logical reason why there has beed a plateau.
Not a decline like you falsely state.
3) In this aspect, actually, this writer agrees with you. But the new oil fields off shore like that Shell field in the Gulf of Mexico rumored to have 100 BILLION barrels, is a sample of the oil deposits that will be found where "Fossil' theory geologists said there would be NONE.
4) Makes sense from an oil chemistry and Abiotic theory point of view that heavier oil will be at the bottom. Agree with your point.
5) Oil will get more expensive to produce, but that's not physical "Peak", that's an argument for economic "Peak." Two completely different arguments -- even the oil companies acknowledge "economic peak." Which in itself, will have some unknown moderating effect on price in the future.
The last part of your argument is an expansion on the your "replacement" strain argument. There is replacement oil -- lots of it. No "Peak" now, Again, like before, someday. NOT TODAY.
--------------
To martinpw: The science is there and convincing.
1) The 15,000 "oil window" limit corollary of fossil theory is garbage, oil has been discovered below 20,000 feet deep 20 times over and more.
2) "Source rock" has been debunked.
3) Biomarkers has been debunked
4) Diamonoids prove oil comes from the mantle (hint Diamondoids are diamonds and they are only greated "At Depth" in the mantel.
5) Helium in oil
6) hydrocarbons in 'solfataric' vents -- sulphur like vents.
7) The known association between the world's biggest oil deposits and tectonic faults all over the world.
8) the Brazilian deep finds are way beyond the "oil window," causing stupid oil geologists to make claims about "burial age and maturation," as if 24 million years isn't enough if there is an "oil window," to crack the oil into methane gas. Sorry, martinpw that argument doesn't pass the smell test.
Sorry, martinpw, Russian CEO's don't talk to anybody publically -- remeber that's Putin's world. People keep their mouths shut.
As for the, Westerns like BP, do you really think they are going to come out and say, " guess what, we were wrong all those years, we put out, those cuddly commercials with dinosaurs in them - oil is practically unlimited." This writer doubts that.
Actually, the two rival "schools" of thought have the same scientific burden to prove their "case." Each starts at the same "starting line."
but you putting out that old canard allows people to assess your regard for scientific principles -- it's far more likely you are a shill for "Peak" oil because you are long on oil.
Although, in terms of practical reality, you are right. The science for Abiotic Theory must be flawless -- It is flawless.
Come on over to Oil Is Mastery website and argue any scientific point, martinpw, and this writer will crush your reasoing. That's how good the science is.
Do you got the 'guts' martinpw?
That's 388 days -- days -- of oil there in Brazil's deep waters. And that's (unrealistically) assuming no further increase in demand.
I know you're mad that geology is messing up your investment schemes, but wishes aren't horses, dude.
The fact is more and more reserves are being found daily i.e. Google Petrobras. Ultra-deep wells being sunk in ultra-deep gulf waters producing record reserve finds. Peak-Oilers argue, “But who can believe Petrobras they are another Multi-National Oil company.” ...and we've come full circle.
As for excess CO2, the forest is experiencing record growth rates. What a dilemma this now creates for the Hystericals.
Contrary to what says Jason Schwarz, Peak Oilers know very well that oil still remains plentiful. But they also know what EROEI means and that any author ignoring it can only write rubbish when they express their opinion about Peak Oil. And it is obvious that Jason Schwarz ignores what EROEI means.
EROEI (Energy Returned on Energy Invested) is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource. For better understanding, let us consider two examples.
First case : EROEI = 16 (high value) ; we expend 1 energy unit, we get 16 units. The net usable energy is therefore 15 units when 16 are produced.
Second case : EROEI = 2 (low value) ; we expend 15 energy units, we get 30 units. The net usable energy is therefore 15 units when 30 are produced.
In the second case, the cost of producing a same amount of usable energy (measured in energy units) is 1.9 times higher than in the first case. And the depletion rate is also 1.9 higher.
More generally, as EROEI declines and gets ever closer to 1, energy production must accelerate just to maintain at the same level the net energy amount available to society. Practically, it means that 1°/ the cost of producing net energy increases, 2°/ the exhaustion of non renewable resources accelerates and 3°/ it becomes more and more difficult to increase year after year the annual net energy amount needed to feed economic growth.
(For more details and calculations about EROEI, I advise Jason Schwarz to look at the article titled “ Understanding EROEI ”, posted on Scitizen (7 March 2008) by Robert Rapier
scitizen.com/stories/F.../ )
From 1945 to around 2005, thanks to conventional oil (high value EROEI) our world has been able to 1°/ produce energy at low cost, 2°/ sell it at low price and 3°/ satisfy a growing demand. This is how fast economic growth was generated. But in the decades ahead the average EROEI of the still plentiful remaining energy resources will get lower and lower, getting ever closer to 1. Therefore the pace of economic growth will get slower and slower, reducing the investment capabilities of our economies, and it will become more and more difficult to increase year after year the annual net energy amount needed to feed economic growth. At some point, beyond a certain threshold, those capabilities will vanish and we will then reach Peak Energy, the summit of world annual net energy production.
Thus Peak Oil will happen, sooner or later. Those who denie such a fact believe that in a finite world the annual energy production can go on increasing indefinitely. Nonsense.
André Sautou
I gree with your analysis except for one HUGE assumption you make: That the energy required to produce the energy will go to a 1:1 ratio as quickly as you imply.
Corn ethanol is less than a 1:1 ratio, I think its about 1 33:1.
That's why corn ethanol is ludicrous to make.
(can only be made with government subsidies)
In the big scheme of things, ultra-deepwater, deep-drilling is still substantially over the 1:1 ratio -- I don't know the exact ratio, but oil companies wouldn't invest in it if it was less than 1:1 ratio.
Almost all hydrocarbons are over a 1:1 ratio. But admittedly some get pretty close to 1:1 ratio to the point they are marginal for economic production.
Liquid hydrocarbons -- oil and gas condensates don't fall into that category.
So your "Peak" gloom and doom, while is right on the analysis of the energy cost to produce energy, is wrong on how soon it will get there, if it gets there at all within a meaningful economic horizon. Over 30 years away and it has no impact on the economics of today.
That's what this blog commentary is about -- the economics of oil today. Not 30,50, or 60 years from today.
Go back asleep and wakeup 30 years from now and cry your "doom and gloom", otherwise you're wasting my time and more important for you -- your time.
So is pointless to "doom and gloom" about it now.
The reality based community is teaching a lesson to all those wishing upon a star.
1°/ I do not imply that the average EROEI (concerning all energy produced in the world) will evolve very quickly towards a 1:1 ratio. I believe this average EROEI will get lower and lower, but I imply nothing about the pace.
2°/ Making low EROEI fuel may be possible at a very low scale when perverse effects (like government subsidies) allow a few producers to make profits. But that is not sustainable at a large scale.
André Sautou
On Jun 25 06:46 PM anaconda wrote:
> To andre Sautou:
> I gree with your analysis except for one HUGE assumption you make:
> That the energy required to produce the energy will go to a 1:1 ratio
> as quickly as you imply.
>
> Corn ethanol is less than a 1:1 ratio, I think its about 1 33:1.
>
> That's why corn ethanol is ludicrous to make.
> (can only be made with government subsidies)
>
> In the big scheme of things, ultra-deepwater, deep-drilling is still
> substantially over the 1:1 ratio -- I don't know the exact ratio,
> but oil companies wouldn't invest in it if it was less than 1:1 ratio.
>
>
> Almost all hydrocarbons are over a 1:1 ratio. But admittedly some
> get pretty close to 1:1 ratio to the point they are marginal for
> economic production.
>
> Liquid hydrocarbons -- oil and gas condensates don't fall into that
> category.
>
> So your "Peak" gloom and doom, while is right on the analysis of
> the energy cost to produce energy, is wrong on how soon it will get
> there, if it gets there at all within a meaningful economic horizon.
> Over 30 years away and it has no impact on the economics of today.
>
>
> That's what this blog commentary is about -- the economics of oil
> today. Not 30,50, or 60 years from today.
>
> Go back asleep and wakeup 30 years from now and cry your "doom and
> gloom", otherwise you're wasting my time and more important for you
> -- your time.
>
> So is pointless to "doom and gloom" about it now.
hsgac.senate.gov/publi...
==> Supply & Demand once again.
Here is the comments from a well known economist who has accurately predicated all oil increases in the last few years.
Jeff Rubin, CIBC (June 2008) "Neither speculation nor the value of the US dollar is material to the oil outlook. We estimate that accumulation of “paper” barrels of oil in the hands of speculators has been, at most, one-fifth of the increase in Chinese demand for actual barrels of oil over the last five years. And even if denominated in a trade-weighted basket of world currencies, the price of oil would still have risen to over US$100/bbl."
scitizen.com/screens/b...
and
ergobalance.blogspot.c...
André Sautou
Regarding the amount of oil in the ground: that isn't going to change. The fact is, however, if we can find a more efficient means of extracting shale oil or heavy crude, we can cause the costs to decline again (they have declined for most of the last century at a fairly steady pace for light sweet crude). Indeed, the high price of extraction makes such a breakthrough MORE LIKELY because anyone who can figure it out will become very rich (being able to sell his/her invention to everyone else in the oil business)--and once the patent runs out, the price will drop enormously. Don't forget the first cell phones and calculators cost thousands of dollars but now are dirt cheap. The same is true for all technology--IF we can figure out how to make it work.
The sooner we develop safe, clean, renewable alternatives to our oil based economy, the sooner we will regain the prosperity and independence we are so rapidly exporting. We must look at oil and natural gas as a gift, and an opportunity to facilitate the transformation of society to a condition of sustainability. We owe this to the next generations who will be sorely impoverished if we fail to do so.
Current production is around 85 million bbls per day. Low end of estimated yearly production decrease per field: 5%. This means that about 4 million bbls per day of new production is needed each year. That means 40 increases of 100,000 bbls per day each.
We will never run out of oil until the core of the earth is cold and dead.
Manmade Global warming is not a problem. The earth is covered with oceans which absorb any excess before it has a chance to accumulate.
Http://frostic.com/co2andglob...
In 1913 the UK produced 287million tons of Coal, its now down to 15 million tons, a level last seen 200 years ago!
The UK has some of the most advanced deep mine coal mines in the world, but its not reversed the decline.