Price-Driven US Energy Independence

Guest post by David Archibald

Mike Jonas’ recent post (http://wattsupwiththat.com/2012/01/03/peak-oil-the-rp-ratio-re-visited/#more-54146) has prompted me to revisit the subject of US energy independence. The best report on the subject of peak oil was produced by the Australian Government and then suppressed by the Australian Government. This is Report 117 written by Dr David Gargett of the Bureau of Infrastructure, Transport and Regional Economics. As I say in this post on Jo Nova’s site: http://joannenova.com.au/2011/12/inconvenient-energy-paper-vanishes-from-government-site/, it is the best report on peak oil I have seen. While Report 117 was issued with an ISBN number, it is only available from a French website: http://www.manicore.com/fichiers/Australian_Govt_Oil_supply_trends.pdf

Figure 13.9 from the report sums it up:

image

Figure 1: Figure 13.9 from Report 117, page 350

The red line is the discovery rate per annum from 1870. It peaked two generations ago in the early 1960s. The dark blue line is the production history of conventional oil to 2007. It peaked in 2005. The greenish line is predicted production, which is now in permanent decline for the balance of our lives.

The oil price is determined by the interplay of demand, supply and the demand-response to price. The demand-response to price is difficult to model, but it does set a trend.

image

Figure 2: Oil Intensity of the US Economy 1980 – 2020

Figure 2 shows the dramatic decline in the intensity of us of oil in the economy. Consider that the 1980 figure of 6.1 barrels of oil per thousand dollars of GPD would mean spending $612 at the current WTI price. In 2011, US households spent an average of more than $4,000 on gasoline. That represents about 8.4% of the median household income. At the 2011 oil intensity of 1.1 barrels per thousand dollars of GDP, the current oil price results in a similar percentage.

image

Figure 3: US Oil Consumption 1980 – 2020

As Figure 1 shows, world conventional oil production peaked in 2005, which is also the year that US oil consumption peaked at 20.9 million barrels per day. It then went sideways for a couple of years before starting a dramatic contraction at 1.1 million barrels/day/year. The demand reduction to date is 4.5 m BOPD from the peak. This is oil that the US used to import but is now available to other countries. If the demand reduction rate established over the last four years continues, US oil consumption will be down to the projected level of US oil production by the end of the decade. The US will then be in the very happy position of being energy independent.

The rate of US demand contraction of 1.1 million barrels/day/year is a bit more than the modelled rate of decline of World conventional oil production, requiring that a high proportion of World demand contraction due to price is in the US even as demand from some other countries rises as their economies grow. This is understandable given the different tax rates between countries. For example, Germans currently pay 1.58 Euros per litre for gasoline. That equates to $7.73 per gallon or $324 per barrel. Another $100 per barrel on the oil price will increase German gasoline prices by about one third.

image

Figure 4: US Oil Production and Imports 1949 – 2024

Figure 4 puts the projection in Figure 3 into the longer term context of US domestic conventional oil production and oil imports since 1949. The anticipated contribution from the Bakken Formation of North Dakota is also shown. Traditionally, oil and gas production has been from reservoir rocks such as sandstones and limestones that host oil and gas generated from a source rock and migrated from that source rock to the reservoir rock. New well completion technology and sustained higher oil prices now mean that production is economic from some source rocks that have high organic carbon contents. With respect to natural gas from shales, it is estimated that 400 TCF of gas will be able to be produced from shales in the US. In terms of energy content, that is equivalent to 67 billion barrels of oil, which in turn is 21 years of the projected 2020 US oil consumption rate of 8.5 million BOPD. The Bakken Formation will provide a further 6 billion barrels of production, giving another 2 years of supply at the 2020 demand rate.

image

Figure 5: US Natural Gas Production 1900 – 2040

This figure assumes that production of shale gas rises from the 4.35 TCF in 2011 to a plateau production rate of 10 TCF per annum. The average breakeven production cost of US shale gas is calculated to be about $5.20 per thousand cubic feet. In energy content terms, this equates to an oil price of $31 per barrel. US shale gas production is almost wholly unprofitable at the current gas price of $2.99 per mcf. The drilling is being conducted to secure acreage positions.

image

Figure 6: Potential Louisiana Gas Production Profile 2011 – 2041

This figure is derived from Kaiser, M.J. and Yu, Y., “How Haynesville shale will lift Louisiana’s gas production profile” Oil and Gas Journal, November 2011. It is included to show the short term impact that shale gas drilling will have regionally as a result of the more profitable formations being drilled out first. This production profile assumes that 800 wells are drilled in the Haynesville Shale annually for ten years with an average gas recovery of 3.4 BCF per well. Plateau gas production of 2.44 TCF per annum equates to 1.1 million barrels per day on an energy equivalent basis. On this basis, the Hayneville Shale in Louisiana will be producing about 20% more energy at plateau from 800 wells per annum than the Bakken Shale at plateau from 1,000 wells per annum.

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Figure 7: Payback period relative to oil price for CNG vehicles at the average US shale gas production cost

Natural gas in the US used to trade at the No 2 fuel oil price in energy terms, and was thus linked to the oil price. At $2.99 per mcf for natural gas and $102 per barrel for oil, natural gas is currently 18% of the price of oil in energy content terms. That will drive the adoption of compressed natural gas (CNG) vehicles. Assuming an increased capital cost of $5,000 for an OEM CNG vehicle (retrofitting starts at $12,000) and a natural gas price at the average for future US shale gas production of $5.20 per mcf, Figure 7 shows how the payback period for that capital cost is projected to fall as the oil price rises.

Back on the subject of Report 117, why did the Australian Government suppress such a well-researched document? I believe that Report 117 tells a rather inconvenient truth for a Government that recently legislated a carbon tax, which in turn is based on things being rosy in the garden. Please don’t laugh too much, but one of the supposed reasons for the tax was to set an example for the rest of the World to follow. At the same time, the Australian Government is well aware that it is not meeting its oil stockholding requirement under the International Energy Agency treaty. With rapidly declining domestic production, the Government would have to spend $300 million per annum to fulfill its obligation.

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128 Responses to Price-Driven US Energy Independence

  1. Kum Dollison says:

    Poor People, Poor Business Models, and Poor Economic Models will bite the dust, first. Followed by slightly less poor people, slightly less bad business models, and slightly less bad economic models. Followed by Average people, and aver . . . . . . . . . .

  2. crosspatch says:

    Much of the reduction of oil production is artificially created. There are currently restrictions on production in areas where we know there are considerable reserves. Gulf of Mexico production has been constrained, coastal production in California has been restricted, Atlantic coastal production has been restricted, Alaskan production has been restricted. These production numbers don’t mean much in light of actual recoverable reserves. In many cases they are reflective of artificial constraints placed on production. There are absolutely huge reserves still available off the coast of California, for example, and the same goes for Alaska. The only reason we are now going for all of this shale fuel is that easier to obtain sources have been restricted.

  3. Kaboom says:

    CNG and propane powered vehicles are offered directly by a number of manufacturers in Germany. Volkswagen for example has a diesel, gas and CNG powered version of the Touran minivan. Testing by leading automotive magazine Auto, Motor & Sport showed that the CNG version is cheaper than the gas model when driven more than 7000 km/year and cheaper than the diesel from 10.000 km/year. Part of those savings come from the low taxation of CNG vs. gas and diesel in Germany, though. The car is powered by a 150 hp/220 nm 1.4 litre engine with a turbocharger AND compressor that costs 3850 Euros more than the gas powered version and has a range of 420 km.

  4. Ceri Phipps says:

    I’ve had an involvement with the oil industry for most of my life, (including as a child, my Father was an Oil Man) and peak oil has been talked about for all that time (48 years) and every time I see the graphs they look the same whether it was in the 1970s, 1980s, 1990s … I am sure they will look the same in 2050 or 2100

  5. gnomish says:

    politicians are a dime a dozen and easily replaceable. hardly unique.
    blame the taxpaying obedient subjects – sine qua non. oh, they cry like a busted virgin afterward, but it is the taxpaying voting lot who ask for, beg for, plead for and pay for that shafting.
    hence, it’s not imposed because it was negotiated. such a negotiation is a business transaction.
    don’t bust the john – he was surrounded by hookers. disregard their whinging – it’s part of their act. they truly love the abuse – they pay well for it, too.

  6. Andrew says:

    http://fuelfix.com/blog/2012/01/04/airlines-latest-fee-hike-exposes-flaws-of-carbon-trading/
    Somewhat on topic…explains how companies deal with Carbon Taxes…

    “…Delta’s fee scheme represents more than just another indignity for passengers. It lays bare the entire carbon-trading boondoggle. If airlines simply foist the fees off on customers, then they have no incentive to actually reduce carbon emissions…

    And what if the carrier pollutes less? The fees, at least in Delta’s case, are added up front. What if the airline winds up coming in under its carbon limits? It would actually then make money by trading its excess carbon credits, yet still collect fees from passengers as if it weren’t in compliance. In the end, the EU’s new rules underscore the fundamental problem with carbon trading — it creates far more profit-making opportunity for the traders and the companies that game the system than it does carbon-reducing opportunity for society.”

  7. gnomish says:

    Speak roughly to your little boy
    and beat him when he sneezes
    he only does it to annoy
    because he knows it teases.
    I speak severely to my boy
    I beat him when he sneezes
    for he can thoroughly enjoy
    the pepper when he pleases

    nobody forces him to use condommints

  8. Hwan says:

    There are fields in Texas that have been producing oil and gas for for over 40 years. Peak oil is a myth.

    We will never run out of oil and gas. It is continuously being created. It is part of this planet’s carbon cycle.

  9. _Jim says:

    No dashed or dotted lines, rather green and red; do you know how many ppl are affected with color perception disorder involving those two colors (about 5% of males*)?

    Lucky I don’t go all ‘ADA Act’ over this … … just KIDDING!

    Thanks for the post nonetheless, but please, consider that neglected 5% out there in your readership …

    * http://en.wikipedia.org/wiki/Color_blindness
    .

  10. meemoe_uk says:

    Ceri’s + crosspatches comment corroborate with mine. There has been a new golden age of oil discovery due to the recent oil price increases of the last 8 years, with gigantic amounts of oil discovered, easliy enough to keep us going for many decades. But peakers somehow forget to add these discoverys to their bell curve graph. Also, they make excuses like, – all the new discoverys are non convential oil , or – the discoveryes are ‘ un proven oil ‘
    Absurd. A huge list of these discovery is here, with a lot of ( kid ) peakers dismising and ridiculing it. Its about 75 forum pages long.

    http://peakoil.com/forums/catalog-of-recent-oil-discoveries-pt-1-archived-t35194.html?hilit=catalog of recent
    http://peakoil.com/forums/catalog-of-recent-oil-discoveries-pt-2-t62512.html

    None of these discoveries are ever used in peakOil_isNow hype charts.

  11. Thanks for presenting this. Not something that some of us have not be saying for years. That’s another story. What is illustrates is the world is a highly complex interplay of many different and often competing emotion driven conditions. No model can account for them except in the short term. Sounds like climate to me. I wonder if all those modelers talk to each other? Probably way to much that’s why they think they know more and predict better then anyone else.

  12. Andy May says:

    The amount of duplicity on the issue of oil and gas production, “fracking,” etc. from the environmental community is shocking. It rivals the duplicity on climate change.

    I’m in the business and, unimpeded, I think the US will be import free in less than 10 years, as the article says. Which should be a good thing, one would think. On “fracking’ or hydraulic fracturing, why complain now? We’ve been fracking wells since 1947 and over 1,000,000 wells have been fracked in the US. I know of no confirmed incidents of fracking an oil and gas reservoir that caused contamination of a fresh water aquifer.. Water wells (and septic tank drainage fields) are often fracked in the Rockies and some of these (The recent report from Wyoming is an example) have contaminated the aquifer they fracked (Duh!). But, we can’t consider that evidence of a problem (unless you work for the EPA).

  13. higley7 says:

    Let’s add to the mix the abiotic source of gas and oil. It accumulates in certain places over time, but is probably rising to the underside of the lithosphere constantly all around the world. This explains why those wells have been producing, however slowly, for 40 years. THey never seem to die. Thus, although they talk of peak oil, no oil and gas is not in the offing.

  14. Kum Dollison says:

    Those Texas oil fields are producing way less than they did back in the seventies. Fields “peak.”

    Countries “peak” (The U.S. peaked in 1972.)

    Regions “peak.” (The North Sea is a good example.)

    Worlds “peak.” (The odds are strong that Planet Earth is on its “peak plateau,” now.)

    Even my 7 yr old Grandson has known for several years that there is no such thing as a “bottomless” milkshake.

    A dead giveaway is the fact that during the last two doublings of price, worldwide production increased substantially. During this last doubling (2005 – 2011) worldwide production has actually declined a small amount.

    This is a really bad time for “magical thinking.”

  15. woodNfish says:

    This is a government report. Is there a reason why it should be trusted? Where did they get the data? How reliable is it? All my experience shows that peak oil is a lie and this report by an alarmist Australian watermelon government isn’t going to change that.

    Government is the enemy of freedom and truth. THis is especially true of the US government.

  16. ChE says:

    Ceri Phipps says:
    January 4, 2012 at 9:33 am
    I’ve had an involvement with the oil industry for most of my life, (including as a child, my Father was an Oil Man) and peak oil has been talked about for all that time (48 years) and every time I see the graphs they look the same whether it was in the 1970s, 1980s, 1990s … I am sure they will look the same in 2050 or 2100

    Bingo. And the rapture is going to happen this year, too. And Hale Bopp, and the Great Pumpkin, and Y2K, and…

  17. captainfish says:

    article stated: “(2005) the year that US oil consumption peaked at 20.9 million barrels per day. It then went sideways for a couple of years before starting a dramatic contraction at 1.1 million barrels/day/year. The demand reduction to date is 4.5 m BOPD from the peak. This is oil that the US used to import but is now available to other countries. If the demand reduction rate established over the last four years continues, US oil consumption will be down to the projected level of US oil production by the end of the decade. The US will then be in the very happy position of being energy independent. ”

    Author also states that this drop in consumption is a usage contraction.

    Nothing can be further from the truth. When production is cut, there is less to buy. Prices go up for a reduced quantity of the item. Recall OPEC has reduced output to keep prices higher. USA has reduced drilling and exploration.

    This has nothing whatsoever to do with … America becoming energy independent. For that to happen, there has to be something to fill the void of lost oil. What you are seeing is a country starving from a reduction in energy supplies

  18. Bloke down the pub says:

    And if Thorium powered vehicles become a reality, people will start talking about peak Thorium.

  19. At 474 pages, the report: Transport energy futures: long-term oil supply trends and projections Report 117, provides a gold mine of data and perspective.

    e.g. see Figure 13.16 Production in the US lower 48 states. on page 354.
    Ask: Why did US production decline ~63% from 3.5 billion bbl/year in 1970 to 1.3 million bbl/year in 2010?
    It is sad the Hwan et al. choose to shut their eyes to pragmatic evidence, and refuse to understand that “Peak Oil” refers to a combined physical/economic production rate constraint on a given region.

    For those willing to read, learn and prepare, see: Peak Net Exports: A Five Year Retrospective and a Look Forward

    Ask: Why did Global exports peak in 2005?
    Ask: Why have Available Net Exports (after China & India) DECLINED 13% since 2005?
    Ask: What are the consequences for oil importing countries from that trend?

  20. BillT says:

    I have been reading Anthony’s WUWT blog for several years as well as Climate Audit, Icecap and several other blogs related to the climate change subject. Its nice to see an article posted that relates to energy. Keep it up Anthony!

    May I make some suggestions to your readers for some fantastic reading and research concerning the energy subject? Ecomotors International (distruptive technology), Energy from Thorium (Liquid Fluoride Thorium Reactor), Lawrenceville Plasma Physics (fusion project) and ITER (tokamak fusion project). I think we are on the cusp of some really fanastic game changing events for the betterment of man kind.

  21. Smokey says:

    Kum Dollison’s worry-wart discomfiture over an imaginary vanishing of energy supplies reminds me of this.

    Relax, Mr Dollison, the free market abides.

  22. Deekaman says:

    Correct me if I’m wrong here…it’s happened before. When I see cost of petroleum vs. time, I don’t see anything indicating “constant dollars”. If cost is not corrected for the decline in the value of the dollar, it is worthless (kinda like the dollar these days).

  23. mkelly says:

    Where does methane hydrate fit into this? Is any research bing done on extraction, etc? Several thousand years of energy available using that stuff.

  24. Ray says:

    crosspatch says:
    January 4, 2012 at 9:28 am
    ____________

    Right on the button.

    Here is a good article summing it up:

    http://www.americanthinker.com/2010/06/the_presidents_oil_reserves_li.html

  25. cmarrou says:

    “At $2.99 per mcf for natural gas and $102 per barrel for oil, natural gas is currently 18% of the price of oil in energy content terms.”

    If CNG is 18% the cost of awl, I’m ‘on’a git myself a Ford F-150 an convert ‘at bad boy, tell you whut…mat even go into the bidness hyar in Texas…

  26. For clarity, see: What is Peak oil?
    “The term Peak Oil refers to the maximum rate of the production of oil in any area under consideration, recognising that it is a finite natural resource, subject to depletion.”
    –Colin Campbell
    A finite resource cannot be produced forever.
    While they can be converted to oil/gasoline/diesel fuel, Heavy Oil, Bitumen (aka Oil Sands), Shale, Coal etc. are not “oil”. Each has its own peak production scenario. It is equivocation to claim shifting to these alternate hydrocarbons in any way negates the peaking of conventional light oil.

  27. Nick Shaw says:

    @ Kum Dollison says:
    Sure your 7 year old knows there is no such thing as a bottomless milkshake, because there is no soda jerk standing there continuously refilling his glass.
    Why is there this assumption that the “making” of oil mysteriously stopped several million years ago? Reason tells us it never did and never will as long as dead things continue to fall upon the earth. Can we use it up faster than it forms? I can’t answer that question but, I seriously doubt it considering the advances in combustion we can expect. Further, I expect a swing to a hydrogen based economy long before any phantom “peak oil” state is reached. Nevertheless, there will always be copious sources of underground fossil fuel. You can take that to the bank!

  28. MarkW says:

    Another post that tells us starting tomorrow, we will run out of oil.

    This same song and dance has been presented as proven for 50 years. And for 50 years, it keeps getting disproven.

  29. JohnM says:

    “I think we are on the cusp of some really fanastic game changing events for the betterment of man kind”

    I remain pessimistic about whether our “leaders” really care about mankind, never mind its “betterment”.
    If you take a step back and look at things now you will see that betterment is not on the “to-do” list.
    Reducing mankind to wattle-and-daub huts is more likely.

  30. MarkW says:

    I find it funny that someone named “kaboom” is pushing CNG.

  31. old engineer says:

    David-

    Thanks for an interesting post. I have a question about Figure 2. Was the GDP adjusted for inflation? In other words was the GDP in 1980 or some other year dollars? Since prices as reflected by the CPI, roughly doubled between 1980 and 2000, it would make some difference in the slope of the curve.

    Really interesting conclusion that we could be “energy independent” by 2020.

  32. Al Gored says:

    Why do all these analyses only look at “conventional” oil?

    Oil sands. In Canada and Venezuela. They change the whole picture, don’t they?

  33. MarkW says:

    Kum Dollison says:
    January 4, 2012 at 10:11 am

    Production follows demand. Over the period of 2005 – 2011, the world’s economies have been in pretty bad shape.

    If the only thing you look at is production numbers, you will never get the right answer.
    Here in the US we’ve also been afflicted with an ideologue who has been making it harder and harder to increase production.

  34. Brad Peterson says:

    Peak oil? Really? Do you really want this site polluted with this conspiracy theory garbage?

    The leading image was quite telling. “Here is current production. You see it is trending upwards. Lets extrapolate into the future. BAM! We predict an instant downturn.” That looks like EVERY SINGLE PEAK OIL GRAPH FOR THE LAST 20 YEARS. Every single one of those predicts sudden and immediate downturns. And it doesn’t happen.

  35. phizzics says:

    I have a feeling that “peak oil” and fusion power are related. Both are currently projected to happen in the near future, just as they have been for decades.

  36. MarkW says:

    “Why do all these analyses only look at “conventional” oil?”

    Mostly because they are more interested in selling a story, than telling the truth.

  37. Smokey says:

    Excellent article, Ray. Thanx for posting it.

  38. mikegeo says:

    There is much confusion with these sorts of analyses and I’ve yet to see anyone acknowledge how hydrocarbon “reserves” are calculated. There are about 8 internationally operative agencies that set requirements for the estimation of reserves. The SEC is one of them, and other international securities agencies get involved too. As well, the engineers who make these calculations are subject to their appropriate professional affiliations for potential censure, as well as by regulatory agencies like the SEC.

    Reserves calculations carry with them current assumptions on the price of the commodity along with the presently anticipated cost structures for recovery etc. So, any newly discovered fields may take some time to understand field permeability and porosity, along with engineering grade estimates of the costs of production. Hence, you never get an over abundance of enthusiasm with the corporate statements of oil companies, due to the oversight and penalties that can be applied for being too optimistic. Most companies therefore tend to be conservative in their annual estimations. As annual commodity values and cost structures change (either up or down), then companies are forced by regulation, to change their reserves status for annual reporting purposes.

    This annual figure also doesn’t mean that’s all there is at that time – but it does mean that’s all they’re willing to stick their necks out for, given the regulatory, financial and professional repercussions that can follow publically reported “mistakes”. The US has a penchant for lawsuits launched against publicly traded companies that may be considered to have induced securities trading with allegedly erroneous information from which the market purports to derive share price valuations.

    If you look at large oil companies annual financial statements, you invariably find that they replace or enhance their reserves virtually every year, no matter how great their production rate.

    Secondly, the advent of new technologies, is usually overlooked in the ability to wring the last barrel from a producing field. Companies do not easily abandon reservoirs if they can squeeze more out over time with new methods because of the double whammy of losing the production and taking on the environmental closure costs.

    And finally, there are huge areas of permissive rocks for potential future hydrocarbon production that are denied to exploration and production through environmental restrictions imposed by various governments for whatever reason. The idea of peak oil is a mistaken concept from the assumption of conclusions derived from incomplete and erroneous information. Imposition of onerous restrictions may bring it to bear, but the operation of human ingenuity and the free market otherwise would keep it from happening.

  39. Kum Dollison says:

    Production follows “Price.”

    TheGlobal “Price” of oil has doubled since 2005 (apprx. $55.00/bbl for Brent to $110.00,) but Global Production was slightly less in 2011 than it was then.

    And, from an American/Euro Centric point of view, it’s worth noting that an oil price that puts Europe into recession, and significantly slows the U.S. economy, China, India, and several of the other “emerging” economies chug right along. (in fact, the oil “Exporters” such as Saudi Arabia Boom – thus using even more oil.)

    This subject evokes a visceral response in a lot of people, because, quite simply, it scares the loving beejeepers out of them. It wouldn’t if they studied it a bit. We Have mitigations, but we need to get busy on them. This is a case where ignorance, most assuredly, will not lead to bliss.

  40. Hoser says:

    Kum Dollison says:
    January 4, 2012 at 10:11 am

    The world peaked? Magical thinking?
    No, the answer is simple: Nuclear energy.

  41. crosspatch says:

    I believe two large oil fields were recently discovered off of Brazil, one off of the Falklands Islands, and the field where Deepwater Horizon blew out (and is currently off limits to drilling) is supposedly huge as well.

    One of the problems with the Deepwater Horizon rig was that the volume of oil and gas and the pressure of it was just amazing.

  42. Roger Andrews says:

    Here’s my guess as to what the future would have looked like had this analysis been done right after the 1975 oil embargo:

    http://oi44.tinypic.com/x27wb8.jpg

  43. James Sexton says:

    When did WUWT become infested with Paul Ehrlich disciples? When we learn how to create and destroy energy and matter, then we can talk about peak this and that. Until then, we’re just moving stuff around.

    But, concerning our present day capabilities. A show of hands for all the people that believe we’re extracting as much oil out of the earth as we can. Delusional. The BP spill occurred because we’ve limited the amount we’re going to allow to be extracted. The Keystone pipeline is being discussed because we’ve limited the places we wish to operate in. These things aren’t occurring because the earth has run out, they are occurring because of the choices our politicians are making.

    Another show of hands from people who believe our energy sources will remain static over the next century. More delusion. We have more options today than we did just a few years ago. A few years from now we’ll have even more. If and when one source becomes less economical, we’ll change.

    Another show of hands from people who believe our means of extracting fuels will remain static in the next several decades. More delusion. It isn’t that we can’t keep up with demand, it is because we choose not to. The discovery of more oil, gas, coal, the ability to extract other gases and liquids continue on a pace nearly equal to Moore’s law.

    Finally, all of this worrying and gnashing of the teeth because we may run out of this or that. So what? We haven’t even come close to utilizing the potential energy around us. Indeed, even in the air that we breathe or the water which we drink, we have an abundance. We can do more with hydrogen than just make bombs, and we can do more with helium than just make balloons float. And while we’re at it, we haven’t even scratched the surface of nuclear energy utilization. There are, of course, many, many, more examples of untapped fuels and energy.

    Ever wonder why, even after the billions and billion, if not trillions, being sunk into alternative fuels and energy they haven’t taken off? Because we don’t need them to and it causes more difficulties than it solves. If and when these situations change, then, too will the earth’s population change their utilization of fuels and energy. The whole point of my message is, don’t worry about what we’re using. Necessity and the path of least resistance wins the day. Always. There’s not a damn thing we can do about it and if we all gave it some thought, there’s not a damn thing we should do about it. What we should do, is go about the business of concerning ourselves with the condition of our fellow man.

  44. Zeke says:

    So much of what happens in markets is psychological and irrational in nature. Peak oil alarmism is psychological in nature and I notice that its adherents are very often the self-same people who are behind the obnoxious and overreaching Federal lockdown of state resources and raw materials.

    A little off topic anecdote, provided for the amazement, wonder and shock and awe to some analysts: without a “peak book” movement, and without any gov’t coercion or favoritism, and without any experts to manipulate figures, the small devices called kindles and ereaders were conceived, designed and marketed. Now many people you see walking down the street are carrying a room full of books and periodicals on their person without your being able to even detect it.

  45. old engineer says:

    David-

    On rereading your post, I see a conclusion that the demand for CNG vehicles will increase.
    IMO CNG is not an good alternate fuel for vehicles. Natural gas is ideal for commercial and residential space heating, water heating, and cooking. That demand will increase. I not sure about CNG for vehicles being anymore than a niche market .

    Back in the 1980′s when alternate fuel research was beginning to receive a lot of attention, I worked for an organization that was testing CNG vehicles for the government. One of the things I looked at was how much domestic natural gas was available. It was clear to me that there was not enough doestic natural gas to supply a significant part of the vehicle fleet. Currently, reading about the newly recoverable natural gas finds, I thought that maybe there was enough natural gas. Your Figure 5 convinced me otherwise.

    The other problems with CNG are all engineering problems. It is more difficult to meter a gaseous fuel into an engine than a liquid fuel. This negatively affects both fuel economy and emissions. Then there is the “C” part of CNG. Natural gas must be compressed. If I remember correctly the CNG tank pressure is 3000 psi. During the mid-eighties there was at least one pretty severe explosion in a bus barn involving a leaking CNG tank on an experimental bus.

  46. tarpon says:

    If you can’t drill because of liberals rules, does that effect the peak oil myth?

    One comes to mind, we gave all our low sulfur coal reserves to the wild horses under Clinton…. So we could buy low sulfur coal from his friend in Indonesia, Riady.

    How about coal to oil conversions? Does that have any effect?

    How about frakking? And those myths?

    Remember Jimmy Carter… “the world will out of oil by the year 2000″

  47. alan france says:

    I understand that oil can be described as “light” to “heavy” and “sweet” to “sour”.
    How does “unconventional” oil differ from “conventional” oil?

  48. patrioticduo says:

    And we were all taught that oil was based upon the compressed metamorphically altered dead vegetation and animal life whereas the Russians figured out that oil is an intrinsic result of deep earth processes. And who of those is still teaching peak oil?

  49. Dire Wolf says:

    While I understand the analysis, I am always leary of graphs like 13.9 which have the critical inflection at “Today”. This means the entirety of the prediction is future with no track record other than the conformity to date. As they say in finance, so in computer modeling, “Past performance is not predictor of future gains [or losses].

  50. Jeremy says:

    The greenish line is predicted production, which is now in permanent decline for the balance of our lives.

    Extraordinary claims require extraordinary proof. I await your proof of future conditions which would make this true.

  51. cedarhill says:

    Hoser said at January 4, 2012 at 11:13 am “the answer is simple: nuclear”

    How true. See this paper from Los Alamos in 2007 http://www.lanl.gov/news/newsbulletin/pdf/Green_Freedom_Overview.pdf is just a sample of what is feasible. In it they state:
    “We performed economic analyses on a partially optimized baseline concept based on a single Gen III PWR to provide power for the process. The analyses estimated a capital cost of $5.0 billion for an 18,400-bbl/day synthetic-gasoline plant and $4.6 billion for a 5,000 tonne/day methanol plant. Nuclear power accounts for more than 50% of the total plant capital investment. The estimated operating cost is $1.40/gal for synthetic gasoline and $0.65 for methanol. Because the capital investment is high, a profit margin of $0.50 per $1.00 of sales or more is needed to yield an acceptable return on investment.
    Therefore, the price of gasoline at the pump must be about $4.60/gal, and price of methanol at the plant gate must be $1.65/gal for these base cases”

    As Hoser implies. who really cares about what’s in the ground. We’ve had the technologyto manufacture as much completely pure hydrocarbons as we need – virtually forever.

    The issue should be how best to build manufacturing capacity which will give us cheap energy. Even nearly zero-cost energy. Worrying about peaks and fretting over things like oil is just a non-productive exercise.

  52. SMS says:

    The problem with the peak oil myth is the interplay of politics and misplaced ideas on how economys work. Oil discoveries in the 70′s were spurred on by the Saudi’s trying to maximize the price on oil by restricting production. This false price led oil companies to invest in drilling all over the world. It took several years for this massive oil production to hit the pipeline, but when it did, the price of oil went into a downward spiral that lasted 20 years. During this 20 year period, there was no price incentive to explore.

    The supply and demand curve remained true but the peak oil curve went off the rails.

  53. patrioticduo says:

    http://www.csun.edu/~vcgeo005/Energy.html As long as we keep looking, we will keep finding. The only question is how much we decide to lock up (eg: ANWAR) and how much we find that is too expensive to pull from the Earth. Other than that, oil and natural gas will continue to be available to us. The only real question is how expensive Government can make it compared to how inexpensive technology can recover it.

  54. James Sexton says:

    patrioticduo says:
    January 4, 2012 at 11:51 am

    And we were all taught that oil was based upon the compressed metamorphically altered dead vegetation and animal life whereas the Russians figured out that oil is an intrinsic result of deep earth processes. And who of those is still teaching peak oil?
    ===========================================================
    lol, no way, dude! Oil patches were just ancient burial grounds for the plants and animals for millions of years. Something about tree’s and grass’s natural instincts to migrate to these burial grounds right before they died to mix with the dinosaurs, (who had the same natural instinct) to form oil! That’s why we call them fossil fuels, dontcha know? :)

  55. Paul Westhaver says:

    I am an advocate of inexpensive safe energy in any form.

    The cheapest and safest utility energy is hydro electric followed by hydrocarbon combustion. Go Hydro!!! Until all the useful water-potential-energy sites have been used up, keep building dams and transmission lines. Where hydro is impractical (cars and buses and locomotives and ships and some geographical locations) coal-oil–gas is the way to go!!!

    I have a real preference for nuclear power for utility based energy.

    This would provide safe cheap and strategically preferred energy to north America. We have lots of uranium 235… Canada is the largest producer of the worlds uranium at 22%.

    Lest improve our energy independence and build nuke plants to power our cities. That way we can limit our need of middle east oil and financially starve the idiots in IRAN and Saudi Arabia and Venezuela, and Nigeria back to the stone age. France did it.

    Canada is an enormous pantry of safe clean energy waiting to be used.

  56. patrioticduo says:

    Ya know, I’ve never seen a flying hydro dam, they must be an impressive sight.

  57. Paul Westhaver says:

    ha!! patriotic duo… so true…
    Planes… that is what kerosene was made for!!!

  58. For those brave enough to look at the actual oil export data, see:
    Mazama Science – OilExport
    About 54 of 69 oil producing countries have already peaked! The total USA production drop off is not as sharp as the 48 states production because of starting production in Alaska and in the Gulf of Mexico. Note especially the rapid increase in imports by China and India.

  59. Robber says:

    As a young engineer in the oil industry 40 years ago I was told by a wise old engineer that the industry was wonderful, but that in another 10 years oil would start to run out. And every 10 years the story has been the same. When the Iran/Iraq war occurred, oil jumped to $44 per barrel, and experts predicted that by 1985 oil would be $100 per barrel – in January 1986 oil was back to $10 per barrel. Now it’s back up to $100 per barrel.
    Today there is no doubt that even with high prices, oil is getting harder to find, hence the need to go offshore into deeper water. It would seem that the US is well past its peak production – for example, Texas peaked in 1970, and is now producing only 1/3 as much. Alaska peaked in 1989 and is now down by 50%.
    Australia’s dependence on oil imports is projected to continue to increase as domestic consumption increases and production continues to slowly decline.
    Oil is getting harder to find. There must be a peak to oil production.
    But as Danish physicist Niels Bohr (1885-1962) is quoted as saying: “Prediction is very difficult, especially about the future”.

  60. catweazle666 says:

    I’ve been looking at that graph for over half a century, only the numbers along the bottom seem to change, they get bigger every year.

    Nice bit of methane, anyone?

    http://www.spiegel.de/international/world/0,1518,523178,00.html

    Don’t omit the second page – there’s something very interesting on it.

  61. Resourceguy says:

    Re: Crosspatch

    Thanks, and now we need someone to post the map of oil fields in the Gulf of Mexico that shows the dramatic difference across the territorial boundary between U.S. waters and those controlled by Mexico. It looks about like North Korea at night except it is oil fields or lack thereof. Going back to HS science teacher musings, if a tree falls in the forest and there is no one there to hear, does it make a sound? In this case if there are no clusters of identified oil fields on the Mexican side of the line, does that mean they do not exist? Now take it a step further to Putin’s oil initiative in the Arctic waters. That will dwarf Alaska by the way, but we must treat it as some kind of dark energy until it becomes obvious to bloggers, reporters, and policymakers.

  62. Jeff S. says:

    A report that talks about oil reserves, but omits unconventional oil (oil sands) is nothing more than a bad joke. It’s equivalent to producing a report on world population, but omitting the populations of China and India. Conventional oil reserves in North America are 25 billion barrels (mostly in the U.S.A.). The Alberta oil sands alone have reserves of at least 175 billion barrels (the minimum figure accepted by everyone), and as much as 2 trillion barrels (the figure quoted by the CEO of Shell Canada).

  63. MarkW says:

    Kum Dollison says:
    January 4, 2012 at 11:09 am
    Production follows “Price.”

    You assume that price is an independant variable.
    Price is determined by the interplay of demand and production. Both current and projected future.

  64. David says:

    What we could do…“The Energy Information Administration (EIA) projects that daily petroleum production will rise 18 percent between 2010 and 2035 and that daily production from offshore wells (in the lower 48 states) will rise by over 40 percent.4 EIA also predicts that offshore drilling will supply significant increases in natural gas production. While total natural gas production will rise 16 percent over the same period, offshore production of natural gas will rise 63 percent, at which time it will be nearly a fifth of total domestic production. The reserves of petroleum are projected to rise by 5 billion barrels—even after extracting 57 billion barrels over the period 2010–2035. This happens because improvements in technology and price increases make previously uneconomic deposits economically viable. In short, petroleum can be a major energy source for many decades. Consequently an offshore drilling ban’s impact on the U.S. would be felt for decades. For example, between now and 2035 an offshore drilling ban would:
    • Reduce GDP by $5.5 trillion,
    • Raise the average consumption expenditures
    for a family of four by $2,381 per year (and
    exceeding $4,000 in 2035),
    • Reduce job growth by more than 1 million jobs
    by 2015 and more than 1.5 million jobs by 2030,
    and
    • Increase the total expenditures for imported oil
    by nearly $737 billion.

    These facts do not include additional development such as Anwar., or shale oil deposits.

  65. Kum Dollison says:

    No, Production probably Won’t start “plunging,” tomorrow. Fields are being reworked, and new fields come online every month, or so. Russia has been doing a Lot of infill drilling, and so have the Sauds. It’s a big old world, and there’s a lot of oil left.

    However, BP, EIA, and the other “big boys” that have looked at it, place the decline rate of present fields at around 5%/yr.. That means it takes somewhere a little north of 3.5 Million bbl/day of new oil, annually, just to keep up with decline from existing fields. This is no small order.

    A large field such as The North Sea Field can hover around the “peak plateau” for five, or six years before starting a serious decline. It seems logical that the global peak plateau could go on for considerably longer than that (we’ve been at these numbers, approx. 73 million bbl/day C+C – Crude + Condensate, for seven years, now. It seems quite likely that it could be 2015, or even later, before we “fall off the edge.”

    Or not.

  66. bionuclearguy says:

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

    “The popularity of the approach stems partly from the fact that Hubbert’s 1956 prediction of lower-48 oil production was extremely accurate, even to this day. However, this is misleading, as his other three predictions were highly inaccurate. His forecast of US gas production in 2000 was 65% too low and his world oil production forecast for 2000 was 50% too low. Even production in Texas is now about twice the amount he forecast. Indeed, given his estimate of URR in Texas, production should have ceased recently as the resources were exhausted. Since Texas was a mature, heavily studied province even in 1956, this error speaks to the fallibility of the method. Other Hubbert models exhibit the same flaw. One group at the US Department of Energy produced a series of Hubbert-style production profiles in the early 1980s (for example, US Department of Energy, 1983). For non-OPEC countries, they produced a prediction for Southeast Asia that has proven very accurate to date, but for non-OPEC South America and Egypt, their forecasts were much too low. Similarly, Root (1991) and Masters et al. (1990) also produced forecasts with near-term peaks for regions, most if not all of which are clearly too pessimistic. The most egregious errors have come from C.J. Campbell, who has repeatedly predicted a near-term peak for the world, not just non-OPEC or non-Middle East (Campbell, 1989; Campbell, 1991; Campbell, 1997) even though most in the industry have difficulty finding signs of near-term scarcity. His 1989 prediction that world production had already peaked and prices would rise to the $30–50 range in the early 1990s was clearly wrong, and his 1991 book produced forecasts for non-OPEC countries that were 10 mb/day too low (net) by 1999.” …
    “There appear to be two primary errors in the design of these models. First, Hubbert-style forecasts take URR as a static variable when it is dynamic. This is a serious error. URR refers not to total resources, which is arguably a fixed amount, but to the proportion of the total which is recoverable. It is logical that this should increase over time, as technological advances raise the proportion of a field which can be recovered economically and as other changes (additions of pipelines, for example) lower costs and thus make it economical to produce smaller and/or deeper fields and less productive wells.” …

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

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

    From “Forecasting oil supply: theory and practice,” Michael C. Lynch: http://www.aspo-australia.org.au/References/Lynch-july-02.pdf

  67. To understand the increasing constraints of oil exporters, see:
    Burning Oil to Keep Cool The Hidden Energy Crisis in Saudi Arabia, Glada Lahn and Paul Stevens, Clatham House, December 2011

    Saudi Arabia’s place in the world oil market is threatened by unrestrained domestic fuel consumption.
    In an economy dominated by fossil fuels and dependent on the export of oil, current patterns of energy demand are not only wasting valuable resources and causing excessive pollution, but also rendering the country vulnerable to economic and social crises. . . .
    Chatham House simulations reveal that, on the current trajectory, Saudi Arabia’s domestic energy consumption could limit its exports of oil within a decade. This would have a severe effect on government spending, over 80% of which is dependent on oil revenues.

  68. Merovign says:

    Hey, did anything *else* happen between 2005 and 2011 that might have affected economic activity?

    If you think real hard, you might come up with one or two things.

    Yes, someday the world will end, but that doesn’t make the raggedy man with the sandwich board that says “the end of the world is nigh” a prophet.

  69. Kum Dollison says:

    This is World Oil ( C+C) Production for the last 10 years, according to “Joint Oil Data Initiative” (JODI.)

    http://s574.photobucket.com/albums/ss189/Darwinian1/?action=view&current=JODICC.jpg

    In fairness, EIA shows the last 7 years as flatter; but, in cases, like Texas, where there was a super-accurate 3rd party keeping tabs (The Texas Railroad Commission – TRC is considered by many to be the most efficient, accurate, hands-on, regulatory agency in the world,) they agreed with JODI, and not with EIA.

    In any case, global production has been, at best, flat, and with the emerging economies like China, and the Oil Producers like Saudi Arabia, continuing to Consume more, and more, all the time, the trendline for Oil Prices is Not flat, or Downward, from here.

  70. mikelorrey says:

    Sorry but Peak Oil has been well debunked. The Brazillian offshore discoveries, plus the recent technological improvements that have allowed the commercialization of the Bakken Shale, Athabascan Oil Sands, etc have expanded proven reserves by a huge amount, more than the original size of the Saudi reserves.

  71. Jay Davis says:

    Given the artificial curtailing of oil exploration and production in the U.S. and the Gulf by the current administration, and given the current doldrums the U.S. economy is in, how can anyone talk about peak oil, U.S. oil consumption or production?

  72. David Archibald says:

    old engineer says:
    January 4, 2012 at 10:49 am
    Figure 2 is in 2010 constant dollars.

    Al Gored says:
    January 4, 2012 at 10:50 am
    It is going to be a slow ramp up of the Canadian oil sands. It is a capital intensive business and it will chew a lot of natural gas. Not much hope should be held for a Venezuelan ramp up.

    Brad Peterson says:
    January 4, 2012 at 10:54 am
    US conventional oil production peaked 40 years ago, as predicted by Hubbert. Why is the oil price now $103/barrel? Or do you have a conspiracy theory to explain that?

    James Sexton says:
    January 4, 2012 at 11:27 am
    What you say is true at one level. In the long term, when the deep oceans have swallowed up all the carbon we have dug up, humanity will run its mobile fleet on liquid ammonia at the equivalent of $4.00 per gallon, assuming nuclear is $0.03 per kWh.
    The post above covers the next ten years. A friend of mine keeps telling me,”If the US went to German vehicle efficiency, they would halve their oil consumption.” And halving oil consumption means that the US wouldn’t have to import any. No need for capex on CTL plants, GTL plants or anything else.

    old engineer says:
    January 4, 2012 at 11:39 am
    We have better electronics these days. The CNG capex premium is significant, but natural gas is now ubiquitous and doesn’t need refining.

    Philip Bradley says:
    January 4, 2012 at 1:01 pm
    And the oil that was refined to produce those exports was imported. Oil refineries are expensive. Nobody is going to build more of them if there is not more oil to refine. In effect, the US isn’t going to use the oil that comes down the Keystone pipeline. It will be refined in Texas and then exported.

    Kaboom says:
    January 4, 2012 at 9:32 am
    Thanks for that Kaboom. I would like to see someone like Volkswagon produce a graph similar to my Figure 7 using their data.

  73. Doug Badgero says:

    The maximum average annual price of oil (inflation adjusted) occurred in 1980. The peak daily price, also adjusted for inflation, occurred in 2008. Are we at or near peak oil? I have no idea but I’m not worried. What I do know is what Dr Milton Friedman said:

    “Inflation is always and everywhere a monetary phenomenon.”

  74. _Jim says:

    David Archibald says on January 4, 2012 at 4:41 pm

    Why is the oil price now $103/barrel?

    Why is bread $1 a loaf (the cheap stuff; and that just went up to $1.29 a loaf thank you very much) and a can of soup on the order of a buck ?

    Can you say “inflation”?

    What is the real cost of oil, in say, Gold?

    .

  75. Chuck says:

    There are few problems with these sorts of predictions. One is that no one can predict the future with any reliability. Another is that past performance is a predictor of future performance. A lot of people have lost a lot of money with that sort of thinking. A third is that human behavior is often assumed to be unchanging. Humans change and adapt to meet current conditions. Almost any future scenario for oil is possible.

    If enough people make a prediction, a few are bound to be right, but those few are likely to be wrong the next time.

  76. R. de Haan says:

    Matt Ridley doesn’t agree with David Archibald

    http://marcellus.psu.edu/resources/PDFs/shalegas_GWPF.pdf

  77. R. de Haan says:

    The video I posted was not complete, sorry for that.

    Here is the original presentation.

    Matt Ridley ‘s presentation starts at 20.28

  78. _Jim says:

    R. de Haan says:
    January 4, 2012 at 6:27 pm

    Nice ‘egg head’ recitation of the advantages of CH4 vs coal, et al, but, there is the matter of convenient transport CNG for passenger vehicle use, the retrofitting of existing vehicles et al.

    He doesn’t explain the economics of that process.

    Say, Ron, do you ever use the trunk in your present vehicle, for say, grocery transport? Kiss that function goodbye in the case of fueling via CNG …

    .

  79. Merovign: Constrained oil production caused oil prices to more than quadruple which in turn caused the economic chaos you refer to. See economist James Hamilton‘s paper: Historical Oil Shocks.

    This paper surveys the history of the oil industry with a particular focus on the events associated with significant changes in the price of oil. Although oil was used much differently and was substantially less important economically in the nineteenth century than it is today, there are interesting parallels between events in that era and more recent developments. Key post-World-War-II oil shocks reviewed include the Suez Crisis of 1956-57, the OPEC oil embargo of 1973-1974, the Iranian revolution of 1978-1979, the Iran-Iraq War initiated in 1980, the first Persian Gulf War in 1990-91, and the oil price spike of 2007-2008. Other more minor disturbances are also discussed, as are the economic downturns that followed each of the major postwar oil shocks.

    mikelorrey – Kindly enlighten us with references as to the alleged debunking. The data clearly shows constrained production while domestic production in oil production countries is increasing. Consequently net exports are declining in many oil exporting countries. Yet China and India are rapidly increasing consumption and oil imports. Consequently the Available Net Exports available to all other oil importing countries is declining. Prepare!

  80. Mark C says:

    Is it my imagination, or do these graphs look to be almost Mannian in their hiding of stuff? For one, starting Fig. 3 in 1980 hides some important trends in the 1970s similar to 2008+ that didn’t continue. Fig. 1 looks like it’s had the living daylights smoothed out of it to make a point, making it look all pretty and predictable. Show the raw numbers too.

    Speaking of trends….
    “If the demand reduction rate established over the last four years continues, US oil consumption will be down to the projected level of US oil production by the end of the decade.”

    Yes, and if my uncle had breasts he’d be my aunt. There was a stinkin’ recession going on that drove down demand, too, not just cost. Anyone remember when gas in the US dropped well below $2/gal at the start of the recession? If it were purely cost-driven, gas would have stayed nearer $4/gal even while demand fell off.

    Bah, this post has to be one of the worst ever on this site. Cherry-picking, hiding, and smoothing worthy of a Team effort. Bring some real data (and show your prediction work!) and try again.

  81. Bob Shapiro says:

    Your figure 2 is not clear on whether the US energy intensity is based on US production or US consumption (more likely). However, neither option would give a true picture.

    Especially since the 70s, the US has been running huge trade deficits. Yes, a significant part of that trade imbalance is for energy imports, but not all. To the extent that the trade imbalance is due to the foreign manufacture of goods consumed in the US, the energy used in the production of those goods would need to be included in the energy intensity figure.

    Including this vicariously (?) imported energy would show a very different graph from figure 2. It is only through the kindness of stangers that we are able to pay for the goods (including the energy spent to produce them) while exporting rapidly depreciating paper.

    Once those kind strangers wake up, the US will not “happily” be energy independent.

  82. Kum Dollison says:

    Here’s Global Oil Production for the last 7 years (during which time the global price of oil has doubled.) It’s from the EIA.

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

  83. bones says:

    As a long-time reader of WUWT, I have been impressed with the quality of the scientific and historical climate discussions that have been posted here. But on this issue of peak oil I am appalled at the many ill informed comments that have been left here. I have spent 32 years as an analyst of oil reserves and resources. In those years, the evidence has been accumulating that a peak in world crude oil production will occur. The only questions are when, and what can we do about it. World conventional crude oil has been pegged at about 74 million barrels per day for six years, during which there have been huge price increases. These have helped to stymie the recovery of the U.S. economy, but they have not led to large new oil supplies. If not for the recently gained production of about 14 million barrels per day of natural gas liquids, there would already be shortages of transportation fuels. There is a pressing need to be developing new oil fields and converting to natural gas as a transportation fuel. A just-in-time inventory system for most businesses will not remain viable without truck fuel. High fuel prices and shortages will be big-time sand in the gears of our economy. Coal and nuclear energy won’t help here. As one writer noted, it’s a damned poor time for magical thinking.

  84. bionuclearguy says:

    “Many of the authors warning about “peak oil” have no expertise in either the oil or mineral industries10 or in the specialized practice of forecasting. 11 Although there appears to be a large body of publications, the bulk of what is being written consists of nothing more than anecdotes and quotations from the works of others.”

    “What is noteworthy about this body of work is that it has been wrong repeatedly; the theories underlying it have been demonstrated false and largely abandoned by their proponents; and much of the research is shown to rely on unproven assertions. Rather than extensive research, simplistic extrapolation of historical curves is used, even though the method is not based on sound theory and clearly does not provide reliable projections.12 Back Off—I’m a Scientist: A favored tactic is to include technical information, implying the writer has a technical background that serves to intimidate many readers, including those in the general press.13 Being trained as a political scientist, I would hardly argue that “lay” experts cannot understand technical issues. However, it is telling that the great bulk of these articles appear in non-refereed journals or solely on the Internet.”

    From “CROP CIRCLES IN THE DESERT: THE STRANGE CONTROVERSY OVER SAUDI OIL PRODUCTION,” Michael C. Lynch
    http://masterresource.org/wp-content/uploads/2008/12/crop-circles.pdf

  85. Wayne Delbeke says:

    Hmmm – and the SHORTAGE ;-) of natural gas has caused the price to go from $8 to $3 and unlikely to break $4 per million BTU any time soon /sarc off – Here are some of the reasons:
    http://www.forbes.com/sites/kitconews/2012/01/04/2012-outlook-crude-oil-prices-could-rise-this-year-but-prices-could-be-very-volatile-2/

    I have an oil well on my farm that has been producing since 1952, and they are still drilling more and more around me as technology changes. Yes, oil and gas will run out one day, but I do not fret for my grandchildren or theirs.

  86. Wayne Delbeke says:

    bones says:
    January 4, 2012 at 8:33 pm
    As a long-time reader of WUWT, I have been impressed with the quality of the scientific and historical climate discussions that have been posted here. But on this issue of peak oil I am appalled at the many ill informed comments that have …
    ++++++++++++++++++++++++++++++++++++++++++++
    I don’t disagree that resources are limited but as oil prices rise it will again be economic to convert coal to fuel like we did in WWII and previously. There are still lots of energy options provided we are allowed to use them. The extent of the coal beds in North America is extensive and new technologies to exploit them are being developed all the time. There is a lot of carbon based energy available and we will use it until we discover something better.

  87. Lightrain says:

    1979-1981 what happened then? Inflation of the worst kind, leading to job loss and less demand for oil. And after that the use of oil increased again. In 2008-2012 there’s been a sweeping world recession that has limited consumption. Do you think the future will follow the 1979-1981 and demand will increase as the economy recovers? Everything from 2012 forward is just models and guesstimates. It’s the same old every year. Peak Oil, peak CO2, we’re doomed, doomed I say!

    BTW it was +17c in Calgary today, should I worry about AGW?

  88. Alan Wilkinson says:

    Sorry, but Fig 1 leaves me entirely sceptical that it is based on real data rather than supporting an agenda. Furthermore it looks nothing like the US EIA data world crude production 1995-2011 given in the link by Kum Dollison.

    I call b.s. Maybe the Oz report was suppressed for good reason.

  89. Steve P says:

    bionuclearguy says:
    January 4, 2012 at 8:42 pm

    Thanks very much for the link to Michael C. Lynch’s most excellent paper, which demolishes most of the alarmist”s hand-waving about declining Saudi production:

    Again, this is part of the “what if” argument, where one has to ask why there is no plan B to deal with a meteor striking the Saudi oil fields.

    This shows yet another example of poor research and numbers taken out of context. The threat being discussed is of depletion that would cause a production loss on the order of 500,000 b/d per year, at the outside, which sounds large unless you realize global capacity additions are about 5 mbd to 6 mbd, most of which goes to offset depletion. In short, even in the most dire scenario—for which there is no evidence—the impact would be only marginally noticeable.

    Evaluation:
    Ultimately, then, all the evidence purporting to show a near-term peak in Saudi oil production is discredited. It falls into patterns of irrelevant observations that are purported to be significant,assumptions of causality without considering alternative explanations,misrepresentation of data, numbers taken out of context, and so forth.

    CROP CIRCLES IN THE DESERT: THE STRANGE CONTROVERSY OVER SAUDI OIL PRODUCTION kept me up waay past my bedtime, but it is well worth reading in its entirety. Peak Oil falls into the same category as CAGW: BS meant to baffle and frighten the masses.

  90. Brian H says:

    catweazle666 says:
    January 4, 2012 at 1:08 pm

    I’ve been looking at that graph for over half a century, only the numbers along the bottom seem to change, they get bigger every year.

    Nice bit of methane, anyone?

    http://www.spiegel.de/international/world/0,1518,523178,00.html

    Don’t omit the second page – there’s something very interesting on it.

    Yeah; money quote from page 1:

    World reserves of the frozen gas are enormous. Geologists estimate that significantly more hydrocarbons are bound in the form of methane hydrate than in all known reserves of coal, natural gas and oil combined. “There is simply so much of it that it cannot be ignored,” says leading expert Gerhard Bohrman of the Research Center for Ocean Margins (RCOM) in the northern German city of Bremen.

    But page 2 goes on about sequestering CO2 into the hydrates to displace the methane. Inanity. Leave the *#$(@ CO2 where the plants can continue to benefit from it.

  91. ferd berple says:

    January 4, 2012 at 4:41 pm
    ”If the US went to German vehicle efficiency, they would halve their oil consumption.”

    The US could cut oil consumption even more if all 300 million lived in a country half the size of Texas.

  92. John Bronson says:

    Yes, conventional oil peaked 7 years ago. So what? So now we have even more liquid fuel production than ever before, because we also have tar sands, biofuels, gas-to-liquids, etc. And those poor buggers that pay for oil fired electricity? Some have even found out that SOLAR ENERGY IS CHEAPER THAN OIL! But isn’t the sun finite? Won’t we run out of solar energy a billion years from now? Doomers really just need to put down the Malthus, and pick up some Darwin. Humans are a clever animal. Very clever.

  93. JamesD says:

    You need to update Fig 4 and add “Eagle Ford Shale Production”. It is coming on strong.
    Also, evidently they are getting oil from shale in Eastern Ohio, but I don’t work up there, and don’t know the particulars. You have to throw some shale oil from the Rockies also.

  94. JamesD says:

    Alan,
    There really is no difference in quality between conventional and unconventional. You can basically “dial in” the qualities you want with unconventional.

  95. E.M.Smith says:

    At the person who asked about light / heavy sweet / sour:

    Sweet / sour has to do with sulpher in the oil and acidity. Taking sulpher out takes time, money, equipment, so sour sells cheaper than sweet. Heavy oil is sort of like a mix of motor oil and grease. It can be various ‘thicknesses’. It takes time, money, and equipment to turn that into thin light liquids like gasoline and kerosene (catalytic cracking or ‘cat cracking’ and reforming). So heavy sells for cheaper than light.

    Most “unconventional” is very very heavy, and often soaked into something like sand or shale so it will not just pump out but must be heated, cooked, steamed, or retorted to get it out (in some processes it is chemically converted in the ground into liquids). This can consume various mixes of water, natural gas (heat) and chemicals. So costs more. (Tar Sands run about $25-$35 /bbl for the effort, shale oil about $50). So folks don’t put $Billions into getting that oil out if they think Saudi can just push the price down to $30 and put them out of business or PertroBras in Brazil can find another monster field – they are at what, 2 or 3 now in the last dozen years?…)

    This all matters.

    For a bunch of years Saudi produced from a couple of giant fields. Why even look for more if you have 2 Million bbl/day of reserves you are not selling? They even had a third field somewhat drilled out, but folks didn’t want to buy that oil. It was “heavy sour”. So a few years back we heard two statements that sounded conflicted, but were not. We were told “there is a shortage” and from the Saudis “There is plenty of oil, folks are not buying”. Why? Because the refiners didn’t want to spend money converting to process ‘heavy sour’ if they could just buy ‘light sweet’.

    Over time (partly due to a lot of other ‘heavy sour’ from south of the USA) refiners converted. Valero VLO was among the first (so for several years bought heavy sour cheaper than other refiners bought light / sweet and made a bundle… a great trade for about a decade); but other refiners converted too.

    Now a lot more refineries can process heavy sour.

    And about 2 or 3 years ago a bunch of drill rigs headed off to Saudi to start drilling more holes in some of the other areas. They added a couple Million bbl/day, last I heard, but are still at it.

    How much ‘reserves’ does Saudi have? Nobody knows as until recently they didn’t even need to look for more and couldn’t sell all they had drilled. So yeah, the ‘light sweet’ fields are getting watery and harder to produce. Open the taps on the heavy / sour fields and send that to the upgraded refiners… Oh, and maybe actually try looking in a couple of other areas to see if there is more laying about…

    At the same time something ‘strange’ happened in deep water. Chevron CVX found oil below the depth where it was said to be impossible to find oil. Under the Gulf of Mexico. LOTS of oil.

    Just impossible, everyone said. Heat would break it down and it just can’t exist. But it does.

    So now all over the planet, in EVERY FIELD EVER PRODUCED, we have to ask: Is there MORE, below where we stopped drilling because “it couldn’t exist”? There is a whole new shell of depth to explore…

    Brazil ran out to deep water and found a couple of giant fields. Petrobras PRR sold 20 years worth of production to China in exchange for $200 B or so of US Treasuries China wanted to dump. Estimates are all over the place but some put it at about a Saudi Arabia (others much less). Nobody will know until it is drilled.

    BTW, in old dead “empty” oil fields, about 1/2 the total oil is still in the ground. They are shut in as it is too much trouble to try and produce at that point (as long as new fields can be found). But the oil is still there. So for ALL the oil ever produced (shown on those graphs) there is at least that much oil still in the ground. Waiting for a Bright Idea to get it out. APA Apache Oil makes a great living producing oil from spent fields with new techniques…

    Mean time Russia started looking “where oil can’t exist” in hard rocks and found oil. The “abiotic oil” that some folks say can’t exist. So Russia is producing like crazy. We now have huge chunks of land that was never looked at because it was the wrong kinds of rocks; that have to be looked at because Russia finds oil there.

    See a pattern here? When oil is cheap, we stop looking. When there are more than 50 years reserves, we stop looking. Then price gets up to $100 /bbl and we look, and find more.

    Oh, and in the other oil thread I posted a comment that Devon Energy DVN just signed a deal with China for $2 Billion to start producing shale oil in the USA. Oil that “doesn’t exist” in terms of “reserves” because we don’t produce it. Yeah, a chicken and egg definition problem. (That’s WHY we are always going to run out in 50 years, btw. We stop defining things as reserves at that point…) So there are now about 3 TRILLION bbls of “shale oil” that just became “reserves” (or will, as soon as someone makes the entry in an annual report).

    BTW, global tar sands are estimated at about the same. Some folks think there might be about a Trillion bbl in Venezuela alone. Again, folks don’t really know as we don’t need them yet.

    The kind of oil in really crummy deposits is asphaltine heavy. It has a lot of polycyclic hydrocarbons in it. (Large sheets of joined benzene rings) and not much linear molecules. So it takes a lot of cat cracking, so why bother. For now…

    There’s more (a whole lot more) but this is already a bit long. Just as a wrap up, though, there are LOTS of sources we don’t talk about much. Like using nuclear power to turn coal into gasoline. VW did a study on this in the ’70s and it was competitive at about $2 /gallon. Call it $4/gallon in present dollars.

    For all the folks fretting about converting cars to run on natural gas: Don’t forget you can just convert the natural gas to gasoline in a GTL plant. Not really hard to do at all. Chevron has one or two running IIRC. We’ll be up to our eyeballs in nat gas for generations…

    But if all that isn’t enough, Rentech RTK has just done a spin out / secondary of it’s nitrogen fertilizer facilities and is also making ‘biofuel’ for LAX airport. From trash. They also make oil from trash. I don’t think we’re going to run out of trash any time soon. (but if we do we can go mine all those old landfills ;-)

    BTW they just signed a deal with Peabody BTU one of the largest, if not THE largest, coal miners in the world. To make oil from coal:

    NEW YORK (MarketWatch) — Peabody Energy on Tuesday pledged $10 million in cash toward a future coal-to-liquid fuel operation run by Rentech Inc., in return for the right to buy a stake in the plant, which is being billed as the first commercial U.S. facility of its kind.

    http://www.marketwatch.com/story/peabody-energy-to-invest-in-rentech-fuel-plant

    Yeah, it’s a small one now. And there are other folks with slightly different technology doing very similar coal to oil things (several facilities being built in China, IIRC by Synthesis Oil SYMX and Syntroleum SYNM, but it could be others. SYNM has a deal with Tyson TSN where they turn chicken butchering waste into oil…

    So yes, absolutely. We are in PEAK (conventional) OIL! We are GOING TO RUN OUT!!!!

    And nobody will even notice.

    CTL, GTL, Trash to Oil, Tar Sands, Shale Oil, methane clathrates, et al will be filling our tanks instead. Price about $4 / gallon. (Which is why folks have started making those facilities now).

    That is the ‘magic thinking’ that everyone forgets. And it really IS Magical. It is “resource substitution” via “technology”. It has been the history of modern man since we turned our first napped rock into a substitute for claws and teeth via the stone knife.

    So take all those pretty graphs and profound projections and learned concern, and just chuck ‘em in the trash bin. Just not important as long as we have the technology we have that is already invented and sitting on the shelf. Some of it has been in production for 30 years. (SSL Sasol making gasoline, Diesel and “petro” chemicals from coal since the ’70s). Just need oil prices to hold above $80 /bbl average with only sporadic drops to $50.

  96. theBuckWheat says:

    “Peak Oil” is no more about the price of gasoline, diesel and Jet-A than “Global Warming” is about temperature change.  Both issues are used by those with agendas of worry and change, primarily to destroy our prosperity and our liberty.  Our great-great-grandparents didn’t worry about “peak whale”, because the higher price that was caused by dwindling supply was mitigated by adaption, innovation and changes in behavior.  Whale oil for illuminating homes gave way to the use of oil made from coal and later from crude oil.

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

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

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

  97. David says:

    Why restrict the analysis to “conventional” oil? My gas tank doesn`t care whether its origin os conventional or unconventional. It would be nice to include all types of reserves to get a more relevant picture of the situation.

  98. Ed_B says:

    E.M.Smith says:

    “So yes, absolutely. We are in PEAK (conventional) OIL! We are GOING TO RUN OUT!!!!
    And nobody will even notice. ” “Just need oil prices to hold above $80 /bbl average with only sporadic drops to $50″

    Nice summary. I totally agree. The near $100 price is here to stay and I hope we don’t get silly spikes to $150 that puts the worlds economy into recession.

    No Peak oiler ever said thet oil was going to run out by the way.. they just correctly anticipated peak conventional oil 10 years ago when everyone was poo pooing the concept(the charts say it happened in 2005 to 2008, right on schedule). No, don’t throw the graphs away, as they still help to summarize what we should expect from remaining conventional fields, and when we add what we “manufaacture” on top, we can see the future in terms of supply growth. The biggest limitation to “manufacturing” oil is capital, in the form of $$$ and human talent. It is an exciting time for young people to get into the oil manufacturing business!

  99. Crispin in Waterloo says:

    @MarkW
    I find it funny that someone named “kaboom” is pushing CNG.

    ++++++++++

    It is called nominative determinism. You become what you are named.

  100. John Garrett says:

    According to the 2011 issue of the BP Statistical Review of World Energy, U.S. petroleum consumption in 2010 was 19.15 million barrels per day.

    That figure contrasts and conflicts rather starkly with the data given in Figure 3 of Mr. Archibald’s post.

    I’m sure there’s an explanation; what am I missing ?

  101. cromagnum says:

    The entire article fails to address (or at leas mention) the taxes that would be levied on CNG fuel or modifications to fund the roads, and other political dreams.

    These would be wholesale level, distribution level, and retail level. This can alter the math, depending on the funding that comes from the lobbyists.

  102. Crispin in Waterloo says:

    @theBuckWheat

    I mostly agree with you. Peak coal is a possiblity (forecast to be 2070 by Willem Nel). Coal is without doubt a fixed quantity resource. It does not appear that crude oil and natural gas are fixed in the quantum of supply. There are good reasons to believe they are both manufactured under heat and pressure in the crust of the earth, and rise to be near enough to access at major fracture zones at the edges of plates. One can puncture the covering (Deep Water Horizon) or drill into the cracks (Haiti, California). Sometimes the covering fractures suddenly releasing a motherlode of trapped, accumulated oil (Athabaska oil sands) .

    Peak oil is an artifice of economic opportunism. The price of gasoline is dominated by available refining capacity not feedstock. There is no reason for the oil industry to invest in additional capacity because the selling price rises if they do not. Have a look at when the current refineries were built. On the whole, oil is a self-serving cartel. If it gets too expensive, SASOL will be building coal to liquid (CTL) plants all over the place including Mongolia and Brazil. Maybe even Virginia, who knows? But that feedstock is limited. Oil may literally flow forever and ever amen. Limestone and water under enough heat and pressure make natural gas very nicely thank you. Natural gas endothermically polymerises into oil and tar. All SASOL does is to do it above ground. Any idea how many SASOL plants China is building right now? Two I heard about…

  103. John Mann says:

    I paid $1.65 per gallon of gasoline in 1980 when, for example, the spot price for Brent was $36.83 per barrel. In late 1999, I paid $0.99 per gallon when the spot price for a barrel of Brent crude was $17.97. Recently I paid $2.34 for a gallon of gasoline. Who is going to tell me what I will pay even next year with any confidence?
    And to add to the uncertainty, how many groups who are not end users are affecting the prices of crude and gasoline based on current events?
    And Pennsylvania is a major producer in the energy industry now. Who predicted that?

  104. harrywr2 says:

    Assuming an increased capital cost of $5,000 for an OEM CNG vehicle

    In India a CNG Chevy Aveo costs $1100 more then the gasoline model.

  105. Steve P says:

    ferd berple says:
    January 5, 2012 at 12:30 am

    “The US could cut oil consumption even more if all 300 million lived in a country half the size of Texas.”

    (original comment by) James Sexton
    January 4, 2012 at 11:27 am
    ”If the US went to German vehicle efficiency, they would halve their oil consumption.”


    We can’t change the size, or geographical expanse, of the United States, but we could save quite a bit of fuel if we changed the way we haul freight. Trains are much more efficient than trucks for this purpose:

    As illustrated in Exhibit 1-1, rail fuel efficiency varies from 156 to 512 ton-miles per gallon, truck fuel efficiency ranges from 68 to 133 ton-miles per gallon, and rail-truck fuel efficiency ratios range from 1.9 to 5.5.

    http://www.fra.dot.gov/Downloads/Comparative_Evaluation_Rail_Truck_Fuel_Efficiency.pdf

    ~
    And ‘sorry to belabor the point, but everyone talking about Peak Oil really needs to read, and understand, David C. Lynch’s brilliant analysis of this misleading notion.

    Please read PDF linked by bionuclearguy on January 4, 2012 at 8:42 pm

  106. Experts with the most data are increasingly warning of shortages and declines in oil production. See:
    Oil will decline shortly after 2015, says former oil expert of International Energy Agency
    Posted by JoulesBurn on January 5, 2012 – 11:46am

    Olivier Rech developed petroleum scenarios for the International Energy Agency over a three year period, up until 2009. . . .He expects stronger tensions as of 2013, and an inevitable overall decline of oil production “somewhere between 2015 and 2020″ . . .

    John Garrett
    See EIA data: U.S. Weekly Product Supplied , especially US Product Supplied of Petroleum Products history, and the graph.

    Be careful to distinguish between total “liquids” (all fuels, sometimes labeled “oil”) versus petroleum crude oil.

  107. Robert Brown says:

    This is a really bad time for “magical thinking.”

    I agree. I also agree that there are untapped reserves in moderate abundance that aren’t being exploited for political/environmental purposes, most likely (cynic that I am) to preserve them so that in 20-30 years we have oil as the oil supply of the rest of the world is being sucked dry.

    As for “abiotic oil” — perhaps, possibly, but far from proven, don’t you think? Consider where, and how, most oil is found, ditto coal. And even if oil is partially or even completely abiotic in origin and leftover from when the planet was first cooling, well, we still have to be able to get it and most wells do run dry eventually and the replenishment rate “from below” may not be great enough to keep up with demand.

    This is actually a rather excellent and informative report, and is the kind of thing that should be out there driving the entire public discussion on energy. The real point of these figures is that — if true — there is no CAGW problem at all! due to CO_2, simply because within the next decade, we’re all going to be producing a lot less CO_2 no matter what.

    The bad thing about the report is that it focusses too strongly on “just oil” (and natural gas, because the two are often found together). A better report would consider oil, NG, coal, nuclear, solar, and wind. The reason all of them need to be considered together is because there are easily understood crossover points as supply shrinks and demand continues relatively unabated, causing the price to fairly systematically increase. At some point it becomes cheaper to mine coal and turn coal into gasoline than to mine oil. Oh, wait — that point is now. The first US coal-to-gas production facility is just now breaking ground in West Virginia (Adams Fork Energy).

    As I have often pointed out on this site, which seems to contain some “haters” of solar energy, hate it or love it solar energy is already at the leading edge of the crossover point where it is more or less break even as a way of getting energy to dump into the electrical grid (and thus reduce the cost to utilities relative to more expensive fuel-based electricity). There are decades of growth in this process where storage doesn’t matter and the fact that the sun doesn’t shine at night doesn’t matter — daytime, unstored electricity will simply be cheaper than fuel-produced electricity, which will increasingly be used just to manage and smooth production and demand variation. And then there are a lot of people working on solar plants that can “bank” heat and provide smoothed output and nighttime output. Not all of the pilot generating facilities being constructed are profitable yet, but as the technology is worked out the construction and operation gets cheaper, and the projected continuous rise in the cost of oil and coal makes crossover to solar, driven by pure capitalist profit advantage, nearly inevitable.

    At the moment, solar-cell derived electric has an amortized payback time of roughly 20 years in North Carolina (less in the southwest where insolation is highest, taxes on alternative forms of energy are the greatest). That’s just a bit too long for most people to want to pop for the substantial investment involved, even with interest rates as low as they are. But the cost of solar cells has an exponential halving time of roughly 10 years, and the rising cost of fuel based energy is pushing in the other direction, reducing its comparative cost even faster. As this process continues, solar implemented on both large and small scales will become increasingly attractive until it is a no brainer, costing half as much as fuel-derived energy.

    Biofuels are also a form of “solar” energy, and it is not terribly unlikely that we will see research-driven breakthroughs here that permit e.g. solar plants to produce carbohydrate-rich algae, ferment it, convert it, and produce gasoline that way as well (or produce bio-diesel from high fat strains). It isn’t all about corn or deforestation — there are really exotic technologies out there that people are investing in and any one of them could turn out to be an “oil killer”, yet another alternative way of getting gasoline without mining oil (alternative to coal-to-gas, already possible at or around break even). It’s just a matter of coming up with a natural bio process that creates organic, fixed carbon at a cost per derived joule that competes with the cost of mining those derived joules out of the ground either in the form of coal or oil. This completely solves the problem of storing the sun’s energy for later use, and has the considerable advantage of letting us continue to drive gasoline-fuelled cars. Gasoline simply has an enormous energy density compared to nearly any alternative. Note that biofuel is a “carbon neutral” solution. It just re-fixes atmospheric CO_2 to be burned again, and it might give all of our NC tobacco farmers something to grow that doesn’t kill people but will still be worth a fair bit of money…;-)

    Even wind isn’t to be sneezed at as energy prices rise. Cost-benefit analysis doesn’t give a damn about global warming scares — what matters is that a free society is going to harvest energy the cheapest way they know how, and if it turns out to be wind, well hell then, let’s make electricity from the wind! In the meantime (before we reach the break even to win a bit point) let’s ensure that we work on the technology itself so it is there, as cheap and debugged as possible, as an alternative for when we might need it.

    IMO, the energy production profile we are likely to have in the year 2050 will have well over half of the world’s (not just the US’s) energy production derived directly or indirectly from the sun, unless we work out fusion first, with nuclear, NG, and coal making up the differences. I won’t be alive at that point to see it (probably) but I expect to see massive solar plants being built for most of the rest of this decade, initially partly subsidized but as time passes we’ll see more and more of them being just plain built straight up as the cheapest way to get more, cheaper, electricity. Large parts of the world are ideal for making solar energy, and a second technological problem that could revolutionize its production in those places is the development of cheap ways to transport the energy to places where the sun does not shine so much, so often, so consistently. A comparatively tiny patch of the Earth’s surface in Arizona or the Sahara somewhere could produce all of the energy used by the entire world, if one could get it from there to here, if one could use it as easily at night as during the day. Hybrid technologies — using solar electricity as the energy source for converting e.g. plant matter to biofuels that can later be burned in conventional plants — or improved transmission lines might do the trick here.

    This is why I consider CAGW to be such an enormous non-problem. We know that in the year 2050, let alone 2100, we aren’t still going to be burning fossil fuel for energy the way we are today. It wouldn’t matter if somebody discovers that there’s a bubble of oil with the volume of lake superior just a few hundred meters further down than has ever been explored right under my house right now — there are too many problems associated with mining and burning fuels for energy and in any case burning fuel for energy doesn’t scale and continue into the next millennium — we will have to come up with alternatives to achieve a steady state civilization that doesn’t risk collapse back to barbarism or conversion into a “water monopoly” Imperium, substitute energy resources for water. We can even clearly identify the eventual replacements for oil (and yes, for coal as well). In the end, conversion will be driven not by ideology or politics but by humans, acting in their own self-interest. It will simply be cheaper not to use oil for fuel, because non-oil derived energy will cost less and be increasingly abundant because, well, it costs less, which will make it even cheaper. Very little in the curves above suggest that oil is ever going to get to be much cheaper than it is right now — 30% variations up or down sure, but we’re not likely to see gasoline prices of $1/gallon for oil derived gasoline in any future Universe I can foresee.

    rgb

  108. Wayne Delbeke says:

    How do we calculate peak oil when certain environmental groups are attempting to pay countries like Ecuador to keep their oil IN THE GROUIND.

    http://www.huffingtonpost.com/2010/09/28/ecuador-requests-internat_n_742178.html

    This used to look like a good idea to protect a unique environmental area but it appears to have morphed into a scheme to extort money from various sources as it has expanded to other areas including off shore along with huge fines for small leaks in the whole area …. which can be ameliorated through discussions with an appropriate representative of the government – according to a report I just listened to on CBC. That was not their spin, but it is what I took away. They were questioning how billion dollar law suits could develop out of a small oil spill. Apparently if you were to contribute to their environmental funds that the charges on the oil spills might be adjusted …..

    Isn’t International work fun? One of the reasons I quit working overseas. I hated the guns and being asked to pay to leave a country. Gotta pick the right countries I guess.

  109. Wayne Delbeke says:

    Robert Brown – good comments covering many of my own thoughts. Interesting that you also noted some oil reservoir areas seem to being reserved. Good well thought out comments. Thank you.

  110. Robert Brown says:

    Again, E. M. Smith, I failed to see that you made the same answer, only better. Hats off to you, sir. I agree, for moving cars gasoline is as good as it gets, and there are lots of ways to get gasoline as soon as the right price points are reached (and that point is pretty much “now”, although oil companies still have plenty of reserve capacity to hold the price just under the point where this gains momentum and economy of scale for some time still).

    I am still unconvinced about abiotic oil, although I am certainly open minded about it. T’would be lovely were it so, but I still somewhat favor subduction of millions of years of organic crap on the ocean bottoms at tectonic plates and gradual conversion under pressure (which can still produce very deep deposits and deposits in non-sedimentary rock). AFAIK there are no “biotic” signatures likely to survive such a process — C14 has far too short a half-life, although there may be other things that could be used. I’m not just talking about the last 500 million years, also — there is evidence that there has been organic life on Earth for almost the entire 4 billion years of its age, so there are billions of years of primitive oceanic life living, dying, and depositing on bottoms and being swept down into the crust to account for. In part, as I understand the issue, the question is just where and how carbon precipitated out as the molten Earth cooled. AFAIK the answer to this question is not well understood, although the carbon being vented at certain places very, very deep under the ocean may hold a clue. Curiously, I “work for” one of the people who studies this, among other things, at Duke’s marine bio lab. There are amazing ecosystems at those deep vents, driven by free energy sources that are not, I believe, solar! Even indirectly. Nutrients are locally given up by the vents, energy is the heat of the vent itself. It is geoenergy and geobiology, and may represent a lot of the evolution that went on early on before things moved up in the water column. Or not — not my area of study.

    Either way, building and using cars that consume less gasoline makes pure economic sense (especially with relatively high gasoline prices) and it will be interesting to see what happens when solar-derived garbage-fuel (where solar will probably be cheaper than nuclear, don’t you think, in around a decade or at most two?) starts to undercut most of the alternatives.

    rgb

  111. Zeke says:

    “Either way, building and using cars that consume less gasoline makes pure economic sense (especially with relatively high gasoline prices)” ~Robert Brown

    Replacing useful machines which people purchase for both utility and enjoyment, with cars which are much less useful and which people do not wish to purchase, does not make any economic sense at all. It is government make-work and results in worthless products.

  112. Steve P says:

    Robert Brown says:
    January 5, 2012 at 8:30 am

    This is why I consider CAGW to be such an enormous non-problem. We know that in the year 2050, let alone 2100, we aren’t still going to be burning fossil fuel for energy the way we are today.

    Just for the sake of argument, Robert, how did you (not we) arrive at your conclusion?

    Solar, Wind, and Nuclear all have major technical and/or environmental problems, but we have plenty of coal, and we know how to burn it very cleanly these days. As for oil, or “Peak Oil,” please read Lynch.

    You also wrote:

    …building and using cars that consume less gasoline makes pure economic sense…

    I could not agree more, Zeke’s equivocation notwithstanding. High efficiency always makes sense. The same is no less true with words.

  113. R. de Haan says:

    @_Jim says:
    January 4, 2012 at 7:03 pm
    R. de Haan says:
    January 4, 2012 at 6:27 pm

    Nice ‘egg head’ recitation of the advantages of CH4 vs coal, et al, but, there is the matter of convenient transport CNG for passenger vehicle use, the retrofitting of existing vehicles et al.

    He doesn’t explain the economics of that process.

    Say, Ron, do you ever use the trunk in your present vehicle, for say, grocery transport? Kiss that function goodbye in the case of fueling via CNG …”

    Jim, thanks for the question and the remarks.

    1. I see shale as an excellent fuel for electricity generation.
    You don’t need and extensive costly grid, no smart meters as you can simply scale up or down the power plant. Same for natural gas. I always say that natural gas is good for cooking, not for driving.

    2. Coal, natural gas, shale gas can be converted into gasoline and sulfa free diesel
    Coal to liquid is already in use in South Africa and China.
    Gas to liquid is already in use in Qatar (Shell Plant)

    3. As said I see nothing in the application of shale or natural gas for automotive applications.
    It takes too long to fuel up and you lack range. You need a high pressure system, it costs additional energy and the pumps/valves have short life cycle
    In the Netherlands we have busses running on natural gas that are fueled up during the night.
    But a test with taxi’s went bad because the time to fuel up was too much.
    A taxi makes money when it’s moving not at the fuel pump.

    4. I love LPG though.
    It’s low pressure, high octane and if you use liquid injection this is absolutely superior to gasoline.
    The tank is no problem because you simply build it under the floor without loss of boot space.
    And fueled up with gasoline and LPG you can double your range.
    Besides that. The engine runs smoother and the engine oil remains cleaner, less wear, less maintenance, just great and where I live very, very cheap.
    Last year I bought a P92 Range Rover (8 cylinder) on the cheap with low milage and put an LPG installation in it just to have a 4WD for winter conditions and some heavy pulling.
    At home I’ve build a power generator (for emergencies) in the basement based on a Smart 3 cylinder engine I bought for scraps and this engine also runs on LPG.
    The exhaust gas is diverted to the greenhouse (tomatoes, cucumbers and peppers love Co2) and in the garden I have two big storage tanks. One of them has an electric pump so I can fuel up the cars at home.
    I think I can bridge a 6 month oil boycott with full tanks.

    And if that doesn’t work I simply move to another location.

    We don’t have an energy problem, we don’t have a climate problem and CO2 is great stuff not a poison.

    By the way, the company that delivers the best LPG injection system available with fuel tanks that fit under most cars is Vialle, just google it.

  114. John Bronson says:

    Steve P wrote:

    “Just for the sake of argument, Robert, how did you (not we) arrive at your conclusion?”

    Just look at a graph of renewable energy development over time. Renewables have already surpassed nuclear power in the US. You might also want to look at a graph of PV price over time. Looks a lot like Moore’s law doesn’t it? This is why CSP projects are being replaced with PV.

    It’s also intersting to note that the actual number for climate sensitivity directly attributable to CO2 is only 1 degree C. At our current rate of 2ppm/yr, it would take 200 years to double CO2 levels.

  115. David Archibald says:

    E.M.Smith says:
    January 5, 2012 at 3:38 am
    The US DOD are well aware that there is a problem with future oil supply. Observe this:
    http://www.dod.gov/ddre/doc/Jul08_Synthetic_Fuel_Utilization_Report_to_Congress.pdf
    But they are stymied by legislation passed in 2007: “the Energy Independence and Security Act of 2007 required that any alternative and synthetic fuels bought by federal agencies for “mobility-related use” must have lower greenhouse gas emissions — or at least no greater — than those
    of conventional fuels.

    Most of the Republican contenders have now renounced AGW but have yet to go to the next step which is to promise to repeal that 2007 legislation and let the DOD use Fischer-Tropsch from coal.

    harrywr2 says:
    January 5, 2012 at 7:47 am
    Thanks for the information.

  116. Zeke says:

    One thing you cannot blame me for is “equivocating.” Implicit in my post is point that government mandating milage and emissions standards, and “investing in car technology” is the quickest road to worthless cars and worthless companies making them.

  117. Zeke says:

    David Archibald says:
    January 5, 2012 at 2:08 pm
    “Most of the Republican contenders have now renounced AGW”

    This is totally false. Mitt Romney supports a carbon tax and has a long history with ghg initiatives. For example, he passedCO2emissions standards 30% stricter than nationwide standards.

    Where has Romney renounced AGW? There are statements that he has made which you can construe any way you like, but his past and his present positions involve carbon tax, vat tax, and worldwide emissions reductions agreements. Look it up.

  118. JimBrock says:

    ChE: When I was in engineering school, I was advised by a professor to avoid the oil industry as there was only a fifty year supply of proved reserves. Now in my 80s, I know that it does not pay to prove reserves more than fifty years ahead. And, while there may be a finite amount of oil and gas, as the supply shrinks, prices go up, and new sources of supply become financially viable.

    In short, we won’t run out of oil and gas in my lifetime (in my 80s, remember), or those of my children, or grandchildren, or (when they arrive) my great-grandchildren. Peak oil is, then, mostly an academic concept.

    ‘Nother ChE

  119. 1DandyTroll says:

    How many would contend that there exist more oil on this “feeble and weak” little planet than there is water in the Great Lakes in US and Canada?

    Imagine our 160 years use of oil. That’s a lot of oil!

    Take a world map and look at the Great Lakes. They’re some big lakes right, at least on the surface, but still just specks on the chart compared to everything else. Banded together, though, they’re like the size of Ireland.

    Imagine the thousands of oil drilling sites. Put the reserves together, do they rival the great lakes in size in your imagination?

    They should, because spread all that oil out, the area would be H U G E !

    But of course it would be so deep. Apparently there’s more an 14 times more water in the Great Lakes than the oil we have used for 160 years, and the Great Lakes aren’t all that deep.

    No matter the hubris or ego, but it’ll probably take more ‘an a couple of hundred years to extract a billion years of natural oil production. After all, when all is said and done, our planet is only small compared to the sun, otherwise it is friggin ginormous compared to man(n).

  120. Steve P says:

    Zeke says:
    January 5, 2012 at 2:10 pm

    One thing you cannot blame me for is “equivocating.”

    Yes, you’re right. I should have said “strawman.” My bad; ‘sorry ’bout dat.

    Zeke says:
    January 5, 2012 at 9:23 am

    “Either way, building and using cars that consume less gasoline makes pure economic sense (especially with relatively high gasoline prices)” ~Robert Brown

    Replacing useful machines which people purchase for both utility and enjoyment, with cars which are much less useful and which people do not wish to purchase, does not make any economic sense at all. It is government make-work and results in worthless products.

    Useful machines, utilitarian and enjoyable, could also be made more fuel efficient, no?

    ~
    John Bronson says:
    January 5, 2012 at 1:06 pm

    Just look at a graph of renewable energy development over time. Renewables have already surpassed nuclear power in the US. You might also want to look at a graph of PV price over time. Looks a lot like Moore’s law doesn’t it? This is why CSP projects are being replaced with PV

    (What the heck is CSP?)
    John, as I mentioned above, wind and solar both have serious technical and environmental problems. In any event, neither solar nor wind can provide the base-load power.we need to run our civilization.

    We have plenty of coal, and we have learned how to burn it quite cleanly.Coal is safe, reliable, relatively inexpensive, and probably cleaner – all things considered – than either wind or solar.

    Coal-fired power plants are certainly safer than their nuclear counterparts. The fall-out from Fukushima will be with us for a very long time. It really is worse than we thought.

  121. Ed_B says:

    “Peak oil is, then, mostly an academic concept.”

    Wow, I guess you missed making millions of $$$$ on owning small oil companies that went up 10 fold?

    next time, pay attention to the academics!

  122. Windchaser says:

    @JimBrock

    Yes, we’ll never run out of oil – everyone agrees on this, even the Peak Oilers.

    The question is not when we will run out of oil, but “When will oil become so expensive that we start using less of it?” Eventually, it will be more expensive to get more oil out of the ground than it will be to grow biofuels, or to make gasoline from coal, or to bicycle to work, or to use an electric vehicle, or whatever.

  123. Walter Sobchak says:

    “Why restrict the analysis to “conventional” oil?”

    Easier to generate hysteria so that they can raise taxes.

  124. Spector says:

    It looks like work is being done on an alternative method of achieving Energy Independance by making petroleum obsolete.

    Charles Holden – Liquid Fueled Thorium Reactor 40 Megawatt Pilot Plant Outline @ TEAC3
    Uploaded by gordonmcdowell on Dec 30, 2011
    20 likes, 0 dislikes; 990 views; 18:17 min
    “Charles S. Holden gives an overview of his 40 Megawatt Thorium Molten Salt Reactor design. No Plutonium Produced. No melt downs. No fuel rods. No cooling ponds. No 10,000+ year spent nuclear fuel storage.

    “Presented at the 3rd Thorium Energy Alliance Conference, in Washington DC”

  125. Brian H says:

    Robert Brown says:
    January 5, 2012 at 8:30 am

    As I have often pointed out on this site, which seems to contain some “haters” of solar energy, hate it or love it solar energy is already at the leading edge of the crossover point where it is more or less break even as a way of getting energy to dump into the electrical grid (and thus reduce the cost to utilities relative to more expensive fuel-based electricity).

    You’re usually so clear-thinking, too bad you resort to handwaving instead on this subject.

    The magical transmission and storage capacity required to make variable sources from hugely diffuse energy collectors work don’t and can’t exist. TANSTAAFL. Even room-temp superconductive transmission wouldn’t change that (and would deflect energy sourcing and consumption into totally different paths, first, in any case.) Case in point: Britain has very poor solar resources, but a fair amount of wind. It would require windfarms covering 10-20% of its land mass to provide its power, assuming they could be maintained and replaced as they fail and reach end-of-life (much sooner than projections, of course, as usual). And sometimes (2009, e.g.) a blocking high sits on the country in the middle of winter, and the winds die. And people soon follow.

    As for solar:
    Solar park after 18 months:
    [IMG]http://solarresearch.org/sk2010/images/stories/Loeschke_PVSolar_Markranstaedt_201106.jpg[/IMG]

    Solar park after 20 years:
    http://notrickszone.com/wp-content/uploads/2011/07/1989-Solar-Park.gif
    http://notrickszone.com/2011/07/04/weed-covered-solar-park-20-acres-11-million-only-one-and-half-years-old/
    Take your pick!

    Costing for panels is the least significant part of the calculation. Even if they were free, solar would still be egregiously unworkable on a large scale.

  126. Brian H says:

    P.S. “to dump onto the grid” — I think you’d better have a wee chat with some of the dumpees. Grid managers hate the stuff; it forces impossible rampings up and down of facilities designed for base load generation, and/or reliance on much more inefficient load-following designs, etc. Recently, Poland blocked purchases of German excess solar peak power because it was making such a mess of their grid, causing panic on the German side — what do do with all this wildly fluctuating useless output? Etc.

    Denmark has a parallel situation with its wind power; it generates a high percentage of its needs, but at the wrong times. So it sells it at a hefty loss to neighbours, who also are rather uninterested in having it.

    Stupidity on stilts, I calls it!

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