Conventional Wisdom, Unconventional Oil

Another well written post, Willis. Makes me miss Port Orford…
BTW there is rumors a big Gas find here in NE Oregon….
Certain folks don’t like peace, prosperity, and plenty….

I used to give a talk on the history of oil explortion in the Powder River Basin of Wyoming.
First, they drilled all the surface anticlines, domes so obvious they just asked the sheepherders where to find them. When all of them were drilled, they declared the PRB drilled up, fired all the geologists and left. Then they found with seismic data, structures could be found which had no surface expression. Another cycle of boom and bust followed, and certainly, this time, all the oil had been found. Then oil was found in stratigraphic traps, where the rock was not folded at all, but things such as buried sand bars, river channels and dunes were found full of oil. The entire basin was drilled up, with oil found everywhere. You might think people would have known better to write the area off, but after the stratigraphic traps played out, people with no imagination then missed the coal bed methane developments, and now only a few are trying to drill the source rocks horizontally. We don’t run out of oil, we just have pauses, waiting for people with vision to come along.

Thank you, Willis!
A welcome burst of sanity, adventure and poetry.
Ah, the majesty (and smell) of sea creatures…
Kurt in Switzerland

Doesn’t matter. The Export Land Model handles all your arguments, right or wrong. It is the thing at the moment in POLand. Buy some.

We hit peak oil in the mid-1800’s, sperm oil that is. Call me Ishmael alarmed.
http://en.wikipedia.org/wiki/File:US_Sperm_Oil_Imports_1805-1905.jpg
/sarc
Yep, there are plenty of fossil fuels and when there isn’t any more centuries from now there will be the next thing, perhaps extraterrestrial hydrocarbons.

Your writing is inspiring in many ways!

Agree completely. All forms of fossil fuel, by whatever means of extraction, are fungible, at some cost, including an energy cost.
You are also correct about rapid changes in mining technology. Here in Western Australia, a mine recently opened with no underground workers (the Argyle diamond mine). All machinery is operated remotely. Iron ore trains in the Pilbara are driven by office workers in Perth.
Steps along the road to autonomous robotic mining operations, and then the sky is literally the limit.

I wonder if there will ever come a time of peak alarmism? (oil / climate change / ice age / food/ …, whatever)

Willis, you just don’t understand peak oil do you? So I will give you a simple analogy, the apple tree in my garden has low hanging fruit that I can pick while standing, these are known as “conventional” apples, the rest of the apples I have to use a ladder to pick, these are known as “unconventional” apples. Now do you understand?
Nice story about fishing.

“To him who in the love of Nature holds, she speaks a various language”
For some, Nature’s love is embodied in the language of the sea. Others, the sky or horizon’s to be reached.
For me, the crux, a small boat, sailed on a dark sea by the light of the Milky Way. Rocks and shoals outlined as well as heard by the splash of waves. Past the starboard harbor light, into the swells from yesterday’s storm, mainsheet held tight, heeling to lee, the luff barely aflutter.
I’ve encountered no whales on the Great Lakes. It must be a moving experience!

I generally enjoy your writing, Willis, but this one seems to me to be an unnecessary cheap shot.
Hubbart did his work in the 50s. His experience was with drilling down, plus some technological innovation. He made some projections based on what he knew, and he was right about US production reaching a peak once half the oil had been brought to the surface.
That he underestimated what technology was capable of in the long run is a common theme throughout history. (Didn’t the Patent Office Director request that his office be shut down 100 years ago, because just about everything already has been invented?)
I recall a National Geographic article almost 50 years ago discussing shale oil which acknowledged that it would be economically feasible only with a significantly higher price per barrel (very correct it turns out).
Maybe the higher breakeven point could help define conventional vs unconventional – or maybe not. But so what? For his time, given his knowledge base, he was very right. His disciples, later talking about Peak Oil worldwide, also were very right – up until a decade or so ago. In a way, their projections of Peak Oil and the then coming rise in oil prices fueled the innovation which, at the current higher price, has given us the new, huge supply.
Again, my point is that it wasn’t necessary to paint Hubbart and his followers as stupid Malthusians (and CAGW Alarmists by your tone) for their identification of a problem which then allowed for a solution from which we benefit today.

Willis, I don’t think you express the general peak oil arguments that well. I think Wikipedia gives a pretty good description of them – http://en.wikipedia.org/wiki/Peak_oil
I think one of the overriding factors of ‘peak’ is that it will have economic repercussions due to price effects.

Of course one has to ask what is actually meant by ‘fossil’ fuel some of the deep aquifers are said to have ‘fossil’ water. Is oil rather than fossil, really abiogenic and coal plant matter that has been soaked in oil at high pressure? If hydrocarbons are absolutely certainly only ever formed from rotted plant life no other method possible – how come there is methane and ethane on Saturn’s moon Titan?

I still go by what I read in the Prize twenty years ago, and Twilight in the Desert. The primary issue is not whether the resource is exhausted (it isn’t close), the challenge is output per-day. One commenter above mentions the idea that we’ve run out of $20/bbl. Wrong, we cannot increase flow of $20 bbl/day oil, but we still pump it. The price is set by the cost of the marginal barrel. That marginal barrel of production per day is what’s costing $100.

William Stanley Jevons (1835–1882)

Ooops – unfinished posting above. Contrary to what you claim, Willis, in your beautifully-written piece, there were people howling about peak coal. William Stanley Jevons (1835–1882) was an English economist who predicted that economically viable coal in Britain would have been mined out by around 1970. He made this prediction in 1865 in his book, The Coal Question. I am not sure, between miners’ strikes, the 1955 (or thereabouts) Clean Air Act, natural gas, and Margaret Thatcher’s actions to shut down the miners’ unions if this was prescience or coincidence, as the coal mining industry has all but disappeared in my ancestral country of Wales.

Willis,
I’ve always liked this graph: http://rankexploits.com/musings/2011/an-interesting-chart/

I’ve lived through much of the whole peak oil deal, which near as I can tell has turned into a half-century-long goat roping contest.

I’d call it more like something else involving goats, which our Drill Sgt used to yell at us all the time. It’s something nice people don’t say, so it fits the peak oil situation perfectly.

Willis
I enjoyed reading the article. I think Jeff raised the point about price – which I think is the crux of the issue.
One of the thing the “peak oilers” don’t say is that the argument comes with the implicit caveat that with “given technology, proven reserves and current price then…”.
As you say the world is awash with oil but of course some of it would cost too much to extract – at current prices and technologies. Furthermore, exploration takes a long time to get started in a new – venture – region. We know that there are other big finds out there but the paper work needs to be done first and with political instability in some regions, companies are playing a “wait and see” game.
Your point about conventionals and unconventionals is a good one. But again this is largely a result of economics. In general terms, both have been exploited historically with conventionals winning through due to ease of extraction – why would a company go for the higher fruits first?
And as you say directional drilling has been revelation to both conventional and unconventional reservoirs; improving recovery rates. Other things 3D/4D seismic, microseismic, more stimulation options etc. In short the “peak oilers”, ignore the caveats.
Finally, as demand increases prices go up, if prices go up then marginal fields become economic. Oil companies (particularly private firms) then develop these fields all the while improving the engineering and driving down price.

It really is nice to know that the head of the IPCC, Dr. Rajendra Kumar Pachauri , helped us to prolong our use of dirty, co2 emitting OIL. He set up Glori Oil, now Glori Energy, which is a residual oil extraction technology company. He was its scientific advisor while being head of the IPCC. Al Gore and Pachauri are seeped in oil and are both utter hypocrites of the highest order.
Oil will never run out. This is because by the time reserves get to dangerously low levels we humans would have moved on, like we have always done. There are alternatives which we can’t be bothered with too much at the moment such as Algae fuel.
Further reading:
George Monbiot – Guardian – 2012
“We were wrong on peak oil. There’s enough to fry us all
A boom in oil production has made a mockery of our predictions.”
Business Week
“Everything You Know About Peak Oil Is Wrong“

Peak oil is a myth.
The average production price of a liter of oil has not risen much.
The cost of producing 1 barrel of oil (about 159 liters) is between US$2.00 and US$15.
While new extraction methods or technology will be more expensive to start off with, they will drop when adopted whole scale.
The price of petrol is a political construct…..
The price of crude oil is not determined by the market but determined by a cartel (OPEC) which sets the bottom price. Price fluctuations are above this bottom price.
http://sovereign-investor.com/2012/12/18/oil-prices-are-headed-higher/
The price of petrol for the end user is also determined by politics.
Governments are heavily dependent on the tax on petrol to fund their election bribes.
Taxes on petrol are also used to subsidize public transport projects. The price needs to be high enough for public transport to ‘compete’.
They are also pressured to keep the price artificially high to appease the ‘environmental’ activists who want to phase out fossil fuels.
For example, some 60 per cent of the pump price in Britain is down to tax and duties.
Petrol is a cash cow.
On top of that, some are wondering if the cost of oil has actually risen at all….
Due to inflation it is very hard to gauge whether oil prices themselves are rising or falling.
Measured in gold, the price seems pretty stable and is currently below average.
Measured in gold, the oil price today is only 82% of its average over the past 41+ years.
http://www.forbes.com/sites/louiswoodhill/2012/02/22/gasoline-prices-are-not-rising-the-dollar-is-falling/

Why are we skeptics generally such optimists and Warmists tend to be such such doom mongers? They draw a straight line. Let’s look at the peak horsesh!t problem of the late 19th century.

“IN 1 8 9 8 , D E L E G A T E S F R OM A C R O S S T H E G L O B E gathered in New York City for the world’s first international urban planning conference. One topic dominated the discussion. It was not housing, land use, economic development, or infrastructure. The delegates were driven to desperation by horse manure…………………………
The situation seemed dire. In 1894, the Times of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure. One New York prognosticator of the1890s concluded that by 1930 the horse droppings would rise to Manhattan’s third-story windows. A public health and sanitation crisis of almost unimaginable dimensions loomed……….”
http://www.uctc.net/access/30/Access%2030%20-%2002%20-%20Horse%20Power.pdf

Vrooom, vroooom. Problem solved.

“Knowledge and experience mean nothing to the ocean. After a life at sea, if I put one foot wrong, I get just as wet as the landlubber falling off the dock”
But after a life at sea, you are surely a lot less likely to put a foot wrong than a landlubber is.

LOL we reached peak oil in 2004? News to me. I guess those massive reserves of shale in australia are just illusory.

It isn’t just “peak oil” projections that have repeatedly come a cropper. In the 70’s we were certain we were already into that long slow decline to the next Ice Age. By the 90’s, we were all about to burn up and die. For a quarter century it was illegal to build a natural gas fired power plant in the U.S. because we “knew” that all our natural gas was pretty much used up and we wished to save what was left for higher uses. The list goes on and on and yet here we go with yet another set of confident announcements about the future, all based on what “we know”. It seems to me that this endless cycle of faulty prognostication could be ended if we simply came to appreciate the immense expanse of “what we do not know” and weighed it against the relatively frail body of “what we do know”.

“…
fracking now only delivers “unconventional oil” simply because the drill hole goes horizontally instead of vertically … does this make any sense to anyone?
…”

That’s a rather obtuse question don’t you think?
Good post Willis.

Remember the California gold rush? Well….. http://money.cnn.com/2013/01/14/news/economy/california-oil-boom/index.html

Here is something on the history of conventional / unconventional [delete as necessary] small / big oil.
Bitumen and Petroleum in Antiquity
Brill Archive, 1955 – 194 pages
http://tinyurl.com/a7aewhh

As Jeff L mentioned, the determinant is price that justifies the recovery. I like to think of it as “easy” oil vs. “hard” oil. Most, but not all of the easy oil has been found. There may still be places that have been closed to drilling where easy oil may lurk. But of the places that are open, easy oil is the past tense. If you want to cook oil sands, drill horizontally and frack, drill in deep water, and other things that may become possible in the future, oil can still be retrieved. It will just not be cheap to do so. This is the “hard” oil. Because we are running on harder oil all the time, it will make sense that the price goes up in line the recovery costs. That should be sufficient to limit oil to those things where it is a good choice. Oil/petroleum products are nice to use for plastics, and their energy density and storage characteristics make them nice to use other places. The market will decide the outcome. If not in places like the US, then globally.

Willis,
It is rare to find a practising scientist who is proficient, let alone poetic, in their expression. Perhaps it is a function of age. But then I am an old curmudgeon become mathist who was fortunate to have been educated (in England) when my science subject teachers would criticise the writing as well as the technical content of my work. Reading your articles is always a joy. Thank you.
Back to the subject in hand. I only properly understood the fallacy of peak [insert current doom here] when I read http://remittanceman.blogspot.co.uk/2008/02/mineral-reserves-and-resources-what.html?zx=d5d0af80de1f9e64 (ignore scary warning). Written by a horny-handed* mining engineer. Simple and easy to understand. I’ve yet to see a better description.
* I hope this doesn’t mis-translate in Amerenglish. On the right side of the water there is an expression ‘horny-handed son of the soil’, meaning someone whose hands are hardened and calloused from a lifetime of working the land. I believe that horny might be misinterpreted beyond ~70 degreesW

TimTheToolMan
Peak oil is not about and has never been about reserves or technology. Its about peak production and so if you look at the larger picture, the 60s and 70s saw massive growth in the West supported by huge increases in oil usage….The last 20 years has seen massive growth in the East unsupported by the same oil production increases. And what has happened?
Production is determined by price and demand as well as capacity (both upstream and downstream). OPEC have a duty to themselves and their customers. They cannot change capacity Willy-Nilly else they destabilise their own economies. Therefore, there will be times that demand exceeds output, while others when demand does not. This is reflected in the oil price and there’s typically a lag between both when prices generally plateau. Remember prior to the 1970s crisis the West basically determined capacity. Post 1970 that changed. So it is hardly surprising that OPEC acts in self-interest if they don’t up supply they can cause a global recession (demand drops and they lose trade) they increase supply to quickly they do themselves out of pocket. They play balancing game. Essentially your point is wrong.

Those who seek to justify the peak oil meme in terms of rising oil prices are missing the point. Firstly, the real cost of oil on world markets has not risen in the same way as US prices have. The steady weakening of the purchasing power of the $US over a long period has made imported oil more expensive for Americans, but less expensive for some other countries. Further, changes in the world oil price have little to do with availability, and a great deal to do with political instability in all sorts of places – the Middle East, Venezuela and Iran/Iraq for example.
For an excellent potted history of world oil prices and their effect on the US, see:
http://www.wtrg.com/prices.htm
As the article points out, US oil exploration for anything but the easiest fields was discouraged until 1971, when domestic price controls were lifted. Previously, US companies had to supply the domestic market at below world prices. It was unlucky timing for the oil industry too – just as they gained incentives to look beyond the easiest pickings, the environmental movement took off.
Another consideration is that we in the West are far wealthier than people were in the days of very cheap oil, and drive much more fuel efficient cars. So, even though the graphs of rising prices look dramatic, most people can afford the same or a better lifestyle without making sacrifices. Indeed, not only are our cars more efficient, they have dozens of features which only limousines might have had 50 years ago, if they existed at all. Nor is there any evidence that rises in the cost of petrochemicals have had any appreciable impact on us, for similar reasons.
As others have pointed out, peak oil is a chimera designed to scare us into subsidising certain people’s pet projects, and is in any event irrelevant as the planet is awash with other kinds of hydrocarbons.
Oh, and nice Kipling reference, Willis.

I still remember as a young engineer in the oil industry being told that it was a wonderful industry, “but you know that in 10 years time oil will start to run out”. And every ten years the same story would be repeated! In 1979-1980 the Iran/Iraq conflict led to an oil price shock with prices hitting more than $50/barrel with plenty of predictions that by the mid 80’s oil would be over $100/barrel. Instead it dropped back to around $10/barrel. “Prediction is difficult, especially about the future” (Niels Bohr).

willis, thank you! Your sailing experiences reminded me of ” Vagabond House” by Don Blanding. Hope you have read it.

“If you disagree with something I said, quote it and tell me why I’m wrong.”
I didn’t say you were wrong just that you don’t present peak oil arguments well. They don’t go around shouting about an impending apocalypse, they say that we won’t produce any more ‘conventional’ oil than we do now. As you point out all this means is that people move to alternative energy sources (or unconventional oil as you describe it.) You just group all the different energy sources together, and there is no problem with that.
It’s easiest just to think as ‘Peak Oil’ as only conventional oil though as you point out different sources of energy can be converted to the same thing or equivalent.

From The Globe & Mail, 2007. No longer available, but I copied it. According to Wikipedia (OK, just this one time) “Neil Reynolds is an Ottawa writer whose columns on national economic issues appear in Wednesday’s and Friday’s Globe and Mail.”

‘Peak oil’ doomsayers fall silent as reserves grow ever larger
theglobeandmail.com | 11/04/07 | NEIL REYNOLDS
[Original URL: http://www.theglobeandmail.com/servlet/story/RTGAM.20070411.wrreynolds11/BNStory/Business/home%5D
OTTAWA — You will have noticed the marked decline these days in the number of “peak oil” people making cataclysmic pronouncements. Global oil production set records throughout 2006 — for all-time highest production day, month, quarter and year. For the single-year record, production reached 31.3 Gb (billion barrels), an average of 85.2 million barrels a day. Affirming the trend, production set a new global single-day record before the end of January, 2007.
Along with record-setting production came record-setting increases in reserves — moving “peak oil” deeper into the century and ultimately beyond.
The “peak oil” hypothesis, relentlessly propounded for decades, holds that the world has passed (or will momentarily pass) the highest point it can ever reach in oil production — at the halfway mark in the depletion of global oil resources. It holds that this imminent peak necessarily marks the start of an irreversible decline in production. It holds, in other words, that the end of oil is nigh. The principal problem is that the hypothesis is demonstrably wrong — and is vigorously proven wrong year after year.
In 1979, the “life-index” of global oil reserves was calculated as 35 years — suggesting, superficially, that known oil reserves could support the current level of production only through 2007. In 2003, after decades of accelerated production, this index had risen to 40 years. It has now risen further to 45 years — moving us safely through mid-century. Indeed, the record-setting oil production last year marked the umpteenth consecutive year that “peak oil” theorists have found it necessary once again to run the numbers and once again to postpone the end time of oil.
It was in 1989 that Colin Campbell, the prominent Irish champion of “peak oil,” proclaimed that the global peak had already occurred — a declaration he found it expedient, almost immediately, to amend; “peak oil,” he said, would instead occur in 1995. He now opts for 2010. Yet global oil production, since 1989, has risen by 20 per cent (13.8 million barrels a day), global oil supply by 28 per cent (18.9 million barrels a day).
The production records set last year were significant for a number of other “peak oil” prophets, including Marion King Hubbert himself, the American geophysicist who devised “peak oil” analysis in the mid- fifties and who accurately predicted that U.S. oil production would peak in 1979. In 1956, he determined that global oil would peak “in about 50 years” — in other words, 2006. At the pinnacle, he said, the world would consume 12 Gb of oil a year.
In 2004, Mr. Campbell increased this number, almost doubling it, to 23 Gb. For his part, Texas oilman T. Boone Pickens has held that oil would peak at 30 Gb — a level exceeded last year.
Yet the world’s most comprehensive measure of oil resources keeps right on growing — higher, yes, but at a faster pace as well. TrendLines, the Canadian statistical research company, confirms this assertion in its February report on URR — “ultimate recoverable reserves.” In an analysis of optimum reserves, TrendLines concludes that the world’s URR is now increasing, depending on the period you select for comparison, at twice or thrice its historical pace. From 1957 through 2006, it says, URR grew at an average annual rate of 2.4 per cent.
From 1979, it grew at an average annual rate of 4.2 per cent. From 2000, it grew at an average annual rate of 6 per cent. “Peak oil” prophet Mr. Campbell, TrendLines says, has underestimated the actual rise in URR by tenfold.

In 2000, the U.S. Geological Service (USGS) calculated that global URR would increase by 2.4 per cent a year for the foreseeable future — rising from 1,669 billion barrels in 1995 to 3,345 billion barrels in 2025. (A billion barrels — one Gb — is roughly the amount of oil that the U.S. keeps in its Strategic Petroleum Reserve.) “Peak oil” proponents dismissed the USGS analysis as impossibly optimistic. As with all apocalyptic manifestations, peaks must necessarily be imminent. Yet the forecast has proven significantly understated.
Driven by smart technology, global URR now increases each year at unprecedented rates. It has now (December, 2006) reached 3,288 Gb, not far off the USGS calculation for 2025. It increased last year by 114 Gb, compared with a historical annual average increase of 47 Gb. Sustained at this rate for another 20 years, the world’s ultimately recoverable oil could increase by another two-thirds to 5,568 Gb, or three times the resource when “peak oil” proclamations began. Assuming consumption of 30 Gb a year, this URR could sustain production for something approaching 200 years. Once again, the end is not nigh.

I gotta give you this, Willis, you sure know how to start a war.
I’ll now read the 2nd half of your post, in fact, I can’t wait to read it.
It looked interesting as I scrolled past.

Is the fact that oil might be abiotic verboten on this thread?
NPR interview with Dr. J.F. Kenney:
http://web.archive.org/web/20111025151824/http://www.gasresources.net/Kenney-NPR.mp3
The Earth and Atmospheric Sciences Dept. University of Alberta (Edmonton) October, 2012
“Organic Carbon on Mar is Abiotic”
http://www.accn.ca/index.php?ci_id=3478&la_id=1

Actually I recall oil at $13 when gold was $300.
Bush Sr made a deal with the Saudis to keep it at 13 until after the election.
I bought oil futures because I knew it.
Made a pittance(should have been able to retire with that knowledge) ,but I was correct in my prediction.
Opec meeting had been scheduled immediately after the election and oil went from $13 to $20 instantly.

Kipling is not much read these days, and almost never outside the UK and former colonies. So, for the benefit of readers, the reference I mentioned was from his famous poem “If”:
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
http://www.kipling.org.uk/poems_if.htm
[Thanks, Johanna. Ah, yes, I remember now, I did toss that into the post, you were good to pick it up … -w.]

Wow. It’s interesting how Willis posts graphs of the data and certain people completely miss those graphs. It is a big thread though. Still, there is no peak oil at the moment, and production is not flattening out. The rate of change is pretty much steady, if one takes an ordinary differential.
None the less, peak oil is a ridiculous, short sighted topic for the most part. Mostly due to the fact that oil production is driven by oil -demand-, just as with any other commodity. The real question to ask is when will we hit peak oil -demand-, as only then will we hit peak oil production as companies scale back rates to keep track with a lowered demand.
That’s what drives production, that’s what drives the system; demand.
So, start looking at those rates and asking those questions. We aren’t going to hit peak oil due to a peak in our ability to pull from reserves, or our reserves running out, or anything like that any time in the rational future. But we may well hit peak oil -demand- within a reasonable amount of time.
And that is really what the discussion is about, as that is really the limiting factor.

I have studied peak oil since 1998. I live in an oil producer country: Mexico. Oil production here peaked in 2004. There are a lot of troubles to extract oil from Chicontepec, a giant oil field indeed. So, when I read that peak oil is just another catastrophist cult, I do not think in U.S., I think in the north of the state I was born (Puebla)….

I think one of the deals with nonconventional oil is to calculate the amt of energy you spend to produce it total, from the ground to the pump. Wilis, I bet you could make that graph for us, it would be be useful in this discussion. For example, I could imagine that there might be a time when that value becomes negative, in which case oil “peaks” wont make much sense anymore…except for airplanes and motor trips to the South pole.
The other trouble with oil peaks is that they are small in comparison to the coming “cars” peak as Indians and Chinese increase their use of autos to a double digit percentage of what we do in the states. Once there are several cars for every vatara, they will use more oil than we do.
Luckily, I bike to work most of the year…I not have oil people getting rich because of me.

As of 2004, according to energy.gov website, in America we used 140 BILLION gallons of gasoline.
Thanks to the EPA, environmentalists and lawyers we cannot get relatively cheap oil from the oceans, gulf, Alaska and many other locations. It adds likely more then $2.00 per gallon to the cost of gasoline.
That means about $280 BILLION are being transfer from consumers to energy companies and to a lesser extent the people who have mineral rights for the land they use. $280 BILLION !
Thanks eco-freaks.

E.M.Smith says:
February 2, 2013 at 4:36 pm
“… We can already turn coal and nuclear process heat into ‘oil’ if desired. …”
Actually in some places of the world it is possible to use naturally occuring
nuclear process heat ( a.k.a Geothermal ) to do the job.
First fully loaded tankship from a new plant in Iceland has just left harbour, a day or two ago bound for Rotterdam, Holland.
It was built right next to a geothermal power plant, that taps into a large pool
of superheated saltwater to generate electricity and heat fresh water for that
is then pumped to 3 or 4 nearby towns for heating buildings and other uses we normally
use hotwater for. The steam contains some carbon dioxide when it comes out of the
ground ( 2-3% I think, not sure though) and was previously just vented off into the open through a chimney butnow it is seperated out of the flue gas and together with some
residual heath, waste lukewarm water and aided by some electricial energy from the plant, is reformed into methanol. More info here.
http://www.carbonrecycling.is/index.php?option=com_content&view=article&id=49%3Aicelandic-fuel-from-geothermal-sources-sold-in-holland-&catid=2&Itemid=6&lang=en
I have been told that the process is acceptably profitable to the company at the price 30-40 $/bbl oil equivalent, and I have seen claims from the firm that they can procecss the alchol further to make some type diesel engine fuel and deliver it profitably at shipside for less than 60$ @ barrel oil equvalent.
Seems to me if this really lives up to promise and f.ex. the LFTR nuke work and is able to provide electricity at dirt cheap rates, the setup would be to place one pice of each type on the premises of the coal plants in use to day and generatae our transport fuel from the their carbon dioxide emissions. /sarc on/ Would certainly to make warmists and the oil peekers very miserable indeed, while they drifted off in searh of or to invent new imaginary man caused catasthropes to cheer themselves up again with. /sarc-off/

Trafamadore says
Quote
I think one of the deals with nonconventional oil is to calculate the amt of energy you spend to produce it total, from the ground to the pump. Wilis, I bet you could make that graph for us, it would be be useful in this discussion. For example, I could imagine that there might be a time when that value becomes negative, in which case oil “peaks” wont make much sense anymore…except for airplanes and motor trips to the South pole.
Unquote
LOL
Every single viable business on the planet depends upon a simple formula for its viability and that is that total costs are less then total receipts. Large corporations with a variable cost base can shut down expensive costs until such time as price makes them viable again. This happens a lot in the oil business.
In terms of Peak Oil, price is a red herring. Think about that. A standard 1,000 barrel contract is just a piece of monopoly paper, not real oil. But it returns real money thus those above boasting about their profits, but not from oil by by playing casino.

Well there is a lot of irony in there Willis.
You see this is WUWT where people scream, gnash their teeth and claim the imminent collapse of civilization if there is the slightest hint of the teensiest increase in gas pump prices.
The solution you are propounding involves more advanced technologies for extraction and conversion of hydrocarbons into the gas we all love.
You see light oil is not the same as heavy oil and is not the same as coal of whatever kind.
These interconversion processes all cost money and make the end product more expensive. This is probably the reason we do not use coal to oil processes even though coal is very cheap and the technology is ancient and well proven.
The whole peak oil thing is in fact about this very issue. Oil does not run out it simply gets more expensive.

I remember when I was in high school and Paul Erlich’s rantings started scaring people. I mentioned to my father that we were running out of oil and civilization would collapse. He almost fell out of his chair laughing! He told me that he people have been screaming about how the world was going to run out of oil since he was a boy. I thought he was crazy at the time. Now I realize he just recognized that every generation has its paranoid scaremongers.
Life is good. Weather will be what it will. Humanity is resourceful. Optimism is healthy, not naive!

Tim says
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My main beef with Willis on this is that he flatly refuses to believe that there is any chance that production will drop by assuming “human ingenuity” will prevail irrespective of any reality of increasing scarcity of the resource and production cost associated with maintaining that production rate.
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Tim hello, you awake? Willis does not believe that, he reports the facts. Soon the USA will be a net exporter. Facts. Substance.
Read the posts and links, the mix gets better every day and the costs balance.

RE: SMS 2:15pm and Willis 3:40 pm.
I was thinking about whale oil, too and how Drake’s well in Pennsylvania was the unconventional oil of the time.
Willis, if you want to give attribution to the “whale oil – Drake” idea, I’d give priority to Texas A&M professors Charles Maurice and Charles Smithson who wrote The Doomsday Myth: 10,000 Years of Economic Crisis Hoover Press, 1985. I wrote a short summary in “No Cornucopia of Gas”.
Specifically, one of their ten “Doomsday” scenarios was the shortage of whales that was a alleviated by, then unconventional, petroleum discovered in Pennsylvania. What is most ironic, the Pennsylvania stratigraphic play was very soon suplanted by the unconventional oil found in anticlines. Then more oil unconventionally found salt domes.
As you point out, water flood of secondary recovery was unconventional when first tried. So was tertiary recovery steam flooding unconventional once upon a time. Kern River, one of many steam floods has a most unusual Hubbert Linearization chart. If you could not foresee the benefits of steam flooding and higher oil prices, the Hubbert linearization cumulative production would have been less than 500 mmbo. With steam flooding, it is 2500 mmbo.
The lesson is that yesterday’s uneconomic resource is today’s unconventional oil and tomorrows conventional energy. What is tomorrow’s unconventional liquid energy resource? Horizontal Steam-flooding? Horizontal bio-cracking?
“Where oil is first found, in the final analysis, is in the minds of men” (Pratt, AAPG 1952 v36 #12).

“harrywr2” (February 2, 2013 at 3:09 pm) wrote:
I’m old enough to remember 29 cent/gallon gasoline.
I’ll raise (er, lower) you: 12.4 cents/gallon in Helena, Montana when I was 12 or 13. I paid 25.9 cents per gallon until my last two years in college, when it rose to 29.9 cents/gallon.

I think in 100 years we will still be using oil, as well as the usual other minerals and energy resources, and the whole current AGW thing and various other green ideological fantasies will have gone the way of Christianity-largely extinct and customary. It usually takes a few decades, and up to a few thousand years, for societies to develop a resistance from these kinds of mass ideologies, perhaps less so these days with mass communication and technology-as was the case with communism.
Mass ideologies like Christianity follow a remarkably similar pattern to a virus-people and societies are largley unresistant to them at first, and they may become pandemics, but after a time societies develop various resistances and they go the way of being largely a childhood phenomenon. For example, Christianity no longer has any teeth amongst the law and politics of developed nations, it used to a few hundred years ago, but now it largely only affects children in Sunday schools, the same way childhood diseases such as measles and chicken pox do, which were also once far more severe amongst grown adults and throughout societies. Children are the ones that now get affected, but they usually grow out of it. Societies at large are now also largely resistant to Christianity, but in this case it was a particularly pervasive and effective disease/meme complex that took over a thousand years to get on top of.
People will inherit a few good things out of the whole green thing, the same way I think the west did with Christianity, such as the value of the individual, and a dislike of violence; from the greens it may be a respect for nature’s processes and it’s all-encompassing influences, as well as the earth’s ability to change. (There wasn’t alot of these 2 from Christianity).
Just as we won’t run out of earth resources, (because they are fundamentally too large), we wont run out of people’s tendancy to mass ideology, but it will take some other form to the current AGW one; something else will always be invented to fool some of the people some of the time.

@willis
‘The Needles’ are a formation of appropriately named rocks off the western tip of the Isle of Wight, which itself is located on the southern coast of England, protecting Southampton and Portsmouth.
Great sailing, complex waters and tides to contend with. And porpoises and Cowes week. Come over and join us!
http://en.wikipedia.org/wiki/The_Needles

Mike Jonas says:
February 2, 2013 at 10:03 pm
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Thanks for the courteous reply.
You, of course, are correct.

@stephen rasey
I don’t doubt that the different mechanisms of procuring the oil require some technical changes behind the scenes to accommodate them. Nor that some ways of extracting the oil are more energy efficient than others. Nor that some bright guys are working very hard to make it all happen.
But if the end product is the same – to the point where I can fill a car with either ‘conventional’ or ‘unconventional’ oil, or a mixture and not notice any difference – then while the split between ‘conventional’ and ‘unconventional’ may be a useful term for oil tekkies, it is misapplied to the wider world of those who ultimately buy and use the stuff.
And – as ever – there is a strong suspicion that the technical use of the term ‘unconventional’ has been conveniently hijacked by those who wish to alarm the public.
My old Mum would be worried stupid if told she needed to run her car on ‘unconventional’ oil. Or that her favourite seascape was being ‘acidified’, not ‘neutralised’. These are emotive terms and, I submit, not chosen lightly.

As far as the inflation part of the price discussion goes, I will note:
When I first started (abt. forty years ago) the job I eventually retired from, an hour’s wages would buy about seven or eight gallons of gasoline. Comparing the ups and downs of gasoline prices where I live for the past year to the wage I retired at, I get from about seven and a quarter to eight and three quarters gallons. Eight gallons of gasoline are still worth about an hour of an operating engineers time.
This is like Heinlein’s quick test for estimating the standard of living in a place: “How long does it take a journeyman carpenter to earn a one kilo loaf of the standard local bread?”
No matter how you hang numbers on the prices of things, if it takes a skilled worker the same amount of time to earn them,they haven’t changed.