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Guest Post: Washington Capitulates - Peak Oil Is Real
By Doug Horning, Casey's Energy Opportunities
Washington Capitulates - Peak Oil Is Real
Each year, generally in May, the Energy Information Administration publishes a less-than-eagerly-anticipated tome called the International Energy Outlook, 250+ pages of mind-numbing text, charts, graphs, and tables.
No one reads it. The mainstream media ignore it.
It’s the product of the best prognosticators in the Department of Energy. Okay, that may be what puts most people off. But if you’re patient enough to dig into it, it will cough up some fascinating nuggets of information.
The present edition is no exception. The report refrains from spelling out the conclusion that seems most obvious from its data. However, confirming a trend begun just last year, the 2009 edition clearly reveals that the government has been forced to admit that Peak Oil is coming. Moreover, it’s expected to arrive much faster than was believed as recently as two years ago.
This represents a remarkable turnaround in the agency’s opinion. Up until 2008, they were predicting unbroken growth in world oil supplies for the next two decades. But in ’08 and ’09, the rosy picture turned decidedly unrosier.
Before we look at the numbers, a couple of notes on terminology. The EIA makes its projections based on what its analysts call the “reference case,” i.e., average economic growth. It also provides estimates for better- and worse-case scenarios, but the reference case represents the best guesses they have.
Oil (as we generally think of it), upon which most of the world economy depends, is termed “conventional liquids,” i.e., the stuff that comes gushing up from under Saudi sands. “Unconventional liquids” – extra-heavy oil, bitumen, coal-to-liquids, gas-to-liquids, and biofuels – are also covered in the report, as we’ll see, but conventional is far and away the most important one at this moment in history.
With that in mind, by 2007 the IEO was in its final year of irrational exuberance, confidently predicting that world production of conventional liquids would be 107.5 million barrels/day (up from 81.9 in 2005). That dovetailed nicely with a forecast for world demand of 118 million b/d, with 10.5 million barrels of unconventional liquids taking up the slack.
By ’08, they had put the info into table form, and look what happened:
Same table, ’09:
Projected production, as you can see, is suddenly shriveling up. From 107.5 million b/d of oil projected for 2030 in 2007, to 102.9 million b/d in 2008, to this year’s meager expectation for 93.1 million. That’s a drop of 13.4% in only two years, and posits production growth of only 11.6 million b/d (14.2%) from 2006 levels.
If that isn’t an admission that the era of Peak Oil is upon us, what is?
The report assumes that some of this stunning shortfall will be made up by development of unconventional liquids to the tune of 13.5 million b/d, including a jump of 5.9 million b/d in biofuels. At the same time, while conventional liquid production from non-OPEC nations is projected to grow only 7%, OPEC is expected to substantially increase its contribution, ramping up output by almost 25%. (All figures are for the period of 2006-2030.)
Does this seem optimistic? Well, it presupposes some heavy lifting on the part of OPEC, a dicey proposition in the best of times.
And it means creation of the infrastructure necessary to exploit extra-heavy oils, tar sands, shale, ultradeep deposits and other unconventionals, all of which require sophisticated technological know-how and face significant environmental challenges.
Biofuel production could more easily be elevated. But to reach the lofty level of nearly 6 million b/d would necessitate a huge diversion of cropland from food to energy, certain to be attended by a rise in food prices, not to mention potentially serious food shortages. The need for food being rather more primal than the need for gasoline, politicians are going to be reluctant to risk loosing angry mobs into the streets.
Even if all of these developments proceed flawlessly, though, we’ll still have to face a widening gap between production and consumption. Or will we?
As it turns out, we’re in luck! Or so the EIA would have us believe. Because, accompanying that falling supply is – you guessed it – declining demand. In 2007, the IEO anticipated world demand for all liquids of 118 million b/d in 2030. This year, that estimate shrank to 107 million b/d, right in line with production.
The important point to take away from the IEO’s analysis is that the world is facing a decline in liquid fuel production and the government, after years of straight-faced denial, is now admitting it.
Does this mean we’re going to run out of oil? No. But supply constrictions mean that the good old days of limitless, cheap oil are gone. And, though viable alternatives eventually will be developed, there’s no way of putting a timetable on that. In the interim, we’re going to have to pay up if we want to keep the family jalopy on the road.
How much? The IEO report’s reference case calls for $130/barrel oil in 2030, but that’s based on relatively modest demand increases from India, China, and other developing nations, and we find it very optimistic. It easily could be twice that.
Rising oil prices mean some belt-tightening, but they also offer investment opportunities, in both conventional and unconventional resource companies. In addition, power-generation alternatives such as solar, nuclear, and geothermal will be coming to the fore.
But discovering the right companies with sound fundamentals and the potential for handsome returns isn’t easy. Read our report how a math-prodigy-turned-multimillionaire finds those companies… and how you, too, can profit from his secret system. Click here to learn more.
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I think that anyone that has a 'secret system' can't be taken seriously under any circumstance... unless you have an IQ of 85 and enjoy watching infomercials at 2am...
"But discovering the right companies with sound fundamentals and the potential for handsome returns isn’t easy. Read our report how a math-prodigy-turned-multimillionaire finds those companies… and how you, too, can profit from his secret system."
Seriously. Why is this infomercial on Zero Hedge? you needing donations man?
even broken clocks are right two times a day no?
I think what we've witnessed is peak consumption and that the shriveling future production levels indicate a shift in consumption habits not a peak oil supply side issue per se.
As far as being a bull or bear goes I think that it's easy enough to be on the right side if you wait long enough =) But here, oil is overpriced but with interest rates low you can't keep the specs away.
"Up until 2008, they were predicting unbroken growth in world oil supplies for the next two decades." Enough said.
They changed their tune to peak oil right when the global warming hypothesis fell apart. I don't think that's a coincidence. If you're interested in controlling the behavior of everyone in the industrialized world, you need a threat big enough and convincing enough that everyone will buy into it.
Peak oil? Maybe, maybe not. All I know is that the folks who run the show aren't interested in telling me the truth about anything.
With all due respect, Peak Oil has been projected to be reached in 30-40 years for the past 30-40 years. New technology has always pushed the limit out. I'm not saying that the conclusions in this article are wrong, but let's add some grains of salt here. Also, in 20-30 years, we may not even need to rely on oil as we do today. Progress in new fuel replacements might seem slow now, but let me remind you:
First billion barrels of crude oil took 40 years to produce; second took 8, third 5, fourth 3.5 [current rate is about 80M/day, or a billion barrels every 12 days].
wouldn't that imply that the end is getting closer at an accelerated rate?
"wouldn't that imply that the end is getting closer at an accelerated rate?"
It would imply that even if the article's conlusions are true, which I doubt, then alternative technology will allow for us to offset lack of oil. Biofuels etc. My point is that even though progress in these new technology seems slow now, it will only accelerate (as my example of oil production was supposed to illustrate).
thats a true syllogism. comparing oil development to alternatives is fucking retarded. Where do biofuels come from? crops. we dont have enough food already.
growing algae in transparent vertical sheets is a very interesting technology, the energy density is off the charts compared to conventional biomass.
"made up by development of unconventional liquids"
Peak EROEI.
Every oil watershed event has a SocioEconomic
Political Mirror Event.
EX, Kingdom Saudi Celebrates 75. Google that
and see who else is celebrating.
The story of Saudi Arabian oil goes back to 1933 when King Abdulaziz bin Abdulrahman Al-Saud granted Standard Oil of California (Socal), later renamed Chevron, the right to prospect for oil in the new Kingdom.
Despite the negative connotation of the term, Bordwin said, "extend and pretend" can be a sound strategy. Lenders and property owners are reasoning,
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
peak oil is; lets say " hypothetical "; and no its not because i believe oil is infinite or renewable; but simply because the mathematics used in the determination of quantity of oil is, well, lets say " hypothetically leaning " and their geometry is, lets say " non-complete measurement " of fields.
I'm good Andy; thanks; doing some math to train my brain; taking a swim every couple of hours; generally enjoying; and you ( my goddamn question mark doesnt work )
oh i understand now,
this is when the question mark key, went bad.
excuse me for my previous accusations in regards to your dysfunctional ¿ mark.
dude; you still working on that; i hope you found more besides those two; this is a bullshit market where navigational skills are more required than financial ones ( if you know what i mean ). Man, i hope you find what you looking for.
fuck glory; this is not a time for heroics; while you may take great rewards; the punishment is more severe; play it safe and bring it home.
i know perfectly what you talking about; i meet mediocre men, women and ideas almost every day; and i cant stop asking myself; WTF has happened to mankind in the past 20 yrs. Dumbed down mofos with no understanding and one dimensional look at the world. The movie Idiocracy seems more like a future reality than a SF comedy. to me; financial biz lost his touch somewhere in the early 00 when i met a couple of traders who worked in the City; all kids between 23 and 25 yo who thought that stocks were only meant to go up, and that every down period is just a correction. They have never seen a severe crisis; no strong recessions; no nothing; raised in a bubble.
Andy i know your idiots and raise you a metric tonne of dopes!
Mediocrity replaced the quest for excellence about 15 years ago (just my opinion).
What he said...
And get over it.
You gotta get them to talk for two hours before you know if you really want the job or not. It's the employment version of the Third Date. Kiss a lot of toads, that old story.
I know the idea is to evaluate the message, not the messenger... but this may be taking it a step too far.
I have to agree with the other commenters.
Could this not be subject to political pressures as well.
Also, could not lower productions simply be an indicator of demand. Even with the lower production numbers, we can rely on those floating container ships for some time I think. lol.
Mmmaybe we have peak oil (Brazil just found a bunch more, I recall).
And mmmore mmmaybe we simply have peak 'easy oil'... Lotta bitumen up North. Like, lots.
Frankly, it's hard for me to take anything seriously that first uses the gov't as an 'expert' and then tries to sell me something. : p
I like that phrase: Frankly, it's hard for me to take anything seriously that first uses the gov't as an 'expert' and then tries to sell me something.
From ZH's headlines... http://www.bloomberg.com/apps/news?pid=20601087&sid=a44RUTBIl_3Q : p
Wow a far Left administration comes in and *#*POW*#* "Peak Oil" is suddenly here!
Who would have guessed?
The Left has been waiting for this Godot since the early 70s/late 60s?
How much would our capacity increase is we were allowed to drill for new resources? Use shale oil?
Aside from not believing this politically convenient appearance of "Peak Oil" (Ohh scary!!), I do believe the price of oil will rise as China & India come on-line and start demanding more oil. But that doesn't mean we'll suddenly run out of oil (The Left's masturbatory Armageddon fantasies aside), only move on the supply/demand curve. Supply is limited not by the size of the global oil barrel, but the width of the spigot removing the oil from the barrel.
I am a professional geologist in Canada. Peak Oil is NOT ABOUT RESERVES!!!. Yes the oil sands technically have an OOIP larger than Saudi Arabia. However, the roughly 100 billion dollars of investments have raised the production outlook from 1.5 to 2.5 MMbbls/day. A moderate fraction of Canadian demand. Peak oil is incredibly 100% real. And YES the end of easy oil means the EROEI is going to get worse as the production rates fall. World production will never breach 100 MMbbls/day. Ever.
I agree that Peak Oil is very real. But how do you arrive at the 100 MMbbls a day figure? Also, do you think we reached peak already? I see that the period between 2005-2009 shows a plateau of production.
As for most of the comments on this post - the masses are truly clueless.
IMO the most meaningful post in this thread.
---
Peak oil is the second most significant issue for our species in this era. [The first being population overshoot.]
Not that that would be at all apparent to someone with a finance/economics background lol!
Therefore thanks for exploring this issue on this forum.
Of course, the ramifications demand more than an "how can i personally profit most from this?" "philosophy", but one step at a time ...
-
From what I read on TOD at the beginning of 1900 EROEI was 100:1 now is 16:1 and that is a fact (despite the difficulties in assesing it). That is more that enough to consider the Peak Oil a reasonable assumption. An EROEI of 3 is judged as the lower limit for our sistem to keep working. I'd rather be wrong than unprepared.
From what I read on TOD at the beginning of 1900 EROEI was 100:1 now is 16:1 and that is a fact (despite the difficulties in assesing it). That is more that enough to consider the Peak Oil a reasonable assumption. An EROEI of 3 is judged as the lower limit for our sistem to keep working. I'd rather be wrong than unprepared.
Uh boy! Lets deal with the depression first, if we have any money to buy gas once GS is through with us, then we can consider this problem.
what about synthetic oil, there's shit load of coal just laying around doing nothing; synthesize that mofos
What about Mexico and North Sea? maybe you can help to synthesize some with your abiogenic oil theories for them too? They'd be glad if you could make it in a year or 2 though. A few million years won't do, sorry.
It is called Fischer-Tropsch synthesis ans was used in Germany during WW2 and South Africa during apartheid.
At some price of oil it becomes economically, but then expect coal to get expensive soon too.
An important admission that Peak Oil may arrive sooner than the govt thought. "Conventional liquids" are critical. Right now, the 800-pound oil gorilla is resting. But the oil gorilla will awaken again. My guess is that a conflict in the Middle East is an odds on favorite to result in shortages and higher prices before a pick-up in U.S. and world economy pushes up prices. In any case, oil ("conventional liquids") is too important to our economy to take our eyes off it for long. Thanks for this update on Peak Oil.
Peak Oil Is Real?
I'm more worried about the price callapsing.
You don't go by the name Robert Prechter do you... do you think it will go as low as he is predicting?
No.
Lower.
Steve Schork say's oil fundamentals put the price between $40 and $50 at most, but admits that oil isn't trading on fundamentals at all.
Is ANYTHING trading on fundamentals at this point?
Why would you need to increase production during a depression?
if we run out of oil we always have the Moon
http://www.wired.com/science/space/news/2006/12/72276
but seriously, the green shirts not interfering and the USA having the most coal, we could always turn it into natural gas and other liguid fuels.
"The process was used by Nazi Germany and Japan during World War II. When apartheid was the law of the land in South Africa, the country was subject to an international petroleum embargo. To compensate, South Africa developed Fischer-Tropsch operations, which are still in use today"
It's a chemical process = expensive !!! While we are used to cheap energy.
Stop driving your SUV ;-)
Agree.
Butanol is better!
Helium 3 - Hell yeah!
Some people may believe peak oil is coming and act upon that belief, or they may want to act upon a desire and need to project to others that peak oil is coming...
Never waste an opportunity
corollary: If you need a CHANGE create an opportunity.
Or it's just the best estimate we now got, and could change drastically (either direction) in 10 years.
yeah dont worry
there is an infinite supply of oil
and there is an infinite supply of price increases
dollar denominated, on the way
mock turtle
many of the people who
dont believe in peak oil
nor climate change
believe in the literal interrpretation of the book of revelation
and (AND) they intend to do destructive things to help bring about the end of times
Well, I post about oil here sometimes. ZeroHedge is about anonymity and so I shall remain thus. Above in this thread you have a person who says he is a geologist who says the most important thing about the whole matter.
It's not the size of the tank. It's the size of the faucet.
Let me toss out a more radical concept. Supply and Demand is a law only because the pseudo science of Economics declared it so, yes? And how much respect does ZH have for them.
Therefore, consider the possibility that as a commodity gets scarce, its price doesn't change. Or even goes down. If it gets scarce, what happens is someone doesn't get an order filled. Regardless of price.
Now, if that someone's order was to put fuel in trucks to carry food to a city, then you're going to have starving people even if oil doesn't spike.
And if that someone whose order for oil didn't get filled, and his neighbor's order did, and that someone's people are starving, he's going to go try to take his neighbor's oil delivery. Or he's going to nuke that neighbor to suppress his demand so there's more left to go around.
This is very serious business, people. This is society destroying. It may not affect the markets at all, but it could destroy society.
NO ONE...Knows where oil comes from.
Those ASSHOLES who say it comes from DINASOURS should choke themselves and just die.
If you think oil comes from dinasours just kill yourself. I mean that for the betterment of humanity. Crawl into a hole and die so the rest of man can get your oil (please)
Sorry...Just very impassioned with the ignorance of man kind.
For the idiot who says cows farting causes global warming...crawl in that hole with the dinasours. I've had enough hot air for the month (like Bernanke hasn't blown enough farts down my throat, now I have to deal with this peak oil BS)
Thank you. It's a package deal, take the blue pill and you will believe:
* Peak oil, a fraudulent "scientific" theory promoted by the like of CFR activist Matt Simmons (who incidentally is a banker, not a oilman)
* Global warming, another economy crippling hoax instigated by Greenpeace
* Keynesianism, a discredited economic theory designed to drive nations into debt slavery
The common thread behind these inane schemes coming from the Left is that they are designed to undermine and improverish the society. Only in a climate of hunger and misery can a revolution be instigated.
Actually, peak oil theory was crafted by Hubbert, who in the 1950s predicted U.S. peak oil occuring in 1970. He was entirely right, down to the year.
And yes it is scientific, just not exact. Hubbert predicted worldwide peak in the late 90s, but obviously that hasn't happened. Most are saying peak oil will occur around 2010-2012 now.
Excuse me? Crude comes from the remains of ancient Algae. The science is well proven and your ignorance is what mankind must fear most - Denial of reality about peak oil and climate change.
What is Crude oil?
Organic materials such as plankton and algae that have been deposited in sedimentary layers over many years on ocean and floors are believed to account for most crude oil. Contrary to popular perception, dinosaurs and other large animals are not thought to account for much oil.
All living creatures are composed of the elements carbon, hydrogen, oxygen, nitrogen, sulfur, phosphorus, along with minor amounts of other elements. Crude oil is composed of these same elements in addition to small amounts of inorganic materials picked up from the surrounding area. If buried deep enough and long enough the heat and pressure closer to the earth’s core combines the hydrogen and carbon over time to produce hydrocarbon molecules.
The primary factor which makes oil so valuable is that these liquid hydrocarbon molecules quickly release a large amount of energy as heat when combined with oxygen in a process called oxidization, more commonly referred to as combustion or burning.
Being lighter than surrounding rock, newly formed crude oil tends to head to the surface where it evaporates or is eaten by bacteria. If it is to be found today, the oil needs have been trapped under a suitable cap rock on its way to the surface.
A crude oil reservoir does not resemble an underground lake; instead, an accumulation of crude oil is contained between grains of sand or within tiny pores inside an otherwise solid rock matrix, like a rigid finely perforated sponge.
The hundreds of different grades of crude oil produced today are literally crude. To be used, they must be boiled in a refinery to separate out individual finished products including gasoline, diesel, heating oil, jet, and residual fuel. Each product has a different boiling temperature range.
The two factors which are most important for refineries to know about crude oil are its density and sulfur content.
In general, less dense, or lighter, crude is more valuable--it will more easily yield high value light products such as gasoline. Heavy crude oils can be processed to yield light products also, but only with the use of expensive and energy intensive processes which crack the heavier molecules.
Crude oil can be referred to as being sweet--low in sulfur, or sour--high in sulfur. Sulfur corrodes metal piping and tanks in producer and refining facilities. It also becomes a pollutant when burned, and sulfur in tailpipe exhaust damages catalytic converters. Refineries have to use costly methods to remove the sulfur from products such as gasoline and diesel, so the less sulfur in the crude to begin with, the better.
And where did the algae get the carbon to make themselves?
There is primordial carbon somewhere. We have just not found it.
It doesn't come from Dino the Dinasour and his ilk?
Damn, another example of how the public 'screwl' system failed me....again.
"In order to avoid the problem that arises by knowing the danger, they're pushing it down the road" — a bank will extend the maturity date by a couple years "and pretend it's OK."
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Are you dumb?
Oil was formed in two points in geological history; 90,000,000 and 150,000,000 years ago. Fossilized algae and various other organic matter that once lived under water was compacted by new layers of geological matter - whatever that process is called - and when it reached a depth of about 2000 meters in these two periods of extreme global warming, the fossilized matter was "cooked" into oil.
Saying no one knows where oil comes from is a pretty ridiculous statement. I don't know exactly what caused the chemical reaction, what the process was called, etc., but it's obvious that fossil fuels are stored and compressed solar energy, in the form of FOSSILS.
Listen to me very quietly.......
Buy RTK now.
The stock will be over $8.00 within 60-90 days.
They are about to drop some big news.
There's a lot of oil still left to tap. In 20 years, it will start to be a problem. By then we'll have cheap solar. And yes, you can do a lot with coal. CVR Energy is using coke (real dirty petroleum "coal") to make fertilizer in the USA.
The problem is the enviro regs. Alaska has barely been tapped. Bakken in the Dakotas looks real too. Offshore Mexico, Heavy oil in Ven and Colombia. There's time to get it right, but the gov will screw it up.
You can sure tell the difference between commentators who've read in-depth books/articles on topics (such as peak oil) and those who believe whatever silliness pops into their head is some sort of profundity they must explain to the rest of us who just don't "get it".... ;-) Fortunately, the economy of the future will likely not be as enabling to the ignorant as the economy of the past has been.
Peak Oil is short for "Cheap Oil Peak". The problem is that large part of our infrastructure and way of life is based on cheap oil. There are enourmous quantities of liquids with high energy consetration that may be produced if you can sell it for the equivalent of today US$ 10 pr gallon. But a country with most of it population placed in suburbs a gallon or more away from work will have a disadvantage in such an economic landscape. The way we live and the way we use energy will have to change. But this is not a situation like in 1973 when someone shut down production over night. The fall in production of oil will gradually fall and oil become more expencive. It will make alternative technology more profitable, and slowly we will come around to a society that is both the same and a bit different, like when we went from sail to steam. No disaster looming, just a shift in the direction of development.
The question is not oil supply outlook--it is the rate of technology change. Take your bets. So far over the last 100 years the rate of technology change has upper hand. When $200 a barrel comes back in a recovery (whenever that happens!) folks will be astounded about how much energy we do not use. Once that demand is gone it ain't coming back anytime soon.
Diesel
Uh, this does not mean peak oil. This means that they anticipate that everybody will produce less. In part, that is because the downturn in the economy stopped work on discovery and access to new sources. It is in part because the downturn, and a shift in assets away from creating a bubble in oil, caused a drop in price. It is in part because of serious instability in several large production regions (do I really need to name them?).
Production has very little to do with potential reserves. No one knows what the Saudis have under their sand, perhaps not even the Saudis. But what I do know is that the REAL threat to peak oil is not production, but its status as a new precious metal. The moment that the lords of the universe start keeping tankers of oil anchored places as an inflation hedge, you've met the end of cheap oil.
We had better get off our assses and develop the Baaken fields in the plains states and shale in the Rockies, but wait, we have Obama, Waxman and Pelosi running the show - not going to happen
The real problem is how much oil does it cost to get a barrel of oil out of the ground. With the big oil fields it takes very few barrels to get a large number of barrels out. With the new oil sands etc. it takes a lot of energy to get it out. It is the law of diminishing returns. The more you use extracting it the less you have for other purposes. At some point there will still be unconventional oil available but it will use more than a barrel to get a barrel.
Nothing brings out a yawn faster than the Peak Oil loons. Its as if an alien spacecraft eons ago injected our planet with a finite amount of oil via a giant syringe. The last I checked, oil is a renewable resource and is made 24/7. A measly hundred years ago we were riding horses on unpaved roads and crapping in the backyard. Its not a novel concept that our best days of oil discovery are ahead. Now if only that pesky thing called agg demand would pick up....
http://www.youtube.com/watch?v=cwNgNyiXPLk
Unfortunately, the current price system for oil is not useful or credible. Thus, efficient allocation of capital for alternatives is not possible or prudent to attempt. Until the oil pricing system is fixed, no productive investment for alternative energy will be possible or attempted.
a companion article to the above:
Peak Water
http://seekingalpha.com/instablog/239719-james-quinn/24883-peak-water
Folks, Peak Oil is Real
If I may, Anon #51312 is correct. I am a geophysicist and have spent almost 25 years 'in the buisness' if you will.
Please read M. King Hubbert's original paper. The copy at the site below has scanned it from SCIENCE so the figures are hard to read. The more motivated can visit the local College library.
http://www.hubbertpeak.com/Hubbert/
I really hate to get personal on these blogs however I find some responses nonsensical and downright offensive and which add nothing but a farcical quality to an otherwise meaningful dialogue:
Pizza Delivery Man...Go away.
Cheeky, et al: Put a cork in it. You can't synthesize oil on any meaninful scale from either tar sands or oil shales due to the energy cost. With currently available technology it cost more in terms of energy to synthesize a barell of oil than the energy IN a barell of oil.
I refer your attention to Mr. Hubberts reply made to David Nissen of Exxon in 1982
"Your kind remarks with regard to my previous studies of the evolution of the U.S. petroleum industry are greatly appreciated. However, you suggest that my estimates of the ultimate amounts of oil to be recovered is questionable for reasons of classification and because I have not taken into account the effect of the price of oil on ultimate recovery. You mention oil shale, coal, and the Orinoco heavy oils of Venezoela.
With regard to classification, if unintelligibility is to be avoided it is essential that one define his terms and then adhere rigorously to those definitions. In the present study I have been concerned with the techniques of estimation as applied to conventional crude oil and natural gas in the U.S. Lower-48 states. This excludes consideration of shale oil, coal, Orinoco heavy oils, natural gas from unconventional sources, and also oil and gas from Alaska.
My analyses are based upon the simple fundamental geologic fact that initially there was only a fixed and finite amount of oil in the ground, and that, as exploitation proceeds, the amount of oil remaining diminishes monotonically. We do not know how much oil was present originally or what fraction of this will ultimately be recovered. These are among the quantities that we are trying to estimate.
Your statement that the fraction of the original oil-in-place that will be recovered is correct, but the effect may easily be exaggerated. For example, we know how to get oil out of a reservoir sand, but at what cost? If oil had the price of pharmaceuticals and could be sold in unlimited quantity, we probably would get it all out except the smell. However there is a different and more fundamental cost that is independent of the monetary price. That is the energy cost of exploration and production. So long as oil is used as a source of energy, when the energy cost of recovering a barrel of oil becomes greater than the energy content of the oil, production will cease no matter what the monetary price may be. During the last decade we have very large increases in the monetary price of oil. This has stimulated an accelerated program of exploratory drilling and a slightly increased rate of discovery, but the discoveries per foot of exploratory drilling have continuously declined from an initial rate of about 200 barrels per foot to apresent rate of only 8 barrels per foot"
Ther real argument is not 'is peak oil real'? it is weather we have just reached the peak or just passed it.
Please visit here:
http://energy.sigmaxi.org/
and review the data.
For good or ill we are an oil empire and the empire is coming to an end.
Some energy is free and easily tunable. Using solar energy to convert salt to magma etc. You'd think the damn oil companies would at least do that crap for cracking processes.
"As it turns out, we’re in luck! Or so the EIA would have us believe. Because, accompanying that falling supply is – you guessed it – declining demand... This year, that estimate shrank to 107 million b/d, right in line with production."
What does he think HAS happened this year?
Thankfully a great op-ed just appeared a couple days ago debunking this nonsense: http://www.redcounty.com/peak-oil-theory-debunked
Wow I learned (and enjoyed) alot more from the comments than the article. Thanks!
Concern about energy policy is a left-wing conspiracy! Those damn liberals want to force everyone to breathe clean air! The bastards!
Yawn.
I find it interesting that those who trust in improvements in drilling and exploration technology to avoid Peak Oil indefinitely are often the same people who claim that renewables will "never" be able to compete with fossil fuels. Uh, logic problem anyone? I guess oil services is the only industry that benefits from technological advances?
In all honesty (not trying to be needlessly provocative here), can someone explain to me why the right in the US seems to have this strange, almost emotional revulsion to alternative energy technologies?
And as for the cost and gov't subsidies or what not- energy is not, and never has been, a "free" market. Think of all the tax breaks and subsidies (including, one could argue, the US military budget) that have supported fossil fuels. But meanwhile, people flip out when a bunch of people want to put solar panels on their roofs?
I really don't get it.
I'm not sure either
Hey, do you have panels? Do you follow your own medicine? What do do you really do to forward the conversation other than complain?
I'm the anonymous who wrote the first comment. Yeah, I follow my own medicine- I don't own a car, I bike to and from work, and my work involves structuring investments in promising late-stage private clean tech and renewable energy companies.
I don't have a penny of my own money in any fossil fuel producers. And what might be even more of a shock is that I'm not some nutcase left-winger.
So yeup, sorry to disappoint you.
Contact: David Ruth
druth@rice.edu
713-348-6327
Rice University
http://www.eurekalert.org/pub_releases/2009-08/ru-sos082709.php
Peak oil my ass; just GS manipulating another market.
To a hammer, every problem is a nail. You people should stick to creative ways to reduce the aggregate value of humanity. Besides, real or not, you'll come up with some way to profit.
Even what he says is true, delaying an audit trail by "several months" is ludicrous.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Organic George:
You are undoubtedly correct with regards to major price fluctuations on short time scales. A perfect example of this was the oil spike last summer. This was due in part(allegedly)to GS and others short squeezing SemPerm Holdings. I really do not doubt that they did it, however one is going to have a tough time proving it. Goldman has good lawyers.
This does not change the fact that Hubbert was correct.
We as a society are going to have to wean ourselves off of fossil fuels. They will ultimately kill us.
Alternatives are the only solution, but which ones?
This is the most important question of our age.
Currently touted alternatives come at significant monetary, environmental and social costs which are higher than most are aware. Consider just one: Energy Sprawl. Recent studies indicate that the area required to produce 1 terawatt of power from fossil fuels is on the order of 10 sq kilometers. To produce the same 1 terawatt from wind-power would require something like 70 sq kilometers. It gets worse for bio fuels. Nukes are an option, however they are proving to be MUCH more expensive to build in today's political, economic and environmental climate than they were 30 years ago. Large scale use of ocean tidal generators is also an option.
What you better hope for is that someone smart learns how to get past the break even point with nuclear fusion.
Organic George:
You are undoubtedly correct with regards to major price fluctuations on short time scales. A perfect example of this was the oil spike last summer. This was due in part(allegedly)to GS and others short squeezing SemPerm Holdings. I really do not doubt that they did it, however one is going to have a tough time proving it. Goldman has good lawyers.
This does not change the fact that Hubbert was correct.
We as a society are going to have to wean ourselves off of fossil fuels. They will ultimately kill us.
Alternatives are the only solution, but which ones?
This is the most important question of our age.
Currently touted alternatives come at significant monetary, environmental and social costs which are higher than most are aware. Consider just one: Energy Sprawl. Recent studies indicate that the area required to produce 1 terawatt of power from fossil fuels is on the order of 10 sq kilometers. To produce the same 1 terawatt from wind-power would require something like 70 sq kilometers. It gets worse for bio fuels. Nukes are an option, however they are proving to be MUCH more expensive to build in today's political, economic and environmental climate than they were 30 years ago. Large scale use of ocean tidal generators is also an option.
What you better hope for is that someone smart learns how to get past the break even point with nuclear fusion.
Ugh.
Peak Oil is defined as the point at which 1 gallon of oil is required to extract 1 gallon of oil - in other words, you're just running in place. More precisely, it's the point at which 1 joule of kinetic energy extracts 1 joule of potential energy. There is a 1 to 1 correlation.
There is no clear indication this will occur anytime soon, but it's clear that we're getting closer.
It was once said that it was the point at which $1 of oil extracts $1 of oil. But even that is imprecise, since the productive capacity and capability of extraction and refining has continually lowered the cost. We've pushed THAT peak point back further and further. Assuming we can extract oil using alternative (wind, solar) energy - then we have to move to the 1 joule for 1 joule scenario.
Even then, assuming the extraction of oil can be performed via renewable resources, it may PAY to extract oil (which will still be needed in the future) even if it is a 1 joule for 2 joule ratio. It's not terribly efficient, to be sure, but if we have no other means to power vehicles, then it may make sense. I suspect we'll have other means of vehicular motion, by then.
That is NOT what peak oil is. All you had to do is google it. Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline.
Bunch of lazy, crazy posters on this subject. Except for the geologists, most of these people don't know the other stuff from Shinola.
Bullshit to peak oil. Dumbasses...
I hate to see ZH expend credibilty needed for other projects, Goldman anyone, on this sort of crazy nonsense. These folks have been predicting Peak Oil since I was young and that was a good while ago.
It's not a left wing conspiracy. If Peak Oil were a left wing conspiracy . . . stating oil is depleting and disaster looms . . . they the left wing would support drilling and pumping anywhere you can find whatever remains.
BUT STOP TALKING POLITICS ABOUT THIS MATTER. It's physics. Not politics.
A generic Toyota Camry has an engine of approximately 100 Horsepower. You can google unit conversions yourself on this. 1 Hp = about 745 watts. Simply put, a watt is a volt-ampere. Your car battery is 12 Volts. It will crank using about 100 Amps. That is 12 X 200 = 1200 watts for the few seconds it takes to start your car. This is only 1/60th the power needed to equal a 100 Horsepower engine.
Worse, your car battery is generically about 30 ampere hours. Meaning you can crank the engine 30/1200 = .025 meaning you can crank for about 2 minutes before the battery is dead. And that's using 1/60th of what you need to be a not very powerful Camry.
It's physics. There will never be solar powered cars of this power. At 100% efficiency, a Camry's solar panel surface area would have to be 10X the size of the car -- and we will never get to 100%.
There is no solution. Gasoline became gasoline for a reason. It has an astonishingly high energy density. It may be the highest ever discovered. If that's true, most of us will be dead long before present published life expectancies.
When the shortage of whale oil was looking dire, peak whale oil looked like it would drive the price to the moon. Then it collapsed. It's called substitution. Once the advantage of oil begins to wane as its cost of production goes up, people will stop using it.
Idiots who know nothing about the well documented record of total world reserves wouldn't understand that has been dropping since the 60s and this didn't just "sneak up on us" like some commie conspiracy. Exploration in the past decade has been very active, with negligible finds to offset the amount consumed. Burgan and Cantarell are documented past peak, and Ghawar probably is too (though the Saudis keep this secret). The only surprises could be concealed reserves in Iran or potential big finds in very nasty places (countries that end in "stan") that have not been well explored due to political instability.
People don't understand that you can't hide a huge reservoir out there. Don't expect some toothless inbred hillbilly to understand geology.
Still think that's a decade away, but the first signs of change are upon us, in spite of speculation, market manipulation and medium term price drops due to economic depression.
Toothless inbred hillbilly? How about Michael Lynch, the former director for Asian energy and security at the Center for International Studies at the Massachusetts Institute of Technology, is an energy consultant.
He calls Bullshit to your rantings...I call Bullshit to your rantings. Course I am the toothless inbred hillbilly...what would I know except that I made a bunch of money betting on the price of oil to decline after a bunch of clowns including the Sec of Energy were predicting Peak Oil in the 70's
Here lets allow Michael Lynch to fart in your general direction.
In the end, perhaps the most misleading claim of the peak-oil advocates is that the earth was endowed with only 2 trillion barrels of “recoverable” oil. Actually, the consensus among geologists is that there are some 10 trillion barrels out there. A century ago, only 10 percent of it was considered recoverable, but improvements in technology should allow us to recover some 35 percent — another 2.5 trillion barrels — in an economically viable way. And this doesn’t even include such potential sources as tar sands, which in time we may be able to efficiently tap.
Oil remains abundant, and the price will likely come down closer to the historical level of $30 a barrel as new supplies come forward in the deep waters off West Africa and Latin America, in East Africa, and perhaps in the Bakken oil shale fields of Montana and North Dakota. But that may not keep the Chicken Littles from convincing policymakers in Washington and elsewhere that oil, being finite, must increase in price. (That’s the logic that led the Carter administration to create the Synthetic Fuels Corporation, a $3 billion boondoggle that never produced a gallon of useable fuel.)
This is not to say that we shouldn’t keep looking for other cost-effective, low-pollution energy sources — why not broaden our options? But we can’t let the false threat of disappearing oil lead the government to throw money away on harebrained renewable energy schemes or impose unnecessary and expensive conservation measures on a public already struggling through tough economic times.
Michael Lynch is a one man "Consulting Group" called Energy SEER who makes a living flying first class to give speeches as the "other side of the debate". His BS and MS degrees from MIT are in Political Science. He has milked his MIT connection without ever mentioning that he never got an engineering degree.
He has never been a VP or Exxon or BP or Chevron. He has never been a VP of any entity with an annual budget north of $10 million. He's an entertainer, and even a modicum of research would have told you this.
This is not a "debate". This is physics and math. There's no need to have an entertainer present "the other side". The "other side" the other side of the = sign. It's all math. Not philosophy.
Ha ha finance/economists crack me up with the lack of accounting for the natural processes that make human activity possible.
"some energy is free and tunable" sorry what what do you think makes solar panels an such? It takes engery and it aint free.....ha ha ha "free energy" come on - nothing's free.
Ha ha finance/economists crack me up with the lack of accounting for the natural processes that make human activity possible.
"some energy is free and tunable" sorry what what do you think makes solar panels an such? It takes engery and it aint free.....ha ha ha "free energy" come on - nothing's free.
Production and consumption must match.
If they lower production forecasts, this doesn't necessarely mean that they are forecasting peak oil. Maybe they are only forecasting lower production because of lower demand?
solar / geothermal / etc = next bubble
>>
Production and consumption must match.
If they lower production forecasts, this doesn't necessarely mean that they are forecasting peak oil. Maybe they are only forecasting lower production because of lower demand?
>>
Or did it ever occur to you that maybe it's the reverse?
Ghawar has been pumping SIXTY YEARS, people. SIXTY YEARS. That field is 1/2 of Saudi annual production! The Rube Goldberg projects they have going on to try to hold production levels up are doomed and anyone with common sense examining it would know. Oil underground isn't a big ocean that you can drill into one place and all the liquid nicely flows to that one hole you drilled. The stuff is in pockets. You have to keep drilling into new pockets. They have been doing this for SIXTY YEARS. Ghawar is about 7% of global production. 5-6 million of the 80ish million barrels of oil per day. It's Going Dry.
All fields go dry. ALL FIELDS GO DRY. You drill new holes, or you snake the horizontal drill looking for new pockets. Eventually the pockets are so small that you're moving the drill every day to a new one. Diminishing returns kill you.
Pay particular attention to the wording of the new, big elephant fields ballyhooed in places like Brazil. Their new field is very deep and the fine print says "oil and natural gas". The deeper you go, the higher the temperature. The higher the temperature, the less likely oil versus natural gas.
And don't wave your hand and say "convert to natural gas". Natural gas has a fraction of gasoline's energy. An 18 wheeler trying to run on natural gas would need a tank the size of the shipping containers to go 100 miles with those 400 Hp engines. Gasoline is gasoline for a reason people. It's incredible stuff. And we're not going to have enough, people are going to starve and people are going to get nuked because of it.
Fake numbers, fake accounting, glad ZH clears the BS
The cost of gasoline beginning in mid 2012 has Bernanke worried. The cost is going to kill the economic recovery. He knows had this current depression not occurred, gasoline would have been $6.00 a gallon today. Mexico is going off line in late 2011 and will become an importer. The UK went from exporter to importer in 2004, Indonesia the same at the beginning of the decade and, Argentina is not far behind. The Saudi's have been lying about their reserves for the past 10 years. The undeveloped countries that CNBC says will carry us to the promise land has over-taken the developed countries in energy consumption. China has 30 million people about to start driving cars that never had a car before. Gone are the days when Jed Clampet could shoot at some food and find oil. So to the days when a lonely fisherman discovers oil floating in the gulf. No one in their right mind would go looking for oil until it sells above $85 per barrel. Bernanke cannot think about controlling inflation without first getting a grip on the cost of gasoline from 2012 through 2016. He is worried. What he is about to pull on us is designed to get the nation ready for $ 8.00 per gallon gasoline. This economic mess caused by the financial oligarchies is solvable. 2mm barrels of day world-wide shortage beginning in 2014 will take more than a bank holiday to solve.
Is it possible:
Oil: NOT be a fossil fuel.
That would mean we have to figure out at what kind of rate different fields replenish themselves (if at all).
That would make ownership of the drilling sites A LOT more contentious. As in, if fields replenish (even extraordinarily slowly) there is no way we should allow corporations such as Exxon, Chevron, etc. to OWN these drill sites!
"A significant reservoir of crude oil was discovered (in the Gulf of Mexico) in the late ’60s, and by 1970, a platform named Eugene 330 was busily producing about 15,000 barrels per day (2,400 m³/d) of high-quality crude oil. By the late ’80s, the platform’s production had slipped to less than 4,000 barrels per day (640 m³/d), and was considered pumped out. Done.
Suddenly, in 1990, production soared back to 15,000 barrels per day (2,400 m³/d)
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Suddenly, in 1990, production soared back to 15,000 barrels per day (2,400 m³/d)
>>
These kinds of posts are irresponsible. Oil field "replenishment" is either horizontal drilling or MOVING THE PLATFORM A FEW THOUSAND METERS. The field didn't replenish. It just became economical to try for a smaller pocket elsewhere.
Take a look at Oklahoma. If there was replenishment, the'd be the richest state in the US, as they once were. They are not.
America has really REALLY cheap gas compared to other countries already. So it is a no-brainer that gas will get more expensive there.
I pay about $1.06 for a LITRE of gas right now. That works out to $4 a gallon, Canadian. Works out to $3.68 US, at todays exchange rate.
The cheapest I could find in the US RIGHT NOW is around $2.46-2.5. The most is $3.03 in Cali!
So yeah, we are paying 20% more for gas than even the unluckiest American consumer!
Long dialogue on "Oil and Economics," treating some of the issue raised here.
http://echoesofthedeepworld.blogspot.com/
You can skip all the politics and conspiracy theories (in both directions). Peak oil is easy to judge. Just look at the annual worldwide production figures. I don't have the exact numbers, but in 2006 the world pumped something like 86 million barrels of oil a day. All you have to do is to look at the annual figures and see if that number is ever exceeded. If not, then we've past peak production. The proper definition of peak oil is the point when worldwide production cannot be increased beyond a certain peak level no matter what the incentives.
Props to Anon #51824 and thank you Anon#51875 and others who appear to have some understanding of the problem.
Anon #51798 please skip the Pythonesque rhetoric. It does makes you sound like a toothless hillbilly.
Anon #51833 is correct, it is all about the physics, the math and the geology.
It's not about production capacities, consumption and demand forcasts or the complex economies thereof. The continuous present, ongoing and future demand for the material is built into the very fabric of modern technological society. It is a finite resource and there is only so much of it in the ground that is recoverable.
As Anon #51824 has clearly and correctly pointed out all fields go dry and there are only a fixed number of oil fields that nature has blessed (or cursed) us with.
Let's toss out one more tidbit to get attention.
Oil production has been what it has been. It's all documented. The numbers are on the graphs.
Oil spiked to $147. Its average price in 2007 was $66. Its average price in 2008 was $100.
In the world where supply and demand is worshipped as the mechanism by which prices are set, how is it that supply didn't spike when price did? Why did those Arabs not flood more to collect that extra money?
Maybe. Just maybe . . . because they couldn't. Maybe they're maxed at the numbers as they are. There can't imaginably BE greater incentive to pump more oil than existed in 2008 -- but more didn't get pumped.
Now toddle off and imagine up some conspiracy theory that ends with people not doing things in their own best monetary interests.
there is plenty of oil left.
there is no more oil left at today's prices.
"hybrids are like mermaids. when you want a fish, you get a woman. and when you need a woman, you get a fish."
"when you have small problems in the individual level, like the price of gasoline to drive every morning, you don't notice it, but when the aggregrate comes up, you're dead."
"if you want to buy a gasoline car in denmark, it costs you about 60,000 euros. if you buy our car, it's about 20,000 euro. if you fail the iq test, they ask you to leave the country."
"Europe has solved it. They just put tax on gasoline. They'll be the first in line to get off because their prices are high. China solves it by an edict. At some point they'll just declare that no gasoline car will come into a city. And that will be it. The Indians don't even understand why we think of it as a problem because most people in India fill two or three gallons every time. For them to get a battery that goes 120 miles is an extension on range, not a reduction in range."
source:
Shai Agassi's bold plan for electric cars (Feb 2009, 18 minutes)
http://www.ted.com/talks/shai_agassi_on_electric_cars.html
Dood, you need to read before you post. A poster earlier in the thread laid out horsepower and watts.
There's a reason the Volt goes 40 miles between charges. That's NOT because of the battery. It's because of the cables. You can't get power into the battery even overnigh even over night that will take it farther than 40 miles. If you try, you melt the wires.
The guy above really did have it right. It's physics. Electric cars will never have an engine of 100 Hp.
Oh, and on a previous thread someone pointed out that if you drive past apartment complexes and look at carports, you won't find any power outlets. Apartment dwellers are cut out of the market for potential buyers (for this reason and because someone who can afford to live only in an apartment isn't going to be buying a $40,000 micro car that has a battery in it that will need replacing in 5-7 years at a cost of $7000 and that goes only 40 miles.
Electric cars, btw, don't carry food. Trucks do. Nobody is going to plug big trucks into an outlet for 8 hours every 40 miles.
Oil production in the Persian Gulf, and therefore the world, is peaking now, give or take a couple or three years. The largest oil reservoirs in the Persian Gulf have active aquifers which push out the oil and prevent pressure decline. When the aquifer reaches the wellbore, the well waters out and production declines at accellerated rates. When will this happen? It happened in the early 1990's when Saudi ramped up production for Desert Storm. All the original vertical wells were abandoned and were replaced with horizontal wells which hover above the aquifer. When the water level reaches the horizontal well, it waters out immediately. This will soon start happening at the down-dip wells. In a few years, Saudi oil production will begin declining. They haven't had a major discovery since the 1960's. But don't take my word for it, read "Sunset In the Desert" by Matt Simmons.
CEO of the SOFA
The oil output in the Persian Gulf, and therefore the world, is now peaking, give or take a couple or three years. The giant Persian Gulf fields have a natural aquifer which maintains oil reservoir pressure and production levels until the aquifer level reaches the well. Then the well waters out and the oil production begins to decline at accelerated rates. When will this happen? It happened in Saudi Arabia in the early 1990’s when they increased production for Desert Storm. All the original vertical wells had to be abandoned and were replaced with horizontal wells which hover above the oil / water contact. When the water level reaches the horizontal wells, they will water out immediately. When will this happen? It’s a Saudi State secret, but some observers say it’s only a few years away. There have not been any major discoveries in Saudi Arabia since the sixties despite significant efforts. There are not enough discoveries in the works that can offset the coming Persian Gulf oil decline. In the past, periods of tight oil supplies were ended by the opening of new oil provinces. In the 1970’s, the North Sea, Prudhoe Bay, and several discoveries in Africa and South America boosted production and created an oversupply that lasted until just a few years ago. Today, there are no such discoveries in the works. The most promising prospects are in politically unstable countries such as Sudan and the United States. The new sub-salt discoveries in the Gulf of Mexico and Brazil are so remote and deep, and in such a complex geological area, that production will come on line gradually and will only have a minor impact on the world supply and demand balance. Technology will help, but will not be enough to get us out of this hole. The best way to alleviate this problem in a minor way is to open up drilling in offshore California and Florida. In California, prospects are known, shallow, and near the coast. California could potentially produce at least an additional 1 million BOPD on relatively short notice. Florida is anybody’s guess. Alaska may have more oil than Iraq. ANWR is just the tip of the iceberg. There are 13 sedimentary basins in Alaska which have never been drilled. They were all put out of reach by Jimmy Carter when he locked up about half of Alaska with a “Wilderness Designation”. The Outer Continental Shelf in the Gulf of Mexico should also be leased at accelerated rates. Oil will be declining in importance in the coming decades, so we may as well develop our remaining oil reserves now.
EIA's IEO has addressed Peak Oil since the 1998 version. The author doesn't mention that production keeps rising after 2030 ... to 108-mbd in 2090.
EIA has been making projections for decades. At TrendLines Research, we track the accuracy of vintage predictions to rate their records. EIA's 1995 forecast for 2008 was 86-mbd, while the actual was 85.4-mbd.
Meanwhile, McPeaksters said in 1989 that production would never exceed that year's 66-mbd flow rate. 2009 marks the 20th consecutive year that they've declared "Peak was last year!"
See the top 16 vintage forecasts (and world's top 20 future scenarios) at http://www.trendlines.ca/scenarios.htm