Peak Oil – the R/P Ratio re-visited

Guest post by Mike Jonas

On Dec 13, Willis Eschenbach posted a convincing (and eloquent as always) argument “The R/P Ratio” against Peak Oil being imminent. I would like to present a different view. In fact I draw the opposite inference from the same statistic.

From the BP data [1], Willis argued that the “R/P ratio” – the ratio of reserves R to production rate P – is higher than ever, and that therefore the world is even more able to continue producing oil at today’s rate than it was yesterday at yesterday’s lower rate.

My argument is that the high R/P ratio shows that it is getting very difficult to increase P in spite of a high R and a high oil price. This argument is based on two factors of which Willis took no account – the reliability of stated reserves and the quality of the oil.

Reliability

The first major hiatus in the oil world occurred in 1973, when OPEC caused the price of oil to quadruple. The second was the Iranian revolution in 1979. Their effects are clearly seen in the historical oil price:

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Figure 1 – Historical Oil Price – click image to enlarge


Over the following years, 1980 to 1988, the world’s oil reserve increased by 331.5 billion barrels, of which 329.6 were OPEC.

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Figure 2 - Historical Oil Reserve - click image to enlarge

What is thought to have happened is that certain OPEC countries artificially inflated their reserves so that they could sell more oil, because OPEC production quotas were based on official reserve figures [17][22]. It is quite possible that none of this reported increase in reserves actually exists. There has recently been supporting information from Wikileaks [2].

Questions about the reliability of reserve figures are not restricted to the reserves declared between 1980 and 1988. For example, the UAE’s official reserve has been stuck on exactly 97.8bn barrels since 1996 (and was at 98.1bn barrels from 1989 to 1995), in spite of total production of 15bn barrels over that period (21bn barrels 1989-2010) and no major discoveries [21]. That’s mathematically possible, but rather unlikely.

Some other countries have similar patterns – Iran reserve at 92.9bn barrels from 1986 to 1993 (9bn barrels produced), Iraq 100.0 from 1987 to 1995 (5 produced) and 115.0 from 2001 to 2010 (8 produced), Kuwait 96.5 from 1991 to 2002 (8 produced) and 101.5 from 2004 to 2010 (7 produced), Saudi Arabia in a tight range 260.1 to 264.6 from 1989 to 2010 and not falling more than 0.1 in any one year (75 produced).

It does appear likely that a significant proportion of stated reserves do not in fact exist.

Quality

After 1988, the next significant increases in world reserves occurred in 2002 and 2008-9.

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Figure 3 – Annual change in reserves - click image to enlarge

In 2002, most of the 60.7 billion barrel increase was in Russia, Iran and Qatar, and I haven’t checked it. I have no reason to suppose that it was anything but a genuine increase in good quality oil. However, of the 123.0 billion barrels increase in 2008-9, 111.8 were in Venezuela. This is an ultra-heavy crude, difficult and expensive to produce at high production rates [3].

This is where the problem lies. Much of the easy oil has gone. We are into the difficult and expensive stuff. It is a major challenge to maintain high production rates. Heavy and unconventional oil are now dominant in world reserves [4] …

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Figure 4 – Total World Oil Reserves by Type - click image to enlarge

[http://en.wikipedia.org/wiki/File:Total_World_Oil_Reserves.PNG]

… to the extent that actually being able to increase the total production rate may prove to be out of reach [8].

Global oil production has basically flatlined for the last 5 or 6 years …

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Figure 5 – World Oil Production - click image to enlarge

… while the oil price has surged over the same period (Fig.1). I would argue that a high R/P ratio does not necessarily indicate an ability to increase production. Rather, a high R/P together with a high oil price would seem to indicate that it is difficult to increase production. Note that for 5 years now the price of oil has been higher (in 2010 dollar terms) than it was after the 1973 oil shock.

In Venezuela (heavy and very heavy oil), the production rate has declined nearly 30% from 1965 to 2010. In 2006, before the large 2008-9 increases in reserve, its R/P was already high at 85, but was still exactly what it had been in 1985. From 1985 to 1998, production did increase markedly, bringing R/P down to 60, but production has been in decline since.

It is possible that the major factor here was Hugo Chavez being elected president in 1998, so let’s look at all the countries with above average R/P –

R/P
Venezuela 233.9
Iraq 128.0
Kuwait 110.8
UAE 94.0
Iran 88.4
Libya 76.6
Saudi Arabia 72.4
Kazakhstan 62.1
(World average) 46.1

- maybe Venezuela, Iraq, Iran and Libya have political reasons for relatively low production rates. The UAE, whose oil is chiefly in Abu Dhabi, does have difficulty increasing production [10]. Kuwait [11][12] and Saudi Arabia [13] do too.

For comparison, Canada’s Alberta Tar Sands, which began production in 1967, have an R/P of 662. It is hoped that it may in future come down to around 150 (reserve 174bn bbls, prodn 720k bpd, target 3m bpd [6]).

[bbl = barrel, bpd = barrels per day]

There is a clear tendency for high R/P to be associated with heavy and unconventional oil, that is, oil for which high production rates are very difficult.

The Future

The oil industry has been successful in maintaining reporting a world R/P of 40+ since 1988.

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Figure 6 – World R/P - click image to enlarge

But in order for the rate of oil production to keep increasing, a lot has to go right. Things like:

· Major new conventional oil discoveries.

· Technological progress in heavy and unconventional oil production.

· Political stability in producing countries.

· Political stability in consuming countries.

· A high oil price.

· Increasing demand in spite of the high oil price.

· Oil remaining competitive with alternatives.

· Non-obstruction by governments (think “carbon” trading and taxes, USA offshore exploration ban)

More optimistic estimates of the Peak Oil date range from 2014 [7] to the IEA’s 2035 or later [5][5a]. But in the IEA presentation, note that although foil #8 “Oil production becomes less crude” …

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Figure 7 IEA forecast - click image to enlarge

… shows production increasing to at least 2035 , there is enormous (heroic?) reliance on “fields yet to be developed or found” which are more than half of all oil production by 2035. Note also the relatively low contribution from “unconventional oil”, and the rapid decline of currently producing conventional fields.

There is another figure worth keeping an eye on for the next few years – Saudi Arabia’s production rate. The IEA presentation [5] expects Saudi Arabia to increase production by 50% between 2009 and 2035.

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Figure 8 – IEA forecast by country - click image to enlarge

In mid 2008 Saudi Arabia announced that they would increase production by 500k bpd [14], but production fell 8% over the next two years. Perhaps this confirms that the producing Saudi fields are already in decline [15]. In June 2011, Saudi Arabia again stated that they would raise production [16]. It will be interesting to see if they are able to.

Saudi Arabia’s (2010) R/P is 72. They do have some as yet undeveloped fields, but none are anything like as large as the now-declining Ghawar [20].

Conclusion

The increasing world R/P, together with the high oil price, probably means that it is getting ever more difficult to increase production, rather than that Peak Oil is obviously many years away. I suspect that we are already at or close to Peak Oil, but it can only be identified in retrospect [see footnote 4].

It is, admittedly, still mathematically possible that Peak Oil is many years away. I would agree that “Peak Oil & Gas” and “Peak Energy”, as opposed to “Peak Oil”, are many years away – provided sanity returns to western governments.

Footnotes

1. All production and reserve amounts, associated amounts (eg. R/P), and graphs, are from or derived from the BP data [1] unless otherwise indicated. BP’s reserve data includes “gas condensate and natural gas liquids“, but does not include the Canadian oil sands.

2. Oil reserves are relative to economic and operating conditions, so they can increase without new discoveries.

3. Why did I quote the IEA 2010 report instead of the 2011 report? Because in 2011 the IEA lost its marbles and interlaced everything with the need to reduce CO2 emissions [18]. When the world wakes up to the fact that CO2 emissions are not dangerous, much of the 2011 report will be useless. FWIW, in the 2011 report oil production is still expected to increase by a similar amount by 2035, with OPEC increasing its share [19].

4. I understand “Peak Oil” to mean the point in time after which global oil production does not materially increase. The peak in oil production does not signify ‘running out of oil’ [9]. It doesn’t mean that oil production cannot physically be increased, simply that it does not increase. Peak Oil can therefore be influenced by factors such as price, changes in use and efficiency of use, and competition from alternatives. Basically, it is only possible to identify it in retrospect.

Mike Jonas

Jan 2012

###

Mike Jonas (MA Maths Oxford UK) retired some years ago after nearly 40 years in I.T.. He worked for BP in the 1960s and 70s, including 3 years in Abu Dhabi.

References

[1] BP Statistical Review of World Energy, Jun 2011.

http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/spreadsheets/statistical_review_of_world_energy_full_report_2011.xls

[2] Time report “Have Saudis Overstated How Much Oil Is Left?” Feb 2011

http://www.time.com/time/world/article/0,8599,2048242,00.html

[3] Wikipedia “Oil reserves in Venezuela”

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

[4] Wikipedia “Oil Reserves”

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

[5] IEA “World Energy Outlook 2010” Presentation to the Press Nov 2010

http://www.worldenergyoutlook.org/docs/weo2010/weo2010_london_nov9.pdf

NB. See Footnote 3 above.

[5a] Gail Tverberg, Comment on IEA “World Energy Outlook 2010”, Nov 2010.

http://www.countercurrents.org/tverberg101110.htm

[6] Popular Mechanics “New Tech to Tap North America’s Vast Oil Reserves” Oct 2009

http://www.popularmechanics.com/technology/engineering/4212552

[7] msnbc.com “Peak oil production predicted for 2014” Dec 2010.

http://www.msnbc.msn.com/id/35838273/ns/business-oil_and_energy/ – .TumIeGAch0I

[8] AAAS Member Central “Peak Oil Production May Already Be Here” Mar 2011.

http://www.sciencemag.org/content/331/6024/1510.short

[9] Energy Bulletin “Peak Oil Primer”

http://www.energybulletin.net/primer.php

[10] My comment on JudithCurry.com, re Zakum, Tupi and Peak Oil. Nov 2011.

http://judithcurry.com/2011/11/24/emails/ – comment-144017

[11] H. M. Shalaby “Refining of Kuwait’s Heavy Crude Oil: Material Challenges” Kuwait Institute for Scientific Research. Dec 2005

http://www.arabschool.org/pdf_notes/20_REFINING_OF_KUWAITS_HEAVY_CRUDE_OIL.pdf

[12] Bloomberg “Kuwait Reduces Its 2020 Heavy-Oil Production Target by More Than Half”. Oct 2010.

http://www.bloomberg.com/news/2010-10-21/kuwait-reduces-its-2020-heavy-oil-production-target-by-more-than-half.html

[13] WSJ “Facing Up to End of ‘Easy Oil’”. May 2011.

http://online.wsj.com/article/SB10001424052748704436004576299421455133398.html

[14] The Independent “Saudi King: “We will pump more Oil”” June 2008

http://www.independent.co.uk/news/world/middle-east/saudi-king-we-will-pump-more-oil-847830.html

[15] Energy Security “New study raises doubts about Saudi oil reserves” March 2004

http://www.iags.org/n0331043.htm

[16] NY Times “Saudi Arabia, Defying OPEC, Will Raise Its Oil Output” June 2011

http://www.nytimes.com/2011/06/11/business/energy-environment/11oil.html

[17] Telegraph article “Oil reserves ‘exaggerated by one third’” Dec 2011.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7500669/Oil-reserves-exaggerated-by-one-third.html

[18] IEA “World Energy Outlook 2011” Presentation to the press Nov 2011

http://www.worldenergyoutlook.org/docs/weo2011/homepage/WEO2011_Press_Launch_London.pdf

[19] IEA “World Energy Outlook 2011 Fact Sheet” (see “Global oil production”)

http://www.worldenergyoutlook.org/docs/weo2011/factsheets.pdf

[20] NY Times “Forecast of Rising Oil Demand Challenges Tired Saudi Fields” Feb 2004

http://www.nytimes.com/2004/02/24/business/24OIL.html?pagewanted=all

[21] Gerald Butt “Oil and Gas in the UAE”

http://www.geopowers.com/energie/sites/default/files/images/PDF – VAE.pdf

[22] Dr. Jean-Paul Rodrigue, Hofstra University “Changes in Major Crude Oil Reserves, 2001-2006” http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/oilreserves.html

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229 thoughts on “Peak Oil – the R/P Ratio re-visited

  1. Your initial assumption about it being harder to increase production due to the quality of the oil is simply false. Technology continues to advance, and make refining lower quality oil cheaper and easier and more efficient. The bottleneck in production is government regulation and restrictions on expanding production, but also the capital cycle that it simply takes TIME to expand production infrastructure, and reserves have expanded a LOT in the last few years. The industry is developing production infrastructure, but it takes 5-10 years for new facilities to reach full production capacity.

  2. Mike Jonas
    Good presentation almost convincing, but there is a lot of evidence that you are wrong, as Peak oil predictors have been along. It’s the same doom and gloom predictions as the CAGW crowd.

    As the song says:

    “Won’t be fooled again”

  3. The basic idea here is right, although I don’t necessarily agree in the details. Daniel Yergin explains in his 1991 book, ‘The Prize’–which is just about a bible of oil industry history that the idea of a ‘peak’ in production is quite fictitious.

    All the evidence suggests that the rate at which oil can be pumped will plateau. This is because not as this author suggests that the light oil has been found; its because adding more wells onto a formation does translate into proportional increases in output. There isn’t enough underground pressure–which largely comes from the water table–to pump at an arbitrary rate.

    In the middle east and other places, water injection is used to boost the rate of production. The water fraction pumped back out is well over ninety-percent now. Water injection is also constrained due to the cost of skimming the oil from the water. Higher rates of production become significantly more expensive as the wells start pumping only a few percent oil.

  4. One thing… I see a lot of evidence here in Alaska that there is a LOT (Billions of barrels) of oil in the ground that is not available for production at this time. The political and business environments are unfavorable in the extreme. Oil traveling through the pipeline has fallen dramatically (almost 50%) here, not because there is no oil, but because of hostile government (taxes) and environmental (psycho green nutjobs) concerns. Unfortunately I do not see this trend changing anytime soon…

  5. mikelorry – the cheap oil is gone. The kind where you used a few mules to make a hole in the ground and started pumping. That’s why there is now deep water drilling – difficult, expensive and no fun for anybody.

    I think this atricle presents are less rose-colored-glasses view of the oil outlook, sounding far more like one written by somebody with a more engineering or insiders view. Thanks!

  6. I hear very strong and persistent rumors that a new field the size of Saudi Arabia’s Gawar field has been found off the coast of Antarctica. It extends up into the territorial waters of New Zealand. Nothing about it in the news but the pros are talking a lot about it.

  7. no mention of oil shales – the largest deposits in the world are in the USA – ~1 trillion bbls. With horizontal drilling and massive fracking they can be economically and safely produced if Obama gets out of the way. mikelorrey is correct – even then it will take time

  8. While I agree there is a limit to what can be produced, we are not necessarily close to that limit. Sure there are a lot of oil reserves that are inflated – I completely agree with this point. But there are still new oil reserves to be found, and existing ones that will flow again as we figure out new ways to extract the remaining oil.

    What people predicting the fall in oil production continually fail to under-estimate is advances in technology. Technology makes oil extraction a) cheaper than before and b) more efficient. So even though the oil might be harder to extract, technology eventually makes it worthwhile. My dad was an oil-hunter (geologist) in the 60’s and I remember back then the same arguments that we would run out of oil soon (late ’60’s to 70’s mainly) – he didn’t buy it. No one dreamed we would find so much more, and become so much better at getting at it – other than people like my dad. If anyone figures out how to extract shale oil efficiently (and safely) we will be set for a long, long time. 30 years ago no one thought tar sands were worth anything but now they are viable.

    The other problem I have with your argument is that I don’t really see oil demand increasing as drastically as in the past. Eventually as technology is improved, we will have better/cheaper alternative fuels, better electric cars that can be charged from coal burning or nuclear power plants, and oil demand will start to flatten out. Even “normal” combustion engine cars are improving drastically now. Higher prices will cause this to happen naturally (assuming we let them).

    In 50 years we will likely have more oil available in the ground than there is demand to extract it (because it will cost more than the alternatives available). It will be used mainly in jets and other transport that can’t make as good of use of alternative fuels. I simply don’t buy the “running out of oil argument” as I have listened to it for 50 years now.

    In any case, I respect your position and you certainly worked hard to back up your point of view. I enjoyed reading it – thanks.

  9. Discussions of this nature would be greatly improved if commentators addressed what current and potential supply might be available at specified oil prices. For many years, the industry majors based their “reserves” analyses on the known supply that could be economically produced at US$25 per bbl. This was generally sweet, easily recovered crudes that could be produced at very low cost. Clearly such reserves are diminishing.

    However, change that price to US$50, US$75, US$100, US$125 and it becomes obvious that dramatically more supply can become available from reworking old fields, from shale oil, from tar sands, from coal to oil conversion and in the gas area from shale gas particularly. What we are describing is a micro-economic supply curve.

    So far as I know, the oil majors have declined to present “reserve” information in such a manner. If they did, the issue would become very much clearer.

    To push it to an extreme, consider what available supply would become available if a sustained US$200 per bbl price could be guaranteed.

    A major factor is that most of the alternative sources of crude are very capital intensive. Major companies can probably finance such sources off their corporate balance sheets, but non-major project proponents will generally struggle to source funding, given the memories of financiers of the disastrous first round of alternative projects, many of which went into the receivers hands when the oil price slumped to as low as $10 per bbl.

    In fact, if the US wanted to assure energy security, all it has to do is to guarantee an offtake price of say $75 or $100 per bbl for 20 years for suitably qualified emergent projects, and you would see the markets flooded with oil. Clearly environmental factors have to be considered as well, but it seems to me that it will be a long time before we really have to worry about “Peak Oil”.

  10. We call the Oil Sands here in Canada, also, there is a lot of heavy oil in northern Alberta and Saskatchewan.

  11. Together the Mike Jonas and Willis Eschenbach postings provide interesting reading. This is not the first time that learned folks arrive at opposite conclusions from inspecting the same material. The truth, whatever that may be, hardly matters. We are not going to run out of raw material for petroleum products in the near term.

    Further, as has happened before, when push-comes-to-shove there will be a series of transitions to a new situation, again, whatever those might be. Recall, in the mid-to-late 1800s the use of horse-power in cities became intolerable – providing food for and removal of waste from (and deceased ones), filthy streets, disease, smell (well-to-do moved out from and onto the local hills), and so on.

    Electric trolleys (inter-urban and intra-urban), steam trains, subways, autos and other adjustments/transitions replaced horses as major contributors to urban and then all developed society. Expect equally interesting changes over the next 100 years. The horse-powered society did not end because of a lack of horses.

  12. Nice, very nice.

    Now go back and recalculate using Barrel of Oil Equivalent for all the natural gas coming onstream.

  13. The only limit to production CURRENTLY is political roadblocks. Take Venezuela. The Orinoco region has an abundance of water. The upgrading area has an abundance of natural gas. Throw both together and you are perfectly situated to run an upgrading industry. Except no one has added capacity since Chavez came in. “Upgrading” is rather simple. It is just delayed coking coupled with hydrotreating. With water and natural gas abundant, it is also cheap. Diluent is produced from coker naphtha. The upgraded crude is good quality.

    Tar sands production is limited to pipeline availability. Again, a political roadblock over Keystone. The area of production has a huge supply of water and natural gas. Again, it is well situated for production.

    The cutback in Saudi production in 2008 is clearly due to the world wide depression.

    Then we have Alaska. Barely touched. Again, politics is keeping that from being produced. Russia has found massive oil in the Pacific, and we have West Africa. Politics again is limiting supply. And then there is the “stans”, plenty of untouched oil.

    Furthermore, what is your definition of conventional production? Does this include horizontal drilling and fracking shale formations? Yes, vertical bores are going to go away. Everyone will transition to horizontal drilling, and it is still in its infancy. Oil production will increase as the technology spreads. And don’t forget about NGLs, which contain a substantial amount of butane and natural gasoline (drip). These again are limited due to pipelines in the USA. Eventually we’ll peak, but we have a few decades.

  14. Throw in some more political problems: Mexico has an abundance of oil, but they are not allowed to use US companies to get it. The fields are offshore and they are having problems developing them. Colombia is promising. However the oil is in a wilderness, and due to the war, people have been hesitant to install the infrastructure. But it will eventually be exploited. Peru and Ecuador sued the crap out of Chevron-Texaco. Their fields will continue to flounder due to POLITICAL problems.

  15. the capital cycle that it simply takes TIME to expand production infrastructure, and reserves have expanded a LOT in the last few years.

    The problem with high capital cost unconventional oil is the OPEC uncertainty. If most oil were owned and produced by commercial businesses then their reserve estimates could be relied on and their future production and hence the likely price be reasonably estimated.

    Everyone in the oil industry remembers $8/b oil from the 1990s which was viewed as an attempt by OPEC to bankrupt alternative producers such as oil sands. Funding unconventional oil projects requires a large risk premium due to the possibility OPEC will again crash the oil price.

    The solution is for governments to buy oil from unconventional sources on long term contracts at fixed price and implement other ways to mitigate the risk. Otherwise businesses carry all the risks and governments reap most of the rewards thru taxes.

  16. First, thanks to Mike Jonas for submitting an interesting article with a good bit of data, along with references.

    That said, I have to contribute a link to a high level USA government report from 2004 regarding USA shale oil “Strategic Significance of America’s Oil Shale Resource.” While it’s been several years since I’ve read this report, iirc it basically said that we have enough quality oil in shale deposits to basically cover all of the USA oil requirements for the next 100 years. That the oil is practical to recover at competitive rates – I believe it said with price at about $80/barrel – and perhaps lower. That we have roughly twice the oil as in the entire Canadian oil sands. Since that time, the entire frakking process has made large technological gains such that it is significantly cheaper and easier to recover that even when the report was written, using less resources and energy also.

    Meanwhile, I don’t believe the shale oil is even included in the R/P calculations….

    Please don’t misunderstand – I’m not trying to say that we ought to go for the shale oil first, or that it’s our best resource… we have a lot of conventional oil resources that are currently off limits because of government regulations, not for technical or scientific reasons. I’m just saying that here is evidence of massive oil resources that we have available but that aren’t being utilized primarily because of government moratoriums or delays. As a result, oil companies went towards deep sea drilling, rather then the cheaper and safer drilling in shallow waters or on land shale oil, the latter two having been for all intents and purposes eliminated from consideration because of government regulation.

    I also have to note that as best I recall, there was no actual oil shortage associated with the 1973 OPEC fiasco. Oil prices simply don’t directly – or even close to directly – reflect actual/total availability or resources. They’re tied to political action, and heavily affected by the monopoly or virtual monopoly OPEC has had for decades. The 70’s ‘shortage’ was a shortage imposed by OPEC, not by an inability to produce sufficient oil.

    Canada’s oil sands, and if we can get our government to start aiding rather than hurting production, our oil shale, may help break OPEC’s stranglehold on oil supplies and prices. Unfortunately, even with no government interference, it takes time to develop the necessary infrastructure in order to ramp up production.

    The report link below is to Vol. 1 only, note that there is a vol. 2 which you can easily find by googling the title.

    http://fossil.energy.gov/programs/reserves/npr/publications/npr_strategic_significancev1.pdf

  17. There is a profound difference between “more difficult to produce” and “more expensive” that is ignored. It is more expensive to produce the tar deposits in Venezuela (even if it were not politically obstructed) but not more difficult per se. It is the refining that takes more work, to turn it into gasoline and Diesel. (Not too hard to do, just folks will use light sweet before they use heavy sour…)

    Reserves is a Very Rubber Ruler. With almost as many variations in definition as the “what is is”… A major revision was done just a decade or two ago (and obsoleted many of my favorite terms). So just WHICH reserves are you comparing? Ultimately recoverable? Economic? etc.

    So WHEN is “peak oil”? Far more in the future than any of us needs to worry about.

    In the news today, China invested a chunk of money in Devon Oil and US Shale oil:

    http://www.bbc.co.uk/news/business-16404499

    Chinese oil firm Sinopec has agreed a $2.2bn (£1.4bn) deal with Devon Energy, giving it access to shale deposits in the US.

    Sinopec will get a one-third stake in five new shale projects, with the firms expecting to drill 125 wells this year.

    China has been buying energy sources to feed its fast-growing economy, and wants to improve its ability to extract domestic shale deposits.

    China has some of the biggest shale deposits in the world.

    Folks have finally decided prices will stay over $80/bbl and they can make a profit from shale oil. As Saudi had a habit of crashing oil prices to run unconventional oil out of business, folks had not been willing to invest in it. That’s now changed.

    How much oil shale is there in the world?

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

    Deposits of oil shale occur around the world, including major deposits in the United States of America. Estimates of global deposits range from 2.8 to 3.3 trillion barrels (450×109 to 520×109 m3) of recoverable oil.

    Yes, about 3 TRILLION barrels that even the wiki is willing to think of as ‘recoverable’. That means “ultimate reserves” are much larger…

    That was the sound of several Trillion barrels of new reserves being brought to market…

    So, about that peak oil…

    Oil production is much more driven by politics and the economic definition of ‘reserves’ being sensitive to price than anything technical, and way after THAT comes “ultimate reserves” limits.

    BTW, shale oil is only ONE of the “unconventional reserves” that exist…

  18. I am perfectly comfortable with an orderly replacement of fuel processed from crude oil, to electrical energy produced by a fusion or nuclear process at least for private transport. I am perfectly comfortable with this transition, but in taking that step, I also see a need to unlock patents on the most efficient and most viable means of storing electrical energy, if such technology is patented and not marketed, then the patent should lapse into a form of “crown patent (British term) and available for open use but subject to whatever arrangements that can be made to feed compensatory payments back to the inventor or his backers.

    A viable personal or family electric car network and power distribution can then be put in place by normal commercial arrangements in a competitive market to supply the needs of the consumer at the best possible price. The remaining crude oil supply is then reduced to the supply of diesel for long haul truck and rail transport between commercial centres, structured in such a way that supply of the fuel for the needs of communities will be at the most competitive rate and supply not manipulated by storing in ghost ships, or any of the other tricks to restrict supply and artificially inflate pricing.

    This in itself should put peak oil on the back burner as other fuel and energy distribution schemes develop, doesn’t need to be over regulated but just reward those that give us the best for our consumer buck.! Remember also that there are means to limit market access, by shifting alternative fuels (Gas, LPG CNG) into the truck and train heavy hauling market and reduce crude oil refining to a more limited market of say lubricating oil and supply to chemical refiners for plastics and other products if the consumer needs them.

    I’d rather the crude producers embrace this concept as necessary to ensure the future competitive marketing and future use of their product and in this way ensure some freedom to undertake the business and investment as a reasonably free enterprise. If future governments can work with the producers and ensure strategic development with the least possible disruption and repressive legislation, the better it will be..

    Maybe a little idealistic, but we have seen the good the bad and the ugly, lets see if we can encourage competition and conserve at the same time. Government democratically elected to make life better and encourage rather than stifle adaptation and initiative. Try that for size!!

  19. Mike Jonas, Interesting but new finds continue. The Eastern Mediterranean springs to mind with Noble Drilling announcing huge gas field finds off Israel and Cyprus. The single Cyprus field explored has enough gas to keep the island electricity generation going for 210 years (and Noble will have given conservative estimates to protect themselves) and this was from a single exploration block!
    Source: http://www.rigzone.com/news/article.asp?a_id=113763
    It would seem to me there is still plenty to be found!

  20. All we know for sure is that today we are at Plateau Oil,
    a basic world capacity ceiling of 100 million barrels per day.
    Surpassing it significantly will require huge investments
    all the way through the supply chain, from exploration
    to recruiting new engineers and technicians.
    Good luck with that as our educational system
    continues to decline.

    As mentioned above, it will also require
    that Western governments end their parasitic corporate taxation
    and stifling regulatory bureucracy.
    Good luck with that as our bloato-Ruling Class
    continues to metastasize so destructively.

    Until world output regularly exceeds the 100 level
    we only have the Plateau.

  21. For those not believing in a near peak oil : if it is not difficult – generally speaking – to increase the production, why did North sea production peak in 2000 ? and why did UK become a net oil *importer* in 2004 , precisely when the oil prices started to climb to the heavens, loosing a comfortable source of income , and paying very much for a very expensive energy ?

    can you find a simple and understandable explanation ?

    I think neglecting the peak of fossil fuels productions of one of the weakest points of the IPCC scenarii – the three pillars of the climate change paradigm being : uncertain climate models, unreasonable fossil fuels reserves, and absurd economic theories.

  22. I have a dispute with regards to the ‘high’ oil price. Prior to the quadrupling of oil price in the 70s, Nixon took the US off the gold standard and the price of god went from $35 and ounce to $140. So OPEC didn’t raise the price of oil, they demanded more dollars because the dollar had been devalued. Inflation continued, and the price of gold reached over $600 by 1981. Paul Volcker at the Fed brought the price of gold down and kept it in the $300-$400 range where it stayed until the late 90s. Now gold has gone well over $1500 an ounce. Is it really the case that producers consider the price of oil to be currently high? Perhaps it is still not high enough in real value to be worth extracting the oil.

  23. The “harder to produce oil” mantra is funny considering that nowadays, most of the job in the “hardest” places is done by pressing buttons, moving joysticks and checking control screens.
    No amount of facts is enough to convince peakoilers they are wrong since they keep believing they’ll end up being right, soon. It’s a religion.

  24. RobW says: “No where is there mention of oil-shale, curious since the US has it in spades.

    Oil shale is the wave of the future. And always will be.

  25. A few points in response to some of the comments made:

    Technology may indeed be able to more than keep pace, but it has to compensate for existing fields’ decline rates before it can increase total production. There is a neat picture of this in http://www.theoildrum.com/node/8697 where the chart http://www.theoildrum.com/files/AK_ND_MT_production.png shows that “The Bakken boom has simply hidden a much more troubling trend; it has nearly perfectly balanced out the decline in North Slope output.“.

    re the US’s oil shale. The N Dakota dept of mineral resources https://www.dmr.nd.gov/pipeline/assets/Video/11102011/NDPA%20Nat%20Gas%20Slides%2011-10-2011.pdf puts the start of the Bakken production decline as early as 2015, with production peaking below 1m bpd even if the oil price goes to $200 – and that’s with 33,000 new wells being drilled (2,650 to date).

    I haven’t heard anything about major Antarctica discoveries. One obstacle to be overcome would be the Protocol on Environmental Protection to the Antarctic Treaty (1991) http://www.antarctica.ac.uk/about_antarctica/geopolitical/treaty/update_1991.php Article 7 “Any activity relating to mineral resources, other than scientific research, shall be prohibited.‘. OK, treaties can be torn up, but there could be a lot of heat generated…

    “Peak Oil” does not mean “running out of oil”, just that for whatever reasons the production rate doesn’t increase. That includes political reasons and competition from other energy sources, including gas. Already, in the BP figures, oil consumption has exceeded oil production by more than 2m bpd since 2001 (5m bpd in 2010), thanks to “consumption of non-petroleum additives” – presumably mainly politically-driven subsidised biofuels. In spite of that, the oil price has risen. A rising oil price can increase reserves but can also increase the attractiveness of alternatives and hence reduce demand. And production is driven by demand.

  26. A lot of folks can’t understand how we
    came to have an oil shortage here in our country.
    ~~~
    Well, there’s a very simple answer.
    ~~~
    Nobody bothered to check the oil.
    ~~~
    We just didn’t know we were getting low.
    ~~~
    The reason for that is purely geographical.
    ~~~
    Our OIL is located in:
    ~~~
    ALASKA
    ~~~
    California
    ~~~
    Coastal Florida
    ~~~
    Coastal Louisiana
    ~~~
    Coastal Alabama
    ~~~~
    Coastal Mississippi
    ~~~~
    Coastal Texas
    ~~~
    North Dakota
    ~~~
    Wyoming
    ~~~
    Colorado
    ~~~
    Kansas
    ~~~
    Oklahoma
    ~~~
    Pennsylvania
    ~~~
    And
    ~~~
    Texas
    ~~~
    Our dipsticks are located in DC
    ~~~

  27. Each time the price of WTI has risen over the past 30 years that I have been in the business, the industry moves to sell more oil, increases production and the natural result is an over-supply that kills the price of WTI.

    Watching the effect of the new technologies (horizontal wells and multi-stage fracing) I am again struck by how the industry is again quickly ramping production from “new” sources. Of course, the sources aren’t new. Here in Alberta, we knew about the Cardium, Montney and Viking formations for decades but simply couldn’t produce them with any volume that approached profitable until the advent of the new technologies. The Cardium alone is over 10 billion barrels of WTI-quality oil. Alberta is drilling-up a storm bringing this previously uneconomical resource to the market.

    There are similar formations, numbering in the dozens, all around the world and at $100/bbl, you can be assured that the effort to bring all these previously marginal fields into rapid production is well underway. Will the result be another over-supply situation that again crashes the price of NYMEX crude? I have begun to believe so simply because the technology is so incredibly efficient.

    When Alberta can drill 50 wells a day that will produce 200-300 bbls/day each after spending a generation drilling wells that averaged 25 – 30 bbls/day, you have to know that if this is replicated on dozens of fields worldwide, the R/P ratio will nose-dive along with the price of oil.

  28. MikeN says:
    January 3, 2012 at 11:26 pm
    I have a dispute with regards to the ‘high’ oil price.

    Oil has gone from $0.22 to $1.30 a liter in Vancouver (6x), while gold has gone from $150 to $1500 (10x). At the same time cars and houses have gone up by a similar amount. What hasn’t gone up to the same degree is wages. So while the price of oil remains much the same in real terms, most households have two parents working, while a generation ago it only took one parent working to support the family.

    I found this on the web:

    ’64 Impala v8 – base price 2850 – loaded $3828
    2011 Impala LT – $25,605 (6.7x)
    U.S. Bureau of Labor Statistics, $3,828 in 1964 is equivalent to $26,932 (7x) in 2010 dollars.

  29. The “harder to produce oil” mantra is funny considering that nowadays, most of the job in the “hardest” places is done by pressing buttons, moving joysticks and checking control screens.

    The oil industry is a very dangerous and difficult industry. Recently there was a well reported incident in the Gulf of Mexico that demonstrates the difficult conditions. I think it was a bit more than pushing joysticks to remedy the situation.

    Also there are quite a few posts confusing gas and oil. Mike mentions we are probably at or near peak oil but peak gas and energy are definitely off in the future.

  30. Peak oil is a worry, but not for the reasons that we won’t have enough. As the price of oil increases, it becomes more economical to burn fuels other than oil. Sooner of later it becomes cheaper to burn corn, wheat, the amazon, whatever is available. The very foolish notion that we can prevent this by slapping a tax on fossil fuels will only drive the price higher, making the conversion of food and timber to fuel all the more attractive. Quite litterally, the oil we leave in the ground has to be replaced by something, which in the end will be the food off the tables of the poorest people on the planet. The one least able to compete in a global market.

  31. The worth of the subject is that “It is an endless article”. This should be continued.
    The reason is there are many active variables in the nature of subject that must always be monitored.

  32. Very interesting. Oil reserves cannot be counted unless it is legal to extract. Much Alaskan oil comes under this category. There must be oil under Arctic waters where we have to await technology to enable extraction below moving ice but that will come.

  33. The articulated thesis seemed plausible, but I was left hunting for one obvious chart that would disambiguate and crush Willis’ argument without a lot of words — A chart of cost per barrel over time. Everything else is just hand waving.

  34. You have not considered the advancement of technology to process poorer quality oil at a cheaper price. Technology is dynamic, not static, as proven in the horizontal drilling and fracking of known and unknown reserves like the Bakken Oil Shale. Furthermore, what is the reliability of the data of stated reserves. There are too many unknowns to the Theory of Peak Oil.

  35. Production/refining of oil aims to meet demand at a profitable price. Level of reserves depends on how much exploration for new reserves is carried out which depends on the rate of return for that oil. The balance of the 2 may be through keeping the ratio of reserves to production to about 40 to create a stable scenario with 40 years known capacity.

    How much excess refining capacity exists, how much is opening and closing and what proportion of exploration capacity is being utilised?

    To me that ratio simply says there are 40 years of reserves at today’s production rate and conveys little else except comfort.

  36. With technological improvements and the rising price of oil, I do not see Peak Oil happening any time soon.
    Nice article, though and always good to see another stand point.

  37. I think that Mike Jonas has put in some very good analysis.

    Nevertheless, I think the big hole in Mike’s arguments is that even if peak oil is true, it’s kinda irrelevant. When one resource becomes scarce and expensive, human ingenuity replaces it with another resource (viz transition from wood/peat/charcoal to coal).

    But I’m glad that WUWT presents different sides to the argument, and that most comments are civil and thoughtful. That’s how all blogs should work.

  38. Unfortunately Mike’s analysis ignores the most important factor in improving reserves which is technological changes which dramatically increase recoverability. Reserves does not just mean oil in place but recoverable oil and the last 3 decades have seen the amount of oil that can be recovered from reservoirs increase from around 20% (or sometimes less) up to 60-70%. Rotary steerable assemblies allowing for long extended reach drilling, underbalanced drilling to prevent reservoir damage during the drilling phase and enhanced recovery techniques have all made huge differences to the reserve figures. This is one reason why the Peak Oil ideas are so misguided. Of course it is a finite resource but we are certainly not yet at the stage where we have any clear idea of what the limits are on either the reserves available or how much of them we will be able to extract.

  39. We should get the whole WUWT community and redirect any PO articles comments to hysteria central – http://www.peakoil.com

    When are the WUWT reader surveys happening ? How many of us believe the POisNOW hype?
    I was a peaker from about 2006 – 2008, but after a while I saw it to be a doom and hype crowd just like the AGW gang. Both religions are quietly sponsored by big oil. There have been POers for over a century. They’ve never been right yet.

    There’s only ever 20-30 years worth of old in ‘proven’ reserves at current comsumption rate because that how far oil companys bother to look ahead. POers misinterpret this as ‘ there’s only 20-30 years supply at current rate left in the world ‘. So for them PO is now … always.

    The talk of ‘expensive oil’ and ‘all easy oil is gone’ is nonsense. Even if oil was 100 times harder ( EROEI ) to get out the ground, it would still be economic to recover it. Oil is still ridiculously cheap in real terms.

  40. RobW says:
    January 3, 2012 at 9:15 pm

    No where is there mention of oil-shale, curious since the US has it in spades.

    ==========================

    Nor should there be any mention of oil-shale. US oil shale reserves are almost entirely in the Eocene Green River formation in the central Rockies, and nobody has any idea how to extract the hydrocarbons at any reasonable cost. The “Oil” is present as a wax like substance called Kerogen that is dispersed in the interstices of fairly hard rock.

    There are small amounts of less intractable oil shales elsewhere in the country that may well be a useful reserve. But not enough to make much difference.

    Today, and for the foreseeable future, it’d be far simpler and cheaper to make oil via proven Coal to Oil (CTL) technologies than to get the “oil” out of the Green River rocks.

  41. Alan Clark ‘ “Will the result be another over-supply situation that again crashes the price of NYMEX crude?

    Well, it might. But everyone here pointing out that there are vast quantities of oil just waiting to be produced, and that the technology is going to deliver it, needs to check the numbers carefully.

    The world in 2010 used 31.9bn bbls of oil. N Dakota’s Bakken production reached a record in 2011 of nearly 500k bpd. That sounds very impressive, and no doubt it will increase by a decent factor in future, but it’s only 0.6% of global oil consumption. To put it a bit more in perspective: Saudi Arabia did manage to produce more oil in 2010 than in 2009, but 2010 production was still 559,000bpd below their 2003-2009 average and 1.1m bpd below their 2005 peak. So the mammoth efforts on N Dakota’s Bakken are struggling just to compensate for production lost from Saudi Arabia.

    The oil companies piling into Brazil (Sera comment http://wattsupwiththat.com/2012/01/03/peak-oil-the-rp-ratio-re-visited/#comment-852542) are chasing a possible 123bn bbls of reserves, although the figure stands now at 16bn. But it is going to take many years to develop those fields, and 123bn bbls is only 4 years’ world supply. By the time they reach peak production it is quite possible that they will be able to do no more than compensate for other fields’ declines over the intervening years.

    Maybe the world really can increase oil production for many more years, but IMHO when you look at the numbers and add in things like political factors it is looking ever less likely. I would be very happy to be proved wrong.

  42. Mike Jonas is spot on and Peak oil most probably did happen in july 2008. Though it is an understandable reaction to hide one’s head down the (tar)sand there would be a lot to gain from a more widespread understanding of Peak Oil. The future estimate from IEA is, as Mike Jonas explains, no more than wishful thinking. For a more realistic perspective read this presentation by Dr Höök from a conference in Spain 2011. The title of the presentation is “Peak Oil: Fact or Fiction?”:

    http://www.tsl.uu.se/uhdsg/Personal/Mikael/Barcelona2011_05_05.pdf

    For a more in depth view dr Höök has published +20 peer review papers on the subject and you will find them (among others) here:

    http://www.fysast.uu.se/ges/en/publications/peer-reviewed-articles

  43. Thanks for writing that Mike. As far as I can see, it is pretty much 100% correct, but as you can see, there are a lot of folks around here who have not done their homework and who prefer wishful thinking to data as a basis for discussion.

    One additional point is that the current oil production plateau well might be demand driven. There is little point in producing additional oil if it does not have customers or if the additional oil will drive prices down and result in lower profits. Economics is not remotely up to computing the optimum supply and price levels, so we are left with petroleum prices being set by a market that appears to be anything but efficient. The only other approach to computing peak oil is Hubbert. But Hubbert’s math depends on accurate estimates of reserves. And we probably do not have accurate oil reserve numbers.

    I myself can’t distinguish between an oil production plateau driven by demand destruction (lousy economies, fuel switching) and peak oil. I don’t think anyone can. I have come to the conclusion that I will find out about peak oil when I start seeing “No Gas” signs at gas stations regularly and with no natural disaster to blame. I’m guessing that the EIA is more correct than most folks think. Oil production might not peak until the 2030s. But I also suspect that future demand from developing countries is widely and substantially underestimated so it’s quite likely that more oil production may not mean lower prices.

  44. Dennis Ray Wingo says:
    January 3, 2012 at 9:17 pm
    I hear very strong and persistent rumors that a new field the size of Saudi Arabia’s Gawar field has been found off the coast of Antarctica. It extends up into the territorial waters of New Zealand. Nothing about it in the news but the pros are talking a lot about it.

    Can you link to any information on this at all? I’m afraid I think you’ve just made it all up, there’s no drilling in Antarctica so how can it have been discovered?

  45. JamesD says:
    January 3, 2012 at 10:03 pm
    The only limit to production CURRENTLY is political roadblocks….

    —-

    I think you’ll find cost is also a major reason, sure you can drill more wells or build pipelines etc but that all costs money. The more money you spend to extract the same amount of oil at a faster rate, the less economical it’ll be.

  46. Mike you have the “political” reserves generally right. But a couple of things, in oil and mines, you develop reserves as required. To drill off 100 years of oil, copper etc. is not good exploration economics as it is expensive to do. For minerals, a feasibility study is usually based on 10-20 years of production. To drill more, you have cash sunk, ticking away at 5-8% (opportunity cost) that isn’t going to be returned for a long time. Now if you happen to hit a very large rich deposit, you end up with much larger reserves than planned – nice- but you certainly aren’t going to continue on trend where you are likely to find more (we look for elephants in elephant country). The price of oil does two things: it pays to develop more reserves (for example very deep reserves fairly well known that were not economic and, until recently were technologically unavailable); and two it pushes us toward substitutes – oil from coal or shales, methane hydrates in the ocean muds which were discovered relatively recently and which appear to be enormous reserves on the sea floor, and of course, as mentioned by others, the alternative competing energy sources which will ultimately replace hydrocarbons. You note the replacement but neither you nor Willis noted that this factor actually makes the R/P factor almost a little silly since it is put forward as an alarming situation for he future of energy available to man. Other commenters mentioned the dire situation with horse-energy in the 19th C. We could have probably had a formula that showed the increasing number of horses that would be required doing unproductive hauling of hay in and manure out of ever expandiing cities that would have had an alarming edge to it.

  47. The Peak Oil question is always a problem when looked at from a geologist point of view. They look at the known reserves, divide by production, and come up with a date when we run out. From an economist perspective, things are much different. The known reserves is not a static number: it correponds to the optimal level of reserves at today`s price and future anticipated demand. When the optimal reserve level is met, investments to find more oil contracts (oil prices is the mechanism through which this is done). If future demand anticipation grows (seen when prices go up), investments kick in to add to reserve. From this, it is impossible to determine Peak Oil using todays know reserve. Reserves is consequence of demand.

  48. I make lots of $$$$$ betting against the supply siders in this arguement.. has anyone noticed what the price of a bbl of oil is?

    It is $100 a bbl because of a supply squeeze.. not over supply. China is adding 3/4 million bbl/day extra demand every year. The USA is giving up on its demand, off about 3 million bbl/day TO SUPPLY CHINA.

    Willis was wrong. This post is closer to the truth. The truth is DEMAND is going up, prices are going up, and supply is being 1/2 satisfied by price rationing.

    Yes, we will be burning more food unless we build dozens of natural gas to liquids conversion plants.

    We need to enter the natural gas age, and we are, as the price signal of $20 natural gas vs $100 oil is causing the switch in the USA right now, just not fast enough to avoid $130 a bbl oil.

  49. An excellent article. I thought Willis’ offering last week was , let’s say, optimistic.
    I did not have time to comment on it until there were already about 253 posts so I did not bother.

    His basic premise was this is BP data ” I presume other oil companies are the same”. Big assumption.

    Thanks for adding a bit of balance.

    The problem is that IEA have been fabricating data for years. It’s about as scientific and neutral as the IPCC. The Saudis have been talking up their reserves but seem unable to walk the walk.

    The IEA’s projection of undiscovered reserves looks like a line they drew then tried to justify. It has the resounding ring of … fudge rather then truth.

  50. Bob says:
    January 3, 2012 at 9:29 pm
    no mention of oil shales – the largest deposits in the world are in the USA – ~1 trillion bbls. With horizontal drilling and massive fracking they can be economically and safely produced if Obama gets out of the way. mikelorrey is correct – even then it will take time.

    There is no oil in the “oil shales”, it’s kerogen. Big difference. It has to be cooked to make oil. The ERoEI to make kerogen into oil is negative.

  51. E.M.Smith says:
    January 3, 2012 at 10:35 pm

    An interesting quote for you from the United States Bureau of Land Management in March 2011:

    “As there are no economically viable ways yet known to extract and process oil shale for commercial purposes, and Utah tar sands deposits are not at present a proven commercially viable energy source, the BLM, through its planning process, intends to take a hard look at whether it is appropriate for approximately 2,000,000 acres to remain available for potential development of oil shale, and approximately 431,224 acres of public land to remain available”

    http://edocket.access.gpo.gov/2011/pdf/2011-9120.pdf

  52. Sera says:
    January 4, 2012 at 12:12 am
    Right now the oil companies are falling over themselves shipping drilling equipment to Brazil-

    http://www.bloomberg.com/news/2011-01-19/brazil-oil-fields-may-hold-more-than-twice-estimated-reserves.html

    and those who do not understand how technology advances will always be on the ‘end is nigh’ side of the argument.

    From the link:

    Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves

    That’s 4 years of world consumption. It’s a small deposit.

  53. This is a nice counterpoint to Mr. Eschenbach’s piece. Thank you to both Mr. Jonas and Mr. Eschenbach for their contributions; the articles are polished, well-researched, well-written and highly readable.

    A long time ago, U Thant said something to the effect of: “It is no longer resources that determine prices, it is prices that determine resources.” Many petroleum engineers would agree. Boone Pickens accurately quipped, “The solution to high prices is… high prices.”

    I once had a Mobil geologist reply to my question about natural gas reserves with, “The reason the world is round is because it’s full of gas.”

    Nonetheless, I have to admit that I find it very difficult— if not downright impossible— to believe that humanity is ever going to discover another Ghawar.

  54. Sorry but these assumptions are garbage. Peak Oil is just another doom monger scare story that simply isn’t true. As the price of oil goes up there is a huge increase in what is economically recoverable and more costly technology/extraction methods become viable – facts that ensure we will never run out.

    There will, of course, be a peak one day. That day is when a better and cheaper alternative becomes viable and eventually displaces oil and gas. This day is certainly NOT the day we run out. Battery technology is ever improving and if we can get fusion power to work then it is possible that oil may start to be displaced sometime later in this century but NOT because we run out!

  55. Pete H says:
    January 3, 2012 at 11:08 pm
    Mike Jonas, Interesting but new finds continue. The Eastern Mediterranean springs to mind with Noble Drilling announcing huge gas field finds off Israel and Cyprus. The single Cyprus field explored has enough gas to keep the island electricity generation going for 210 years (and Noble will have given conservative estimates to protect themselves) and this was from a single exploration block!
    Source: http://www.rigzone.com/news/article.asp?a_id=113763
    It would seem to me there is still plenty to be found!

    What is “huge”???

    Link please.

  56. I have no doubt that there are huge reserves of some types of resources that can be made into oil. The questions are cost, net energy gained, environmental impacts, and in some countries, politics. In other words, even if we agree that there are huge quantities of solid tar-like deposits in places like Venezuela, turning those deposits into oil will cost a lot of money.

    Canada’s tar sands are a huge resource, but companies didn’t start investing in a big way until it seemed certain that oil would stay over $60 per barrel or so. For the underground tar sands in Canada, you need to create huge amounts of steam by burning natural gas, inject this steam underground in a series of wells, collect the now liquid tar, which flows once it is at a few (low) hundred degrees, and then deal with the oily water once you have removed the petrocarbons from what comes up in the recovery wells.

    I don’t imagine that local Venezuelans will mount any effective protest against using the Orinoco river as a sewer for the oily water than comes up, the way that environmentalists are beginning to effectively protest degradation in Canada, but just the production costs will still be pretty high.

    So I agree that we have lots of deposits. But it will take high world oil prices to develop them, and high prices will reduce demand, as it has in the last 4 years in the US. Peak oil doesn’t mean we are running out of hydrocarbons, it means we are running out of the cheap to produce hydrocarbons that helped create so much wealth. When we reach a plateau of oil production, beyond which the world won’t ever produce more than so many millions of barrels a day, that peak will reflect the high price to acquire usable oil, not the maximum capability of the world to produce more barrels if price were not a consideration.

  57. Thank you, Mike Jonas, for a very readable and well-argued paper. It was balanced, and introduced a whole load of issues which need to be considered whenever the oil question is debated.

    I note your primary line is that ‘production difficulties’ are going to be a major limiter. If these are technical, I suspect they will be speedily overcome. If these are social or political, then you have the obvious example of the suppression of nuclear power to show how apparently sensible projects can be scuppered for the best part of a lifetime by a few activists.

    You have given us all something to think about…

  58. “Oil shale is the wave of the future. And always will be.”

    And yet it’s producing now…

  59. Nice article Mike Jonas. But why is a lack of production increase always seen as a problem? Maybe supply and demand are now well known such that reserve / production ratios are leveling off naturally. Oil is fairly steady at $100 a barrel and a liter of gas costs about the same as a liter of bottled water. Peak oil first occurred in the 1970s and now it is being projected outward to 2035. Why continue with this bogey man?

    I worked for a major mining company that kept much of its reserves off its books because they added no value but cost money to report (extra drilling to meet reserve definitions, more reporting and disclosure issues etc). When they needed more reserves they appeared magically (from one set of books into another with a little bit of work). There was nothing wrong with this. Who cares if you have 30 million tonnes (15 years production) of nickel or 300 million tonnes (150 years)? And if you try and push too much nickel onto the market (by tripling production) you don’t increase market share but the price per pound plummets. I suspect the same for the oil industry. Keep enough reserves on the books to make financing possible and keep production high enough to make a pile of money at $100 oil. And whisper peak oil now and again to keep people guessing.

    And as for fictitious reserves…if these were stated in the 1980s and the countries are still producing at the same rates 30 years later…well…they probably existed all along.

  60. Pete H says:
    January 3, 2012 at 11:08 pm
    Mike Jonas, Interesting but new finds continue. The Eastern Mediterranean springs to mind with Noble Drilling announcing huge gas field finds off Israel and Cyprus. The single Cyprus field explored has enough gas to keep the island electricity generation going for 210 years (and Noble will have given conservative estimates to protect themselves) and this was from a single exploration block!
    Source: http://www.rigzone.com/news/article.asp?a_id=113763
    It would seem to me there is still plenty to be found!

    Noble Energy had discovered between 5 trillion and 8 trillion cubic feet (tcf) of natural gas in the Block 12 Aphrodite field.

    Puny. Just because they have enough NG for 210 years does not mean the world has NG for 210 years. Peak oil and peak gas will affect countries differently at different times. Importing countries will get hit first.

  61. I am an Engineer for a seismic equipment company so I have a bit of a different perspective on this. In the last 10 years, from my company alone, we have produced new survey, measure and monitor technologies coupled with new exploration techniques are identifying new reserves every day. Additionally, because of the improvements in computing power and this advanced technology, we can re-assess existing reserves and make existing wells more efficient from 1 to 5 percent. In terms of production, that is HUGE.

    Based on what I have personally seen over the last 10 years, I expect exploration and extraction develop at an accelerated rate. I think we have really just scratched the surface of what will be available. I think Willis’ analysis is more accurate.

  62. While its fun to argue about R/P, it really comes down to the underlying basket of technologies. Production curves are representative of those technologies which are a reflection of free minds and free markets.

    Up until the late 1500s, there was only subsistence agriculture, then along came Enclosure and ag production took off. Then along came the Haber process, then enclosure for animal production, and then Borlaug.

    Or consider silicon chip production.

    • In the very beginning of oil exploration and production, the R/P in the scale of today’s era is meaningless. The markets and the oil fields however found each other capable to proceed. If we assume that the people had enough knowledge about today’s explored reservoirs in the past, then the R/P could had been greater than this (40). Neither the market nor the technology could not produce and absorb that (maybe) 3- 4digits R/P. Therefore, the market demands and the amount of oil production have been so far synchronized and tolerated by means of Geo-politics, Oil Price and Technology. Today’s exploration and production have the same relations like what happened in the past. Our knowledge and expected demands would not let us go through this is the definition of a predictable balanced power of the market/technology(know how). The (40) as a figure, has a strong message for us. Empirical outcomes through the years in oil industries are valuable part of that. This can be monitored and measured only in its dynamic environment which is only the market included technology – politics mechanism.
      In this study, we find something important and it is the declining trend of R/P which means the progressive technology, while in the process of time, the demands have been grown up extremely, the prices have found new scales, and the political issues have become more complicated.

  63. There are at least two guaranteed methods to get your blog dominated by the crazies:

    1) Just mention *Peak Oil.* You don’t even have to say why it’s not really a problem for decades

    2) Just mention *Ron Paul.* You don’t even have to say the word *kook,* or *crank,* or *wing-nut.*

  64. Amazing wishful thinking going on here imo. The price of oil tells the story, ie empirical DATA.

    The real world data is defying the “believers”.. sound familiar? The Peak Oilers have been arguing their case for 5 or 6 years, and the DATA supports them.(high prices, and flat to falling production from conventional sources).

    What it means is we have a SUPPLY problem, and have had one for 5 or 6 years.

    The data does not lie.

    The marginal price is now set by the tar sands, ie, at least $80 per bbl. Saudi Arabia says it is higher, at $90, to pay for their social programs.

    The USA will pay big time for its wishful thinking coming from its cheap “supply side” thinking.

    Of course, the smart money thought they could take out Saddam and then ramp up its oil production to get the supply. How is that working out?

  65. @MikeN

    Your points are well considered. The global economy is on a defacto gold standard with all countries individually pretending it is not. It is hard to hoard anything else save gold so it remains a real measure of value. With US gov’t bonds becoming technically valueless on paper, efforts continue to keep the $ propped upon the chair of being the ‘commodity trading currency’. That could change in a single week (though trying to do so would probably provoke a desperate war).

    Using a technically bankrupt state’s printed currency for international trade, long term, is crazy. Its value and support will run out long before the oil does.

  66. Not addressed by either one: the fact that the Dollar has been suffering from inflation over the last few decades that has not been reported. The dollars peg against oil might be less about oil production capability, and more to do with the flood of dollars in the world.

  67. Rob Crawford says:
    January 4, 2012 at 6:40 am

    “Oil shale is the wave of the future. And always will be.”

    And yet it’s producing now…
    ——
    No it’s not. Shale oil (tight oil) is producing now. There’s a big difference between shale oil and oil shale. Shale oil is regular crude that until now has been stuck in fairly impermeable rock which can be released by fracking. Oil shale, as pointed out above, is kerogen, not oil. It requires extensive processing to turn into crude oil, which makes it currently uneconomic. If technology improves to the point where it becomes economic, it will be one hell of a resource because it so big. But right now the oil shales are worthless.

    Oil Shale:

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

    Tight Oil:

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

    The naming of these two different kinds of deposits confuses a lot of people.

  68. “In mid 2008 Saudi Arabia announced that they would increase production by 500k bpd [14], but production fell 8% over the next two years. Perhaps this confirms that the producing Saudi fields are already in decline [15]. In June 2011, Saudi Arabia again stated that they would raise production [16]. It will be interesting to see if they are able to.”

    It is important to look at the context of these announcements with respect to the world economy. In 2008 the world was in bad shape economically, oil prices took a precipitous drop. Although Saudi actual production dropped through the period 2006 – 2010 (why would they produce oil for which there was no demand at a reasonable price?) they continued to work on the “mega-projects” which were intended to increase their spare capacity to 12 MMbpd. Most of those projects (with the exception of one heavy oil offshore project) were completed and Saudi Arabia now stipulates that their spare capacity is sitting near the 12 MMbpd range. Spare capacity and actual production aren’t the same thing and should not be confused.

    This past year when Libyan crude disappeared thanks to the Arab Spring S.A. stated they would be able to replace the lost production. Indeed during the first half of 2011 S.A. did increase their production by several 100 Kbpd.but were somewhat constrained in their ability to completely replace the Libyan crude due to the higher sulphur content in S.A. crude (refineries in Europe which were the main consumers of Libyan crude are only set up for light-sweet crude.).

    Also the notion of “heavy-oil” needs to be better described. When you speak about “difficult to produce oil” you are not talking about the gravity of the crude but rather it’s viscosity. As an example in Venezeula and Colombia there are a number of oil fields that have low gravity (10 – 18 API) but also low viscosity (60 cp or less). In contrast, Venezuela also has pools with low gravity but very high viscosity (several thousand cp). The low viscosity heavy crudes are as easy to produce as similar viscosity lighter crudes whereas the higher viscosity crudes often require additional energy imparted to the oil (e.g. steam). Both low viscosity crudes, however have the same challenge in finding the appropriate refinery with capabilities as well as marketability (specific markets with discounted prices).

  69. Peak Oil is a real, immanent, and very serious problem. It is nothing like Global Warming at all. Here’s why.

    While there may have been a point in time when the Global Warming hypothesis merited some attention (back when the issue was first mooted, perhaps), subsequent years of sober and rational reflection have shown us that those concerns can be safely dismissed. Mankind simply cannot produce enough carbon dioxide to effect the climate. The scale is too vast, the feedbacks are too complicated, and the other forcing and/or buffering mechanisms we have identified completely swamp whatever patry effect our miniscule contribution to global greenhouse gas levels may be causing (if there even is such an effect, which we cannot definitively conclude).

    On the other hand, the lexicon of alarmist terms with which we have become familiar through the Global Warming debate — terms like ‘tipping point’ and ‘runaway feedback’ — really do apply in the case of Peak Oil. Just one Iranian nuclear weapon, whether or not it is even detonated, could set off a chain of events which will disturb the world’s oil-producing region for the foreseeable future.

    There is a human dimension to this problem which most commentators seem oblivious to. Oil in the ground does nobody any good. If it cannot be extracted, bought, sold, transported, and refined into useful products, it might as well not exist. It is human societies which produce and consume oil, and our ability to exploit a resource is conditioned by numerous factors besides the level of stated reserves. You cannot simply assume that we will have the resources and finance capital to utilize unconventional oil sources. You cannot simply assume that “technology” is a silver bullet which will overcome all production hurdles. And only someone blissfully ignorant of all world history could believe that governments will ever “get out of the way” and allow private oil producers to pump the wells dry in a Libertarian fantasy-land. The world is the theater of bloody politics: it always has been and it always will be. People will fight for power, wealth, and security, and many delicate fruits of our exigent civil society — fruits like easy access to finance capital and loads of money for R&D — will get trampled in the process. The system of intellectual and financial tensions stretched across the global economy is now so tight that any minor supply disruption could cause the threads to begin to snap. And with the world’s advanced economies getting older and deeper in debt, they will not be able to consume oil as efficiently as before. This is just the beginning of a process that will result in a slowdown of the global economy and the outbreak of hostilities. We will have to get used to living in a world where war is more frequent and wealth less taken for granted; a world, in short, of less civilization.

    Ultimately, it is man’s ability to produce and consume energy efficiently which has peaked. This is the critical measure, the only one that counts in the last analysis. It has a complicated relationship with resource reserve levels, but is not linearly dependent on them. It is more dependent on culture, on the societal discipline which developes the talent necessary to rule the world with the force and intelligence that such requires. The West began depleting that resource quite some time ago.

  70. As a number of posters have pointed out, Peak “Anything” can easily be brought about by interference in market processes. Market processes also involve litigation if someone pollutes, or enables sinkholes, or triggers earth tremors causing damage.

    The Oil Patch can work to clearly defined requirements, “Precautionary Requirements” needn’t apply.

    We’ll have oil and gas for a long time to come, provided we keep level heads.

  71. To Rob Crawford, who said:

    “Oil shale is the wave of the future. And always will be.”
    And yet it’s producing now…

    The shales in North Dakota (Bakken) and west Texas and elsewhere are now producing considerable amounts of oil, just as shales elsewhere are producing unheard of (until a couple of years ago) amounts of natural gas. These shales are widespread.

    But what is termed “oil shale” is different from “ordinary” shales which can produce either oil or natural gas or both, when fractured (“fracked”). Colorado has lots of “oil shale,” which is shale which has a substance called kerogen. This stuff is much harder to extract than fracking a shale and getting oil or gas, if it is present is decent quantities. It has been produced in different parts o the world historically, but it is far more expensive than fracking an ordinary shale which has oil.

    “Oil shale” has been known about for well over a century. I actually have a National Geographic from 1917 which talks about running out of oil, but thank goodness Colorado has all this oil shale. However, it is so hard and expensive to get, that going forward we will instead be getting far more oil from ordinary shales which can be fracked to get oil and natural gas.

    Here is a link about “shale oil:”

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

  72. In order for supply to remain adequate new reserves must be developed as old reservoirs are depleted. At present, as many have noted, the oil found in the shales such as the Bakken in North Dakota and Montana are where most gains are found and predicted for the United States. (Alaska has been found to have more natural gas in places where oil was thought to be). But to get the oil from the shale requires hydrofracking (which folk in the Eastern US don’t like). That improved technology puts cracks through rock, where the normal structure is too fine for the oil to flow economically. But the problem is that the cracks give a high initial yield, but, as the flow falls back to depend on the inherent structure over a very short time, production drops off. The production from the Bakken,as a result, is expected to start falling in about four years and is not expected to go up much more than the levels that it has just reached. (And that anticipates that a lot more wells will be drilled).

    Much of the increase in global production is expected to come from Iraq, with numbers as high as 10 mbd or more (it is still below 3 mbd). That would require large investments of capital, among other things, which remains unlikely as the turmoil continues. Similarly the Arab Spring will impact exports from the MENA countries, and since it is the export trade on which we depend, life will continue to get more difficult.

    And for those who say that technology will get us out of the mess, you might want to suggest where that technology is being developed, and how far along it might be, because predicting oil recovery rates of 70% is generally a foolish dream used to extract investment dollars from those who don’t know better.

  73. In 1960, a gallon of gasoline cost about $.25. To adjust to today’s equivalent $ (inflation) you would have to multiply by 8, = $2.00/gal. But, in 1960, the average car got 10 -12 miles per gallon. Today, the average car gets 20-24 miles per gallon. So, the per mile cost in 1960, adjusted to 2012 for inflation and mpg was $4.00/gal. So, drivers are in about the same position today as they were then as far as price is concerned.

  74. Walter says:
    January 3, 2012 at 9:17 pm
    mikelorry – the cheap oil is gone. The kind where you used a few mules to make a hole in the ground and started pumping. That’s why there is now deep water drilling – difficult, expensive and no fun for anybody….

    The average well onshore in the U.S. produces 8-10 BBL/day. The average newly frac’d well in shale probably produces 100-600 BBL per day. The average off-shore well produces 8,000-10,000 BBL per day. I think the record producer in the Gulf of Mexico is 23,000 BBL per day. The off shore wells produce hugely in comparison to those on-shore. Perhaps we would have pursued these off-shore fields in any event.

  75. We need a tax on oil equal to whichever is greater: $1/bbl or half the difference of $100 – WTI. So, if the price of WTI falls to $60/bbl, then the tax would be $20 (($100-60)/2) and oil would sell domestically for $80/bbl. Even if Saudi Arabia gave oil to us for free my tax would set the domestic price of oil at $50/bbl. This eliminates the spectre of an oil price collapse.
    Create a stable price for oil and you not only benefit domestic production today, but you also foster the development of alternatives going forward. Just as rival nations will be unable to kill our domestic oil production with dirt cheap oil, so cheap oil also won’t be able to throttle natural gas, etc.
    Use the revenue however you want, but I think oil ought to pay for its replacement; especially on our highways.

  76. Good article and yes the reserves are as much political as they are geological in nature. I still disagree that peak oil is here or near. Peak easy oil yes (land based, shallow drilling, etc). The industry still continues to innovate and find ways around problems. Pesky bunch those engineers. Glad to see you don’t buy the “peak energy” stuff.

    “provided sanity returns to western governments”
    Dare to dream my friend, dare to dream.

    ” Political stability in producing countries, consuming countries, · Non-obstruction by governments .”
    Political anything is a toss of the dice given the “for sale” sign attached to most politicians.

    ” Major new conventional oil discoveries.”
    Brazil (possibly Antarctica as mentioned above) but all are offshore. Lots left just harder to get to.

    ” Technological progress in heavy and unconventional oil production.”
    Lots. Alberta = 1.7 trillion, Venezuela = 2 trillion , USA shale = 1 trillion barrels. Refining capacity, water and cheap energy to run the upgraders is required. Years ago the Alberta government locked in a few trillion feet of natural gas so the oil sands could have it for their processes. Then came shale gas. The technology for both the processing and supporting infrastructure show no signs of innovation slowing. If anything they knock down problems at an impressive rate.

    ” A high oil price.”
    Define “high”. Anything above $60 pb makes Alberta and Venezuela viable. Don’t know about US shale.

    · Increasing demand in spite of the high oil price.
    Again define “high”. What percentage of the average person’s income needs to go to fuel for their car before they look for alternatives.

    · Oil remaining competitive with alternatives.
    The old “we didn’t leave the stone age because we ran out of stones” line comes to mind. Are we there yet? No (IMHO) but if any one of a half dozen technologies work out then you will take out a huge amount of demand for oil effectively increasing reserves.

  77. bwanajohn says:
    January 4, 2012 at 6:54 am
    I am an Engineer for a seismic equipment company so I have a bit of a different perspective on this. In the last 10 years, from my company alone, we have produced new survey, measure and monitor technologies coupled with new exploration techniques are identifying new reserves every day. Additionally, because of the improvements in computing power and this advanced technology, we can re-assess existing reserves and make existing wells more efficient from 1 to 5 percent. In terms of production, that is HUGE.

    Based on what I have personally seen over the last 10 years, I expect exploration and extraction develop at an accelerated rate. I think we have really just scratched the surface of what will be available. I think Willis’ analysis is more accurate.

    Please answer yes or no.

    1) extracting oil from a deposit faster means the depletion rate occurs faster.

    2) extracting oil from a deposit faster means you untilimately get less oil from said deposit.

    3) explain, with all this technology, why the major oil fields in the world, North Sea, Cantarell, Hybernia, etc are all in terminal decline.

    4) new discoveries are small.

    5) new production won’t keep up with depletion rates from older fields.

  78. And as for fictitious reserves…if these were stated in the 1980s and the countries are still producing at the same rates 30 years later…well…they probably existed all along.

    But they are not. Very few countries have kept their production growing. Norway, the UK, Indonesia, Mexico, The US plus many more are all seeing declining production. Russia is near decline too.

  79. There is an amazing amout of pollyanna being expressed here today. I am just smiling at how this “skeptical” BB so easily accepts the arguement that a wall of oil is out there.. somewhere.. and it will all be extracted cheaply for our benefit!

    IE: we are at the end of being able to steal cheap oil from the middle east tribes, and as Matt says, we are short on the discipline needed to dig ourselves out of our oil addiction, without maybe a crisis to get our atttention.

  80. Jeremy says:
    January 4, 2012 at 6:23 am
    Sorry but these assumptions are garbage. Peak Oil is just another doom monger scare story that simply isn’t true. As the price of oil goes up there is a huge increase in what is economically recoverable and more costly technology/extraction methods become viable – facts that ensure we will never run out.

    There will, of course, be a peak one day. That day is when a better and cheaper alternative becomes viable and eventually displaces oil and gas. This day is certainly NOT the day we run out. Battery technology is ever improving and if we can get fusion power to work then it is possible that oil may start to be displaced sometime later in this century but NOT because we run out!

    Peak oil has never been about running out. It’s about reaching maximum flow rate, and subsequent decline. Even a small difference between supply and demand will cause major economic hardship. When demand outstrips supply due to what ever reason, then someone does without the oil they need now. The price then increases to the point where the energy component of one’s budget gets too large.

    Take the current price of oil. At this price people are driving for about $10 per hour. That’s also miminum wage here in Canada. So people who have to drive, like taxis, are spending $10 per hour to drive. Governments spend $10 per hour per vehicle (police, fire, EMS, garbage), which has to be passed on in higher taxes. Same with food. Food costs more to produce and transport. Thus the average person is hit with not only increases in energy costs, but also increases in everything else that is also dependant on that energy cost. This squeezes people’s ability to pay, which precipitates recessions, which in turn reduces availability of getting credit (due to more defaults). Reduction in available credit makes it difficult for companies to produce new sources of oil. The Energy Trap comes into play. http://www.theoildrum.com/node/8526

    Peak oil is not a cliff. It’s about the loss of supply relative to the demand.

    Fusion will never happen. There are fundemental walls that cannot be over come. One is getting the waste products out. http://europe.theoildrum.com/node/5929

    There is no alternative to oil in its energy density, flow rates, and versitility (electricity can’t make components of oil like plastics).

  81. Mike Jonas has provided a valuable reality check on wishful thinking.

    See economist James Hamilton, Oil Prices, Exhaustible Resources, and Economic Growth.

    This paper explores details behind the phenomenal increase in global crude oil production over the last century and a half and the implications if that trend should be reversed. I document that a key feature of the growth in production has been exploitation of new geographic areas rather than application of better technology to existing sources, and suggest that the end of that era could come soon. The economic dislocations that historically followed temporary oil supply disruptions are reviewed, and the possible implications of that experience for what the transition era could look like are explored.
    For those who seriously seek to learn, look at the data. Hamilton graphs oil production by state showing production peaked in PA, NY, OH, WV, IL/IN, KS, NE, CO, NM, AZ, and UT, CA, OK, TX, LA, and AK. ND/MT shows some production, but small compared to US consumption.
    See the ASPO-USA Nov. conference presentations.
    See especially
    110311 1400 ASPO China and Middle East Brown.pdf
    Why did OIL EXPORTS Peak in 2005?
    Why did Available Net Exports (after China & India) drop 13% since 2005?
    Why have exports declined while price doubled from $50/bbl to about $100/bbl?
    Not for an abundance of oil production!

    See also:
    110411 0830 ASPO Interim Observations Hirsch.pdf

    Let the wise get ready.
    Set Stewards develop sustainable fuels cheaper than petroleum!

  82. Rational Debate says: ….. I have to contribute a link to a high level USA government report from 2004 regarding USA shale oil “Strategic Significance of America’s Oil Shale Resource.” …..

    Before moving over to the nuclear industry in the mid-1980s, I spent 12 years in the mining industry, three of which were spent doing feasibility engineering studies and cost analysis studies for development of oil shale mines in the Green River Formation’s kerogen bearing rock of Colorado and Utah.

    Contrary to what this government report states, we do not know appreciably more today about how to cost effectively retrieve and process kerogen from the Green River Formation deposits than we knew thirty years ago.

    In order to even think about retrieving the Green River formation’s kerogen deposits and converting them into a suitable refinery feedstock, you have to first acknowledge that the kerogen bearing rock must be dug out of the ground by surface mining methods, otherwise you will not get enough volume of kerogen to recover the capital costs of constructing the processing plants, which by necessity must be located directly adjacent to the surface mining operations.

    Up front capital cost is one significant issue, but the need for extensive supplies of process water and the prospect of very serious long-term environmental damage to the Colorado / Utah landscape are the fundamental issues that will keep a permanent lid on Colorado and Utah oil shale development.

    The prospect of visible and highly acute environmental damage from surface mining operations will go vastly beyond what is now being experienced in other locations across the US with fracking, and the citizens of Colorado and Utah simply will not allow this kind of surface mining to be done. Expanded development of the Green River Formation kerogen deposits will not happen — not now, not a hundred years from now, not ever.

    Does the fact that the Green River Formation’s kerogen deposits will remain forever locked up really matter within the context of the Peak Oil debate?

    I don’t think so, because so long as the capitalist system is allowed to function to its most efficient potential, prices and production costs for liquid carbon fuels will keep supply and demand in a rough balance while the process of technical innovation, operating through trial and error methods, figures out which future approach to replacing crude oil makes the best economic sense.

  83. There is still a lot of confusion on what oil production is, what flow rate means, and what peak oil means.

    A simple analogy may help.

    Take two 45gal drums. One contains water only. The other contains a mix of water and sand. The water only drum can produce a flow rate as fast as the pumps can handle. Then when the last drop is extracted, it’s gone. Thus this first drum of water only ends in a cliff.

    The second drum is completely different. Flow rates depends on a number of factors, such as the ability of the fluid to flow through the sand. Flow from this barrel will follow a bell curve with the peak of flow some time in the middle of the life of the barrel’s ability to produce.

    The second barrel can never get all the water out. Much will be left behind.

    Change that second barrel into oil, and being in the ground, and there are even more factors that determine the flow rate and eventual peaking, and eventual recovered once the deposit is spent. Bakken for example will not produce more than 1% of oil in place. The average for any given field is about 40%, though some of 70% have been achieved.

    Attempt to extract oil too much and the field is damaged. You eventually get peak earlier and you get less over all oil leaving more inthe ground. This happened in Texas.

    It comes down to the same errors people who dismiss peak oil make over and over. They dismiss flow rate and focus on geology. We will never reach geological peak. We will, if not now, reach maximum flow rate. It will affect some countries more than others. Producing countries in decline may decide to keep more of their own resourse for themselves instead of exporting it. Indonesia is a nice example. I’d be willing to bet they wished they never exported a drop. They now have to import.

  84. Scott Brim says:
    January 4, 2012 at 9:54 am
    I don’t think so, because so long as the capitalist system is allowed to function to its most efficient potential, prices and production costs for liquid carbon fuels will keep supply and demand in a rough balance while the process of technical innovation, operating through trial and error methods, figures out which future approach to replacing crude oil makes the best economic sense.

    Scott, nice description on the Green River. Should put an end to those who think we can drop a few wells there and our energy needs are covered for the foreseeable future. It’s not. One report I read suggested detonating nukes in the deposit to cook the kerogen. Like the people there would accept that.

    However, your last bit is far off the mark. First, people keep harping about alternatives to oil. Yet no one says what that alternative is. Like some magic bullet will suddenly appear and all our problems solved. There is no alternative to oil for the purposes we use oil for now. Even if there was, it will take decades to switch over, as well as the costs. Note my posts about the economic problems a drop in suppy will produce. Read the article on the Energy Trap. The Energy Trap is very important and highly restrictive of what we will be able to do in a world where exportable oil production is falling.

  85. The Jonas and Eschenbach blog posts are really saying the same thing. Willis Eschenbach chose to focus on how we have always managed to increase oil production (and reserves) as needed to meet the market desires. Mike Jonas chose to emphasize that the easy-to-get oil is declining and we must work ever harder and spend more to extract each barrel.

    The glass is both half full and half empty.

  86. >>Jon says: January 3, 2012 at 9:15 pm
    >>All the evidence suggests that the rate at which oil can be pumped
    >>will plateau. This is because … adding more wells onto a formation
    >>does translate into proportional increases in output.

    Not so. Look at the declining production figures for the UK and Norway:

    This was once a large region of oil fields, which have all peaked and are now in decline, despite all the ‘new technology’ being thrown at them.

    If the same happens in the Middle Eastern fields, and it will at some point, then we will have reached Peak Oil. Despite the number of small finds coming on stream, there will be nothing capable of replacing the Middle Eastern fields once they peak.

    Look (below) at how the newer but smaller North Sea fields that came on stream did little to make up for the declining Forties field, and are themselves now in decline.

    Translate the North Sea basin into world terms (and oil is now one big world industry and market), and you can see what world production figures will do in the future. The only difficult bit, is deciding when the peak has been reached. In the UK it was 1984 with a secondary peak in 2000 caused by ‘new technology’, but the new technology only pushed the inevitable into the future by a measly 16 years.

    Peak Oil will happen at some time, but as the author here says you will only know it once the crisis is upon us.

    And Peak Oil alarmism is not an equivalent to CAGW alarmism.
    a. AGW says that a fluctuating climate will always increase in temperature.
    b. Peak Oil says that a finite resource will eventually run out.
    Point a. is debatable and unlikely. Point b. is an absolute certainty.

    .

  87. jrwakefield says: However, your last bit is far off the mark. First, people keep harping about alternatives to oil. Yet no one says what that alternative is. Like some magic bullet will suddenly appear and all our problems solved. There is no alternative to oil for the purposes we use oil for now. Even if there was, it will take decades to switch over, as well as the costs.

    No magic bullet will suddenly appear. The process of converting from a transportation system which employs mostly oil-based portable energy resources to one that employs a multi-source mix of carbon-based liquid fuel resources will take decades to occur.

    As the cost of petroleum-based fuels steadily rises, people will progressively adjust their consumption behavior patterns in those ways which account for the cost differences and which also seem most beneficial — or else the least harmful — to their own particular income situation. In the process, they will also decide what kinds of spending are most important to them in allocating their personal incomes.

    In the meantime, as long as the profit-making reward for pursuing technical innovation is maintained at useful levels; and as long as the profit reward is not artificially constrained to suit the whims of some political or social agenda, then the process of transition will be sometimes painful to one degree or another, but will not be catastrophically disruptive as many of the Peak Oilers would have us believe.

  88. They have been predicting peak oil for 100 years.

    They keep finding more oil.

    It’s about like AGW…it will get warm…tommorrow….always tommorrow.

  89. Re Mike Jonas:
    Let’s face it, you are not an expert on this topic. And even some experts can get out of date when an industry begins to shift direction quickly. Focusing just on the Bakken as some kind of unique strata is a mistake that the amateurs are making a lot these days. Watch the industry daily and get some more perspective on what the trends mean and you will begin to understand that the Bakken is not so unique and that money is turning and flowing rapidly to shale oil plays in many directions. It also does not take some leap of imagination to figure this out given the slightly earlier pattern of rush to define, validate, and invest in shale gas resource targets ahead of the USGS, IEA, EIA, Wall Street, blogs, and everyone else behind the curve. Beyond this tech-driven resource shift, there is also the issue of changing risk-reward relationships. There are no oil reserve-production-discovery statistical models that are tailored to the shale oi and shale gas plays at this point and all the outdated discussions are using old models and relationships. Those models were based on completely different risk profiles in mainly onshore basins with conventional drilling and success rates. The new normal is best seen at the forefront of the industry in the mid-sized producers defining the resource and refining the technical approach as they go. There has been nothing in the history of the oil industry that equates to the current pattern of setting up drilling pads onshore and drilling multiple horizons in multiple directions from the same location with high probability of success and doing so across huge basins and also replicating this exploration model across more basins (i.e. not simply in-fill development drilling in a conventional field sense). If the oil industry is going to shift massively then the bloggers need to at least ask why and try to get up to speed. They also need to understand why the resource and reserve models are out of date and likely to fail.

  90. David L. Hagen says:
    January 4, 2012 at 9:53 am

    “Mike Jonas has provided a valuable reality check on wishful thinking.

    See economist James Hamilton, Oil Prices, Exhaustible Resources, and Economic Growth.

    This paper explores details behind the phenomenal increase in global crude oil production over the last century and a half and the implications if that trend should be reversed. I document that a key feature of the growth in production has been exploitation of new geographic areas rather than application of better technology to existing sources, and suggest that the end of that era could come soon. ”
    This is not the only way.
    The serial activity is not: politics—->>explore—->> product. Who can say a mobilized oil field is worthless. In presence abundance of GAS and gas injection where should you let an oil field deserted and look around for new one?
    Yes, if nothing is available anymore, as a whole, you should find new reservoirs, this does not need any special IQ.

  91. jrwakefield says:
    January 4, 2012 at 9:32 am
    ….

    JR, as long as we do not need to produce oil from coal we have not reached peak oil. When oil will be produced from coal – as did the germans in the 2nd world war – then we may say that there is a certain oil limitation, but with the oil sands and horizontal drilling there are still many options to increase oil production – this is why it is not yet the time to invest in huge oil production industry.
    Oil and gas may very well be natural abiotic products – look at Titan, it has 100 times more oil then the Earth:

    http://www.space.com/4968-titan-oil-earth.html

    There is no peak of coal-oil-gas resources this century, not even a limitation for the next 200-300 years and more – which give us a comfortable time to plan for replacement and develop further our current technologies (Thorium? fusion?) solve the famine this century and get electricity & education in each and every village.

    • The Fossil Based Fuels (FBF) have been and would remain for many years as a sustainable energy resource. The life time of this source would be extended however by means of efficient fuel consumption technology. Today, energy price and the reality to having efficient power productivity has forced the manufacturers to give a satisfactory declining trend on fuel consumptions per unit of work.
      The next problem can be O2. We know that only %16 of the atmosphere is oxygen. Carbon emission is not discussed here. But carbon as an energy source can be maintained much easier than O2. If we are not successful to enrich the atmosphere with adequate CO2 that we have, through photosynthesis with green zones, then O2 is a problem. As long as there is no other option for substitution of (FBF), we should take care of air pollution although CO2 is a vital combination for all the creatures living on the earth. The advantages of (FBF) are the infrastructures and powerful economical relations and ties with our living styles too. That is why other energy sources can never be attractive unless economically can give us the necessary and enough advantages.

  92. I think you have forgotten the economic aspect – as proposed by Julian Simon. There is no shortage of resources as we are continually being more economic in our useage of them because of technological advances.

    There is also the point that we haven’t quite worked out how oil is formed – is it the bones of dead trees and dinosaurs or is it formed abiotically? The deep wells would seem to support the abiotic theory.

    I am also reminded of the panic in New York in the late 19th Century – If something wasn’t done about the number of horses in the city, Park Avenue would be 1/2 a mile deep in horse manure by 1920. Wha happened – technology advanced with the horse power being produced by oil derivatives……..

  93. Just to put things in perspective for those who think that shale oil is some kind of gimmick. In 2004 you could lease mineral rights for shale for as little as $3/acre. Today the price is over $5000/acre for the lease rights. The change in the price reflects the change in the economics of well production. Some wells in the “Bakken” are producing >1000 bpd, most are over 100 bpd. The expected recovery ratio is now over 30%. Here in Houston there will be a series of dinners celebrating the unconventional oil pioneers, those interested in what’s gone on should consider attending. http://www.hgs.org/. This is the Houston Geological Society.

  94. Lars P. says:
    January 4, 2012 at 11:42 am
    jrwakefield says:
    January 4, 2012 at 9:32 am
    ….

    JR, as long as we do not need to produce oil from coal we have not reached peak oil. When oil will be produced from coal – as did the germans in the 2nd world war – then we may say that there is a certain oil limitation, but with the oil sands and horizontal drilling there are still many options to increase oil production – this is why it is not yet the time to invest in huge oil production industry.
    Oil and gas may very well be natural abiotic products – look at Titan, it has 100 times more oil then the Earth:

    http://www.space.com/4968-titan-oil-earth.html

    There is no peak of coal-oil-gas resources this century, not even a limitation for the next 200-300 years and more – which give us a comfortable time to plan for replacement and develop further our current technologies (Thorium? fusion?) solve the famine this century and get electricity & education in each and every village.

    There is no oil on Titan because no life was on Titan. Just because small hydrocarbons, which were accreted early in the formation of the solar system, are on Titan means that large molecule oil components can abiotically form on this planet is grossly misguided.

    Coal to oil is negative ERoEI. And it will never have the flow rate required. You people keep missing what peak oil is. It’s about FLOW RATES meeting demand. Soon as demand exceeds flow rate, we have reached peak oil. Soon as demand exceeds supply, someone does without the oil they need.

  95. wsbriggs says:
    January 4, 2012 at 12:57 pm
    Just to put things in perspective for those who think that shale oil is some kind of gimmick. In 2004 you could lease mineral rights for shale for as little as $3/acre. Today the price is over $5000/acre for the lease rights. The change in the price reflects the change in the economics of well production. Some wells in the “Bakken” are producing >1000 bpd, most are over 100 bpd. The expected recovery ratio is now over 30%. Here in Houston there will be a series of dinners celebrating the unconventional oil pioneers, those interested in what’s gone on should consider attending. http://www.hgs.org/. This is the Houston Geological Society.

    Bakken will never yield 30% of oil in place. 1% is the limit expected. Why? Because a normal well produces 30-40%. Bakken is a tight shale. 30% is physically impossible.

  96. Dizzy Ringo says:
    January 4, 2012 at 11:57 am
    I think you have forgotten the economic aspect – as proposed by Julian Simon. There is no shortage of resources as we are continually being more economic in our useage of them because of technological advances.

    There is also the point that we haven’t quite worked out how oil is formed – is it the bones of dead trees and dinosaurs or is it formed abiotically? The deep wells would seem to support the abiotic theory.

    No, no, and no. Oil comes from MARINE environments, shallow seas. Dinos had nothing to do with it. The depth of a well means nothing as per the source of the oil. EVERY oil field has a biological marker. Even the deep Tupi field off Brazil has a biological source rock just below the host rock. NO ONE field has been shown to be abiotic.

  97. In the meantime, as long as the profit-making reward for pursuing technical innovation is maintained at useful levels; and as long as the profit reward is not artificially constrained to suit the whims of some political or social agenda, then the process of transition will be sometimes painful to one degree or another, but will not be catastrophically disruptive as many of the Peak Oilers would have us believe.

    Scott, you really need to read about the Energy Trap. Diverting energy to make alternatives to oil is less energy we need to run society. That then causes recessions, taking capital away from building alternatives. Your mindset is one of economic growth. With economic growth we could proceed to convert society to electrical where we can. But in an ecomony that is not expanding, but contracting, such endevours are near impossible to do.

    Right here in Ontario is a prime example. Our government is pushing for more wind and solar. But it is so expensive (14c for wind, 80c for solar) that our power bills have more than tripled in just 8 years. And not just for power, but to build the infrastructure to move the new power. This increase in power rates is destroying industry as 3 jobs are lost there than are being made in the “green” sector.

    That’s the energy trap.

  98. Alberta has Oil Sands,they’re not tar sands.

    Can we please get the term corrected in the article?

  99. TRENDLines has tracked and published the world’s recognized oil depletion forecasts on a monthly basis since 2004. Back then its consensus inferred a Peak of 95 Mbd in 2020. Today the 16 tier-1 practitioners project 97 Mbd in 2025. My own PS-2500 model suggests PEAK DEMAND will occur upon crude price attaining $113/barrel in 2029 (100 Mbd) truncating GEOLOGIC PEAK (103 Mbd in 2031).

    But congrat’s to Mike Jonas on extending the McPeakster myth (imminent peak oil) to its 24th consecutive year. Even a broken clock has a better record than this fringe group.

    genuine peak oil depletion charts: http://www.trendlines.ca/free/peakoil

  100. Robert in Calgary says:
    January 4, 2012 at 1:42 pm
    Alberta has Oil Sands,they’re not tar sands.

    Can we please get the term corrected in the article?

    It’s niether, it’s bitumen. It has to be cracked into smaller hydocarbons to make synthetic oil. In a conventional oil field, bitumen is a small component, left at the bottom of the distilation process.

  101. That’s 4 years of world consumption. It’s a small deposit.As to a reserve of 123 billion barrels being labeled as a “small deposit,” those of us in the oil business have traditionally had another name for such a field: we call them “supergiants.” Assuming, of course, that the reserve estimate can be borne out by developmental drilling, something which has yet to occur with the Brazilian discovery.

  102. From Fred’s site: The year oil (excl BTL) runs out: 2497

    Interesting you can acccuratly predict that. I also love your wiggly lines past today, especially that drop in 2017. You must have some amazing crystal ball.

    You don’t seem to include any economic consequences, nor have you considered political issues. Should oil producing countrys decide to stop exporting, we have reached fast depletion rates in importing countries.

    No one can predict the future.

  103. Steamroller Sam says:
    January 4, 2012 at 2:42 pm
    That’s 4 years of world consumption. It’s a small deposit.

    As to a reserve of 123 billion barrels being labeled as a “small deposit,” those of us in the oil business have traditionally had another name for such a field: we call them “supergiants.” Assuming, of course, that the reserve estimate can be borne out by developmental drilling, something which has yet to occur with the Brazilian discovery.

    Name it what you want. It’s still only 4 years. Takes a lot of those to run this civilization, one like that won’t compensate for losses from depleting fields.

  104. Mike Jonas says:
    “But everyone here pointing out that there are vast quantities of oil just waiting to be produced, and that the technology is going to deliver it, needs to check the numbers carefully…

    N Dakota’s Bakken production reached a record in 2011 of nearly 500k bpd. That sounds very impressive… the mammoth efforts on N Dakota’s Bakken are struggling just to compensate for production lost from Saudi Arabia.”

    There is no disputing these points except to say that the new technologies have increased N. Dakota production from virtually zero to .5mm bbls/day. Alberta’s conventional oil production was in serious decline and most of the Big Oil players had sold their acreage and moved on. Now Alberta’s conventional production is climbing very rapidly. Manitoba is becoming a “Big Oil Player” with rapidly ramping production. The Hosston, Norphlet, Haynesville and Bartlet formations have fantastic potential in Mississippi, Louisiana, Texas, Oklahoma, etc. Throughout Europe there exists similar potential in Hungary, Ukraine, France, Russia, etc. The prospect for some old fields to reach back to and beyond former glories such as has been demonstrated in Alberta has, in my view, magnificent potential.

    “The oil companies piling into Brazil are chasing a possible 123bn bbls of reserves, although the figure stands now at 16bn. But it is going to take many years to develop those fields, and 123bn bbls is only 4 years’ world supply.”

    I do dislike this old pea game of hiding a significant resource under the big “only 4 years of world supply” cup. Brazil will of course, ramp up production to 2 or 3 mm bbls per day and their 120 bn bbls will produce for many decades to come. My point is; an extra .5mm bbls/day from N. Dakota plus + 1mm bbls/day from enhanced Alberta conventional + 2mm/day from Brazil + 1mm bbls/day from enhanced Russia, and a little bit here and a little bit there and before you know it, it’s 2025 and the ability to supply v. demand hasn’t changed much.

    The real wild-card we will all agree is as you said “Maybe the world really can increase oil production for many more years, but IMHO when you look at the numbers and add in things like political factors it is looking ever less likely.”

    In this I doubt you will be proven wrong.

  105. jrwakefield,

    Keep fighting the good fight. I know it seems like you’re preaching to a very obstinate crowd, but perhaps some guest is reading the thread and learning something. The truth needs to be told that “Peak Oil” (perhaps an unfortunate term) is not about running out of oil. It is about an inevitable decline in the ability of human societies to produce and consume this key resource efficiently.

  106. jrwakefield says: “Diverting energy to make alternatives to oil is less energy we need to run society. That then causes recessions, taking capital away from building alternatives. Your mindset is one of economic growth. With economic growth we could proceed to convert society to electrical where we can. But in an economy that is not expanding, but contracting, such endeavors are near impossible to do.”

    My mindset is indeed one of economic growth. I do not see how we can control the world’s population growth unless most nations become industrialized and therefore have much less need for large numbers of children to support their parents. Hence the need for worldwide economic growth.

    I also happen to be one who thinks the notion of abiotic oil is complete nonsense, the notion of fusion power becoming practical anytime in this century is complete nonsense, and that the prospects for a thorium-fueled nuclear industry emerging anytime soon is highly problematic.

    There will be winners and losers in the transition from petroleum based liquid carbon fuels into multi-source liquid carbon fuels, There will also be economic dislocations for those who are not able to cope with this transition.

    And those who are most economically affected may very well include those in western societies who ignore the fundamental benefits of capitalist economics and who make a serious effort to directly manage the transition according to some predetermined socio-political-technical agenda.

    But the transition will not happen quickly, and for most of those around the world who don’t presently have ready access to cheap energy, they have nowhere to go but up, and can do so using whatever means of production the unfettered interplay between technology and capitalist economics is able to put into their hands.

    jrwakefield says: “Right here in Ontario is a prime example. Our government is pushing for more wind and solar. But it is so expensive (14c for wind, 80c for solar) that our power bills have more than tripled in just 8 years. And not just for power, but to build the infrastructure to move the new power. This increase in power rates is destroying industry as 3 jobs are lost there than are being made in the “green” sector.”

    Here in Washington State, there was a mandate passed several years ago by voter initiative that a certain percentage of the state’s electrical power generating capacity must be provided by renewable sources, 20 percent by 2020 if I remember correctly. In Washington State, this means covering a good portion of the southern, central and eastern areas of the state with wind turbines, a process which is now well underway and which has dramatically affected the character of Washington’s rural landscape; i,e,, it isn’t truly rural anymore.

    A political issue is developing in that producers of wind-generated power are asking to be paid for not producing electricity whenever the northwest power grid is unable to absorb all the electricity they can produce. For example, this happens when the lakes behind our hydroelectric dams are full during spring runoff periods and when as much water as possible must be sent through the dam’s power turbines, rather than the dam’s open spillways, so as to mitigate negative impacts on the local fish populations.

    “Well,” some people say, “why should we pay for electricity that is not actually being produced?”

    The counterargument is this: the voters made their choice about renewable sources of energy, and the voters have to live with the downside of their decision — higher electricity rates and a Washington State which no longer possesses its former rural character. If Washington State voters want to make some other kind of decision, then they should repeal the 20% mandate.

    In the meantime, while the voters are thinking about the wisdom of enforcing renewable energy mandates, it is perfectly reasonable, I think, that they should be willing to pay the wind power producers whatever special compensation those producers are asking for.

  107. James D et al; roughly, conventional production means you drill a well into a sand or karstic limestone reservoir (vertical, inclined, horizontal, S-shaped, fish-hook… it matters not), complete it and the hydrocarbon flows to surface due to formation pressure (which is why I hate reading MSM articles which talk of oil being ‘pumped’ from conventional wells).
    Deep water drilling, horizontal drains, arctic drilling, water or gas injection production are all quite conventional.
    Once you start having to run ESPs (electric submersible pumps) to lift high viscosity oil to surface, injecting steam to liquify tar for pumping, mining oil rich sand, fracturing shales and coals to achieve long term mouse flatulence production rates you move into the realm of unconventional production. It’s the future and it’s all properly fascinating; but look to the arctic first (provided governments and electorateswake up to the fact that anti-development watermelons wouldn’t know their rectum from their retina) and to the US or China sorting out a few more 3rd world basket cases in order to remove political obstacles to future oil production.
    Once we’re done with that, there’s always submarine drilling and who knows what in Antarctica(certainly coal and metals), but that should be some way into the future :o)

  108. I read a book a while back, by Peter Tertzakian, and while he advocates for the peak oil, for the lack of a better term, hypothesis, there was a gem or two in the book (A Thousand Barrels a Second). It essentially showed just how fast technological change occurs, particularly with energy, but that whatever is going to replace oil (transportation, energy, what have you) is already on the scene.

  109. jrwakefield says:
    January 4, 2012 at 1:13 pm

    Coal to oil is negative ERoEI.

    ==============

    I know what ERoEI is, but I have no idea what is being said here.

    For what it is worth, South Africa meets about 25% of its liquid hydrocarbon needs with synthetic oil produced from coal — about 150,000 bpd. Costs are said to be in the $50 per barrel range. Are you saying that isn’t possible? BTW, I personally hate the idea of CTL. Massive environmental damage. But it WILL almost certainly happen in North America, my desires notwithstanding.

  110. @jrwakefield

    As I said, they are called Oil Sands.

    http://www.oilsands.alberta.ca/resource.html

    “Bitumen is a viscous form of oil that has combined with sand and water. The bitumen must be removed from the sand and water prior to being upgraded into crude oil and other petroleum products.

    There are two types of oil sands extraction methods: in situ (which means in place) recovery and surface mining.”

  111. Don K says:
    January 4, 2012 at 5:44 pm
    jrwakefield says:
    January 4, 2012 at 1:13 pm

    Coal to oil is negative ERoEI.

    ==============

    I know what ERoEI is, but I have no idea what is being said here.

    For what it is worth, South Africa meets about 25% of its liquid hydrocarbon needs with synthetic oil produced from coal — about 150,000 bpd. Costs are said to be in the $50 per barrel range. Are you saying that isn’t possible? BTW, I personally hate the idea of CTL. Massive environmental damage. But it WILL almost certainly happen in North America, my desires notwithstanding.

    Just because they are doing it does not mean it’s positive ERoEI. Countries do lots of things that don’t make sense, re AGW. One has to look at the entire picture of what energy is being used, from mining to the pumps. Notice their flow rate from this is puny.

  112. Robert in Calgary says:
    January 4, 2012 at 7:24 pm
    @jrwakefield

    As I said, they are called Oil Sands.

    http://www.oilsands.alberta.ca/resource.html

    “Bitumen is a viscous form of oil that has combined with sand and water. The bitumen must be removed from the sand and water prior to being upgraded into crude oil and other petroleum products.

    There are two types of oil sands extraction methods: in situ (which means in place) recovery and surface mining.”

    Bitumen is a sub-component of oil, but bitument isn’t oil because oil contains more compounds than just bitumen. To make those compounds from bitumen it has to be cracked and capped with H+ ions to make smaller chains to make synthetic oil.

  113. Here in Washington State, there was a mandate passed several years ago by voter initiative that a certain percentage of the state’s electrical power generating capacity must be provided by renewable sources, 20 percent by 2020 if I remember correctly. In Washington State, this means covering a good portion of the southern, central and eastern areas of the state with wind turbines, a process which is now well underway and which has dramatically affected the character of Washington’s rural landscape; i,e,, it isn’t truly rural anymore.

    At least your people voted for that con, we didn’t, it was thrusted upon us by liberals who think they know better than anyone else. Both you and us are bound for epic failure of the system because of this. Do the math of how many wind turbines would be needed (at 10% median capacify factor). In Ontario we would need some 40,000 of them. That’s one every 100 meters from Windsor to Montreal. BY the time you get part way to the goal, the first batch of turbines will be past their lifespan and will need to be replaced. That means you have to build twice as many that next year for new capacity and replacing depleting capacity because turbines are past their age. You will never get to 20%.

    You may find this useful http://ontariowindperformance.wordpress.com

    BTW, we hold back Niagara to allow wind to supply. When we have too much production we have to pay Ohio to take it from us. It’s only a matter ot time before this mess comes crashing down.

  114. I do dislike this old pea game of hiding a significant resource under the big “only 4 years of world supply” cup. Brazil will of course, ramp up production to 2 or 3 mm bbls per day and their 120 bn bbls will produce for many decades to come. My point is; an extra .5mm bbls/day from N. Dakota plus + 1mm bbls/day from enhanced Alberta conventional + 2mm/day from Brazil + 1mm bbls/day from enhanced Russia, and a little bit here and a little bit there and before you know it, it’s 2025 and the ability to supply v. demand hasn’t changed much

    It’s a perspective to counter the moniker of “supergiant” which people then say. wow it must be HUGE! But when compared to world consumption it isn’t. But if it’s a true comparison you want how about comparing Brazil’s increase with Mexico’s decrease. Cantarell has dropped by 2mb/day in only 15 years.

    You are also assuming that countries like Brazil will export that resource. They consume 2.654 million bbl/day, and import 750kb/day. So half the off shore will be used to stop importation. The rest they could just leave in the ground for future growth in their own country. None of it may even get to world markets. We will have to see.

    Bottom line is depletion from older fields will outpace production from these new deposits much sooner that 2025.

  115. Ah, my old friend, “Peak Oil”! Thanks, Mike, that’s a good summary of how things appear with conventional technology.

    Back in the late 1970’s through early 1980’s, there was quite a push for “enhance oil recovery” technologies that could stimulate further production from played-out fields, or move heavy crude from the formations more readily. Groups like Argonne National Labs injected anaerobic bacteria into formations for “microbial oil recovery,” where the bugs would generate surfactants & carbon dioxide to help reduce the viscosity.

    Other techniques involved using radio frequency heating of entire oil fields with dispersed antennas, injection of steam and, lately, renewed interest in using fossil fuel carbon dioxide to help reduce viscosity while losing the CO2 into the formation (a form of geosequestration, they hope).

    Where there is a will, there is a way. As the price per barrel goes up, these technologies will be dusted off & reapplied. Combined with modern innovation such as directional drilling, I think there are some exciting times yet to be had in the oil patch.

    Cheers, Charles the DrPH (old Okie petroleum scientist from Tulsa, OK)

    http://fossil.energy.gov/programs/oilgas/eor/

    http://www.onepetro.org/mslib/servlet/onepetropreview?id=00038311&soc=SPE

  116. Scott Brim says:
    January 4, 2012 at 3:32 pm

    jrwakefield says: “Diverting energy to make alternatives to oil is less energy we need to run society. That then causes recessions, taking capital away from building alternatives. Your mindset is one of economic growth. With economic growth we could proceed to convert society to electrical where we can. But in an economy that is not expanding, but contracting, such endeavors are near impossible to do.”
    1.Strong ties between our lifestyles and the existing energy resources(fossil based fuels) from one side, and huge systematic infrastructures and mobilization on this sector, on the other side, are the main factors that would not let other sources to proceed. Basically it’s correct, there is an old proverb saying “a little bird in hand is much better than 100 eagles in the sky.” There are no evidence as yet, that can convince the market (all the people) as a whole, a divert to new unknown system may meet the requirements.
    2. You have mentioned that with economic growth we could proceed to convert society to electrical where we can. Actually, this has been done in some ways. You said “where we can”, but there are priorities of the “MUSTs”. This is quite different from “where we can” that is “optional”. Metro/Underground Railways is an example of “MUST” large scale projects. You can imagine how the system could work with diesel based locomotives! The system now is powered by power plants outside the cities, but still with Fossil Based Fuels, this is perfect, nothing wrong would take place here and the people that do like CO2, are satisfied as well. There are still more to do as “MUSTs”. You know greater cities in the whole world there are air pollutions the same as could happen in underground railways with diesel fuel powered, nobody can breath. We are not talking about all the urban areas, just think about the capital cities with more than min.6 millions residents mostly around 12 millions each. Here is the right place for electric vehicles. As soon as you want to speak about this, as a MUST because of the health of millions of people around the world, the calculators start counting, this is the input that is the output. Electric vehicles are essential for the greater cities where we need no more air pollutions, this is a huge project, leave other rural places for the future where and when we need. You are speaking about new energies as a must by the government in Canada, of course it must get started ASAP, when can we really get out of prototype versions? In aviation, the world started with those GOD blessed brothers, we are here now with satisfaction.
    Still more to come…

  117. jrwakefield says:
    That’s 4 years of world consumption. It’s a small deposit.
    ================================
    That’s just one discovery off the coast of Brazil that could fuel the entire for four years! It’s a huge deposit, not a small one. Meanwhile, the U.S. increased domestic reserves by a staggering 50 percent in 2006, with just one discovery in the Gulf of Mexico. Wow!

    And in your fervent hydrocarbon-powered fear-mongering about depletion catastrophe, you responded to Lars P on the subject of Titan’s hydrocarbons thus:
    “Just because small hydrocarbons, which were accreted early in the formation of the solar system, are on Titan means that large molecule oil components can abiotically form on this planet is grossly misguided.”
    The hydrocarbons on Titan, as you might already know, did not accrete during formation, but are produced there continuously by geochemical processes:
    ~~~~~~~~~~~~
    The process is called serpentinisation and is basically the reaction between water and rocks at 100 to 400 degrees Celsius (212 to 752 degrees Fahrenheit)…

    http://esse.engin.umich.edu/PSL/PRESS/Titan_Cassini_Huygens/AP_Wire_012705.pdf

    ~~~~~~~~~~~~

    Did you know that “peculiar changes” are required of biological molecules to convert them into kerogen?

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

    That seem “grossly misguided” to me.

  118. Scott Brim says:
    January 4, 2012 at 3:32 pm

    “My mindset is indeed one of economic growth. I do not see how we can control the world’s population growth unless most nations become industrialized and therefore have much less need for large numbers of children to support their parents. Hence the need for worldwide economic growth.”
    Controlling the population in most of the 3rd world countries have began since years ago. There are of course economical aspects in addition to some rules and regulations made by the governments. It is not limited to only the poor countries, as you see, the average marriage age has been increased in most cases to 25-35 years. There are still exceptions, that would never be close to the trend lines.
    This is a humanitarian idea about the progress of the nations to be leveled up and touch the higher living standards. That would remain as an idea of course.
    The infrastructure of energy sector today, would never bear an impact not only in exploring but in production of energy for all the requirements if we suppose all the nations are ready to grow up at once, that is utterly impossible. Referring to China and India moving towards industrialization, and in just their start ups, there occurred lots of problems. From drinking water, to food, health care, etc etc…to fuel consumption and all the energy aspects, and air pollution to climate changes …whatever you may think.
    The living costs of the people leaving with $2 a month can never be compared with THE NORTH standards. No need to go further on this issue.

  119. apology for the amendment in the last 2 lines:
    acckkii says:
    Your comment is awaiting moderation.
    January 5, 2012 at 2:46 am

    Scott Brim says:
    January 4, 2012 at 3:32 pm

    …….”The living costs of the people with $2 a month the income, can never be compared with THE NORTH standards. No need to go further on this issue.”

  120. Lars P. says:
    January 4, 2012 at 11:42 am
    Oil and gas may very well be natural abiotic products – look at Titan, it has 100 times more oil then the Earth:

    http://www.space.com/4968-titan-oil-earth.html

    There’s not any oil on Titan – There’s liquid hydrocarbons but that’s because it’s about -179 degrees C. It’s pretty much all methane.

  121. I can speak for North Sea only. I think that one of the biggest factor in decreasing UK production is regulation of produced water discharged to the sea. This is just too tough and diverted huge amount of investment into upgrades of produced water systems with marginal improvements. As a consequence less wells are drilled and less facilities build. This also cause production bottleneck with production losses. When I was in production support I really struggled to make any modification on the platform. What core crew could do in a few hours I had to plan months and years in advance with piles of paperwork and unproductive people being involved.

  122. Scott Brim says:
    January 4, 2012 at 3:32 pm
    “A political issue is developing in that producers of wind-generated power are asking to be paid for not producing electricity whenever the northwest power grid is unable to absorb all the electricity they can produce.”

    This is not a political issue, it is economical matter and it’s true and correct. This is not even compensation.
    If you hire a taxi to do your jobs all around you go, do you pay for the idle time the taxi is waiting for you? The taxi doesn’t work just parks in front door of your bank, and when you get back the driver starts engine ready to drive to your next destination. It depends on your contract with the driver:
    1. You pay for the whole day;
    2. You pay for the time the taxi is with you;
    3. Anyhow you should know that the base price for that taxi includes the wasted times during the daily/weekly/monthly/in a year according to the taxi drivers association fees confirmed by the government/municipality. The taximeter is setup for this rate. It depends on the city/traffic/inside the city/outside the city travel etc..etc. This is just a taxi!
    About windmills, don’t think that it never happens in gas turbines power plants.
    You know that there is peak time in daily power consumption. Sometimes, the power authority orders you to shut down some of your generators due to low demand on power. It is a regular daily program, specially when a government power plant is in your neighborhood. They would not stop their production, they order you to stop generating. Who is going to pay for your IDLE time?
    For idle times they pay %90 of your contract rate per KWh. This (%deduction) may vary for different states and countries. Why is like that? Because you don’t have depreciation. There is one more thing in calculation of the rate per KWh. Depending on your power plant location whether it is at sea level or above sea level your power output in gas turbines or any type of combustion engines would change, besides, in hot climates you would have less power generated although you can modify the recent issue by providing cooling systems but it means you should allocate more than %2 of your produced electricity internally in your system. It means the rates cannot be the same in sea level nice weather conditions and in bad locations, maybe more than %20 is the difference. For the generators with that huge investment your off taker would pay you based on these terms and conditions. It’s not POLITICAL issue at all. And finally this is you as the owner of the plant that must compensate if any shut down takes place. However this is a bilateral agreement not political issue. Otherwise, you are going to kill yourself and burn your money, are you going to sacrifice for any power authority, and or you want the electricity for the people dancing at bars?!!
    To be continued…

  123. Scott Brim says:
    January 4, 2012 at 3:32 pm
    “Well,” some people say, “why should we pay for electricity that is not actually being produced?”

    Tell them: you are not SCOTT BRIM FOUNDATION (no charity).

  124. R/P in driving your car.
    When you are driving with high speed and fast in a highway at night, with your loved ones in your car, do you mind if you don’t have enough light to see your direction, or the next destination that is at 2km?5km?10km?100km ahead of you?
    R is the light
    P is you and loved ones+your car speed
    The (40+) R/P is enough if the figure can be trusted.

  125. JIS says:
    January 5, 2012 at 5:16 am
    I can speak for North Sea only. I think that one of the biggest factor in decreasing UK production is regulation of produced water discharged to the sea. This is just too tough and diverted huge amount of investment into upgrades of produced water systems with marginal improvements. As a consequence less wells are drilled and less facilities build. This also cause production bottleneck with production losses. When I was in production support I really struggled to make any modification on the platform. What core crew could do in a few hours I had to plan months and years in advance with piles of paperwork and unproductive people being involved.

    North Sea is a geological decline. Very real.

  126. Back in the late 1970′s through early 1980′s, there was quite a push for “enhance oil recovery” technologies that could stimulate further production from played-out fields, or move heavy crude from the formations more readily. Groups like Argonne National Labs injected anaerobic bacteria into formations for “microbial oil recovery,” where the bugs would generate surfactants & carbon dioxide to help reduce the viscosity.

    This was done on fields that are now dropping fast in their output. Cantarell went through all this and has dropped from a high of 2.5mb/day to less than 450kb/day today with a decline rate of more than 10%.

  127. Where there is a will, there is a way. As the price per barrel goes up, these technologies will be dusted off & reapplied. Combined with modern innovation such as directional drilling, I think there are some exciting times yet to be had in the oil patch.

    This is a common misunderstanding of economics. If the price of oil increases at the same rate as inflation then society can absorb that increase because wages keep up. But when oil prices spike up many times the rate of inflation then budgets (not just personal but also corporate) can’t keep up. Those increases eat into profits, can turn a profitable company into bankruptcy (the airlines), squeeze peoples bank accounts, increase debt defaults, decreases available credit, all of which throws those economies into recession.

  128. Who is going to pay for your IDLE time?

    This is exactly why power generation should not be private. They should be owned by government. Then no one has to pay anyone for down time because of low demand. Electric production is not like any other business because moving electrons are not a commodity.

    • ELECTRONS are exactly commodity and how lovely they are!
      In large scale the power plants yes you are right depending on regulations.
      But there is a limit that it may vary depending on the state/country laws.
      The max.ever known as private power plants the limit is below 25MWh. The plan name is DG. It means Distributed Generators or small distributed power plants. Small Business has great advantages against large scale business. People are more involved and this is a job why you should think that electrons are different from petrol, gas and other materials. In addition, what is the difference between the idle time the government receives and the idle time that you as the owner, should get. That is not your money, probably you have got it as a loan or facility from your banking system. In Vancouver power authority likes to give the permission to establish your own small power plant of 6MWh. The government likes to be more responsible for the main lines and the network. Electrons are as commodity and you can sell it through the main lines and the network (same as the highways and roads shipping lines airports…) to somewhere else where they need the power at the right time. This is exactly optimizing the electrons that you think they must be socialized. The commodity never can be spoiled/ hijacked. If somebody wants to steal it, as it is self guarded, it kills the thief.
      You can even set the electrons to be swift-ed same as virtual money, or you can swap it. You give the electrons in Vancouver to someone owner of a factory or the power authority that have its own off taker. Then you ask them to give you the same electrons in Toronto to somebody that you want to provide energy for a factory (SWAP), here is not even a WATT loss. In such a case you may need less power lines as well.
      To control the price of these electrons and leave it to the market can make decision over it, you can establish the POWER or ENERGY EXCHANGE (BOURSE), this would provide a competition environment and would guarantee the social benefits. You sell your energy for two months to somebody and at the right time you get back to the market and get another contract in a tender.
      Now, you can judge what is the difference between watermelon and the electrons here?
      Leave the bureaucrats do their jobs, the people know what to do.

  129. I think jrwakefield and others may have missed the point. The way I read the posts of both Mr. Eisenbach and Jonas is that Jonas is purporting that peak oil is happening sooner while Willis is saying that it is a ways out. I am thinking that there is not much disagreement that it will happen at some point, the question is when.

    I have also seen several different definitions as to what exactly “peak oil” is. I think the definition is also tied to the question of when because my definition is when production out paces potential production. If prices would have remained at $40 a barrel, we would have reach peak oil already. We know that we are currently exploiting reserves that were not economically feasible 20 or even 10 years ago.

    Remember that I see this from the exploration (potential) side of the equation. There are still huge areas of the earth that have not yet been explored and still larger reserves that are not yet feasible for exploitation. The keragen deposits in Colorado are very good example. I can guarantee the energy companies are already set up and ready to start extraction as soon as it becomes technically, economically and regulatory viable to do so. One only needs to look at the oilsands or Bakken fields to see what I mean. What I see is still 5 to 15 years from production and business is quite busy and will be for the foreseable future.

    Additionally, we have developed new technics and technologies for “seeing” deeper than before and under formations we could not penetrate before with much better resolution. Whats to say that today’s “deep wells” will not be considered shallow in the future? Do you think people 100years ago imagined miles deep wells under the ocean or even directional drilling? Think how many innovations have happened in your lifetime.

    The biggest obstacle to exploitation is not available reserves or even technology but government regulation.

  130. jrwakefield said:

    >>This is exactly why power generation should not be private. They should be owned by government. Then no one has to pay anyone for down time because of low demand.<<

    Except the taxpayer….

  131. catweazle666 says:
    January 5, 2012 at 8:02 am
    jrwakefield said:

    >>This is exactly why power generation should not be private. They should be owned by government. Then no one has to pay anyone for down time because of low demand.<<

    Except the taxpayer….

    Actually no. An idle plant costs only the wages of the people to maintain it. Corporations also get profit from idle plants, big profit. Shareholders to pay. It’s cheaper in the long run because those same taxpayers don’t have to pay higher power rates for idle plants.

  132. You can even set the electrons to be swift-ed same as virtual money, or you can swap it. You give the electrons in Vancouver to someone owner of a factory or the power authority that have its own off taker

    Power companies are not selling electrons. They are selling potential energy. The electrons are the carriers of that energy. The same number of electrons arrive back at the plant as are sent down the line, minus leakage.

  133. jrwakefield says:
    January 4, 2012 at 7:39 pm

    Just because they are doing it does not mean it’s positive ERoEI. Countries do lots of things that don’t make sense, re AGW. One has to look at the entire picture of what energy is being used, from mining to the pumps. Notice their flow rate from this is puny.

    =============

    It’s true that I don’t know exactly what the EROEI is. But It appears that you don’t either. (The numbers aren’t that easy to come by.) It’s also true that when South Africa built their initial CTL complex, it was during a time Apartheid related embargos and the (then cheap) cost of world oil was not the factor that it would normally be. On the other hand, they continue to operate the plants and to build them out even though they have had the same access to imported oil as anyone one else for several decades. BTW, although the South Aftrican government operates the original plant — which has been converted to Gas To Liquid, their large Coal to Liquid complex is Sasol which looks to be a perfectly normal investor owned multi-national energy corporation that would presumably dump the CTL operation if it were not profitable.

    Quite by chance, I do know the EREOI for natural gas to liquid conversion. It’s half the EREOI for natural gas = 2.5 to 5 — if you believe Wikipedia ( http://en.wikipedia.org/wiki/Energy_returned_on_energy_invested ) Assuming coal is also about half the EREOI for coal used directly as a fuel, that would make the EREOI for Coal to Liquid about 40 … Again, if you believe Wikipedia. In my experience, Wikipedia isn’t always right, but it’s often more right than wrong.

  134. Scott Brim says: “A political issue is developing in that producers of wind-generated power are asking to be paid for not producing electricity whenever the northwest power grid is unable to absorb all the electricity they can produce.”

    acckkii says: “…… This is not a political issue, it is economical matter and it’s true and correct. This is not even compensation. ……”

    ============================================================

    It has become a political issue here in Washington State because it was a combination of a statewide voter mandate and a system of pre-existing government subsidies and tax credits which caused those windmills to be installed in the first place.

    If it weren’t for those subsidies and for that voter mandate, these thousands of windmills wouldn’t be ubiquitously covering the rural areas of the state, destroying its rural character in the process.

    As subsidies go, paying for wind-generated electricity which isn’t actually being produced is not really very different from paying farmers not to grow crops. What kind of real benefit does the public ultimately derive from doing either one?

    Nevertheless, if the majority of Washington State’s voters want it done this way, they should be willing to carry all the baggage which goes with their decision.

  135. jrwakefield says:
    January 5, 2012 at 6:54 am

    “Who is going to pay for your IDLE time?

    This is exactly why power generation should not be private. They should be owned by government. Then no one has to pay anyone for down time because of low demand. Electric production is not like any other business because moving electrons are not a commodity.”
    May I have your attention please:
    “No one” , the government sector, or private sector they would never ever pay a penny from their pockets for this IDLE time. You sleep %50 of your life, who is going to compensate that, just you and only you. You pay from the pocket of your own life time. The government for sure would not pay it, they must give their balance sheets to their offices, they must show real figures of their income and the costs. The private sector has no reason to do it, who do you like to be? G-sector or P-sector? It is the money that you would pay upon the bills. The private sector would not send you any bill. The power authority would handle it because they receive the power from various sources they pay you and the people would pay the authority. So there is nothing to make you happy, only you/ your son/your family/ your friend/ your fellow whatever would have jobs. The PRICE OF IDLE TIME IS INCLUDED IN YOUR BILLS, YOU HAVE PAID THAT SEVERAL TIMES.
    If you wish to be a DG, the financial specialists would lead you what is the reality.

  136. jrwakefield says:
    January 5, 2012 at 8:24 am

    “You can even set the electrons to be swift-ed same as virtual money, or you can swap it. You give the electrons in Vancouver to someone owner of a factory or the power authority that have its own off taker
    Power companies are not selling electrons. They are selling potential energy. The electrons are the carriers of that energy. The same number of electrons arrive back at the plant as are sent down the line, minus leakage.”

    Scott Brim liked to name the power as electrons, it did not make any sense. You are of course right. As you see I have tried to use POWER instead of electrons unless where its meaning was closer to commodity like WATERMELON!

    And about the voters!, how many (%) of the voters are the VOTERS going to the polls and give the VOTES. With respect to all of them, look NASA is handing over more and more its jobs to private sector, how is that, we are talking about socialized power on the streets of Washington?

  137. jrwakefield says a lot in the thread:
    January 4, 2012 at 1:13 pm
    “There is no oil on Titan because no life was on Titan. Just because small hydrocarbons, which were accreted early in the formation of the solar system, are on Titan means that large molecule oil components can abiotically form on this planet is grossly misguided.”
    From wikipedia: “Their structure is not currently known, but they are believed to be tholins, and may form the basis for the formation of more complex molecules, such as polycyclic aromatic hydrocarbons.”
    Yes, true, I have no problem if one does not want to call it oil, but not sure I understand what is the problem with “methane and other hydrocarbons” as energy resource or usage for plastic generation?
    “Coal to oil is negative ERoEI. ”
    ERoEI is sometimes misunderstood and misused. If I have a 300 USD value that I cannot carry with me – as it weights 100 tons – I might sell it for 100 bucks and put those in my pocket and go away with it. Yes, one needs to use energy to generate oil from coal. Where is the problem to use that (nuclear – or solar or whatever) power plant and generate it? The overall energy budget needs to work.
    Why convert coal to oil, what makes oil so special? Its products – gasoline and diesel are used as “concentrated energy” that can be easily transported and used, it is not so efficient to use coal in its solid form for that purpose at current technology. There are no competitive ways at current technology for energy storage, distribution and handling but technology evolves. So when there will be other forms to use & transform that electric energy it would make no longer sense to convert coal to oil. As long as there is not such, it still makes sense.
    What else is oil used for? Chemistry and plastics, cosmetics – where it could be replaced also through coal and gas.
    The demand will not be satisfied at a certain time? Well is now each and every oil demand satisfied? Will it cost more? Yes. Will it stop suddenly? No.

  138. What is ECA?
    Let me explain it:
    ENERGY CONVERGENCE AGREEMENT.
    DGs must be protected from their fuel price fluctuation and inflation.
    So DGs would have the contract for “energy convergence”. Their benefits are limited to their equipment (the generators) and wages (the people working on generators), they are never benefited because fuel rate changes and they have nothing to lose on fuel because of nothing no risks for them at all.
    But they must give the people the efficient power against the fuel they receive. This rate is around min%41-%46 the output. If they get back the power with less efficiency than the given numbers they would compensate that fuel for sure.
    So old engines must be renewed to get higher outputs. This can be done by private sector, you never see such controls and services in government sector, don’t forget USSR.

  139. acckkii says: “And about the voters!, how many (%) of the voters are the VOTERS going to the polls and give the VOTES. With respect to all of them, look NASA is handing over more and more its jobs to private sector, how is that, we are talking about socialized power on the streets of Washington?”

    ===================================================================

    If a majority of the eligible voters of Washington State actually do want something done differently in regard to publicly-subsidized wind power generation, but that majority hasn’t bothered to take the time needed to vote their opinions, they will just have to get off their duffs and go make their opinions heard at the polls. But until this happens, these eligible but non-participating voters should have to live with the full range of economic consequences that go with their decision not to participate in the voting process.

  140. ERoEI is sometimes misunderstood and misused. If I have a 300 USD value that I cannot carry with me – as it weights 100 tons – I might sell it for 100 bucks and put those in my pocket and go away with it.

    The monitary analogy to energy ERoEI also works. Negative monitary ERoEI is why the EU and the US are in deep trouble. You can only lose money (energy) for so long. Society needs a minimum of 3:1. Some argue the more complex society becomes the larger the ERoEI society needs to maintain itself, let alone allow for growth. Eventually it catches up with you.

  141. From wikipedia: “Their structure is not currently known, but they are believed to be tholins, and may form the basis for the formation of more complex molecules, such as polycyclic aromatic hydrocarbons.”
    Yes, true, I have no problem if one does not want to call it oil, but not sure I understand what is the problem with “methane and other hydrocarbons” as energy resource or usage for plastic generation?

    It has to do with ERoEI, it rules supreme, Second Law and all that. Ask the petrochemical industry what it takes to make plastic from methane vs the residuals from oil. I really do not understand this fascination with Titan with respect to our energy needs. Not like we are going to start to send tankers there next year.

  142. jrwakefield says:
    January 4, 2012 at 8:06 pm

    “Bottom line is depletion from older fields will outpace production from these new deposits much sooner that 2025.”

    Just because you say so, doesn’t make it so. Peakers have been saying exactly this since 1978 and have been wrong since the first time they uttered the words. The world has been trundling along with +/- 2mm bbls/day of surplus capacity for a more than a decade now and I see no indication that this will change. Some fields will deplete. Some will be brought back into production, some into very significant production, using new techniques and technologies. The gains and losses have kept pace, going to and fro like a good football game for decades. The field has not been vacated and the ball is still in play.

  143. Alan Clark of Dirty Oil-berta says:
    January 5, 2012 at 12:02 pm
    jrwakefield says:
    January 4, 2012 at 8:06 pm

    “Bottom line is depletion from older fields will outpace production from these new deposits much sooner that 2025.”

    Just because you say so, doesn’t make it so. Peakers have been saying exactly this since 1978 and have been wrong since the first time they uttered the words. The world has been trundling along with +/- 2mm bbls/day of surplus capacity for a more than a decade now and I see no indication that this will change. Some fields will deplete. Some will be brought back into production, some into very significant production, using new techniques and technologies. The gains and losses have kept pace, going to and fro like a good football game for decades. The field has not been vacated and the ball is still in play.

    It’s a physical fact. It’s inevitable. It will happen. The world was at maximum output in 2008. Fact: The vast majority of world discovery was prior to the 1980’s.

  144. jrwakefield wrote:

    “Negative monitary ERoEI is why the EU and the US are in deep trouble. You can only lose money (energy) for so long. Society needs a minimum of 3:1.”

    Socialism is why the EU and US are in deep trouble. What’s needed are fewer left wing loonies.

  145. John Bronson says:
    January 5, 2012 at 4:35 pm
    jrwakefield wrote:

    “It’s a physical fact. It’s inevitable. It will happen. The world was at maximum output in 2008. Fact: The vast majority of world discovery was prior to the 1980′s.”

    Sorry, 2010 eclipsed 2008. Doomers will just have to keep waiting for the “Great Pumpkin”.

    http://earlywarn.blogspot.com/2010/12/new-high-of-liquid-fuel-production.html

    2008: 87.8
    2010: 88.1
    Diff: 0.3
    % increase 0.003% in two years.

    Hardley an “eclips”.

    If anything this shows we should hit the ceiling again. Price has started to increase again above 100. The next 12 months will be the tell all.

  146. jrwakefield says:
    January 5, 2012 at 2:33 pm
    “It’s a physical fact. It’s inevitable. It will happen. The world was at maximum output in 2008. Fact: The vast majority of world discovery was prior to the 1980′s.”

    Here’s another fact that supports your position: a stopped clock is correct twice a day. Unlike the peakers who have never been right.

  147. CRS, Dr.P.H. – yes, there’s exciting times yet to be had in the oil patch. When they have dusted off the old technologies, brought in new ones, opened or re-opened previously uneconomic fields, found and developed new fields, dug into new types of oil, knocked some sense into the politicians, and fought off the greenies at every step, will they hit and maintain a new high production rate? They might indeed succeed, they really might, and there is more than enough oil to do it with, but as I said before a lot has to go right – and every year that goes by without a new high rate, the chance of a new high rate recedes just a little because some of the oil that could have contributed will have been produced.

    Khwarizmi and others point to the discovery of huge new oil deposits, and argue that the world will therefore have plenty of oil. This is paying attention only to R. You need to look at P to make sure. Some of those deposits, such as in the Gulf of Mexico, will indeed be able to deliver a high P (relative to R), but will take many years to develop. In the meantime, existing producers will have declined, so that much of the new P will be used to compensate for the lost old P.

    Other fields, such as the Alberta shale, will most likely never be able to deliver high P (relative to R). As I pointed out, the future hope for Alberta is that its R/P can eventually come down to about 150. Overall, the world R/P is likely to increase quite markedly, ie. although R will be looking great, P might not be doing quite so well.

    But looking at it that way is only looking at what production is possible. There are still some other factors that should not be ignored, such as politics, also technology which not only improves production capability but also improves alternatives and efficiency.

    Alan Clark of Dirty Oil-berta – Are we talking about the stopped clock or the scientific turkey? We might be at or near Peak Oil, or we might not (we can’t be sure until years later), but bear in mind we’re not talking about running out of oil. That’s not what Peak Oil is. We’re not even talking about production declining – at Peak Oil the production rate can be expected to remain fairly steady for a number of years, eg. US oil production was highest in 1970, but was still within 10% of that 16 years later (it’s down 33% now but moving up from the 2008 low). We have to work harder than ever to keep increasing oil production, as we always have done successfully in the past, but at some point we must fail, or we may simply choose a different track.

  148. Oh where to begin…

    1. The Wikileaks conspiracy theory about Saudi Arabia is a myth.

    Saudi Oil Reserves and the WikiLeaks Chinese Whispers Effect (The Wall Street Journal, February 9, 2011)

    “At first glance it looked like a story to shake the world: the WikiLeaks cable suggesting Saudi Arabia’s oil reserves -– the most bountiful on the planet -– may have been overstated by 40%.

    It opened the door to a future in which oil would be depleted far more quickly than anybody believed -– raising the threat of sky-high prices and cut-throat competition for scarce resources.

    But a conversation this morning with the man whose comments set off the furore revealed a Chinese-whispers chain that ended up giving the apparent imprimatur of the U.S. diplomatic service to a misunderstanding over oil figures.

    The story starts back in 2007 when U.S. diplomats had a chat with Abdullah al-Saif, head of exploration at Saudi Arabian Oil Company, commonly known as Saudi Aramco.

    He told them that the kingdom had 716 billion barrels of oil –- a figure that would rise to 900 billion in about 20 years.

    Enter Sadad al-Husseini, a predecessor of Mr. al-Saif as Saudi Aramco’s exploration head, and pretty much the only company insider ever to speak in public. In the past he has been skeptical of some Saudi forecasts on how much oil it can pump and is regarded within the industry as a careful, knowledgeable man.

    Asked by the American diplomats what he thought of Mr. al-Saif’s statements, he made what appeared an extraordinary statement: that the reserves figure was inflated by 300 billion barrels. Deducting that figure from the 716 billion barrels created the idea that Saudi reserves were 40% less than it officially said.

    As it turns out, however, Mr. al-Husseini’s memory of that conversation is rather different.

    He says he has no dispute with Aramco’s official reserves data, but disagrees with Mr. al-Saif’s projection for the future and with the diplomats’ characterization of its existing 716 billion barrels as “reserves”.

    In fact, he says, that figure refers to “oil in place” which includes both recoverable and non-recoverable oil.

    The kingdom’s “proven reserves”, the oil Saudi Aramco believes it can extract, are officially given as 260 billion barrels (Mr. al-Saif said the actual figure was probably more like 51% of the “oil in place” –- around 358 billion barrels).

    Mr. al-Husseini says he has no problem with either Saudi Aramco’s official figures on current proven reserves or Mr. al-Saif’s estimate, but was simply making the point that to describe “oil in place” as reserves was to inflate the kingdom’s figures by several hundred billion barrels.

    By that reckoning, the world of energy looks pretty much how it looked yesterday, with Saudi Arabia set to remain the world’s biggest producer for some time yet.”

    Drilling for an Oil Crisis (The New York Times, February 25, 2011)

    Please do better research before posting unfounded conspiracy theories.

  149. 2. OPEC did not cause the energy crisis of the 70’s Nixon did with socialist price controls.

    All OPEC did was create a new middle man and provide an incentive for non-OPEC producers to search for more oil. This is why we got Prudhoe Bay and the North Sea fields. The oil shock of the 70s was cause by Nixon’s economically illiterate policies.

    How gas price controls sparked ‘70s shortages (The Washington Times, May 15, 2006)

    “Proposals to control gasoline prices and tax producers’ windfall profits were popular ideas that were tried — without much success — during the oil shocks of the 1970s and 1980s.

    The era of price controls is most remembered for long lines at gas stations. The controls were put in place by the Nixon and Ford administrations in reaction to a jump in fuel prices caused by cuts in production by the newly formed international oil cartel, the Organization of Petroleum Exporting Countries.

    Back then, “price controls turned a minor adjustment into a major shortage,” said Thomas Sowell, author of “Basic Economics: A Citizen’s Guide to the Economy.”

    Mr. Sowell says that although the best response would have been to let prices rise, giving oil companies an incentive to produce more and consumers an incentive to conserve, “this basic level of economics is seldom understood by the public, which often demands ‘political’ solutions that turn out to make matters worse.”

    The public — as it does today — wanted low prices. But the artificially depressed pump prices imposed during the oil crisis of 1973 — which stayed in place in various iterations through 1980 — brought about lines at gas stations and an artificial shortage of gas, he said.

    The price controls resulted in a fuel-rationing system that made available about 5 percent less oil than was consumed before the controls. Consumers scrambled and sat in lines to ensure they weren’t left without. Gas stations found they only had to stay open a few hours a day to empty out their tanks. Because they could not raise prices, they closed down after selling out their gas to hold down their labor and operating costs, Mr. Sowell said.

    The shutdown of stations that had been open at all hours before price controls further raised the public’s panic level and resulted in more lines, anger and frustration in what many Americans still remember as one of the nation’s worst economic nightmares.

    “No doubt many or most motorists whose daily lives and work were disrupted by having to spend hours waiting in line behind other cars at filling stations would gladly have paid a few cents more per gallon to avoid such inconveniences and stress,” Mr. Sowell said.

    Those who preferred not to sit in line bought gas on the black market at exorbitant prices far above what the market price would have been, he said. “Price controls almost invariably lead to black markets.”

    By the Iranian oil crisis in 1979, the controls had grown unsustainable as oil prices escalated in global markets. With lines forming once again and fistfights breaking out at the pump, President Carter quickly waived most of the controls on oil and gas prices to make more fuel available.

    The resulting sharp price increases ushered in a new nightmare: double-digit inflation, as businesses quickly passed on their higher fuel costs and workers’ unions demanded cost- of-living increases to keep pace with higher prices. The surge in inflation put the Federal Reserve in crisis mode. It ordered its largest-ever increase in interest rates in October 1979, plunging the economy into a deep recession.

    By the 1980s, Congress and the administration had figured out that price controls were not the answer.

    President Reagan, who rode to office on anger over the recurrent energy crises and inflation of the previous decade, immediately abolished what remained of oil and gas price controls upon entering office in 1981. [...]

    By 1986, the deregulation of the petroleum industry led to record production levels and a glut of oil that drove prices down to $10 a barrel. The trend toward low prices and plentiful oil continued through the 1990s as major non-OPEC producers such as Russia ratcheted up output to take advantage of the high oil prices engineered by the cartel. [...]

    Mr. Sowell said profits are the least-understood aspect of business, and have been under attack since the days of Karl Marx and George Bernard Shaw, who called profits arbitrary “overcharges” motivated by greed.

    In reality, profits provide the vital incentive businesses need to make products consumers want at low prices, he said.”

  150. 3. Without knowing how much oil the earth contains and how it is created no such claims of “peak oil” can be made.

    <b.4. The production argument is fallacious as real production is currently restrained by governments.

    Real production without government intervention is only restricted by price. Governments can stop all production in their country that does not mean “peak oil” is reached. Markets adjust production on their own to meet demand so long as governments are not artificially restricting production. That is basic economics. You cannot look at artificially suppressed production rates with state run oil companies and draw any meaningful conclusions about “peak oil” from them.

    This is just further proof that all peak oil theorists are economic illiterates.

  151. 3. Without knowing how much oil the earth contains and how it is created no such claims of “peak oil” can be made.

    4. The production argument is fallacious as real production is currently restrained by governments.

    Real production without government intervention is only restricted by price. Governments can stop all production in their country that does not mean “peak oil” is reached. Markets adjust production on their own to meet demand so long as governments are not artificially restricting production. That is basic economics. You cannot look at artificially suppressed production rates with state run oil companies and draw any meaningful conclusions about “peak oil” from them.

    This is just further proof that all peak oil theorists are economic illiterates.

  152. jrwakefield is posting more economically illiterate nonsense about EROEI,

    Thermodynamics and Money (Peter Huber, Ph.D. Mechanical Engineering, MIT)

    ” According to this theory it can never make sense to burn two units of energy in order to extract one unit of energy. The Eroei crowd concedes, for example, that the world has centuries’ worth of junk oil in shale and tar sands–but they can also prove it’s irrelevant. It takes more energy to cook this kind of oil out of the dirt, they argue, than you end up with in the recovered oil. And a negative Eroei can only mean energy bankruptcy. The more such energy investments we make, the faster things will grind to a halt.

    Eroei calculations now litter the energy policy debate. Time and again they’re wheeled out to explain why one form of energy just can’t win–tar sands, shale, corn, wood, wind, you name it. Even quite serious journals–Science, for example–have published pieces along these lines. Energy-based books of account have just got to show a profit. In the real world, however, investors don’t care a fig whether they earn positive Eroei. What they care about is dollar return on dollar invested. And the two aren’t the same–nowhere close–because different forms of energy command wildly different prices. Invest ten units of 10-cent energy to capture one unit of $10 energy and you lose energy but gain dollars, and Wall Street will fund you from here to Alberta.

    As it happens, the people extracting oil out of tar sands today use gas from the fields themselves to power their refineries. There’s gas, too, under what has been called Alberta’s “trillion- barrel tar pit,” but it’s cheap because there’s no pipeline to deliver it to where it would be worth more. As an alternative to gas, Total S.A., the French oil giant, is thinking about building a nuclear power plant to supply heat to melt and crack the tar. But nuclear reactors extract only a minuscule fraction of the energy locked up in the nuclei of uranium atoms; all the rest gets discarded as “waste.” On Eroei logic, uranium would never be used to generate either electricity or heat. But per unit of raw stored energy, uranium is a thousand times cheaper than oil. [...]

    The economic value of energy just doesn’t depend very strongly on raw energy content as conventionally measured in British thermal units. Instead it’s determined mainly by the distance between the BTUs and where you need them, and how densely the BTUs are packed into pounds of stuff you’ve got to move, and by the quality of the technology at hand to move, concentrate, refine and burn those BTUs, and by how your neighbors feel about carbon, uranium and windmills. In this entropic universe we occupy, the production of one unit of high-grade energy always requires more than one unit of low-grade energy at the outset. There are no exceptions. Put another way, Eroei–a sophomoric form of thermodynamic accounting–is always negative and always irrelevant. “Matter-energy” constraints count for nothing. The “monetary culture” still rules. Thermodynamics And Money”

    It is like the whole peak oil camp is filled with legions of economic illiterates.

  153. “Saudi Oil Reserves and the WikiLeaks Chinese Whispers Effect
    By Angus Mcdowall
    http://blogs.wsj.com/source/2011/02/09/saudi-oil-reserves-and-the-wikileaks-chinese-whispers-effect/
    My comment was:
    5:07 am January 6, 2012
    ACCKKII wrote:

    assuming oil in place 358bn. 358,000,000,000b:10,000,000bpd(production)=35,800days. 35,800days:365days/year=98.0821917808 years.“oil in place”

    The kingdom’s “proven reserves”, the oil Saudi Aramco believes it can extract, are officially given as 260 billion barrels: 260,000,000,000b:10,000,000bpd(production)=26,000 days 26,000d:365=71.2328167123 years.proven reserves

    the global average expected is 40years.

    I refer to:
    : Great White Northerner wrote:

    Advantage oil sands: our proven reserves are based on what we can extract with today’s technology – and that is always getting better. Alberta’s deposits exceed both the recoverable and the Saudi reserves in place.”

  154. Poptech says:
    January 5, 2012 at 9:28 pm
    —————————————-
    You are largely in the right of it Sir.

    For my sins, as they may be, I am a sometime shipowner, a relatively free trade in which even today over half the commercial tonnage in cargo is owned by private owners like me, typically one or two ships, and supplied on charter to whichever operator hires ‘em and has them liveried for the house flag.

    I had a policy and still do that I do not order a new ship built until I have a charter contract for her with a reputable charterer as well as the mortgage for her: plus of course the shipyard bounty. The industry is highly cyclical which is why at the moment I am bereft of bottoms having sold them all a few years ago but with the builders’ yards empty and urgently soliciting custom I may yet go back into the business.

    Some years ago there was great too do about liquefied natural gas [LNG] about which I know something: I have several patents in this matter. It was seen as an investment bonanza. Figures such as a few hundred billion dollars, give or take, were bandied about Indeed having secured long term charters I had two ships built by Korean yards and very expensive they were too, an LNG tanker is pretty complicated thing. In anticipation of the bonanza a lot more were built as orphans and are now laid up like the plateau tankers before them.

    The reason is the boom never happened, not that anybody knew at that time of the potential for fracking natural gas. But the oil and gas majors having had their fingers well and truly burned by US politicians with their price controls etc. especially over natural gas, were very wary of investing these huge sums in what they saw as a highly controlled business in which they neither owned the terminals or distribution pipelines nor had any influence over the politicians who might mandate new controls.

    Thus the investment boom never happened. It is true that some private investment went into building ships now laid up and terminals. Now there is much talk of terminals being turned around for export rather than import. It is ill informed. Do you have any idea how much it costs to build a bulk gas liquefaction plant? It is not cheap I assure you.

    And who pray is to buy this all too abundant gas?

    Well fifty years ago the UK took a bold decision to build a natural gas grid to supply effectually the whole country from North sea reserves. An investment which paid off in spades and still is: it brought cheap energy into homes and businesses on a nationwide scale. The dash for gas to replace coal fired electric generation depleted the North sea reserves faster than expected so some ill informed investors decided that LNG imports would be necessary. They forgot however that the Frigg field is enormous and that the UK had a longstanding agreement with the Norwegian government about sharing it and thus all it took was the construction of a new undersea pipeline, the Connector, to solve the problem.

    So the terminals stand idle. Mean while of course a British government which apparently believes in little green fairies at the bottom of the garden is destroying the economy despite the fact that there are huge reserves of shale gas in the country.

    But there are huge reserves of shale gas elsewhere.

    So who? I repeat, is going to buy all this natural gas which is available almost everywhere it might be wanted for the next few hundred years.

    There are people you know who are obsessed with the idea that because they consider themselves intellectuals they can draw a few graphs and charts and so predict the future of industries they know little or nothing about. Unlike me or thee.

    Kindest Regards.

  155. jrwakefield says:

    2008: 87.8
    2010: 88.1
    Diff: 0.3
    % increase 0.003% in two years.

    Hardley an “eclips”.
    —-

    That’s actually a 0.3% increase in 2 years not 0.003%.

    I agree though, still sounds to be on plateau.

  156. Poptech –

    1. Wikileaks. A cable from a US embassy, highly embarrassing and damaging to an important ally, Saudi Arabia, is released by Wikileaks. What to do? Answer – go into damage control. Result – the WSJ item you quote.

    So, now, what is the correct interpretation, yours or mine?

    If you check my post, you will see that the Wikileaks item was incidental, not central. Concrete information is hard to find on the Saudi fields, because they are rather, um, secretive. But there is a whole heap of information out there, in the form of both opinions and data, which paint a picture that is not quite as rosy as you might have us believe. Ghawar appears to be genuinely in decline, with massive amounts of water being injected and produced. Recently, Saudi Arabia has twice said they will increase production. After the first time, production fell fairly sharply. We are waiting to see, for the second. The data seems to support the view that they can’t increase production, or not by much.

    Here is a 2008 WSJ article which could be read either way: http://online.wsj.com/article/SB121002229576468609.html. One point of interest is that there appears to have been a lot of drilling going on in 2007. Saudi production reportedly increased in 2008, as could be expected, but has declined since. Not very encouraging.
    2003 10164k bpd
    2004 10638
    2005 11114
    2006 10853
    2007 10449
    2008 10846
    2009 9893
    2010 10007

    As I said, Saudi production will be worth keeping an eye on.

    [It's midnight here, I'll try to get to your other points tomorrow]

  157. Poptech, I fully agree that as long as money is to be made, negative ERoEI will be ignored. That can last a long time. However, it will come to an end. Eventually the net energy returned will turn on economics (one can argue that one such event was 2008). The second law of theromdynamics rules supreme. A few people make money while the rest of the society get’s starved for energy.

  158. That’s actually a 0.3% increase in 2 years not 0.003%.

    Yes, soon as I posted it I realized I forgot to take the extra zeros off my paste from the calculator. Would be nice to be able to edit a post one makes.

  159. 3. Without knowing how much oil the earth contains and how it is created no such claims of “peak oil” can be made.

    False. You are making the mistake of thinking that peak oil is geological peak. It’s not. It’s about flow rates. Doesn’t matter what’s in the ground, it’s how fast it can be extracted to meet demand.

    4. The production argument is fallacious as real production is currently restrained by governments.

    Peak oil is ANY reason that curtails flow rates, including producing countries consuming more of their own oil, and exporting less. It also includes when one country goes around the world making contracts to supply them with oil. That’s what China is doing, which takes less exportable oil off future markets.

  160. 2. OPEC did not cause the energy crisis of the 70′s Nixon did with socialist price controls.

    It was caused because for the first time in history the US no longer produced enough of its own oil to meet demand. It was the year the US had to import oil for the first time. It was the year the US started to drop in oil production.

  161. Poptech, let me give you an example of how ERoEI works. The Mayan’s could only send out troops so far when rading near by settlements. This is because to feed that army, they had to have runner delivering food. But runners could only go so far because they could only carry enough food for them selves for a few days. So either they have more runners than soldier, not a good idea, or they limit how far they could travel. ERoEI limited how far their army could travel.

    As for the money aspect, here is an analogy. You own a coal fired tanker. Coal is cheap, oil expensive. So you haul oil half way around the world. But your ship is inefficient and burns more Joules of coal than you deliver in oil. You make a profit, but over all society has less FF energy available.

  162. Mike Jonas says: January 6, 2012 at 5:15 am

    1. Wikileaks. A cable from a US embassy, highly embarrassing and damaging to an important ally, Saudi Arabia, is released by Wikileaks. What to do? Answer – go into damage control. Result – the WSJ item you quote. [...]

    If you check my post, you will see that the Wikileaks item was incidental, not central. Concrete information is hard to find on the Saudi fields, because they are rather, um, secretive. But there is a whole heap of information out there, in the form of both opinions and data, which paint a picture that is not quite as rosy as you might have us believe. Ghawar appears to be genuinely in decline, with massive amounts of water being injected and produced.

    It is not “damage control” it is the correct context to what was claimed. What is with Peak Oil theorists and conspiracy theories? They are not referring to proven reserves but projected ones and the speculative argument made by al-Husseini was no secret,

    http://www.nytimes.com/2005/08/21/magazine/21OIL.html?pagewanted=all

    The “controversy” of Saudi oil production is very much disputed,

    Crop Circles in the Desert: The Strange Controversy Over Saudi Oil Production (PDF) (Michael C. Lynch, President of Strategic Energy and Economic Research, 2006)

    “It is hard to characterize the discussion about Saudi oil resources as scientific in nature. Much of the technical information cited is either irrelevant (provided without explanation of its meaning) or wrong. Many of the arguments involve perverted logic and are often refuted by information provided by the “alarmists” themselves, particularly in the case of Simmons. The omission of publicly available information raises questions about the sincerity of the work.

    The actual evidence presented by the Simmons work suggests that (a) the Saudis are at the beginning of their resource curve, (b) they are developing their fields in a very careful manner, and (c) they have faced and overcome numerous technical challenges. Nowhere is there anything to support his conclusions that their production is going to peak, and historical evidence refutes this hypothesis quite clearly.

    It is also interesting to realize that these 12 papers, each dealing with various technical problems in Saudi Arabian oilfields, were presented at a prominent industry forum to an audience of technical experts assembled from all over the world, and not a single question was raised about the overall capability of Saudi Arabia as an oil supply.

    Schermer has a simple test of any hypothesis: consider which is more likely, the hypothesis put forth or its opposite? In this case, we are being asked to believe whether it is more likely that a Harvard M.B.A. with no technical background has correctly perceived an extraordinary conclusion from engineering papers, contradicting all other data and observed reality as well as the vast majority of expert opinion, or whether he simply got it wrong. The evidence in this paper shows that what he has said, which can be tested, is demonstrably wrong.

    Overall, the arguments made by the various “alarmists” resemble a cable television special on crop circles, where only evidence conforming to the zealots’ beliefs is presented—most of it unquestioningly—even where it is illogical, meaningless, or simply incorrect. What is needed is
    greater critical thinking on the part of the audience on both crop circles and Saudi peak-oil warnings.

  163. Poptech – Your “simple test of any hypothesis” can be applied to climate : consider which is more likely, the hypothesis put forth or its opposite? In this case, we are being asked to believe whether it is more likely that a weatherman with no technical background has correctly perceived an extraordinary conclusion from a semi-retired mining consultant, contradicting all other data and observed reality as well as the vast majority of expert opinion, or whether he simply got it wrong. The evidence in X’s paper shows that what he has said, which can be tested, is demonstrably wrong.

    It could have been written by RealClimate.

    That doesn’t mean you are necessarily wrong, because this is a different topic with different controversies and different evidence.

    Oil (reserves, supply, demand) is controversial. It is polluted by politics and obfuscation. It is very hard to know just what the situation is, especially in Saudi Arabia. I don’t know what the real situation is, and you may indeed be right, but I sense a sea-change.

    As I said before, Peak Oil is not ‘running out of oil’. There is physically enough oil to continue increasing production for many years to come. But there are new obstacles, some technical, some environmental, some economic, some political. Maybe Peak Oil will come not with a bang but with a whimper. One day we will realise that in spite of all the oil we still have, we haven’t materially increased production for years and it isn’t going to go on up again. By then, we may be using energy so efficiently, and using so much other stuff (natural gas or whatever), that we don’t need to anyway. As I said before, “Peak Oil & Gas” and “Peak Energy”, as opposed to “Peak Oil”, are many years away – provided sanity returns to western governments.

    Note that oil consumption already exceeds oil production by about 6% – that’s a non-trivial amount of ‘other stuff’ already, and it’s only the ‘other stuff’ that can be counted as oil. The fact that this ‘other stuff’ is uneconomic and politically-driven isn’t too relevant to the argument (although it is very relevant to the people of the western world who have to pay for it), because politics is part of the problem.

  164. Mike Jonas says:
    January 5, 2012 at 8:42 pm
    “We have to work harder than ever to keep increasing oil production, as we always have done successfully in the past, but at some point we must fail, or we may simply choose a different track.

    A couple of years ago I would have agreed with you Mike. Your statement today however, is patently false. I’ve already given the Alberta analogy but perhaps I can make it clearer this time.

    From 1970 through 2006, a typical well drilled in Alberta (not Oil Sand but “conventional”), would initially produce 50 – 100 bbls/day and ultimately, within a few months, settle in at about 12 – 30 bbls/day for most of the rest of it’s life-span.

    Most conventional wells being drilled in Alberta today are coming on at 300+ bbls/day and settling in a month or 2 later to consistently produce 100 – 200 bbls/day for the rest of their life-span.

    In effect, the new technologies of horizontal drilling and multi-stage fracing are resulting in a 5 – 10-fold increase in individual well production. This is being accomplished in old, once thought to be played-out fields.

    In the old days, Alberta had a maximum conventional production of ~900,000 bbls/day. No knowledgeable person would dispute that Alberta’s conventional oil production will soon exceed 2 million bbls/day. Alberta is on-track to becoming the third largest exporter in the world by 2015 at over 3 million bbls/day (including OilSands).

    Extrapolate and transpose these results to geologically similar fields in Russia, Ukraine, France, Hungary, N. Africa, America and The “stans” and you are looking at a powerful up-surge in “productive capacity”.

    If Alberta has an additional 2 million bbls/day to export into existing infrastructure in the USA and America can achieve similar results in LA, MS, TX, OK, AR, etc… that means less imports are required meaning less shipping bottle-necks across the big ponds, more resources available to feed growth in Asia.

    A few years ago I wrote a well publicized article titled “Alberta Conventional Oil Production. Are The Good Times Really Over For Good?” in which I argued that they indeed were. I have since been proven wrong by the advent of technology. As I make my living from Alberta conventional production and fracing horizontal wells, I’m pleased to have been proven wrong.

    Don’t take it too hard when you are also.

  165. jrwakefield wrote:

    “You are making the mistake of thinking that peak oil is geological peak. It’s not. It’s about flow rates. Doesn’t matter what’s in the ground, it’s how fast it can be extracted to meet demand.”

    “Geological peak” is what most peakers claim. Of course you can make up your own arguments. What’s often quoted as recoverable reserves is 1.2 trillion barrels, or 40 years supply. “Recoverable reserves” are only a small percentage of total oil in place. As new reserves are discovered, and as new technology is developed, recoverable reserve numbers grow. You can go back and look at EIA data 20 years ago, and see that the US had the same 20 million barrels of reserves then. Without “reserve growth”, that oil would have all been used up by now several times over. What is the total amount of oil in place? A recent Scientific American article estimated 12 trillion barrels. As long as there is sufficient “oil in place”, flow rates can be maintained by simply drilling more wells. Or in the case of heavy oil, applying more equipment and labor to the operation.

    There are currently vehicles on the market (and many on the road already), that get 70 cents/gallon equivalent running on CNG or electricity. Oil will be substituted long before it “runs out”.

  166. Before I respond to the rest,

    Mike Jonas says, “Your “simple test of any hypothesis” can be applied to climate : consider which is more likely, the hypothesis put forth or its opposite? In this case, we are being asked to believe whether it is more likely that a weatherman with no technical background has correctly perceived an extraordinary conclusion from a semi-retired mining consultant, contradicting all other data and observed reality as well as the vast majority of expert opinion, or whether he simply got it wrong.

    Who are you referring to exactly as a “weatherman” and “mining consultant” and what “conclusion”?

  167. Mike Jonas wrote:

    ‘Note that oil consumption already exceeds oil production by about 6% – that’s a non-trivial amount of ‘other stuff’ already, and it’s only the ‘other stuff’ that can be counted as oil. The fact that this ‘other stuff’ is uneconomic and politically-driven isn’t too relevant to the argument (although it is very relevant to the people of the western world who have to pay for it), because politics is part of the problem.”

    The fact that we already have a significant amount of alternative liquid fuel production is more proof that peak oil is a non-issue. And certainly, alternative transport systems such as EVs should be considered as an alternative to required oil production.

    A common argument for peakers is that alternatives are “uneconomic”. Yet at the same time, they claim oil prices will reach several hundred dollars/barrel. You simply can’t have it both ways.

  168. @Mike Jonas

    “Observed reality” for global warming in the 21st century is 0. Quite a bit less than the .5 degrees alarmists have been predicting.

  169. Most conventional wells being drilled in Alberta today are coming on at 300+ bbls/day and settling in a month or 2 later to consistently produce 100 – 200 bbls/day for the rest of their life-span.

    Not physically possible. All wells follow a skewed bell curve. The downside after peaking steadily drops off. Wells do not flow at a fixed rate and then suddenly stop.

    In effect, the new technologies of horizontal drilling and multi-stage fracing are resulting in a 5 – 10-fold increase in individual well production. This is being accomplished in old, once thought to be played-out fields.

    Post a link of such cases. Seems Alberta has what no one in the world with dying fields has and would love to have. Extracting oil from a deposit too fast destroys the deposit (I’ll let you find out why) and you ultimately get less from a field than if you have extracted the oil slower.

  170. John Bronson says:
    January 6, 2012 at 12:44 pm
    jrwakefield wrote:

    “You are making the mistake of thinking that peak oil is geological peak. It’s not. It’s about flow rates. Doesn’t matter what’s in the ground, it’s how fast it can be extracted to meet demand.”

    “Geological peak” is what most peakers claim.

    Then you are reading the non-experts on the subject. Peak oil has always been about flow rates.

    Of course you can make up your own arguments. What’s often quoted as recoverable reserves is 1.2 trillion barrels, or 40 years supply. “Recoverable reserves” are only a small percentage of total oil in place. As new reserves are discovered, and as new technology is developed, recoverable reserve numbers grow.

    Discoveries peaked in the 1980’s

    You can go back and look at EIA data 20 years ago, and see that the US had the same 20 million barrels of reserves then. Without “reserve growth”, that oil would have all been used up by now several times over. What is the total amount of oil in place? A recent Scientific American article estimated 12 trillion barrels. As long as there is sufficient “oil in place”, flow rates can be maintained by simply drilling more wells. Or in the case of heavy oil, applying more equipment and labor to the operation.

    This shows you don’t understand oil recovery. Adding more wells DOES NOT mean more oil extracted. In fact, adding more wells destroys a field. One only has to look at what happened in Texas in the 1960’s.

    Ghawar is drilling more periphery wells to inject sea water to keep the pressure up (absoutely essential), yet their water cut is growing, less oil per well, less oil over all. Fact is fields go into depletion, reduced flow rates. Oil in place is irrelevant.

    There are currently vehicles on the market (and many on the road already), that get 70 cents/gallon equivalent running on CNG or electricity. Oil will be substituted long before it “runs out”.

    You’re still not getting it. It’s not about running out. It’s about loss of flow vs demand. Soon as demand exceeds supply someone does without the oil they need. That drives up the price and causes recessions.

    BTW, electric cars are going to be failures. It’s now being found out they do not produce the range they claimed the vehicles should have. Batteries cost a fortune to replace and have short lives (plus it just puts the fossil fuel consumption somewhere else, mining the metals, creating the power). They will be a grand failure in places like Canada with our winters.

  171. @jrwakefield

    Hirsch is as expert as it gets. Perhaps your speakers don’t work, and you missed the part where he says peak oil is a geological problem.

    Demand is not exceeding supply. If it were, there would be shortages. Not only are there no shortages, but there are billions of barrels of oil in storage.

    Europe has paid much higher fuel prices than the US without causing recessions. The last recession in the US was caused by the failure of the sub-prime mortgage market, not peak oil.

    With regards to EVs, perhaps you should have shared your brilliant insight with the car manufacturers before they dumped billions of dollars into the technology. You obviously know more than them, lol. In reality, Lithium batteries last for several thousand cycles. This has been proven with actual use.

    EVs and othe alternatives are a big problem for doomers. So according to doomers, they don’t work. Peak oil, (like global warming) is goal oriented. With the goal being the end of the world, unless everyone does what the doomers (lefties) say. Cars represent individual freedom of mobility. Lefties want only public transportation that can be centrally controlled. This is one of the major planks of socialism.

    • John Bronson says:
      January 6, 2012 at 5:08 pm

      @jrwakefield

      “With regards to EVs, perhaps you should have shared your brilliant insight with the car manufacturers before they dumped billions of dollars into the technology. You obviously know more than them, lol. In reality, Lithium batteries last for several thousand cycles. This has been proven with actual use.
      EVs and othe alternatives are a big problem for doomers. So according to doomers, they don’t work. Peak oil, (like global warming) is goal oriented. With the goal being the end of the world, unless everyone does what the doomers (lefties) say. Cars represent individual freedom of mobility. Lefties want only public transportation that can be centrally controlled. This is one of the major planks of socialism.”

      John,
      May I have your special kind attention?
      Have you ever been in Moscow? Or a city like that? In greater cities we have the problem of real real real air pollution. In many points of such cities there are electronic bill boards showing the pollutions of CO2, SO2, CO etc. In many days, the view is too short, things are invisible the weather is dark grey, you cannot even breathe. What should you do for millions of people living in such city. Am I a doomer? Are these people all doomers? OKAY! Forget about EVs. What do you suggest?
      Let me explain you more, it doesn’t mean I want to say I know something, not at all, really I want to know better, please:
      In greater cities, Metro/Underground is working well, no way out.
      The system is quite different from what we see in North America, except some cities.
      Should we let the people go down in Metro, and travel with diesel powered engines locomotives?
      The space above the cities is the same as this example. They say there were mistakes about global warming because the weather temperature were extracted from instruments located inside the cities and those measured temperatures were obviously above the reality because of certain correct matters (no need to talk about it here). Do you believe in the so called cities, air pollution is correct or not, for the temperature hopefully you agree with it. Is it right?
      Somebody has come and given a proposal to the people, as EV. What do you put on the table as your own proposal? What is your idea? The people are dying John. I am not talking about the whatever gas is good/bad. You may say nothing found so far, as evidence that the GASs X,Y or Z is the reason for the death of the people. There are records, showing in some days, more than 310 individuals are dying due to air pollution. If the GAS is good or at least neutral to human beings, why we use electric powered locomotives in Metro/Underground?
      I would be very much appreciated to have your good comments.

  172. I wonder. Does a day go by when an Ontarioian doesn’t try to impress an Albertan with his vast knowledge of our oil industry? I’m sure Texans feel the same way about “information” offered by New Yorkers.

    I’m sure Mr. Wakefield is just as capable of typing “Cardium, Viking or Montney” into the Google search as the next person so I’m not going to put a whole lot of effort into troll-satisfying but just to prove that he has no knowledge of what he blathers…

    http://www.slideshare.net/fullscreen/NALenergy/corporate-presentation-november20114/3 (see pages 14,18)

    http://www.andersonenergy.ca/pdfs/2011/AXLPR111026.pdf

    http://www.delphienergy.ca/PDF/news_releases/2011/DEE-2011-12-22.pdf

    http://www.petrobakken.com/wp-content/uploads/2011/12/PBN-2011-12-14-corp-pres.pdf (See page 20 for flow results).

  173. Poptech – I thought the reference to RealClimate made it obvious. The point is that a consensus or an argument from authority can be wrong and has to be checked against the evidence. That is what WUWT has been all about.

    John Bronson – Yes, peak oil may turn out to be a non-issue, but a peak nonetheless. Yes, oil will surely be substituted long before it “runs out”. As I said, “Maybe Peak Oil will come not with a bang but with a whimper”.

    Alan Clark of Dirty Oil-berta – I was pencilling in Alberta for about 3m bpd, about in line with your numbers. I don’t think the techniques making a big difference in Alberta can or will necessarily be applied successfully everywhere else. Oilfields vary a lot.

    What I think is happening is a combination of various factors.
    1. A fairly high proportion (probably over half[*]) of major oil producers are in decline. Technological advances may slow the decline, may even increase production here and there for a while, but decline they will.
    2. Not all oil-producing countries will produce as much as they can, preferring to keep a supply for later on. Not all producing countries will be politically stable and cooperative, thus their producing capability may be reduced.
    3. With the high oil price of the last few years, the search for alternatives has intensified, as has the push for greater efficiencies. There has always been the argument that technological advances can increase oil reserves and production, but the other side of the coin is that technological advances can also reduce demand.
    4. Fossil fuel has come under intense attack from greenies, leveraging off the “global warming” fraud. This has increased the political risk of investing in oil production.

    The result is a limit on oil production, as evidenced by the high oil price of recent years. Some of the investment amounts required to increase oil production in some places are eye-watering. Maybe the money will be made available in future, as it always has in the past, but the increased political risk makes it just a bit less likely.

    It’s always dangerous to make predictions, but the scenario I envisage is one of highly variable oil prices as news and sentiment fluctuates, a gradual reduction in the proportion of world energy supplied by oil, and the realisation in years to come that the golden age of oil ended in the first decade or so of the 21st century.

    [*] Producers in decline. It’s not possible to know for sure, of course, but given that world production has flat-lined for 5 or 6 years while the oil price has increased rapidly, it might be reasonable to suppose that a country that hasn’t increased production since 2005 is likely to be in decline. Those countries, the year of their maximum production, and their proportion of world production in 2010 are:
    Russian Federation 1987 12.5%
    Saudi Arabia 2005 12.2%
    US 1970 9.2%
    Mexico 2004 3.6%
    Kuwait 1972 3.1%
    Nigeria 2005 2.9%
    Norway 2001 2.6%
    United Kingdom 1999 1.6%
    Indonesia 1977 1.2%
    Oman 2001 1.1%
    Colombia 1999 1.0%
    Countries under 1% 7.4%

    Total so far 58.3%

    Iran 1974 5.2%
    Venezuela 1970 3.0%
    Iraq 1979 3.0%
    Libya 1970 2.0%

    Total 71.5%

    I have separated the last four, because they may be in the table for political reasons. Maybe Nigeria should be separated too.

    You can see that Saudi Arabia, and whether it is in decline, is an important factor. That’s why their production over the next few years will be so interesting.

  174. The following article has some excellent information regarding the issue of prices (including in inflation adjusted $$ over many decades) and various political situations associated with both prices and production. I think anyone reading here would be interested in the info: http://www.wtrg.com/prices.htm It also seems pretty likely to me that production issues are far more tied to political circumstances than actual technical production abilities…

    Also note that frankly I’ve primarily seen ‘peak oil’ discussed as a technological issue that does NOT include political machinations… once the latter is thrown in, the term effectively looses all meaning, because politics of various countries is so changeable and dependent on circumstances, not ability. Look at the current USA situation – there is an effective partial moratorium on deep sea production being imposed by the Obama administration (leasing, permitting, etc., is all drastically down since the BP spill), drilling off the eastern sea board and most of the western sea board is all off limits again due to government regulations… toss much of Alaska into that category. Much of the oil available from shale deposits is under federally controlled lands that are also off limits.

    Meanwhile, the USA just became a net EXPORTER of petroleum products recently – for the first time since the 1940’s. http://online.wsj.com/article/SB10001424052970203441704577068670488306242.html and http://hotair.com/greenroom/archives/2011/12/19/how-we-became-a-net-petroleum-exporter-again/

  175. This chart is also useful, showing historical oil production by region from 1965 to 2008 – and it certainly seems to show that when one region significantly drops in production, others step in to fill the void… http://chartsbin.com/view/wyw

  176. Poptech, thank you for posting the reminder about the impact of Nixon/Carter price controls – I had incorrectly laid the blame almost entirely on OPEC – I stand corrected and much appreciate the reminder/refresher on the issue. I’d learned that long ago, and am ashamed to have forgotten it/misplaced the blame again over the years.

  177. jrwakefield says, “Poptech, I fully agree that as long as money is to be made, negative ERoEI will be ignored. That can last a long time. However, it will come to an end. Eventually the net energy returned will turn on economics (one can argue that one such event was 2008). The second law of theromdynamics rules supreme. A few people make money while the rest of the society get’s starved for energy.

    It is not that it is ignored, it is that it is irrelevant. Energy sources such as oil are invaluable as transportation fuels thus their high demand due to no economically viable alternatives means sacrificing EROEI using other forms of cheaper energy (natural gas, nuclear ect…) to extract it is acceptable.

    As the price of one form of energy increases, that creates a market incentive to locate more or find an alternative. No one gets “starved” of energy. The only way that happens is through government intervention in the economy.

    The 2007-2008 oil price shock was due to inflation caused by government monetary policy. The CPI does not reflect true inflation because it does not include food and energy prices. Food and Energy are the first places inflation shows up and the economically illiterate politicians blame it on “price gouging” or “speculators” or some other nonsense, anything but the real cause,

    The Oil-Price Bubble (Frank Shostak, Ph.D. Economics, June 2, 2008)

    “We suggest that there is a high likelihood that the massive increase in the price of oil is the manifestation of a severe misallocation of resources. The loose monetary policy of the Fed from January 2001 to June 2004 is the likely key factor behind this misallocation. (The federal funds rate was lowered from 6% to 1%.) The tighter Fed stance from June 2004 to September 2007 should undermine the existence of various nonproductive activities and in turn reduce upward pressures on the price of oil.

    Regrettably, the loose monetary stance that the Fed has adopted since September of last year, coupled with still very buoyant Chinese economic activity, is likely to counter any downward pressure on the price of oil. The Fed’s current policy of fighting an emerging economic slump is, in fact, a policy of deepening the misallocation of resources, thereby promoting higher prices for oil. If our thesis regarding the oil market bubble is valid, then it is the Fed’s policies that must be blamed for the erosion in consumers’ living standards and not the rising price of oil.”

  178. jrwakefield, “False. You are making the mistake of thinking that peak oil is geological peak. It’s not. It’s about flow rates. Doesn’t matter what’s in the ground, it’s how fast it can be extracted to meet demand.

    Yes I have heard all this nonsense before. Flow rates cannot be a measurement of “peak oil” because they are artificially restrained by governments. Price controls, taxes, subsidies, environmental regulations, land use restrictions, inefficient state run oil companies ect… all artificially restrict flow rates.

    Peak oil is ANY reason that curtails flow rates,

    According to your logic if Saudi Arabia bans oil production tomorrow even though it has massively huge reserves still in the ground that means peak oil is reached!

    …including producing countries consuming more of their own oil, and exporting less. It also includes when one country goes around the world making contracts to supply them with oil. That’s what China is doing, which takes less exportable oil off future markets.

    Contracts are normal part of a market economy. Just because one country intelligently and successfully makes various contracts is meaningless. All this will do is have an affect on the price of the remaining available supplies of oil. If the price rises enough the intelligent countries who made short term contracts will sell to the highest bidder not just China. A higher price spurs exploration or new reserves and development of existing ones. If the price gets high enough the next most viable source of energy gets used. This is all basic economics.

  179. Yes I have heard all this nonsense before. Flow rates cannot be a measurement of “peak oil” because they are artificially restrained by governments. Price controls, taxes, subsidies, environmental regulations, land use restrictions, inefficient state run oil companies ect… all artificially restrict flow rates.

    “Peak oil is ANY reason that curtails flow rates,”

    According to your logic if Saudi Arabia bans oil production tomorrow even though it has massively huge reserves still in the ground that means peak oil is reached!

    You are finally understanding :-) That is quite correct. You need to move out of the “whats in the ground” and look at what is AVAILABLE to the market. Indeed if SA were to shut in all their oil for export it indeed would reduce flow rates on the world, and someone would do without the oil they need. Agree or not, peak oil has ALWAYS been about flow rates.

    As for China, every drop of future oil they secure for themselves is a drop that is not exported to countries who need it. Take a simple example. You need a loaf of bread every day to feed your family. But your neighbour secures bread for the next twenty years from that bakery, all of it. You then can’t get any more when your contract runs out. Now you starve. Why? Because there isn’t enough supply of bread to keep up with growing demand. Someone does without, you.

    Peak oil is like musical chairs with a twist. Not only is a chair removed at the end of a song (depletion of oil), but a dancer is added to the floor. More people chasing deminishing resourses.

    It is clear from your posts you do not understand the mechanisms of oil supply and the crutial roll it plays. You are too fixated on what’s in the ground. And oil fields do deplete, regardless of what’s thrown at them. The list of dying fields is long. Mexico’s Cantarell peaked some 15 years ago at 2.3mb/day. Today it’s only 450km/day. There is nothing they can do to stop that. The US peaked in 1974 declining since. There is nothing they can do to stop that.

    I guess you will have to find out the hard way.

  180. It is not that it is ignored, it is that it is irrelevant. Energy sources such as oil are invaluable as transportation fuels thus their high demand due to no economically viable alternatives means sacrificing EROEI using other forms of cheaper energy (natural gas, nuclear ect…) to extract it is acceptable.

    Maybe acceptable, but thermodyanmically it’s suicide.

    Governments do not set the price of oil, markets do. Oil production in 2005 was the same as 2008, yet demand was still increasing. That’s why the price went up. Now the question is, why didn’t production increase? It couldn’t, production was a full maximum in 2008, there was no spare capacity. Thus the rate of flow was LESS than the demand. People did without the oil they needed. Who? Everyone who went to the gas station to fill up and found they could not afford to fill their tank. They drove less. I know this for a fact, because that’s what happened to me and just about everyone I knew. We just stayed home more.

  181. Hirsch is as expert as it gets. Perhaps your speakers don’t work, and you missed the part where he says peak oil is a geological problem.

    Hubbart was about as expert as it gets, he said it was flow rates.

    Demand is not exceeding supply. If it were, there would be shortages. Not only are there no shortages, but there are billions of barrels of oil in storage.

    It did between 2005 and 2008. Supply was flat, demand kept increasing, price spiked and popped the subprime bubble.

    Stratigic reserves are kept for emergencies, and if I recall during 2008 the US did open up some of it’s 15bb of strategic reserves. BTW, that 15bb is less than 2 years of US consumption. All US producers are required by law to set aside 15% of their production to fill the SR, or pay equal amount in money. That oil is kept in old salt mines.

    With regards to EVs, perhaps you should have shared your brilliant insight with the car manufacturers before they dumped billions of dollars into the technology. You obviously know more than them, lol. In reality, Lithium batteries last for several thousand cycles. This has been proven with actual use.

    Yet we have a post here at WUWT of someone sueing because their batter life isn’t what was claimed. Fact is, up here we need more lights on, snow to get through, and heating of vehicles. No way a EV will do as well up here.

    EVs and othe alternatives are a big problem for doomers. So according to doomers, they don’t work. Peak oil, (like global warming) is goal oriented. With the goal being the end of the world, unless everyone does what the doomers (lefties) say. Cars represent individual freedom of mobility. Lefties want only public transportation that can be centrally controlled. This is one of the major planks of socialism.

    I’m no socialist, quite conservative. For Ontario to go all EV we would have to build at least a dozen more nuke reactors.

  182. As far as I can tell, the exhaustion of *cheap* carbon power is an eventual certainty. It is being extracted at a rate that exceeds any believable rate of abiotic or biotic production. The chart shown in figure 7 does seem to confirm that we are on a declining trend for traditional petroleum production and any increases in production are now the result of exploiting oil from previously ignored, extraction resistant sources that will cost ever more to produce. The question on depletion of the Earth’s economically recoverable sources of carbon power does not appear to be whether it will happen but of when it will happen.

    I believe the primary message here is that we should be thinking about the post carbon future. Once that energy is exhausted, there remain two basic options for an energy source: solar-renewable and nuclear.

    Many seem to believe that solar-renewable or naturally renewable power is the only ‘good’ source of energy for man. It may also turn out that there is no sustainable or practical method for the generation of artificial power on a scale equivalent to carbon power as we know it. I believe that anyone content to rely on natural or green power for the future should also be content with the knowledge that they may only have a ten to twenty percent chance of having any descendents after that change is effected. I base this latter estimate on the understanding that a nineteenth century population is the only reference we have for a world supported primarily by green energy. Modern technology might improve that a little, but I doubt that would be enough to support our current population. My *guess* is that each person on Earth would require something like an acre of solar energy collectors to support their existence. A rice plant qualifies as a solar energy collector.

    Nuclear power, as we know it is based on the fact that free neutrons may be captured by any atomic nucleus. As a neutron has no electric charge, there is no repulsive force to block its attachment. If the neutron-augmented nucleus is stable, then nothing more happens except for a minor change in physical properties, but if the result is unstable, the stage is set for one or more forms of radio-active decay—the most common being beta-decay in which the nucleus expels an electron transforming the extra neutron into a proton and thus advancing the nucleus one step higher in the periodic table of elements.

    For transuranic (uranium and bryond) element isotopes (same element but differing numbers of neutrons) this resulting nucleus may be so unstable that it breaks in two, releasing a large amount of energy and more free neutrons that can disrupt other nuclei. Fissile isotopes tend to be rare because they are naturally unstable and have largely decayed over the lifetime of the Earth. Objections to this method of energy generation center around the relative scarcity of naturally fissile isotopes, the creation of dangerous, neutron contaminated radioactive waste, including the generation of long-lived plutonium isotopes, and the inherent risk of explosion with the high-pressure, superheated thermal exchange fluid (water).

    Breeder reactors operate on the principle that a neutron capture can cause a more plentiful, fertile non-fissile isotope to undergo radioactive decay which eventually transforms it into a fissile nucleus. If that nucleus creates more than two free neutrons on fission, it can support fission of like nuclei and the ‘breeding’ of more fissile nuclei. The standard process involves the conversion of non-fissile uranium, U-238 to U-239 by the added neutron. U-239 then becomes fissile plutonium, Pu-239 by beta decay. In what may have been one of the great miscarriages of science in the twentieth century, the Nixon administration was persuaded to push the development of this technology to the exclusion of any other option. After spending more than five billion dollars on the Liquid Metal (sodium) Fast Breeder Reactor (LMFBR) project, concerns were raised about the weapons grade plutonium produced and potential environmental contamination and thus, President Carter, a solar energy proponent, cancelled the project. Bill Gates is recently reported to be working with China on a novel concept to exploit this breeding cycle.

    Another possible breeding process involves plentiful thorium, Th-232 converted to Th-233 by neutron capture, which, in a two-step process, decays into protactinium, Pa-233 and then into fissile uranium, U-233. This cycle seems best likely to be exploited by the fluid-state, Liquid Fluoride Thorium Reactor (LFTR) concept, which allows continuous processing of the fissile and pre-fissile components, but its minimal development was throttled down, after promising initial tests do to an apparent administration policy to concentrate on the LMFBR project which the government then believed to be the sure ticket to energy independence. The thorium cycle does have the advantage of stopping one place lower on the periodic table and it is not as conducive to the generation of weapons grade fissile materials. The continuous reaction process tends to consume almost all of the dangerous transuranic wastes that current reactors leave behind. The remaining wastes are short-lived and not considered a long-term problem. There do remain a number of materials design issues to be resolved as a complete unit was never constructed and tested. As the system operates at ambient pressure, it is thought that these units would be much safer and smaller than current reactors because no expensive high-pressure containment vessels would be required.

    Nuclear Fusion, the power that drives the sun, has been a dream for the last sixty years. So far, it has stubbornly resisted the efforts of our best minds. Unlike neutron-induced fission, fusion requires two strongly repulsive positively charged nuclei to collide. This requires a combination of high temperature, to get the nuclei moving fast enough to overcome the repulsion, and high pressure, to cause a sufficient collision rate, which has not yet been obtainable on Earth. The primary advantages of this method are a higher potential energy yield than fission and minimal production of radioactive wastes.

    • Who has any idea about energy sources, please step forward and put the required money on this table of energy.
      Spector,
      As I understand from your comment, man should not stay quiet until the TODAY energy comes to him and say IT IS FINISHED. Pilot projects are for this important matter.
      Other energy sources, now are BABY ENERGIES, they must study and grow up, here we may have Hitlers, Pastors, Nobel prize winners in medicine, in economy, in whatever:
      – atomic energy: we have many concerns,
      – Fossil Based Fuels: we have concerns of its sustainability, global warming(don’t worry about listing this one),
      – Hybrid: Limited, leave it for doomers,
      – Solar: long way to go, no just for traffic lights,
      – Hydro: Fish concerns,
      – Windmills: Birds, not efficient for large scales,
      – LPP: http://www.lawrencevilleplasmaphysics.com/
      -Please add one: and say what is your concern,

  183. jrwakefield wrote:

    “Hubbart was about as expert as it gets, he said it was flow rates.”

    Hubbert was wrong. You can see his prediction for world peak here:

    http://www.oilcrisis.com/hubbert/natgeog.htm

    He was wrong because he didn’t consider deep water, or heavy oil production.

    “Yet we have a post here at WUWT of someone sueing because their batter life isn’t what was claimed.”

    In the world of marketing, very little is as good as claimed. However, Lithium batteries are light years ahead of the Nickel batteries used in the Honda.

    “For Ontario to go all EV we would have to build at least a dozen more nuke reactors.”

    You obviously don’t understand power plant operations, or electrical demand load curves. There is enough spare capacity at night to charge 80% of the auto fleet with existing power plants. With regards to colder climates, most of the worlds population live in warmer climates. So what may not work well in Siberia, Alaska, Antarctica, Canada, etc., is really not that relevant.

  184. Spector wrote:

    “My *guess* is that each person on Earth would require something like an acre of solar energy collectors to support their existence. A rice plant qualifies as a solar energy collector.”

    1 acre for vegitarians, 2 acres for meat eaters, 1 acre fro 10,000 miles on corn ethanol, 1/44th an acre of PV for 10,000 miles in an EV.

  185. “For Ontario to go all EV we would have to build at least a dozen more nuke reactors.”

    You obviously don’t understand power plant operations, or electrical demand load curves. There is enough spare capacity at night to charge 80% of the auto fleet with existing power plants. With regards to colder climates, most of the worlds population live in warmer climates. So what may not work well in Siberia, Alaska, Antarctica, Canada, etc., is really not that relevant.

    That didn’t come from me, it was from a study done by experts here in Ontario. Again the problem here is our nights in winter are long, starting around 5pm. People will be coming home from work and plugging their cars in right at the hieght of demand time. During the summer people will also be plugging them in at work charging during the highest demand times.

  186. @ACCKKII

    There is technology to mitigate pollution from coal plants, etc. It’s up to the people living in those cities to take action on their own behalf.

    • John Bronson says:
      January 7, 2012 at 1:32 pm

      @ACCKKII

      “There is technology to mitigate pollution from coal plants, etc. It’s up to the people living in those cities to take action on their own behalf.”

      This is not my right expected reply from John Bronson. Coal Plants in Centre of the Cities Like Moscow! Bangkok! Cairo! Almost all Asian greater Cities! New York! We are talking about transportation system of the cities.

      My view if you like:
      there is nothing to do except you change the fuel from petrol to Gas Liquid, EV, Motor Cycles and even in some parts of the cities the Bicycles ONLY. This is what is happening right now except removing PETROL and substituting EV.
      This would not affect your ideas, air pollution management and traffic are sister and brother. In Undergrounds you so the same work, let the CO2 get out of the tunnels and stations, and make the air clean inside underground, you manage your case here same should be done on the streets of the cities. Okay I expect you are a democrat gentleman, that leaves the work of the people to be solved by the people, now if I am the people, do you mind what I do? Then don’t you have any objection or criticize about what I do for EV? I did it John.

  187. jrwakefield wrote:

    “Again the problem here is our nights in winter are long, starting around 5pm. People will be coming home from work and plugging their cars in right at the hieght of demand time. During the summer people will also be plugging them in at work charging during the highest demand times.”

    Most people (Ontarians included) work during the day, and sleep at night. Peak demand is during the daytime when stores and other businesses are open. There is a spike when people come home from work, but there is very low demand (50%) after 11:00 pm, when most people are sleeping. The ideal time to plug-in is before you go to sleep. Electric companies that promote EVs offer discounted rates for off-peak charging. Unless you work more than 50 miles from where you live, there’s no need to plug-in at work.

  188. Rational Debate – Fair point re Russian Federation. BP data for Russian Federation is “n/a” until data starts in 1985, peaks in 1987 at 11484, drops to 6114 in 1996, and is now on the increase again at 10270 in 2010. Your article shows 10270 for 2011 but maybe that’s just a typo. Putin calls for 10000+ for a decade, so it will be interesting to see whether they can get up past the old mark. IEA (2010) does not see Russia with increased production by 2035 because Russia is not in the “More oil from fewer producers” table. Maybe Russia really has peaked. In any case obviously some of its production history did relate to politics, but politics is part of the equation, not outside.

    I’m temporarily (I hope) short of time, but will get back to various other points raised here as soon as I can.

  189. @ACCKKII

    EVs are a no brainer, IMO. The motors are upwards of 95% efficient. Plus, much of the energy from the forward motion of the vehicle, can be captured with regenerative braking. Contrast that with the internal combustion engine which is only 20% efficient, and no regenerative braking. Even if we continue to use oil as an energy source, it would be much more efficient to burn the oil in a powerplant, and use the energy to charge EVs.

    • John Bronson says:
      January 7, 2012 at 3:40 pm

      @ACCKKII

      “EVs are a no brainer, IMO. The motors are upwards of 95% efficient. Plus, much of the energy from the forward motion of the vehicle, can be captured with regenerative braking. Contrast that with the internal combustion engine which is only 20% efficient, and no regenerative braking. Even if we continue to use oil as an energy source, it would be much more efficient to burn the oil in a powerplant, and use the energy to charge EVs.”

      Efficiency and all comparing instruments would show “fossil based fuels” (FBF)
      would be the best at least for the near future. Comparing a well equipped system of combustion engine with EV would be of course good, but not to stop the progressive studies on EVs just to understand where we are. Always COMPARISONS are our motivation to go on and on. In practice my problem is air pollution but where? In the greater cities. As I said before, this is not because of FBF is not my favorite energy source, but it is because where and how can we take care and avoid the side effects of FBF. EVs as you said somehow are efficient as an engine but more efficient as a friendly healthy system to us, which we should prefer it without any hesitation and delay. As a matter of fact, regarding the production capacities of EVs even if everything is prepared for a move and change to it, then our first priorities would be the greater cities where we need EVs more. The reason is this change cannot happen at once. In metros and undergrounds we have the same conditions no way out.
      Evs would have better future, every step forward would make it more feasible. Any system that its starting point is FBF would be successful. This is not ethanol or whatever. EV is an end user site in continuation of energy convergence at still fossil based fuel power plants. We have all distribution network more efficient than the existing fuel preparations at stations. We have a home delivery fuel.

    • John Bronson says:
      “Even if we continue to use oil as an energy source, it would be much more efficient to burn the oil in a power plant, and use the energy to charge EVs.”

      Same as Metros/Underground railways, which are powered by power plants. This has been my view. I don’t have any idea about “regenerative brake” if your point is not “self induction”.

  190. jrwakefield, “It was caused because for the first time in history the US no longer produced enough of its own oil to meet demand. It was the year the US had to import oil for the first time. It was the year the US started to drop in oil production.

    That is not why gasoline prices went up and not why there was an energy crisis. Globalization actually reduces price shocks because it provides a country many more sources to obtain energy from. If our production is reduced, it is picked up by other countries. The market signal to do this is a higher price of oil. U.S. production was not sold only to the U.S. but to anyone who wanted to buy it. Governments are the only thing that can prevent market adjustments of commodities. During the 70s there was plenty of oil available in the worldwide market but economically illiterate price controls caused U.S. shortages,

    Time to Lay the 1973 Oil Embargo to Rest (Cato Institute, October 17, 2003)

    “It’s time that we exorcised the ghosts of 1973 once and for all. The embargo was a non-event. The production cutbacks were trivial. The wrong lessons were learned. In short, everything we think we know about the events triggered 30 years ago today is wrong.

    Let’s start with the embargo. Most people believe that it was directly responsible for long gasoline lines and for service stations running dry. The shortages were, in fact, a byproduct of price controls imposed by President Nixon in August 1971, which prevented oil companies from passing on the full cost of imported crude oil to consumers at the pump (small oil companies, however, were exempted from the price control regime in 1973). In the face of increasing world oil prices, “Big Oil” did the only sensible thing: It cut back on imports and stopped selling oil to independent service stations to keep its own franchisees supplied. By May of 1973 (five months before the embargo), 1,000 service stations had shut down for lack of fuel and many others had substantially curtailed operations. By June, companies in many parts of the country began limiting the amount of gasoline motorists could purchase per stop.

    In response, Congress passed the Emergency Petroleum Allocation Act about a month before the embargo, which made matters worse. The Act mandated that supply reductions had to be shared equally between independent and branded gasoline stations. It also put a small percentage of gasoline going to each state under the governors’ control, which they then could then allocate as they wished if shortages occurred. And occur they did, largely because of the withdrawal of supplies from the market necessary to put together the governors’ set aside.

    Did the subsequent embargo stoke the crisis further? No — it was an economically meaningless gesture. That’s because the embargo had no effect on imports. Once oil is in a tanker, neither Petroleum Exporting Countries nor OPEC nor Knick-Knack-Paddywack can control where it goes. Oil that was exported to Europe during the embargo was simply resold to the United States or ended up displacing non-OPEC oil that was diverted to the U.S. market. Supply routes were shuffled but import volumes remained steady.

    Saudi oil minister Sheik Yamani conceded afterwards that the 1973 embargo “did not imply that we could reduce imports to the United States … the world is really just one market. So the embargo was more symbolic than anything else.” It took a while, however, for Americans to figure this out. In his memoirs, then Secretary of State Henry Kissinger wrote that, looking back, “the structure of the oil market was so little understood that the embargo became the principle focus of concern. Lifting it turned almost into an obsession for the next five months. In fact, the Arab embargo was a symbolic gesture of limited practical importance.”

  191. Rational Debate, “By the way, Mike, you’re showing Russia as peak production in 87, but apparently they’ve reached a post Soviet Union high this year

    Excellent research! This just shows peak oil theorist cannot do basic research and should not be taken seriously as they do not understand basic economics,

    Russian Crude Oil Production Rose to Post-Soviet High in 2011 (Bloomberg, January 2, 2012)

    I love how all peak oil theorists foolishly try to make meaningful conclusions from nationalized oil companies under socialized governments.

  192. This is all anyone needs to know about your “argument” – According to your logic if Saudi Arabia bans oil production tomorrow even though it has massively huge reserves still in the ground that means peak oil is reached!

    jrwakefield, “You are finally understanding :-) That is quite correct. You need to move out of the “whats in the ground” and look at what is AVAILABLE to the market. Indeed if SA were to shut in all their oil for export it indeed would reduce flow rates on the world, and someone would do without the oil they need. Agree or not, peak oil has ALWAYS been about flow rates.

    That is the most ridiculous argument I have ever heard. All anyone cares about is what is in the ground. I am well aware that largest obstruction to oil production is government.

    The solution to your “peak oil” nonsense is simple,

    1. Privatize all oil companies.
    2. Remove all price controls, taxes, regulations and subsidies on the oil industry.
    3. Remove all land use restrictions on the oil industry.

    None of which changes the fact that just about everyone believes “Peak Oil” to be a geologic peak.

    As for China, every drop of future oil they secure for themselves is a drop that is not exported to countries who need it.

    China can only secure oil reserves in two ways,

    1. Negotiate for it or,
    2. Take it by military force.

    So long as they are doing it via negotiation any other country/company can bid for these as well. Any change in the available supply of oil to other countries because of this will be reflected in the market price of oil. A higher price simply signals to producers the need to produce more. If the market price gets above other sources of crude (heavy oil, tar sands, shale) then that gets used. If the price gets above other forms of energy that can be used for transportation fuel (natural gas, CTL) then that gets used.

    There are enormous known quantities of these,

    6 Trillion barrels of oil are estimated in the U.S. Oil-Shale Reserves (DOE)

    http://www.fossil.energy.gov/programs/reserves/npr/Oil_Shale_Resource_Fact_Sheet.pdf

    100 Billion barrels of heavy oil are estimated in the U.S. (DOE)

    http://www.fossil.energy.gov/programs/reserves/npr/Heavy_Oil_Fact_Sheet.pdf

    60 to 80 Billion barrels of oil are estimated in U.S. Tar Sands (DOE)

    http://www.fossil.energy.gov/programs/reserves/npr/Tar_Sands_Fact_Sheet.pdf

    Take a simple example. You need a loaf of bread every day to feed your family. But your neighbour secures bread for the next twenty years from that bakery, all of it. You then can’t get any more when your contract runs out. Now you starve. Why? Because there isn’t enough supply of bread to keep up with growing demand. Someone does without, you.

    That is a total economically illiterate fantasy. No baker would enter into any such contract unless the buyer was willing to pay some ridiculous price. If this did happen you simply get bread from another baker. If no other baker exists in your town, you get it from the next town and I guarantee you (baring government intervention) that a new baker will set up shop in your town to sell bread to everyone else.

    This is why a geological peak is the only valid argument. So long as oil exists in the ground, it is only a matter of cost to get it out (baring government intervention).

    Peak oil is like musical chairs with a twist. Not only is a chair removed at the end of a song (depletion of oil), but a dancer is added to the floor. More people chasing deminishing resourses.

    You have failed to make an argument for diminishing resources as you have failed to provide the total amount of oil the Earth contains nor how it is created.

    It is clear from your posts you do not understand the mechanisms of oil supply and the crutial roll it plays. You are too fixated on what’s in the ground.

    No I actually understand the economics of oil supply and why your arguments are meaningless. What is in the ground is the only valid argument in relation to “peak oil”. Production rates are misleading and wildly distorted by government intervention. They are not something valid future predictions of oil supply can be made on. They are used when peak oil theorists lose the argument and start grasping at straws.

  193. RE: ACCKKII: (January 7, 2012 at 12:22 pm)
    “Spector,
    “As I understand from your comment, man should not stay quiet until the TODAY energy comes to him and say IT IS FINISHED. Pilot projects are for this important matter.”

    Not quite, I think we should not wait until available carbon power has declined to the point where a population reducing energy famine sets in before looking for a long-term replacement.

    As I understand it, despite massive government subsidies and the purported danger of a global warming catastrophe, the so-called green energy sources have not been able to provide more than about one percent of our current power usage. Thus green energy might be able to supply a population reduced to something like ten percent of our current population with ten percent of the energy we now use. We do have the nineteenth century example of a population primarily supported by green energy.

    At this stage, no potential source of energy should be absolutely disallowed unless it can be shown that such source cannot be continued on a long-term basis without progressively reducing the habitability of the planet. So far, based on presentations by its advocates, the Liquid Fluoride Thorium Reactor seems to be the most likely option for a *total* carbon power replacement technology. According to a recent Kirk Sorensen Google Tech Talk video, it appears that a scientific decision during the Nixon Administration may have forced nuclear development down the wrong path to the exclusion of any other option. Based on his own words, it appears that the President may really have been convinced the LMFBR was the only way to go.

    REF: http://www.youtube.com/watch?v=bbyr7jZOllI

  194. spector wrote:

    “As I understand it, despite massive government subsidies and the purported danger of a global warming catastrophe, the so-called green energy sources have not been able to provide more than about one percent of our current power usage. Thus green energy might be able to supply a population reduced to something like ten percent of our current population with ten percent of the energy we now use. We do have the nineteenth century example of a population primarily supported by green energy.”

    According to this report:

    http://www.ren21.net/REN21Activities/Publications/GlobalStatusReport/GSR2011/tabid/56142/Default.aspx

    Renewables provided 16% of total energy, and 20% of electricity production in 2010. Of course the 2011 numbers will be higher because of the large growth rates.

    Also, comparing 19th century energy production technology to the 21st century is beyond absurd.

  195. Time for some clarification:

    I said in my original post that “I understand “Peak Oil” to mean the point in time after which global oil production does not materially increase.“.

    This is completely in line with the definition in Wikipedia, which it is reasonable to assume is the most generally accepted definition: “Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline.“.The “terminal decline” bit is a bit unnecessary, and it might be many years after the peak before the decline begins in earnest, but obviously it is eventually inevitable.

    There is a perception among some here that “Peak Oil” is an oh-my-gawd moment when oil production suddenly hits a brick wall and we all fall off a cliff (sorry about the mixed metaphors). Otherwise known as “Geological Peak Oil” (GPO), the point when the absolute geological limits of oil production is reached. Just as with the definition I use, it would be hard to know when you’re at GPO – there will never be a moment when every single oil deposit is being produced at the maximum possible rate, because there will always be some that are being held back by politics or conflict or accident, etc.

    What I have been trying to suggest is that Peak Oil won’t be like that. We might be there already, or nearly there, and it’s no big deal. Yes, oil prices will fluctuate quite a lot, but we’re fairly used to that. Yes, there will be scare stories in the media, and wildly optimistic ones too, but we’re fairly used to that too. But if we’re sensible there is no brick wall or cliff.

    Poptech – You say “According to your logic if Saudi Arabia bans oil production tomorrow even though it has massively huge reserves still in the ground that means peak oil is reached!“. Yes, that is correct, if other countries don’t or can’t in due course fill the gap, and if the Saudis don’t later on change their minds and bring world production back up above the old mark. That might seem to you to be unreasonable, but we don’t live on the amount that we could have if the Saudis produced more, we live on the amount we actually have.

    The situation at present appears to be that (a) more than half of the world’s oil producers have peaked or are near their peak, (b) compared with the past, a much larger proportion of oil reserves is now difficult to produce at high flow rates, and (c) the oil price has risen a lot in recent years, making alternatives more attractive. [Thanks, John Garrett, for the Boone Pickens quote “The solution to high prices is… high prices.”]

    A certain amount of faith in technology has been expressed, and it is certainly the case that in the past technology has kept finding ways of increasing oil reserves and production. It is absolutely possible that it can continue to do so, and there is more than enough oil in the ground for that. But technology advances in other ways too. It can make alternatives to oil more attractive. It can make our use of oil more efficient.

    As I said before, it’s dangerous to try to predict the future, but personally, I look forward to the day when electric vehicles (EVs) succeed. As with many new technologies, there are problems at present, often reported with schadenfreude, but technology does keep progressing and I think the EV will soon be viable for many. There are major advantages.
    • Our cities will be quieter and cleaner.
    • Our wind turbines and solar PVs will become more useful because instead of disrupting the grid for baseload they can be used, when available, to re-charge EV batteries.
    • We can generate electricity using whatever methods are best – coal, gas, nuclear, geothermal, etc – and we can even out demand by using some of it to re-charge EV batteries when other demand is low.
    • We will need a bit less oil, at a time that increases in oil production are becoming more expensive and difficult.
    Of course, in order to succeed, EV’s must compete successfully with alternatives, such as CNG (Compressed Natural Gas). There should be room for both.

  196. RE: John Bronson: (January 7, 2012 at 8:29 pm)
    “Renewables provided 16% of total energy, and 20% of electricity production in 2010. Of course the 2011 numbers will be higher because of the large growth rates.

    “Also, comparing 19th century energy production technology to the 21st century is beyond absurd.”

    The actual source quote was from about 9:50 minutes in a Kirk Sorensen presentation where he says that “We have been trying to put solar and wind on line for decades. It is still on the order of about one percent of total energy production in the United States.”

    Ref: http://www.youtube.com/watch?v=P9M__yYbsZ4

    If you take 16 percent of our current global population of eight billion, the result is 1.28 billion which corresponds to the global population around 1870.

  197. @Spector

    There’s more to renewable (green) energy than wind and solar. There’s also hydro, biomass, geothermal, and waste (garbage to energy etc), and some others. The latest EIA data for the first 9 months of 2011 quotes 82% fossil fuel, 9% renewable, and 8% nuclear in the US.

    http://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf

    The argument that current world population could not be supported without the use of fossil fuels is a weak one. For one thing, many heavily populated areas in Africa, India, and Asia are not large per capita users of fossil fuels. They rely on the ancient use of manual labor, and draft animals for production. And wood, and cow dung for fuel. It is the western countries that would suffer most from a reduction in fossil fuel production. A commonly reported fact is that the US has 5% of the world’s population, and uses 20% of the world’s oil. However, it is logical to assume that priority would be given to food production and distribution industries, if there were ever a shortage of energy supplies.

  198. RE: John Bronson: (January 8, 2012 at 12:11 am)
    “The argument that current world population could not be supported without the use of fossil fuels is a weak one. “

    That may be true; however, global human population has a true ‘hockey stick’ shape following the mass exploitation of coal and more particularly petroleum. A recent article here, ‘The Contribution of Fossil Fuels to (a) Feeding Humanity and (b) Habitat Conservation?’ by Indur M. Goklany expounded on this relationship. I believe that ‘fossil’ fuels have allowed the manufacture of fertilizers and the mechanization of agriculture, which have greatly augmented food production, and a forced return to more primitive agricultural methods as carbon power is exhausted would reduce human populations unless this loss can be made up by an alternative source of energy.

    http://wattsupwiththat.com/2011/12/11/the-contribution-of-fossil-fuels-to-a-feeding-humanity-and-b-habitat-conservation/#more-52842

  199. How many of the armchair experts that cite EIA energy stats have actually held up samples of crude oil from the Bakken shale to the light to compare it to traditional crude oils? Most crude oils are black as ink and with varying degrees of viscosity. And what does the Bakken crude look like? And why does it require minimal refining or none in the case of diesel engines with some filtering on the front end? And why are producers willing to ship it by rail while waiting for pipeline upgrades? One other point, the Bakken extends well into Canada from ND and MT. Have you factored that into the relative importance of this methodically developed resource?

  200. Re: John Bronson
    You might want to go read the current media stories of the financial collapse and taxpayers losses incurred in Georgia by renewable energy fraud using pine trees for ethanol.

  201. RE: Mike Jonas: (January 7, 2012 at 9:55 pm )
    “We can generate electricity using whatever methods are best – coal, gas, nuclear, geothermal, etc – and we can even out demand by using some of it to re-charge EV batteries when other demand is low.

    On the other hand, with a new prolific, low-cost source of energy, we may be able to manufacture easily portable transportation fuels that are compatible with existing vehicles. This is probably the only solution practical for aircraft. While the purported ‘peak oil’ signals we are seeing now may not be signaling the beginning of the end, they do seem to be indicating the end of the beginning.

  202. John Bronson, “The argument that current world population could not be supported without the use of fossil fuels is a weak one. For one thing, many heavily populated areas in Africa, India, and Asia are not large per capita users of fossil fuels. They rely on the ancient use of manual labor, and draft animals for production. And wood, and cow dung for fuel.

    They also are much poorer and have lower life expectancies. Why would we want to makes our lives worse and de-industrialize?

    A commonly reported fact is that the US has 5% of the world’s population, and uses 20% of the world’s oil.

    The U.S. uses 25% of the world’s oil supply because it produces over 25% of the world’s economy (World Bank)

    http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf

  203. Poptech wrote:

    “Why would we want to makes our lives worse and de-industrialize?”

    I never suggested that. I was merely refuting the common doomer argument that population levels would collapse without the use of fossil fuels.

    Spector, I would give more credit to medical technology, vaccines, erradication of disease, etc., as the reason world population has increased so rapidly.

  204. Resourceguy wrote:

    “You might want to go read the current media stories of the financial collapse and taxpayers losses incurred in Georgia by renewable energy fraud using pine trees for ethanol.”

    There are millions of news stories, blog posts, etc. about how bad ethanol is, or that it doesn’t work, or that the industry has failed. I am more impressed with an industry that produces 12 billion gallons of fuel/yr, and has growth year over year, than I am with the various naysayers.

    There are many advantages to biofuel over fossil fuels. The production potential is larger. It only takes one growing season to produce (not millions of years). It’s cleaner, because it’s not mixed with toxic elements like mercury, and sulfer.

    Peak oil will be from demand not supply, because alternatives are cheaper, cleaner, and more abundant.

  205. RE: John Bronson: (January 8, 2012 at 12:30 pm)
    “Spector, I would give more credit to medical technology, vaccines, erradication of disease, etc., as the reason world population has increased so rapidly.”

    Perhaps, but that would presume that the death rate from these diseases increased dramatically with population density and would always defeat the high birth rates typical of underdeveloped nations. This concept might merit a scientific article entitled “Theory of Population Stabilization by Disease.”

    One would have to presume that the large quantities of cheaply produced food by a newly mechanized agriculture, and cheaply exported all over the world, played no role in the modern population increase. Of course, we might all be able to live on the starvation diet provided by green energy alone, but I doubt our current population would be sustainable under those conditions.

    The operational presumption here is a hypothetical future where only green renewable energy sources are allowed after carbon power has run out. I think such a restriction would be likely to cause a population reduction because I have found no evidence that this default energy source could be made to match the rate of energy use obtainable with carbon power. As general renewable energy now only represents about 16 percent of our current energy use, a worst-case assumption is that this restriction might cause an 84 percent population reduction. Reality would probably be somewhat less severe.

  206. RE: John Bronson: (January 7, 2012 at 8:29 pm )

    Thanks for providing the 16 percent contribution factor for general renewable energy. I do seem to have taken a statement meant to apply to what might be called the ‘designer’ renewable energy sources of wind and solar and made it more universal. While the proportionality of global population to global energy available may be controversial, sixteen percent of our current population does yield a value equivalent to that of a date late in the nineteenth century before any significant petroleum exploitation. In the absence of any official scientific estimate, I regard this as a good guess for a *worst-case* fallback population assuming that nuclear energy is not allowed.

  207. RE: John Bronson
    We will see what the Brazilian ethanol exporters have to say next. They have the absolute cost advantage and still have production subsidies and no special interest U.S. tariff to deal with now. It is also fitting that Bill Clinton’s former home state is taking one of the larger relative hits from overpriced feed inputs. But then again that is a minor historical footnote for a win-the-day lawyer politico.

    At least you got the peak oil from demand part right, but it will come from an impoverished nation with Greek-style debt load from special interest payoffs to ethanol and all manor of other payoffs from back in the day when we had the wealth to spread.

  208. Spector wrote:

    “While the proportionality of global population to global energy available may be controversial, sixteen percent of our current population does yield a value equivalent to that of a date late in the nineteenth century before any significant petroleum exploitation.”

    16% was the estimate for 2010. I suspect 2011, and every year after that the numbers will be higher, until fossil fuel use represents a small percentage of total energy used.

    With regards to the amount of renewable energy available, wiki quotes 3,850,000 EJ for solar, 2,250 EJ for wind, 3,000 EJ for biomass, and 487 EJ as the total amount of energy the world used in 2005. http://en.wikipedia.org/wiki/Solar_energy

    The only real issue are the costs, which have been declining, whilst fossil fuel prices have been increasing.

  209. Resource guy wrote:

    “At least you got the peak oil from demand part right, but it will come from an impoverished nation with Greek-style debt load from special interest payoffs to ethanol and all manor of other payoffs from back in the day when we had the wealth to spread.”

    According to Exxon, it will come from alternatives, and increased efficiency.

    http://www.reuters.com/article/2009/10/02/energy-exxon-demand-idUSN0182993220091002

    Exxon on Peak Oil:

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