Geologist: In Terms of Supply and Demand, the Oil Peak Is Past 60 comments
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By Eli Neusner
Jeffrey Brown is an independent petroleum geologist and analyst, who also manages an exploration program in West Texas. He has a major interest in the subject of "Peak Oil" and has used mathematical models to project a very grim future for the world's oil supply. We caught up with Jeffrey at his office outside Dallas.
Eli Neusner, reporter, HardAssetsInvestor.com (HAI): You've published some controversial research in the past. What is the gist of your analysis?
Jeffrey Brown, petroleum geologist (Brown): The basic thrust of my research is that the world has already arrived at Peak Oil - which is a condition in which the worldwide supply of oil cannot keep up with demand. We have used proven mathematical models to show that the top five net oil-exporting countries - which are Saudi Arabia, Russia, Norway, Iran and the United Arab Emirates, and which account for one-half of current world net oil exports - are showing an ongoing decline in net oil exports, continuing a trend that began in 2006. To give you an idea of where we're headed, Mexico - another former top producer - will see its oil exports hit zero in 2010.
HAI: How can you be so sure?
Brown: Because of the models and because we've seen it all before. Our mathematical model shows that once oil production in an oil-exporting country starts declining, the resulting decline in net oil exports can be quite rapid, and the oil exporter tends to show an accelerating net export decline rate. It's irreversible. The top five oil-exporting countries will approach zero net oil exports around 2030, going from peak exports to zero in about 25 years.
Many large producing regions have shown production patterns that are consistent with the models. The lower 48 peaked in 1970. Texas peaked in 1972. Alaskan oil production slowed the U.S. oil decline, but U.S. oil production never equaled its 1970 peak. Today, Prudhoe Bay, the largest American oil field, is now at about one-fifth of its peak production and declining rapidly. Did we stop finding oil in Texas or in the rest of the lower 48? No. However, it is impossible to replace old, very large oil fields, with a collection of the much smaller fields, such as those we've been finding in Texas since 1972.
HAI: Are there other examples of regions that have experienced peak oil production?
Brown: Yes; just take a look at what happened in the North Sea oil fields, where, despite using the best technology and with no restrictions on drilling, production has been falling steadily since peaking in 1999 at 52% of total recoverable reserves. North Sea oil production is now about one-fourth below its peak. As a result, the United Kingdom, which was a net oil exporter in 1999, exporting more than 1 million barrels a day, is now a net importer.
HAI: But don't the oil fields of the top five exporters have enough supply to last us for decades? Aren't they continually finding new oil fields?
Brown: Unfortunately, whatever new fields come on-line are only incremental improvements in the level of supply. Russia's big fields are in decline and their new fields aren't coming on-line fast enough. Russia peaked in the 1980s, then it rebounded and now it's resuming its production decline. Saudi Arabia showed an uptick this year, but it's still below its 2005 rate of production. There was a big find in Brazil recently, which some say has the potential for 600 billion barrels of oil. But even that will take 7-10 years to come on-line and it will only postpone Peak Oil by a few years. Brazil is still a net importer, and whatever new oil it finds will go to supporting its domestic economy.
HAI: What does it all mean for net importers like the U.S., and what can we do about it?
Brown: Oil is basically a horse race between declining demand and declining production, and right now declining production is winning. Declining net oil exports will inevitably result in continued rapid increases in the price of oil. As we all know, the price of oil doubled between May 2007 and June 2008. Over that same period, the average monthly price increase was 6%. Oil's taken a breather over the past couple of months, but last September and October, oil kicked up 10% per month, and we expect the same this year.
In terms of what we can do, we'll have to decrease our dependence on oil and reduce our overall energy consumption. I know I'm not the first person to advocate that, but I'm afraid it's going to take large-scale measures, including writing off a big swath of our investment in suburbia. That's a lifestyle that we can no longer support, with its dependence on inexpensive and abundant fossil fuels. We'll have to reduce our dependence on the automobile and increase our investment in electrified transportation, such as electric light rail, streetcars, commuter rail and subways. We're going to have to return to the way we used to live: in dense, urban housing along electrified mass transit lines. This, combined with a crash wind and solar power program, as well as a big push for more localized food production, will help us make the transition to our inevitable future without oil.
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Even if you think "peak oil" is rubbish, I can think of several reasons we should encourage a move away from oil:
-Having our recessions scheduled for us by OPEC. Oil rises and we have a recession, each and every time! Iran is untouchable because they could cause a depression in the U.S. by stopping exports for a week.
-Balance of payments and the national debt: For years, we have exported dollars/debt in exchange for foreign oil. That is not likely sustainable. We are risking a dollar devaluation that will put our standard of living in line with the rest of the world.
-Pollution. Gasoline is a carcinogen. Smog. Periodic oil spills.
-The need to spend a trillion dollars and a thousand or so lives a year in military protection for middle east oil producers.
-Supporting the America-hating fundamentalist theocracies in the mid-east with our money. Iran, Saudi Arabia, Yemen, etc.
-If we had cheaper alternatives for transportation, consumer spending on cars (depreciation, fuel, insurance, interest, tires, repairs...) could be devoted to more productive purchases (savings and retirement, education, health, recreation...) thus helping our economy.
-The lifestyle of multi-hour daily commutes is not so luxurious after all, especially when it bankrupts you. How about more family/leisure/sleep time every day?
-Motivation to stop ignoring the problems that have made our inner cities like those of third-world countries. Crime, education, infrastructure, crappy culture... etc.
The free market is starting to move in the right direction, but if peak oil happens by 2010 as seems most likely, then it will be too little too late. As much as I prefer laissez faire policies in general, this is one that is too important to everything-- our economy, our national security, our prosperity, even our survival-- to leave solely in the hands of the whims of the market. The government should have been leading the market in the right direction 20 years ago, with a much more aggressive energy policy that promotes renewables and discourages waste.
We don't have 20 years so the best we can do is get aggressive now. Yet even now people want to deny what is going on.
On talk radio, I hear fairy tales of a "trillion barrels of domestic oil" that we could tap now if only the "radical environmentalists" would get out of the way. This is, to put it mildly, wishful thinking. For example, they claim the Bakken formation may have 400 BILLION barrels of oil. However, the USGS came out and pretty much said that's a myth. Their estimate of technically recoverable oil is 4.3 billion-- nothing to be sneezed at, but nothing that will save us either.
It's time to bite the bullet. It's time for electric cars and improved public transporation. It's time for solar and wind, nuclear, geothermal, and everything else that we can pursue. Postponing what we must eventually do anyways only heightens the risks.
Coal has terrible pollution problems, and it is not renewable.
Nuke is more promising, but we need to develop closed cycle plants that reuse their own combustible, like the Russians are experimenting with (certainly more achievable than fusion). Nuclear decay goes a long time, and if we can use each stage of the nuclear decay, then the combustible of one power plan will last longer that the Human race.
But all this will not solve a bigger problem: food. Our food production is so dependent on oil that transportation will be a remote problem once feritilizers and diesel will not be available in enough quantities. You can think of nuke powered agro machinery, but I don't think we know yet how to synthesize nitrogen fertilizers without fossil fuels (NG).
So we need to protect and spare our domestic oil reserves, instead of drilling for oil like headless chickens.
Adapt, or perish.
The worst case for the USA is presently its financial crisis, which could collapse the monetary system and lead to our collective inability to purchase imported oil. That could happen at any time now.
So, our window may only be less than 4 years wide to get off our butts and change our old habits. Not much time for 300 million to act in a coherent way, but we should try something, behaving as if our lives depended upon its success.
Time...
Oil will rule and the cost will sky rocket so believing in a miracle is not in the cards.
We must move quickly to wind, solar and everything else. In doing all this it will be 10 years with our fingers crossed.
We will see boom times just by changing our infrastructure to a plan advocated by Mr. Pickens.
Thing is we have to do it at some point why not yesterday.
In the short term keep the message alive by talking to everyone about this issue. I don't think Matt Simmons would mind someone else spredding his message.
Finally, Jim Klingdale has a wonderful and spirited site that is a must visit. You won't be disapointed.
Norsk Hydro has been using the arc process for fixing nitrogen for years, going back to before WWII; they were also producing heavy water for a German enrichment program, that resulted in a sucessful commando raid to dump the heavy water.
The arc process works the same as lightning does, causing nitrgen to combine with oxygen to make nitric oxide (NO); the NO reacts with more nitrogen and water to make nitric acid and residual NO to continue the cycle. The only way to make ammonia commercially requires high pressure (1,000 atmospheres) and a nickel catalyst to convert a mixture of nitrogen and hydrogen to ammonia. The hydrogen conventionally is created by controlled burning of methane to produce CO and water and free hydrogen. Hydrogen can also be produced by electrolysis, and by a shift reaction between coke and steam. the latter two require fossil fuel input.
The overall comments recognize both the need to return to townhouses and to rail transport.
Electricity needs still need to be met with uranium fueled reactors. The comment regarding recycling spent fuel is well made; the primary component in this is plutonium, which President Carter banned totally during his term as president, with no published justification to my knowlege. It is possible that the concern that the plutonium would have too be purified before its blending into fuel would permit its diversion to nuclear devices, or that its high toxicity made its handling too dangerous. Both concerns stand in stark contrast to the use of plutonium in fission devices, which presumably can continue today.
I have long thought that the flight to suberbia was a subconcious desire to expand municipal target areas to the point that the fringes could survive nuclear attack, as well as a chance to get "elbow room". I can still remember when factory work forces lived close to their work, and walked to and from work daily. I also recall amusing myself, while awaiting my bus, by counting the number of commuter vehicles, out of any hundred, that had more than one occupant; the score was usually one or two instances! If all commuters just doubled up, a significant reduction in fuel demand would follow!
End of this Jeremiad.
We discussed future transportation, the lobbyists for the trucking and airline industry are to powerful. We talked about high speed rail for moving goods as well as people. Now some of the rail corridors are either abandoned or made into bike paths. The sky can only accommodate so many planes. There more people every year and now here we site moving goods with trucks from east to west, such stupidity what a bunch of idiots we have in office all of them. JUST THINK OF THE WASTED OIL. I know we have enough oil for the next 400 years but, that doesn't mean we should be wasting it. Finally we are going to wind and solar, maybe high speed rail next, but the trucking and airlines are to stupid and powerful, they want to cripple the country first.
Prof Rick Smalley - Our Energy Challenge
Columbia University Nanoscale Science and Engineering Center presents "Our Energy Challenge" by Nobel laureate Professor Richard Smalley of Rice University.
video.google.com/video...
Power point presentation Smalley is using in the above lecture
smalley.rice.edu/empli...
At 85 million barrels per day and a CERA claimed decline rated of 4.5% per year one existing production Neil King Jr, oil reporter for the Wall Street Journal, pointed out that represents an annual decline of about 4 million barrels. And that is just so happens that Iran produces 4 million barrels. So to keep production flat year over year the oil industry must bring to market the equivolent of a new Iran every year.
Anyone been watching the Olympic's swimming events? At 86 million barrels per day (a 1000 barrels per second) you could fill 5,600 Olympic pools of oil every day or enough to fill 2,044,000 pools in one year. Lay those end to end and you'd have a train of 'em 63,500 miles long.
At 85 million per day if you laid each barrel on the ground to make a pipeline, your pipeline would be 28 inches in diameter and reach 1.6 times around the world. And since the since the world uses that volume every day the crude flowing through this pipeline would be traveling at a speed greater then twice the speed of sound.
One more visualization. This is by John Hofmeister, president of Shell, before the House: the US economy uses 10,000 gallons of oil every second (240-250 barrels or about 1/4 the world supply), It, the US economy, uses 60 billion cubic feet of natural gas every day. And if you stack those cubic feet on top of each other they'd reach from the earth to the moon and back again...25 times. That's every day. And the US economy uses 20 railcars of coal evey minute. That's a 100 railcar train every 5 minutes.
If you want to watch The End of Suburbia the producers have put it on youtube www.youtube.com/watch?...
Here's more videos
oildepletiondebate.blo...
Great to do list.
The technology is certainly there to reduce demand through ride sharing, cooperative dinners & gardening, etc. But as long as people can keep fighting for the almighty dollar, they will.
What I mean by this is that so much of people's time is presently spent trying to survive by working long hours at one or more jobs rather than taking community based classes on food storage, or learning more about the soil, etc.
The fact is, most people must be told what to do or see others in their social order and groups doing a certain thing or behavior before they change their own.
This is what Bright Neighbor aims to help solve. If any of you live in Portland, feel free to ask for a Beta invite at Bright Neighbor.com to see what the buzz is all about.