View Full Version : Let's talk about oil


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CavLancer
Jan 30, 2012, 11:30 PM
If only...

Monsterzuma
Jan 31, 2012, 05:51 AM
Oil is hovering at 100$ while both the US and Europe are mired in economic lethargy with an output gap of 7% each that has lingered for more than 3 years now. That's about 2 trillion dollars' worth of unrealized demand that would otherwise be bidding up the price of several basic resources including oil. Is there still anyone on earth who thought the "business as usual" of 2005-2007 could go on forever where the oil situation was concerned..? If there hadn't been a major crisis by the end of that period, where on earth would the price of oil have been?

IMO, the data available at this point already disproves "cornucopeanism".

Murky
Jan 31, 2012, 05:58 AM
I don't want to thrive after the collapse. I want the collapse to be replaced by thriving

There could be a collapse but there doesn't have to be. We can adapt.

NedimNapoleon
Jan 31, 2012, 06:32 AM
You just want to stop the Arabs ability to earn money.

Murky
Jan 31, 2012, 06:34 AM
You just want to stop the Arabs ability to earn money.

That's like saying you're going to cure all the drug addicts in the world at the snap of the finger. That's not going to happen. :lol:

NedimNapoleon
Jan 31, 2012, 06:43 AM
Well you are going to improvish them by stopping oil consumption, also Shell came to Bosnia to search for oil, I'm hoping they find some and you guys buy it.

Silurian
Jan 31, 2012, 06:47 AM
A collapse is unlikely.

The oil is going to run out over the next hundred years but I would be surprised if it we are still extracting the oil except from the cheapest fields then. As the price of oil rises demand will fall and petroleum will be replaced as whale oil was.

I doubt that one thing will replace oil it will be lots of little things.

As I said above personal transport journeys will reduce. Peoples work patterns will change to make better use of their trips by for example working longer on four days and having a three day weekend. Moving closer to their work place. Using public transport for part or all of a journey.

People will use smaller more efficient vehicles. Hybrid and electric vehicle will become more common especially in towns. In rural areas where the roads are covered in snow in the winter people will have a winter vehicle and a lighter more efficient vehicle for the rest of the year.

Plastics will be increasingly recycled and replaced by non oil based plastics and wood. Machinery will be improved to use lubricants more efficiently and synthetic lubricants will be increasingly used.

Etc.

El_Machinae
Jan 31, 2012, 07:16 AM
It's nice to want that. I'd love for everyone to thrive too.

I'm suggesting that spending $10k on survival supplies, in case society goes to pot, is a worse investment than spending $10k on making things more sustainable. One set of spending has positive feedback, the other negative feedback.

Murky
Jan 31, 2012, 07:33 AM
Well you are going to improvish them by stopping oil consumption, also Shell came to Bosnia to search for oil, I'm hoping they find some and you guys buy it.

Oil consumption is on the rise around the world. The only meaningful thing the USA has done is to ramp up domestic production of oil and natural gas. That is the main reason why we are at less than 50% dependance on foreign sources of oil. That is easily offset by India and China's increased demand.

The world isn't going to just stop using oil at the drop of a hat. The economies of all the industrial nations would quickly grind to a halt. It would be total chaos to even try it.

Cutlass
Jan 31, 2012, 07:35 AM
Plastics will be increasingly recycled and replaced by non oil based plastics and wood. Machinery will be improved to use lubricants more efficiently and synthetic lubricants will be increasingly used.

Wood is, and has been, replaced by plastics for quite a lot of years now. And the reason for that is that wood has become much more expensive to make things out of. The wood that can be easily harvested and transported for industrial uses is largely gone.

NedimNapoleon
Jan 31, 2012, 07:39 AM
Oil consumption is on the rise around the world. The only meaningful thing the USA has done is to ramp up domestic production of oil and natural gas. That is the main reason why we are at less than 50% dependance on foreign sources of oil. That is easily offset by India and China's increased demand.

The world isn't going to just stop using oil at the drop of a hat. The economies of all the industrial nations would quickly grind to a halt. It would be total chaos to even try it.

It isn't going to stop right away, but the Arab princes wont be able to eat with golden spoons but with silver ones [I was being sarcastic from the beginning].

warpus
Jan 31, 2012, 08:01 AM
A collapse is unlikely.

The oil is going to run out over the next hundred years but I would be surprised if it we are still extracting the oil except from the cheapest fields then. As the price of oil rises demand will fall and petroleum will be replaced as whale oil was.

I doubt that one thing will replace oil it will be lots of little things.

As I said above personal transport journeys will reduce. Peoples work patterns will change to make better use of their trips by for example working longer on four days and having a three day weekend. Moving closer to their work place. Using public transport for part or all of a journey.

People will use smaller more efficient vehicles. Hybrid and electric vehicle will become more common especially in towns. In rural areas where the roads are covered in snow in the winter people will have a winter vehicle and a lighter more efficient vehicle for the rest of the year.

Plastics will be increasingly recycled and replaced by non oil based plastics and wood. Machinery will be improved to use lubricants more efficiently and synthetic lubricants will be increasingly used.

Etc.

Americans love their cars, this is going to be a huge shock to the system for them.

Murky
Jan 31, 2012, 08:04 AM
Americans love their cars, this is going to be a huge shock to the system for them.

Nah, in a hundred years the internal combustion engine will probably have been replaced by something that runs on some sort of advanced fuel cell. It also wouldn't surprise me if we have cold fusion by then to charge them with. That is all possible if we act in time to prevent global warming from ending civilization as we know it.

Silurian
Jan 31, 2012, 09:55 AM
Wood is, and has been, replaced by plastics for quite a lot of years now. And the reason for that is that wood has become much more expensive to make things out of. The wood that can be easily harvested and transported for industrial uses is largely gone.

Many things can be purchased in plastic or wood such as chairs or windows. As the price of oil rises plastics will increase in cost and things like timber or plastic coated timber window frames or wood plastic composites could well end up being cheaper.

From UN

Since the 1990s, the forest area in Europe, North America, Caucasus and Central Asia has been increasing steadily. Forest area in the region has grown by 25 million hectares over the last 20 years (a size equivalent to the surface of the United Kingdom), or an average of 1.25 million ha per year (equivalent to an area slightly smaller than Montenegro). In the pan-European region* alone, the forest area increased by 17 million hectares in the last two decades. In addition to forest area, the volume of wood in pan-European forests is growing - by over 430 million cubic meters every year (which corresponds to a 1 cubic meter ring around the globe) due to the expansion of the forest area and increases in stock levels. In North America, the area of forests increased by almost 8 million hectares in the same period, mainly due to afforestation in the USA

http://www.unece.org/press/pr2011/11tim_p02e.html

There is no reason why fast growing hardwoods could not begin to be planted in the near future and start too be harvested within twenty years.

Cutlass
Jan 31, 2012, 11:17 AM
Many things can be purchased in plastic or wood such as chairs or windows. As the price of oil rises plastics will increase in cost and things like timber or plastic coated timber window frames or wood plastic composites could well end up being cheaper.

From UN



http://www.unece.org/press/pr2011/11tim_p02e.html

There is no reason why fast growing hardwoods could not begin to be planted in the near future and start too be harvested within twenty years.


Sure there is. A 20 year old tree is 4 to 6 inches in diameter at best. You can't harvest a useful amount of lumber from that. You need far larger trees. And that requires far longer growing times. Those little trees are only useful for particle board and paper making.

GoodGame
Jan 31, 2012, 12:44 PM
Bioplastic

http://www.blogcdn.com/www.engadget.com/media/2011/01/the-graduate----plastics.jpg

Murky
Jan 31, 2012, 12:49 PM
We're recycling a lot of plastics now. Most of time it's just a matter of removing impurities, shredding and melting it to make a new product. That's certainly easier than converting petroleum to plastic or plastic to petroleum for fuel.

CavLancer
Jan 31, 2012, 04:47 PM
Of course plastics don't move themselves to the collection point and on to the processing plant. Though I have not seen anyone say they could once they get there they cannot be turned into fuel for the gathering and processing of additional plastics.

One thing that concerns me about Saudi being past peak is the potential speed of its decline. If the Saudi fields were to behave like the Cantarell Field in Mexico, a super giant which has lost aprox a quarter of its output in 5 or 6 years, then the down slope of peak oil could be rather precipitous. Imagine again Gwawar in Saudi, that once great ocean of oil, being basically drained of its life blood by all the pinpricks of a thousand pumps going day and night for decades. Once emptied, how much longer will oil drain into it or be forced with steam, and at what production level for how long? Saudi doesn't let anyone look into their fields but their own people and their estimates are believed to be vastly overstated for reasons of security and influence. If those great fields behave like the Cantarell Field, we could be looking at a very different world in a decade, like civilization fell off an energy cliff instead of walked slowly down a slope. The end result would not be much different since so little is being done to replace, nor could much be done, but the time frame brings it from some distant happening in coming decades to... soon.

As we go down the slope when we are past the peak, and I believe that we are past the peak on a plateau before the fall, everything will become local. We will almost all be thrown upon and live as individuals in a local economy that is unable to sustain us. How great is the food production where you live? In today's society a few people off in some distant place using vast machines driven by endless energy produce the food which 200 years ago was produced by 95ish% of us working on small farms and with very different skill sets than we now have using animals which we don't have.

The fuzzy notion that someone will put up windmills and we can all go on being bankers and insurance agents is delightful, but not the horrific reality bearing down upon us.

Narz
Jan 31, 2012, 10:52 PM
I'm suggesting that spending $10k on survival supplies, in case society goes to pot, is a worse investment than spending $10k on making things more sustainable. One set of spending has positive feedback, the other negative feedback.
I agree with you. Frankly, I don't have 10 extra K to spend either way.

IMO, the best sort of investment is the sort that is both helpful no matter how society turns out (growing a garden for instance, or installing a rain catchment system or switching your home to decentralized power).

Nah, in a hundred years the internal combustion engine will probably have been replaced by something that runs on some sort of advanced fuel cell. It also wouldn't surprise me if we have cold fusion by then to charge them with. That is all possible if we act in time to prevent global warming from ending civilization as we know it.
Assuming we haven't already past that point.

amadeus
Jan 31, 2012, 11:57 PM
Quick question: have proven reserves gone up or down in the last 20 years?

Narz
Feb 01, 2012, 12:55 AM
Overall up in the last twenty years. The next twenty years is the more important concern. The last few have been fairly stagnant, iirc.

CavLancer
Feb 01, 2012, 01:02 AM
If you look a little deeper into where from the figures come for the oil reserves of nations you might come away feeling less sure. Certainly I'd like to post a link for that statement but its info I've come across in prior years in studying the problem and I can't do better than that.

Cutlass
Feb 01, 2012, 07:55 AM
Quick question: have proven reserves gone up or down in the last 20 years?


That's hidden. Some people think Saudi Arabia is running out rapidly and hiding the fact. And it's a misnomer in any case. Because much of that oil cannot be extracted in an economically viable manner.

Monsterzuma
Feb 01, 2012, 08:29 AM
It's useful to discuss peak oil in terms of the peaking of oil of a certain price. 30$* a barrel oil, for example, may well already have peaked (barring further recessionary disruptions). even if the oil production rate rises substantially from where it is now, it may not drive the price back down to that level.

* inflation adjusted

El_Machinae
Feb 01, 2012, 09:52 AM
Quick question: have proven reserves gone up or down in the last 20 years?
A nearly 20% rise!

http://www.energyinsights.net/cgi-script/csArticles/uploads/139/Oil%20Reserves%20Global%20World%20Total.gif

but

http://www.energyinsights.net/cgi-script/csArticles/uploads/139/Oil%20Cost%20Per%20Region%20per%20year%20-%20actual%20and%20forecast%20to%202015.gif

Ayatollah So
Feb 01, 2012, 11:01 AM
Cool how they got the "actual" cost of oil in 2014 on that chart ;)

But yeah. If oil production is roughly flat, the price will increase quickly. Because demand isn't going to stay put. Even a Euro-fiasco can only delay the demand crunch a little while.

Narz
Feb 04, 2012, 01:12 AM
People get almost as delusional as creationists when it comes to wanting to believe in limitless oil.

http://rvanews.com/news/transportation-chief-says-oil-supply-unlimited/55970

It's weird, in any private section job you'd think you'd be sacked or demoted for saying stupid, inane things in public (if you're supposed to be a spokesperson) but probably this guy won't even get a hand slap.

Narz
Feb 04, 2012, 01:15 AM
Quick question: have proven reserves gone up or down in the last 20 years?
Not exactly an answer to your question but it appears we've hit a production ceiling of sorts.

http://www.nature.com/nature/journal/v481/n7382/images_article/481433a-f1.2.jpg

Stats from an article in Nature magazine.

Integral
Feb 04, 2012, 01:20 AM
It is rare that I am convinced by a picture, but damn that shifted my priors.

You don't see many right angles in economics.

NedimNapoleon
Feb 04, 2012, 02:21 AM
The second graph, the dots are arranged like Japan.

Narz
Feb 04, 2012, 01:36 PM
It is rare that I am convinced by a picture, but damn that shifted my priors.

You don't see many right angles in economics.
Yeah it's pretty scary to me since I first starting thinking about it about five years ago. It's definitely a limiting factor. I tend to fear that both peak oil & climate change (and other environmental feedback) will laugh at our hopes & dreams & expectations & aspirations.

I don't really want it to be so (I've been accused by many at various points of schadenfreude for wishing humanity would curtail it's enthusiasm & plan ahead realistically) but it's quite the opposite. I've also been called a Luddite (which is an ironic insult to bandy about against someone on an Internet forum) but I like my Internet & warm running water.

I just don't know how we're going to be able to maintain all this without a massive shift in the way we do just about everything (and even if so, even with massive change on the political, business & social level things will still be rocky). Seeing as people don't like massive change, especially governments & fatcats, I think we're totally screwed. The fatcats & govt. will try to manage collapse so it is not complete & they can still maintain power but I think they overestimate their abilities & underestimate the extent to which things are going to change once we get past the bumpy plateau onto the decline (just in time for the effects of climate change to start heating up and with population continuing to climb).

The second graph, the dots are arranged like Japan.
On a lighter note, yes they are.

tokala
Feb 04, 2012, 02:09 PM
A nearly 20% rise!

One should pay attention to the fact that more than 50% of "proven" reserves comes from middle eastern states, where no external auditing of their reserve data takes place.

I.e. they could just pull any numbers they like out of their rear ends, and they have done so in the past; those jumps in the 80s appear not to have any economic or geologic base.

Mongoloid Cow
Feb 04, 2012, 02:37 PM
One should pay attention to the fact that more than 50% of "proven" reserves comes from middle eastern states, where no external auditing of their reserve data takes place.

I.e. they could just pull any numbers they like out of their rear ends, and they have done so in the past; those jumps in the 80s appear not to have any economic or geologic base.

Essentially, they estimated how much they had, and then doubled it. Most of the Middle East still uses those numbers.

pi-r8
Feb 04, 2012, 04:41 PM
A nearly 20% rise!

It's not so simple. There's three sources of uncertainty in estimating oil reserves

1) The proven reserves are supposed to be "extractable under existing economic and political conditions" so you have different estimates of what's economical. Increasing the price of oil should automatically increase the reserves somewhat.
2) There's the different types of oil, which may or may not be considered "oil" depending on the source
3) Certain countries (Saudi Arabia in particular) might lie about their reserves for strategic reasons

So I think you have to take any world reserve estimates with a HUGE grain of salt. Actual production is a lot more clear-cut.

EnglishEdward
Feb 05, 2012, 07:07 AM
Can Hydrogen push me 240 kph? I dont think so.

How fast did those Appollo astronauts go when they set the world speed record?

El_Machinae
Feb 06, 2012, 04:22 AM
One should pay attention to the fact that more than 50% of "proven" reserves comes from middle eastern states, where no external auditing of their reserve data takes place.

I.e. they could just pull any numbers they like out of their rear ends, and they have done so in the past; those jumps in the 80s appear not to have any economic or geologic base.

There's more than that. Their treaties state that their yearly sales are based on their reserves (higher reserves means they can have higher sales). Since they're being paid nearly $80 (profit) per barrel right now, each Kingdom is incentivised to fudge their reserve numbers.

magellenproject
Feb 06, 2012, 04:49 AM
Yes indeed lets talk about Oil.

Oil exists because it gives people control over another Human being in the long run.
This is just as true in NK as it is un the US, and the UK, and the rest of the world.

Big oil Cartels, that have the same evil people in power who have been plotting our demise since antiquity, who also control Jim Sung Un, and Barrack obama like puppets.
All control is Evil.
All Authority is Evil.
And if everyone stops sucking up to everyone else, we can have what we all desperately need.
A world for everyone, set for each the way they want it.

Profit and Tax both=Control of people, by State AND Corporation.
The same people who set up Taxes on petrol are the same people who Tax the Sale, Consumption, and production of it.
The only way we can completely Annialate all forms of Authority, is by Tapping into energies that never run out and run our cars. Or Just walk everywhere.

I walk from Winersh to Reading, and Despite what all the Corporate/State Propoganda says I didn't die of exhaustion. I wonder if they'll kill me when I figure out I can walk from Bracknell to Reading without the need to pay a Fascist money to take me by Public Transport, that would be free if it weren't for another type of Fascist somewhere.

magellenproject
Feb 06, 2012, 05:26 AM
Oh....GOD....I hate my country.

My nations people are a bunch of conformist Sheep.
:( :(

Trolling.

I was reading in a book called ground control, and you guys actually stood up against the Corporations take over of public space.
I.E. B.I.D Buisiness improvement District.

I have ironically been suckered into the propaganda I get over here, about the US letting the Corporations take over public space.
But according to this book I was reading, there was fierce uproar about the B.I.D's in the US.
So I appologize, about the innacuracies of my above post.
I cant know everything, and seeing as the Communist Lennist BBC used to fill my head with crap,(Untill I cancelled my TV licence and through thr RF cable out the <snip> window) then its definately not my fault.
I have decided that I never going to get my informaiton from a paper, the internet, or the TV ever again.
The only way to not get in the Disseased UK, is to read a Degree Level text book from cambridge.
UK people are so unbelievably apathetic, i could snap they're arms of, mail them to Thailand, and they wouldn't complain.

Inappropriate language removed.

Narz
Feb 21, 2012, 03:05 PM
The bumpy plateau bumps along.

http://www.msnbc.msn.com/id/46446824/ns/business-oil_and_energy/#.T0QTNfXnte4

Monsterzuma
Feb 21, 2012, 06:07 PM
Citigroup Research Note: North Dakota Shale Oil 'Buries' Peak Oil Hypothesis. (https://www.citigroupgeo.com/pdf/SEUNHGJJ.pdf)

at what oil price does this supply emerge?

Cutlass
Feb 21, 2012, 06:15 PM
Daniel Yergin's new book "The Quest" makes a strong case that peak oil is a non issue. However the lack of peak oil does not mean that prices will not be high or volatile. We can have high and volatile prices even though oil won't run out. Yergin has a lot of credibility on oil issues. Accessibility, and therefor production costs, are not going to be as low as in the past. And political factors matter to that as well.

Oerdin
Feb 21, 2012, 06:20 PM
BTW record amounts of oil were produced in 2010 and 2011 so no peak oil yet. Also there are a lot of new fields coming on line in Africa soon so it looks like global production will continue hitting record highs for some time yet to come.

Sadly, demand in Asia is booming though so prices will continue to stay high.

Monsterzuma
Feb 21, 2012, 07:36 PM
Daniel Yergin: What's Wrong With Peak Oil (http://online.wsj.com/article/SB10001424053111904060604576572552998674340.html)

Monsterzuma
Feb 21, 2012, 07:48 PM
There Will Be Oil, But At What Price? (http://blogs.hbr.org/cs/2011/10/there_will_be_oil_but_can_you.html)

critique of Daniel Yergin.

Narz
Feb 21, 2012, 07:56 PM
Citigroup Research Note: North Dakota Shale Oil 'Buries' Peak Oil Hypothesis. (https://www.citigroupgeo.com/pdf/SEUNHGJJ.pdf)

at what oil price does this supply emerge?
Hmm, Citigroup is ultra trustworthy of course.

Shale oil has never proven to be any solution. To meet demand with shale oil would wreck even more havok on the environment & fresh water supplies. It's a fake solution & I'm sure Citigroup knows it (but probably they've got money in it).

Daniel Yergin's new book "The Quest" makes a strong case that peak oil is a non issue.
Care to offer a synopsis?

BTW record amounts of oil were produced in 2010 and 2011 so no peak oil yet.
Source?

Also there are a lot of new fields coming on line in Africa soon so it looks like global production will continue hitting record highs for some time yet to come.
Major fields are also going into decline, it's a big issue in Mexico right now.

Sadly, demand in Asia is booming though so prices will continue to stay high.
Simply not enough to go around, imagine if most of Africa were also living as Americans do and Chinese aspire to.

Cutlass
Feb 21, 2012, 08:03 PM
Care to offer a synopsis?

Short version is that new technology is making oil available that could not be extracted with the technology of just a couple of decades ago. Even that oilfield in Montana and the Dakotas which is the major increase in domestic oil now was impossible to drill 20 years ago. Further, existing old fields can have more oil extracted from them. In the past much of the oil from any particular oil field remained in the ground once the field was shut down because it could not be gotten to the surface. Also better analysis of fields gives more accurate, and larger, estimates of what is the size of them.

Monsterzuma
Feb 21, 2012, 08:06 PM
Hmm, Citigroup is ultra trustworthy of course.

I thought the tone of the article is suspiciously unprofessional, as if they are trying to put undue emphasis on the message as opposed to just presenting it secularly.

Shale oil has never proven to be any solution. To meet demand with shale oil would wreck even more havok on the environment & fresh water supplies. It's a fake solution & I'm sure Citigroup knows it (but probably they've got money in it).

They address the water issue on page 16.

Even if it isn't a long term sustainable solution, they can be right that the problem of high oil prices will be traded in for an environmental problem given the incentive structures that are in place.

Narz
Feb 21, 2012, 08:55 PM
Short version is that new technology is making oil available that could not be extracted with the technology of just a couple of decades ago. Even that oilfield in Montana and the Dakotas which is the major increase in domestic oil now was impossible to drill 20 years ago. Further, existing old fields can have more oil extracted from them. In the past much of the oil from any particular oil field remained in the ground once the field was shut down because it could not be gotten to the surface. Also better analysis of fields gives more accurate, and larger, estimates of what is the size of them.
I'm still skeptical that the better technology will be able to keep reserves growing enough to keep pace with decline but time will tell of course.

Even if it isn't a long term sustainable solution, they can be right that the problem of high oil prices will be traded in for an environmental problem given the incentive structures that are in place.
Unfortunately I have no doubt about that. European dominance of the world came from unscrupulous exploration of opportunities (people, places, things) while ignoring long-term consequences as well as those negatively affected in the present. This trend which has allowed them (and ultimately even some other peoples which of course is always touted by defenders of the status-quo, manifest destiny expounders) to prosper over the last few hundred years (a mere blip in the long history of humankind) cannot continue forever. Adaption isn't always a choice, nor is any creature guaranteed the ability to adapt (indeed most do not). We seem to have this hubris that no matter what we will adapt because we're so smart. But, to paraphrase Forest Gump, smart is as smart does. We're like a crafty child smart enough to find a way into the cookie jar but not smart enough to anticipate the stomach ache the next morning.

Oerdin
Feb 21, 2012, 09:43 PM
Shale oil is recoverable exactly the same way the Alberta tar sands are recoverable so I expect that at a price point of $100-$120 per barrel it is profitable. Of course, the big problem is the refining of it requires a lot of water and many states which have shale oil are dry states without much extra water.

Monsterzuma
Feb 21, 2012, 10:16 PM
The Quest: The Daniel Yergin Interview. Why He’s “Cautiously Optimistic” on the Future of Oil

...

Peak Oil Theory: Fact or Fiction?
In the accompanying video, Yergin addresses the Iranian threat as well as the debate over whether the world is approaching peak oil. Contrary to popular misconception, peak oil does not mean the world is 'running out of oil' but that "the oil that's left is progressively expensive, difficult, risky, marginal and fraught with secondary effects," as Chris Nelder and Gregor Macdonald write on Harvard Business Review's web site — a post written in response to Yergin's recent WSJ op-ed There Will Be Oil.
"We certainly are moving past the era of cheap oil," Yergin concedes. " we do have major new supplies opening up," including offshore Brazil, and the U.S. and Canadian oil sands as examples. [b]"None of them can be considered 'cheap oil'," he continues. "That's partly why we see higher floor under the price" of oil.

http://finance.yahoo.com/blogs/daily-ticker/quest-daniel-yergin-interview-why-cautiously-optimistic-future-150347358.html

he doesn't seem to substantially disagree with the peak cheap oil thesis.

Cutlass
Feb 22, 2012, 07:24 AM
http://finance.yahoo.com/blogs/daily-ticker/quest-daniel-yergin-interview-why-cautiously-optimistic-future-150347358.html

he doesn't seem to substantially disagree with the peak cheap oil thesis.


Yeah, that's the way I read it, and my post at the top of the page reflects that. Production costs are going up, even as production is going up. It is the higher costs which makes the higher production feasible.

Narz
Feb 22, 2012, 12:28 PM
Yeah, that's the way I read it, and my post at the top of the page reflects that. Production costs are going up, even as production is going up. It is the higher costs which makes the higher production feasible.
But production isn't going up.

Cutlass
Feb 22, 2012, 04:29 PM
But production isn't going up.

It goes up with demand. Just in fits and starts. 66million barrels per day 10 years ago, 72million barrels per day now.

uppi
Feb 22, 2012, 05:35 PM
It goes up with demand. Just in fits and starts. 66million barrels per day 10 years ago, 72million barrels per day now.

and 73 million barrels per day 7 years ago. And demand has increased during that time. So at least for the moment, production does not go up with demand.

Cutlass
Feb 22, 2012, 05:42 PM
and 73 million barrels per day 7 years ago. And demand has increased during that time. So at least for the moment, production does not go up with demand.

There are intervening factors. The Great Recession massively reduced demand. Political instability in some nations takes production off the market.

Whomp
Feb 22, 2012, 06:16 PM
Yergin is not the only one who sees the western hemisphere becoming self-sufficient over the nect 20 years. Interesting that OXY is being pretty quiet about Kern County, CA.

The report said the volume of oil imports in the US would fall below 1990s levels, largely due to rising domestic shale oil production and ethanol replacing crude. The US would also become a net exporter of natural gas. And, Dudley said, US oil imports "are likely to be half of today's level in 2030".

Overall, global energy demand would surge in the next 20 years, fuelled by economic and population growth in China and India, but at a slowing annual rate, due to advances in energy efficiency and growth of renewables. China would leapfrog the US to become the biggest energy importer.

By 2030, China and India would be the world's largest and third-largest economies and energy consumers, jointly accounting for about 35% of global population, GDP and energy demand.

World energy demand is likely to grow by 39% over the next two decades, or 1.6% annually, almost entirely in non-OECD countries. Consumption in OECD countries is expected to rise by just 4% in total over the period.

http://www.guardian.co.uk/environment/2012/jan/18/shale-oil-gas-us-energy-self-sufficient

Miles driven in the U.S. continues to crater even with economic recovery (1997 levels) and has continued to decline consistently for the last 77 months from the peak (now at 6.8% decline). By comparison, the longest peak to valley (6%) prior to this started in May of 1979 and ended 61 months later (26 months to trough).

Monsterzuma
Feb 23, 2012, 03:31 AM
There are intervening factors. The Great Recession massively reduced demand.

OK, but which way does the causality run? Does the recession happen by itself and diminish the demand or does excess demand cause the recession?

Watch this video from Jeff Rubin again, I think he makes a pretty good case that inflation induced by high oil prices was a major enabler of the subprime loan default debacle:

smRo7UFUuwM

JohnRM
Feb 23, 2012, 05:23 AM
The bottom line is that cheap, abundant fossil fuels are almost solely responsible for our ability to sustain 7 billion human beings living on this planet at our current standard of living. In absence of even just cheap fossil fuels, never mind abundance, this will become more and more difficult. To say that "as it becomes more expensive, alternatives will become economically viable", is just plain misleading. More expensive energy is more expensive energy, no matter what form it takes. If I have to pay more for everything because energy costs more, then my standard of living will decline. All of the wealth on this Earth is backed only by the amount of energy that we can harness versus the energy we expend to obtain it (EROEI). As those two numbers approach each other, the less likely it is that we are going to be able to sustain industrial civilization.

This isn't rocket science or calculus or some kind of whimsically wizardry. This is plain, cold, hard truth. You had better be prepared to live in a world where energy per capita is decreasing and efficiency fails to keep up with it, because that world is now. This is a finite world and there is a limit to how much we can grow and increase our standard of living. As we continue to increase the population while our resources dwindle, there will come a time when there just isn't enough to go around and our shares get smaller and smaller. The Western World has survived by taking everyone else's fair share for a very long time. That time is now over.

JohnRM
Feb 23, 2012, 05:43 AM
There are intervening factors. The Great Recession massively reduced demand. Political instability in some nations takes production off the market.

This just doesn't jive with reality. With the price of oil at $147 per barrel, anyone with spare capacity would have been producing flat-out. Well, they were doing just that and they still couldn't keep up. I haven't seen the report myself, but I was told that there were several months that year where it was judged that supply simply did not meet demand, PERIOD. Now, I realize that lack of investment has hurt the supply side to a large degree, but there can be no denial that; (A) The high price of oil played a significant, if not primary, role in causing the Great Recession, and (B) The past twelve years show that price volatility is increasing as supply growth becomes more difficult to achieve. Unconventional oil and alternatives are not going to bring the price down and there can be no adjustment to higher priced energy that will sustain the kind of standard of living that we currently enjoy.

Cutlass
Feb 23, 2012, 07:48 AM
OK, but which way does the causality run? Does the recession happen by itself and diminish the demand or does excess demand cause the recession?

Watch this video from Jeff Rubin again, I think he makes a pretty good case that inflation induced by high oil prices was a major enabler of the subprime loan default debacle:

smRo7UFUuwM



Oh it was definitely a situation where the answer to the question of was it A or B was Yes. The point is made that most modern recessions have followed a spike in energy prices.

However 2 points: First, the chicken or the egg in this case did not actually matter, because they were so tightly intertwined. The housing bubble was happening independently* of the oil costs. And so were the foundation of the financial crisis. I do tend to think that oil was the straw that broke the camel's back. However that camel was well and truly loaded to death before oil prices went up. The subprime crisis was going to happen with no regard to oil. Oil may well have just been the critical factor in timing.

Second, both high oil prices and economic slowdowns have a significant negative impact on oil use. It would be very difficult to separate the impact of either one from the impact of the other. Oil use is not very elastic in the short run except to the extent that it tracks the economy as a whole.



* This is an important asterisk from where I sit. Because the housing bubble and the spike in oil prices largely had the same cause. Which was a financial bubble due to there being a worldwide glut in savings which had tons of investable capital chasing far too few investment opportunities, and therefor went into bidding up commodity prices.


This just doesn't jive with reality. With the price of oil at $147 per barrel, anyone with spare capacity would have been producing flat-out. Well, they were doing just that and they still couldn't keep up. I haven't seen the report myself, but I was told that there were several months that year where it was judged that supply simply did not meet demand, PERIOD. Now, I realize that lack of investment has hurt the supply side to a large degree, but there can be no denial that; (A) The high price of oil played a significant, if not primary, role in causing the Great Recession, and (B) The past twelve years show that price volatility is increasing as supply growth becomes more difficult to achieve. Unconventional oil and alternatives are not going to bring the price down and there can be no adjustment to higher priced energy that will sustain the kind of standard of living that we currently enjoy.


That assumes that there is a lot of slack in current production capacity. And there wasn't. Current production capacity is not really a great deal over current use most of the time. And it takes a long time to change production capacity. Up to a decade to bring an oilfield into production and transported to market.

In that time frame Iran, Iraq, and Nigeria essentially were out of exporting business. Nigeria's exports were being destroyed by the ongoing civil conflict there. So there were supply disruptions that were unexpected.

Further, like I said above, a lot of the price spike in 2007-8 was actually a financial speculation bubble premium on top of a tight supply situation. And that was something that more supply cannot help. Saudi Arabia tried to increase production, but no one would buy the oil. Why? Supply was equal to demand without production changes. The rest of the price increase was not going to suppliers, but to financiers.

Oerdin
Feb 23, 2012, 08:19 AM
BTW most of Africa, much of South America, and much of Asia haven't been checked for conventional oil fields using modern technology much less for unconventional hydrocarbons.

Source?

Actually globally it looks like we're just a smigen below the record output of 2008 before the global economy tanked.

http://www.google.com/imgres?imgurl=http://gregor.us/wp-content/uploads/2011/01/Global-Crude-oil-Supply-2002-2010-4-by-6.jpg&imgrefurl=http://gregor.us/eia/global-oil-production-update-and-eia-data-changes/&h=387&w=579&sz=35&tbnid=Ko9AnBXzIuRcBM:&tbnh=70&tbnw=104&zoom=1&docid=rPU9YkH9pzp2UM&sa=X&ei=QFlGT_3gCe3XiQK64qnbDQ&ved=0CHUQ9QEwBQ&dur=592

Major fields are also going into decline, it's a big issue in Mexico right now.

Mexico's big problem is that the national oil company has been looted for funds by the government for decades now and they haven't invested what is needed to modernize equipment of existing fields much less explore for new fields. There are a ton of them still out there in the Gulf of Mexico as shown by the US's big new discoveries in recent years in the Gulf. Heck, even Cuba is finding oil in the Gulf now.

BTW BBC has reports about big new fields being found in several west African countries.

http://www.bbc.co.uk/news/world-africa-17115042

Remember most of that continent hasn't even been explored yet by modern equipment.

Cutlass
Feb 23, 2012, 11:24 AM
That's right about Mexico. The main problem with Mexican oil production is that the national government and Pemex have been systematically mismanaging their resources for decades now. Brazil is finding good offshore oil fields after failing to find good onshore ones. But they are extremely deep and new drilling technology is needed to exploit them. So even though that will be a large supply, it will not be an inexpensive one.

Monsterzuma
Feb 25, 2012, 01:32 AM
very accessible presentation of the peak oil case:

VOMWzjrRiBg&feature=player_embedded#!

Cutlass
Feb 25, 2012, 05:11 PM
very accessible presentation of the peak oil case:

VOMWzjrRiBg&feature=player_embedded#!



Yergin claims that the numbers aren't 1 trillion used and 1 trillion remaining as the video claims. He's talking about 5 trillion barrels, of which today's technology can profitably extract about 1.4 trillion. And further that new tech is constantly expanding what can be extracted.

But, again, that doesn't mean it will ever again be cheap.



Edit: As I got deeper into that it became more and more alarmist and less scientific. At about the 19 minute mark it crossed the line into conspiracy theory crap. All the "debt fueled money" bs that we've had 3 dozen threads debunking in the past few years. Don't watch the clip :p

Monsterzuma
Feb 25, 2012, 05:49 PM
Yergin claims that the numbers aren't 1 trillion used and 1 trillion remaining as the video claims. He's talking about 5 trillion barrels, of which today's technology can profitably extract about 1.4 trillion. And further that new tech is constantly expanding what can be extracted.

how is oil defined in those statements exactly? the numbers obviously differ depending on whether we include unconventional variants of oil in the mix.

Edit: As I got deeper into that it became more and more alarmist and less scientific. At about the 19 minute mark it crossed the line into conspiracy theory crap. All the "debt fueled money" bs that we've had 3 dozen threads debunking in the past few years.

I think it decently got the point across that when growth halts, you don't get a smooth decline but a volatile and abrupt one based on the fact that debts can not be serviced. This is a very straightforward fact derivable from the fact alone that governments (and many private entities) run perpetual deficits by design under the auspices of "growing out of them".

anyway, the video is just there for an introduction and any facts in it should obviously be double checked.

Cutlass
Feb 25, 2012, 06:11 PM
how is oil defined in those statements exactly? the numbers obviously differ depending on whether we include unconventional variants of oil in the mix.



The point to that is that reserves have always been based on what could be extracted with current technology and what could be located with current technology. And yet neither are constants.

Technology gets better. Yergin states that more oil has been "discovered" by revising upwards the amount of recoverable oil in existing oil fields than has been discovered in the discovery of new oil fields. And in most years the number size of existing reserves is revised upwards by a number greater than that year's production.



I think it decently got the point across that when growth halts, you don't get a smooth decline but a volatile and abrupt one based on the fact that debts can not be serviced. This is a very straightforward fact derivable from the fact alone that governments (and many private entities) run perpetual deficits by design under the auspices of "growing out of them".

anyway, the video is just there for an introduction and any facts in it should obviously be double checked.



Don't confuse sloppy politics with economic realities. Debt is a real issue. But the debt is money conspiracy theory has no more substance than the 9/11 conspiracy theory. It takes a few facts and runs in a confused and wrongheaded direction. And anyone attached to that is pretty much already discredited.

Further, the whole clip (I stopped watching at 19 minutes) is not just how peak oil will kill us, but how every possible alternative sucks and will fail as well. And there's just no basis for that.

Narz
Mar 07, 2012, 11:44 PM
The problems with guys like Yergin IMO is that they're all speculation. Technology "will" get better. It's "believed" we can increase output/slow decline of certain oil fields by x-amount. The guy is an author & authors have a responsibility to be spin a consistent narrative that appeals to their audience. His audience seems to be govt. officials & fatcats who don't particularly want to change. Yergin doesn't care if he's wrong, he's getting paid right now to tell people what they want to hear. Not saying he's not educated or doesn't have facts & figures on hand to try to pack up his future assertions but people can dig up facts & figures to back up anything. Amadeus can post about has the US economy improved under Regan in terms of mean average GDP, someone else can post about how the poor got poorer & jails filled up.

Sadly, no matter who ends up being right, future generations are screwed (if oil peaks sooner countries will burn more coal & fight over filthier forms of oil, if somehow we can keep the unsustainable party rolling for a few more decades the hangover at the end, in terms of ecological wreckage will also be a disaster).

Cutlass
Mar 08, 2012, 07:08 AM
And yet much of the oil, and natural gas, being extracted today are supplies that could not be extracted just 20 years earlier because the tech did not exist....

Monsterzuma
Mar 08, 2012, 07:14 AM
The guy is an author & authors have a responsibility to be spin a consistent narrative that appeals to their audience.

this also goes for the doom porn salesmen to at least as large an extent.

El_Machinae
Mar 08, 2012, 07:18 AM
there was a recent article in Science that discussed peak gold as a proxy for other peak theories. The production of gold has not risen over the last decade, and maybe even be going down. This is despite the drastic increase in the price of gold

tokala
Mar 08, 2012, 07:41 AM
And yet much of the oil, and natural gas, being extracted today are supplies that could not be extracted just 20 years earlier because the tech did not exist....

There's an oil/gas drilling engineer over at the oil drum very convincingly arguing that the "new tech will get us more oil" line is mostly a myth. The fancy stuff like hydraulic fracturing and horizontal drilling was available for several decades already, it just wasn't used much because it mostly wasn't cost effective as long as oil price was low and plenty of more easily exploitable fields were available.
And, especially regarding the new gas boom in the US, it is likely to be not sustainable geologically nor economically. According to him, the investors are forcing the producers into maximizing short term cash flow over long term profitabilty.

Cutlass
Mar 08, 2012, 07:51 AM
There's an oil/gas drilling engineer over at the oil drum very convincingly arguing that the "new tech will get us more oil" line is mostly a myth. The fancy stuff like hydraulic fracturing and horizontal drilling was available for several decades already, it just wasn't used much because it mostly wasn't cost effective as long as oil price was low and plenty of more easily exploitable fields were available.
And, especially regarding the new gas boom in the US, it is likely to be not sustainable geologically nor economically. According to him, the investors are forcing the producers into maximizing short term cash flow over long term profitabilty.


It is true that you need prices up to justify the cost of less accessible supplies. But it is also true that the costs of less accessible supplies becomes lower as technology improves. So both factors are in play. They reinforce one another. It is also true that the most accessible fields will be developed first. That's just the most profitable way to go.

As to the short term v. the long term, well that's why they try to delay alternative energy sources. Alternative energy will reduce demand on current sources, which will put downward pressure on their prices.

Which brings us around to the point earlier made by Churchill, and Yergin makes as well: When it comes to energy, safety lies in diversity. Having the largest number of different sources of energy is the way forward for the best, and safest, results.

Narz
Mar 08, 2012, 11:28 PM
this also goes for the doom porn salesmen to at least as large an extent.
I don't deny that.

I'm just in favor of the precautionary principle, it seems wildly stupid as an individual & as a society to be so confident about our future when being prepared for the worst only costs a fraction of the energy we spend blindly going forward with no plan B.

Doomer porn appeals to outcasts who want to live out some Mad Max fantasy (except with more women in their fantasies probably), I just want a safe future for myself & my daughter. Our current world is unsustainable, unsustainable isn't a buzzword or moral imperative, it's a statement of fact (though no one knows for sure what is actually sustainable, I figure most projections of what is or isn't are highly optimistic), if mankind can't sustain it's current raping/polluting ways that means they won't sustain, if we try we're just going to create massive suffering for generations to come.

Technology hasn't reversed topsoil loss, grain-production per capita has been dropping since the 80's despite all the "GMO will save us all" circlejerking. All efficiency gains in terms of electricity have been cancelled out by overall growth & people's rise in consumption. The "demographic transition" is a joke & a lie as poverty continues to increase worldwide (more hungry people now than ever before). The very poor in the world will never get to live like Americans & Americans themselves will have to change... but of course we won't without kicking & screaming & finding people to blame. Newt Gingrich promised $2/gallon gasoline if he became president & people lapped it up. The fear of reality/natural limits & culture of entitlement is why the Right wing is still able to stir up so many people here in the US, as gas prices go up this is likely to get even worse.

El_Machinae
Mar 09, 2012, 06:29 AM
Here we go. I thought that 'peak gold' would be an interesting model of peak oil.

Original article (only abstract is free)

This is not the picture in the Science article, but it's close.

http://www.zealllc.com/c2009/Zeal073109A.gif

Monsterzuma
Mar 09, 2012, 06:45 AM
Nice.

Is there some way to quantify how many new exploration/mining efforts are in the process of being started and how long it would prospectively take for these to give rise to increased supply and by how much?

Cutlass
Mar 09, 2012, 07:18 AM
The new frontier for gold mining is the ocean floor. But the efforts to develop the tech ran out of funding with the financial crisis.

El_Machinae
Mar 09, 2012, 07:29 AM
Nice.

Is there some way to quantify how many new exploration/mining efforts are in the process of being started and how long it would prospectively take for these to give rise to increased supply and by how much?

That's harder to do, but here's an estimate of discoveries year-to-year

http://www.marketoracle.co.uk/images/2010/Jun/gold-miners_image004.gif


The point of the Science article is that the price of gold has caused increased investigation and prospecting, and the technology has certainly gotten better in the meantime. So, there's a disconnect between supply and demand and price.

Now, I don't care if we 'run out' of gold. But I think it's a decent analogy to peak oil.

Monsterzuma
Mar 09, 2012, 08:25 AM
I agree that it is a great analogy and a demonstration of how inelastic supply curves exist and can throw a monkey wrench into the pricing system in real and practical ways.

I would imagine that a mismatch between supply and demand would draw an increasingly large share of capital from the world capital markets to go into investment to bring about a supply increase. But capital is not in infinite supply and making it diminish in other areas through the drawdown has negative consequences in the respective areas (i.e. it causes the general interest rate to rise; capital becomes more expensive; sound familiar?*). The question is just whether the quantities concerned make this principle of a marginal impact or of something greater. The interesting thing happens when the threshold between the two is breached.

I should say one thing about the gold situation, though: most of the new demand is investment demand only. Actual consumption demand has not yet increased by a commensurate amount. Maybe a lot of people are simply recognizing that this investment bubble (until proven otherwise ;)) is something fishy and not raising investments in new supply to match on that basis.

* I like this insight because up to this point I thought the only way oil could influence interest rates was through inflation. But it can also do so by drawing increasing amounts of capital from the capital markets. It's a double whammy. Which sort of makes it hard to defend that having oil prices rise by +/- 500% in a 10 year period would have no negative macroeconomic consequences.

"Oil is the new federal funds rate." - Jim Puplava

zstep14
Mar 09, 2012, 09:05 AM
Daniel Yergin's new book "The Quest" makes a strong case that peak oil is a non issue. However the lack of peak oil does not mean that prices will not be high or volatile. We can have high and volatile prices even though oil won't run out. Yergin has a lot of credibility on oil issues. Accessibility, and therefor production costs, are not going to be as low as in the past. And political factors matter to that as well.

Hmmm, have you read anything by Richard Heinberg? He says that Peak Oil most certainly is an issue, and seems to me, to be the leading voice on the Peak Oil issue. I've only read very little of Yergin.

zstep14
Mar 09, 2012, 09:17 AM
And yet much of the oil, and natural gas, being extracted today are supplies that could not be extracted just 20 years earlier because the tech did not exist....

These "hard to get" energy sources require injecting rather harsh chemicals, which are destructive to the environment, into the ground in order to get to the sources of oil and natural gas.

Cutlass
Mar 09, 2012, 10:23 AM
These "hard to get" energy sources require injecting rather harsh chemicals, which are destructive to the environment, into the ground in order to get to the sources of oil and natural gas.

It's debatable how much fracking requires the use of those chemicals compared to less harmful ones that just cost more.




I agree that it is a great analogy and a demonstration of how inelastic supply curves exist and can throw a monkey wrench into the pricing system in real and practical ways.

I would imagine that a mismatch between supply and demand would draw an increasingly large share of capital from the world capital markets to go into investment to bring about a supply increase. But capital is not in infinite supply and making it diminish in other areas through the drawdown has negative consequences in the respective areas (i.e. it causes the general interest rate to rise; capital becomes more expensive; sound familiar?*). The question is just whether the quantities concerned make this principle of a marginal impact or of something greater. The interesting thing happens when the threshold between the two is breached.

I should say one thing about the gold situation, though: most of the new demand is investment demand only. Actual consumption demand has not yet increased by a commensurate amount. Maybe a lot of people are simply recognizing that this investment bubble (until proven otherwise ;)) is something fishy and not raising investments in new supply to match on that basis.

* I like this insight because up to this point I thought the only way oil could influence interest rates was through inflation. But it can also do so by drawing increasing amounts of capital from the capital markets. It's a double whammy. Which sort of makes it hard to defend that having oil prices rise by +/- 500% in a 10 year period would have no negative macroeconomic consequences.

"Oil is the new federal funds rate." - Jim Puplava


It doesn't appear to be a capital availability issue. Rather it appears to be a capital markets failure issue.

zstep14
Mar 09, 2012, 10:58 AM
It's debatable how much fracking requires the use of those chemicals compared to less harmful ones that just cost more.

It's only debatable among those in the oil and energy industries and only because the EPA has faced outside pressures in reporting of the dangers of fracking. The EPA hasn't really been very "open" as far as fracking goes. There have been numerous documentations of water contamination due to fracking and fracking has even been linked to earthquakes in certain areas of the United States, such as Ohio, due to the fact that fracking injects chemicals deep into the ground.

Cutlass
Mar 09, 2012, 05:24 PM
It's only debatable among those in the oil and energy industries and only because the EPA has faced outside pressures in reporting of the dangers of fracking. The EPA hasn't really been very "open" as far as fracking goes. There have been numerous documentations of water contamination due to fracking and fracking has even been linked to earthquakes in certain areas of the United States, such as Ohio, due to the fact that fracking injects chemicals deep into the ground.


You misunderstand what I said. It is debatable how much those chemicals are needed. We don't know because no one is studying it. It may be doable to do fracking without the chemicals.

Narz
Mar 10, 2012, 12:26 AM
You misunderstand what I said. It is debatable how much those chemicals are needed. We don't know because no one is studying it. It may be doable to do fracking without the chemicals.
I find it hard to believe, with billions of dollars on the line, trillions eventually, that noone is studying it but maybe you're right. I figure the fracking companies find it cheaper just to pay to keep the EPA in their pocket & pay the occasional lawsuit from some bumpkins who get sick than spend the money researching cleaner ways to do the fracking. What do those in charge care? They sure as hell wouldn't live or raise their children anywhere near fracking sites I'm sure. Better to ask forgiveness than permission & all that. "We didn't know?" they'll proclaim. The money will already be in the bank.

Cutlass
Mar 10, 2012, 07:24 AM
The thing you have to keep in mind is that GW Bush was a rabid deregulator. And Obama has not rebuilt most of the regulatory enforcement that Bush eliminated or crippled. Hasn't tried a great deal, to be honest. So only the states have been dealing with this issue, not the feds.

zstep14
Mar 10, 2012, 07:37 AM
You misunderstand what I said. It is debatable how much those chemicals are needed. We don't know because no one is studying it. It may be doable to do fracking without the chemicals.

Okay, but still, what I'm saying is the current fracking process is environmentally worrisome.

Cutlass
Mar 10, 2012, 07:56 AM
Okay, but still, what I'm saying is the current fracking process is environmentally worrisome.

Some people are concerned about it. But the concerns don't mean that the issues could not be dealt with if someone could be bothered to really look into it.

zstep14
Mar 10, 2012, 08:52 AM
Some people are concerned about it. But the concerns don't mean that the issues could not be dealt with if someone could be bothered to really look into it.

Okay, even if fracking was somehow turned into an environmentally safe process (which I don't see happening), it doesn't take from the fact that oil companies are having to go to greater lengths just to find sources of oil and natural gas. Whenever someone finds a new source of oil, it seems like some people just think, "We don't need to worry about oil! We have plenty!" All it does is delay the finding of viable alternative energy sources.

Cutlass
Mar 10, 2012, 08:59 AM
Okay, even if fracking was somehow turned into an environmentally safe process (which I don't see happening), it doesn't take from the fact that oil companies are having to go to greater lengths just to find sources of oil and natural gas. Whenever someone finds a new source of oil, it seems like some people just think, "We don't need to worry about oil! We have plenty!" All it does is delay the finding of viable alternative energy sources.


I've never denied that. However, saying what you just did, which I have said multiple times, still does not equate to peak oil or an imminent economic crisis due to lack of oil.

zstep14
Mar 10, 2012, 09:18 AM
I've never denied that. However, saying what you just did, which I have said multiple times, still does not equate to peak oil or an imminent economic crisis due to lack of oil.

I don't see how it doesn't. I apologize if I miss something you already posted or if you're repeating what you've already previously said. But, the conventional sources of oil and natural production are declining. Even though there may be huge boosts in production from time to time, this is only temporary. The energy required to extract oil and natural gas is becoming just as much, if not more, than the energy that is actually produced.

Have you read any of Richard Heinberg? If so, what did you think? He projected Peak Oil to occur in the year 2010.

Cutlass
Mar 10, 2012, 09:41 AM
I don't see how it doesn't. I apologize if I miss something you already posted or if you're repeating what you've already previously said. But, the conventional sources of oil and natural production are declining. Even though there may be huge boosts in production from time to time, this is only temporary. The energy required to extract oil and natural gas is becoming just as much, if not more, than the energy that is actually produced.

Have you read any of Richard Heinberg? If so, what did you think? He projected Peak Oil to occur in the year 2010.


The problem with that is that in most instances the oil being extracted have much more energy than it takes to extract them, and that's not going to go away any time soon. And even if it did, it might still make sense to use renewable energy to extract the oil. Both what is considered proven reserves and what is economically extractable reserves are on a generally upwards trend. So peak oil is clearly not what is happening in the foreseeable future. What is happening is surging demand in LDCs, particularly China and India. What is also happening is existing oil supplies off the market because of political instability in Africa and the Mideast.

Oil prices are spiking right now because of the brewing conflict in Iran, the poor recovery of oil exports from Iraq and Libya, turmoil in Nigeria, and speculation on Wall St. Not because there isn't enough oil out there to meet demand.

zstep14
Mar 10, 2012, 09:56 AM
The problem with that is that in most instances the oil being extracted have much more energy than it takes to extract them, and that's not going to go away any time soon. And even if it did, it might still make sense to use renewable energy to extract the oil. Both what is considered proven reserves and what is economically extractable reserves are on a generally upwards trend. So peak oil is clearly not what is happening in the foreseeable future. What is happening is surging demand in LDCs, particularly China and India. What is also happening is existing oil supplies off the market because of political instability in Africa and the Mideast.

Oil prices are spiking right now because of the brewing conflict in Iran, the poor recovery of oil exports from Iraq and Libya, turmoil in Nigeria, and speculation on Wall St. Not because there isn't enough oil out there to meet demand.

Are world production levels of oil increasing?

Cutlass
Mar 10, 2012, 04:18 PM
Are world production levels of oil increasing?

Hard to say exactly. Production doesn't get above consumption much. If consumption is down, as in an economic downturn, then production goes down as well. And don't forget all that oil not being pumped for political reasons.

Narz
Mar 10, 2012, 05:57 PM
Have you read any of Richard Heinberg? If so, what did you think? He projected Peak Oil to occur in the year 2010.
It seems we peaked even before then, maybe we can inch production up a tiny bit but we appear to be on the "bumpy plateau" now.

innonimatu
Mar 10, 2012, 09:20 PM
It's debatable how much fracking requires the use of those chemicals compared to less harmful ones that just cost more.

The problem, I'm willing to bet, isn't a calculation of the cost of the compounds. The problem is actually the opposite, or so I suspect. We'll see...

Why was depleted uranium used instead of tungsten in war material? At the source of the chain of supply someone was getting rid of a problem!

Monsterzuma
Mar 12, 2012, 03:55 PM
Peak oil debate dead?
An "unexpected boom" in oil supplies ends the debate on "peak oil," Bank of Montreal's chief economist believes.

Sherry Cooper took a look this week on the surge in production in the United States and Canada. And ironically, she says, many are looking at the negative hit to the economy from high prices while it's oil production that has been the biggest boon to economic growth and jobs.

"Two years ago it was believed that oil molecules were too large to extract from shale," she said. "But now, new fracking technologies and horizontal drilling has led to the biggest oil boom in many years."

There are bottlenecks in pipeline capacity, of course, which is why Canada needs to export beyond the United States.

"The boom in shale oil drilling is just what the struggling U.S. economy needed," Ms. Cooper said.

"This, along with cheap shale gas, is providing enormous stimulus to many sectors and regions. The Canadian oil and gas industry must export oil to China and the rest of Asia to offset the negative impact of reduced U.S. oil demand going forward. Canadian pipeline companies and oil service companies will continue to benefit from the U.S. boom, and so will other Canadian exporters to the U.S. market. This energy boom is creating jobs and boosting income, assuring the U.S. economy continues to recover."

After Russia, Ms. Cooper said, the United States is now the biggest non-OPEC oil country in the world. Canada comes next. And, she added, that's hurting Canadian companies somewhat because they "carry the burden" of the high-cost oil sands.

When all is said and done, though, "this unexpected boom in oil supply puts to rest the so-called 'peak oil' debate, where adherents to this theory argued that the supply of oil is fixed and dwindling as traditional oil wells dry up. They argue that this would lead to much higher oil prices and reduced travel and transport. Some even suggested it would spell the end to globalization."

The Globe and Mail's Carrie Tait and Shawn McCarthy take an in-depth look at fracking in Saturday's edition.

http://www.ctv.ca/generic/generated/static/business/article2359192.html

It's still not clear to me what the impact of this on prices is.

Cutlass
Mar 12, 2012, 04:06 PM
Oil prices are in a state of disconnect from supplies. The US has unused refining capacity, is exporting refined products at high levels, and supplies of crude are plentiful. And yet gasoline has never been more expensive.

You can thank Wall St and saber rattling against Oran.

Agarwaen
Mar 12, 2012, 04:24 PM
This canadian shale oil seems to me like a false answer. Isn't it extremely costly and polluting?

Cutlass
Mar 12, 2012, 04:35 PM
This canadian shale oil seems to me like a false answer. Isn't it extremely costly and polluting?


It's probably the most costly and polluting oil currently in production. However Canada seems convinced it's a good idea they don't seem to have other sources to meet their needs domestically.

Monsterzuma
Mar 12, 2012, 04:56 PM
You can thank Wall St and saber rattling against Oran.

I'm not sure it makes sense to blame wall street's speculators for anything, because all speculators can do is propagate the price effects of a future shortage into the present, which is actually a valuable market function. If an issue like peak oil ever makes an economy tank, it's because there were too few speculators to smoothen the price effects by bidding up prices before the shortages form in concrete ways. The speculators are the canary in the coal mine that warns the miners to get out. Meanwhile the profits that speculators take are either spent or reinvested. For the economy as a whole, these profits are not a loss. They are just a redistribution.

If the speculators don't have a reason to expect price rises, they will automatically be disincentivized from betting on them.

One caveat: since it's wall street taking the profits, more of these are likely to be invested than spent, so one could argue that they are harmful during a liquidity trap when too little spending is taking place relative to savings.

Cutlass
Mar 12, 2012, 05:13 PM
I'm not sure it makes sense to blame wall street's speculators for anything, because all speculators can do is propagate the price effects of a future shortage into the present, which is actually a valuable market function. If an issue like peak oil ever makes an economy tank, it's because there were too few speculators to smoothen the price effects by bidding up prices before the shortages form in concrete ways. The speculators are the canary in the coal mine that warns the miners to get out. Meanwhile the profits that speculators take are either spent or reinvested. For the economy as a whole, these profits are not a loss. They are just a redistribution.

If the speculators don't have a reason to expect price rises, they will automatically be disincentivized from betting on them.

One caveat: since it's wall street taking the profits, more of these are likely to be invested than spent, so one could argue that they are harmful during a liquidity trap when too little spending is taking place relative to savings.


I don't really agree with that. Specualation takes on another form when there's too much money chasing too few assets. Prices are bid up, not because of rational evaluations of their worth, but because there's a lot of money that needs to be put to some use, and people can see a way to make money off of it. 2008 was definitely a speculative bubble in oil prices. Not any reflection on the fundamentals of the industry. Now looks like it is too.

Monsterzuma
Mar 12, 2012, 05:48 PM
I don't really agree with that. Specualation takes on another form when there's too much money chasing too few assets. Prices are bid up, not because of rational evaluations of their worth, but because there's a lot of money that needs to be put to some use, and people can see a way to make money off of it.

in most instances in which asset prices get inflated by speculators like that, there is poor monetary and (to a lesser extent) fiscal policy to be blamed primarily.

2008 was definitely a speculative bubble in oil prices. Not any reflection on the fundamentals of the industry. Now looks like it is too.

those prices came down as the result of the greatest economic crisis in post war history occurring. without that event, the prices seen at the time don't look that strange at all.

Cutlass
Mar 12, 2012, 05:53 PM
in most instances in which asset prices get inflated by speculators like that, there is poor monetary and (to a lesser extent) fiscal policy to be blamed primarily.


That's not always true either. Capital flows across borders. There was what Bernanke called a global glut of savings that resulted in a capital inflow bonanza. The same overseas money that fueled the housing bubble fueled the commodities bubble, including oil.



those prices came down as the result of the greatest economic crisis in post war history occurring. without that event, the prices seen at the time don't look that strange at all.


It would still be a bubble. The prices do not reflect the fundamentals of the market. There is no tightness of supplies.

innonimatu
Mar 12, 2012, 06:26 PM
If the speculators don't have a reason to expect price rises, they will automatically be disincentivized from betting on them.

The only reason they need is a belief that they can get away with raising the price and keep it high long enough to find some suckers to buy their positions. And given the limited "free market" for oil it probably doesn't take a big group to achieve that.

One caveat: since it's wall street taking the profits, more of these are likely to be invested than spent, so one could argue that they are harmful during a liquidity trap when too little spending is taking place relative to savings.

The injustice is the profiteering from the speculation, though sadly it has been so consented to that it's now seen as "stupid" not to do it; the immediate economic harm is allocations of resources due to the speculative prices. It doesn't matter where the money ends up being spent again, these harms have already been done.

Monsterzuma
Mar 12, 2012, 06:32 PM
That's not always true either. Capital flows across borders. There was what Bernanke called a global glut of savings that resulted in a capital inflow bonanza. The same overseas money that fueled the housing bubble fueled the commodities bubble, including oil.

lack of capital controls where they are appropriate = poor policy.

the housing bubble would likely not have grown to the proportions it has if proper speculation was enabled to take place. in 2006, attempts were made to create a futures market based on a nationwide US housing price index. the problem was that no one wanted to bet that prices would go up, so a counterparty to the huge number of short sellers could not be found. the lesson from this is that prices would not have gone where they did if people were enabled to make these downward bets earlier and a proper arbitrage between the futures market and the real market was made. the existing real market did not give speculators a simple means by which to make these downward bets to tame the market.

It would still be a bubble. The prices do not reflect the fundamentals of the market. There is no tightness of supplies.

a sustained 3% growth rate would have made the supply constrained in due time given the empirically undenyable plateauing of the global production rate of oil (and no, the interaction between price and production does not occur on a timeframe short enough to have production rise suddenly in the counterfactual). any speculation was just getting ahead of the events, like it should.

it was only a bubble in the tautological sense that the widespread expectation that no major demand depressing downturn would occur was false.

El_Machinae
Mar 12, 2012, 06:34 PM
My instinct is that oil should be hovering at about $100-120 (assuming no devaluation of the USD) in a 'healthy' economy. At the last bubble, once we got above $120, I knew we were in a bubble

Monsterzuma
Mar 12, 2012, 06:43 PM
The only reason they need is a belief that they can get away with raising the price and keep it high long enough to find some suckers to buy their positions. And given the limited "free market" for oil it probably doesn't take a big group to achieve that.

this makes no sense. they'd be putting money into the market to bid it up, only to get the same amount out again.

The injustice is the profiteering from the speculation, though sadly it has been so consented to that it's now seen as "stupid" not to do it; the immediate economic harm is allocations of resources due to the speculative prices. It doesn't matter where the money ends up being spent again, these harms have already been done.

in as far as the speculation serves to make the production/consumption economy prepare for a shortage sooner, it provides a public service, so these profits are legitimate earnings. even from a moralistic point of view there is no contradiction.

Cutlass
Mar 12, 2012, 08:11 PM
lack of capital controls where they are appropriate = poor policy.

the housing bubble would likely not have grown to the proportions it has if proper speculation was enabled to take place. in 2006, attempts were made to create a futures market based on a nationwide US housing price index. the problem was that no one wanted to bet that prices would go up, so a counterparty to the huge number of short sellers could not be found. the lesson from this is that prices would not have gone where they did if people were enabled to make these downward bets earlier and a proper arbitrage between the futures market and the real market was made. the existing real market did not give speculators a simple means by which to make these downward bets to tame the market.


It's easy to say there should be mechanisms for controlling a bubble. But the reality is that no one has invented one yet. And even if they did, that's no guarantee that the government would be willing to implement it.

The problem is that there are no firm and uncontroversial boundaries between what is a bubble and what is normal market pricing. The disagreement we are having at the moment is an example of this. I call it a bubble because there are no current supply shortages, but there are vast pools of capital surging into any market segment where money can be made. You call it not a bubble because someday the real price of oil will be up again. We prove right here that any mechanism for fighting bubbles has an inherent flaw of disagreement concerning what is and is not a bubble.



a sustained 3% growth rate would have made the supply constrained in due time given the empirically undenyable plateauing of the global production rate of oil (and no, the interaction between price and production does not occur on a timeframe short enough to have production rise suddenly in the counterfactual). any speculation was just getting ahead of the events, like it should.

it was only a bubble in the tautological sense that the widespread expectation that no major demand depressing downturn would occur was false.


It's a bubble in the sense that it is a capital inflow which is inflating the price, not supply and demand. The markets don't properly factor the future of the market long term because there are simply too many unknowns. There is not enough information for rationality.



this makes no sense. they'd be putting money into the market to bid it up, only to get the same amount out again.


And yet that's what financial markets do. Whether it makes sense or not it is objectively observable that that happens. Because there is always the hope that the person winning will be you and the loser will be someone else.


in as far as the speculation serves to make the production/consumption economy prepare for a shortage sooner, it provides a public service, so these profits are legitimate earnings. even from a moralistic point of view there is no contradiction.

Except it doesn't. It just causes disruptions in the market that cause disruptions in the economy.

zstep14
Mar 13, 2012, 01:29 PM
The problem with that is that in most instances the oil being extracted have much more energy than it takes to extract them, and that's not going to go away any time soon.


I guess I'm not understanding how these unconventional sources of oil and natural gas are not more costly. I've always been under the impression that these unconventional sources of oil and natural gas are much more costly to produce than the conventional sources from before. Also, these new unconventional sources of natural gas are also rapidly depleting, if I'm not mistaken.

tokala
Mar 13, 2012, 02:01 PM
Also, these new unconventional sources of natural gas are also rapidly depleting, if I'm not mistaken.

More precisely, each well that is drilled will, initially, yield a huge flow rate but will drop rapidly back towards very low rates on the timescale of months. There's still a huge amount of gas in there, but you can't get at it fast, unless you drill an obscene numer of boreholes

Cutlass
Mar 13, 2012, 04:10 PM
I guess I'm not understanding how these unconventional sources of oil and natural gas are not more costly. I've always been under the impression that these unconventional sources of oil and natural gas are much more costly to produce than the conventional sources from before. Also, these new unconventional sources of natural gas are also rapidly depleting, if I'm not mistaken.


I never said it wasn't' more expensive than old conventional sources. But saying it is more expensive is not in any way the same as saying that they are not profitable on their own merits.

Monsterzuma
Mar 14, 2012, 12:05 PM
http://www.renewableenergyworld.com/assets/images/story/2012/3/12/1332-toward-energy-literacy.jpg

http://www.renewableenergyworld.com/rea/news/article/2012/03/toward-energy-literacy

the tiny uptick to the right is what is being hailed as the massive US domestic oil production boom that will dispell all concerns regarding US energy independence and world production constraints. i'm sure there's a lot more where that came from, but let's not get ahead of ourselves.

The global picture: running faster to stay in the same place
http://www.renewableenergyworld.com/assets/images/story/2012/3/12/2-1332-toward-energy-literacy.jpg

title says it all. this good news we're hearing is not a new boom but the baseline scenario. there'd better be a constant stream of such good news, or the rug will be pulled from underneith of everything.

Narz
Mar 14, 2012, 12:33 PM
Any "good" news should be met with "Thank goodness we have more time to prepare for a sustainable future" instead of "Oh good, see I told you we could continue business as usual indefinitely, Hummers for everybody! :beer:"

Monsterzuma
Mar 16, 2012, 05:43 PM
Peak oil is real and will stunt any economic recovery (http://www.publicserviceeurope.com/article/1648/peak-oil-is-real-and-will-stunt-any-economic-recovery)

Heavy on rhetoric and old arguments. They very conveniently don't show the most recent year in their oil production graph, which I mean to remember would show a slight increase. Has the "declining EROEI" argument been debunked by people like Yergin?

Interesting factoids:

In April 2011, chief economist of the International Energy Agency Fatih Birol revealed what the industry knows: "We think that the crude oil production has already peaked, in 2006."

And since the population is growing, peak oil per capita occurred in 1979.

Daniel Yergin: What's Behind Rising Gas Prices? (http://online.wsj.com/article/SB10001424052702304459804577281580476174366.html)

As in the 2008 presidential election—remember the chants of "Drill, baby, drill!"—rising oil and gasoline prices have become an issue in 2012.

But election-year politics aside, the forces driving up prices at the pump are very different today than they were four years ago. In 2008, it was primarily the surge in oil consumption in emerging markets, disruptions, and a belief that the world was running short of oil (the so-called peak oil crisis).

In 2012, the reason is mainly geopolitics. Last November, the United Nations declared that Iran was clearly developing nuclear-weapons capabilities. The West is responding with sanctions aimed at reducing Iran's ability to export oil, on which it depends for more than half of its government revenues, to get it to halt its nuclear-weapons program. Tehran has answered by conducting large naval exercises and threatening to close the Strait of Hormuz, through which passes some 35% of the world's oil exports.

1970: The Peak of Everything (http://www.countercurrents.org/goodchild150312.htm)

Forget "peak oil" for a moment. At least in terms of the United States, if not elsewhere, the decline of the good times began around 1970. From a broader perspective, that was the really big "peak." Around that period, "it was the best of times, it was the worst of times," as Dickens might say. It was Jimi Hendrix, "sex, drugs, and rock 'n' roll," Easy Street. In the year 1969 there was the first moon landing. The gap between the rich and the poor was not so bad, whereas since then both the wealth and the income (two different things) of the richest five percent of American families have shot up enormously. Yet what some people regarded as bad news was that in 1968 the Tet offensive marked the turning point of the Vietnam War.

The bad news about oil was that US domestic production in 1970 began a permanent decline. The bad news about oil globally arrived not a great deal later: "peak oil" in the absolute sense was a few decades in the future, the "peak per capita" was in 1979, at 5.5 barrels of oil.

...

Monsterzuma
Mar 21, 2012, 01:55 PM
The death of peak oil (http://www.businessspectator.com.au/bs.nsf/Article/peak-oil-shale-gas-fracking-energy-nuclear-budget-pd20120229-RWR7C?OpenDocument)

the existence of vast reserves of oil and gas in shale formations, mainly in the United States, combined with the return of the oil price to $US100 a barrel without, so far, causing a global recession, is producing a profound transformation of energy markets.

Forget declining oil, there is a new global oil rush. The US has an estimated 2 trillion barrels of shale oil reserves – about 70 per cent of the world’s total and eight times the oil reserves of Saudi Arabia. The gas reserves, in the US, Australia and elsewhere, are vast.

The cost of extracting shale oil ranges from $US95 per barrel down to $US12, although the process of fracking, where water is pumped in to break up the shale and release the oil, is very controversial – as highlighted on the ABC’s Foreign Correspondent program last night.

Finally, some numbers on the extraction price.

IEA Report Shows We Are Already In A 'Peak Oil' Context (http://www.marketoracle.co.uk/Article33708.html)

The most recent IEA Oil Market Report, for February, could be interpreted as bringing some good news to oil importer countries of the OECD group, for which the IEA is the "energy watchdog agency". Its report said that oil demand in the OECD group, at about 46.25 million barrels per day (Mbd) was still 1.25 Mbd below the 5-year average for oil consumption by the 30-nation developed economy group.

The OECD group has a total population of about 1.05 billion, 14% of world population, and consumes slightly more than 50% of world total oil supplies - but nonOECD consumption is progressing fast.

The report pointed out that reduced oil demand was almost exclusively due to recession, led by sharp oil demand declines in some OECD Europe countries since 2008 and by declining US oil demand since 2008. OECD Pacific countries, including Japan and South Korea have already renewed their growth of oil demand, and the outlook for US oil demand is for an end to decline, as the US economy's industrial output recovers.

The report treats the demand side, before the oil supply side highlighting that oil prices, at least since 2000-2005, are heavily and more affected by demand changes, than by supply changes. Not referring anywhere in its report to Peak Oil, this report like others in the same series however highlights the changing fundamentals of world oil, which show there is a "megashift" in progress towards Peak Oil.

The main findings of the latest Oil Market Report can be summarized this way:

*Oil demand can easily "bounce" in OECD countries, including Europe, and demand remains very strong in non OECD countries led by China, India, other Asian, many African, and Latin American countries;
*Oil supply is tight, as witnessed by the impact of slowly growing and small-sized embargoes on Iranian supply, and net additions of global supply capacity, due to depletion and high development costs, that are now vanishingly low;
*Oil inventories are declining, low or very low in nearly all world regions;
*Market prices are high and converging at a high level, pulled up not down by continuing high demand and anticipations of supply shortage in 2012;
*Refinery runs in major global regions, and oil product imports also underline a supply/demand context of tight supply but strong demand, that is "Peak Oil".

Funny to see such an alarmist title at the head of an article with mostly positive news.

Space-Based Solar Power (http://www.theoildrum.com/node/9046)

In Summary
I sense that people have a tendency to think space is easy. We have lots of satellites, we’ve gone to the Moon (remember that?!), we used to have a space shuttle program, and we have seen many movies and television shows set in space. But space is a very challenging environment, and it is extremely costly and difficult to deliver things there. If you go to the Fed-Ex site to get delivery costs, you immediately get hung up on not knowing the postal-code for space. Once in space, failures cannot be serviced. The usual mitigation strategy is redundancy, adding weight and cost. A space-based solar power system might sound very cool and futuristic, and it may seem at first blush an obvious answer to intermittency, but this comes at a big cost. Among the possibly unanticipated challenges:

The gain over the a good location on the ground is only a factor of 3 (2.4× in summer, 4.2× in winter at 35° latitude).
It’s almost as hard to get energy back to the ground as it is to get the equipment into space in the first place.
The microwave link faces problems with transmission through the atmosphere, and also flirts with roasting ducks on the wing.
Diffraction of the downlink beam, together with energy density limits, means that very large areas of the ground still need to be dedicated to energy collection.
Traditional solar photovoltaics in good locations can accomplish much the same for much reduced cost, and with only a few times more land than the microwave link approach would demand. The installations will be serviceable and will last longer. Batteries seem an easier way to cover storage shortcomings than launching stuff to space. I did not even address solar thermal schemes in this post, which competes well with photovoltaics and can very naturally build in storage capability.

I am left puzzled as to why we would want to take a harder, more expensive road to solar power. I think it is just not intuitive to most how difficult and expensive space is. And perhaps they think it’s very futuristic and cool to push our power generation out to space: it fits the preferred narrative about where we’re going. I don’t know—I’m just guessing.

Astronomers frequently face this issue: should we build a telescope/observatory on the ground, or launch something into space? The prevailing wisdom is that if the science can be accomplished on the ground, then by golly you’d best do it that way. You’ll have the result sooner, at less expense, and with a greater chance of success. The lion’s share of astronomical advance is carried out from the ground. Space is reserved for those places where there is no other way. The atmosphere blocks many interesting wavelengths, creates turbulence that makes high-resolution imaging difficult, and produces variations in transmission that make it impossible to measure fluxes to high precision. The rotating Earth gets in the way of continuous observation of a single target for long periods. Some of the more exciting (an well-publicized) discoveries come from space missions, because these avenues are not generally available to us, increasing discovery potential.

Space-based solar power contains little intrinsic advantage that we can get “only from space.” It looks like a wash at best, and the astronomers would say “don’t bother.”

Monsterzuma
Mar 23, 2012, 08:04 AM
Crude Oil Prices And The 'Peak Oil' Environment (http://marketoracle.co.uk/Article33743.html)

Peak Oil can be defined at least 4 ways but one way is simple: Peak Oil is when supplies and stocks are tight enough, relative to demand, to make price slides short and price hikes long, until and unless the economy tilts into recession or by policy decision in response to a dysfunctional and parasitic bank, finance and insurance sector is either pushed or allowed to fall into recession.

The most recent example of this was in 2007-2008 culminating in US Nymex oil prices at around $145 a barrel, with little or no difference between Brent and WTI prices.

Today in March 2012 the oil importer countries of the OECD group, according to their energy watchdog agency the IEA are consuming about 46.25 million barrels per day (Mbd), still 1.25 Mbd below the 5-year average for oil consumption by the 30-nation developed economy group, and about 1.33 Mbd below their early 2008 demand peak.

Taking the OECD group's total population of about 1.10 billion, this oil consumption rate is an average of around 15.3 barrels per capita per year (bcy). At the same rate of oil demand, China would consume 54.6 Mbd (real consumption in early 2012 is 9.3 Mbd) and India would consume 50.1 Mbd (real consumption in early 2012 is 4.3 Mbd).

To be sure, a few countries on the planet for example Saudi Arabia and UAE consume as much as 30 - 32 bcy, but there is no conceivable way the planet's entire population will ever reach the OECD's average per capita oil consumption rate. We can forget that. And we can move on to talking real.

Tom Murphy Interview: Resource Depletion is a Bigger Threat than Climate Change
(http://oilprice.com/Interviews/Tom-Murphy-Interview-Resource-Depletion-is-a-Bigger-Threat-than-Climate-Change.html)

Oilprice.com: Do you think that the shale gas boom will lead/has led to reduced investment in alternative energy, and could therefore limit the advancement of alternative energy and its mainstream implementation?

Tom Murphy: I do worry about the sentiment that "our problems are solved" based on a very short history of tapping low-hanging shale-gas fruit. David Hughes presented a sobering report to put these claims in perspective (http://www.postcarbon.org/report/331901-will-natural-gas-fuel-america-in). Even though it is clear that shale gas will contribute to our net energy demands in an unanticipated way, I worry that A) extrapolations based on the "gusher" equivalents is risky; B) natural gas is not a direct answer to a liquid fuels shortage; and C) the associated exuberance can stifle the imperative that we have an all-hands-on-deck response to the looming challenges.

The report mentioned above:
REPORT: Will Natural Gas Fuel America in the 21st Century?
(http://www.postcarbon.org/report/331901-will-natural-gas-fuel-america-in)

Even assuming the EIA forecast for growth in shale gas production can be achieved, there is little scope for wholesale replacement of coal for electricity generation or oil for transportation in its outlook. Replacing coal would require a 64% increase of lower-48 gas production over and above 2009 levels, heavy vehicles a further 24% and light vehicles yet another 76%. This would also require a massive build out of new infrastructure, including pipelines, gas storage and refueling facilities, and so forth. This is a logistical, geological, environmental, and financial pipe dream. Although a shift to natural gas is not a silver bullet, there are many other avenues that can yield lower GHG emissions and fuel requirements and thus improve energy security. More than half of the coal-fired electricity generation fleet is more than 42 years old. Many of these plants are inefficient and have few if any pollution controls. As much as 21% of coal-fired capacity will be retired under new U.S. Environmental Protection Agency (EPA) regulations set to take effect in 2015. Best-in-class technologies for both natural-gas- and coal-fired generation can reduce CO2 emissions by 17% and 24%, respectively, and reduce other pollutants. Capturing waste heat from these plants for district and process heating can provide further increases in overall efficiency. The important role of natural gas for uses other than electricity generation in the industrial, commercial, and residential sectors, which constitute 70% of current natural gas consumption and for which there is no substitute at this time, must also be kept in mind. Natural gas vehicles are likely to increase in a niche role for high-mileage, short-haul applications.

Strategies for energy sustainability must focus on reducing energy demand and optimizing the use of the fuels that must be burnt. At the end of the day, hydrocarbons that aren’t burnt produce no emissions. Capital- and energy-intensive "solutions" such as carbon capture and storage (CSS) are questionable at best and inconsistent with the whole notion of energy sustainability at worst.

Narz
Mar 23, 2012, 12:26 PM
C) the associated exuberance can stifle the imperative that we have an all-hands-on-deck response to the looming challenges.
That's pretty much the response I was hoping to generate (the all hands on deck response) in this thread & have been hoping to generate regarding environmental & energy issues in all my (serious) threads.

Monsterzuma
Mar 23, 2012, 02:08 PM
CHARTS OF TRUTH (http://www.theburningplatform.com/?p=31870)

I hate to interrupt your regularly scheduled dose of MSM and government misinformation and propaganda, but this just in – GAS PRICES ARE HEADED HIGHER.

As usual, if you want some facts and truth about the world of oil, you go to the Oil Drum website.

This first chart shows that Saudi Arabia and these other key OPEC nations have doubled the number of oil rigs pumping oil since 2003 and oil production is absolutely flat. Zip. Nada. A 100% increase in oil rigs and 0% increase in production. Ever heard of peak oil?

http://www.theoildrum.com/files/3%20Rig%20count%20KSA.png

Now for the coup de grace. This is a busy chart but tells the whole story. The Ghawar oil field is the biggest in the world. It generates 50% of all Saudi Arabian production at 4.5 million barrels per day. It started producing in 1951. That makes it 61 years old. Please observe the production line on the chart. Do you notice a trend?

Please check out the cumulative discoveries. Do you notice a trend?

Look at how many oil rigs it is taking to keep oil production flat.

And now the factor no one is taking into account. Saudi Arabia is consuming more of their own oil as they become more modern and their population grows dramatically.

http://www.theoildrum.com/files/4.%20Sam's%20rig%20plot.png

What we have here is a big problem for the U.S. of A. Saudi Arabia will never produce the 12.5 million barrels per day that they say they can. Their current level of 9.8 million barrels per day is straining their oil rigs. Ghanwar is in terminal decline. They are consuming more oil and exporting less.

http://i1095.photobucket.com/albums/i475/westexas/Slide1-21.jpg

Get used to $4 gas as a floor. Of course, if you elect Gingrich, you’ll pay $2.50 a gallon. He has a plan. The numnut Republican candidates have a plan. Drill, drill, drill and bomb, bomb, bomb. That should work.

Supply and demand sure is a .

Monsterzuma
Mar 23, 2012, 02:45 PM
CERAWEEK: Total's Upstream Chief Says Peak Oil Is Around The Corner (http://www.forbes.com/sites/christopherhelman/2012/03/06/ceraweek-totals-upstream-chief-says-peak-oil-is-around-the-corner/)

For the past couple of years executives from French oil giant Total have espoused a belief that the world is pretty close to a peak in oil supply. Today in a speech at the CERAWeek energy conference in Houston, Yves-Louis Darricarrere, president of the company’s oil and gas exploration division, said, “We think it will be difficult to produce more than 95 to 97 million barrels per day in the foreseeable future.”

This volume of oil is not far away from the 91 million bpd or so expected by the International Energy Agency this year. Getting to 97 million bpd would entail supply growth of just 600,000 bpd a year for 12 years – that’s about what China’s demand growth has averaged in recent years.

Thus, says Darricarrere, oil’s share of the global energy supply will fall, with the slack to be picked up mostly by natural gas, which he says will increase in supply from 320 billion cubic feet now to 450 billion cf per day by 2030.

He admits that his view seems “paradoxical” when considering the amazing growth of supplies from shale fields; further, he says that the 95-97 million number excludes potential growth from biofuels and the manufacture of liquid fuels from coal. Still, he says, by 2030, “25 to 45 million bpd will need to be supplied from fields that are not online today.” That’s akin to the creation of two new Saudi Arabias.

Total’s view is unusual among big oil company execs. Even if they might agree with Total, oil execs are loathe to admit peak oil concerns publicly for fear that the countries that still hold large untapped resources (like Venezuela, Iran, and Russia — all places where Total has played) will extract higher rents from drillers who want in.

If Darricarrere really does think that peaking oil will bring “structural support for higher oil prices,” then it seems odd that Total would invest in anything other than oil. Yet Total has also invested in solar in a belief that it will become economic in the years to come.

For more on all these issues, check out my interview last year with Chief Executive Christophe de Margerie (“High Friends In Low Places” (http://www.forbes.com/forbes/2011/0214/features-christophe-de-margerie-total-high-friends-low-places.html)).

High Friends In Low Places (http://www.forbes.com/forbes/2011/0214/features-christophe-de-margerie-total-high-friends-low-places.html)

Total's Christophe de Margerie believes the world will soon run short of oil. To keep the crude flowing, he'll deal with despots and drill in deepwater just about anywhere.

Christophe de Margerie, the chief of French oil and gas giant Total, is late again, this time for breakfast with a reporter at Manhattan's Four Seasons Hotel. He arrives straight from his room there, without jacket, tie or apology but with a gregarious gleam in his eye. Once, after arriving two hours late to a meeting with the powerful energy minister of Qatar, De Margerie dropped to his knees in penance. (Total now operates a large LNG plant in the emirate.) It's hard to be annoyed at the guy employees call "Big Moustache." His bristle brush dominates an otherwise dough-ball face--the face of a jovial proprietor of a prosperous brasserie.

In contrast to awkwardly laconic peers like ExxonMobil's Rex Tillerson, De Margerie is chatty and uncharacteristically blunt. He tells you straight up that he thinks the world will soon run short of oil and that as long as he's around Total will make deals with anyone (perhaps even the devil?) to keep the hydrocarbons flowing. When he signs an agreement he prefers making toasts with single-malt Scotch--a rebuke of sorts to his patrimony: His grandfather founded Taittinger Group (as in Champagne). De Margerie could have been a king of brut. Instead, he became a prince of crude--and an ambassador to some of the world's toughest regimes.

Oerdin
Mar 23, 2012, 03:06 PM
The US production graph is rather dumb because US production declined mainly because foreign sources were simply cheaper not, as peak oil pundits would have you think, because the US was running out of oil or even cheap oil. It was simply cheaper and easier to produce in countries with no environmental laws, no minimum wage, no legal right to sue if the company damaged your property next to their oil field, no worries about covering sick or injured workers, no worries about providing a safe working environment.

Global production hasn't even gotten close to peaking yet and our decades long glut of oil depressed exploration efforts (why spend billions finding more when the market price was already low due to a glut?). The good news is demand growth has finally sopped up the glut so exploration will now resume and investment will pour in to new production.

Narz
Mar 23, 2012, 11:09 PM
The good news is demand growth has finally sopped up the glut so exploration will now resume and investment will pour in to new production.
Quite the optimistic you are. Time will tell.

kramerfan86
Mar 24, 2012, 12:03 AM
Part of me (not a huge part, but a small little part) is happy with the high prices so long as they dont reach a tipping point that clobbers the economy, last time this happened it spurred some advancement when it came to efficiency in cars due to consumer demand. Peak cheap oil that occurs well before peak oil could be beneficial and get us off of it. On this particular issue I prefer Obama win seeing as the republican solution isnt to begin moving away from oil but just to extend use. Im for drilling to increase the time frame we have to work on alternatives, but its a stupid "solution".

Monsterzuma
Mar 24, 2012, 06:53 AM
The US production graph is rather dumb because US production declined mainly because foreign sources were simply cheaper not, as peak oil pundits would have you think, because the US was running out of oil or even cheap oil. It was simply cheaper and easier to produce in countries with no environmental laws, no minimum wage, no legal right to sue if the company damaged your property next to their oil field, no worries about covering sick or injured workers, no worries about providing a safe working environment.

Global production hasn't even gotten close to peaking yet and our decades long glut of oil depressed exploration efforts (why spend billions finding more when the market price was already low due to a glut?). The good news is demand growth has finally sopped up the glut so exploration will now resume and investment will pour in to new production.


its true that in a counterfactual situation in which there was no foreign oil market to draw investment in oil wells away from the US, you would have seen higher oil prices and more oil production in the US, but the question is: can economic growth at levels we are used to be sustained under those conditions? at what point do people simply stop consuming the oil because the price is too high, thus leading to lower aggregate demand (GDP)? at what point does the lapse in GDP bring about debt default events?

also, if there has been such an oil glut - if the foreign inflow of oil has really been a luxury rather than a necessity - shouldn't we be expecting GDP growth in the last 40 years to have been higher than the post-war average? it was not that. sooner the opposite (http://krugman.blogs.nytimes.com/2009/11/07/reagan-reagan-reagan/).

in my eyes this is the kind of situation the world is faced with right now. although the way monetary policy works, its not really oil that gets consumed less but stuff in general, because the monetary controls spread out the demand fluctuations over all consumer products.

Cutlass
Mar 24, 2012, 06:56 AM
From the link:

Growth in per capita real GDP from 1950 to 1980: 2.2 percent per year
Growth in per capita real GDP from 1980 to 2007: 2.0 percent per year

That's Supply Side Economics. It doesn't have to do with oil.

Monsterzuma
Mar 24, 2012, 07:00 AM
it discusses roughly the same time frame, so i think it's relevant to my argument. do you have better resource in mind for comparing 1950-1970 growth to 1970-2012? i'm not very savvy with economic data yet.

besides, supply side economics got devised in a historical context. people started talking about that stuff because a lot of things that had been done up to the 70s stopped working well. this is all interconnected.

Cutlass
Mar 24, 2012, 09:04 AM
I don't have the latest statistics, no. But the thing is that while the 70s to now are bracketed by high oil prices, taken as a whole it has been a period of low energy prices, including very low oil prices in much of the center of that time period. And energy use per unit of GDP has roughly been cut in half during that time period. So I don't see where energy costs are likely to have been the difference.

What has been a difference is low net new capital spending in the US. And Reaganomics is certainly a contributor there.

Monsterzuma
Mar 25, 2012, 06:10 PM
January Oil Supply (http://www.theoildrum.com/node/8959)


Stuart Staniford is a scientist and innovator in the technology industry with advanced degrees in physics and computer science.

This post presents the latest data from the Energy Information Administration (EIA), the International Energy Agency (IEA), and the Organization of Petroleum Exporting Countries (OPEC) on crude oil and associated liquids production and price as of January 2012. This article is cross posted from Early Warning, where it forms part of a long-running series of articles that charts monthly changes in global oil supply (total liquids) from the EIA, IEA, and OPEC.

http://www.theoildrum.com/files/Screen%20shot%202012-02-13%20at%208.56.34%20AM.png

A graph of changes just since 2008 is above, and a longer picture (with prices on the RHS) is here:

http://www.theoildrum.com/files/Screen%20shot%202012-02-13%20at%208.58.44%20AM.png

The combination of higher production and (slightly) lower prices is causing the price production curve to push the envelope of recent behavior:

http://www.theoildrum.com/files/Screen%20shot%202012-02-13%20at%209.01.12%20AM.png

The above data are all for "Total Oil Supply" aka "Total Liquid Fuels". To break it down into components we need to rely on EIA data that only go through October (so we can't see where the surge in Nov-Jan came from yet):

http://www.theoildrum.com/files/Screen%20shot%202012-02-13%20at%209.02.36%20AM.png

Note the above is not zero-scaled. It allows us to see that "crude plus condensate" (C&C) has been pretty flat since 2005, with increases in the total mainly coming from other components of the liquid fuel stream. This next picture makes a line graph of that data and moves the "crude plus condensate" line onto the right hand scale to make the changes in the different streams more easily comparable:

http://www.theoildrum.com/files/Screen%20shot%202012-02-13%20at%209.03.40%20AM.png

You can see that during the C&C plateau period since 2005, about 1mpd in additional total supply has come from a long standing trend in the increase in natural gas liquids (NGPL), while another 1mpd has come from "Other Liquids" and appears to be specifically a response to the plateauing of conventional oil. This is mainly biofuels. Note that the increases in "Other Liquids" appear to have leveled off in 2011. The world has very limited capacity to produce more biofuel without causing severe increases in food prices.

This report made Ilargi of The Automatic Earth revise his assumptions in a long standing history of peak oil doomerism (http://theautomaticearth.org/Finance/christchurch-china-and-peak-oil.html).

US and EU oil/gasoline demand, or refinery output, give it a name, is way down, like anywhere between 5% or a multiple of that. China's oil demand must have been hit too in view of other data like the iron ore ones mentioned above. And in the face of that oil prices are near record highs? Excuse me? Looks like demand is not up. And no, supply is not down either. So? Stuart Staniford had a post up on TheOilDrum recently that puts a lot of peak oil assumptions in question, so much so that I intend to write a re-definition of the entire principle in the light of the unfolding financial crisis, as in: Peak Oil: Not in Your Lifetime. If only I had the time to do the research.

caketastydelish
Mar 25, 2012, 06:41 PM
here's something you guys might enjoy.

http://www.addictinggames.com/strategy-games/oiligarchy.jsp

pi-r8
Mar 25, 2012, 08:52 PM
From the link:



That's Supply Side Economics. It doesn't have to do with oil.

If you want to see the big difference, look at median income rather than GDP per capita... (barely any growth there since 1980).

Cutlass
Mar 26, 2012, 07:26 AM
If you want to see the big difference, look at median income rather than GDP per capita... (barely any growth there since 1980).



Yes, I've been aware of that. Supply Side Econ is about concentrating the distribution of wealth at the expense of the creation of wealth. It's pure Zero-Sum-Game.

tokala
Mar 27, 2012, 02:18 PM
Shamelessly copypastad from The Oil Drum (http://www.theoildrum.com/node/9015) (references are in the original article, which is a repost of a published research article):

3.1 The economics of oil supply

One important feature of oil supply is its cyclical boom and bust cycle in prices and production. Maugeri (2010, p. 12-13) describes this phenomenon: “if petroleum becomes scarce and there is no spare capacity...oil price climbs. This rise in prices fosters a new cycle of investment from which new production will flow. It also triggers gains in energy efficiency, consumer frugality and the rise of alternative energy resources. By the time the new production arrives at the market, petroleum demand may have dropped. This vicious circle has been a feature of all oil crises of the past.”

However, oil production recently became less responsive to traditional economic stimuli. The first decade of this century witnessed a dramatic increase in oil exploration and production when the price of oil increased (Sorrell et al., 2009; 2009a). Unfortunately, as noted already, total world oil production seems to have reached a plateau nonetheless. To a large degree this is because the oil that remains tends to be unconventional oil, which is expensive and takes more time to bring to market. Some consequences of having extracted much of the easy oil are the following:

a) It takes significantly more time once a field is discovered to start production. Maugeri (2010) estimates it now takes between 8 and 12 years for new projects to produce first oil. Difficult development conditions can delay the start of production considerably. In the case of Kashagan, the world’s largest oil discovery in 30 years, production has been delayed by almost 10 years due to difficult environmental conditions.

b) In mature regions, an increased drilling effort usually results in little increase in oil production because the largest fields were found and produced first (Höök and Aleklett, 2008; Höök et al., 2009).

c) Because the cost of extracting the remaining oil is much higher than easy-to-extract OPEC or other conventional oil, if the market price remains lower than the marginal cost for long enough, producers will cut production to avoid financial losses. See Figure 3.

d) Uncertainty about future economic growth heightens concerns for executing these riskier projects. This delays or often cancels projects (Figure 4).

e) Most remaining oil reserves are in the hands of governments. They tend to under-invest compared to private companies (Deutsche Bank, 2009).

f) Possible scarcity rents have to be taken into account. Hotelling (1931) showed that in the case of an depletable resource, price should exceed marginal cost even if the oil market were perfectly competitive (the resulting difference is called scarcity rent). If this were not the case, it would be more profitable to leave the oil in the ground, waiting to produce it until the price has risen. Hamilton (2009a, 2009b) noted that while in the 1990s the scarcity rent was negligible relative to costs of extraction, the strong demand growth from developing countries in the last decade together with limits to expanding production “could in principle account for a sudden shift to a regime in which the scarcity rent is positive and quite important.” In this regard, the Reuters news service reported on April 13, 2008 that “Saudi Arabia’s King Abdullah said he had ordered some new oil discoveries left untapped to preserve oil wealth in the world’s top exporter for future generations, the official Saudi Press Agency (SPA) reported.” Therefore, a possible intertemporal calculation considering scarcity rents may have already influenced (i.e. limited) current production. Although the sudden fall of prices at the end of 2008 is difficult to reconcile with scarcity rents, the following quick price recovery to the $70-$120 range during the enduring global financial crisis indicates that this aspect cannot be dismissed. This is despite the assertion by Reynolds and Baek (2011) that the Hotelling principle "... is not a powerful determinant of nonrenewable resources prices," and that "...the Hubbert curve and the theory surrounding the Hubbert curve is an important determinant of oil prices." We agree that the Hubbert curve, which defines the depletion curve of a non-renewable resource, may be the prime determinant of oil price but it is not the only one.

The consequence of these issues is that in the short-medium term the available supply is essentially fixed and thus relatively straightforward to compute. As Figure 4 shows, net production capacity will decline due to the difficulty in finding new reserves at an accessible cost while the existing capacity is steadily depleted. Just as occurred in 2004, by 2011 there is again no new net capacity while the world economy, and thus oil demand, has resumed growth. After 2014, it appears that global oil production will begin its decline (See the second report of the UK Industry Taskforce on Peak Oil and Energy Security (UK ITPOES, 2010), Lloyd’s (2010), Deutsche Bank (2009, 2010), the report by the UK Energy Research Centre (Sorrell et al., 2009a) and the 2010 World Energy Outlook by the IEA (2010).)

Fig 3: Global marginal cost of production 2008. Source: LCM Research based on Booz Allen/IEA data (Morse, 2009). The unlabeled items, from left to right are OPEC Middle East, Former Soviet Union and Enhanced Oil Recovery.

http://www.theoildrum.com/files/image003_2.jpg

Monsterzuma
Mar 27, 2012, 02:30 PM
I'm not sure I understand that graph. Does it display the potential for output at those prices? There was not 120 million barrels of oil per day's worth of production online in 2008.

tokala
Mar 28, 2012, 10:01 AM
Good question. Unfortunately the source of that graph appears to be off the net.

It indeed looks likely that is is related somehow to production potential (probably discounting future depletion and/or delays in getting new production online).

Something similar, more in line with current overall oil production:

http://static6.businessinsider.com/image/4d0b6c06ccd1d59f4e2d0000/murphy-oil.jpg

Narz
Mar 28, 2012, 10:43 AM
This one doesn't need much explanation I don't think.

http://www.paulchefurka.ca/OilFoodCorrelation.jpg

http://www.paulchefurka.ca/Oil_Food.html

Narz
Mar 30, 2012, 08:58 PM
And while we're at it.

http://gailtheactuary.files.wordpress.com/2011/11/world-total-energy-and-real-gdp.png

http://ourfiniteworld.com/2011/11/15/is-it-really-possible-to-decouple-gdp-growth-from-energy-growth/

Food & growth closely in step with energy. Not really surprising perhaps to biologists, considering we're just another biological organism, but perhaps to economists (who believe we're more than that).

Monsterzuma
Mar 30, 2012, 09:02 PM
that food graph would be excellent if it weren't for the gloomy message behind it. your other graph makes me go DUH. :lol:

ZeletDude
Mar 30, 2012, 09:03 PM
here's something you guys might enjoy.

http://www.addictinggames.com/strategy-games/oiligarchy.jsp

On a lighter note, I love this game

Narz
Mar 30, 2012, 09:03 PM
that food graph would be excellent if it weren't for the gloomy message behind it.
Wouldn't it all be excellent without the gloomy message behind it? ;)

Monsterzuma
Mar 30, 2012, 10:09 PM
0w83l_CSw6g&feature=relmfu

15:55 - important remarks on natural gas from The Automatic Earth's Nicole Foss. The rest of the videos is also worth watching for general energy- and economics related information:
http://www.youtube.com/watch?v=kAgaCR0_qVE&feature=relmfu
http://www.youtube.com/watch?v=n3YQoTAfg40&feature=relmfu
http://www.youtube.com/watch?v=0w83l_CSw6g&feature=relmfu

Monsterzuma
Apr 01, 2012, 06:54 PM
http://www.theoildrum.com/files/1.%20Fig%208%20Citigroup.png

http://www.theoildrum.com/node/9079

Narz
Apr 01, 2012, 06:55 PM
BP and Citigroup, if I can't trust them who can I trust? ;)

Monsterzuma
Apr 01, 2012, 06:57 PM
Companies whose credibility and hence profits depend on the quality of the information they put out?

Narz
Apr 01, 2012, 07:44 PM
Companies whose credibility and hence profits depend on the quality of the information they put out?
Fixed that for you. Companies like them care about profits first & credibility later. Invest in their (snake) oil first and they'll worry about providing later. The only thing that's gonna be pointing straight up like that over the next few years is gonna be in the pants of the Citigroup fat cats if people buy into their hype.

The fun thing about predicting the future is that you get to fantasize up your perfect scenario. While you're investing with Citigroup in shale "plays" (someone's gonna get played that's for shizz) I'd also encourage you to invest in my Hoverboard corporation, they are due to come out in 2015 you know. :p

Seriously though, Citigroup is a crooked corporation. They don't give a damn about reality as long as they make money in the short term.

In a magical land where people & governments hold corporations accountable & are educated & knowledgeable about them perhaps the free market can ensure they are honest & fair. In the real world... well, you see what happens, you can fake activists posting about the human rights violations of Apple from their iPads & in our fast paced world suckers are born every second, who wants to wait a minute?

If US oil production doesn't double by 2020 (which it won't unless we f-ing destroy every last bit of nature they can exploit... which seems to be the plan) folks'll still be saying we should trust 'em cause their reputation depends on them being honest. :hammer2:

http://www.theoildrum.com/files/11.%20Bakken%20production.png
My penis is possibly three yards long, possibly!

Monsterzuma
Apr 01, 2012, 08:10 PM
Do you think BP benefits from having people think oil is going to be available in widespread abundance? The higher the expected price of oil, the higher their expected profits and the more attractive they are as an investment.

Narz
Apr 01, 2012, 08:57 PM
They can have their cake & eat it too, lots of domestic production, looking like heroes while still keeping prices high, "Prices too high, we need more domestic drilling, still high? More domestic drilling" rewind, playback. Speaking of reputation BP probably wouldn't mind mending theirs.

Cutlass
Apr 02, 2012, 07:22 AM
Do you think BP benefits from having people think oil is going to be available in widespread abundance? The higher the expected price of oil, the higher their expected profits and the more attractive they are as an investment.


They absolutely benefit from the perception that oil is not going to run out in the foreseeable future. If people really believed that oil was going to run out, they would take steps to minimize oil use. And that would impact long term profits for the oil industry. As long as people are unconvinced that oil is running out, then price spikes have moderate impact on oil use. And so when oil does run short, people will have no ability to rapidly transition away from it, and so the oil industry will make windfall profits.

Remember that when oil use stops, a century of fixed investment becomes scrap metal. Hundreds of billions of dollars in capital becomes worthless. Making the most money possible before that day happens is the rational choice.

Truronian
Apr 02, 2012, 07:30 AM
Thread moved to Civilium

El_Machinae
Apr 02, 2012, 08:31 AM
And while we're at it.

http://gailtheactuary.files.wordpress.com/2011/11/world-total-energy-and-real-gdp.png

http://ourfiniteworld.com/2011/11/15/is-it-really-possible-to-decouple-gdp-growth-from-energy-growth/


This actually looks like good news. There're many correlates between growth and well-being. It's not perfect, but there're obviously some types of growth that are of benefit. In the past, we see how completely necessary increased oil consumption was for continued growth. However, if growth trends are slightly faster than oil consumption, then it means that we've figured out how to get growth even if oil consumption stabilized and even if it dropped a little bit.

Narz
Apr 02, 2012, 09:17 AM
GDP =/ well being

http://vimeo.com/14106706 (don't worry it's only 3.5 minutes long)


However, if growth trends are slightly faster than oil consumption, then it means that we've figured out how to get growth even if oil consumption stabilized and even if it dropped a little bit.
Growth trends are tied to energy use, that's the point.

Continued growth is unsustainable & undesirable. Note : that'll probably be misinterpreted by someone ("OMG what about the poor"). The poor need growth perhaps (but really richer communities, more resources made available to them & more organization within their communities, which doesn't necessarily mean growth), the rich need to scale back a bit (many Americans have more 2+ more bedrooms than they have people living in their homes, is this really necessary, are SUV's & minivans for empty-nesters necessary?).

Of course libertarians & right-wingers would never let that happen (or be financially encouraged to happen). "My toys, I won't share, pffft screw 'the planet', some shill at the WSJ says global warming isn't real anyway, waaaaah!!!" is the extent of their arguments usually.

If we can't figure out how to maintain quality of life without growth we're screwed. It's going to be chaos &/or the rise of extreme authoritarian govts or a lil' of both.

El_Machinae
Apr 02, 2012, 11:31 AM
I agree with most of your gist! :)

I'm pointing out that the two trends are not completely correlated. It looks like we can get growth faster than energy demand. The only thing I disagree with is that we need to get used to 'no growth', because not all growth is equal. I work in science, so this is stunningly obvious to me, but the value of a scientific paper written in 2011 is vastly higher than one written in 1990, because there's been a massive amount of information gained. Anything that's objectively (or subjectively) better can become growth. It's nice to see that it's not completely tied to fossil fuel consumption. That is where the edge in the wedge is, to wriggle us into a better world.

Narz
Apr 02, 2012, 02:01 PM
It is mostly tied though. Efficiency helps & I suppose it's a strange form of consolation that efficiency isn't really being taken very far yet.

I think growth is science is great, growth in community resilience, growth in health, quality of life, etc. but economic growth IMO cannot continue much longer. Which is fine because, at least here in the US there is still plenty of wealth to go around for everybody if it were managed better.

Monsterzuma
Apr 02, 2012, 03:38 PM
Lawrence Solomon: A world awash in oil (http://opinion.financialpost.com/2012/03/30/lawrence-solomon-a-world-awash-in-oil/)

Although shale oil technology is still in its infancy, much of the U.S. shale oil can be developed inexpensively, at a cost comparable to the US$50 to US$60 per barrel cost of tar sands, which has itself been dropping. The trend down in shale oil costs is likely to continue over the coming years. Israel, which has some 250-billion barrels in one basin near Jerusalem alone, an amount comparable to Saudi Arabia’s reserves, expects to develop its oil at a cost of US$35 to US$40 per barrel. Should the world price of oil drop to this level — which happens to be the average price over the last two decades — the halving in oil prices will have mirrored that of natural gas. In the process, today’s Middle East energy exporters will have been bankrupted and their autocrats ousted.

What was the EREOI of shale oil extraction again? How much of a problem is it that it is low?

Cutlass
Apr 02, 2012, 04:53 PM
Pic didn't work. Can be found here (http://en.wikipedia.org/wiki/File:EROI_-_Ratio_of_Energy_Returned_on_Energy_Invested_-_USA.svg).

Monsterzuma
Apr 02, 2012, 05:03 PM
I imagine it would be a problem in as far as the energy used as input also has to be in the form of oil. In that instance you would see a proportion inverse to the EREOI ratio get cut from the revenue, before the subtraction of any operating costs. If other energy can be the input, the method could function as an arbitrage between more abundant sources of energy such as coal or natural gas and oil. I don't know exactly what kind of energy is used as the input, though.

Cutlass
Apr 02, 2012, 05:16 PM
That is a trick. Much of oil production actually deliberately wastes a huge amount of energy because that's a profit maximizing thing to do.

http://upload.wikimedia.org/wikipedia/commons/thumb/5/58/PTT_flame_1.jpg/450px-PTT_flame_1.jpg

The question is whether that form of extraction has flammable waste products that can be used to fuel the process.

innonimatu
Apr 02, 2012, 06:46 PM
I guess it'll depend on local availability and pricing, which depends on transport. It always does.

That is a trick. Much of oil production actually deliberately wastes a huge amount of energy because that's a profit maximizing thing to do.

The question is whether that form of extraction has flammable waste products that can be used to fuel the process.

Natural gas is finally being captured and sold instead of being simply burnt, even in Africa's oilfields! Here too the problem was transport, but it's now worth enough to liquefy and ship it. Which is an example of how the mount of the world's reserves of usable natural gas depend on pricing, and prediction of "peak something" can easily go wrong.

ainwood
Apr 02, 2012, 11:25 PM
That is a trick. Much of oil production actually deliberately wastes a huge amount of energy because that's a profit maximizing thing to do.

http://upload.wikimedia.org/wikipedia/commons/thumb/5/58/PTT_flame_1.jpg/450px-PTT_flame_1.jpg


I believe that the thing in your picture is a process safety flare. In the event of a gas release or similar, for safety reasons the facilities get depressurised as quickly as possible, burning all the gas safely (rather than let it leak where it can ignite and explode). I can almost guarantee its not there to simply burn gas for the hell of it.

If you had shown a similar flare from (say) in the middle of the Nigerian delta, then I would concede that the purpose of the flare would be to burn associated gas from oil, because it is too expensive to capture that flare and use it somewhere. However, I would then point out that that picture would probably be an old one, because most companies now have a goal of minimising flaring. Such flaring is illegal in Nigeria (and in most other countries).

Cutlass
Apr 03, 2012, 07:37 AM
I believe that the thing in your picture is a process safety flare. In the event of a gas release or similar, for safety reasons the facilities get depressurised as quickly as possible, burning all the gas safely (rather than let it leak where it can ignite and explode). I can almost guarantee its not there to simply burn gas for the hell of it.

If you had shown a similar flare from (say) in the middle of the Nigerian delta, then I would concede that the purpose of the flare would be to burn associated gas from oil, because it is too expensive to capture that flare and use it somewhere. However, I would then point out that that picture would probably be an old one, because most companies now have a goal of minimising flaring. Such flaring is illegal in Nigeria (and in most other countries).


There are flares at refineries to burn off excess gas for safety reasons. But that could be used to fuel operations or produce electricity. And I believe it currently largely is. However not all of it is. The other issue is remote oil fields that don't have the facilities to transport both the oil and the gas.

The World Bank estimates that over 134 billion cubic metres of natural gas are flared or vented annually, an amount equivalent to more than 20 percent of the United States’ gas consumption or 33 percent of the European Union’s gas consumption per year.[5]

This flaring is highly concentrated: 10 countries account for 70% of emissions, and twenty for 85%. The top ten leading contributors to world gas flaring in 2010, were (in declining order): Russia (26%), Nigeria (11%), Iran (8%), Iraq (7%), Algeria (4%), Angola (3%), Kazakhstan (3%), Libya (3%), Saudi Arabia (3%) and Venezuela (2%).[6]

Russia has announced it will stop the practice of gas flaring as stated by deputy prime minister Sergei Ivanov on Wednesday September 19, 2007.[7] This step was, at least in part, a response to a recent report by the National Oceanic and Atmospheric Administration (NOAA) that concluded Russia's previous numbers may have been underestimated. The report, which used night time light pollution satellite imagery to estimate flaring, put the estimate for Russia at 50 billion cubic meters while the official numbers are 15 or 20 billion cubic meters. The number for Nigeria is 23 billion cubic meters.[


http://en.wikipedia.org/wiki/Gas_flare

That's no small quantity.

Narz
Apr 03, 2012, 10:26 AM
This is a great blog (http://physics.ucsd.edu/do-the-math)PeterGrimes clued me onto. I read just one post so far, I think ElMac would like it : http://physics.ucsd.edu/do-the-math/2012/02/my-great-hope-for-the-future/

A quote I really like & wish people would listen to/respect. The position that people who are concerned about the environment are anti-progress is a very tiresome strawman.

In many ways, what I describe is a return to a simpler time. But with some key differences. We have made important advances in science, medicine, and technology that we treasure and would work hard to maintain and improve. The future I imagine does not give up on all our pursuits—just the ones aimed at growth and commanding a high resource throughput. Those activities centered on developing knowledge, and understanding what it means to be human, would thrive.

ainwood
Apr 03, 2012, 11:07 PM
There are flares at refineries to burn off excess gas for safety reasons. But that could be used to fuel operations or produce electricity. And I believe it currently largely is.
In a safety emergency, you don't want to be mucking about using gas to generate electricity. You want to get rid of it as quickly as possible.

Generally, refineries are self-sufficient. They don't actually have any excess gas, because they are receiving stabilised crude, and it is actually LPGs that they end up burning, or byproduct light ends from cracking.

Oil stabilization facilities do use associated gas for powering compressors, or for thermal load, or for gas lift. Generally though, they export the gas wherever possible.

Yes, there are remote facilities that don't have infrastructure to deal with the gas, but they are not remote enough to not deal with the oil. The better solution is to transport the oil and the gas together in a pipeline to a central location.

This flaring is highly concentrated: 10 countries account for 70% of emissions, and twenty for 85%. The top ten leading contributors to world gas flaring in 2010, were (in declining order): Russia (26%), Nigeria (11%), Iran (8%), Iraq (7%), Algeria (4%), Angola (3%), Kazakhstan (3%), Libya (3%), Saudi Arabia (3%) and Venezuela (2%).[6]
So that would be the state-owned oil companies that are primarily responsible, then?

El_Machinae
Apr 04, 2012, 04:26 AM
My back-of-the-envelope indicates that Ft. McMurray (of tar sands fame) might want to build a nuclear power plant, because the EROEI of nuclear is superior to that of oil sands

Cutlass
Apr 04, 2012, 07:22 AM
In a safety emergency, you don't want to be mucking about using gas to generate electricity. You want to get rid of it as quickly as possible.

Generally, refineries are self-sufficient. They don't actually have any excess gas, because they are receiving stabilised crude, and it is actually LPGs that they end up burning, or byproduct light ends from cracking.

Oil stabilization facilities do use associated gas for powering compressors, or for thermal load, or for gas lift. Generally though, they export the gas wherever possible.

Yes, there are remote facilities that don't have infrastructure to deal with the gas, but they are not remote enough to not deal with the oil. The better solution is to transport the oil and the gas together in a pipeline to a central location.


I understand that the waste gas is put to productive use where it is practical to do so. But it isn't always. And so it's a safety feature to flare the rest.

My original point was that in the case of some of these higher energy required oil extraction techniques, it may be possible to use flare gas as the energy source instead of oil.



So that would be the state-owned oil companies that are primarily responsible, then?

I haven't seen a breakdown by company who is responsible. As far as I know, gas recovery is expensive and difficult. But now, as opposed to some years in the past, much more of it is recovered. A couple decades ago there was a lot more flaring. But this is still often gas which is not transported to market. Instead it is forced back underground. Prudoe Bay, for example, as far as I know has no facilities for transporting gas, just oil. They have to either use it or pump it back underground.

I think that the Russian oil companies are all technically "private" now. However given the oligarchical nature of the Russian state and economy, that may be an academic distinction.

Monsterzuma
Apr 04, 2012, 01:35 PM
Does the U.S. Really Have More Oil than Saudi Arabia?
People are often confused about the overall extent of U.S. oil reserves. Some claim that the U.S. has hundreds of billions or even trillions of barrels of oil waiting to be produced if bureaucrats will simply stop blocking development. In fact, in a recent debate between Republican candidates contending for Gabrielle Giffords' recently vacated House seat, one candidate declared "We have more oil in this country than in Saudi Arabia." So, I thought it might be a good idea to elaborate a bit on U.S. oil resources.

Oil production has been increasing in the U.S. for the past few years, primarily driven by expanding production from the Bakken Shale Formation in North Dakota and the Eagle Ford Shale in Texas. The oil that is being produced from these shale formations is sometimes improperly referred to as shale oil. But when some people speak of hundreds of billions or trillions of barrels of U.S. oil, they are most likely talking about the oil shale in the Green River Formation in Colorado, Utah, and Wyoming. Since the shale in North Dakota and Texas is producing oil, some have assumed that the Green River Formation and its roughly 2 trillion barrels of oil resources will be developed next because they think it is a similar type of resource. But it is not.


Summarizing the Definitions

To summarize, let's review the definitions for the important terms discussed here:

Oil resource -- the total amount of oil in place, most of which typically can't be recovered

Oil reserve -- the amount of oil that can be recovered economically with existing technology

Oil shale -- sedimentary rock that contains solid hydrocarbons called kerogen (e.g., Green River Formation)

Shale oil -- the oil that can be obtained by cooking kerogen

Tight oil -- liquid hydrocarbons that are obtained by hydraulic fracturing of shale formations (e.g., Bakken Formation and Eagle Ford Formation)

Conclusion: Resources are not Reserves, and Tight Oil isn't Shale Oil

It is pretty clear that at current oil prices, developments in the tight oil formations will continue. It is not at all clear that even at $100 oil the shale in the Green River formation will be commercialized to produce oil, although a number of companies are working on it and will continue to do so. Oil shale is commercially produced in some countries like Estonia, but it is primarily just burned for power.

In order to commercially convert the oil shale into oil, a more energy efficient method of producing it must be found (or, one would have to have extremely cheap energy and abundant water supplies to drive the process). I have heard from multiple industry sources that the energy return for producing oil from oil shale is around 4 to 1 (lower than for oil sands production), and that is before refining the oil to finished products. At this sort of energy return, oil sands will continue to be a more economical heavy oil option.

http://www.theoildrum.com/node/9085

Monsterzuma
Apr 06, 2012, 08:20 PM
Global oil production trouble - it's not just Iran

http://i2.cdn.turner.com/money/2012/04/03/markets/oil-production/world-oil-map.top.gif

It's not just Iran driving up oil prices. From South Sudan to Canada, over a million barrels of oil a day are not available to world markets.

No one outage is particularly large. But taken together, they rival the amount of oil that could be lost from Iran over the next few months as sanctions take hold.

"There are always disruptions, but when the market is this tight, they have an impact," said Daniel Yergin, IHS CERA Chairman and author of "The Quest: Energy, Security, and the Remaking of the Modern World." "It would be better for the economy if these barrels were there."

South Sudan: Roughly 350,000 barrels of oil are offline due to a flare-up in violence in the African country.

Libya: Oil production in the war-torn country has rebounded faster than expected. During the hostilities, all of the nation's 1.6 million barrels of daily production was halted. Libyan production has since resumed to 1.3 million barrels a day, although 300,000 barrels a day remain shut-in.

Syria: About 230,000 barrels are offline in Syria thanks to the fighting in the country.

Yemen: Nearly 140,000 barrels of oil are unavailable from Yemen as the Arabian country battles militants in its south-west region bordering the Red Sea and the Gulf of Aden.

The North Sea: Over 100,000 barrels a day are offline due to maintenance, pipeline problems and weather in the notoriously harsh region.

Canada: Up to 50,000 barrels a day have been lost in Canada as a result of various equipment problems with machines that turn the oil sands into usable forms of crude oil.


http://money.cnn.com/2012/04/03/markets/oil-production/index.htm

By itself this is bad "news", but the news is already priced into the market. So this actually weakens the case that the high price is due to structural factors such as peak oil.

Monsterzuma
Apr 08, 2012, 09:49 PM
I'm not sure it makes sense to blame wall street's speculators for anything, because all speculators can do is propagate the price effects of a future shortage into the present, which is actually a valuable market function. If an issue like peak oil ever makes an economy tank, it's because there were too few speculators to smoothen the price effects by bidding up prices before the shortages form in concrete ways. The speculators are the canary in the coal mine that warns the miners to get out. Meanwhile the profits that speculators take are either spent or reinvested. For the economy as a whole, these profits are not a loss. They are just a redistribution.

If the speculators don't have a reason to expect price rises, they will automatically be disincentivized from betting on them.


the housing bubble would likely not have grown to the proportions it has if proper speculation was enabled to take place. in 2006, attempts were made to create a futures market based on a nationwide US housing price index. the problem was that no one wanted to bet that prices would go up, so a counterparty to the huge number of short sellers could not be found. the lesson from this is that prices would not have gone where they did if people were enabled to make these downward bets earlier and a proper arbitrage between the futures market and the real market was made. the existing real market did not give speculators a simple means by which to make these downward bets to tame the market.

For more information on where I'm coming from with this, read up on Robert Shiller's views on finance and speculation. Shiller is one of the most credible experts on asset bubbles, not in the least because he predicted the collapse of both major ones in the last decade, and argues for increased democratization of finance. See the following article for more info:

http://www.nytimes.com/2012/04/08/business/democratize-wall-street-for-social-good.html

ps. here is the interview in which the facts expressed in my second quote are revealed: http://michael-hudson.com/audio/061208HudsonRealEstates.mp3
Well worth listening to for other reasons (dated 2006 though!).

Monsterzuma
Apr 12, 2012, 09:25 AM
What the New 2011 EIA Oil Supply Data Shows (http://www.theoildrum.com/node/9106)

http://www.theoildrum.com/files/growth-in-world-liquids-lagging-since-2005.png

Conclusions

It is easy to find small opportunities where it looks possible to increase oil production, but on a world-wide basis, it appears likely that at best, very slow growth will continue. The oil production of China and Russia were previously increasing, but now seem to be hitting plateaus. Even smaller groupings, such as the FSU excluding Russia, seem to be hitting plateaus.

Future prospects for oil supply look to be worse, especially if Iranian exports are taken off line, or if there are unexpected surprises on the downside. One concern is that political disruptions may take oil production offline in additional countries. Anther is that financial disruptions (perhaps related to European debt defaults) may lead to lower oil prices, cutting off some marginal supply.

On balance, it would appear that at best oil production in the near future will be virtually flat, leading to more spiking of oil prices and greater world economic problems. Another possibility is that world production will begin to decline. The likelihood of decline would appear to be increased if more oil exporters encounter political disruptions, or if the world enters a major recession leading to an oil price decline.

Monsterzuma
Apr 14, 2012, 05:59 AM
High Oil Prices: Why $200 Oil Won’t Cause A Recession (USO, XLE, UGA, COP, XOM, CVX, DVN)

High Oil Prices and the Economy

The U.S. Bureau of Labor Statistics breaks down personal consumption expenditures (PCEs) on energy versus other items on a month-by-month basis.

The PCE on energy goods (which include natural gas and electricity) rose from 5.05% of total PCE in 2004 to 5.88% in 2007 and 6.31% in 2008. When oil prices peaked in July 2008 PCE hit a maximum monthly level of 7.01%.

Thus taking the increase from 2007 to the highest month in 2008, energy PCE rose by 1.13 % of total PCE, or about $115 billion on an annualized basis.

That sounds like a lot of money, but it’s well under 1% of GDP.

For example, it’s less than the estimated $152 billion cost of former President Bush’s ineffective 2008 tax rebate stimulus.

Indeed, it is one-seventh the size of President Obama’s stimulus the following year, which didn’t have much visible effect. Thus the high oil prices of 2008 might have made the difference between marginal growth and marginal decline, which according to the “butterfly effect” of chaos theory could have caused other larger changes.

However, high oil prices were certainly not sufficient to push an otherwise healthy economy into recession.

2007 vs. 2012: Comparing High Oil Prices

This time, oil prices are rising from a higher base.

The average West Texas Intermediate oil price of $94.87 in 2011 was 31% above 2007′s average. It follows that an oil price jump to $147 would not be very economically significant.

In this case, we would need a larger spike to have any noticeable effect.

Oil prices did spike 101% from 2007′s average to the peak on July 3, 2008. A similar rise from 2011′s average would take the price of oil to $191 per barrel.

If that jump raised energy PCE by the same proportion as in 2008 (starting from 2011′s higher energy PCE of 6.07% of total PCE), it would push it up to 7.24% of PCE. This equates to a rise of about $129 billion.

If oil touched $200 a barrel, the rise in personal energy expenditures might be around $140 billion.

Again, at 0.9% of today’s GDP that increase is just not big enough to cause recession in an economy growing even moderately.

It’s just a little larger than the $118 billion “stimulus” from continuing the payroll tax cut for 2012.

It would slow growth, but given that we are currently experiencing growth of around 2%, it would not turn our current growth into decline.


http://etfdailynews.com/2012/04/12/high-oil-prices-why-200-oil-wont-cause-a-recession-uso-xle-uga-cop-xom-cvx-dvn/

"which according to the “butterfly effect” of chaos theory could have caused other larger changes." <-- most important comment. Of course the economic damage is not distributed evenly and the industries and households that are hit all have debts to service. Also, a stalling economy is its own enabler. Any reduction in growth reduces confidence in the sustainability of debts and the sustained presence of consumer demand. All it takes is for people to go on another saving spree with the FFR already at 0% for things to go haywire.

Monsterzuma
Apr 15, 2012, 11:31 PM
Global Oil Production Update: EIA Revises Two Decades of Oil Data

Gregor MacDonald, Gregor.us | Apr. 14, 2012, 9:15 AM

With the most recent release of international oil production data, EIA Washington has revised figures back to 1985. This is one of the most comprehensive revisions I have seen in several years. Generally, the totals were revised slightly lower, and this was especially true for the past decade. Data for the full year of 2011 has now completed. | see: Global Average Annual Crude Oil Production mbpd 2001 – 2011.

http://gregor.us/wp-content/uploads/2012/04/8-Global-Average-Annual-Crude-Oil-Production.png

Since 2005, despite a phase transition in prices, global oil production has been trapped below a ceiling of 74 mbpd (million barrels per day). New production from new fields and new discoveries comes on line, but, it has not been at a rate fast enough to overcome declines from existing fields. Overall, global decline has been estimated at a minimum of 4% per year and as high as 6+% a year. Given that new oil resources are developed and flow at much slower rates, the existing declines present a formidable challenge to the task of increasing supply. I see no set of factors, in combination, that would take global production of crude oil higher in 2012, or next year, or thereafter.


http://gregor.us/oil/global-oil-production-update-eia-revises-two-decades-of-oil-data/

Monsterzuma
Apr 18, 2012, 08:52 AM
The cost of new oil supply

The new floor

The new floor for oil prices is being set increasingly by the production cost of these unconventional liquids. A few decades ago, we could produce conventional oil profitably in the U.S. for under $15 a barrel. But those days are long gone for the U.S., and for most of the world (except a few old fields in places like Saudi Arabia). As every major oil company has admitted in the past few years, the age of easy and cheap oil has ended.

As the cheap oil from old mature fields is depleted, and we replace it with expensive new oil from unconventional sources, it forces the overall price of oil up. This is because oil prices are set at the margin, as are the prices of most commodities. The most expensive new barrel essentially sets the price for the lot.

Research by veteran petroleum economist Chris Skrebowski, along with analysts Steven Kopits and Robert Hirsch, details the new costs: $40 - $80 a barrel for a new barrel of production capacity in some OPEC countries; $70 - $90 a barrel for the Canadian tar sands and heavy oil from Venezuela’s Orinoco belt; and $70 - $80 a barrel for deepwater oil. Various sources suggest that a price of at least $80 is needed to sustain U.S. tight oil production.

Those are just the production costs, however. In order to pacify its population during the Arab Spring and pay for significant new infrastructure projects, Saudi Arabia has made enormous financial commitments in the past several years. The kingdom really needs $90 - $100 a barrel now to balance its budget. Other major exporters like Venezuela and Russia have similar budget-driven incentives to keep prices high.

Globally, Skrebowki estimates that it costs $80 - $110 to bring a new barrel of production capacity online. Research from IEA and others shows that the more marginal liquids like Arctic oil, gas-to-liquids, coal-to-liquids, and biofuels are toward the top end of that range.

My own research suggests that $85 is really the comfortable global minimum. That’s the price now needed to break even in the Canadian tar sands, and it also seems to be roughly the level at which banks and major exploration companies are willing to commit the billions of dollars it takes to develop new projects.

http://www.smartplanet.com/blog/energy-futurist/the-cost-of-new-oil-supply/468

Ayatollah So
Apr 18, 2012, 07:40 PM
http://gregor.us/oil/global-oil-production-update-eia-revises-two-decades-of-oil-data/


I see no set of factors, in combination, that would take global production of crude oil higher in 2012, or next year, or thereafter.

Guess I'll stay invested in energy companies then (but maybe switch from mutual fund to stocks, hmm...). The world economy won't stay depressed forever.

ainwood
Apr 21, 2012, 08:36 PM
My own research suggests that $85 is really the comfortable global minimum. That’s the price now needed to break even in the Canadian tar sands, and it also seems to be roughly the level at which banks and major exploration companies are willing to commit the billions of dollars it takes to develop new projects.
Looking at the demand for people to work in the oil and gas industry, I suspect that the statement isn't really correct. Of course oil companies will want the price to stay around that mark as it adds to profitability, but screening economics are made on much lower oil prices than that.

Monsterzuma
May 04, 2012, 06:51 AM
Here's a perspective on the oil issue that considerably weakens the peak oil case as far as I'm concerned:

While the price of oil is rising, the affordability of oil, expressed in terms of the cost of oil relative to incomes, is still at a historical high. I haven't done the calculations but I'm guessing that even in a serious worst case scenario such as 200$ a barrel oil, the share of incomes that will be spent on oil consumption will at best go back to what it was in the 50s and 60s, which has proven to be quite survivable in those times.

A few caveats to the argument, though:
- prior to the rise in oil prices, economic growth is not particularly high, so the relative change in prices, while by itself not problematic, causes a relative change in economic growth that is a problem
- economic growth in recent decades has likely been debt-funded to begin with (http://www.debtdeflation.com/blogs/2010/06/13/empirical-and-theoretical-reasons-why-the-gfc-is-not-behind-us/); not only does this mean the expected future growth rate is dramatically lower, but the financial structures that come with this debt also render the economy very vulnerable
- affordability to certain vulnerable classes such as homeowners is not as high as that of the whole economy

Monsterzuma
May 04, 2012, 07:06 AM
New Study Predicts Frack Fluids Can Migrate to Aquifers Within Years
Posted on May 3, 2012 by Mountainkeeper
Major news outlets such as Bloomberg News, Business Week and Propublica are reporting on a game changing peer reviewed study commissioned by Catskill Mountainkeeper that predicts frack fluids can migrate into aquifers, directly contradicting the claims by the gas industry that these toxic chemicals will stay underground forever.

The new peer-reviewed study by hydrogeologist and researcher Tom Myers, "Potential Contaminant Pathways from Hydraulically Fractured Shale to Aquifers” published in the current issue of Ground Water, demonstrates that fluids from highly-pressurized gas drilling activities can migrate from deep subsurface layers of shale to shallow aquifers and surface waters, bringing along polluting gases, chemicals, and radioactivity. The study, based on computer modeling of pressure waves, rock characteristics, and fluid mobilization in natural and induced fissures, offers an explanatory mechanism for previous reports of contamination of wells by deep shale methane in and around Dimock, Pennsylvania. The study accords with detailed fracture maps produced by structural geologist Robert Jacobi, showing extensive fracturing of deep bedrock, including shale layers in the Catskills and across New York State.
Hydrofracking and other high-pressurized drilling activities seek to exploit natural and induced fractures in order to release methane gas, but migration of contaminated gas and fluids through rock fissures cannot be managed or controlled, making slow contamination of aquifers and water resources – over time frames as short as one year – extremely likely in areas of intensive drilling activity. This threat from deep level contamination therefore points to risks inherent in high pressure drilling activities and adds a level of threat to human and animal health beyond that of poorly drilled wells and dissolving cement sheaths and casings, already well-accepted as mechanisms by which drilling activities can ruin water sources.

http://www.catskillmountainkeeper.org/new-study-predicts-frack-fluids-can-migrate-to-aquifers-within-years/

Oerdin
May 05, 2012, 09:06 PM
That is interesting and not what I'd expect in most situations.

Monsterzuma
May 12, 2012, 06:28 PM
IMF Working Paper - The Future of Oil: Geology versus Technology

V. Conclusion
The main objective of this paper has been to propose and to empirically evaluate a model
of the world oil market that does not take an a-priori view of the relative importance of
binding resource constraints versus the price mechanism for world oil supply. We do not
want to rule out either of these mechanisms, because the recent data tell a convincing
story that both must have been important. Our empirical representation of this view
models oil supply as a combination of the Hubbert linearization specification of Deffeyes
(2005) and a price mechanism whereby higher oil prices increase oil output.
Our empirical results vindicate this choice. Our model performs far better than competing
models in predicting either oil production or oil prices out of sample, in a field where
predictability has historically been low. Our empirical results also indicate that, if the
model’s predictions continue to be as accurate as they have been over the last decade, the
future will not be easy. While our model is not as pessimistic as the pure geological view,
which typically holds that binding resource constraints will lead world oil production onto
an inexorable downward trend in the very near future, our prediction of small further
increases in world oil production comes at the expense of a near doubling, permanently, of
real oil prices over the coming decade. This is uncharted territory for the world economy,
which has never experienced such prices for more than a few months. Our current model
of the effect of such prices on GDP is based on historical data, and indicates perceptible
but small and transitory output effects. But we suspect that there must be a pain barrier,
a level of oil prices above which the effects on GDP becomes nonlinear, convex. We also
suspect that the assumption that technology is independent of the availability of fossil
fuels may be inappropriate, so that a lack of availability of oil may have aspects of a
negative technology shock. In that case the macroeconomic effects of binding resource
constraints could be much larger, more persistent, and they would extend well beyond the
oil sector. Studying these issues further will be a priority of our future research.

http://www.imf.org/external/pubs/ft/wp/2012/wp12109.pdf

That's right guys, the IMF is acknowledging a pessimistic account of Peak Oil. Peak Oil pessimism is now officially mainstream!

Bootstoots
May 14, 2012, 10:37 PM
I made it to 2287 in Oiligarchy! If only we'd loosen up our moral standards and start burning humans for power...

kramerfan86
May 14, 2012, 11:29 PM
I dont think many deny cheap oil will not last forever. i think the main debate comes into just what that means ranging from apocalyptic to non-event with the main argument revolving around just how effective alternative resources can me and how effectively society can come up with new technology. Personally Im of the belief that worsening prices will motivate more technology. Unfortunately people and companies arent altruistic enough to really develop alternatives until there is a big pay off. Its an unknown though to be certain.

Monsterzuma
May 19, 2012, 03:05 PM
$85 the make or break price for the oil patch

CARRIE TAIT
CALGARY— Globe and Mail Update
Posted on Thursday, May 17, 2012 12:50PM EDT

Canadian Natural Resources Ltd. has rolled out two key numbers: 85 and 75.

...

In the oil sands, Mr. Cusson said companies will flirt with trouble if the price of crude dips to $85 (U.S.) per barrel as expansion spreads in northern Alberta.

...

In shale oil plays, however, companies have a bit more breathing room. In order to break even traders must pay at least $70 to $75 per barrel for crude extracted from the geologically-challenging zones.

http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/85-the-make-or-break-price-for-the-oil-patch/article2435883/

peter grimes
May 20, 2012, 08:44 AM
our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade. This is uncharted territory for the world economy, which has never experienced such prices for more than a few months. Our current model of the effect of such prices on GDP is based on historical data, and indicates perceptible but small and transitory output effects. But we suspect that there must be a pain barrier, a level of oil prices above which the effects on GDP becomes nonlinear, convex. We also suspect that the assumption that technology is independent of the availability of fossil fuels may be inappropriate, so that a lack of availability of oil may have aspects of a negative technology shock. In that case the macroeconomic effects of binding resource constraints could be much larger, more persistent, and they would extend well beyond the oil sector. Studying these issues further will be a priority of our future research.

This is worrisome on a couple of different levels, but my initial reaction was to recall something I've read about called The Energy Trap. I'll quote a few important lines from a blog entry I've linked to in other threads:

Source:
http://physics.ucsd.edu/do-the-math/2011/10/the-energy-trap


...the idea is that once we enter a decline phase in fossil fuel availability—first in petroleum—our growth-based economic system will struggle to cope with a contraction of its very lifeblood. The invisible hand of the market will slap us silly demanding a new energy infrastructure based on non-fossil solutions. But here’s the rub. The construction of that shiny new infrastructure requires not just money, but…energy. And that’s the very commodity in short supply. Will we really be willing to sacrifice additional energy in the short term—effectively steepening the decline—for a long-term energy plan? It’s a trap!

Market optimists would see the tremendous investment potential of a new energy infrastructure as an antidote against such an outbreak. Given this uncertainty, let’s shy away from economic prognostication and look at a purely physical dimension to the problem—namely, the Energy Trap.

I’ll actually soften the effect to a 2% annual decline [in fossil fuel production] to illustrate that we run into problems even at a modest rate of decline. By itself, a 2% decline year after year—while sounding mild—would send our growth-based economy into a tailspin. As detailed in a previous post, across-the-board efficiency improvements cannot tread water against a rate as high as 2% per year. As we’ll see next, the Energy Trap just makes things worse.

Let’s say that our nation (or world) uses 100 units of fossil fuel energy one year, and expects to get only 98 units the following year. We need to come up with 2 units of replacement energy within a year’s time to fill the gap. If, for example, the replacement:

-has an EROEI of 10:1;
-requires most of the energy investment up front (solar panel or wind turbine manufacture, nuclear plant construction, etc.);
-and will last 40 years,

then we need an up-front energy investment amounting to 4 year’s worth of the new source’s output energy. Since we require an output of 2 units of energy to fill the gap, we will need 8 units of energy to bring the resource into use.

Of the 100 units of total energy resource in place in year one, only 92 are available for use—looking suddenly like an 8% decline. If we sit on our hands and do not launch a replacement infrastructure, we would have 98 units available for use next year. It’s still a decline, but a 2% decline is more palatable than an effective 8% decline. Since each subsequent year expects a similar fossil fuel decline, the game repeats. Where is the incentive to launch a new infrastructure? This is why I call it a trap.

To set the scale, the U.S. uses about 3 TW of continuous power. A 1% drop corresponds to 30 GW of power. Our modest 2% replacement therefore would require the construction of about 60 new 1 GW power plants in a single year, or a rate of one per week! Worldwide, we quadruple this number.

When France decided to go big on nuclear, they built 56 reactors in 15 years. In doing so, they replaced 80% of their electricity consumption, which translates to about 30% of their total energy use. So this puts them at about 2% per year in energy replacement.

the Energy Trap is a generic consequence of modest-EROEI sources requiring substantial up-front investment in energy. We would need the EROEI to be equal to the resource lifetime in order to have a null effect during the decline years, or better than this to ease the pain or allow growth. For a 40 year lifetime (e.g., power plant, solar panels, wind turbines), this means we would need 40:1 EROEI or better to avoid the trap. Our alternatives simply don’t measure up.

solar photovoltaics, solar thermal, wind, and nuclear, are all ways to make electricity, but these do not help us very much as a direct replacement of the first-to-fail fossil fuel: oil. This is a very serious point. As Bob Hirsch pointed out in the 2005 report commissioned by the Department of Energy, we face a liquid fuels problem in peak oil. As such, not one of the five immediately actionable crash-program mitigation strategies outlined in the report represented a departure from finite fossil fuels. The grip is tight, indeed.


I'm leaving the best (and most salient!) parts of the post behind at the link. This is stuff everyone following this thread should be aware of. Also read the comments - very intelligent discussion follow many of his posts.

Monsterzuma
May 20, 2012, 06:45 PM
The peak oil debate has taken a funny turn. On one hand you have people declaring the debate "over" because there is plenty of supply from sources like shale oil and tar sands to keep the world going for another few decades. On the other, you have people (such as the IMF research group) looking at the price issues and concluding that the price of oil will have to rise to further extremes to keep supplies coming. This is worrisome because currently the US and EU economies are already running well below their full capacity, meaning that demand for oil is relatively suppressed even at the current high price level.

What I think things roughly come down to:
Peak Oil: averted for the moment
Peak CHEAP Oil: potentially a problem

The REAL issues:
Peak AFFORDABLE Oil: not too big a deal; at worst a return to 1960s ratios of income to oil costs, at which growth wasn't a problem
Peak AFFORDABLE Oil for the western middle class that hasn't seen income rises since the 70s: quite likely a serious issue, see housing crash under influence of rising interest rates

peter grimes
May 20, 2012, 07:51 PM
The peak oil debate has taken a funny turn. On one hand you have people declaring the debate "over" because there is plenty of supply from sources like shale oil and tar sands to keep the world going for another few decades. On the other, you have people (such as the IMF research group) looking at the price issues and concluding that the price of oil will have to rise to further extremes to keep supplies coming. This is worrisome because currently the US and EU economies are already running well below their full capacity, meaning that demand for oil is relatively suppressed even at the current high price level.

What I think things roughly come down to:
Peak Oil: averted for the moment
Peak CHEAP Oil: potentially a problem

The REAL issues:
Peak AFFORDABLE Oil: not too big a deal; at worst a return to 1960s ratios of income to oil costs, at which growth wasn't a problem
Peak AFFORDABLE Oil for the western middle class that hasn't seen income rises since the 70s: quite likely a serious issue, see housing crash under influence of rising interest rates


So you pretty much entirely ignored my post. :crazyeye:

But I'll respond to one part of yours, for the sake of fairness:
Peak AFFORDABLE Oil: not too big a deal; at worst a return to 1960s ratios of income to oil costs, at which growth wasn't a problem

It's important to remember that absolute tax rates were double and even triple today's rates. Yes, there was economic growth - but you can't simply draw a line between fractional fossil fuel costs and economic growth. And this is why I think you're being very foolish if you ignore the issues raised in by the stuff I linked: You're stating that Peak Affordable Oil is no big deal, but failing to account for the replacement costs of whatever is going to fill that FF void.

Please comment on the Energy Trap before we get too far afield!

If you think it's irrelevant then lay out your reasoning.

If you think his premises are wrong then please show us.

Ignoring the conundrum for the sake of wishful thinking isn't smart at all...

Monsterzuma
May 20, 2012, 08:21 PM
It seems pretty obvious to me that the 85$/barrel extraction rates cited for shale oil take energy inputs in account, so this already accounts for the EROEI problem. Say that the current EROEI for shale oil is 1:5, when that goes down to 1:4, energy input costs go from 20% to 25%, meaning the increase in total price is no more than 5%. Doesn't look like all that big a deal to me. Not until you get to far worse ratios.

The problem of needing to change to infrastructure for another energy type is also irrelevant, because shale and tar sand oil provide regular oil that can be used in the existing infrastructure.

Your article implies that the extra energy needed should be in the form of powerplants, but shale oil, tar sand oil and natural gas liquids also fit the bill. That makes meeting the mentioned energy needs a lot more feasible.

It's important to remember that absolute tax rates were double and even triple today's rates.

Sounds like a further drag on economic growth to me, and yet rates of 3 to 4% were achieved at those times. This only helps my argument.

Cutlass
May 21, 2012, 07:24 AM
So you pretty much entirely ignored my post. :crazyeye:

But I'll respond to one part of yours, for the sake of fairness:


It's important to remember that absolute tax rates were double and even triple today's rates. Yes, there was economic growth - but you can't simply draw a line between fractional fossil fuel costs and economic growth. And this is why I think you're being very foolish if you ignore the issues raised in by the stuff I linked: You're stating that Peak Affordable Oil is no big deal, but failing to account for the replacement costs of whatever is going to fill that FF void.

Please comment on the Energy Trap before we get too far afield!

If you think it's irrelevant then lay out your reasoning.

If you think his premises are wrong then please show us.

Ignoring the conundrum for the sake of wishful thinking isn't smart at all...

Tax rates weren't that high in the US. Actual after all the games and deductions for Americans, including state and local taxes, was actually a little lower at that time. What has changed is not so much the tax burden on the economy, but rather where the weight of that tax burden falls on the socioeconomic scale.

Monsterzuma
May 25, 2012, 12:14 AM
BofA: Here Are 4 Ways A Greek Exit From The Euro Could Shock Oil Prices

We recently covered GasBuddy.com's Patrick DeHaan's take on what effect a Greece exit from the Eurozone would have on oil prices.

Last week, Bank of America Merrill Lynch's Francisco Blanch went one step further, laying out the effect of four Euro-crisis resolution scenarios, ranging from mild to burn-your-mouth, on oil prices:

Scenario 1 Greek package renegotiation: "Greece accepts modest revisions to the austerity programme (including relaxation of debt/GDP targets) and stays in EUR in return for more proactive growth stimulus from the Eurozone."
Impact: $120/bbl Brent & $110/bbl WTI

Scenario 2 Face-off with Greece where exit is explored but does not materialize: "Non-pro European government will materialize after elections which will drive Greece to the brink of disorderly bankruptcy as the government attempts to broker a new funding deal which is better for Greece but untenable for the IMF/EU/ECB."
Impact: $100/bbl Brent & $80/bbl WTI.

Scenario 3 Disorderly Greek Euro exit, but other members remain in Euro: "Disorderly Greek default and exit of Eurozone as current funding run out between June and July (on our economists' estimate). Some contagion to the Eurozone through the European banking sector, however, other Eurozone members remain in the Euro."
Impact: $80/bbl Brent & $65/bbl WTI.

Scenario 4 Disorderly broad Eurozone break-up: "Greek exit leads to vast contagion and bank funding freezes in the Eurozone and results in other countries leaving and the eventual break-up of the Eurozone into a number of new domestic currencies."
Impact: $60/bbl Brent and $50/bbl WTI for two years.


http://www.businessinsider.com/four-grexit-oil-price-shock-scenarios-2012-5

El_Machinae
May 26, 2012, 06:47 AM
This is worrisome on a couple of different levels, but my initial reaction was to recall something I've read about called The Energy Trap. I'll quote a few important lines from a blog entry I've linked to in other threads:

Source:
http://physics.ucsd.edu/do-the-math/2011/10/the-energy-trap



I'm leaving the best (and most salient!) parts of the post behind at the link. This is stuff everyone following this thread should be aware of. Also read the comments - very intelligent discussion follow many of his posts.

That was pretty concerning! I think the weakness in the argument is due to the fact that we don't "invest" as if we are just one slightly irrational person. People with spare capital will see the need for increased levels of energy, and then invest that spare capital in order to fulfill future demand. Or, in other words, they're the ones taking the '8%' hit. In the process of consuming that 8% of energy, they will be buying and hiring in order to do so, so the 'GDP' will not change because of their re-allocation of their resources

I'm trying to think of a way to rephrase my intuition, but it might require a flash of insight

Monsterzuma
May 26, 2012, 07:31 AM
http://home.entouch.net/dmd/cera.h2.jpg

http://home.entouch.net/dmd/cera.htm

Careful who you pick as your gurus, guys.

Monsterzuma
Jun 24, 2012, 10:30 PM
Shale Gas Reality Begins to Dawn

The shale gas bubble is a perfect example of the irrationality of markets, the power of perverse short-term incentives, the driving force of momentum-chasing, the dominance of perception over reality in determining prices, and the determination for a herd to stampede over a cliff all at once.

The perception of a gas glut has driven prices so low that none of the participants are making money (at least not by producing gas) or creating value. We see a familiar story of excessive debt, and the hollowing out of productive companies dead set on pursuing a mirage.


Many industry insiders know perfectly well that the prospects for recovering substantial amounts of gas are poor, and that the industry is structured as a ponzi scheme. Still, there has been money to be made in the short term by flipping land leases and building infrastructure to handle gas.

http://theautomaticearth.org/Finance/shale-gas-reality-begins-to-dawn.html

Monsterzuma
Jun 25, 2012, 02:32 AM
Quick summary of my main personal take-home messages from ASPO 2012

A nice summary of the main discussion points was presented by Paul Hohen:

Peak-Oil is now! (true but there is some delay due to unconventional oil and gas)
Plateau Oil now! (true, since 2005 at just above 80 Mb/d, but not for very much longer as the potentials of unconventional oil and gas are extremely limited)
The precise moment of PO is not so important anymore, as we are probably already at or closely before the peak according to many. (Robert Hirsch: Peak is likely in 1 to 4 years).
Peak Myth (i.e. there is plenty still): not true - good news trump bad ones - new finds exaggerated (e.g.: shale gas hype)
Peak Demand: (False - demand is still rising, especially in Asia. As Bob Hirsch says - there is a 100 trillion US$ infrastructure installed on the planet which works on oil - changing this will take many years (20 or more)).
Peak Price (or Peak Economics): (also true but there is a maximum price the economy can take before it goes into recession and the oil price falls – 6-7% of GDP according to Euan Mearns). Price should not be overemphasized - according to Meadows - the main issue is Exports! For producers of oil the market price is not that relevant.
Peak Emissions: (True? IPCC seems to overestimate available carbohydrates for its scenarios (only 3 of 37 are within realistic ranges according to Aleklett), but there are other drivers for green house gas emissions too). According to Nakicinovic, there is still 30000 Gt of C02 in Coal left. Only 850 are allowed to remain below 2 degrees.
Peak Insecurity: Political insecurity is on the rise, which explains the rush of the oil industry to invest in shale gas/oil which is technically difficult but in politically safe places, where they can own assets.

The golden age of Shale oil (Schiefer gas)

This is not a golden age, but the retirement party of the oil age (Arthur Berman). "If something sounds too good to be true, it probably is."

The industry is losing money with it (Arthur Berman), because the wells are extremely expensive and have very fast decline rates (Euan Mearns). This is particularly the case since gas prices in the US have collapsed. Temporarily some good wells may still be subsidizing bad ones.

Disadvantages of shale gas:
Fast decline rates
Expensive wells & technology
Danger of groundwater contamination by chemicals added to fracking- water (2 tons per well!)
Large land-mass necessary, because many boreholes necessary - this is a problem for Europe, which is much more densely populated than the US
Renewable Energy (RE) affluence vs. sufficiency

Obviously everyone is in favor of renewables, but there is big tension between those who preach "100% renewable is possible without radical systemic changes" (Jeremy Leggett, Peter Droege, Karen Smith-Stegen, Claudia Kemfert), and those who only see a limited scope for RE of around 10% of the current energy mix and therefore a need for (and desirability of - Hagens) sufficiency (Nate Hagens, Pierre-René Bauquis, Yves Cochet, Jeremy Gilbert, Rob Hirsch, Meadows, Reiner Kummel..). Austria for example has a strategy to become Energy autarkic by 2050 including a complete restructuring of the energy system and Electricity autarkic by 2012 according to the ministries. Berlin for example is apparently already Energy-independent (Peter Droege). Wind alone, so it is argued by another speaker, could provide 4-5 times global conventional energy demand. Berlin is already Energy-independent (Peter Droege). To many (e.g. Michael Klare), RE are the only hope for avoiding collapse and resource wars.

The middle ground of these positions is covered by Nakicenovic's idea of "transition", driven strongly by efficiency and maybe Wolfgang Streicher's "100% Renewables for Austria by 2050" (the study does not include the Rucksack of imported goods which amount to about 44%). On the technological side of renewable Audi is currently working on combating the main problem of RE - cyclicality, with its system of power-to gas conversion (Hermann Pengg).

Pierre-René Bauquis is the only one in favor of Nuclear due to the limited scope of RE. Even though he claims that with solar energy we might have a "wild card", as progress is difficult to predict. Total (which he worked for) is still the only oil company which openly talks about Peak-Oil. Gilbert and Hirsch would be among those being in favour of more exploration of fossil fuels. Hirsch would also be in favour of pushing Coal-to-liquid. Gilbert calls the media and public reaction after the Gulf of Mexico an exaggeration (new technology inevitably has risks and costs - if we want more oil we have to accept that). The Rimini (oil cap) protocol, which he recalled himself, is an unrealistic dream, as we do not want to reduce our consumption voluntarily.

Not surprisingly, many "100%-no-problem people" have vested interests in the renewable energy industry or work within the framework of such projects (e.g. Smith-Stegen for Desertec , which is according to critics - despite the good intentions - solar colonialism - this caused quite some debate).

http://www.theoildrum.com/node/9251

Peak Oilers are sticking to their guns.

Kozmos
Jun 25, 2012, 03:34 AM
I've read too many promising research to be too worried. (turning wood into oil? awesome stuff, really sticks it up to the tree hugging hippies as well, ah the endless wonders of science) The only downside that the economy will suffer during the transition and that non-energy-production science might suffer some cuts.

EDIT: He said sleep deprived fully expecting to be ripped a new one by people who read up on the subject far more than him.

Monsterzuma
Jun 25, 2012, 03:46 AM
turning wood into oil?

Got a link on that? I've only heard of machines turning plastic into oil using electricity. There is also Coal Liquefaction and a process to turn Natural Gas into an oil equivalent.

The question is of course whether these things can be done economically on large enough a scale and in short enough a time frame.

Kozmos
Jun 25, 2012, 07:39 AM
http://www.reuters.com/article/2011/10/18/us-cellulose-oil-idUSTRE79H6SL20111018

Yes, your point still stands though. But I feel like we have plenty of avenues we can take when it hits the fan.

Monsterzuma
Jun 27, 2012, 08:26 AM
New study forecasts sharp increase in world oil production capacity, and risk of price collapse
June 27, 2012 By James Smith

(Phys.org) -- Oil production capacity is surging in the United States and several other countries at such a fast pace that global oil output capacity is likely to grow by nearly 20 percent by 2020, which could prompt a plunge or even a collapse in oil prices, according to a new study by a researcher at the Harvard Kennedy School.

The findings by Leonardo Maugeri, a former oil industry executive who is now a fellow in the Geopolitics of Energy Project in the Kennedy School’s Belfer Center for Science and International Affairs, are based on an original field-by-field analysis of the world’s major oil formations and exploration projects.

Contrary to some predictions that world oil production has peaked or will soon do so, Maugeri projects that output should grow from the current 93 million barrels per day to 110 million barrels per day by 2020, the biggest jump in any decade since the 1980s. What’s more, this increase represents less than 40 percent of the new oil production under development globally: more than 60 percent of the new production will likely reach the market after 2020.

Maugeri’s analysis finds that the gross additional production from current exploration and development projects in the world could produce an additional 49 million barrels per day by 2020, an increase equivalent to more than half the world’s current 93 million bpd. After adjusting that gross output increase for political and technical risk factors as well as the offsetting depletion rates of current fields, the analysis projects the net increase by 2020 to be about 17.5 bpd.

His study attributes the expected growth in oil output largely to a combination of high oil prices and new technologies such as hydraulic fracturing that are opening up vast new areas and allowing extraction of “unconventional” oil such as tight oil, oil shale, tar sands and ultra-heavy oil. These increases are projected to be greatest in the United States, Canada, Venezuela and Brazil. Maugeri also predicts a major increase in Iraq’s oil output as it regains stability, which will add new production in the Persian Gulf region -- potentially destabilizing OPEC’s ability to manage output and prices.

The combination of new production in the Western Hemisphere and the still growing production in other parts of the world could lead to a sharp drop in oil prices, Maugeri finds, which if steep enough could lead oil companies to cut back on investment and ultimately slow down oil supplies. But if oil prices remain above about $70 per barrel, sufficient investment will occur to sustain continued growth in production, possibly leading to a stable phenomenon of oil overproduction after 2015.


http://phys.org/news/2012-06-sharp-world-oil-production-capacity.html

Interesting contrast to the recent pessimistic IMF working paper.

Exxon CEO says low US natgas prices not sustainable

(Reuters) - Current prices for U.S. natural gas are not sustainable for the energy industry to continue to cover the cost of finding and producing new supplies, the head of Exxon Mobil said Wednesday.

"The cost of supply is not $2.50. We are all losing our shirts today," Rex Tillerson, chief executive officer of Exxon Mobil, said in a presentation at the Council of Foreign Relations.

Exxon Mobil is the largest producer of natural gas in the United States following its purchase of XTO Energy in 2010.

U.S. natural gas prices slumped to their lowest levels in a decade earlier this year below $2.00 per million British thermal units, but have rebounded to near $2.80 in recent days.


http://www.reuters.com/article/2012/06/27/exxonmobil-tillerson-idUSL2E8HR2ZK20120627?rpc=401&feedType=RSS&feedName=rbssIndustryMaterialsUtilitiesNews&rpc=401

India to establish nuclear reactor that uses Thorium as fuel: Atomic Energy Commission

http://timesofindia.indiatimes.com/india/India-to-establish-nuclear-reactor-that-uses-Thorium-as-fuel-Atomic-Energy-Commission/articleshow/14432116.cms?

Not an LFTR, but interesting regardless.

Forget peak oil, we may have reached 'peak GDP'

by Dave Gardner

We will find out in this century whether we are living in the era of peak everything: peak food, peak water, peak biodiversity, peak energy, peak population and even peak gross domestic product – argues campaigner

Economic growth and population growth, these are undoubtedly the questions of our time. These questions are highlighted by most of today's major news events: climate disruption, economic meltdown, hunger, poverty, species extinction and economic inequity. We have all heard of peak oil, but we will find out in this century whether we are living in the era of peak everything: peak food, peak water, peak biodiversity, peak energy, peak population and even peak gross domestic product. Several of these scenarios are potentially cataclysmic and we face them precisely because we have been embracing values and pursuing policies that are inherently unsustainable.

http://www.publicserviceeurope.com/article/2128/forget-peak-oil-we-may-have-reached-peak-gdp

Monsterzuma
Jul 07, 2012, 09:28 AM
Tech Talk - New Energy Report from Harvard Makes Unsupportable Assumptions
Posted by Heading Out on July 2, 2012 - 11:56am

Criticism of the Leonardo Maugeri paper at the top of the last post.

http://www.theoildrum.com/node/9292

Monsterzuma
Jul 12, 2012, 06:09 PM
Interview with Jim Lucier: The Bull Case for America in a Future of Energy Abundance

The IRA: Wow. So we are not talking scarcity anymore? Can't wait till the happy squirrels in the green movement get the memo.
JL: No, we are talking about a new paradigm of abundance. America will once again become the world center for energy intensive industries and manufacturing. These industries will include glass, steel, cars, chemicals, and you name it. Refined petroleum products like gasoline would be an especially attractive high-tech, high value-added product that could support lots of good-wage jobs in the U.S. of A. It should not come as a surprise that the United States has already become a net exporter of refined products for the first time since 1949. What's more, refined petroleum products are actually our number one export by value. They are making a huge contribution to our balance of payments and the national bottom line. Citigroup actually published a report recently that describes the United States as "The New Middle East." Citi estimates that oil and gas could add about 3% to GDP by 2020.


http://us1.irabankratings.com/pub/IRAstory.asp?tag=537

I really don't know what to believe anymore. :crazyeye:

tokala
Jul 13, 2012, 08:47 AM
That last article is intended as satire, I hope?

If in doubt, trust mathematics, geology and the guys doing the actual grunt work in the oil/gas patch. They will tell you that US "gas boom" is more like a bubble, which will not take all that long to burst.

Monsterzuma
Jul 13, 2012, 10:55 AM
I'd like to think Chris Whalen knows better than to set up an interview with a satirist, although from the way the questions are asked it's not impossible he's in on the joke. Just doesn't seem like something he'd pull off without making clear what he's doing in a footnote at the very least.

There seem to be a good number of people that take the Leonardo Maugeri paper seriously which has very similar conclusions.

Take for example George Monboit's capitulation on the peak oil front: http://www.guardian.co.uk/commentisfree/2012/jul/02/peak-oil-we-we-wrong (We were wrong on peak oil. There's enough to fry us all)

tokala
Jul 13, 2012, 11:14 AM
See this for a reply (http://www.theoildrum.com/node/9327#more)

The bottom line is that Maugeri has made some very optimistic assumptions about global average decline rates, failed to provide adequate justification for them and misrepresented the estimates made by others. Adopting more realistic estimates would significantly change his results.
Edit: blarb, didn't see you already linked to TOD :crazyeye:

Be wary of what Execs and bank "analysts" peddle, their job is to "sell the sizzle, not the steak" as one of the commenters on TOD put it (himself being an engineer producing the actual "steak")

Monsterzuma
Jul 24, 2012, 06:15 AM
Is Peak Oil Dead? - Chris Nelder

http://ftalphaville.ft.com/blog/2012/07/24/1094111/is-peak-oil-dead/

Conclusion
Although Maugeri does not state explicitly what decline rates he is using, researchers Stephen Sorrell and Christophe McGlade derived an annual average decline rate from the data in his report of 1.6 percent, or about one-third the global decline rates estimated by IEA, CERA and others. After analyzing the IEA data, they found an aggregate global production-weighted decline rate of 4.1 percent per year. At that rate, they found that Maugeri’s forecast for 2020 would reach just 95.1 mbpd, not 110.6 mbpd—a gain of just 2 mbpd over today, not 17.6 mbpd.

We cannot independently evaluate Maugeri’s country-by-country forecasts without seeing the assumptions in his data model, but his summary expectations are optimistic in the extreme. For example, he sees production from Iraq expanding in the next eight years at rates that have never before been achieved, despite a great deal of uncertainty about the country’s stability, its ability to maintain security in the future, and its ability to attract Western oil partners with the knowledge and technology needed to exploit its resources. The failure of Iraq’s recent oil lease auctions do little to give one confidence that Maugeri’s extraordinary forecast can be realized.

More generally, his assertion that, of the countries with more than 1 mbpd of production capacity, only four will have reduced capacity by 2020 is impossible to square with the fact that production has been declining in more 50 of those countries since 2000.

Maugeri’s forecast does not mention a price ceiling at all, an obvious deficiency given the extreme volatility of oil prices over the past four years. We know that as prices approach $120 a barrel, demand shrinks, yet triple-digit prices are precisely what is required to bring much of the new supply Maugeri anticipates online.

To his credit, Maugeri acknowledges that his analysis “is subject to a significant margin of error, depending on several circumstances that extend beyond the risks in each project or country,” and he details numerous important caveats. And to the extent that he reveals the assumptions underpinning his forecast, his transparency is laudable. In the final analysis, however, it is insufficient. He fails to provide adequate justification that his assumptions, being widely divergent from most other industry estimates, are remotely realistic.

We must conclude that the key assumptions about reserve growth and its effect on decline rates in Maugeri’s report are muddled, speculative and unverifiable. And sprinkling those assertions with repeated declamations about how peak oil is a non-issue, insisting repeatedly that the only real constraints on his scenario have to do with political decisions and geopolitical risks, suggests that his report is more about grinding a political axe on behalf of the oil industry than offering a serious or transparent analysis. Finally we must note that Maugeri is well known for his hostility to peak oil, as is BP, which funded his report. After taking real-world risks, costs, and restrictions into account, the case for peak oil—which is about production rates, not production capacity or reserves—seems far more realistic.

Monsterzuma
Sep 05, 2012, 07:00 PM
BP unveils new technology to boost oil production

BP has announced it is introducing new technology which will significantly boost the amount of oil it can extract.

It will be used for the first time offshore in the £4.5bn Clair Ridge development west of Shetland.

If left to its own devices an oil well will deliver only about 10% of the crude it contains. By then its pressure is exhausted.

However, the new technique means the energy firm will bring in an extra 42 million barrels from Clair Ridge alone.

The established industry technique of waterflooding brings more oil to the surface. Sea water is pumped into the oil-bearing rocks deep below the seabed.

But even then almost two thirds of the crude will remain beneath the waves.

BP's new technique - called LoSal EOR and announced here at the British Science Festival in Aberdeen - promises to increase both the life and yield of oilfields worldwide.

Instead of sea water, it will inject water from which most of the salt has been removed. It'll still be too salty to drink, but enough to force the crude to separate itself from the rock and come to the wellhead.

BP will be spending $120m on desalination equipment for Clair Ridge. It will produce up to 25,000 tonnes of water every day and the reward will be an extra 42m barrels of oil from that oilfield alone.

The science underpinning the technique is that water which is low in salt helps loosen the bonds between crude oil and the rock which surrounds it. Too salty, and the oil binds to the rock more tightly.

BP say there are likely to be benefits for oilfields worldwide.

The field trials to prove the science worked were held in Alaska and the field expected to use the technique after Clair Ridge is in the Gulf of Mexico.

Aberdeen University economist, Professor Alex Kemp, described it as a "landmark announcement of great significance".

He said the technique was being studied by several major oil companies and there was scope for it to be replicated elsewhere.

He says the method could extend the lives of oilfields, sustaining more jobs for longer. It could boost industry profits and increase tax revenues.

http://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-19497064

Unclear how much of a difference this makes. It would be nice to have a % as to how much more oil it can extract from a typical field.

civ_king
Sep 10, 2012, 12:32 AM
http://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-19497064

Unclear how much of a difference this makes. It would be nice to have a % as to how much more oil it can extract from a typical field.

In this case it is tripling the output so it qualifies as pretty good.

Monsterzuma
Sep 10, 2012, 12:40 AM
In this case it is tripling the output so it qualifies as pretty good.

Really? That sounds like a game changer. It remains to be seen whether that can be done to more than just a small subset of all fields though. It sounds like this burns through a lot of clean desalinated water as well, which could lead to some capacity problems when upscaled.

peter grimes
Sep 10, 2012, 04:42 PM
Really? That sounds like a game changer. It remains to be seen whether that can be done to more than just a small subset of all fields though. It sounds like this burns through a lot of clean desalinated water as well, which could lead to some capacity problems when upscaled.

Don't forget that this sort of high tech extraction technique requires a higher energy investment than what's currently deployed. In other words, a lower return on energy invested. I think it's referred to as EIROI?

Which means these techniques are only profitable when crude is above a specific price per barrel - desalination takes energy (this must be subtracted from the latent energy in the crude itself when doing an honest audit.)

Which happens due to problems in supply.

Which is yet one more signal that we may be at the Peak Oil Plateau.

So, Yes, a game changer I in terms of short term extraction. But more importantly a signal that our entire energy foundation is undergoing a game changing paradigm shift.

Monsterzuma
Sep 28, 2012, 01:26 PM
In March 2012 I posted:

http://www.renewableenergyworld.com/assets/images/story/2012/3/12/1332-toward-energy-literacy.jpg

Here's an updated graph:

http://static1.businessinsider.com/image/5065b265ecad04263d000003-590-443/chart.jpg

Multiplying 6500 by 365 gives 2372500. The rise is still quite small when viewed on the top map. Arguably the rate of change is quite promising. I'm personally not getting my hopes up (http://www.youtube.com/watch?v=dEFS26qqT18).

Rashiminos
Sep 28, 2012, 03:10 PM
Don't forget that this sort of high tech extraction technique requires a higher energy investment than what's currently deployed. In other words, a lower return on energy invested. I think it's referred to as EIROI?


It's EROEI - Energy Returned On Energy Invested, although I wonder if elgoog would handle the other.

Edit: No.

Cutlass
Sep 28, 2012, 05:06 PM
A friend of mine was recently telling me that a couple of years ago he made a spreadsheet showing that if oil prices had risen steadily at 3% from the time he started to drive to now, then the prices today would look normal.

El_Machinae
Sep 29, 2012, 07:15 AM
Clearly past peak oil for US production, but something has changed since? Looks like a ~ 2 year delay between price and production changes.

Monsterzuma
Sep 29, 2012, 10:11 AM
Clearly past peak oil for US production, but something has changed since? Looks like a ~ 2 year delay between price and production changes.

Shale oil boom + off shore drilling.

Monsterzuma
Oct 16, 2012, 04:10 AM
A pretty devastating analysis of Leonardo Maugeri's claims:

http://www.davidstrahan.com/blog/?p=1570

Monsterzuma
Oct 17, 2012, 11:07 AM
http://2.bp.blogspot.com/-7N2VrixPrME/UH6lE7t-m7I/AAAAAAAADxg/-RW5YECktTA/s1600/Screen+shot+2012-10-17+at+8.30.25+AM.png

I just thought to check this following the Presidential debate last night. The above shows the weekly Baker Hughes count of oil rigs drilling in the United States. This number has been in a near-vertical climb ever since the beginning of the economic recovery in 2009. However, in the last few months there are signs of it leveling off - whether temporarily or permanently I don't know. It has certainly been an incredible boom.

The sevenfold increase in rigs since the mid 2000s has so far produced about a 20% increase in oil production:

http://1.bp.blogspot.com/-P71BHz-6H_A/UH6nz0i2jkI/AAAAAAAADyc/_oYgVS4fv-M/s1600/Screen+shot+2012-10-17+at+8.42.41+AM.png

There also seems to be some sign of leveling off in that series. It will be interesting to see if the production continues to rise if we hold drilling at the current very high level.

http://earlywarn.blogspot.nl/2012/10/us-oil-rig-boom-leveling-off.html

I also found it interesting that it took a sevenfold increase in rigs to make production rise by 20%... And I'm guessing there are diminishing returns from that too, since the low hanging fruit is picked first?

peter grimes
Oct 17, 2012, 12:40 PM
I also found it interesting that it took a sevenfold increase in rigs to make production rise by 20%...

I don't think interesting is the word I'd use :scan:

innonimatu
Oct 17, 2012, 03:17 PM
http://earlywarn.blogspot.nl/2012/10/us-oil-rig-boom-leveling-off.html

I also found it interesting that it took a sevenfold increase in rigs to make production rise by 20%... And I'm guessing there are diminishing returns from that too, since the low hanging fruit is picked first?

In their source the yearly average does not seem to match the weekly average at all. They also cherry-picked a local minimum as the start point of that graphic.

Monsterzuma
Oct 17, 2012, 03:34 PM
I'm aware of the cherry-picking; as I posted earlier, the long term graph looks something like this, with slightly more of a rise (to 2372500) at the right end of the graph:

http://www.renewableenergyworld.com/assets/images/story/2012/3/12/1332-toward-energy-literacy.jpg

Where did you find their source? They don't seem to have a link in the blog post.

Cutlass
Oct 17, 2012, 04:16 PM
I also found it interesting that it took a sevenfold increase in rigs to make production rise by 20%... And I'm guessing there are diminishing returns from that too, since the low hanging fruit is picked first?



We started drilling the low hanging fruit in the 19th century. By the 1960s all the low hanging fruit in the US was already in production.

Monsterzuma
Oct 17, 2012, 04:26 PM
Fair point, but it's a relative thing obviously.

Cutlass
Oct 17, 2012, 04:45 PM
Sure. What's changed is the technology of drilling has improved. But what hasn't changed is that the best oil fields are the ones that are tapped first. And they are tapped first because they are the best ones, and can be tapped the easiest.

innonimatu
Oct 17, 2012, 08:07 PM
I'm aware of the cherry-picking; as I posted earlier, the long term graph looks something like this, with slightly more of a rise (to 2372500) at the right end of the graph:

http://www.renewableenergyworld.com/assets/images/story/2012/3/12/1332-toward-energy-literacy.jpg

Where did you find their source? They don't seem to have a link in the blog post.

Baker Hughes, it's some oil industry services company, they mention it.

Monsterzuma
Oct 21, 2012, 01:04 PM
British engineers create petrol from air and water

http://www.newsdaily.com/stories/bre89i0v7-us-petrol/

Cutlass
Oct 21, 2012, 01:21 PM
We've got a whole thread for that one....

Monsterzuma
Oct 21, 2012, 01:25 PM
oh, I've only been checking my thread subscription list lately.

Monsterzuma
Oct 24, 2012, 11:50 AM
http://www.theoildrum.com/files/Simmons_us_production_history_forecasts.png

Figure 6 - US oil production forecast from 2015 from Simmons & Co, with low, medium and high range scenario's varying due to oil price levels (75, 85, and 100 USD) and service industry drilling rate expectations.

http://www.theoildrum.com/node/9569

A pretty bold forecast in all three cases in my book. I get the impression this is not consistent with Steve Mohr's findings (http://www.youtube.com/watch?v=dEFS26qqT18) at all.

tokala
Oct 24, 2012, 01:19 PM
"Simmons & Co. | Investment bankers for the Energy Industry"
Simmons & Co, who see US shale oil production growing to 1.9 mb/d in 3 years
:mischief:

Corelabs, who expect 1.8 million b/d at maximum from shale oil, of which 900.000 was already in production at the time of forecast (1.2 mb/d at present). In other words we can expect about a 600.000 b/d increase yet to come. The reason is that the sweet spots according to Corelabs are much smaller than people think (too much extrapolation of the good areas).
(Those are the guys who have the best data in the industry on what's actually in the ground.)


Matthew Simmons is probably spinning in his grave ...

Monsterzuma
Oct 27, 2012, 05:11 PM
IMF study: Peak oil could do serious damage to the global economy
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/27/imf-study-peak-oil-could-do-serious-damage-to-the-global-economy/

That's the second major negative report on peak oil coming from the IMF. Peak oil is now firmly in the spotlights in mainstream thinking.

Monsterzuma
Nov 08, 2012, 03:43 PM
A few simple rules of thumb:

1. The liquid fossil fuels endowment is finite. The cheaply located and produced oil has been exploited first because it is the most profitable to produce. As the supply of cheaply located and produced oil falls, E&P costs rise. These are passed on in the form of higher prices to consumers. If there is not sufficient demand for the more expensively produced oil at the prices that will yield a profit to producers, that oil will not be produced.

2. Rising prices will ration demand. What will be the demand for diesel at $50 per gallon in 20 years? Zero for passenger cars used for commuting, some for rail and ocean freight, some for fueling equipment used for mining shale rock, and so on. Altogether a fraction of demand today.

3. Rising prices will make currently uneconomical (unprofitable) oil E&P profitable, such as using nuclear energy to refine shale rock or disill water out of the oil that exists in highly depleted oil fields. As prices rise a wider range of alternative fuels production will become profitable. These will therefore be financed. However,these additions to supply will not increase the liquid fuels supply in excess of demand and lower price because the supply of cheaply located and produced oil will continue to fall and E&P costs will keep rising.

I think it's this last point that most people have trouble getting their heads around. All our lives the oil E&P cycle has been rising demand, rising price, increased E&P investment, increased supply, falling price, rising demand, and so on. But as we saw in the wake of the 2008 and 2009 recession, prices did not collapse to $20 as they did during the much smaller recession of 2001 and quickly increased to $100 even though most of the world remains in or close to recession and demand is lower than after the end of the previous recession. Partly that was due to dollar depreciation, partly due to oil supply characteristics.

In other words, PCO means we are on the wrong side of the supply/demand curve for liquid fuels from now til kingdom come, starting in 1998 by my estimate, six years before the actual plateau in global production.

http://www.itulip.com/forums/showthread.php/23964-Reporting-gross-oil-production-to-hide-the-collapse-of-net-oil-production/page3?p=242528

Monsterzuma
Nov 12, 2012, 10:24 AM
Does the IMF believe we have a peak oil problem?
http://www.oilvoice.com/n/Does_the_IMF_believe_we_have_a_peak_oil_problem/8dc81b8ccbf5.aspx

IEA sees OPEC output rising by more than 10 million b/d by 2035
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8903120

tokala
Nov 12, 2012, 11:20 AM
IEA projections from earlier "outlooks":
http://ronyissar.files.wordpress.com/2011/09/iea-world-oil-projections-2000-2010-mbd.jpg

:lol:

Monsterzuma
Nov 12, 2012, 11:34 AM
Beautiful!

peter grimes
Nov 12, 2012, 11:34 AM
IEA projections from earlier "outlooks":
http://ronyissar.files.wordpress.com/2011/09/iea-world-oil-projections-2000-2010-mbd.jpg

:lol:

How do those projections compare with observed production? Or are you just posting the graph to give us a sense of how much salt to take with their +10mb/d guess?

EDIT:
At Monsterzuma's second link, we have this:
The IEA sees total OPEC output rising to 37.3 million b/d in 2015 from 35.7 million b/d last year

I assume by 'last year' they mean jan2011-dec2011

tokala
Nov 12, 2012, 12:08 PM
Or are you just posting the graph to give us a sense of how much salt to take with their +10mb/d guess?

That was the idea.

From about 2005 world crude oil production was basically flat, depite the exploding oilprice.
http://www.skepticalscience.com/pics/OilProduction.jpg

Those "projections" look awfully as if someone more or less linearly extrapolated the last few year before each "outlook" was published.

Monsterzuma
Nov 13, 2012, 02:37 PM
An American Oil Find That Holds More Than All of OPEC
By ALAN FARNHAM
Nov. 13, 2012
Drillers in Utah and Colorado are poking into a massive shale deposit trying to find a way to unlock oil reserves that are so vast they would swamp OPEC.

A recent report by the U.S. Government Accountability Office estimated that if half of the oil bound up in the rock of the Green River Formation could be recovered it would be "equal to the entire world's proven oil reserves."

Both the GAO and private industry estimate the amount of oil recoverable to be 3 trillion barrels.

"In the past 100 years — in all of human history -- we have consumed 1 trillion barrels of oil. There are several times that much here," said Roger Day, vice president for operations for American Shale Oil (AMSO).

The Green River drilling is beginning as shale mining is booming in the U.S. and a report by the International Energy Agency predicts that the U.S. will become the world's largest oil producer by 2020. That flood of oil can have major implications for the U.S. economy as well as the country's foreign policy which has been based on a growing scarcity of oil.

The IEA report does not detail where the American oil will be coming from, but the largest deposit is the Green River formation which has yet to tapped in any significant way.

This tantalizing bonanza, however, remains just out of reach, at least for now. The cost of extracting the Green River oil at the moment would be higher than what it could be sold for. And there are significant environmental obstacles.

The operation might require so much water it would compete with Denver and agriculture for vital supplies, the GAO report warned, could pollute underground streams, affect fish and other wildlife, and kick up so much dirt it would leave national monuments in a cloud of dust.

http://abcnews.go.com/Business/american-oil-find-holds-oil-opec/story?id=17536852#.UKK7w2_R6-k

peter grimes
Nov 13, 2012, 02:46 PM
See, reports like this just remind me of the way people who are hooked on a drug will fall into a cycle of optimistic expectations when a whiff of 'good news' comes their way.

But the fundamental truth that methamphetamine addiction will lead to an early, ugly, death is ignored. Even despite that truth remaining true whether the validity of the 'good news' is upheld or not.

Kaitzilla
Nov 13, 2012, 04:40 PM
IEA projections from earlier "outlooks":
http://ronyissar.files.wordpress.com/2011/09/iea-world-oil-projections-2000-2010-mbd.jpg

:lol:

This graph is amazing :goodjob:

Monsterzuma
Dec 07, 2012, 04:18 PM
Meadows: I have a neighbor, she's rich. Her electric bill is, let's say, 1 percent of her income. Then comes Hurricane Sandy, and suddenly she had no electricity in her house. Does her quality of life go down by 1 percent? No! Her food is spoiled; she can't turn on her lights; she can't work anymore. It's a disaster for her. Take a look around. The chair you sit on, the glass windows, the lights -- everything is here for one single reason: We enjoy cheap energy.

http://www.spiegel.de/international/world/limits-to-growth-author-dennis-meadows-says-that-crisis-is-approaching-a-871570.html

Monsterzuma
Dec 07, 2012, 04:30 PM
http://ronyissar.files.wordpress.com/2011/09/iea-world-oil-projections-2000-2010-mbd.jpg

is this trend broken with this recent super-optimistic IEA report..? or was it just optimistic toward the USA?

tokala
Dec 08, 2012, 01:14 AM
AFAIK they don't have a global "projection" anymore in the latest report.

The "superoptimistic" part of the report is mostly US, Canada and Iraq from what I've seens so far.

On the global scale this won't make much of a dent, even if turning out correct.

One comment I've seen on the IEA oil projections is claiming that they are/were basically made up by working backwards from a world economy projection, not by building a bottom up account out of the sum of oil production projections of single countries/regions.

A breakdown of an earlier reports:

2008:
http://crudeoilpeak.info/wp-content/uploads/2011/06/DECC_IEA_WEO_2008.jpg

2010:
http://3.bp.blogspot.com/-dJ_Dl-VbR6Y/T1QHMSlDElI/AAAAAAAAAw8/FB5V2MkRoMY/s1600/World+oil+production+by+type+in+the+New+Policies+S cenario.jpg

Note the large fraction of "to be found or developed" oil in the projections, i.e. wishful thinking when taking into account the actual historic development of conventional oil dicoveries:

http://www.inspire-change.info/wp-content/gallery/peak-oil/oil-discoveries.jpg

Monsterzuma
Dec 08, 2012, 05:09 AM
ok, but there is a definition issue inherent to that last graph. I assume shale oil, bitumen and tight oil are not included? or do the discoveries in the 60s in large part consist in unconventional oil findings?

tokala
Dec 08, 2012, 05:28 AM
That last graph is about conventional oil only.

Note that even the notoriously optimistic IEA only assumes a tiny fraction of unconventional oil in the world production for the next decades.

While the amount of unconventional oil in the ground might be much larger than the remaining conventional oil, this doesn't mean it can be extracted economically fast enough to make much of a difference on the global scale.

Unconventional oil will be able to supply high value uses for hydrocarbons for centuries to come, but not the cheap oil glut we were enjoying up to about a decade ago.

Monsterzuma
Jan 08, 2013, 06:06 PM
China blazes trail for 'clean' nuclear power from thorium

Princeling Jiang Mianheng, son of former leader Jiang Zemin, is spearheading a project for China's National Academy of Sciences with a start-up budget of $350m.
He has already recruited 140 PhD scientists, working full-time on thorium power at the Shanghai Institute of Nuclear and Applied Physics. He will have 750 staff by 2015.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9784044/China-blazes-trail-for-clean-nuclear-power-from-thorium.html

WHAM. There it is. The energy abundance game changer.

iLX8jCKL9I4

Mouthwash
Jan 09, 2013, 12:53 AM
It's quite amusing to hear neo-cons claiming that somehow we're not running out of oil, that it isn't a worry at all, and so on, when the neo-con leaders are working their butts off to secure the major sources of oil supply. It all makes perfect sense from a geo-political viewpoint, if you think that they're looking to secure oil. If you don't think that, then what the Bush administration is pursuing is not only stupid, it has no justification, legal, strategic, political, what have you.

Really? How do you arrive at that conclusion? Because from a "geopolitical" standpoint, the invasion of Iraq interestingly made perfect sense.

WindFish
Jan 09, 2013, 09:50 AM
Really? How do you arrive at that conclusion? Because from a "geopolitical" standpoint, the invasion of Iraq interestingly made perfect sense.

Yeah, you're going to have to elaborate on that one.

Mouthwash
Jan 09, 2013, 04:41 PM
Yeah, you're going to have to elaborate on that one.

I don't feel like provided an entire argument right now, but I think there's something extraordinarily stupid about claiming that getting rich off of oil was the only possible reason for invading Iraq.

innonimatu
Jan 09, 2013, 09:18 PM
I don't feel like provided an entire argument right now, but I think there's something extraordinarily stupid about claiming that getting rich off of oil was the only possible reason for invading Iraq.

Yeah, there was also the "neither the saudi not the israeli like Saddam but they're unwilling to fight a war and can't ally openly anyway, let's do it for them" thing.

On the bright side the cost of the damn thing seems to have left the americans unwilling to invade Iran for them.

classical_hero
Jan 10, 2013, 01:22 AM
IMF study: Peak oil could do serious damage to the global economy
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/27/imf-study-peak-oil-could-do-serious-damage-to-the-global-economy/

That's the second major negative report on peak oil coming from the IMF. Peak oil is now firmly in the spotlights in mainstream thinking.

How many times have wee been told that peak oil will come and yet every time we find more oil?

Monsterzuma
Jan 10, 2013, 03:59 AM
How many times have wee been told that peak oil will come and yet every time we find more oil?

never? the higher oil price has just made it economical to exploit resources that were previously out of reach. But the oil price has not come down as a result of increased exploitation despite that the OECD world is an output gap that is not narrowing. Which is why I, and Eric Janszen of itulip.com, have been saying that the real issue is not peak oil but peak cheap oil:

3. Rising prices will make currently uneconomical (unprofitable) oil E&P profitable, such as using nuclear energy to refine shale rock or disill water out of the oil that exists in highly depleted oil fields. As prices rise a wider range of alternative fuels production will become profitable. These will therefore be financed. However, these additions to supply will not increase the liquid fuels supply in excess of demand and lower price because the supply of cheaply located and produced oil will continue to fall and E&P costs will keep rising.

classical_hero
Jan 10, 2013, 04:16 AM
But you never once mentioned cheap oil, but peak oil. There is a difference between the two.

Monsterzuma
Jan 10, 2013, 06:59 AM
the two terms get conflated a lot in the discussion. forgive me if I take a shortcut every one in a while.

Monsterzuma
Jan 16, 2013, 11:18 AM
http://2.bp.blogspot.com/-R7pn4hWPxQQ/UPbQyk79P1I/AAAAAAAAEfs/3JM8doo_F9U/s1600/Screen+shot+2013-01-16+at+8.08.56+AM.png

I noted back in October that there seemed to be something of a pause in the huge oil-drilling boom in the US. Going back to the data again today, it appears that the rig count in the US peaked in the summer of 2012 and has actually been declining since.

Given the very high decline rates of the shale-oil plays that most of these rigs are drilling in, it seems this means that the US oil production increase will also have to slow sharply or stop in 2013/2014. Unless the rig count starts increasing again - it's not clear to me why it stopped, so it's hard to say whether or not the climb will resume.

http://earlywarn.blogspot.com/2013/01/us-oil-rig-count-declining.html

Monsterzuma
Jan 16, 2013, 05:14 PM
http://media.peakprosperity.com/images/OIL-Sweetnam-Graph-2013-580x.jpg

This first chart comes to us from the EIA courtesy of one Mr. Sweetnam, a former director at the EIA who was promptly reassigned to a distant position when his superiors discovered that this chart revealing declines in existing conventional oil fields had been released to the public.

What this graph shows is the projected decline of all known projects in 2009 (so this does not have the U.S. shale 'revolution' baked into it, but I'll get to that shortly), and it shows that those projects are going to slip from delivering 85 million barrels per day (bpd) of crude oil to just 45 million bpd between 2012 and 2030. In other words, 40 million bpd will go missing. But it's worse than that, because demand is expected to grow, leaving a gap of more than 60 million bpd by 2030.

If that sounds like a lot, it is, but that's just an assumed rate of production decline of 4.8% per year, which is right in the midzone of expert estimates. Some estimate decline rates as high as 6.5%, which would really amplify the drop and the resulting gap.

The top line is showing how much oil demand would grow if it was going to expand at the usual historical rates. The gap between those two modeled states is 43 million barrels. To put that in a U.S. shale context, the EIA projects that the domestic shale plays might deliver as much as 3 million barrels per day by 2020, which is nothing to sneeze at, but even with that there's a projected 40 million bpd shortfall.

http://media.peakprosperity.com/images/Global-Crude-Plus-C.jpg

Between 2004 and 2012, the total supply of global crude oil + condensates (a definition which excludes the non-transportation fuels known as natural gas plant liquids and biofuels) has just flopped around in a tight band with only 5% wiggle.

It bears noting here that the 2004 average spot price for crude oil (using the Brent contract, as that better defines the 'world oil' price) was $38.35/bbl, while the average 2012 spot price was $111.63, or 2.9 times higher than the 2004 price.

Despite this near tripling in price, the global supply is just sitting there stuck on a plateau. Economically speaking, this is not supposed to happen. What is supposed to happen is that suppliers will react to these higher prices and deliver more to the market, and then prices will settle down. But that hasn't happened, which indicates that global oil supplies are, as expected, constrained by something other than market forces.

This brings us to the third chart of global spending on oil projects:

http://media.peakprosperity.com/images/Koptis-CapEx-600-billion.jpg

What also happened during the time that global supplies of crude oil were undulating along that 5% plateau? Global expenditures on oil projects jumped by 100% from $300 billion per year to $600 billion. With a 100% increase in capital spending by the petroleum industry, we saw petroleum supplies remain more or less stuck in the exact same spot.

I am of the impression that $600 billion a year is a lot of money and that the people dedicating that capital are applying it to the very best projects available. I make the further assumption that when a project is identified and pursued, it is brought on line as rapidly as possible. There are not that many ways to look at this data other than noting that we are spending more and more to get the same...for now.

If you want to know why oil costs over $110 on the world stage, the last two charts above give you the answer: There's just not that much of it to go around.

Despite all of this effort and expense, the world is basically treading water with respect to overall production. The reason for that is contained in the first chart out of these three: The race is now on to bring new projects on line quickly enough to offset the losses from existing fields.

Petroleum is neither a U.S. issue nor any other specific country's issue, but rather a global commodity of immense importance. While the development of the shale plays in the U.S. is of domestic importance, it has not altered the global dynamic of static oil production – at least not detectably in the global supply charts. Not yet.

http://www.peakprosperity.com/blog/80506/really-really-big-picture

Another thing I'd add to this: prices have stayed high despite that a huge number of developed nations are operating far below their full output capacity. Unemployment and unused capacity should be suppressing the price, but prices are at all time highs. 2012 had the highest annual average for oil prices.

Monsterzuma
Feb 09, 2013, 11:53 AM
http://media.peakprosperity.com/images/Koptis-CapEx-600-billion.jpg

I'm looking at this graph again and... I think this is much less of a big deal than they make it look like. The figures on the y-axis are in nominal billions. Since nominal world GDP is growing at a fairly rapid pace the expenditure as a % of GDP probably didn't go up by all that much.

tokala
Feb 09, 2013, 12:34 PM
Two issues with that.

1. Real world GDP probably didn't grew THAT fast:

http://media.economist.com/sites/default/files/imagecache/full-width/images/2013/01/blogs/graphic-detail/20130119_inc767.png

let's be generous and call it 3.5%, which will equal about 40% over ten years.

2. Where did your graph originate from? This piece (http://press.ihs.com/press-release/energy-power/total-2012-upstream-oil-and-gas-spending-reach-record-level-nearly-13-tri) claims that spending is more like 1.2 trillion in 2012, with a third of that in the US+Canada alone, rapidly rising, not constant like your graph.

Which is entirely in line with what the non-mainstream sources argue (e.g. TOD), that the oil patch is sucking in a rapidly rising amounts of capital, and barely manages to keep overall production in a slow increase.

Does your graph exclude operating costs?
All those alledgedly "new and improved technology" (fracking, tar sand mining, deep sea offshore) has the nasty side effect of involving huge operating costs compared to the conventional operations.

Monsterzuma
Feb 09, 2013, 12:59 PM
let's be generous and call it 3.5%, which will equal about 40% over ten years.

That's just Real GDP, so you'd have to add about 3% of inflation to it to get the nominal figure.

2. Where did your graph originate from?

http://www.peakprosperity.com/blog/80506/really-really-big-picture