Peak Oil – now for the downslope

Guest post by David Archibald

When I posted on peak oil’s effect on agricultural costs and food security, some comments questioned the idea of peak oil. What follows is a summary of the subject. We will start with what is considered to be the most successful economic forecast ever made – the prediction in March 1956 by King Hubbert of the Shell Oil Company that US oil production would peak in 1970. This was in a paper entitled “Nuclear Energy and the Fossil Fuels” presented at the Spring meeting of the American Petroleum Institute in San Antonio, Texas. The paper’s title reflects Hubbert’s view that nuclear power would have to replace fossil fuels on the latter’s exhaustion. The view hasn’t changed, but the replacement need has become urgent.

archibald_oildown_fig1

Figure 1: Logistic Decline Plot for the United States

Source: Al-Husseini 2006

Figure 1 shows the basis for Hubbert’s prediction. This is a logistic decline plot of annual production divided by cumulative production to that year against cumulative production. His original analysis anticipated that Lower 48 crude production would peak at 2.8 -3.0 billion barrels between 1966 and 1971 and then enter an irreversible decline. Production in the lower 48 actually peaked at 3.4 billion barrels in 1970. Under Hubbert’s original forecast of ultimate potential of 200 billion barrels in his 1965 assessment, 1991 crude oil output was projected to be 1.9 billion barrels. Actual 1991 production was, in fact, 2.0 billion barrels – a modest variation from Hubbert’s prediction made 35 years earlier (Smith and Lidsky 1993).

archibald_oildown_fig2

Figure 2: Logistic growth curve for US crude oil production

This figure is from Nashawi et. al. 2010. The blue line is the modeled projection to 2070. The purple line is cumulative production to 2008. The US has burnt through 84% of its original oil endowment.

archibald_oildown_fig3

Figure 3: World oil discovery by year

Source: Al-Husseini 2006

Figure 3 shows that oil discovery peaked fifty years ago in the early 1960s. Based on the well-established trend, not much hope can be held for positive departure from the forecast discovery profile.

Having shown how powerful Hubbert-style analysis is forecasting production, let’s go on to look at what the global oil production profile looks like.

archibald_oildown_fig4

Figure 4: Logistic Decline Plot for Global Oil Production

As Figure 4 shows, the world had consumed half of its original oil endowment by 2005. 2005 was the year that global oil production peaked. According to Hubbert theory, we will have a few years of near-peak production before the steep decline down the right hand side of the bell-shaped curve begins.

archibald_oildown_fig5

Figure 5: A 2004 estimate of the Global Oil Production Decline

Source of figure: Al-Husseini 2006

I have included Figure 5 because it covers a 120 year span and it has been accurate for production over the last seven years since it was published.

archibald_oildown_fig6

Figure 6: World Oil Production 1965 – 2030

This is another way of looking at the coming decline which will be 1.5 million barrels/day/year. The decline will go on for about three decades at that rate before flattening out.

archibald_oildown_fig7

Figure 7: Logistic growth curve for Non-Opec oil production

Source: Nashawi et. al. 2010

Discussion of oil prices and the tightening oil market tends to concentrate on just how much spare capacity Saudi Arabia has. As Figure 7 shows, whatever swing capacity Saudi Arabia has will soon be overtaken by events. The big story is Non-Opec production, which will almost halve by the end of this decade.

archibald_oildown_fig8

Figure 8: Oil price 1990 – 2016

Modelling the oil price in a tightening market is difficult because of the dampening effect on consumption of the increasing price. Plotted logarithmically, the oil price chart itself may reflect that effect and thus might be used as a predictive tool. What it shows is that the oil price is constrained by a parallel uptrend channel rising at 15.6% per annum. The current UK retail price for gasoline is indicated on the chart to show that civilisation, of a sort, can continue at very high oil prices.

archibald_oildown_table1

Table 1: Oil price forecast by year and the concomitant effect on agricultural operating costs.

Table 1 shows how the oil price rise derived from the established trend in Figure 8 translates through to price per US gallon and agricultural operating costs relative to the 2009 level. There will be a severe departure from what Michelle Bachman has promised to achieve.

archibald_oildown_fig9

Figure 9: Energy-related inputs relative to total operating expenses, 2007-08 average

From: Sands and Westcott 2011

Based on the USDA figures and recalculating for the $200 per barrel oil price expected in 2014, wheat and corn operating costs will be 60% higher in 2014.

In 2009, the Chief Economist of the International Energy Agency, Fatih Birol, said that “we have to leave oil before oil leaves us.” Only one country is doing that, and of course it is the same country that is proceeding to commercialise the molten salt, thorium-burning nuclear reactor – China.

archibald_oildown_fig10

Figure 10: Chinese oil production, imports and coal-to-liquids production

This figure shows Chinese domestic oil production, imports and a projection of coal-to-liquids production assuming that demand follows its established trajectory.

China currently has three Fischer-Tropsch coal-to-liquids (CTL) plants and one liquefaction plant commissioned with a further three Fischer-Tropsch plants under construction. Total planned production from those seven plants is in excess of 600,000 BOPD. A journal earlier this year reported that “Chinese CTL investors will pay active efforts in preliminary works for mega size CTL projects starting from 2011 and may realise commissioning of such projects before the year 2015”. By comparison, in the United States, Section 526 of the Energy Security and Independence Act of 2007 blocks the Department of Defense from using CTL fuels because the life cycle greenhouse gas (GHG) emissions from those fuels would be much larger than the GHG emissions from conventional petroleum.

The economic effect of continuously rising oil prices will be to continuously cause economic contraction.

Table 2: Compilation of studies on the Oil Price – US GDP Effect

Source: Sauter and Awerbuch 2003

At the 1.5% average estimate of growth decrease per 10% oil price increase, the 15.6% per annum oil price rise expected over the next few years will shrink the US economy at 2.2% per annum. The fastest way to reduce this effect would be to install CTL capacity in the US. To replace all of the US’ oil imports with home-grown CTL would take more coal than is currently burnt in US power stations. It follows that what is also needed is a good, safe nuclear technology to replace coal in power generation, bearing out Hubbert’s observation of fifty-five years ago.

References

Al-Husseini, M., The Debate over Hubbert’s Peak: a review”, GeoArabia, Vol. 11, No. 2, 2006

Nashawi, I.S,, Malallah, A. and Al Bisharah, M., Forecasting World Crude Oil Production Using Multicyclic Hubbert Model, Energy Fuels, American Chemical Society 2010

Smith, A.L. and Lidsky, B.J., 1993, King Hubbert’s analysis revisited: Update of the

Lower 48 oil and gas resource base, The Leading Edge, November 1993

Sands, R. and Westcott, P., Impacts of Higher Energy Prices on Agriculture and Rural Economies, United States Department of Agriculture, Economic Research Report Number 123, 2011

Sauter, R. and Awerbuch, S., Oil Price Volatility and Economic Activity: A Survey and Literature Review, IEA Research Paper, August 2003.

October 2011

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221 Responses to Peak Oil – now for the downslope

  1. Madman2001 says:

    Goodness. But you forget about peak phosphorus, peak rare earth metals. peak uranium, peak gas, and peak coal.

    We’re doooooomed. Alvin Toffler was right. It’s worse than we thought!

  2. JohnB says:

    George Will delivered an interesting and often forgotten history lesson on Oil in a column at the end of 2009. http://www.thedailybeast.com/newsweek/2010/10/11/will-the-energy-future-will-look-familiar.html

    “Herewith a recapitulation of the recalculations: In 1914, the Bureau of Mines said U.S. oil reserves would be exhausted by 1924. In 1939, the Interior Department said the world’s petroleum reserves would last 13 years. Oil fueled a global war and the postwar boom, and in 1951 Interior said the world had … 13 years of proven reserves. In 1970, proven reserves were estimated at 612 billion barrels. By 2006, more than 767 billion barrels had been pumped and proven reserves were 1.2 trillion. In 1977, Jimmy Carter said mankind could “use up” all the world’s proven reserves “by the end of the next decade.” Since then, the world has consumed three times more oil than was in the proven reserves. Today, shale rock formations in Texas and Louisiana; Montana and North Dakota; and New York, Pennsylvania, and other Eastern states may contain 2,000 trillion cubic feet of clean-burning natural gas.”

    We’ve regularly failed to predict the demise of oil in the past and increasingly have improved our ability to access it through sound engineering and good science in spite of the predictions of doom that our supply would end 10 years into the future.

  3. Robert in Calgary says:

    “….but the replacement need has become urgent.”

    Another planetary crisis? Sorry, no sale.

  4. Roger Sowell says:

    And now, for the realist viewpoint.

    Peak Oil is not a problem, and has never been a problem despite numerous predictions of its impending occurrence. The reason is that the model that is used to forecast peak oil is false; it is wrong. To paraphrase one of the US’s most brilliant scientists, the late Dr. Richard Feynman, when the predictions are wrong, you must get a new model. Dr. Feynman won the Nobel prize in physics for is work in QED, quantum electro-dynamics.

    World oil demand is decreasing, oil supply is increasing, and there are far more options today for oil use than there were 30 years ago. .

    http://sowellslawblog.blogspot.com/2011/04/speech-on-peak-oil-and-us-energy-policy.html

  5. Ed Mertin says:

    Best of luck out to Westport Innovations on development of LNG heavyweight truck engines. Though I have to wonder about upper cylinder lubrication. Even with diesel there is a need for improvement. Sure would take some of the pressures off petroleum usage.

  6. Stuart Lynne says:

    Why is it that all of the predictions seem to place the 50% peak within a few years of the of the publishing date?

  7. rbateman says:

    Does China have any of these molten salt/thorium-burning reactors online?
    Does anyone else have any of these new reactors online?
    It would be good to see the results.

  8. Zorro says:

    The naysayers who are sure to turn up had better watch this.

    http://www.abc.net.au/catalyst/stories/3201781.htm

    And yes I am heavily invested in oil.

  9. Gasguy says:

    Never commented here but know a fair amount about energy markets. Clearly higher prices unlock more resource potential (Canada’s oil sands are notoriously forgotten in peak oil arguments). However new technology is changing the energy landscape. Looking no further than North American natural gas prices which are near decade lows due to over production with no end to production increases at any higher price. All the same peak arguments were applied. A host of LNG import facilities were constructed to deal with the upcoming crisis; these now sit idle and are begging the government to let them export.

    Technology driving shale gas exploration is open to a generation of enterprising geoscientists; already shale oil production is causing growth in US oil production which was thought impossible by many experts just three years ago.

    Shale gas and oil have global implications. Don’t worry about a shortage of those anytime soon – we are only four years into a multi-decade global resource play. I can’t say the same about many metals however.

  10. The author might want to review information that is a little more timely then decade old data. The state of North Dakota has seen its oil production increase by over 100% since January 2009. When it produced 187,733 barrels of oil per day for the Month of January, to 444,142 barrels a day as of August 2011.

    https://www.dmr.nd.gov/oilgas/stats/historicaloilprodstats.pdf

    The take off capacity for the region is expected to increase from 350,000 barrels a day currently, to about 1.3 million barrels of oil by 2015’ish. This is on top of the ramp up in EagleFord in Texas which is coming online faster then capacity is to take it to market.

    The US has produced more oil every year, for the last three years. It will most likely see 2 million barrels of unconventional oil production coming on line on shore in the next 5 years. The multi stage hydro-fracking of horizontal legs is going to revolutionize the oil industry on shore again.

    The US could be the largest producer of oil again by 2020, if it continues to develop source rock, the way it has over the last few years.

  11. Pingo says:

    We’ll naturally use less oil when shale gas is widely liberated. I wonder what Hubbert style analysis into Peak Stone would have shown? :D

  12. Ben says:

    While Hydrocarbon energy is being drawn down – Perhaps the Age of GeoThermal is dawning, per the earlier Google Maps topic.

    By the way, if I recall correctly, it mentioned “basement granite” as a prime area to tap for energy. Looked for information about it without success. Anyone have a link to some information about what kind of technology they are using to tap energy from “basement granite?” Also wondering if there are maps that detail better where those sites are located. The article mentioned Northern Illinois as one area, but that doesn’t narrow things down very much.

  13. peterhodges says:

    Well peak oil theory is about as effective at predicting the future as climate science. The primary problem being they keep finding more oil, and production continues to increase. Just recently there was a great article in the WSJ:

    http://online.wsj.com/article/SB10001424053111904060604576572552998674340.html

    Virtually all of Archibald’s analysis above can be interpreted as a problem of economics, not of oil.

    U.S. production declined because it has been cheaper to get it elsewhere, not because we are running out of oil

    Oil gets more expensive because the Fed prints more dollars.

    Oil gets more expensive because cartels control the prospecting, production, refining, distribution, and the so called “market”, which itself is really just a scam where speculators (i.e. bankers and oilmen) drive up the cost while selling it back and forth to themselves…while they make more money betting on all the fake derivative products.

    And speaking of the Fed creating more dollars, that’s the real problem you should be worried about: PEAK DEBT.

    Our debt money system is designed to fail, and fail it will. Google “money as debt” if you don’t know what debt money is.

  14. Ken Methven says:

    Apart from China, where is the global demand curve against global production?

    We can all see that price is likely to rise, give us some idea about when and how much….

    …and we already knew..”its wose than we thought”….

  15. Ken Methven says:

    ….and a very good post David. I appreciate the education.

  16. Bob in Castlemaine says:

    Meanwhile Western governments worry about the sky falling.
    How is LNG likely to figure as a future a transport fuel, it seems there should be a considerable amount of it around for a few years.

  17. temp says:

    Peak oil can only happen when we hit peak government… IE the government blocks any future drilling. The reality is the US has more then enough known oil supplies to last a good 100 years and thats including the current rate of growth… add in the fact that the US has not only banned drilling in something like 30-40% of the US… it has even banned LOOKING FOR OIL in 10-30% of the US and some of those bans have been around for 40+ years. I believe the CA banned that blocked both looking and drilling of oil has been around since the 1960s.

    Another favorite myth is the “peak CHEAP oil” myth. This myth is basically saying sure we’ll have lots of oil but at $200 dollars a barrel… this myth is also solely based on the government adding $140-$160 of cost onto said barrel of oil.

    Peak oil is a complete myth outside of the government banning oil/restricting it to the point of a ban.

    One can look at any country where socialism takes hold and see production steady drop… a great case study is mexico where they’re oil production has plateaued not because they’ve run out of oil but because they refuse to reinvest in they’re oil company and thus its failing apart and not exporting for more oil.

    This is much the same in the US where the government and the handful of big oil companies have both locked out all oil companies and have basically prevent small oil companies from competing with the big names.

    I have no doubt that as socialism expands and gets more and more a grip on the US that oil production will drop like a rock… this until your arguments has been proven time and time again throughout history.

  18. Here is a link to NG production in the US

    In the case of EagleFord, the production is considered a wet or liquid NG well due to the extremely high API and sweetness they are seeing. This condensate liquid is mixed with heavy sour crudes to generate a WTI equivalent product.

    http://www.rrc.state.tx.us/data/production/ogismcon.pdf

    Check the ramp up of NG production in Texas from 2005 – 2011. The US as a whole is increasing its NG production profile. In fact it has increased its production to the point the US is now the largest producer of Natural Gas in world.

    Here is a link to U.S. Natural Gas Gross Withdrawals (Million Cubic Feet) data for the first link. Check out the ramp up in production that is visible. The US is suffering from a glut of NG, and in 5 years it will have a glut of oil.

    http://www.eia.gov/dnav/ng/hist/n9010us2A.htm

    I mean no disrespect, but the data is clearly showing that the world has multi generational supplies of UN-conventional sources, which have barely been tapped into. These unconventional wells are going to change the US and the global energy dynamics significantly.

    The US is poised to be exporting LNG in 2015, instead of being the estimated largest importer of LNG in 2015 per the models of 2005.

    The amount of oil and sweet natural gas liquids that are being unlocked is more then the current infrastructure (pipelines, rail, truck) can get it to market. Here is a link to a brand new industry of barging crude. The number of barges has grown by 10x in the last 10 years or so.

    “…Between 140 and 150 barges industrywide are currently
    carrying crude oil, more than 10 times the number in operation
    ten years ago, Joe Pyne, Kirby’s chairman and chief
    executive officer told analysts during the company’s thirdquarter
    conference call on Thursday.
    “We used to be able to count on less than two hands the
    number of crude barges,” said Joe Pyne, head of Kirby.”

    https://customers.reuters.com/community/newsletters/oil/InsideOil20111028.pdf

    The supply of unconventional energy is going to erase the Hubbard Peak Model’s usefulness. Yes it worked great on conventional production. Its shattered by the unlocking of source rock.

    Best Regards,

    Jack H Barnes Jr.

  19. Governments should stop meddling with energy supply and let the free markets decide.

  20. I respect David’s knowledge but as with the past forecasts there are many things left out such as occured with Australia’s iron ore resources in the early 1950’s when exports were banned because the then wisdom that resources were limited (now Australia is the largest exporter in the world, with vast unexploited resources too far from the coast for export at present prices and demand). With respect to oil, the considerable areas of Russia, central & southern Africa, Asian Pacific area and Antarctic circle area (eg Falklands ) under explored and under exploited. There are also vast resources of oil/gas shale. Australia has huge reserves some of which were tested in the 1980’s but proved to be uneconomical at oil prices below $60/barrel (these would be economical now if the greens would not have a hold on politics.) As David has mentioned coal to liquids is an option at present oil prices and plants are being installed in China and India. Western and Arabian oil companies are of course not interested in coal conversion. They burnt their fingers in the 1980’s with coal mines (BP, Shell, Amocco, Total, AGIP etc) in which they have no expertise. The oil companies have been financing the greens to raise the carbon dioxide spectre so the can continue to control the energy business through a shift to supposedly more greenhouse friendly methane (but in fact more greenhouse gas emission than coal), geothermal, & solar. The oil companies also do not like the move to nuclear particular thorium of which there are vast reserves. The possibility of a small Thorium reactor in a railway engine scares the oil companies and the greens.

  21. Dave Springer says:

    The U.S. has trillions of barrels in oil shale and trillions more equivalents natural gas and coal.

    I thought pretty much everyone knew it was a strategic decision to drain the light sweet crude reserves of any foreign countries willing to sell it to us for as long as they’re willing to sell it to us at prices we can afford. When it’s gone guess who, with probably half the world’s known oil shale, is left holding all the marbles?

    Oil shale is economical to produce well under $100/bbl which is why OPEC walks a thin line once they get up in that ballpark with light sweet crude. It would take us ten years to ramp up production of oil shale in the grossly vast deposits in Wyoming and Colorado but persistent $100+ imports would inspire it. OPEC can screw with us by letting LSC get to $140/bbl for a few months or a year but know very well we’d balk and replace them before that lasted very long at all. Hence it didn’t last very long.

    Rick Perry wants to revive the US economy by unleashing fossil fuel recovery in this country putting a couple million people to work in good high paying jobs in the energy sector and simultaneously stabilizing for the forseeable future oil at $60/bbl produced domestically from oil shale.

    It’s doable. Everyone knows it. Politics is all that stops it.

  22. Joe Prins says:

    David should start a surfacestation project for peak oil calculations. First, looking at reserves, nobody is honest in their estimates. BP is not going to announce to Shell that they have x-amount of reserves but fail to mention that it is not recoverable. Recoverable middle east oil is at best a wild guess amount. Not even Russia knows how much recoverable oil they have due to old equipment and old extraction techniques. And this is just for conventional oil. Unconventional, shale oil and the tar sands in Alberta and Saskatchewan add to the mix. It was only recently that the UN recognized the recovery of oil from Canadian oil (tar) sands. Never mind Venezuala. One needs to include demographics into the equation of use. Most developed nations are seeing a population decline in the coming decades. The only reason North America is somewhat less affected is through immigration. Because of the one child policy in China it is highly likely that that country’s population will decline starting about 2060. Large sections of the globe have not been explored due to environmental ( read government) constrains. A very large proportion of the under- and undeveloped world will not be able to afford $ 200.00 per barrel oil. This would severely restrict the use of oil products in all forms for those affected. Finally, if Germany during the Second World War could convert coal to oil products, and China is doing it now, could that really abundant resource worldwide not be used for that purpose?

  23. BCBill says:

    And don’t forget gas hydrates (http://en.wikipedia.org/wiki/Methane_clathrate). There are some technical problems related to exploiting them but so far it doesn’t seem as if chopping up bats and birds will be required. Potentially enough fuel to give us a few hundred years to transition from hydrocarbon fuels.

  24. Logan in AZ says:

    The 28th of October is E-Cat day. If it works as expected, the remarks here, and much else besides, will no longer have any relevance.

    http://peswiki.com/index.php/News:October_28%2C_2011_Test_of_the_One_Megawatt_E-Cat

    And, then other radical energy concepts will finally get a fair hearing.

  25. Dave Springer says:

    cementafriend

    There are currently insurmountable engineering difficulties with thorium reactors. There just aren’t any known materials that can simultenously resist both embrittlement from exposure to high level of radiactivity and corrosion from molten salts. There are materials that can do one or the other but not both. Such material is required for the plumbing in LFTR (liquid flourine thorium reactor) which is what all the usual pie-in-the-sky suspects are raving about. Without suitable long lasting materials to construct pipes and valves and pumps with the replacement intervals and maintenance costs make it economically impractical for commercial use. Embrittlement alone makes operating conventional nukes at a profit a dicey affair which can be easily ruined by competition from cost improvements in natural gas or coal fired plants.

  26. Thomas U. says:

    I agree wholeheartedly with all who are not buying this “peak oil” idea. Reasons are given not only by Joe Prins, whose suggestion of a “surface stations project” for oil points in the right direction: At present there is no valid, independent source of information in these matters. All figures given by the players in the business are to be treated with caution. There is nobody in the whole industry who gains anything by announcing higher reserves, but all gain tremendously when playing the “we-run-out-of-oil” tune… This industry is not operating in a market, because the players have cornered it and thus transformed it into an oligopol. For it to behave like a market, the industry would have to be restructured: Exploration, extraction, refining, transport and last not least selling through gas stations – each of these steps would have to be organised as a competitive market.
    I agree with peterhodges concerning “peak debt”, and assume we will see it here in continental €urope faster than you. The mismanagement of our “experts” might even help you to solve (or ease) your difficulties.

  27. john douglas says:

    Logan in AZ BEAT ME TO IT..

  28. I’m suspicious of the peak oil calculations as they all assume conventional oil production. I’d like to see what happens to the peak-oil calculations when one factors in Alberta’s oil sands, which are currently rapidly expanding and US oil shale. As others have mentioned methane clathrates are currently almost unexploited and represent a vast energy source.

    Right now in Canada, the political climate is favorable for the next 4 years so that Alberta’s oil sands can expand dramatically. Whether this oil gets exported to the US or China depends on how receptive the US government is to “ethical oil” (to use Ezra Levant’s terminology for oil sands crude). In online discussions on other sites I’ve been told by people working in the oil industry that natural gas is so cheap now that there isn’t even a theoretical interest in constructing nuclear reactors in Northern Alberta to provide the heat necessary in extraction of bitumen from the oil sands.

    In the long run we need a large scale nuclear reactor construction program. I’d far rather see money being spent on this than constructing bird-blenders that produce only a tiny fraction of their rated power output and serve primarily to create environmental disruption and destabilize the electrical grid. Where I live in British Columbia, the provincial government has decreed that no new hydroelectric projects will be built which is utter insanity. Hydroelectric power is a true renewable resource and water falling down a gravitational gradient has a far higher energy density than an intermittently flowing gas. Guess what choice for energy production the moonbats in power in BC have decided upon. Hint: BC is one of the few places on the continent that has a carbon tax.

    What I’d be interested in seeing is peak oil calculations done with and without the effects of watermelon policies which restrict both oil exploration and production in very large portions of N. America. Given the ubiquity of gasoline fueled vehicles around the world, likely it would prove cheaper in the long run to use nuclear power to produce synthetic gasoline rather than try to switch to electric vehicles. Until batteries with much higher energy densities are available, and not requiring rare elements for their construction, electric vehicles will just be a novelty reserved for the rich (aside from the ubiquitous golf-cart in some retirement communities in the southern US).

  29. John Marshall says:

    Much oil in the US remains in the ground due to state laws preventing extraction. Due to this these reserves are not counted in the reserve total but remain a resource only. Same in the UK. the discovery of shale gas resources reduced fears of cold winter homes till the government stopped fracking because of earthquake fears (actually the same as a heavy lorry passing 50 ft away at 40mph- not actually earth shattering) so no gas available.

    The stupidity of governments never ceases to amaze me.

  30. Andrew McRae says:

    The oil optimists commenting here should remember one important logical and practical conclusion:
    There is a world of difference between saying that peak oil has not happened versus saying peak oil will never happen. Peak oil is inevitable due to both physical and economic limits. The only question is when. Once you have rejoined the sane by recognising oil production will cease at some future date, you might have a hope of using real evidence to put an actual use-by-date on your optimism – because there is one (irrespective of our ability to predict it).

    When both ASPO and the IEA and everyone else who has investigated the numbers are all telling you that peak oil occurred in 2008 and that global production will go into decline within a few years, it is time to stop denying that the earth is a finite sized object and start figuring out how we can maintain the highest standard of living possible with only a tenth of today’s oil production.

    Biofuel as a liquid from algae or crops is a total waste of time, space, and energy, not only for the fact it competes with food production for arable land, but because the rate-determining step in photosynthesis is less than 1% efficient. Biogas (methane) is a potential maybe based on current landfill trials.

    Oil is wasted on stationary power production. I’d say the same for natural gas. For the electricity grid there are several alternatives, some of which are sustainable at any high scale (concentrated solar with energy storage), some of which are sustainable only at lower volumes than would be required for current demand (eg photovoltaic), and some of which are totally unsustainable at any scale in the longer term (100+ years) for the same reason as oil (eg nuclear reactors consume fuels too).
    Wind power is a joke, but may be of some supplementary help in isolated residential settlements.
    Of course neither PV nor concentrated solar power can deliver totally reliable power, which disrupts both industrial output volume and schedule but does not prevent current industry from continuing on a more stochastic output curve.

    For land transport we may postpone the inevitable by converting most existing cars and trucks to LNG at the expense of luggage space. Peak gas will happen at some date much further in the future than oil. The electric car is practically still in the shop, not quite ready for prime time, especially when the resulting doubling in electricity demand is considered. Electric trains and trams are superb ideas, though converting one lane of every highway to a train line is going to be expensive.
    For aviation there is presently no substitute for kerosene, though of course R&D continues on both battery technology and artificial carbohydrate fuel production processes.

    The sooner the world starts seriously contemplating solutions to the inevitable decline in oil the sooner these solutions will reach a level of efficiency and maturity that can help us take the edge off the societal unpleasantness that is going to happen (around 2018) when for the first time ever global oil supply cannot meet global demand.
    Life will go on, somehow, just not with oil.

  31. David Archibald says:

    Jack H Barnes says:
    October 27, 2011 at 11:04 pm
    That’s a useful site. Let’s go data mining. In August 2003, 3, 188 wells in North Dakota were producing an average of 25 BOPD. In September 2006, 3412 well were producing an average of 33 BOPD. In the last month of data, 5702 wells were producing an average of 78 BOPD. The extra 2,290 wells in five years are averaging 144 BOPD. Bakken wells have very steep decline rates and are down to about 15% of the initial production rate by year three. To produce 1,300,000 BOPD by 2015 at the current rate of 78 BOPD requires 16,700 producing wells. So we need another 10,000 wells in four years. Not physically impossible if there are enough drilling locations left. It would require a four fold increase in the current drilling rate. In the meantime, conventional US oil production, falling at 150,000 BOPD/year, will have fallen 600,000 BOPD.
    In February this year, Marathon Oil reported that it was completing Bakken wells for $6.0 million with an initial production rate of 300 to 500 BOE per day and an estimated ultimate recovery of 350,000 BOE per well. That is a capital cost of $17 per BOE (which includes gas). Bakken wells are down to 5% of the initial flow rate at year 10. With an average initial flow of 400 BOPD, that is 20 BOPD by year 10, which is very close to the average of what all North Dakota wells were producing in 2003. If we wanted to produce 1,300,000 BOPD at 20 BOPD per well sometime next decade perhaps, that would require 65,000 producing wells.

  32. Knut Witberg says:

    I do not see any Table 2. I believe it has fallen out of the text,

  33. Bulldust says:

    Technological change and substitution… I am sure Hubbert was a good geoscientist, but he was a lousy economist. The market mechnisms cited will take care of this non-issue. I really don’t think much elaboration is necessary, no?

  34. DirkH says:

    What I never liked about the “logistic decline” plots is that one variable – Q – occurs in both axis, and Q – cumulative production – is dependant on P (being P’s integral). Using a 2D plot to show one variable over a value derived from that one variable sounds so wrong.

    Imagine that P – production – stays constant – say at 1 – , and Q is the integral of this constant function so it just goes up linearly over time.

    The logistic decline plot will in that case take the shape of a hyperbel: y = 1/x.

    And when you look at fig 1, it has a certain similarity to a hyperbel. A lot of data points on the left are far above the trend line. Without the newest data points, the trend line would have been steeper…

    So, it would be interesting to compute a hyperboloid trend instead of a linear trend for fig. 1. I’m not saying that the resulting hyperbel will have a horicontal asymptote; but it would match the data better, and maybe allow better projections. (Or alternatively, just use P over time; the “logistic decline plot” is IMHO more of a tool to frighten the chicken than one that shows data in a clear way)

  35. jim hogg says:

    People believe what they want to believe – even the most brilliant. With all of the conflicting, so called “expert” reports on peak oil, and much else besides, I don’t think it’s possible for the objective layman to know what to believe. But as Dylan said, “there’s a slow train comin'”. Reality will bring it all home to us one day. I suspect that before we’re troubled by warmist projected sea level rises we’ll be well embroiled in very nasty resource wars.

  36. PaulR says:

    This post is yet another exercise in projecting a trend in a straight line, assuming that nothing changes. That trend line created by dividing by cumulative production is guaranteed to make a downward sloping line in all possible production scenarios, it is statistically meaningless. Try extracting any physical meaning from dividing the speed at which you walk by the cumulative distance you have walked. Its nonsense.

  37. Dave Baker says:

    Gasguy rightly says that higher prices unlock resource potential.
    As an example look at what’s happening off the Falkland Islands right now. Explored by the major oil companies around 20 years ago, they abandoned the area, despite good oil shows, as uneconomic at the contemporary oil price. Now the small exploration companies that picked up the licenses have made discoveries that suggest a whole new oil province possibly as large as the North Sea (or larger). The current oil price makes the ongoing exploration and potential extraction eminently economic.

  38. paul says:

    predicting future oil reserves cant be an exact science
    but calculating what we have used is

    Its approximately 216 cubic kilometers

    Thats a cube thats 6 kilometres long/wide/high
    Thats all , if it was all in front of you you could see it all
    and given that everyone who currently wants to buy some petroleum/gas
    gets some ,I do not think we are going to run out soon

  39. The truth? It’s a finite resource. It will run out at some day in the future. And the years approaching that time will be some frikkin’ ugly. Then we will adapt.

  40. William says:

    A liquid fluorine thorium reactor may not be a practical design.

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

    Canada has commercially available third generation advanced heavy water reactor design that can consume either slightly enriched uranium or thorium.
    Thorium is roughly four times as abundant as uranium and does not produce significant amounts of plutonium.

    India is a developing a commercial heavy water thorium reactor (the hydrogen in heavy water, deuterium has an extra neutron).

    http://www.barc.ernet.in/publication…chapter1/1.pdf

    http://www.theregister.co.uk/2011/02…a_thorium_bet/

  41. JohnL says:

    Peak oil claims to be about science (geology and math). It’s actually about economics. If you use discounted cash flow analysis you would never invest in discovery of a resource you couldn’t sell for 20 years. In 1970 some bright lights discovered we only had 20 years of oil reserves. But it was because we had slowed discovery because we had enough. Today we have 40. It was just over a decade ago that oil went below $10 and was predicted to go to $5.
    The great failing of the Hubbert model and its successors is that they are extrapolations of the status quo without consideration of the interactive nature of supply and demand.

  42. Dave Springer says: October 27, 2011 at 11:37 pm

    The U.S. has trillions of barrels in oil shale and trillions more equivalents natural gas and coal. I thought pretty much everyone knew it was a strategic decision to drain the light sweet crude reserves of any foreign countries willing to sell it to us for as long as they’re willing to sell it to us at prices we can afford…

    Thanks Dave. That looks credible. Like to do an article for WUWT???

    Dave Springer says: October 27, 2011 at 11:57 pm

    There are currently insurmountable engineering difficulties with thorium reactors. There just aren’t any known materials that can simultenously resist both embrittlement from exposure to high level of radiactivity and corrosion from molten salts…

    Again, Dave, many thanks. But I would like clarification (another article???) because I’d understood that the US did have a thorium reactor running for a considerable time, so that thorium was of proven feasibility.

    Look forward a lot to replies on both fronts. Dave that’s a double thumbs-up.

  43. cedarhill says:

    Discussions about oil production are intellectually stimulating due mostly to the complex interaction of Western governments continual suppression of oil and coal production. Go read this review from Chu’s Department of Energy for 2011:

    http://205.254.135.24/forecasts/ieo/index.cfm

    And check out the charts by clicking the “read more”.

    There are some things to note about the DOE report:
    1. Chu is 100% nut-case greenie so the “reference case” of renewables is questionable at best and laughable in reality.
    2. But even as green as the DOE is, the “liquids” projections continue to increase through 2035.
    Which means the issue is not “peak” oil but global energy production to meet global consumption. DOE touches on the underlying issue in that energy prices serve as a governor on GDP. That is if one trashes the “core CPI” fiction and uses the real economy.

    Energy should be a large part of your investments. You have artificially forced decrease in supply and almost unlimited growth in demand (think about the African that would really like an electric pump to obtain fresh water).

    Peak oil is interesting but only as a footnote as the world continues to search for it’s peak energy consumption.

  44. William says:

    For those who have not noticed Canada is now constructed a LNG (Liquefied natural gas) export terminal at its West Coast to export natural gas. A few years ago Canada was planning to construct a port at the same location on its West coast to inport LNG. What changed? The discovery of massive reserves of deep earth CH4. North America suddenly has a massive surplus of “natural gas”. Why?

    Saudi Arabia has 25% of the planet’s oil reserves half of which is contained in only eight fields. Half of Saudi Arabia production comes from a single field the Ghawar. Again why?

    As most are aware a large mars sized object struck the earth roughly 500 millions after the formation of the solar system. The impact formed the moon and stripped the planet’s mantel of most of the volatile lighter elements. As 70% of the planet’s surface is covered by water a natural question to ask is: Where did the water come from, as the earth’s mantle contains almost no water or hydrocarbon?

    Also interesting is the recent discovery that the solar wind strips water vapour from the earth atmosphere. If one does a basic calculation it indicates there should be no water left on the planet particular as the solar wind of the sun was significantly stronger when the sun was younger.

    There are two theories to explain how water and hydrocarbons came onto the earth: the late veneer theory and the deep CH4 theory. The late veneer theory hypothesizes that comets struck the early earth after the big splat event covering the very hot earth with hydrocarbons. There are multiple problems with that hypothesis (See Thomas Gold’s Book Deep Hot Biosphere for details. One of the key problems is the observation that the percentage of gaseous isotopes in the earth’s atmosphere does not match that of comets (Comets are residues of the early solar systems. The comet elemental composition does match that of the sun). The late veneer theory’s explanation for the miss match of isotopes in the earth’s atmosphere to that of comets is that the early solar system had a close encounter with another solar system which temporary provided a limited source of comets to cover the earth but not significantly change the element composition of the sun.

    The second hypothesis is the deep earth hydrocarbon theory. This theory hypothesizes that massive amounts of hydrocarbons (5% of the total core mass) are located in the earth’s core. As the core cools these hydrocarbon (CH4) are released. At very high pressures the CH4 forms longer chain molecules.

    The release of CH4 is still occurring as the upper surface of the ocean is saturated with CH4 which indicates that CH4 is being released from some source.

    The next question is could the deep earth CH4 also be the source of liquid hydrocarbon? I will leave that one for a different comment. Why does “heavy oil” have high sulfur and heavy metals in it? Where do the heavy metals come from? What is the source for the Alberta massive heavy oil field?

    See Carnegie Institute of Sciences Deep Carbon Workshop presentations if you interested in this subject.

    https://www.gl.ciw.edu/workshops/sloan_deep_carbon_workshop_may_2008

    This is also interesting.

    http://www.sciencedaily.com/releases/2009/09/090910084259.htm

    http://www.nature.com/ngeo/journal/v2/n8/abs/ngeo591.html

  45. Tom says:

    Civilisation, of a sort, can continue at very high oil prices.

    Should have included the current US price, to show that in fact fuel prices and civilisation are correlated.

    Now to comment on the substance, is that actual and model timeseries data spliced together that I see? A neat trick. I’ve seen it before somewhere. Especially flagrant in figures 6 and 7, but figures 2 and 5 are also pretty bad. Several of these are outright lies – what is labelled as model data is only model data for the future, and is actual data for anything up to the present. The effect is very misleading. On first glance, it looks like the model has predicted perfectly up to now, and the model’s next prediction is for a ghastly decline. Terrible, right? Wrong. These plots tell you nothing at all about how effective the model has been in the past. Or perhaps they do tell you something – they tell you that the author doesn’t want to show you the model’s past performance.

    Look closely at all these plots. Notice how in almost every one, production is increasing right up to today, when the model data takes over and the production forecast is declining? Again, I’ve seen this technique somewhere before. It’ll come to me in a minute.

    The only exception is US production which, as others have pointed out, only fits the thesis if you ignore the past five years.

    The comparison to how the IPCC treats temperature model data is just too obvious to ignore. Every time the model is proved wrong, the model is adjusted so that it fits past data exactly and then presented as a perfect model with an undeniable future prediction. Every four years the process is repeated because every four years the model is dead wrong.

  46. I wonder what is the date for peak Nickel? Must be a Billion year from now.
    Today is the test day for the 1MegaWatt of the E-cat Nickel Hydrogen LENR Cold Fusion reactor by Andrea Rossi in Bologna.
    If it works as advertised then everything changes and the question of CO2’s effect on the climate becomes irrelevant
    Apparently most of the Nickel on the Earth is believed to be in Earth’s core. Who knows, some people believe the Earth’s core is several millions degrees.
    At any rate, the peak Nickel day if this reactor works, is a long long way into the future.

  47. Marek says:

    Most people don’t get peak oil. It’s about net energy and rate of extraction…. just try use straw to tank your car…

  48. Peter Miller says:

    The concept should be of “Peak Easy Oil”, not “Peak Oil”.

    The ‘not easy’ oil is mostly found in tar sands and oil shales. It is just a matter of economics, i.e. a sufficiently high price, sufficient capital investment and keeping the loonies/greenies in their box.

    Obviously, nuclear power is the only rationale answer at the moment for our long term energy needs; once again it is just a matter of sufficient capital investment and keeping the loonies/greenies in their box.

    Sadly, the tsunami in Japan brought a sharp rise in the shrill shrieking of the loony/greeny brigades against nuclear power. The subsequent political reaction of dithering and rejecting nuclear power has guaranteed widespread future electricity brown outs for many parts of the world, most notably in Germany and the UK.

  49. Myrrh says:

    IIRC the initial reason the US became importer rather than exporter was to make the dollar the international currency, it began by making a deal with the Saudis to buy their oil if they also sold elswhere in dollars and the dollar soon became the currency for practically all global trading. It was Saddam Hussein who tried to break that hold, changed his dollars into euros and would only sell in euros – a bankers war, but again, they’re all the same bankers so it’s merely a way of pushing it around among themselves to get bigger returns.

  50. Mike C. says:

    I must say, I’m rather disappointed to see this presented here with no commentary from Anthony. It’s pretty much just unjustified alarmism.

    37 years in the oil business here, and counting.

  51. Smokey says:

    For more than a century the world has been at ‘peak oil’. For more than a century the ‘peak oil’ Luddites have been proven to be wrong.

    I suppose they think this time it’s different.

  52. View from the Solent says:

    Now I get it. The Iron Age was brought about by our prehistoric planners foreseeing a shortage of flints.

  53. b a cullen says:

    I think what everyone is missing goes back to first principles; IF all of the hydrocarbons below ground were generated from CO2 in the atmosphere, the concentration of CO2 started out in the low percentage range, and the atmospheric pressure early on was >200 atmospheres then we have not even started to scratch the surface of hydrocarbons present.

    In addition, it is likely, though little evidence to date, that Tommy Gold is correct and much of the methane is primordial. That methane has been converted to petroleum deep underground at elevated the temps and pressures.

  54. Allen63 says:

    If the world is going to run out of oil in the next few decades, then we don’t have to governmentally-limit its use for AGW reasons — as, ultimately, its use is self-limiting.

    I’ve always felt that “we should use our oil last” — importing oil until there is none left to import at a sensible cost. Given our balance of payments, maybe now is the time to start exploiting our own supplies to the max — while building nuclear plants and making hydrogen-fusion power practical (but, not bothering with cost-ineffective windmills and such).

  55. There. We can now end the /thread.

  56. Greg Holmes says:

    Nuclear, nuclear, when the greenies lights go out, hear them shout, NUCLEAR! Its carbon free, non polluting the best (sarc) what they will rally be saying is “Jeez I am cold”.

  57. Jit says:

    Logan and others: fingers crossed for the E-cat, not holding my breath.

    DirkH: Agree. This form of “analysis” has been used in population studies, where the rate of change of a population (R, which equals population at time t+1 divided by population at time t) is plotted against the population at time t.
    So you have on Y axis N(t+1)/N(t) and on the X you have N(t).
    For a time a negative slope was considered an interesting result. (!) Then things became more nuanced, where the “form” of the curve was seen to be saying something about underlying processes.
    Like you I prefer a simple time series.

  58. David,

    Lots of pretty charts and graphs; all modeling the future. You should know we can’t model the future. The eight-hundred pound gorilla is tearing up your charts and graphs and projections jumping up and down, screaming, “You don’t know how much hydrocarbon is down there and you don’t know what future advances in extraction will make recovery economically feasible” In short you can’t know the future, you can’t predict the future – Unless you control the unknown variables.

    You haven’t and you can’t. Earth’s Peak oil is unknowable.

  59. michael says:

    We stopped at a campground in Oklahoma last week that was completely full by supper time in the MIDDLE of the week in OCTOBER. Most of the sites were occupied by extended stay campers — workers in the oil and gas industry. We were told that the campground was staying open through the winter now because of the business from the oil and gas industry workers — and a few people that work in the wind energy.

    On the last several days of our trip, it was obvious in parts of Oklahoma, Texas, and New Mexico that the oil and gas industry is booming right now.

  60. martin mason says:

    There is no such thing as peak oil. Supply and demand will as always be balanced by price and as oil becomes too expensive its uses will be taken up by alternatives or it will simply stop being used. We know that oil will run out but the planet is sloshing with oil and gas and predicted crises just never happen. Oil will run out eventually and we will adapt to it, nothing new here, move on.

    If I could just find a way of converting irrational alarmism to energy we wouldn’t need any oil.

  61. Crispin in Waterloo says:

    @temp

    This is much the same in the US where the government and the handful of big oil companies have both locked out all oil companies and have basically prevent small oil companies from competing with the big names.

    I have no doubt that as socialism expands ….

    ++++

    A handful of big oil companies block small competitiors using government to control them? That, dear sir, is the very definition of capitalism, or perhaps it is closer to call it fascism as Mussolini defined it. I am sure you have heard of the game ‘Monopoly’.

    http://www.informationclearinghouse.info/article7260.htm

  62. Dave Springer says:

    William says:
    October 28, 2011 at 2:21 am

    Two of your links don’t work and the third makes no mention of the LEU fuel in latest generation of CANDU reactor being replaceable with thorium. I don’t think you have the first clue of what makes thorium different from enriched uranium to be quite honest.

  63. Louis Hooffstetter says:

    As a geologist, peak oil predictions annoy the crap out of me. Hubbert’s prediction will eventually come true, but not in the lifetime of anyone old enough to read this. All of the petroleum on the planet has already been discovered? Really? In Antarctica, (as large as North America), one seventh of the planet’s sedimentary basins have never been tapped. Of the basins that have been tapped, deeper horizons remain largely unexplored. In this country alone, the entire east coast, nearly half of the Gulf of Mexico (west coast of Florida), half of the north slope of Alaska, and huge chunks of the west are quarantined from exploration.

    Huge natural gas deposits are known to lie ~50 miles offshore of the Carolinas, but our legislators won’t even allow their reserves to be determined. Why? Because our energy policy is molded by legislators funded by oil producing nations and environmental lobbies. At this point in history, the supply of petroleum is artificially controlled; supplies are not the problem.

  64. Richard Binns says:

    Today is the day for test of the 1MW LENR device which has the potential to make all this discussion irrelevant. Forbes article last week –

    http://www.forbes.com/sites/markgibbs/2011/10/17/hello-cheap-energy-hello-brave-new-world/

    AP is present at the test in Bologna today so the main stream media may finally take note.

  65. wayne Job says:

    Once upon a time this evil oil oozed out of the ground in many places. It still does in many places.

    Odd is it not that hydrocarbons seem to be prolific through out our solar system and our galaxy, no doubt also the universe.

    This would suggest that it is a naturally occurring product some what like iron or sulphur.

    If this is the case peak hydrocarbons will occur when the world is making it less fast than we are using it, that is once we have found and exploited all the reservoirs of oil and gas. Plus the vast treasures of methane stored at the oceans bottom. Perhaps then peak will occur but I doubt muchly for the odd hundred years or so from now we will probably have progressed a tad in technology.

    Worry warts and doom sayers abound, but we are a very adaptive bunch, with an inventive bent.
    The stone age ended, not for a lack of stones. The bronze age ended for iron was tougher, horses became our friends, not our beasts of burden.

    Dick Tracey had his wrist radio, Maxwell Smart had his shoe phone, Now the world has iphones who would have thunk it.

  66. Richard S Courtney says:

    Andrew McRae:

    At October 28, 2011 at 1:45 am you assert:

    “The oil optimists commenting here should remember one important logical and practical conclusion:
    There is a world of difference between saying that peak oil has not happened versus saying peak oil will never happen. Peak oil is inevitable due to both physical and economic limits. The only question is when.”

    Your mistaken assertion is supported by some others. For example, Mike Bromley the Kurd says at October 28, 2011 at 2:21 am;
    “The truth? It’s a finite resource. It will run out at some day in the future. And the years approaching that time will be some frikkin’ ugly. Then we will adapt.”

    Sorry, but no. The assertion is an error. In the real world, for all practical purposes there are no “physical” limits to natural resources so every natural resource can be considered to be infinite. This a matter of basic economics which I explain as follows.

    Humans do not run out of anything. The usage of a resource may “peak” then decline, but the usage does not peak because of exhaustion of the resource (e.g. flint, antler bone and bronze each “peaked” long ago but still exist in large amounts).

    A resource is cheap (in time, money and effort) to obtain when it is in abundant supply. But “low-hanging fruit are picked first”, so the cost of obtaining the resource increases with time. Nobody bothers to seek an alternative to the resource when it is cheap.

    But the cost of obtaining an adequate supply of a resource increases with time and, eventually, it becomes worthwhile to look for
    (a) alternative sources of the resource
    and
    (b) alternatives to the resource.

    And alternatives to the resource often prove to have advantages.

    Both (a) and (b) apply in the case of crude oil.

    Many alternative sources have been found. These include opening of new oil fields by use of new technologies (e.g. to obtain oil from beneath sea bed) and synthesising crude oil from other substances (e.g. tar sands, natural gas and coal). Indeed, since 1994 it has been possible to provide synthetic crude oil from coal at competitive cost with natural crude oil and this constrains the maximum true cost of crude.

    Alternatives to oil as a transort fuel are possible. Oil was the transport fuel of military submarines for decades but uranium is now their fuel of choice.

    There is sufficient coal to provide synthetic crude oil for at least the next 300 years. Hay to feed horses was the major transport fuel 300 years ago and ‘peak hay’ was feared in the nineteenth century, but availability of hay is not significant a significant consideration for transportation today. Nobody can know what – if any – demand for crude oil will exist 300 years in the future.

    But you assert;
    “There is a world of difference between saying that peak oil has not happened versus saying peak oil will never happen. Peak oil is inevitable due to both physical and economic limits. The only question is when.”

    That is similar to a neolithic man asserting;
    “There is a world of difference between saying that peak flint has not happened versus saying peak flint will never happen. Peak flint is inevitable due to both physical and economic limits. The only question is when.”

    Your assertion is devoid of any worth.

    Richard

  67. Dr Chaos says:

    If you price oil denominated in gold, what do you get? I suspect when denominated in gold, the price is flat or declining.

  68. Bill says:

    A long time a go when I first started working in the oil industry as an environmental advisor I nosed through some old files and found internal company documents talking about oil running out by 1928…

    The thing about this document is that production is a function of demand. (Economics 101) We live in a world of an economic slowdown plus a tremendous push on conservation where many of the major producers and users are seeing energy efficiencies of 5 to 10% a year since the 1990’s and before.

    The Peak Oil paradigm needs to be compared against proven reserves not production. For example Canada has huge proven reserve we could bring to market if a certain pipeline in the news gets built. Same with the Mackenzie pipelines.

  69. Paul Nevins says:

    Hard to take this seriously when the most important factors controlling oil production, i.e. government interference, is totally ignored. Particularly questionable is accepting the estimates in North America that are known to be totally wrong while ignoring huge new natural gas finds and Oil sands and shales.

  70. Curiousgeorge says:

    Coincidentally, I just received this months SSI newsletter, which mentions a paper by Alexander Ghaleb titled: “Natural Gas as an Instrument of Russian State Power” . SSI is the Strategic Studies Institute of the US Army War College. I haven’t read the entire paper yet, however the brief here: http://www.strategicstudiesinstitute.army.mil/pubs/display.cfm?PubID=1088 , makes it plain that ( re: NG ), the throttling of NG (or other energy sources)- not the lack of it – is a significant aspect of Russian state power. As it is with other countries. A previous poster also alluded to this control of fossil fuel as a strategic power issue.

    Brief Synopsis

    This monograph is meant to provide an unbiased examination of: the scarcity of natural gas in the contemporary security environment; the salience of natural gas in Russia’s national security strategies; and, the natural gas pipeline politics in Eastern and Central Europe. While the tendency of most energy security scholars has been to collectively analyze Europe’s dependency on oil and gas, this author analyzes the two energy markets separately, and demonstrates that natural gas is a more potent instrument of coercion in the contemporary security environment than oil was in the traditional security environment. Sufficient evidence is also provided that Russia continues to perceive NATO as a hostile alliance, and that future natural gas disruption by Russia—who holds a monopoly on the supply of natural gas via pipeline to Eastern and Central Europe—will prove deadly to the economies of many NATO member states. The salience of natural gas as an instrument of state power is emphasized in Russia’s negotiations with Ukraine; this monograph credits the 2006 and 2009 gas wars between the two nations as the main causes for the failure of the Orange Revolution in Ukraine. Ultimately, today, Russia uses the same tools it used in Ukraine—in the context of natural gas negotiations—to bribe Western European nations; to divide the NATO Alliance; and to rule over its traditional sphere of influence in Eastern and Central Europe. Finally, the author emphasizes that with the Russian construction of Nord Stream and South Stream natural gas pipelines, and unless alternatives to Russian natural gas are found, it is only a matter of time until Russia will use natural gas as an instrument of coercion against NATO member states.

  71. MarkW says:

    The only problem with such analysis is that it ignores the impact of Washington. They assume that the result of any decline is because we are running out of oil, when in fact it is the result of Washington making it more and more difficult to drill for new oil, or expand existing fields.

    It’s no surprise that “peak oil” coincides with the establishment of the EPA.

  72. theBuckWheat says:

    People who fret about “peak oil” are confusing the supply of oil with the price of fuels. The two are not as closely related as one might think. In fact, “Peak Oil” is no more about the price of gasoline, diesel and Jet-A than “Global Warming” is about temperature change. 

    In the real world, nobody buys oil to burn in their car or airplane, they buy a technical product that is made by breaking down and reassembling a feedstock of hydrocarbons that  presently is in the form of crude oil.  However, should  the price of crude climb higher than the hydrocarbons found in other sources such as coal or agricultural wastes, then those sources will be used.  The only issue is cost.  This does not mean that there cannot be supply disruptions when oil suddenly jumps in cost, as it has recently. However, there is abundant documentation, such as the Barna report (Office of the Secretary of Defense, Clean Fuel Initiative [1]), that show we are awash in convertible hydrocarbons. The only thing stopping their use is cost and government.

    The truth is that we are awash in hydrocarbons that can be converted to usable fuels. The ONLY thing that matters is the price of the finished fuel product at the pump. That price reflects how much people are willing to pay for it. At today’s price, we can afford to convert many sources of hydrocarbons into the fuels we need. It just happens that for the time being, crude oil is the most economically efficient feedstock. The instant that some other source is better, we will start making our fuels from it.

    [1] Dr. Theodore K. Barna., OSD Clean Fuel Initiative http://www.westgov.org/wieb/meetings/boardsprg2005/briefing/ppt/congressionalbrief.pdf

  73. Dave Springer says:

    @Lucy

    U.S. (Livermore IIRC) ran an experimental thorium reactor for 5-10 years in the late 50’s and early 60’s.

    Running an experiment which doesn’t have to produce a profit and turning the experiment into a profitable commercial enterprise are two different things. We put a man on the moon in the 1960’s but that didn’t translate into McDonalds and Holiday Inn locating there. First electric car was built in 1835 about 30 years before the first car with an internal combustion engine. Electric cars are still impractical for most uses 175 years later.

    Just because something can be made to work doesn’t mean it can made to work well enough for any intended use. Thorium fueled reactors so far can’t be made to work well enough and no one stopped trying in the 50 years since the first experimental thorium reactor was built. The thing most nuclear power advocates don’t readily admit is there’s no shortage of uranium ( especially in the United States), the cost of the uranium fuel is just a tiny fraction of the cost of producing electricity in a nuclear power plant, and thorium reactors can’t be made (so far) that can economically compete with uranium. The motivation for thorium is entirely political with the loony left supporting it either because you can’t make nuclear bombs from thorium fuel cycle and the radioactive waste is only dangerous and difficult to store for a thousand years instead ten thousand years. For some nations like China and India they don’t have an unlimited supply of uranium but have lots of thorium so they have the additional impetus of not wanting to rely on foreign uranium 50 or 100 years from now. China is busy looking into thorium alternatives as we speak. If they figure it out then good for them but we don’t have any particular need for it anymore than we have a need for a one-child policy. China’s needs are the same as ours.

    The U.S. is an energy rich nation it simply lacks the political will to exploit it due to the loony left, environmentalist whackos, and democrats pandering to them for votes. The usual ploy of the politics of guilt is used by the left which manages to sway otherwise sane adult voters who would normally vote in their own self-interest to feel guilty at not being a starving Ethiopian and voting against the things that will retain or enhance their own status as citizens of the wealthiest, most free, and most powerful nation on the planet in modern times and perhaps at any time in history. These politics of guilt are working well enough to cripple a great and proud nation and some of us are pretty pissed off about it. Pray that Rick Perry becomes POTUS. He and a republican majority in both houses of congress will end this new age bullshit and put America back to work with a vibrant domestic energy program the benefits of which will be fast and furious at righting the floundering economic ship of state. We are indeed shovel-ready, literally, to end the ginned up energy crisis and letting ourself become little bitches for OPEC to manipulate. All we have to do is remove the regulatory restraints from those ready, willing, and able to man those shovels.

  74. SteveE says:

    William Abbott says:
    October 28, 2011 at 4:32 am

    Do you ever find yourself screaming at the TV when the weather man tells you it’s going to be sunny tomorrow?

    “You can’t know the future, you can’t predict the future”

    Oil if a finite resource and while we don’t know exactly how much is buried in the Earth’s crust we can make a pretty good estimation based on how much we’ve found to date and how many places there are left to look. Sure we don’t know what technological advances will come along in the next decade, but you’ve just got to look at the “oil discoveries by year” graph to see that the rate we’re discovering it is in steady decline. You can’t know the future, but you can be pretty confident in your prediction that that graph isn’t going to suddenly shoot upwards over the next twenty years.

  75. Jason Joice M.D. says:

    “Mike C. says:
    October 28, 2011 at 3:44 am
    I must say, I’m rather disappointed to see this presented here with no commentary from Anthony. It’s pretty much just unjustified alarmism.

    37 years in the oil business here, and counting.”

    1

  76. Luboš Motl says:

    I wanted to write the same comment that – as I see – was already written by DirkH.

    The logistic decline graph is straight but the actual datapoints could very well also be interpolated by a hyperbola, y=1/x, which never drops to zero which means that there is never an “end of oil”. Such a curve corresponds to constant production per year. The truth may also be in between them. At any rate, all these suggestive extrapolations are meant to predict a doomsday but one may always make equally convincing extrapolations that have a very different outcome.

  77. Jay Curtis says:

    >>There is nobody in the whole industry who gains anything by announcing higher reserves, but all gain tremendously when playing the “we-run-out-of-oil” tune… <<

    Most people miss the point about peak oil. This problem isn't about running out of oil, or coal, or gas, etc. There will still be plenty of oil around even after people have stopped using it.

    The problem is about the cost of extraction, and it's not the DOLLAR cost, but the ENERGY cost that is a concern. Once it costs as much energy to extract a fuel as the fuel itself will deliver, you're done. Why? Because you might as well just sell the energy you're using to extract. Of course, the energy cost begins to show up in the dollar cost long before you reach parity between energy in/energy out.

  78. Dave Springer says:

    Richard S Courtney says:
    October 28, 2011 at 5:26 am

    Brutal drubbing. Kudos to you, sir.

  79. mike g says:

    The sum total of all the naysayers comments on here is just a blip on these predictions. We better be prepared for this. The Chicomms certainly are.

  80. Smokey says:

    The 0dumbo Administration has decreed that drilling for energy is forbidden in these locations:

    No wonder the price of gasoline is so high.

  81. More Soylent Green! says:

    Roger Sowell says:
    October 27, 2011 at 10:21 pm
    And now, for the realist viewpoint.

    Peak Oil is not a problem, and has never been a problem despite numerous predictions of its impending occurrence. The reason is that the model that is used to forecast peak oil is false; it is wrong. To paraphrase one of the US’s most brilliant scientists, the late Dr. Richard Feynman, when the predictions are wrong, you must get a new model. Dr. Feynman won the Nobel prize in physics for is work in QED, quantum electro-dynamics.

    World oil demand is decreasing, oil supply is increasing, and there are far more options today for oil use than there were 30 years ago. .

    http://sowellslawblog.blogspot.com/2011/04/speech-on-peak-oil-and-us-energy-policy.html

    I say “Amen, Roger.” “Amen” seems appropriate here, as Peak Oil is another enviro-religious issue, just like overpopulation and AGW.

    The “Peak Oil” arguments are fuzzy, relying upon production figures instead of recoverable supplies or known reserves.

    Of course production in the USA peaked long ago. It’s nearly impossible to create a new refinery and our regulatory environment also makes it very hard to drill at new sites. There is plenty of oil in Alaska, off our three coasts and in oil shale. Further, coal can be converted into liquid as a substitute and while that’s technically not oil, there is enough coal in this country to last us for centuries.

  82. ferd berple says:

    The opening decline graph is misleading and dishonset. What it shows is this;

    Current Production / Total Production versus Total Production

    If anyone cannot spot why this is declining they don’t understand mathematics. Every year cumulative production goes up, so even if the US produces more oil each year, the graph will show production as declining.

    For example, consider that US production starts out at 1, and increases by 1 each year. You end up with the series:
    1,2,3,4,5…

    cumulative production is then:
    1,3,6,10,15…

    However, when you divide production by cumulative production you get:
    1, 0.67, 0.5, 0.4, 0.33, 0.29, 0.25….

    So, even though production is increasing, the graph will make it look like it is decreasing. Did Mann or Jones produce this graph?

  83. Dave Springer says:

    Jay Curtis says:
    October 28, 2011 at 6:16 am

    “The problem is about the cost of extraction, and it’s not the DOLLAR cost, but the ENERGY cost that is a concern. Once it costs as much energy to extract a fuel as the fuel itself will deliver, you’re done. Why? Because you might as well just sell the energy you’re using to extract. Of course, the energy cost begins to show up in the dollar cost long before you reach parity between energy in/energy out.”

    This is inherent in the term “economically recoverable” and I think every modestly knowledgable student of energy resources is aware of it. But we are also well aware that recovery methods constantly improve. Necessity is the mother of invention. We can routinely and cost effectively drill horizontally now, for instance, which vastly increases what’s economically recoverable. In the past it was economically possible to recover oil from a mile beneath the ocean’s surface but that’s routine now too. For peak oil to become a real threat one must assume that recovery technology will suddenly stop improving. There’s no historical basis for imagining that technologic improvements that reduce recovery costs will come to a halt.

  84. JC says:

    @wayne Job: the full quote is:

    “The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil.” — former Saudi oil minister Sheik Ahmed Zaki Yamani, a man who has knowledge of oil reserves that nobody outside the house of Saud shares.

  85. Steve from Rockwood says:

    It would be worthwhile to replot Figure 5 (World Production Oil Decline) starting from 1970 and ending in 2010 (where the data ends and the projections begin). Also plot exploration investment, or new infrastructure investment on the same graph.
    What you will see is that oil production is higher in 2010 than in 1970 and that but investment has really picked up over the past few years.
    Without comparing investment in new oil fields with total production it is hard to argue for peak oil.
    But I thought your summary was excellent otherwise.

  86. ferd berple says:

    By comparison, in the United States, Section 526 of the Energy Security and Independence Act of 2007 blocks the Department of Defense from using CTL fuels because the life cycle greenhouse gas (GHG) emissions from those fuels would be much larger than the GHG emissions from conventional petroleum.

    There you have the real “reason” for peak oil in the USA. Thermal coal is $20 a ton in the US. This has the same energy as two barrels of oil worth $200. A ten times price difference between coal and oil. The US has the largest known coal reserves on the planet. The US could be converting coal to oil on a massive scale. Given the price difference, and the US dependence on imported oil, the question to be asked is WHY ISN’T IT?

    US Law prevents the US from defending itself with secure fuel supplies because of environmental worries. No problem using depleted Uranium in the Balkans or Agent Orange in Vietnam, but heaven forbid releasing CO2.

  87. Dave Springer says:

    Smokey says:
    October 28, 2011 at 6:22 am

    “No wonder the price of gasoline is so high.”

    The price of gasoline is so high because foreign sources (read OPEC) control the top marginal rate it and extract every penny (and then some) that the market will bear.

    I mean c’mon. Crude price went from $20/bbl in 2001 to over $120/bbl in 2008. What The F Is Up With That!? What kind of moron do you have to be to believe that price increase has any relation whatsoever to production cost or known reserves? This is all political and ecnomic manipulation. Consumers are having their pockets picked clean by those controlling the cost of energy. Whatever price can be maintained just bloody short of worldwide economic collapse. Does anyone really think there isn’t a causal connection betweent the economic meltdown in 2008, which is still ongoing today, being a direct and immediate result of artificially inflated energy prices? Don’t be naive. Vote for Rick Perry and give him a cooperative Republican congress and he’ll end this nightmare. Perry knows the goose that lays the golden eggs is energy producers and he knows how to end this nonsense with artificial price inflation driven by foreign energy cartels. Let him do it. We’re *ucked if we don’t.

  88. Smokey says:

    Hey, I like Rick Perry.

    I like Herman Cain, too.

  89. Pamela Gray says:

    Re: Free Marketers:

    I often hear this: “If we were to free up the market from onerous laws and regulations, we would all have plenty of oil.” However, absolute power corrupts absolutely, regardless of whether it resides in government or free market corporations.

    On one side of the coin: The free market has often resulted in the highest net income producer squeezing out the marginal performers. Unfortunately, once the competition has been shut down, the consumer has been, at times, harmed by the corporation king’s carelessness (tailings flowing down mountains and entering streams, lead in paint, lax sanitation in food production, etc). So laws were made to bar corporation kings from engaging in careless practices. However, these same laws prevent start-up businesses from entering at the ground floor and placing healthy competitive pressure on the status quo.

    On the other side of the same coin: An out of control growing governmental body will often meddle in the business of creating wealth by attempting to be in the economic driver’s seat, or worse, by resting complete control and ownership over businesses. This governmental grab for power prevents start-up businesses from entering at the ground floor as well. Who would want to start up a business you cannot have control over, and what government cares about the pennies a start up business will generate in the beginning?

    Is there a happy middle?

  90. I’ve often thought the oil companies invented global warming to hide peak oil. After all what better way to convince the world that oil isn’t running out than by getting every politician to run round like a headless chicken shouting that the biggest problem on earth is that there’s too much fossil fuel.

    Of course the economics is all to pot. Oil will not so much rise in price as earnings will drop relative to oil. Or in real terms it will become cheaper to employ someone/some animal to do the work than to employ a mechanical machine.

  91. SteveE says:

    Richard S Courtney

    Your comment that we didn’t reach “peak flint” reminded me of a quote by Sheikh Yamani, the former Saudi Oil Minister:

    “The stone age didn’t end because we ran out of stones.”

    We’re now effectively in the oil age, and whilst there are different ways of producing oil such as from coal, these all cost more and currently are produced at a slower rate than conventional crude. Peak oil is not the running out of oil, or the ability to produce it, but is when the maximum rate of global production is reached.

    Perhaps we can sink more wells to produce it faster or use EOR to squeeze more out, but that costs more money and the price of oil increases to match this. Peak oil will happen because the cost of producing it will exceed what people can afford to pay. An alternative will be found, but the age of oil will have ended.

    I personally think it will be nuclear fusion that will take over, but my friend who works at the Joint European Torus tells me that commercial fusion reactors are about 25 years away.

    I’m guessing the oil price will continue to rise until then.

  92. “The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil.”

    There is a story told by old miners of the rats in the mine who fed on the human waste. Once a year the mine would shut down for a week or two leaving the rats nothing to feed on. So, the minors would fling the last of their sandwiches in a metal wagon with a plank to allow the rats to get in, but escape was impossible due to the steep metal sides.

    It is said that when they got back, there would be one very fat rat left in the wagon.

    The rats didn’t die for lack of food … they died because there was one very fat rat that eat the rest of them. The Stone Age didn’t end for lack of stone …. it came because someone with a copper axe (not bronze that was later) bludgeoned to death anyone whose only weapon was a stone axe.

  93. Dave Springer says:

    ferd berple says:
    October 28, 2011 at 6:38 am

    By comparison, in the United States, Section 526 of the Energy Security and Independence Act of 2007 blocks the Department of Defense from using CTL fuels because the life cycle greenhouse gas (GHG) emissions from those fuels would be much larger than the GHG emissions from conventional petroleum.

    There you have the real “reason” for peak oil in the USA. Thermal coal is $20 a ton in the US. This has the same energy as two barrels of oil worth $200. A ten times price difference between coal and oil. The US has the largest known coal reserves on the planet. The US could be converting coal to oil on a massive scale. Given the price difference, and the US dependence on imported oil, the question to be asked is WHY ISN’T IT?

    US Law prevents the US from defending itself with secure fuel supplies because of environmental worries. No problem using depleted Uranium in the Balkans or Agent Orange in Vietnam, but heaven forbid releasing CO2.

    Right on brother. It’s now or never. Evict the leftist idiots from Washington once and for all and replace them with a majority that know energy production is the key to restoring the economic success of the United States. You can fund grandiose entitlement programs with a vibrant growing economy and full employment. The only way to get there is to remove the obstacles in the way of restoring low energy prices. Energy price is a major cost component of just about everything else with tangible, real value. We have the energy sources. What we don’t have are enough self-interested guilt-free adults in federal government willing to exploit our natural advantage in being an energy-rich nation.

    I’m here to tell you sh*t rolls downhill and when the U.S. is made to suffer by naive energy policy of Ivy League academics without a lick of common sense or street smarts in high public office the rest of the world ends up suffering too. This isn’t theoretical, it’s playing out before our very eyes as we speak. Send the Ivy League dipsh*ts back to the academic enclaves where they belong and put some practical minded adults who know the real world works back in charge of things. It’s the only way out of this mess.

  94. ferd berple says:

    SteveE says:
    October 28, 2011 at 6:10 am
    “You can’t know the future, you can’t predict the future”

    The funny thing about the future is that we all believe in it, yet when you think about it the future doesn’t actually exist. No one has seen it or been there. We might as well compare the future to Santa Claus. When it finally does arrive, it turns out to be nothing like what you imagined.

    The idea that the future is predictable rests on Victorian Age physics. The sort of physics taught in high school that we now know to be incomplete and thus misleading. The future looks predictable because high school physics treats the future incorrectly, as though it was something real, a destination to which we are traveling. A destination that does not exist until we get there.

  95. Steve from Rockwood says:

    Scottish Sceptic says:
    October 28, 2011 at 6:56 am
    I’ve often thought the oil companies invented global warming to hide peak oil. After all what better way to convince the world that oil isn’t running out than by getting every politician to run round like a headless chicken shouting that the biggest problem on earth is that there’s too much fossil fuel.

    Of course the economics is all to pot. Oil will not so much rise in price as earnings will drop relative to oil. Or in real terms it will become cheaper to employ someone/some animal to do the work than to employ a mechanical machine.
    ——————————————————————–
    Ship that scotch to Canada because you’re not making sense. Oil companies are not interested in convincing the public there is too much oil. And get ready for higher oil prices. I can imagine driving a 400 HP BMW but I can’t imagine looking after 400 horses. Even at $200 a barrel oil is CHEAP. People don’t get that. and when oil hits $200 there is a whole lot of “new” oil ready to come on stream.
    Peak use of oil maybe, but no to peak oil.

  96. SteveE says:

    Dave Springer says:
    October 28, 2011 at 6:46 am
    “What kind of moron do you have to be to believe that price increase has any relation whatsoever to production cost or known reserves”

    It relates to demand. The demand has increased and in order to meet that demand more costly production techniques have to be used to extract the oil. Currently fields are being developed that cost in excess of $80/bbls to produce from. Ten years ago these would have been considered uneconomic, but as the demand is there now these can be brought on stream. OPEC hasn’t significantly cut it’s production, it just is unable to significantly increase it’s production.

  97. Dave Springer says:

    SteveE says:
    October 28, 2011 at 6:59 am

    I personally think it will be nuclear fusion that will take over, but my friend who works at the Joint European Torus tells me that commercial fusion reactors are about 25 years away.

    I’m guessing the oil price will continue to rise until then.

    It can’t. The past ten years has been an acid test of how much and how fast oil price can rise before worldwide economic meltdown. In 2001 it was $20/bbl which was the historic, inflation adjusted norm that reflected both actual scarcity and cost of production. In 2008, just 7 years later, it peaked at $120/bbl and economic meltdown was real and imminent. It almost immediately retreated to $35/bbl for long enough to avert a meltdown and then has been allowed to creep up to somewhere between $75-$100/bbl which the powers that be have evidently determined can be sustained without global economic collapse but instead perennial economic malaise. I’m sick of it. Vote the morons out of office who are willing to continue putting up with it. Vote for Rick Perry. He’s not a great debater but he understands that energy policy is the key to restoring the U.S. economy and he knows it isn’t green energy that’s going to save our bacon. Romney will fail every bit as much as Obama failed. Get energy prices back down, put a couple million people back to work in the energy industry, and everything else that needs fixing will get done as a consequence of that bounty.

  98. ferd berple says:

    SteveE says:
    October 28, 2011 at 6:59 am
    my friend who works at the Joint European Torus tells me that commercial fusion reactors are about 25 years away.

    Fusion is like Hansen’s predictions about sea level rise in New York. Always 20 years away from whatever day the prediction is made, whether the prediction was made today or 20 years ago.

  99. SteveE says:

    Dave Springer says:

    ” For peak oil to become a real threat one must assume that recovery technology will suddenly stop improving. There’s no historical basis for imagining that technologic improvements that reduce recovery costs will come to a halt.”

    That’s not true. Whilst technology has improved, that has come at a cost. A deep water well off the West coast of Africa can now cost in excess of $150 million.

    Whilst 20 years ago the technology wasn’t there to drill such wells, with the oil price at $20 a bbl it made no sense to even try. Now that it’s at $100/bbl this type of exploration can take place.

  100. Dave Springer says:

    Smokey says:
    October 28, 2011 at 6:51 am

    “Hey, I like Rick Perry.”

    “I like Herman Cain, too.”

    The pizza mogul doesn’t realize that he can’t control the United States with the authority of a corporate CEO and majority stockholder. He’s an unelectable distraction of the same mold as Donald Trump. Everyone knows it.

    There are two serious contenders able to manage and fund a successful presidential campaign against a weak incumbent. Those two are Rick Perry and Mitt Romney. Rick Perry has the better staff and fund raising ability. The theatrics of the Republican debates will fade away quickly, they always do, and the real campaign with the big money media ads targeting the critical markets will, as usual, decide the winner. Perry is coming into his strength and perennial presidential contender Mitt Romney comes into his weakness. Slick debate skills are no advantage when the contest turns to slick advertisements, lots of money to pay for them, and lots of money to employ campaign staff who know how to win these things.

  101. david konarky says:

    If Russia is now leading production and they are drilling at 30,000 ft., and BP is drilling in the gulf at 27,000 ft. , doesn’t that support the argument for abiotic reserves? Could all this be about profits? Maybe a commodity that the population has become dependent on can be manipulated
    to garner deep profits and be supported by questionable science.

  102. Olen says:

    This is a promo for green for green energy that is driven by governments. When government cuts off exploration and drilling, taxes the oil industry beyond others, interferes with recovery when accidents happen you can expect there to be less oil production and less oil discovered by the US.

    There is also the theory that oil is made naturally in the earth and will not run out anytime soon.

  103. Jeremy says:

    When I posted on peak oil’s effect on agricultural costs and food security, some comments questioned the idea of peak oil. What follows is a summary of the subject. We will start with what is considered to be the most successful economic forecast ever made – the prediction in March 1956 by King Hubbert of the Shell Oil Company that US oil production would peak in 1970. This was in a paper entitled “Nuclear Energy and the Fossil Fuels” presented at the Spring meeting of the American Petroleum Institute in San Antonio, Texas. The paper’s title reflects Hubbert’s view that nuclear power would have to replace fossil fuels on the latter’s exhaustion. The view hasn’t changed, but the replacement need has become urgent.

    I note you say “economic” forecast. Well oil production depends on a number of things outside of economics. I would call such a “prediction” blind luck since it seems terribly unrealistic to predict the environmental movement’s large opposition to offshore drilling that occurred back then. It also fails to account for advances in science that might someday make the direct manufacture of products from crude, eliminating the need for crude.

    Peak Oil is not just a myth, but the idea that we can’t do without oil is *ALSO* a myth.

  104. JPeden says:

    “Peak oil will happen because the cost of producing it will exceed what people can afford to pay.”

    ~”When I’m President, electricity prices will skyrocket!”

  105. Doug says:

    All those Hubbert curves were developed in a period of rather stable oil prices. Higher prices have warped them beyond recognition. Even Texas, the most mature, peaked-out place in the world is increasing production.

    I torment a peak oil board on Motley Fool investments- here are some of my recent posts:
    —————————————————————————————————–
    I was reading Oil and Gas Journal(October 3rd)on all the new liquids plays coming out of the continued advances in horizontal drilling and multi-stage fracs. An interesting statistic was cited:

    “Goldman Sachs economists in an Aug. 8 note forecast US oil production, which includes natural gas liquids, at 8.06 million b/d for 2011, and 10.27 for 2017″

    I looked up what our historical production of crude plus NGL has been and found a nice graph from 2007 by the great French pessimist Jean Laherrere.

    http://www.aspousa.org/index.php/peak-oil-reference/peak-oil

    He shows a nice steady decline from a peak of just over 11 million a day in about 1970, projecting to something around 5 million by 2017.

    A sharp reversal of the decline has already occurred. Absent a major price drop, I would not be surprised to see domestic liquids production reach a new peak
    ————————————————————————————————————-
    The production from horizonally drilled and fractured shale has gone from some gas wells in Texas to oil and gas worldwide.

    Take Ohio. Oil was discovered in 1860, a few months after Pennsylvania. Production peaked in 1896 at 65,000 BOD. By 2009 it had declined to 14,000 BOD (so much for the symmetrical Hubbert curve).

    Chesapeake just completed three Utica shale wells. The initial flow from the three wells is 3,420 bod of liquids and several mmcf of gas.

    Meanwhile a thick and rich section of gas charged shale has been found in small corner of England. Estimates are 200 TCF in place, with 10-30% recoverable.

    China, India, Poland, are all finding new reserves. We are looking at a total game changer.

    —————————————————————————————————————–
    Gafney Cline are now reporting what has been rumored for awhile–that there are 21.2 TCM (748 TCF) of reserves in one field in Turkmenistan. So much for all the elephants being found long ago.
    To put it in perspective, all of the E.U. uses about 20 TCF a year.
    LOS ANGELES, Oct. 13
    By Eric Watkins
    Oil Diplomacy Editor

    Gaffney, Cline & Associates (GCA) said Turkmenistan’s South Iolotan natural gas field is the world’s second-largest, with an estimated 21.2 trillion cu m (tcm) of gas reserves. Supergiant Iolotan field was discovered in the country’s Amu Daria basin in late-2006 (OGJ Online, Nov. 22, 2006).

    In a recent presentation, Jim Gillett, GCA business development manager, said South Iolotan’s latest reserves estimate make it second only to giant South Pars gas field, shared by Turkmenistan and Qatar.

    “Turkmenistan’s gas reserves are more than enough for any potential demand over the foreseeable future, whether it be from China, Russia, Iran, or Europe,” Gillett said.

    However, Gillet said estimates of the central Asian nation’s reserves could increase even more, noting that in addition to South Iolotan, the country’s Yashlar field has substantial gas, too.

  106. William says:

    In reply to Dave Springer (Dave if you have a question please ask. If you have a comment please include some facts and logic to support your comment.)

    As I stated the Advanced Candu Reactor can use thorium fuel. Both India and China are developing thorium reactors. The Indian reactor uses a design that is similar to the advance Candu reactor as it use heavy water as a moderator.

    http://www.iaea.org/NuclearPower/Downloads/Simulators/ACR700.Simulator.Manual.2009-10.pdf

    http://www.nuceng.ca/ep4d3/studentfiles/acr_present.pdf

    ACR Has Been Developed To Be Very Flexible As To Choice Of Fuels

    􀂄 Nominal SEU Fuel
    􀂄 Up To 100% MOX Fuel (Recycled Pu In Form Of Mixed Oxides Of Pu / U)
    􀂄 Thorium Fuel Cycle
    􀂄 On-Line Re-Fuelling Important Part Of This Flexibility

    http://www.barc.ernet.in/publications/eb/golden/reactor/toc/chapter1/1.pd

    India’s three-stage nuclear power programme is chalked out based on the domestic resource position of uranium and thorium. The first stage started with setting up of the Pressurised Heavy Water Reactors (PHWR) based on natural uranium and pressure tube technology. In the second phase the fissile material base will be multiplied in Fast Breeder Reactors using the plutonium obtained from the PHWRs. The third stage is focused on reactors designed to utilise the large thorium reserves based on thorium-233U fuel cycle. The Advanced Heavy Water Reactor (AHWR) has been designed to fulfill the need for the timely development of thorium-based technologies for the entire thorium fuel cycle. This chapter highlights the recent activities carried out in the design and development of the AHWR, such as the core & process system design, nuclear data, fuel design, fuel handling systems, safety analyses, analytical studies and experimental validation.

  107. LamontT says:

    The problem with the peak oil models is that it fails to model human behavior into it’s calculations. The only reason the models see for a decrease in production is because there is less oil available. The reality is more complex. Oil production is in general run by a cartel of countries that regulate the production to keep the price high. They increase and decrease the amount being produced to keep the price where they want it and for the last 3 or 4 years have been decreasing production to keep the price per barrel as high as they could.

    But the peak oil modelers only see the decrease in oil production and assume that finally they have peak oil not simply natural greed to keep the price up. As is usual at some point either a country not in the cartel will have a break through and flood the market with cheap oil, or a production improvement will happen or one of the cartel will want fast cash and flood the market. It has happened before.

  108. Ed Mertin says:

    Gasoline gets priced off Brent, even if the refiner pays the lower WTI price for the oil they used. Brent is kept higher by manipulation.
    Imo Ron Paul is the only Reflubitcan that speaks more about fixing this problem, cutting spending and possibly even eliminating usless, waistful government agencies.

  109. David,

    The ramp up in production per well is where your numbers are falling apart. I need to find you the N.D. list of wells that have come off of confidential status. https://www.dmr.nd.gov/oilgas/confidential.asp

    There is a significant number of wells producing over 1000 barrels of oil per day after 6 months of production.

    The wells with 30+ multi stage frac’s or more have changed the way that wells are developed. Smart Pads are allowing equipment to be setup once, and then to drill well after well from the same single location, but in a different horizontal direction. This allows crews to save days of labor per well.

    These wells are now coming online with as much as 3000 boepd of flush production each. Unconventional oil in North Dakota is also a light sweet oil that is close to WTI. This is not stuff that needs upgrading.

    When you quote the average well production, you are intentionally smoothing the 1000 per boepd of flush production into the 10 barrel per day conventional wells from 20 years ago. The ramp up in production per new well is the key data point.

    Here is a link to production numbers in a PR

    http://ir.bexp3d.com/releasedetail.cfm?ReleaseID=607772

    “Brigham Exploration Company (NASDAQ: BEXP) announced that the Irgens 27-34 #2H Three Forks well produced approximately 2,906 barrels of oil equivalent during its early 24-hour peak flow back period, which represents a company record early production rate for a Three Forks well. The Irgens 27-34 #2H is located in Brigham’s Rough Rider project area in Williams County, North Dakota. To date, Brigham has completed 88 consecutive long lateral high frac stage wells in North Dakota with an average early 24-hour peak rate of approximately 2,797 barrels of oil equivalent.”

    The drop off in these wells is high, however when you have wells that produce over 1000 boepd for the first 6-12 months or more, it a game changer. We are not drilling ten’s of thousands of wells producing 80 boepd each. That should be obvious.

    In 2001, North Dakota had 15 oil rigs operating. Today it has cracked 200 active drilling rigs. http://www.willistonherald.com/articles/2011/09/03/news/doc4e59a6ad907c1288461919.txt

    Best Regards,

    Jack

  110. kwik says:

    “I can guarantee that Norway can deliver all the gas the EU needs to not only 10 – 20 years, but in more than a generation into the future. I am quite sure that we are able to deliver gas for up to 70 years”.
    Norwegian Oil and Energy Minister Ola Borten Moe.

    http://translate.google.no/translate?sl=no&tl=en&js=n&prev=_t&hl=no&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Fe24.no%2Folje-og-raavarer%2Fmoe-lover-norsk-gass-til-europa-i-opptil-70-aar%2F20114961

  111. More Soylent Green! says:

    Pamela Gray says:
    October 28, 2011 at 6:52 am
    Re: Free Marketers:

    I often hear this: “If we were to free up the market from onerous laws and regulations, we would all have plenty of oil.” However, absolute power corrupts absolutely, regardless of whether it resides in government or free market corporations.

    On one side of the coin: The free market has often resulted in the highest net income producer squeezing out the marginal performers. Unfortunately, once the competition has been shut down, the consumer has been, at times, harmed by the corporation king’s carelessness (tailings flowing down mountains and entering streams, lead in paint, lax sanitation in food production, etc). So laws were made to bar corporation kings from engaging in careless practices. However, these same laws prevent start-up businesses from entering at the ground floor and placing healthy competitive pressure on the status quo.

    On the other side of the same coin: An out of control growing governmental body will often meddle in the business of creating wealth by attempting to be in the economic driver’s seat, or worse, by resting complete control and ownership over businesses. This governmental grab for power prevents start-up businesses from entering at the ground floor as well. Who would want to start up a business you cannot have control over, and what government cares about the pennies a start up business will generate in the beginning?

    Is there a happy middle?

    You and I have vastly different understandings of what the term free market means. Monopolies are not part of the free market, while market domination through providing a better product or service or providing either at a better price is part of the free market.
    We haven’t had much of a free market in this country for quite some time, and corporatism, sometimes incorrectly called crony capitalism is currently king.

    We live in an age where plenty of information is available for consumers who want to make informed choices, but we’re stuck in a regulatory model which still believes the robber barons are lurking in every board room.

    We don’t have one for oil, as OPEC effectively controls world-wide supply, and therefore price.

  112. hitfan says:

    I was really into the peak oil theory in 2004, and as a result I made investments that were tied to the oil industry. It has paid nice dividends. I used to go to gas stations with my small gar proud to pay high gasoline prices because it meant that my investments were making money.

    There’s an old anecdote that says that one barrel of oil energy used to produce fifty barrels of oil. That number has dropped considerably since then.

    Higher oil prices means that more economic activity is being spent to get to the harder-to-produce oil. So if you live in certain areas of Texas or Alberta, then you can enjoy upswing of the boom cycle when oil prices go up.

    In micro economic terms, peak oil benefits those who are tied to the oil industry, but on a macro scale, it sucks for everybody else. It’s like the broken window fallacy.

    Maybe Ray Kurzweil is right that the price of solar energy will eventually make it a better energy source than oil. But he’s too much of an optimist.

    Our modern world is made with oil. It is the equivalent of spice from the movie “Dune”.

  113. Eric Gisin says:

    Figure 7: Logistic growth curve for Non-Opec oil production
    In this graph Nashawi shows oil peaking around 2006, which is also his last data point. Hasn’t production increased since then? Another failed prediction.

  114. Doug says:

    —-“The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil.” — former Saudi oil minister Sheik Ahmed Zaki Yamani, a man who has knowledge of oil reserves that nobody outside the house of Saud shares.—-

    Actually the house of Saud doesn’t know any more about Saudi reserves than the geologists and engineers who calculate reserves for them. My wife and many of our friends fall into that category.

    They are not too concerned about “Twilight in the Desert”.

    I might add—lots of good comments here, good grasp of the oil biz.
    Plus, the thread has gone a record number of comments without the abiotic oil crowd bringing on their old Russian pseudo-science.

  115. Jeremy says:

    Sorry but this is madness. There is no peak oil! There is plenty of the stuff. The only thing that is killing oil and gas is TAXES and government restrictions on access to fields. The industry is highly regulated and well over a trillion a year are collected annually in taxes. The government percentage take has been steadily increasing for decades and that is why oil and gas will continue to get more and more expensive until the taxes lead to high enough prices to kill demand (don’t seem to be there yet). What is not understood is that profits from Oil and Gas are re-invested in the industry bringing new production to market (ultimately keeping supply up and prices down) in stark contrast to what is collected in taxes. The golden goose which has created so much prosperity and higher living standards is being choked and choked.

  116. DesertYote says:

    To all the nay sayers, you forget the devestaing effect of peak-coal had on the world… oh never mind …

  117. Gail Combs says:

    rbateman says:
    October 27, 2011 at 10:27 pm

    Does China have any of these molten salt/thorium-burning reactors online?
    Does anyone else have any of these new reactors online?
    __________________________________

    That was my first thought. Thorium Nuclear. If the PAID nuclear protesters had had more morals and the US media had not spread propoganda we in the USA would have top of the line nuclear for most of our non-moble energy needs.

    Access to energy = Civilization.

    Energy is always the limiting factor in the advancement of civilization. Labor saving devices allow the leisure needed for advancement and the energy to fuel new inventions.

  118. David Larsen says:

    And we have at least 100 years in oil shale in the US. We did not even know about the Bachen formation a few years back. Start riding your bicycles. What about wind turbines on a helmet on your head?

  119. chris y says:

    Regarding the US oil production peak in the early 1970’s, when did $1/brl (production cost) Saudi oil ramp up to significant amounts? Oh yeah, the early 1970’s…

  120. David,

    In the case of Bakken Oil production. Here is what Reuters is reporting this week.

    Production from wells drilled into the Bakken has leapt
    from less than 3,000 b/d in 2005 to 233,000 b/d in 2010,
    and will crest over 300,000 b/d this year. Output from
    other formations in the same areas has actually fallen
    slightly but been more than offset by the 100-fold increase
    in Bakken oil.
    Bakken now accounts for 75 percent of all oil produced in
    North Dakota, up from 3 percent in 2005. It has easily
    overtaken production from the state’s two other leading
    formations — the Madison (8 percent in 2010, 33 percent in
    2005) and Red River “B” (9 percent in 2010, 34 percent in
    2005).

    https://customers.reuters.com/community/newsletters/oil/InsideOil20111027.pdf

    The supply of shale oil is driving the construction of railroad rolling pipelines. There are 5 new train depots being built to get the oil out of the basin via a rolling pipeline approach. Additionally, in the Bakken they are now experimenting with dual zone completions. There is a secondary shale that is now being developed with the same tools as used on the Bakken. It allows a company to have two shale horizontal high capacity wells with one hole.

    Here is a quote about EagleFord Production stuck behind pipe currently.

    The US could resume exporting some of its domestic crude oil production in 2012 when the output from Eagle Ford Shale in Texas ramps up.

    Eagle Ford shale crude’s gravity ranges from 42 API to 60 API with very low sulfur content, which in the US Gulf Coast refining terminology is considered a super light crude.

    But that’s the problem for US refiners: they aren’t built to process that type of crude. So the highest value for it may be outside the country.

    Current Eagle Ford production stands at around 100,000 b/d or more.

    http://www.platts.com/weblog/oilblog/2011/06/08/eagle_ford_crud.html

    As of July, 2011, Eagle Ford shale oil production (including condensate) stands at around 100,000 barrels a day. That figure is expected to rise to over half a million barrels a day by 2012. Enterprise Products Partners is currently building a 350,000 b/d pipeline network which will transport oil to Gulf Coast refiners as well as into larger pipeline networks which will send it on to the Cushing hub in Oklahoma.

    http://eaglefordshaleblog.com/2011/07/22/where-will-eagle-ford-shale-oil-go/

    David, the total production per new well is the key factor here. You are comparing conventional wells with conventional flow rates to new non conventional wells, with non conventional completions. The new wells are producing 5X to 10X what conventional wells were producing 5 years ago. EagleFord has 250,000 – 400,000 boepd of new production stuck behind take off constraints or is coming online in the next year.

    Best Regards,

    Jack

  121. Anthony Scalzi says:

    Ken Methven says:
    October 27, 2011 at 10:50 pm

    Apart from China, where is the global demand curve against global production?

    We can all see that price is likely to rise, give us some idea about when and how much….

    …and we already knew..”its wose than we thought

    ———————

    Here’s one:

  122. Jeff Grantham says:

    Except oil production didn’t peak in 2005. EIA data shows it was highest last year (31.72 Bb), and this year is on track to meet that level of production (and this during the economic slump when demand is down).

    http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=50&pid=53&aid=1

  123. MarkW says:

    “However, absolute power corrupts absolutely, regardless of whether it resides in government or free market corporations.”

    The problem with this analysis is that free market corporations can never achieve absolute power. Without govt stepping in to close a market, there will always be competitors waiting to take advantage of any mistakes (including over charging for product) that the big companies make.

  124. Matthew W says:

    Did America “Peak” with its oil production because America is producing less oil (having absolutely nothing to do with the physical supply, but political limitations??)

  125. Richard S Courtney says:

    SteveE :

    Your post at October 28, 2011 at 6:59 am purports to be answering my post at October 28, 2011 at 5:26 am but it completely ignores facts I presented.

    For example, your post says;
    “We’re now effectively in the oil age, and whilst there are different ways of producing oil such as from coal, these all cost more and currently are produced at a slower rate than conventional crude. Peak oil is not the running out of oil, or the ability to produce it, but is when the maximum rate of global production is reached.”

    That is NOT true. As I said in my post;
    “Many alternative sources have been found. These include opening of new oil fields by use of new technologies (e.g. to obtain oil from beneath sea bed) and synthesising crude oil from other substances (e.g. tar sands, natural gas and coal). Indeed, since 1994 it has been possible to provide synthetic crude oil from coal at competitive cost with natural crude oil and this constrains the maximum true cost of crude.”

    If you do not believe me then google for Liquid Solvent Extraction (LSE) process. We proved the technology both practically and economically with a demonstration plant at Point of Ayr, Wales, in the early 1990s. (There are several papers on LSE in the public domain and UNESCO commissioned one on it from me when I was the Senior Material Scientist at the UK’s Coal Research Establishment when we developed LSE. But the UK government owns some important technical details of it.)

    And your claim of increasing crude oil costs is also denied by my statement I quote in this post.

    The remainder of your assertions are also refuted by the facts in my post you claim to be answering.

    Richard

  126. MarkW says:

    “If Russia is now leading production and they are drilling at 30,000 ft., and BP is drilling in the gulf at 27,000 ft. , doesn’t that support the argument for abiotic reserves?”

    Depends on exactly where they are drilling. In subduction zones, oil bearing deposits will be pulled deeper and deeper, until the oil is destroyed by the increasing heat.

    Off the top of my head, I can’t think of a situation where we are likely to get 30,000 feet of accumulated deposits, but I suppose it is possible.

  127. Ramon Leigh says:

    All too often, discussions about oil seem to miss the point that the only major reason we need oil
    (aside from plastics, lubricating oils, etc) is to power our vehicles. We no longer use any oil to make electricity, although a fair amount is used for antique heating oil systems in New England.
    battery technology is rapidly advancing, despite continued high prices for li ion batteries being used for electric cars. Toyota (and the Tokyo Institute of Technology) just last week divulged a battery development program which they claimed a battery much lighter, with a 600 plus mile driving range and a cost at an unbelievable 1/10th current battery prices, making a very cost-effective electric car. Time frame : 3 years or so before commercial production. Another design from DBM-Energy in Germany also promises similar revolutionary advances. Either battery’s availability to the world’s automakers means the immediate death of gas powered personal vehicles. With per mile energy costs of roughly 3 cents, a battery that will far outlast the vehicle, and a minimum of maintenance costs, gas powered vehicles, and out overwhelming need for oil will disappear. For these reasons, estimates of future oil production I consider basically pointless exercises. Even today, right now, or rather in 6 months time, Tesla will produce the first truly practical electric sedan – their Model S, a car better than any gas powered competitor from Mercedes or BMW, and with a 320 mile driving range and a sub 45 minute recharge time, fantastically attractive and very fast with room for 7 passengers. True, it is practical only in its elevated price level, but even if none of the new battery technologies comes to fruition (extremely unlikely) , the prices of its batteries are expected to drop 50% in the next few years.
    Oil? Who needs it? Well, we do….. but not for long at the consumption rates we now enjoy.

  128. temp says:

    Crispin in Waterloo says:
    Octo

    A handful of big oil companies block small competitiors using government to control them? That, dear sir, is the very definition of capitalism, or perhaps it is closer to call it fascism as Mussolini defined it. I am sure you have heard of the game ‘Monopoly’.

    http://www.informationclearinghouse.info/article7260.htm

    Fascism is a form of socialism…. anytime the government does anything in the market thats adding socialism… Running a company out of business because you do things better then they do at a cheaper price then they do is reality. When the “monopoly” becomes fat and lazy another company comes along and kills them off… that is the nature of capitalism. On the other hand when the government steps in and keeps them alive that is called socialism.

    Please take some sociology classes and learn what capitalism is defined by sane ppl not defined by russian propaganda from the 60s and 70s.

  129. Back of the envelope math has the source rock still containing 75% +/- of the original oil. The missing 25% having risen up through geological rock formation structure until it was trapped in a sealed location building a pool of what is now considered conventional oil. We have barely begun to unlock the planets real source of historic production.

    The unlocking of the source oil for the conventional pools is going to provide a multi generational window of growing total production capacity for the US & World. Any nation with “significant” onshore shale deposits has the possibility to become a net energy exporter over the next 10-15 years as the technology is exported to known shale geological formations.

    The Majors have been drilling in Europe over the could of years, and with the lessons learned in the US being transferred now going forward (all of the majors are buying up the small guys who developed the technology, including statoil buying BEXP lately), I expect that Exxon, Shell & others will see their NG/liquids/oil production increase in Europe sooner rather then later.

    The Genie is out of the bottle now, the ability to export this technology to mature shale basins is going to impact global energy supplies in the near future.

  130. More Soylent Green! says:

    Ramon Leigh says:
    October 28, 2011 at 10:06 am
    All too often, discussions about oil seem to miss the point that the only major reason we need oil
    (aside from plastics, lubricating oils, etc) is to power our vehicles. We no longer use any oil to make electricity, although a fair amount is used for antique heating oil systems in New England.
    battery technology is rapidly advancing, despite continued high prices for li ion batteries being used for electric cars. Toyota (and the Tokyo Institute of Technology) just last week divulged a battery development program which they claimed a battery much lighter, with a 600 plus mile driving range and a cost at an unbelievable 1/10th current battery prices, making a very cost-effective electric car. Time frame : 3 years or so before commercial production. Another design from DBM-Energy in Germany also promises similar revolutionary advances. Either battery’s availability to the world’s automakers means the immediate death of gas powered personal vehicles. With per mile energy costs of roughly 3 cents, a battery that will far outlast the vehicle, and a minimum of maintenance costs, gas powered vehicles, and out overwhelming need for oil will disappear. For these reasons, estimates of future oil production I consider basically pointless exercises. Even today, right now, or rather in 6 months time, Tesla will produce the first truly practical electric sedan – their Model S, a car better than any gas powered competitor from Mercedes or BMW, and with a 320 mile driving range and a sub 45 minute recharge time, fantastically attractive and very fast with room for 7 passengers. True, it is practical only in its elevated price level, but even if none of the new battery technologies comes to fruition (extremely unlikely) , the prices of its batteries are expected to drop 50% in the next few years.
    Oil? Who needs it? Well, we do….. but not for long at the consumption rates we now enjoy.

    President Obama assures us that Energy Secretary Chu assures him that we will soon have a 100 MPG car battery. I don’t know what the means exactly, but I do know that an EV won’t be a suitable vehicle for me for most other people I know for quite some time. I’ll need to be able to go at least 200 miles between charges, climb hills, run the A/C in the summer and use the heat/defroster in the winter.

    But I don’t mind the time and money spent on EVs, as long as it’s not my money. If people willing buy them because they think it’s the best choice for them, so be it. But quit underwriting the purchases. The tax-credits for purchasing those vehicles is just more corporate welfare.

  131. Dave Springer says:

    theBuckWheat says:
    October 28, 2011 at 6:04 am
    “The truth is that we are awash in hydrocarbons that can be converted to usable fuels. The ONLY thing that matters is the price of the finished fuel product at the pump. That price reflects how much people are willing to pay for it. At today’s price, we can afford to convert many sources of hydrocarbons into the fuels we need. It just happens that for the time being, crude oil is the most economically efficient feedstock. The instant that some other source is better, we will start making our fuels from it.”

    You want the truth? I’m not sure you can handle the truth.

    The truth is that every alternative liquid hydrocarbon fuel can be produced more economically than using $100/bbl crude oil. The problem is that it can’t be made more economically than it can using $30/bbl crude. OPEC can make money selling crude at $20/bbl. So what happens is that OPEC can drive any company producing alternative liquid fuels straight the f*ck out of business whenever they want by lowering crude price below the alternative production cost.

    This is called price fixing and it’s a federal crime in the United States under the Sherman Antitrust Act of 1890. It’s also illegal under World Trade Organization rules and there’s plenty of people who’d like to take OPEC to the carpet on price gouging like this guy:

    http://www.defazio.house.gov/index.php?option=com_content&task=view&id=712&Itemid=70

    but no coalition has the sack to do it. So we the price-conscious working middle class get screwed at the whim of these criminal oil exporting countries. I think economic terrorism of this scope should be considered an act of war. I mean what are these incompetent impotent OPEC countries gonna do in retaliation – fly jet planes into tall buildings? Oh wait… they’re already doing that too.

  132. G. Karst says:

    Latest update on the E-CAT, a possible game changer. GK

    October 28, 2011

    From Rossi’s Journal of Nuclear Physics:

    http://www.journal-of-nuclear-physics.com/?p=516&cpage=4#comment-105244

    Andrea Rossi
    October 28th, 2011
    FIRST INFORMATION REGARDING THE 1 MW PLANT TEST:
    WE STARTED REGULARLY THE TEST THIS MORNING . EVERYTHING IS GOING WELL SO FAR. THE 1 MW E-CAT IS WORKING IN SELF SUSTAINING.

    TONIGHT I WILL PUBLISH THE NON SECRET REPORT THAT THE CUSTOMER WILL RELEASE.

    WARM REGARDS, I HAVE TO RETURN TO THE PLANT. SORRY, I CANNOT ANSWER TO THE MANY COMMENTS I AM RECEIVING. I WILL PUBLISH THEM PROBABLY I WILL NEVER FIND THE TIME TO ANSWER.

    WARMEST REGARDS TO ALL,
    ANDREA ROSSI

  133. Austin says:

    The problem with the OP is that it is a projection based on early 1900s technology.
    You could do the same thing with grain production based on 1500s technology.
    Both would be wrong.

    As for price, there is true scarcity and price scarcity. The latter is what we have due to the rest of the world industrializing.

    Two trillion barrels of oil are still in the ground in the US.

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

    http://nextbigfuture.com/2011/10/bakken-oil-eagle-ford-utica-shale-and.html

    http://nextbigfuture.com/2011/08/progress-to-unlocking-over-800-billion.html

    Not to mention what is offshore.

  134. Dave Springer says:

    Ramon Leigh says:
    October 28, 2011 at 10:06 am

    All too often, discussions about oil seem to miss the point that the only major reason we need oil (aside from plastics, lubricating oils, etc) is to power our vehicles. We no longer use any oil to make electricity, although a fair amount is used for antique heating oil systems in New England.
    battery technology is rapidly advancing, despite continued high prices for li ion batteries being used for electric cars. Toyota (and the Tokyo Institute of Technology) just last week divulged a battery development program which they claimed a battery much lighter, with a 600 plus mile driving range and a cost at an unbelievable 1/10th current battery prices, making a very cost-effective electric car. Time frame : 3 years or so before commercial production. Another design from DBM-Energy in Germany also promises similar revolutionary advances. Either battery’s availability to the world’s automakers means the immediate death of gas powered personal vehicles.

    All too often electric vehicle fanatics forget that the electrical grid is strained to the limit delivering enough electricity to run lights, television sets, air conditioners, and industrial processes.

    Petroleum supplies 37% of all energy consumption in the US. You can’t just fill a tanker truck up with electricity and drive around filling underground service station tanks with it.

    So you need to double the capacity of the electrical grid and double the generating capacity. Instantaneous? Don’t make me laugh. Trillions of dollars and decades to get it done. And that doesn’t count the cost of replacing every internal combustion engine with an electric equivalent and what that’s going to do to the price of copper for the windings and niobium for the magnets at the same time you’re using those in great abundance for the generators and wire in the electrical grid.

    And you can’t make electrical transportation aircraft so you’re still with a huge aviation fleet that needs liquid hydrocarbon fuels.

    Transforming the liquid fuel transporation infrastructure over to electricity is the stupidest most hare brained ill conceived poorly thought out idea in the history of transportation.

    And add to the above the very likely possibility that genetic engineering within the next decades, at a pace of progress which is reminiscent of semi-conductors in the 1970’s, can produce plants that spread across the ground in thick vines fixing their own nitrogen in poor soils and producing pumpkin like fruits filled with ethanol with built in spouts at the rate of 30,000 gallons/acre/year at a price under a dollar gallon from farm to gas tank.

    Liquid hydrocarbon fuels for transportation aren’t going away. Where and how we produce those fuels is all that will change. There’s simply far too much in the way of expensive ancillary infrastructure surrounding and supporting internal combustion engines and far too great of an expense in both time and money, and too many alternative ways to produce liquid hydrocarbon fuels, to ever see it replaced short of some unexpected breakthrough like a cheap clean cold fusion generator small enough to put in a vehicle. Good luck with that. The smart money is betting on rapid progress in genetic engineering to get bring about cheap photosynthetic production of liquid fuels. There’s plenty of sunlight and raw materials the only thing missing is an organism artificially optimized to produce these fuels. Right now they’re only produced as undesireable byproducts of metabolism like ethanol produced by brewer’s yeast. That will change. The basic technology is already here courtesy of 3 billion years of evolution. We just need to mix and match biologic functions from different organisms into one organism designed to fulfull uniquely human purposes.

  135. Ian W says:

    Dave Springer says:
    October 27, 2011 at 11:37 pm
    The U.S. has trillions of barrels in oil shale and trillions more equivalents natural gas and coal.

    Unfortunately something else that is nowhere near peak is EPA regulatory restraints and constraints on development of oil extraction, refining and indeed on any industry.

  136. proskeptic says:

    Is abiotic oil production not even worth discussing? Is the idea that Russia actually accepts the concept and that her geologists employ it to find new oil deposits just a myth?

    I’m really asking, not making some rhetorical point

  137. Keith says:

    People often bring up net energy as an argument against extraction of some unconventional and hard-to-get-at conventional oil; that it’s pointless using up more energy to extract the stuff than the oil itself would release when burned.

    This founders on a couple of basic flaws.

    Oil isn’t only used for energy. Almost as important to the modern world are plastics, along with a welter of other products produced from crude oil. It should be looked at as being a little more analogous to a typical mining or manufacturing process, which of course will use up more energy than it creates. Nobody suggests not mining for iron ore or bauxite because it is energy-intensive.

    Also to be considered is the economics of the process. If it COSTS more to extract the oil than it can be sold for, then it won’t be extracted (as was the case for the Albertan tar sands for a long time). If it can be extracted and sold profitably, to be used for activities that others value, then somebody will find it worthwhile to do so.

  138. kwik says:

    Ramon Leigh says:
    October 28, 2011 at 10:06 am

    Okay then. I will accept it when they sell these wonderful batteries on the open marked. In the mean time I will just treat it as any other press release. Show it to me, and I will believe it.

    And hopefully the battery factory doesnt do too much damage to the environment.

    After all, batteries doesnt grow on threes. Not even in Yamal.

  139. The U.S. has trillions of barrels in oil shale and trillions more equivalents natural gas and coal.- No wonder that the government pay less attention regarding this matter because they have more in their backyard for the “rainy season”.

  140. temp says:

    proskeptic says:
    October 28, 2011 at 11:20 am

    Is abiotic oil production not even worth discussing? Is the idea that Russia actually accepts the concept and that her geologists employ it to find new oil deposits just a myth?

    I’m really asking, not making some rhetorical point”

    No one really knows how oil is formed… much like global warming its based on “consensus” science. Russia from everything I’ve heard has had good luck in finding oil when it drills deep which is why they have begin exporting more and more.

  141. More Soylent Green! says:

    Crispin in Waterloo says:
    October 28, 2011 at 4:49 am
    @temp

    This is much the same in the US where the government and the handful of big oil companies have both locked out all oil companies and have basically prevent small oil companies from competing with the big names.

    I have no doubt that as socialism expands ….

    ++++

    A handful of big oil companies block small competitiors using government to control them? That, dear sir, is the very definition of capitalism, or perhaps it is closer to call it fascism as Mussolini defined it. I am sure you have heard of the game ‘Monopoly’.

    http://www.informationclearinghouse.info/article7260.htm

    What you describe ain’t capitalism Crispin, but that’s what the collectivists want you to believe. It is very close to (economic) fascism, you got that right. But fascism isn’t capitalism, either. That’s another lie the leftists like to tell. Modern socialism is based upon fascism, in that businesses are privately owned by heavily regulated and controlled by the government. Business owners are allowed to profit as long as they play ball with the government and don’t make waves. Private-public partnership? Pure fascism, too.

  142. Septic Matthew says:

    Logan in AZ: If it works as expected, the remarks here, and much else besides, will no longer have any relevance.

    We can hope, but if that thing works I shall be amazed. Up til now, Rossi and team have used a lot of sophisticated measures to avoid direct tests of whether it puts out more than a couple of watts continuous power per unit. I am not the first person to have noticed this. They are using “complex calorimetry”, whereas all they really have to do is use the heat output to power a Stirling engine (or Peltier effect device) to move a vehicle or drive an electricity generator. It is really easy to tell whether the device puts out more electricity than it consumes, or any other kind of work.

  143. Jeff L says:

    I’m a little late to this party, but David, excellent post.

    For all you arm chair quarterbacks who think they have this whole peak oil thing figured out & that it must be some sort of hoax, consider this. For the last half dozen years, anytime we have good economic data anywhere in the world, the price of oil goes up and if we have bad economic data, the price goes down. Why? Supply & demand, economics 101. Increased economic activity = increased demand. If the supply is so abundant & we aren’t close to the peak, why would price go up? Couldn’t we just produce more? Evidently those who make a living in delivering oil to the markets don’t think so. The markets are telling everyone that David is not far off the mark, whether you like his analysis or not.

    Consider also the relationship between oil & the economy 30 years ago – the price of oil drove the economy, not the other way around as it does today. There would be a glut of supply, the price would plunge & the economy would be stimulated by lower energy prices .

    We have seen a 180 degree change in the relationship between oil prices & the economy & it is easily related to the supply relative to the demand, which evidently , we can’t supply the markets the way we used to, entirely consistent with David’s hypothesis.

    For those who are so hot & bothered on the Bakken , Eagleford . etc – consider it in the framework of global supply & demand. Even if you combined all this new production & said it ultimately would get to 2 MMBOPD (a big stretch), that’s less than 2.5% of world demand. Consider that the average well world wide will decline at 4% per year & you don’t even have enough to cover decline of existing wells, let alone satisfy any increase in demand. Yeah, it’s great for US producers & the US economy, but it’s basically noise within this hypothesis.

    So, for all those who don’t agree with David’s hypothesis, stop your arm waving & show us how we are going to do it – how we are going to continue to increase our daily production. As someone who explores for oil for a living, I will be very interested in the SPECIFICS (no arm waving) of how the industry will accomplish it.

  144. Doug says:

    —-Is abiotic oil production not even worth discussing? Is the idea that Russia actually accepts the concept and that her geologists employ it to find new oil deposits just a myth?

    I’m really asking, not making some rhetorical point—-

    At any international conference, you’ll find the Russians also now consider organic rich sediments as the source. There are some old Russian theories which did not stand up to modern geochemistry, or to the facts of the spacial distribution of hydrocarbons

    The new shale production is simply done by drilling directly into the biotic source rock, and fracturing the crap out of it. The oil did not come from the mantle and seep into those impermiable shales—-that would have taken Halliburton and a million multi stage fracs.

  145. TRM says:

    ” rbateman says: October 27, 2011 at 10:27 pm
    Does China have any of these molten salt/thorium-burning reactors online?
    Does anyone else have any of these new reactors online?
    It would be good to see the results. ”

    I don’t think anyone has a LFTR online yet. We can only take the results from the one built and run in the 1960s for 5 years. The designs that China & India are pursuing are different.

    As to the peak oil is a matter $. The higher the price the more resources open up. If you think Canada has a lot of tar sands check out the Orinoco basin in Venezuela.

    Add in some high performance but way better fuel mileage engines like the MYT engine http://www.angellabsllc.com/

    and don’t even get me started about the Russian theory of abiotic oil in which case we will have oil for a long long time.

    Sorry but peak oil theory is a completely ignorant of technological advancement and hence not worth the paper it is written on (IMHO).

  146. Septic Matthew says:

    Dave Springer: I mean c’mon. Crude price went from $20/bbl in 2001 to over $120/bbl in 2008. What The F Is Up With That!? What kind of moron do you have to be to believe that price increase has any relation whatsoever to production cost or known reserves? This is all political and ecnomic manipulation.

    Oil demand increased faster than oil output, and the purchasers who could afford to bid up the price of oil in order to make sure that they had oil for their customers.. Increases in production might have occurred faster, but there has been insufficient investment in some places, as well as local violence and other social problems in other places. In the US, companies are actively prohibited from developing some of the oil reserves. So what you denote “political and [economic] manipulation” is not something simple.

    The price is determined by what the bidders (for the oil) and consumers (of products like plastics and fuels) are willing to pay.

    With high prices, expensive alternatives become more attractive, and these include deep underground and undersea reserves, and liquid fuel from coal, as well as biofuels (consider Brazil, where an aircraft manufacturers consortium is expanding development of bio jet fuel.)

  147. Max Hugoson says:

    “Septic Matthew says:
    October 28, 2011 at 11:53 am
    Logan in AZ: If it works as expected, the remarks here, and much else besides, will no longer have any relevance.

    We can hope, but if that thing works I shall be amazed. Up til now, Rossi and team have used a lot of sophisticated measures to avoid direct tests of whether it puts out more than a couple of watts continuous power per unit. I am not the first person to have noticed this. They are using “complex calorimetry”, whereas all they really have to do is use the heat output to power a Stirling engine (or Peltier effect device) to move a vehicle or drive an electricity generator. It is really easy to tell whether the device puts out more electricity than it consumes, or any other kind of work.”

    Wonderful! Unless I missed something, the Qdot out was measured by water flow rate and DeltaT. NOTHING could be simpler than that/

    Stirling Enginer for CALORIMETRY? Shirely, you jest!

    Input? I didn’t not observe the elments of that directly, but I understood it involved a standard watt meter/watt hour device.

    Have you ever MADE a Peltier effect device for calorimetry? I have. Frankly it’s nonsence compared to a Seabeck effect device.(You end up with the need for a “feedback circuit” to compensate for baseling operating temperature induced drift. )But then in any case, when you are talking 1000’s of BTU’s per hour, with steam…the question would be “why bother”??

  148. MikeEE says:

    Isn’t Figure 1 a completely worthless plot? All it shows it that we pumped oil before this year. If we had an infinite supply of oil, the chart would still show a downward trend…so how does that inform the discussion in any way?

  149. Septic Matthew says:

    Richard S Courtney says:
    October 28, 2011 at 5:26 am

    Well written. As a naturally critical person, I might rewrite this or that, but it was a good post.

  150. Anonymous Jeff L who makes a living looking for oil,

    Here is the Woods Mackenzie report on US production estimates 2012 – 2030

    http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf

    Results: Wood Mackenzie’s analysis found that U.S. policies which encourage the development of new and existing resources could, by 2030, increase domestic oil and natural gas production by over 10 million boed, support an additional 1.4 million jobs, and raise over $800 billion of cumulative additional government revenue.

    The report is 57 pages long. You might want read it.

  151. Jeff L,

    Here is the Woods Mackenzie report on US Supply Economics 2012 – 2030.

    Their conclusion is:

    Wood Mackenzie’s analysis found that U.S. policies which encourage the development of new and existing resources could, by 2030, increase domestic oil and natural gas production by over 10 million boed, support an additional 1.4 million jobs, and raise over $800 billion of cumulative additional government revenue.

    http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf

    The report is 57 pages and was released in Sept 2011.

  152. Septic Matthew says:

    Max Hugoson: Input? I didn’t not observe the elments of that directly, but I understood it involved a standard watt meter/watt hour device.

    Indeed. The device can be started with a battery bank. It doesn’t need a grid connection at all. The batteries can be recharged from a generator powered by a Stirling engine, with excess electricity used to power a lot of appliances like water pumps. air conditioners, Jaccuzzis and so forth. They could have done this 6 months ago, and there would be no doubt that the device worked.

    Other people have created similarly designed devices that unambiguously generate ~2 watts. Rossi claims that his “catalyst” enables the device to produce ~100 times that amount. If he is correct, he could have had a protoype in a kitchen running appliances for the last half year. It would not be hard to end all scepticism.

    Maybe Rossi’s device will produce useable power, but he has avoided doing so. If he does, I’ll believe in the device.

  153. _Jim says:

    b a cullen says on October 28, 2011 at 4:07 am

    I think what everyone is missing goes back to first principles; IF all of the hydrocarbons below ground were generated from CO2 in the atmosphere, the concentration of CO2 started out in the low percentage range [5 to 10 % range], and the atmospheric pressure early on was >200 atmospheres then we have not even started to scratch the surface of hydrocarbons present.

    Why is this not more self-evident to more ppl?

    If the above quoted section is not true, cam someone please provide some insight was to why not? (Perhaps the CO2 was ‘locked’ within compounds within the world’s liquids/oceans?)

    .

  154. Paul Hull says:

    Why not let a real oil giant weigh in? Here is a link to a 2007 speech by:
    Abdallah S. Jum‘ah, President & Chief Executive Officer, Saudi Aramco. His remarks were made at the Third OPEC International Seminar Vienna, September 12-13, 2006.

    The money quote is “…we are looking at more than four and a half trillion barrels of potentially recoverable oil. That number translates into more than 140 years of supply at today’s current rate of consumption. To put it another way, the world has only consumed about 18 percent of its conventional and non-conventional producible potential*, even leaving aside oil shale potential.”

    http://www.opec.org/opec_web/static_files_project/media/downloads/press_room/Abdallah_Jumah.pdf

    Now it is certainly possible that Mr. Jum’ah was trying to be political with the members of OPEC, but to what end? It seems to be an honest assessment of world oil reserves, both conventional and unconventional, as seen by Saudi Aramco engineers and geologists.

    For a fuller treatment, Bill Kovorik’s site at http://www.radford.edu/~wkovarik/oil/, provides a well referenced view of the subject of oil reserves, both proven and unproven, conventional and unconventional.

    pbh

  155. Scarlet Pumpernickel says:
  156. More Soylent Green! says:

    Jeff L says:
    October 28, 2011 at 12:19 pm
    I’m a little late to this party, but David, excellent post.

    For all you arm chair quarterbacks who think they have this whole peak oil thing figured out & that it must be some sort of hoax, consider this. For the last half dozen years, anytime we have good economic data anywhere in the world, the price of oil goes up and if we have bad economic data, the price goes down. Why? Supply & demand, economics 101. Increased economic activity = increased demand. If the supply is so abundant & we aren’t close to the peak, why would price go up? Couldn’t we just produce more? Evidently those who make a living in delivering oil to the markets don’t think so. The markets are telling everyone that David is not far off the mark, whether you like his analysis or not.

    Consider also the relationship between oil & the economy 30 years ago – the price of oil drove the economy, not the other way around as it does today. There would be a glut of supply, the price would plunge & the economy would be stimulated by lower energy prices .

    We have seen a 180 degree change in the relationship between oil prices & the economy & it is easily related to the supply relative to the demand, which evidently , we can’t supply the markets the way we used to, entirely consistent with David’s hypothesis.

    For those who are so hot & bothered on the Bakken , Eagleford . etc – consider it in the framework of global supply & demand. Even if you combined all this new production & said it ultimately would get to 2 MMBOPD (a big stretch), that’s less than 2.5% of world demand. Consider that the average well world wide will decline at 4% per year & you don’t even have enough to cover decline of existing wells, let alone satisfy any increase in demand. Yeah, it’s great for US producers & the US economy, but it’s basically noise within this hypothesis.

    So, for all those who don’t agree with David’s hypothesis, stop your arm waving & show us how we are going to do it – how we are going to continue to increase our daily production. As someone who explores for oil for a living, I will be very interested in the SPECIFICS (no arm waving) of how the industry will accomplish it.
    .

    Your entire premise just doesn’t hold up. We’re not short of oil reserves, that’s the point you’re missing. The supply of oil available on the market is an entirely different thing.

    Consider – Why are diamonds so expensive? They really aren’t that rare. The supply of diamonds, like oil, is controlled by a cartel. Why would OPEC want to flood the market with an oversupply of oil?

    As for hand-waving about solutions, get the government and the environmental watermelons out of the way and we will produce more oil. We don’t need central planning to make it happen, we need less central planning to make it happen. Allow the free market to work. The oil companies know how to produce more oil.

    Call this Economics 101, day 2.

    I am aware that we can’t outproduce OPEC. In the past, when OPEC’s domination is threatened, they have increased supply so as to put the threat out of business. Still, we can increase our domestic supply and production and move some of our oil use to LNG.

    Peak Oil is just a bunch of hand-waving, based upon a specious argument that oil production and oil reserves are the same thing. They are not.

  157. Kforestcat says:

    Dave

    No offense, but I see some key problems with the analysis presented above

    Background: Former oil field engineer (Halliburton Services) & chemical engineer with background: agricultural chemical production R&D (fertilizers), fertilizer economic analysis/price projections, coal gasification R&D, and electrical production (strategic planning).

    Key problems with the analysis are:

    1) The U.S. peak oil chart (Figure 2) fails to account for oil reserves the U.S. failed to tap due to political considerations. Had we tapped those reserves the chart would look quite different.

    2) Hubbert-like charts, like the World peak chart in Figure 3, tend to underestimate the amount of untapped reserves out there. In large part because, in the 1960s, it was believed that oil was entirely fossil derived. There is considerable evidence that this is not the case. Consequently, finds are being made in places oil is not supposed to be.

    3) The U.S. Department of Energy’s is very conservative in its estimates of world reserves. Private companies know that there is a lot more crude oil out there than the DOE figures suggest. When one talks to industry experts, privately, one comes away with an entirely different picture. (No criticism of the DOE. Conservatism is a good think when doing strategic planning – for say defense purposes)

    4) Hubbert-like evaluations are of no value whatsoever in projecting the discovery, use, and depletion of alternate oil sources such as: coal, shale, and tar sands. And the current shale gas boom shows just how fragile the Hubbert assumption is when directed to non-crude resources in similar formations.

    5) When considering sources for transportation fuels, one has to consider the break point of alternate oil sources. The break-even point for coal is about $100/barrel. This is a major reason U.S. crude oil prices don’t tend to stay high for too long. With a 400 year supply of coal, the U.S. can produce a lot of coal-derived oil. The break-even point for tar sands is much lower. Consequently, I don’t think should one should get overly exercised about crude-oil field depletion projections.

    6) Contrary to popular opinion, it matters not one whit how much energy is needed to get economic value out of a transport fuel. The value of transport fuels is in the ability to facilitate transportation. (i.e. the value is not in the heat produced).

    7) The analysis showing the linkage of agricultural price to crude-oil prices look wildly out of date. Specifically, the analysis operates on the long-established assumption that natural gas prices will track with the price of oil. This was a safe assuumption until recently. However, in the new age of abundant shale gas, it looks like the oil/gas linkage may well have been broken. Simply put, the price of natural gas appears to have de-linked from the price of oil. In practical terms, you can see this by the recent renaissance in U.S. ammonia production (which uses natural gas as a feedstock). Since the majority of agriculture energy usage is in fertilizer…well you can see the implications.

    I appreciate your analysis, I just don’t happen to agree.

    Regards,
    Kforestcat

  158. Paul Murphy says:

    This is utter nonsense. First, Hubbert also predicted that the peak would be reached in the 50s, 60s, and 80s. Second the world can never run out of petrochemicals because burning them changes a few valence bonds, but destroys nothing.

    And, most obviously, known reserves have increased in every year for which records exist – what has changed is the set of conditions, regulatory and economic, under which we access those reserves. “Recoverable reserves” have therefore fallen off a bit – but because of government rules, not because the oil isn’t there or isn’t reachable.

  159. JamesD says:

    There will be a peak, but I believe the calculations are early. I believe they are for conventional oil. The shale gas boom is simply amazing. Out in gas country the land looks like a porcupine with all the rigs. The big problem is moving it, we have so much. Producers are currently cut back. NGLs are certainly limited. All those condensates and butane can easily end up in the gasoline pool. The shale oil boom is just getting started, and it is amazing. Eagle Ford is HUGE, and we all know about Bakken. Alaska hasn’t even been tapped, nor the Rockies. We also have the oil/tar sands. The big one will be Venezuela, but Chavez currently has that screwed up. And Ven also has enormous gas deposits, I mean enormous, that are not being tapped due to political risk. Colombia has huge deposits, but they are in very remote areas. Still $100/bbl will get the infrastructure built. And what about other countries? We also have the oil companies tacitly admitting that abiotic theory is correct, pulling up oil at over 30,000 feet, outside the “hydrocarbon window” in the Gulf. Now some peak oil buffs think abiotic oil is wishful thinking. However, abiotic oil will still “peak”, when we hit the natural seep rate from the mantle. Anyhow, peak oil is a ways off. I think we need a government that gets us off of oil eventually. Just opening up Yucca mountain would be a big step. From what I’ve read, liquid salt Thorium is very promising technology. But who wants to invest the money with Obama in office?

  160. Gail Combs says:

    Kforestcat says:
    October 28, 2011 at 1:26 pm

    Dave

    No offense, but I see some key problems with the analysis presented above….
    ____________________________

    Thank you very much for the analysis. It is what I love about this site. – “Insider information”

    Lately the price of hay and livestock feed has been tracking the at pump price of fuel. When it doubled the costs also doubled. This does not always translate into a higher cost of food in the store (doubling) because farmers are often forced to “eat the cost” due to the problem of just one buyer.

    This “elasticity” has a long term down side. Over 50% of US farmers lose an average of $15,000 per year farming. 90% have off site jobs that cover that loss. The average age of US farmers is about 55. Sooner or later (I think sooner) the independents who are holding the food prices artificially low are going to be forced out. When that happens the economic dynamics becomes an entirely different ball game. This is especially dangerous because of the consolidation and vertical integration within the food cartel. Generally you are talking between four to ten players within each sector and no more.

    I think Dave is certainly correct to worry about our food supply but the major problems are The Global Land Grab combined with coldly calculated Over Regulation and Food Speculation where grain contracts are turned into “derivatives” If this sounds familiar it is what happen in the US housing market with some of the same players (See: http://www.guardian.co.uk/business/2011/may/06/goldman-sachs-set-contentious-agm)

    This is going to cause sky rocketing food prices all over the world well before anything like “peak oil” or “climate Change” gets a chance to kick in.

    I have been following this with mounting horror for several years.

  161. Kum Dollison says:

    If you set that EIA Databrowser on “Crude + Condensate” (oil,) and not on “total” (which gives oil, plus Ethanol, Natural gas liquids, refinery gain, etc,) you will find that Global production has increased by 0.0068 (call it seven tenths of one percent) since 2005, while price has essentially, I guess, Tripled.

    http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=50&pid=57&aid=1&cid=ww,&syid=2005&eyid=2011&freq=M&unit=TBPD

    Lessee, Price has Tripled, and Production is up 0.7%.

    What were you all saying about “Supply, Demand, Economics, yada, yada?”

    Of course we’re at “Peak Oil.” Are you dummies out of your cotton-picking minds?

    I’m, seriously, starting to doubt the “Skeptical” side of the AGW argument, now. I’ve been giving you people a lot of slack, but now I’m really starting to wonder.

  162. Rational Debate says:

    @Dave Springer says: October 28, 2011 at 4:57 am and October 27, 2011 at 11:57 pm

    Dave says about: William says: October 28, 2011 at 2:21 am

    Two of your links don’t work and the third makes no mention of the LEU fuel in latest generation of CANDU reactor being replaceable with thorium. I don’t think you have the first clue of what makes thorium different from enriched uranium to be quite honest.

    and

    There are currently insurmountable engineering difficulties with thorium reactors. There just aren’t any known materials that can simultenously resist both embrittlement from exposure to high level of radiactivity and corrosion from molten salts…

    I’m not sure I’d be talking about who hasn’t a clue, Dave. EBR II, Idaho Nuclear Engineering Laboraory, ran with liquid sodium coolant for 30 years. http://en.wikipedia.org/wiki/Experimental_Breeder_Reactor_II Hardly a case for “insurmountable engineering difficulties.”

    Engineering issues MIGHT exist for a different type of reactor – e.g., not a molten salt cooled reactor as you imply, but a very high temperature molten salt cooled reactor. You can find various papers about this, but here’s the first I ran across: http://arss.ornl.gov/reactor_design/icapp_2005_fast_reactor_Paper.pdf Even here, it’s not presented as anything close to ‘insurmountable engineering difficulties” but rather that testing is needed to verify that various alloys under consideration will work safely and to determine which are the best options. High temperature Brayton cycle designs increase the efficiency, but aren’t necessary for a thorium reactor.

    Meanwhile, misposting links doesn’t indicate that someone doesn’t know what they’re talking about wrt to a particular issue, just that they made a mistake in how they posted links. Frankly, you claim two of his links don’t work and the third doesn’t talk about a particular aspect – for me, his first link worked fine. The third didn’t, yet you imply it was the only link working. Even so, I did a simple search of theregister on thorium and easily found the article: http://www.theregister.co.uk/2011/02/01/china_thorium_bet/

    I don’t see anywhere in William’s post where he claims all three links discuss thorium use in CANDU reactors. None the less, the fact is that they have developed one: http://www.world-nuclear.org/info/default.aspx?id=528&terms=candu%20AND%20thorium Scroll about halfway down the page to “heavy water reactors.”

  163. Jeff L says:

    Jack H Barnes says:
    October 28, 2011 at 12:50 pm

    Jack,
    Interesting read. I guess you don’t find any of this slightly political. Call me cynical, but Woodmac is hardly a unbiased 3rd party. They make money by doing O&G deals. So, they put out a release like this saying we are going to create heaps of jobs , make all these tax revenues & free ourselves from oil imports. All sounds good, especialy given the current crappy economy. If they are lucky, some of it sticks & the politicians ease restrictions & they end up doing more deals. Don’t get me wrong – I do hope it has that effect – I would love to see greater access, but I think it is important to understand the source of the analysis.

    Look at some of the data. Atlantic OCS production to 1.5 MMBOED. The wells drilled to date have been anything but encouraging & modern seismic data analysis (ie offset data) has not given any encouragement that there are significant reserves out there. 1.5 MMBOED from ANWR – hmmmm …. maybe if it is mostly gas. Having worked these areas, it is my opinion that these numbers are wildly optimistic. I have no reason to believe the rest of their #s aren’t also wildly optimistic.

    The other key for you (or anyone else reading the report ) to understand is these production rates are projected to 2030 – 19 years from now. What’s the rest of the world going to do decline-wise?? How about just 2%, which, since I assume you are in the business, you know is a very optimistic assumption. The current ~ 80 MMBOPD being produced outside the US drops to 53.4 MMBOPD. Add in that additions 7 MMBOPD (can’t add in the gas equivalent) from the US from complete deregulation and you are at ~ 60 MMBOED, unless the rest of the world has added another ~ 20 MMBOEPD in the mean time – just to stay flat – which would the equivalent of 10 times the peak production of Prudhoe Bay – which means finding a Prudhoe equivalent (on rate) every other year.

    Jack, all I am saying is when you do the math, the task is daunting at best, if not impossible, to keep continue producing at ever increasing rates worldwide (with the definition of peak oil being that your rate peaks, then starts to decline). I could be wrong, but I am betting I am not.

    Also understand that just because we have a peak, the rest of the alarmist hysteria does not necessarily follow. I don’t believe it will. It is important to separate the alarmism from the science.

  164. SteveSadlov says:

    Realize that lower 48 production produces heavy crude. Furthermore, labor costs have gone up and up over the past 50 years. Those factors combined with increasing enviro regs have resulted in fewer and fewer active exploration and extraction operations. The poster child is California, where we are literally leaving massive quantities of perfectly good oil in the ground, especially offshore. Well, the good news is, years from now, once the Green Religion has been discredited, smarter folks than current denizens will get back to work, and I reckon the US crude will be highly valued.

  165. Jeff L says:

    More Soylent Green! says:
    October 28, 2011 at 1:22 pm

    “Peak Oil is just a bunch of hand-waving, based upon a specious argument that oil production and oil reserves are the same thing. They are not.”

    We can agree the idea that “oil production & oil reserves are not the same thing” on but it appears to me based on your comments that you think peak oil is a theory about reserves but it is a theory about production rate. What peaks is rate.

    Have you looked an initial rates & decline curves for resources being developed today vs in the past ? If you make plots of these vs time , you will see that collectively (industry-wide) initial rates are trending lower & decline rates are getting steeper. Why is this? Because we are moving lower & lower on the resource triangle – ie all the low hanging fruit is basically gone. Thus, for an equivalent reserve today, it comes out slower initially & declines to lower rate faster. This gets to your point – because of this, even though we may have vast reserves, the rates from these reserves will never match the rates of fields from the past , high on the resource triangle. As such, with rates from these reserves being lower & declining faster, it becomes progressively harder to overcome the decline of all wells producing – resulting in a peak in your production profile. It’s just basic math that’s unavoidable.

    I hope this helps your understanding of what the peak oil theory is all about.

  166. Kum Dollison says:

    In fact, if you go from July, 2005 to July 2011 Oil Production is DOWN 20,000 Barrels/Day.

    And, btw, you all keep overlooking that little e, as in BOe. That little e means is’s a combination of oil, and nat gas; and nat gas ain’t oil. And, a lot of it in the “shale” plays is just being vented off, not collected (because there’s not going to be enough of it, long enough, to bother laying the pipeline to get it.)

    I have no idea how you people can look at the price of oil almost tripling over a 6 yr period, leading to a drop in production, and not come to the conclusion that we’re probably pumping about as much on a daily basis as we’re ever going to. But, I would consider a nice, quiet room, and some serious contemplation might be in order.

  167. Doug says:

    Jeff L says:
    October 28, 2011 at 12:19 pm

    As someone who explores for oil for a living, I will be very interested in the SPECIFICS (no arm waving) of how the industry will accomplish it.
    ———————————————————————————————————————

    As someone who also explores for oil for a living, and has found so much of it that I can sit back and watch the checks and consulting jobs roll in, I have no question that Jeff L is missing the big picture.

    Liquids are always tough to find, There are many, many, Bakken and Eagle Ford type type plays available world wide. Here in the US, in some of the most peaked out, explored out places on the globe, production is soaring. Don’t compare Bakken and Eagle Ford to world wide demand without considering world wide potential, Take a look at a core of the Banuawati shale in Indonesia, or the La Luna of Venezuela for starters.

    Gas is being found everywhere. For entertainment, google “peak gas”, or “Hubbert curve gas” and read some stuff a few years old. Recently 748 TRILLION cu feet were found in one field in Turkmenistan. Add that to the 40 TCF found offshore Mozambique, the western Australian gas, and all the shale gas you could ask for, Convert recently proven gas reserves to BOE and stick it on any of the figures in the article, and you see that all those curves and graphs are out of date and irrelevant. Conversion of cars to CNG (as all the buses in New Delhi already have), or electric, powered by gas fired power plants, will shift the demand from liquids to gas.

    Who do you work for, Jeff L? How can a pessimist find anything?

  168. SteveSadlov says:

    RE: “I suspect when denominated in gold, the price is flat or declining.”

    Bingo!

  169. Jeff L says:

    Doug says:
    October 28, 2011 at 4:08 pm
    “How can a pessimist find anything?”

    Nice ad hom Doug. That really added a lot to the conversation.

    I guess you missed the point though. I didn’t say there was nothing to find.

    Best of luck in your consulting business.

  170. DrChaos says:

    As far as I can see, and I’m open to correction, peak oil had broad similarities to AGW. Just as there’s no physical mechanism for CO2 to cause runaway warming, similarly, there is no physical/chemical mechanism to turn highly oxidised waste matter/detritus into highly reduced/high chemical potential matter like hydrocarbons. If the fossil theory is true, surely it would be pretty easy to replicate in a lab? They can’t do it, but hydrocarbons can be made by pressurizing some fairly elemental compounds and heating them up. I was a dyed in the wool peak oil doomster until I read Thomas Gold’s book on it. It was like someone switching on a light. In fact it was a very similar feeling to when Climategate broke.

  171. Gail Combs says:

    #
    #
    MarkW says:
    October 28, 2011 at 9:32 am

    “However, absolute power corrupts absolutely, regardless of whether it resides in government or free market corporations.”

    The problem with this analysis is that free market corporations can never achieve absolute power. Without govt stepping in to close a market, there will always be competitors waiting to take advantage of any mistakes (including over charging for product) that the big companies make.
    _________________________________________

    When you think about it, big companies are at a disadvantage. They have a few advantages.
    1. The ability to BUY politicians and therefore political advantages like skewed regulations.
    2. “Cheap” loans of fiat money from Fractional Reserve Banking.
    3. Deep pockets – maybe

    The disadvantage is a large unwieldy management system where “team playing” and “paper pushing” are valued over innovation. The need for documentation to bring order out of chaos. A need to please the “stockholders” (normally mutual fund managers) every quarter.

    With smaller companies there is usually a direct line of communication between the owner and the customers and workers making a small company a lot more responsive. Since small companies are privately owned, long term plans can be made and implemented without worrying about “pleasing” the stockholders.

    Here is an example of what I mean:
    “Produce 13 to 14 times more patents per employee than large patenting firms. These patents are twice as likely as large firm patents to be among the one percent most cited.” http://www.smallbusinessnotes.com/small-business-resources/how-important-are-small-businesses-to-the-us-economy.html

    Allowing monopolies or cartels to form is, in my opinion, a really bad idea in terms of the health of an economy.

  172. John David Galt says:

    “Peak whale oil” occurred sometime in the 1880s. It took huge government subsidies, punitive taxes, and rationing to enable our country to switch to other light sources.

    NOT!!!

    And the government has been predicting “no more oil in 20 years” since the first oil was produced.

    When is the public going to wise up and stop believing people who stand to profit by having us believe the sky is about to fall?

  173. Gail Combs says:

    …..Lessee, Price has Tripled, and Production is up 0.7%.

    What were you all saying about “Supply, Demand, Economics, yada, yada?”

    Of course we’re at “Peak Oil.” Are you dummies out of your cotton-picking minds?

    I’m, seriously, starting to doubt the “Skeptical” side of the AGW argument, now. I’ve been giving you people a lot of slack, but now I’m really starting to wonder.
    _____________________________

    Part of “economics” is the formation of “cartels” who set prices and stomping out competition. If you do not think all these people talk to each other and cooperate then what in heck do you think OPEC, WTO and the yearly Bilderberg Conference are about???

    Since this is about food, also follow IPC– the International Food and Agricultural Trade Policy Council and its handy work the World Trade Organization Agreement on Agriculture.

    The world DOES NOT have “Free Trade” it has trade dominated by a few very rich corporate cartels. If you are not part of those cartels you get squashed. I watched it happen to my old company. It took me years to figure out what actually happen and why and the truth will never be know except to a very very few. (It is too long and involved to get into here.)

  174. Kum Dollison says:

    Peak Oil is not about “no more oil,” or “running out of oil.”

    It’s about reaching maximum “flow rate.”

    From 2002 till 2005 Global Oil Prices increased, and Global Oil Production increased.

    After 2005 Prices continued to rise, but Global Oil Production leveled out. Flatter’n a pancake.

    This is called, “Peak Oil.” It is Not “Peak Ethanol,” or “Peak Nat Gas,” or “Peak Cow Patties.”

    It is “Peak Oil.” The point at which “flow rates” flatten out, gasoline gets more expensive, and Recessions come, and go with greater frequency.

  175. Rational Debate says:

    re: SteveE says: October 28, 2011 at 6:59 am

    whilst there are different ways of producing oil such as from coal, these all cost more and currently are produced at a slower rate than conventional crude. Peak oil is not the running out of oil, or the ability to produce it, but is when the maximum rate of global production is reached….Peak oil will happen because the cost of producing it will exceed what people can afford to pay. An alternative will be found, but the age of oil will have ended.

    I personally think it will be nuclear fusion that will take over, but my friend who works at the Joint European Torus tells me that commercial fusion reactors are about 25 years away.

    I believe we’re a long way away from the end of the ‘age of oil’ unless some revolutionary technical discovery is made. Others here have already metioned other resources along with shale oil, and I’ve posted this numerous times in various places: 2004 study for Fed. Gov: http://tinyurl.com/3r92rha

    IIRC, basically says that the USA is the Saudi Arabia of shale oil, with over 2 Trillion in technically recoverable oil commercially competitive at about $80. Enough to cover ALL of America’s oil needs at 2004 levels of consumption for the next 100 years. Like anything else, ramping up takes some time and I suppose there could be some supply/demand mismatches over time, but I can’t see how we’ve got anything to worry about in terms of “peak oil.”

    Unless it is to worry about government interferance causing huge problems – now THAT’S something that is already occurring in spades and has cost us dearly. That is well worth worrying, complaining, and trying to do something about – which primarily means contacting your state and federal representatives and complaining, and voting out of office those who keep further and further restricting our ability to use our own resources.

    As to fusion – it’d be great, I’d love to see it happen – but frankly we’ve been “about 10 years away from commercial fusion power” according to some of the most optimistic best experts for about 50 decades now. Last I knew we’d only managed to sustain a fusion reaction for something like 6 seconds, and we’ve yet to reach “ignition” (the point at which the reaction produces more energy than is put in to start/maintain the reaction). Until that occurs, unfortunately fusion is still pie in the sky for all intents and purposes.

  176. Rational Debate says:

    re: Ramon Leigh says: October 28, 2011 at 10:06 am

    Either battery’s availability to the world’s automakers means the immediate death of gas powered personal vehicles.

    I’d love to see some of those advances pan out. Even if they do, we would still be a LONG way away from “the death of gas powered personal vehicles.” Not only are there electrical grid and electrical production issues, charging stations, etc., etc., but the majority of people can’t afford to just scrap the vehical they have and buy a new vehicle, no matter how cheap the operating costs of the new vehical are. Let’s say gas costs $4 gallon, you drive 15,000 miles per year, and get 20 mpg. $3000 a year for gas in a vehicle you aready own (or owe thousands on) is far cheaper than losing the value of the vehicle you currently own entirely, and paying $30,000 to ??? for a new vehicle (or indebting yourself for that amount plus all the additional interest if you finance) .

  177. Rational Debate says:

    re: Kum Dollison says: October 28, 2011 at 3:20 pm

    …Lessee, Price has Tripled, and Production is up 0.7%. What were you all saying about “Supply, Demand, Economics, yada, yada?” Of course we’re at “Peak Oil.” Are you dummies out of your cotton-picking minds?

    You REALLY think that locating, getting the appropriate permits and doing all the required studies etc., then setting up a rig, drilling, and putting into production can respond that fast? You really think the price of oil has nothing to do with the worldwide value of the US dollar? That wars and uprisings in various parts of the world have no effect on price of oil?

    I believe you need to check your own assumptions before casting aspersions on others.

  178. Rational Debate says:

    re: Jeff L says: October 28, 2011 at 3:48 pm

    Well, here’s another study for you, by a different group, discussed here:

    http://hotair.com/archives/2011/07/22/study-picking-up-the-gulf-oil-permitting-pace-could-result-in-230000-jobs/

    Study: Picking up the Gulf oil permitting pace could result in 230,000 jobs

    “A new study by IHS Cambridge Energy Research Associates shows the current (slow) pace of permitting for Gulf oil exploration and production continues to cost the country in jobs, government revenues and oil production….

    …Specifically, compared to historical trends, pending oil exploration plans are up by nearly 90 percent, but approvals are down by 85 percent — and the approval process has slowed from an average of 36 to 131 days. Over the past year or so, the backlog of deepwater plans pending approval has increased by 250 percent. Drilling permits for both shallow- and deepwater have declined by 60 percent.

    Aligning the permitting process with the industry’s production capacity could result in 230,000 American jobs and more than $44 billion in U.S. gross domestic product — all by 2012. That would mean more revenues for the federal government and less money going to foreign governments.

    The employment effects would not be limited to the Gulf states. One-third of the jobs would be generated outside the Gulf region in states like California, Florida, Illinois, Georgia and Pennsylvania….” (full article & link to pdf study online)

  179. Jeff L,

    Thanks for the reply, and while we may agree to disagree, I am enjoying our conversation. I will start off with “trading” some points made. Agree that WM is a paid consultancy with a buttered side to the bread. I also will give you that based on history the Atlantic portion is completely hypothetical. It could be significantly richer or poor then estimated at this time.

    I believe that California off shore and on shore is however significantly under counted for what it is capable of producing. Specifically, the string of pearl fields untouched heading out to sea which I am sure you are aware of.

    Secondly, the shale source rock for California’s production has not been tapped yet.

    Yet being the key word, one of the Majors in Southern Cali is requesting the ability to drill hundreds of new wells into their shale zone. They are going to use acid treatment at this time, skipping the hydro fracking.

    If my envelop math is correct, there is 1-2 MMboepd in growth cooked into the next 5 years for the US going forward. I am now bearish on CL prices (WTI) as historical basins are reevaluated for their source rock. The US will start to export crude selectively again based on refining capacity needs.

    We are going to be exporting LNG around 2015, instead of importing LNG due to demand needs. I used to be a peak advocate, however, in the last few years technology has changed the whole dynamics of the game. I accept that everything I believe, has changed, when the facts changed.

    The US has increased its production of NG to the point its the largest in the world again. The US is actively growing its natural gas supply’s organically. The US has grown its crude & liquids production for the last 3 years. The US is on pace to produce an additional 1 million boepd in the next 3 years and 2 million boepd over the next 5 years. When you include major tar sand projects, there is close to 3 million boepd in North America of new production arriving in the next 5 years.

    A significant drop in longer term average prices in crude is going to happen. Slowly. Which will help the US economy both at the consumer level, but also at the business transportation costs and finally at the balance of payment side, keeping capital or better said liquidity in the US instead of exporting it.

  180. Smokey says:

    There is a much bigger problem than the supply of oil.

    The Obama Administration only allows drilling in the green area. The immense reserves in the red areas are off limits. Why?

  181. Rational Debate says:

    re: Kum Dollison says: October 28, 2011 at 4:03 pm

    …I have no idea how you people can look at the price of oil almost tripling over a 6 yr period, leading to a drop in production, and not come to the conclusion that we’re probably pumping about as much on a daily basis as we’re ever going to. But, I would consider a nice, quiet room, and some serious contemplation might be in order.

    Interesting that you picked a single month 6 years ago as a comparison. If one wants to look more rationally at the issue, you’d consider the recent violatility in oil prices, and try looking at the average annual inflation adjusted values. That’d be far more representative. If one does so, even for your 6 year period, your claims really fall apart. It would seem that 2005 avg. inflation-adj. crude price was $57.57. Far higher than your claim. Meanwhile, 2011 isn’t quite complete yet (especially if one factors in inflation), but the 5 year comparison would be to a 2010 avg. inflation-adj. price of $73.44. I do believe that’s a little over 1/4 higher – and nowhere near 3x higher.

    http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_chart.asp

    http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp (<–for the annual figures)

    Please, take your own advice and find that nice quite room for some serious contemplation.

  182. Rational Debate says:

    OPEC Oil Production vs. Price 1973-2011: http://www.wtrg.com/oil_graphs/PAPRPOP.gif
    Non-OPEC Oil Production vs. Price 1973-2011: http://www.wtrg.com/oil_graphs/PAPRPNT.gif

    Many other charts with discussion here: http://www.wtrg.com/prices.htm

  183. Kum Dollison says:

    I picked July because July of 2011 was the last entry. Many fields go down for maintenance at the same time every year. It seemed like a rational comparison. But, if you go Jan of 2005 to July of 2011 it doesn’t make much change.

    Prices were jumping around quite a bit from 04 to 06 ( But if you want to call ’05 as $55.00 that’s okay, too. If you average Brent, Tapis, Louisiana Light, Prudhoe, Nigerian Bonny Light, Minas, etc it will come out to about $115.00, today. So that would be at minimum, a Doubling of Price with a loss of 20,000 bbl/day of global production over a Six Year Period.

    I could have gone back to ’98/’99 and come up with a 1,000% Increase with, maybe, a ten or fifteen percent increase in production. The fact is: Oil Prices have been rising ballistically for a Decade, and Production stalled out Six Years Ago. And, the Huge, Smart Money Bet is that you’re only a year or two away from the beginning of the decline.

  184. Kum Dollison says:

    Oh, and don’t even think of using WTI. It’s, presently, a “land-locked” puddle of crude that does not affect world oil prices, nor even the price of the gasoline/diesel you purchase down at the corner.

    The most representative, widely-used index is Brent (70% of oil contracts are benchmarked to it.)

  185. The logistic model is woefully underpowered and a realistic study is authored by me

    http://TheOilConundrum.com

  186. David Archibald says:

    cedarhill says:
    October 28, 2011 at 2:42 am
    The reason why Chu and the other nut-case greenies have liquids supply increasing is because if generated a realistic assessment then that would become the number 1 problem, not AGW.

    Luboš Motl says:
    October 28, 2011 at 6:16 am
    Love your work Lubos. No matter what its shortcomings, Hubbert was able to predict US oil production 35 years in advance using the methodology he pioneered in the oil patch. This was when the official estimates had US oil reserves at three times what Hubbert said they would turn out to be.

    mike g says:
    October 28, 2011 at 6:22 am
    Yes the Chicomms are going gangbusters on CTL. Not a peep of interest from anyone in the Western media because it would mean that all the AGW sacrifices would be for nought.

    Jeff L says:
    October 28, 2011 at 12:19 pm
    Jeff, I also explore for oil for a living. I operate 8 .6 million acres and have a net position to my company of 4.0 million acres. That ground has only got seven wells in it. I expect to be poking holes in it for at least the next 20 years. A neighbouring permit recently had a 20 million barrel recoverable discovery. As well as that, I do climate science and medical research (in that I am the inventor of a drug for benign prostatic hyperplasia).

    Jack H Barnes says:
    October 28, 2011 at 12:47 pm
    Wood Mackenzie sold their souls very cheaply to write that rubbish.

    Kforestcat says:
    October 28, 2011 at 1:26 pm
    The US consumes about 64 BCF per day of natural gas. If the US wanted to replace 9 million barrels per day of oil imports by switching to CNG, that would take 54 BCF per day. As the oil price rises, that switching will take place. Increased demand for natural gas from its use as a transport fuel will send the natural gas price back to parity with the No 2 fuel oil price. Don’t plan on low natural gas prices for longer term investment decisions. In Australia here, the LNG market is taking natural gas prices to oil price parity despite an apparent abundance.

    One of the better investments at the moment might be conventional natural gas fields with their value currently suppressed by the shale gale.

  187. kwik says:

    Mike C. says:
    October 28, 2011 at 3:44 am

    “I must say, I’m rather disappointed to see this presented here with no commentary from Anthony.”

    Why? I think it is interesting. The post is nonsense to me, but reading the comments is lots of fun.

    The funniest thing is that it seems to be some underlying urge to ask governments to do something about “it”. Like if a government was ever able to to anything to solve such a “problem”. It is like asking a government to set the price on eggs. Won’t solve a thing. Will only create another even bigger problem down the road. To many, or to few eggs. Peak egg.

  188. moonkoon says:

    Apart from electricity supply problems, another point about electric vehicles that take power directly from the grid is that they could cause many state financial models to experience “peak fuel tax” issues. :-)
    Many countries derive a significant amount of their revenue from liquid fuel taxes.

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

    And electric vehicles avoid the collection point, i.e. the gas station. Ask your local politicos how they might feel about all that spending power slipping through their fingers. “Not until Hell freezes over!” (or words to that effect), will likely be the dismayed reply.

  189. Andrew McRae says:

    Richard Courtney @ 5:26am said:
    “The usage of a resource may “peak” then decline, but the usage does not peak because of exhaustion of the resource.”
    This statement is mostly true and beside the point. It is devoid of worth. As you then go on to correctly point out, the ratio of Energy Returned on Energy Invested is often the deciding factor, even before complete exhaustion of the material. Whatever is not recoverable is not a resource in the economic sense of the word, which is why economists love to argue that adding more capital and technology expands the “resource” base. But the “basic economics” does not alter the basic reality. You have spent a lot of words effectively supporting my point whilst remaining under the impression that you have argued against it. It’s as though you don’t understand the meaning of Peak Oil theory. The relevant peak is the extraction rate, not total reserves. Total reserves are just a rough indication of when the peak rate will be hit. Declining extraction rate leads to declining EROEI which is the physical basis for the Hubbert logistic model and other non-Hubbert models of oil production. So your argument here is against a strawman.

    But this next part was the insanely hilarious part:
    “In the real world, for all practical purposes there are no “physical” limits to natural resources so every natural resource can be considered to be infinite.”

    Wow.
    So trees are unlimited? Tell that to the Britons of 1700, the Japanese of 1900, and the ex-inhabitants of Easter Island.
    So arable land is unlimited? Tell that to the Mayans whose population exceeded their agricultural output.
    So oil is an infinite resource? Tell that to the lower 48 USA states, which peaked almost exactly on the schedule predicted by Hubbert, despite no restriction on exploration and production, no lack of demand, and no better alternative resource for transport energy being available. That’s exactly the effect you say does not happen. The fact that they moved exploration outside the usual continental zones to get more oil is just changing the question and moving the goalposts. That can’t be used to argue against the validity of current Peak Oil concerns because when you hit the peak extraction rate of Earth’s total recoverable resources there is no other planet to tap into.

    A critical error in your thinking is that you presume the economic and physical limits are disjoint. A physical limit of extraction rate manifests as an economic event of price comparison. Just because your economically rational actor decides it’s time for a better alternative does not deny the physical origin of the event that prompted that economic decision.

    A given discovery rate, extraction technology, and consumption rate leads to a fixed date of peak extraction rate for global oil. Improving technology stretches the curve to the right, but at a higher production cost subject to diminishing returns. At this point you will likely claim that non-conventional fuels will be brought online. EROEI kicks in and if you are still using oil to power your non-conventional production and it costs 1 BBL of conventional oil to deliver 1 BBOE of alternative to market then the project will not even go ahead. But even if the EROEI is viable, if these alternatives are not ready *at scale* and *on time* when the physical limit is reached you will still get enormous economic disruption due to oil shortages. To fail to plan is to plan to fail.

    The reality is that natural resources are limited physically in cumulative size (eg consumables) or supply rate (eg renewables), and practical economic supply cannot be expanded beyond what is real, regardless of price and technology. Oil is geologically limited in both size and production rate – it must be on a finite size planet. Sure, you may not reach any physical limit for 50 years… right up until the day you hit the physical limit, and at that point “basic economics” will be of no help. We don’t want to hit the physical oil limit or the price limit without a feasible alternative, but you deny there is even a limit that can be hit. The irony is that it is this same complacency about the physical limit that makes it more likely you will be hit – by not sufficiently executing a transition plan in enough time. e.g. it will take more than 8 years to convert hundreds of millions of cars to run on CNG.
    If you do not have knowledge of any feasible plan to avoid the economic impact of oil shortages then you are in the same Peak Oil boat as the rest of us whether you admit it or not.

    If I understand you correctly, you are saying that because we are so clever and industry is always on the lookout for a better deal, Peak Oil will not be a problem because it will only occur as we voluntarily switch to other better sources of energy (or new oil resources) when conventional oil costs exceed the new alternative. In other words, the rate peak is determined by the advent of substitutes rather than a physical peak necessitating substitutes.
    What you are effectively saying then is that all these predictions of an oil decline during this decade are not necessarily doom but are just a prediction that during the next 8 years a new resource will be discovered that can adequately substitute for both the oil capacity and production rate of two Saudi Arabias and will be developed and deployed so widely that it triggers a measurable voluntary switch away from conventional oil before 2020, AND the oil business already has a plan for doing all of this, AND they are already executing it.
    Richard, I hope you turn out to be correct. However, that is a high hope and hope is not a plan.

    All I have heard so far from you is that because Peak Oil doomer predictions have been wrong in the past the Earth must therefore have an unending chain of recoverable resource types which started with flint and extends to infinity, which is insane. Your analogy of peak flint would have been greatly troubling to those in the neolithic flint business, and the peak flint theorist was proven right in the end. But your flint analogy is devoid of worth because recyclable reusable materials for structural purposes are not in the same league as consumable energy sources. Unlike oil production, the flint business did not use flint as its energy source. Cherry picking an example in which a physical limit was not reached does not disprove physical limits to resource usage generally. Pretending that finite resources are practically unlimited is the mentality that has got us into this problem.

    Far from being “devoid of any worth”, my own assertion about the inevitability of an oil peak simply held no value to you. So it all boils down to the date. You believe the Peak Oil hype is unfounded because, deep down, you know there is a physical peak in carbohydrate production in the future but you think it is far enough away that it is worthless to begin making expensive preparatory changes to our civilisation any time this decade. I would like to know what evidence there is for this apparent optimism. There must be a carbohydrate peak date, so in your opinion what is it really? Why? What do you know about this problem that is not known to people who’ve spent the last 15 years studying the facts? If somebody else were to tell you that this whole Peak Oil issue is nonsense because we have enough oil to power transport at current demand for another 900 years, how would you know that they were talking rubbish but you aren’t?

  190. tmtisfree says:

    Gasguy has it exactly right.

    Get the price of oil high enough & we will sell you all you want.

    – Bucky’ Brock—CEO of Brock Exploration 1982

    To predict ultimate [oil] reserves, we need an accurate prediction of future science and technology. To know ultimate reserves, we must first have ultimate knowledge. Nobody knows this, and nobody should pretend to know.

    – M. A, Adelman (The Real Oil Problem)

  191. Patrick says:

    Michael Lynch and others with relevant experience in the area of oil production estimation have shown why the Peak Oil doomsayers have been wrong time and time again. Their theories of total recoverable resources are just not accurate. They join a litany of other false eco-prophets such as The Club of Rome (Limits to Growth, 1972), Paul Ehrlich (The End of Affluence, 1976), etc. who have predicted the end of certain finite resources, only to be proven wrong – multiple times (http://www.reason.com/news/show/34758.html“>http://www.reason.com/news/show/34758.html).

    http://www.masterresource.org/2011/03/lynch-power-hour-interview/

    http://blog.aynrandcenter.org/power-hour-episode-2-peak-oil-with-michael-lynch/

    http://www.masterresource.org/2011/02/simmons-failed-wager-iii/

    http://www.masterresource.org/2011/02/end-peak-oil-theorist-simmons-i/

    http://www.masterresource.org/2010/12/peak-oil-puff-on-huff/

    http://sepwww.stanford.edu/sep/jon/world-oil.dir/lynch2.html

    http://www.energyseer.com/NewPessimism.pdf

    http://sepwww.stanford.edu/sep/jon/world-oil.dir/lynch/worldoil.html

    http://www.condition.org/sm4602.htm

    http://www.forbes.com/home/free_forbes/2006/0724/042.html

  192. Spector says:

    RE: Main Article, Figure Three
    I find the most telling data in this regard is figure three in the main article, which plots the rate of oil discovery against the rate of extraction. If you accept this plot, showing the rate of oil discovery peaked in the early 1960’s, then there is no way that you can reject the idea that we will exhaust this supply of energy in the next century, unless you believe that the ‘end of time’ will occur first. Figure three tells the whole story. It shows we are now extracting oil twice as fast as we are finding more.

    I believe the message of ‘Peak Oil’ is this: we must now make a serious effort to find a new source of cheap energy or prepare for being forced to live with less energy available. The latter case may include a naturally forced global population reduction to those levels extant before the exploitation of the petroleum resource.

    One complaint I have is there do not appear to be authoritative public listings of the data used to create these plots. The website for the US Energy Information Administration (EIA) has a confusing multitude of detailed plots for production from diverse sources and fuel classifications. In one case there is an Excel table with a line of global totals that runs from 1980 to 2010. This does not quite agree with a similar, but less current table from BP that covers a longer interval of time. I believe the EIA should be providing a simple, authoritative year-by-year *global* oil production table over the last century.

    I note that the emphasis is always on total production, rather than the per capita global-population production. This figure has peaked long ago due to increasing global population. Reduced per capita oil production may be reducing personal comfort levels.

    One Canadian economist, Jeff Rubin, is saying that he believes the current recession was triggered by high oil prices that drove the price of gasoline over four dollars a gallon in the United States in July 2008. He has been predicting that the end of the global recession will, within a year, result in the return of high-cost oil to near double the previous prices.

  193. “Michael Lynch and others with relevant experience in the area of oil production estimation have shown why the Peak Oil doomsayers have been wrong time and time again. Their theories of total recoverable resources are just not accurate. ”

    Those who dispute peak oil make the same mistakes time and time again. They look at what’s in the ground. Peak oil has NEVER been about what’s in the ground. Peak oil is about production, flow rates. Canada’s oil sands is a case in point. Yep, there is a lake of bitumen there. But because it is not easily flowing oil, it has to be mined, with only a very small percent attempting to flow the bitumen (with a very low ERoEI). This means the flow rate from that deposit will always be slow. Currently 1.5 million barrels per day (compared to Canada consumption of 3mb/d, and the US 20mb/d). Hence the flow from all these other sources will not be able to compensate for the loss of flow from other sources. Example, Cantarell was producing some 3mb/d. Less than 10 years after peak and it’s down to 0.45mb/d. That field alone fell in production more than the oil sands produces.

  194. David Ball says:

    Richard Wakefield says:
    October 29, 2011 at 7:41 am
    “Those who dispute peak oil make the same mistakes time and time again. They look at what’s in the ground.”
    That is even more ridiculous than the stuff posted on the oildrum. People should realize that their posts reveal more about them than they are aware. Thanks Richard.

  195. For those wishing to seriously look at the evidence, see:
    Jeffrey Brown, Three Strikes and Your Out.

    Global total petroleum liquids production rose from 74.7 mbpd (million barrels per day, BP database) in 2002 to 81.5 mbpd in 2005 (an annual rate of increase of 2.9%/year). At this rate of increase, global total petroleum liquids production would have been over 94 mbpd in 2010, a volumetric increase of about 13 mbpd (or 16%) over the 2005 rate.which would have been consistent with Mr. Yergin’s prediction, but that is not what happened.

    The data show that global total petroleum liquids production effectively stopped growing in 2005, and production has averaged 81.5 mbpd for 2006 to 2010 inclusive, with production ranging between about 81 and 82 mbpd for 2005 to 2010, except for 2009.

    (We) compiled a database for 2002 to 2010 that tracks Global Net Exports of oil (GNE), which are simply defined as domestic production less domestic consumption of total petroleum liquids. We compiled data for the top 33 net oil exporters in 2005 (exporters with 100,000 bpd or more of net exports), which accounted for 99%+ of total net exports, primarily using the BP database, with some minor input from the EIA for smaller countries.

    The database shows that GNE increased from 39.1 mbpd in 2002 to 45.5 mbpd in 2005 (a 5.1%/year rate of increase). At this rate of increase, GNE in 2010 would have been at about 59 mbpd in 2010 yielding a volumetric increase of more than 13 mbpd over 2005. This increase would have provided ample room to accommodate increasing demand from Chindia, but that is not what happened.

    The database shows that GNE fell from 45.5 mbpd in 2005 to 42.6 mbpd in 2010, a volumetric decline of about three mbpd.

    More importantly, what I define as Available Net Exports (ANE), which are GNE less Chindia’s combined net oil imports, fell even more sharply, from 40.4 mbpd in 2005 to 35.1 mbpd, a volumetric decline of about five mbpd.

    See his graph: Available Net Exports

    A 13% Decline in 5 years, 2.6%/year in oil exports available to other oil importing countries.

    Wake up, listen and understand.

    US 48 states oil production peaked in 1970, UK about 2000, Norway in 2005.
    Jean Laherrere shows Global LIGHT OIL oil discoveries peaked ~1965. Global peak LIGHT oil production is peaking about now.
    See “westexas” graph of:
    Available Net Oil Exports
    Available net global exports (after China + India imports) DECLINED 12% from 2005 to 2010
    “21 of the top 33 net oil exporters showed net export declines from 2005 to 2010.”
    See Robert L. Hirsch, The Impending World Oil Mess:What It Is and What It Means To YOU! ISBN 978-1926837-11-6
    May 2011 ASPO conf. Presentation PDF or Video
    See solutions in: Edwin Black The PLAN – How to Rescue Society When The Oil Stops – or the Day Before,
    and especially:
    Turning Oil to Salt Gal Luft, Anne Korin

  196. Doug says:

    Meanwhile , in the real world, the October 3 Oil and Gas Journal lists a few hundred projects coming on stream in the next few years:

    This much is free, to read the whole article one must subscribe, something that would help inform many of the doomsdayers.

    “Brazil, Canada, Iraq, Australia to have largest production increases10/03/2011
    By Guntis Moritis
    The projects in three countries with the highest increase in oil production are Brazil, Canada, and Iraq, while Australia has the projects with the highest increase in gas production, according to OGJ’s review of major projects listed in the accompanying table. The table lists projects in 44 countries that are in the construction or planning stages, with peak production from these projects occurring in 2011 or after. If all the projects’ peak production rates occurred in the same year, world production capacity would increase by 36.7 million b/d of liquids and 74.3 bcfd of gas. The list includes both individual fields and, in some cases, the accompanying infrastructure”

  197. David Ball says:

    David L. Hagen says:
    October 29, 2011 at 8:42 am
    You and your “real evidence” ignore completely the fact environmental restrictions are the real cause of reduction in oil. You can fool some of the people some of the time, ……..

  198. Patrick says:

    Those Malthusians who have courageously “put their money where their mouths are” give us memorable stories of what happens when you let your pet theories get in the way of understanding reality:

    “Five years ago, Matthew R. Simmons and I bet $5,000. It was a wager about the future of energy supplies — a Malthusian pessimist versus a Cornucopian optimist — and now the day of reckoning is nigh: Jan. 1, 2011.
    The bet was occasioned by a cover article in August 2005 in The New York Times Magazine titled “The Breaking Point.” It featured predictions of soaring oil prices from Mr. Simmons, who was a member of the Council on Foreign Relations, the head of a Houston investment bank specializing in the energy industry, and the author of “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.”
    I called Mr. Simmons to discuss a bet. To his credit — and unlike some other Malthusians — he was eager to back his predictions with cash. He expected the price of oil, then about $65 a barrel, to more than triple in the next five years, even after adjusting for inflation. He offered to bet $5,000 that the average price of oil over the course of 2010 would be at least $200 a barrel in 2005 dollars.
    I took him up on it, not because I knew much about Saudi oil production or the other “peak oil” arguments that global production was headed downward. I was just following a rule learned from a mentor and a friend, the economist Julian L. Simon.

    The past year the price has rebounded, but the average for 2010 has been just under $80, which is the equivalent of about $71 in 2005 dollars — a little higher than the $65 at the time of our bet, but far below the $200 threshold set by Mr. Simmons.

    Maybe something unexpected will change these happy trends, but for now I’d say that Julian Simon’s advice remains as good as ever. You can always make news with doomsday predictions, but you can usually make money betting against them.”

    http://www.masterresource.org/2011/02/simmons-failed-wager-iii/

  199. kforestcat says:

    David Archibald says @October 28, 2011

    Addressing your comment about the use of natural gas as a transportation fuel.

    A good deal of my time is spent in strategic planning for a major utility. Because power plant investments require a long payback period, utilities spend a considerable amount of time forecasting fuel cost and other considerations. Usually the timeframe examined is from the present to thirty years out. One of our primary tools are complicated economic forecasting models that develop/examine world market supply/demand curves for multiple resources (oil, coal, gas, etc.) based on known resources and economic projections. Within the models, old oil facilities, power plants, etc. are dropped and replaced with newer facilities based of the expected marginal cost of individual plant type/fuel type and so on. At present, most models are projecting sufficient natural gas to supply in the United States to meet the U.S. electrical utilities needs for some time to come. These models show electrical demand being met primarily with a mixture of nuclear, coal, gas, and wind (in select – shall we say “unique” markets). The exact mix depends upon the scenario being run.

    Plainly put, for about the next to 20-30 years, the numbers simply don’t show crude-oil competing with natural gas enough to warrant concern about a run up of overall natural gas prices (in the U.S.).

    To place this in perspective you have to understand that only about 60% of a barrel of oil ends up in transportation fuels. The income derived from the other 40% provides considerable price leverage for crude in the transport market. (i.e. the price of transport fuel can go down while the price for the other 40% goes up).

    The above said, I think you are missing the primary point of my previous post. Specifically, that any uncertainty regarding the actual amount of recoverable crude-oil remaining in the world is simply not important…because we have many alternative ways to economically produce non-crude oil as a transportation fuel.

    Even if natural gas were to become a primary transportation fuel in the U.S., this would simply mean demand for crude-oil would drop in favor of cheaper natural gas. Once we ran out of affordable natural gas, the market would simply turn back to crude. And once that was depleted, it would gear to coal, tar sands, and shale oil.

    In my view, there simply is no creditable evidence the world is going to run out of affordable oil resources in my life time or in my children’s life time.

    Best Regards,
    Kforestcat.

  200. Patrick says:

    Hubbert’s prediction for the US isn’t the only one he produced. Leaving out the inaccurate ones gives the false impression that the model produces highly accurate predictions:

    “The popularity of the approach stems partly from the fact that Hubbert’s 1956 prediction
    of lower-48 oil production was extremely accurate, even to this day. However, this is
    misleading, as his other three predictions were highly inaccurate. His forecast of US gas
    production in 2000 was 65% too low and his world oil production forecast for 2000 was 50%
    too low. Even production in Texas is now about twice the amount he forecast. Indeed, given
    his estimate of URR in Texas, production should have ceased recently as the resources were
    exhausted. Since Texas was a mature, heavily studied province even in 1956, this error
    speaks to the fallibility of the method.
    Other Hubbert models exhibit the same flaw. One group at the US Department of Energy
    produced a series of Hubbert-style production profiles in the early 1980s (for example, US
    Department of Energy, 1983). For non-OPEC countries, they produced a prediction for
    Southeast Asia that has proven very accurate to date, but for non-OPEC South America and Egypt, their forecasts were much too low. Similarly, Root (1991) and Masters et al. (1990)
    also produced forecasts with near-term peaks for regions, most if not all of which are clearly
    too pessimistic.
    The most egregious errors have come from C.J. Campbell, who has repeatedly predicted
    a near-term peak for the world, not just non-OPEC or non-Middle East (Campbell, 1989;
    Campbell, 1991; Campbell, 1997) even though most in the industry have difficulty finding
    signs of near-term scarcity. His 1989 prediction that world production had already peaked
    and prices would rise to the $30–50 range in the early 1990s was clearly wrong, and his 1991
    book produced forecasts for non-OPEC countries that were 10 mb/day too low (net) by 1999.”

    “There appear to be two primary errors in the design of these models. First, Hubbert-style
    forecasts take URR as a static variable when it is dynamic. This is a serious error. URR refers
    not to total resources, which is arguably a fixed amount, but to the proportion of the total
    which is recoverable. It is logical that this should increase over time, as technological
    advances raise the proportion of a field which can be recovered economically and as other
    changes (additions of pipelines, for example) lower costs and thus make it economical to
    produce smaller and/or deeper fields and less productive wells.”

    “Some modelers have argued that URR can be estimated using so-called “creaming curves”
    which show discovery size by companies or in a nation, such as the UK, to demonstrate the asymptote3 (Laherrere, 1999). However, this is misleading because they compare current
    estimates of field size for discoveries of many different periods. This is like comparing
    acorns and oak trees; naturally the latter are bigger, but that doesn’t prove that the former are
    destined to always be smaller. Using a given data base of field sizes seems to always yield
    an asymptote, but the asymptote moves over time.”

    “…there is another major mis-specification. Production depends not just on discovery,
    but the amount of capacity lost due to depletion effects. As a field is produced, its
    productive capacity declines—all else being equal (that is, if no additional drilling is done,
    or enhanced recovery put in place). Many of the pessimistic models appear to be showing a
    very high rate of production decline for existing fields, and some such as Pursell (1999)
    explicitly argue that depletion is now so great that offsetting it—not raising capacity—is the
    major challenge to the industry.
    But careful study suggests that the impact is being overstated, as either the rate of
    depletion is overstated or the ability to offset it is understated. In reviewing oil production
    forecasts for various nations, Lynch (1990) was able to derive the forecasters’ estimates of
    production decline rates for existing fields and found nearly all showed an annual drop of
    10–20%, close to the absolute maximum (that is, with no further investment). Since all but
    one of the production forecasts proved to be much too low, the implication is that either
    additional investment slowed the decline of production in existing fields, newer fields were
    offsetting more than expected, or more probably a combination of the two.”

    http://www.aspo-australia.org.au/References/Lynch-july-02.pdf

  201. Mary Childs says:

    The CO2 scare continued the already-advanced war on petroleum, following this peak oil scare . Anyone who really wants to know the truth before they get caught up in the new hype should read the recent book by Daniel Yergen, who won a Pulitzer in 92 for his history of the oil business. He is a consultant for IHS Cambridge Energy Research Associates, and the book is “The Quest:…..” I find it hard to believe that this peak oil article appeared on a trusted website. The science is far from settled as to the true origins of petroleum. Google ‘peak oil debunked’ for a look at the evidence for abiotic origins.

  202. Brent says:

    Just to clarify molten salt reactors can use thorium but they can also use uranium. They can use spent fuel and plutonium. Solid fuel thorium reactor have been built and work great. fort saint vrain being one of them. That reactor had problems with its gas cooled bearinging getting wet. But its fuel worked great.
    The promise of molten salt reactors is not the cheap fuel it is they have the potential of needing less capital to build them. They run at near atmosphere and can not meltdown. You do not need a special forged pressure vessel built only overseas. nor do you need a containment vessel. A new light water reactor costs billions to build. The new light water reactors cost billions to build. The bigger the project to more conservative the investor. any advanced reactor deigns will have to be built by someone to prove that it can be done. and that they can be licensed.

  203. Spector says:

    RE: Brent says: (October 29, 2011 at 5:57 pm)
    “The promise of molten salt reactors is not the cheap fuel it is they have the potential of needing less capital to build them.”

    I believe the only practical promise of thorium based nuclear reactors is to become a plentiful source of *cheap* energy. If they cannot provide low-cost energy equivalent to the current global production of petroleum, then they will remain a footnote in history. I find references to the ‘green’ aspects of thorium based nuclear energy to be rather disquieting. To me, these sound like distractive considerations that might lead developers and investors off the track into the muddy ground that sunk Solyndra.

    I see our civilization to be like a boat hydroplaning on cheap energy. If we run out of that oil which we can afford to use, then we must either switch to an alternative engine or rig a sail.

  204. Resourceguy says:

    The rise of unconventional oil production from fracking in oil shales with horizontal drilling will wreck havoc on traditional resource models like something coming in from another dimension. Natural gas markets in north America were the first to feel the impact of unconventional supply surge and even that technology shift has not played out across other regions. Unconventional liquids plays will follow the natural gas shift down in real dollar terms. Just give it some time, analogous to waiting for the fall in the AMO to wreck havoc on the global warming models.

  205. Resourceguy says:

    Note that in Figure 2 future discovery is appended on , citing Campbell from 2004. This use of a 2004 citation predates the successful field development of the world’s first unconventional oil basin development in the Bakkan Formation and other targets therein. This is like lamenting the fall in natural gas reserves when the opposite is true as a result of unconventional drilling in shale targets. The technology has changed in a more radical way than the resource models allow for—-wake up.

  206. Spector says:

    RE: Resourceguy: (October 30, 2011 at 6:53 am)
    “Note that in Figure 2 future discovery is appended on , citing Campbell from 2004. …”

    If you look carefully, you will see that you are actually referring to Figure 3. (Enumerated below the chart.)

    This is one of those cases where I believe the US Energy Information Agency may be really dropping the ball if they are not providing the public with complete and authoritative tables of current data for making charts like this.

    It is also important to distinguish between cheap oil sources and those sources that can only be refined by energy intensive techniques that might force the cost of gasoline up to ten dollars per gallon in today’s dollars.

  207. James F. Evans says:

    Carbon isotope effects in the open-system Fischer–Tropsch synthesis, 2007

    Yuri A. Taran a,*, George A. Kliger b, Vyacheslav S. Sevastianov c
    a Institute of Geophysics, UNAM, 04510 Mexico DF, Mexico
    b Institute of Petrochemical Synthesis, RAS, Moscow, Russia
    c Vernadsky Institute of Geochemistry, RAS, Moscow, Russia

    Taran, et. al. wrote:1. Introduction
    The Fischer–Tropsch synthesis (FTS), which generally can be defined as the heterogeneous catalytic reduction of oxidized carbon compounds by molecular hydrogen, is widely accepted as a process potentially responsible for the presence of organic compounds in meteorites, submarine hydrothermal systems and igneous rocks (e.g. Lancet and Anders, 1970; Shock, 1990; Salvi and Williams-Jones, 1997; Yuen et al., 1984; Foustoukos and Seyfried, 2004; Horita, 2005). This ‘‘inorganic’’, ‘‘abiotic’’ synthesis has also been considered to be important in global geologic processes including production of methane and petroleum and finally, as a source of prebiotic compounds on the early Earth (Szatmari, 1989; Charlou et al., 2002; Sherwood Lollar et al., 2002; Horita, 2005, among others).

    Abiotic hydrocarbon generation is well supported by the scientific evidence, including the liquid petroleum part of the hydrocarbon spectrum.

    The supposed so-called “fossil” fuel theory has never been successfully replicated in the laboratory, yet the Fischer-Tropsch type process has not only been replicated in the laboratory it has also been developed to such an extent that petroleum has been produced in commercial quanities.

    Follow the scientific evidence: The best evidence supports the Abiotic Oil Theory.

    So-called “peak” oil theory is false.

  208. James F. Evans says:

    The following paper is a relatively brief review of evidence supporting Abiotic Oil Theory:

    Inorganic Origin of Petroleum

    Introductory paragraph: “The theory of Inorganic Origin of Petroleum (synonyms: abiogenic, abiotic, abyssal, endogenous, juvenile, mineral, primordial) holds that petroleum is formed by non-biological processes deep in the Earth crust and mantle. This contradicts the traditional view that the oil would be a “fossil fuel” produced by remnants of ancient organisms. Oil is ahydrocarbon mixture in which the primary constituent is mainly methane CH4 (a moleculecomposed of one carbon atom bonded to four hydrogen atoms). The occurrence of methane is common in Earth’s interior, with the possible formation of hydrocarbons at great depths. This hypothesis dates from the nineteenth century when the French chemist Marcellin Berthelot and the Russian chemist Dmitri Mendeleev proposed to explain the origin of oil and their theories was revived [in the Russian geo-science academy] in the decade after 1950.”

    An interesting read and thought provoking.

  209. Spector says:

    Abiotic Oil and the Forever Oil Theory
    I do not think that abiotic oil implies oil forever. We have been producing oil at near peak rates for just about thirty years. According to one estimate, (T. Boon Pickens) we are now extracting oil at a rate of 85 million barrels a day. If we go back in time 85 million years, just before the end of the Cretaceous period, the Earth only needs to be able to produce about one barrel of biotic or abiotic oil a day to give us the supply we are depleting in a single year. This time is just a convenient number. The beginning of the Mesozoic Era with the Triassic Period was 248 million years ago.

    Starting 85 million years ago, a one hundred-year supply, at our current usage rate, could be produced by a natural production rate or renewal rate of roughly one hundred barrels a day. This does not matter if that production is biotic or abiotic. The Earth has had so much time to generate the oil in the ground that a very low renewal rate can account for all that we have found.

    If the Earth had been producing abiotic oil at 85 million barrels a day since the Cretaceous period then I would expect the ocean and the ground to be covered with a thick layer of degraded oil.

  210. Resourceguy says:

    RE: Spector, thanks for the correction for the figure number as previously posted. But I fear though that your sources of information are limited on this topic and perhaps you are far behind. I’ll at least get the thought list going for you. Do you really think EIA and USGS are going to come out and admit their models developed internally and at academic research groups are bunk? Most of the body of research for those models comes from U.S. onshore basins with thousands of vertical drill holes over many decades forming statistical distributions for drilling success rates and yield. Now image the evolving picture of declining costs of unconventional wells with much higher probability of success in extensive basins and with multiple tragets from each drilling pad. Go read the quarterly reports of the mid sized oil firms that pioneered this biz model. They are the ones defining the trend and the resource base, not EIA. The oil majors are also woefully behind in this revolution and only their money assets and bank connections are being used to play catch up. I also fear that you are citing group think terminology when you use the catch phrase high cost oil. You could also have used that term for high cost natural gas wells a short time ago but the industry is rapidly becoming the unconventional segment and with declining costs measured as time to complete the average well and rising yield per well. As for your concern about the cost of gasoline being pushed up by high cost oil, go look at what unconventional natural gas drilling did in a matter of three years of bonanza-type investment rush beyond the Barnett Shale.That supply rush has only been tempered by the plummet in natural gas prices in the typical tit for tat commodity sector dance to get to a new market equilibrium. I hope this was helpful. There is a similar revolution taking place in the solar sector with a similar lag in understanding the price and cost plummet.

  211. Resourceguy says:

    RE: Jeff L, your comments about the Bakken could have been (and were) stated about the limited impact of the Barnett Shales on gas supply in the picture of things. What changed is a lot of people with extensions to the idea going out and testing 20 other shale basins and finding similar success. That same quiet rush to test other large potential sites and in some old oil sites is now taking place. At some point it will make more sense for investors to pile on to these large new resource plays for methodical drilling and production potential onshore and thereby make the multi-decade offshore oil development projects look risky and high cost! Maybe you will get a clue when one of the unconventional states like ND passes CA in oil production.

  212. More Soylent Green@ says:

    It’s not the definition of peak of oil that’s in question, but it’s meaning that causes the controversy.

    Peak oil proponents attach a great deal of significance to it’s meaning.

  213. Spector says:

    RE: Resourceguy: (October 30, 2011 at 6:37 pm)
    “. . . I fear though that your sources of information are limited on this topic and perhaps you are far behind. I’ll at least get the thought list going for you. Do you really think EIA and USGS are going to come out and admit their models developed internally and at academic research groups are bunk?”

    That may be true and my discovery of the EIA website is recent, but I would assume from their name, “US Energy Information Agency,” that they are responsible for providing the public with accurate and authoritative historical data on known global oil production and discovery without regard to any previous model or theory. They do not appear to be doing this.

    Given the reputation of the author, David Archibald, as a petroleum expert, I have to assume that Figure Three is generally accepted as a true picture of the current state of petroleum discovery and production. By eyeball integration, this chart seems to indicate that we should have discovered about 70 billion barrels of new oil since 2004 and we have extracted over 140 billion barrels of oil from the Earth in the same time interval. Yes, a chart based on more current data would be preferred.

    I have seen seemingly authoritative estimates for the onset of declining oil running from 2012 to 2090. I make no such estimate on my own, except to say that I have found no reason to believe in an unlimited supply of oil.

  214. Resourceguy says:

    RE: Spector
    Try looking up EIA charts and data about reserves tabulation and projections for natural gas in the U.S. prior to four years ago and compare that to updates today and next year after the energy tech revolution becomes obvious. You will at least get one glimpse of a revolution in that one hydrocarbon segment and the fragility of EIA/USGS models and assessments. There is basically no cost to society of you and a federal agency being flat wrong about fundamental market changes that are being driven by the private sector at the margin and with a slow moving cycle of revisionary updates by the agency. There is a tremendous cost to society when you and a federal agency allow energy policy to swing in a costly and wrong direction either absolutely (see Solyndra bankruptcy) or prematurely. see… http://online.wsj.com/article/SB10001424052970204226204576602524023932438.html

  215. Over the last eight years, Trendlines Research has reconciled for comparison literally hundreds of long-term outlooks for its monthly Peak Oil Depletion Scenarios chart presentation: http://www.trendlines.ca/free/peakoil/Scenarios/scenarios.htm

    There are three common errors made in the failed efforts: (a) underestimation of URR/EUR. Most are under 2.5 Tb and reflect a failure to account for rising resource as crude price escalates within the projection period. In general, URR rises by 33 Gb for every $1/barrel increase in oil prices; (b) overestimation of UDRO (underlying decline rate observed). This cyclical loss factor has averaged 2.7% since 1970 and the rate crests and troughs in direct correlation to American Recessions. It is running at 3.4% in 2011, but many practitioners use 5% to 9% rates that foil their short-term targets; & (c) an inherent flaw with worst cast scenario principle of standard bottom-up models is their decision to only utilize announced-to-date megaprojects consistent with seven-year horizons albeit the 40-yr avg is 3.0 Mbd/yr.

    Global maximum production is most certainly going to be related to Peak Demand rather than any form of resource constraint of the natural Geologic Peak (bau). Peak Demand will in turn be determined by ever-rising crude prices: http://www.trendlines.ca/free/peakoil/PeakScenario2500/PeakScenario2500.htm

    This leads to a critical issue in production profiling … the need to accurately predict the long-term price trend. Many invalidated scenarios were based on illogical price forecasts of $200 to $500 and reflected little appreciation for demand destruction thresholds: http://www.trendlines.ca/free/peakoil/BarrelMeter/BarrelMeter.htm

    The consensus of the 16 Tier-1 Scenarios infers Peak Oil will occur @ 97 Mbd in 2024. This is the highest ever peak rate for this average. At this time, my own PS-2500 model projects Peak Demand (100 Mbd) will present itself when crude price hits $205/barrel in 2028. The Peak Demand Barrier is a definitive Petroleum/GDP ratio that was breached temporarily in 2008 ($90/barrel), again in early 2011 ($99) and is projected to be $262 by 2035. Consumption will not rise during the months price surpasses this line-in-the-sand. Peak occurs when crude price fails to drift back…

    Other critical price events rising with GDP are the USA Light Vehicle Sales Collapse Threshold ($92/barrel – avg USA contract crude) & fossil fuel induced/augmented G-20 Recessions ($120).

  216. Rational Debate says:

    re: Kum Dollison says: October 28, 2011 at 7:36 pm and October 28, 2011 at 7:42 pm

    I picked July because …It seemed like a rational comparison. But, if you go Jan of 2005 to July of 2011 it doesn’t make much change…. But if you want to call ’05 as $55.00 that’s okay, too. If you average Brent, Tapis, Louisiana Light, Prudhoe, Nigerian Bonny Light, Minas, etc it will come out to about $115.00, today. So that would be at minimum, a Doubling of Price with a loss of 20,000 bbl/day of global production over a Six Year Period.

    I could have gone back to ’98/’99 and come up with a 1,000% Increase with, maybe, a ten or fifteen percent increase in production. The fact is: Oil Prices have been rising ballistically for a Decade, and Production stalled out Six Years Ago. And, the Huge, Smart Money Bet is that you’re only a year or two away from the beginning of the decline….

    Sorry, it’s not rational to pick a single month’s price for comparision when the monthly price is so violatile. From 2009 thru 2010, inflation adusted, the price varied from a low of about $32.90 to a high of $83.13. Obviously picking a single month for comparision is pretty meaningless at best, and very misleading at worst – and yet you try to shift simply to another month rather than looking at a more meaningful comparison.

    Then, how about we compare apples to apples, and you provide some evidence to back your claims. I’ve already shown that your initial claim of prices tripling was way off, prices only increased by roughly a quarter (Rational Debate says: October 28, 2011 at 6:57 pm). I also pointed out that with oil prices as massively violatile as they’ve been in the last several years, picking one month’s price is almost certain to skew the picture badly. So you ignore that, choose oranges to compare to apples, and move the goal posts – all without a single reference to support your claims. Plus you have fun tossing in a supposedly massive increase over a longer timeframe, where, golly gee, you just happened to pick the bottom of the pricing around those years, and again you provide zero reference and go even further to pick, yet again, a single price rather than a year’s average. Even using your new chosen years, however, the average price for 1998/99 was $19.37 to a 2010 price of $73.44. That’s an increase of about 3.8 times, not 1000%.

    Heck, lets just go back and compare to 1979-1982 why don’t we? In inflation adjusted dollars, every one of those years averaged HIGHER oil prices than 2010.

    Furthermore, as long as production is keeping up with demand, as it clearly has been, there’s no problem – and no way to claim that production is representative of actual resource availability. It would be one thing if they were unable to produce to demand, and prices not only went up, but STAYED up for an extended period – e.g., well past the point where the cycle of exploration to new production could realistically have occurred.

    As to production having stalled out over the past 6 years, again, 2011 isn’t yet complete & therefore not available for comparision. Plus, production is coupled to demand which has been significantly affected by global economic woes. Let’s take the past 6 years available years anyhow. Production is up 2.65%. If you take the past decade, it’s up over 13%. http://www.indexmundi.com/energy.aspx?product=oil&graph=production and http://online.wsj.com/article/SB10001424053111904060604576572552998674340.html

    So you go ahead and make your ‘smart money’ bet – but I’ll go with the available facts which sure don’t support your view on the issue.

  217. Rational Debate says:

    re: Spector says: October 29, 2011 at 11:13 pm

    I believe the only practical promise of thorium based nuclear reactors is to become a plentiful source of *cheap* energy. If they cannot provide low-cost energy equivalent to the current global production of petroleum…

    Spector, nuclear power provides electricity, not transportation fuels and other petroleum based products (plastics, etc). They have to be competitive primarily with natural gas and coal – not oil.

  218. Spector says:

    RE: Rational Debate: (November 3, 2011 at 8:41 pm)
    “Spector, nuclear power provides electricity, not transportation fuels and other petroleum based products (plastics, etc). They have to be competitive primarily with natural gas and coal – not oil.”

    I believe the basic requirement is plentiful cheap energy. Once that energy is available it can be used manufacture energy storage fluids, such as manufactured hydrocarbon fuels or as outlined in the ‘Hydrogen Economy’ proposal.

    We will see major changes in our way of life if future energy sources become too expensive to be used for personal transportation. My comment applies to an undefined time in the future when declining oil production would otherwise force declining automobile and aircraft use.

    One of the selling points touted for Molten Salt Thorium Reactors is that they supposedly extract most of the available energy and leave very little waste. They also say that typical solid fuel Uranium/Plutonium Reactors only extract a small fraction of the energy available and leave the rest as radioactive waste in the spent fuel rods.

  219. Rational Debate says:

    re: Spector says: November 5, 2011 at 2:56 am

    I totally agree that cheap plentiful energy is crucial to mankinds well being – even to the well being of the ecosystem. It’s only people who have cheap abundant energy who have the luxury to be concerned about the environment and other species, rather than scraping all the time to avoid starvation or death from exposure.

    You are partially correct wrt to present day nuclear reactors – they do only burn up a relatively small amount of the fuel in each fuel rod. This is where the issue of reprocessing and breeder reactors comes in, however. The spent fuel from typical reactors can be reprocessed and much of the energy potential recovered for use as new fuel rods. That also drastically reduces the volume of ‘waste’ that remains. All of that said, one has to keep in mind that even without reprocessing, the volume of ‘waste’ (it’s actually a resource still, not waste) is very very small compared to both the amount of energy that has been produced and to other energy generating methods. It’s also all managed – not puffed out into the atmosphere (although scrubbers etc., have drastically reduced the airborne pollution from coal plants, there is still an airborne pollution component, which you just don’t have with nuclear power).

    Just to give you a feeling for the volume we’re talking about, all of the spent fuel rods from over 50 years of nuclear power generation in the United States (roughly 20% of our electricity for many decades now from approx 102 reactors), could be fit into a space the size of a single football field and a depth of a few yards. Spent fuel rods wouldn’t be stored in that geometry of course, but that certainly gives one a feeling for just how small a total volume actually exists. In a realistic storage geometry (e.g., dry cask storage, configured such that casks can be handled and or retrieved as desired) all of the existing high level ‘waste,’ including that generated by military applications, can easily go into a single repository under one mountain top/mesa that takes up a tiny edge of the Nevada Test Site (where most of our nuclear weapons tests have been conducted). This also includes some materials such as old reactor vessels, etc.

    If those spent fuel rods were reprocessed, the volume would be reduced to about 1/100th the current amount.

    When you consider how much energy has been produced for such a minuscule amount of waste product, it’s truly mind blowing.

  220. Spector says:

    Here are two recent videos showing what the leading proponents of the Molten Salt Thorium Reactors are saying. One is a long compendium with a short five-minute summary and the other is a talk by Kirk Sorensen at the Weinberg Foundation. I am not qualified to say if this is a viable project or just a way for governments to waste money; the concept, however, does sound very interesting and potentially practical.

    LFTR in 5 Minutes – THORIUM REMIX 2011
    508 likes, 5 dislikes; 21,719 Views; 1:59:59 (2 Hrs)
    Uploaded by gordonmcdowell on Oct 4, 2011

    “Thorium is readily available & can be turned into energy without generating transuranic wastes. Thorium’s capacity as nuclear fuel was discovered during WW II, but ignored because it was unsuitable for making bombs. A liquid-fluoride thorium reactor (LFTR) is the optimal approach for harvesting energy from Thorium, and has the potential to solve today’s energy/climate crisis. LFTR is a type of Thorium Molten Salt Reactor (Th-MSR). This video summarizes over 6 hours worth of thorium talks given by Kirk Sorensen and other thorium technologists.

    “THORIUM REMIX 2011 starts with a 5 minute TL;WL summary, to hold you over until you find your Ritalin.”

    Energy Future: Guest Kirk Sorensen speaks at Weinberg Foundation Launch
    13 likes, 0 dislikes; 1,014 Views; 5:02 min
    Uploaded by WeinbergFoundation on Sep 25, 2011

    “8th September, 2011 – The Weinberg Foundation, an organisation promoting clean, safe energy from Thorium launches at the House of Lords in London. Co-founder, John Durham introduces guest speaker, Kirk Sorensen of Flibe Energy, who shares with guests his interest in the work of pioneering physicist Alvin Weinberg, and the innovative technologies in energy pioneered at Oak Ridge Laboratories, in Tennessee during the 50’s and 60’s.”

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