Peak Oil – now for the downslope

Guest post by David Archibald

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

archibald_oildown_fig1

Figure 1: Logistic Decline Plot for the United States

Source: Al-Husseini 2006

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

archibald_oildown_fig2

Figure 2: Logistic growth curve for US crude oil production

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

archibald_oildown_fig3

Figure 3: World oil discovery by year

Source: Al-Husseini 2006

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

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

archibald_oildown_fig4

Figure 4: Logistic Decline Plot for Global Oil Production

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

archibald_oildown_fig5

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

Source of figure: Al-Husseini 2006

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

archibald_oildown_fig6

Figure 6: World Oil Production 1965 – 2030

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

archibald_oildown_fig7

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

Source: Nashawi et. al. 2010

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

archibald_oildown_fig8

Figure 8: Oil price 1990 – 2016

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

archibald_oildown_table1

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

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

archibald_oildown_fig9

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

From: Sands and Westcott 2011

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

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

archibald_oildown_fig10

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

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

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

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

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

Source: Sauter and Awerbuch 2003

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

References

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

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

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

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

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

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

October 2011

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Madman2001

Goodness. But you forget about peak phosphorus, peak rare earth metals. peak uranium, peak gas, and peak coal.
We’re doooooomed. Alvin Toffler was right. It’s worse than we thought!

JohnB

George Will delivered an interesting and often forgotten history lesson on Oil in a column at the end of 2009. http://www.thedailybeast.com/newsweek/2010/10/11/will-the-energy-future-will-look-familiar.html
“Herewith a recapitulation of the recalculations: In 1914, the Bureau of Mines said U.S. oil reserves would be exhausted by 1924. In 1939, the Interior Department said the world’s petroleum reserves would last 13 years. Oil fueled a global war and the postwar boom, and in 1951 Interior said the world had … 13 years of proven reserves. In 1970, proven reserves were estimated at 612 billion barrels. By 2006, more than 767 billion barrels had been pumped and proven reserves were 1.2 trillion. In 1977, Jimmy Carter said mankind could “use up” all the world’s proven reserves “by the end of the next decade.” Since then, the world has consumed three times more oil than was in the proven reserves. Today, shale rock formations in Texas and Louisiana; Montana and North Dakota; and New York, Pennsylvania, and other Eastern states may contain 2,000 trillion cubic feet of clean-burning natural gas.”
We’ve regularly failed to predict the demise of oil in the past and increasingly have improved our ability to access it through sound engineering and good science in spite of the predictions of doom that our supply would end 10 years into the future.

Robert in Calgary

“….but the replacement need has become urgent.”
Another planetary crisis? Sorry, no sale.

And now, for the realist viewpoint.
Peak Oil is not a problem, and has never been a problem despite numerous predictions of its impending occurrence. The reason is that the model that is used to forecast peak oil is false; it is wrong. To paraphrase one of the US’s most brilliant scientists, the late Dr. Richard Feynman, when the predictions are wrong, you must get a new model. Dr. Feynman won the Nobel prize in physics for is work in QED, quantum electro-dynamics.
World oil demand is decreasing, oil supply is increasing, and there are far more options today for oil use than there were 30 years ago. .
http://sowellslawblog.blogspot.com/2011/04/speech-on-peak-oil-and-us-energy-policy.html

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

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

rbateman

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

The naysayers who are sure to turn up had better watch this.
http://www.abc.net.au/catalyst/stories/3201781.htm
And yes I am heavily invested in oil.

Gasguy

Never commented here but know a fair amount about energy markets. Clearly higher prices unlock more resource potential (Canada’s oil sands are notoriously forgotten in peak oil arguments). However new technology is changing the energy landscape. Looking no further than North American natural gas prices which are near decade lows due to over production with no end to production increases at any higher price. All the same peak arguments were applied. A host of LNG import facilities were constructed to deal with the upcoming crisis; these now sit idle and are begging the government to let them export.
Technology driving shale gas exploration is open to a generation of enterprising geoscientists; already shale oil production is causing growth in US oil production which was thought impossible by many experts just three years ago.
Shale gas and oil have global implications. Don’t worry about a shortage of those anytime soon – we are only four years into a multi-decade global resource play. I can’t say the same about many metals however.

The author might want to review information that is a little more timely then decade old data. The state of North Dakota has seen its oil production increase by over 100% since January 2009. When it produced 187,733 barrels of oil per day for the Month of January, to 444,142 barrels a day as of August 2011.
https://www.dmr.nd.gov/oilgas/stats/historicaloilprodstats.pdf
The take off capacity for the region is expected to increase from 350,000 barrels a day currently, to about 1.3 million barrels of oil by 2015’ish. This is on top of the ramp up in EagleFord in Texas which is coming online faster then capacity is to take it to market.
The US has produced more oil every year, for the last three years. It will most likely see 2 million barrels of unconventional oil production coming on line on shore in the next 5 years. The multi stage hydro-fracking of horizontal legs is going to revolutionize the oil industry on shore again.
The US could be the largest producer of oil again by 2020, if it continues to develop source rock, the way it has over the last few years.

Pingo

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

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

peterhodges

Well peak oil theory is about as effective at predicting the future as climate science. The primary problem being they keep finding more oil, and production continues to increase. Just recently there was a great article in the WSJ:
http://online.wsj.com/article/SB10001424053111904060604576572552998674340.html
Virtually all of Archibald’s analysis above can be interpreted as a problem of economics, not of oil.
U.S. production declined because it has been cheaper to get it elsewhere, not because we are running out of oil
Oil gets more expensive because the Fed prints more dollars.
Oil gets more expensive because cartels control the prospecting, production, refining, distribution, and the so called “market”, which itself is really just a scam where speculators (i.e. bankers and oilmen) drive up the cost while selling it back and forth to themselves…while they make more money betting on all the fake derivative products.
And speaking of the Fed creating more dollars, that’s the real problem you should be worried about: PEAK DEBT.
Our debt money system is designed to fail, and fail it will. Google “money as debt” if you don’t know what debt money is.

Ken Methven

Apart from China, where is the global demand curve against global production?
We can all see that price is likely to rise, give us some idea about when and how much….
…and we already knew..”its wose than we thought”….

Ken Methven

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

Bob in Castlemaine

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

temp

Peak oil can only happen when we hit peak government… IE the government blocks any future drilling. The reality is the US has more then enough known oil supplies to last a good 100 years and thats including the current rate of growth… add in the fact that the US has not only banned drilling in something like 30-40% of the US… it has even banned LOOKING FOR OIL in 10-30% of the US and some of those bans have been around for 40+ years. I believe the CA banned that blocked both looking and drilling of oil has been around since the 1960s.
Another favorite myth is the “peak CHEAP oil” myth. This myth is basically saying sure we’ll have lots of oil but at $200 dollars a barrel… this myth is also solely based on the government adding $140-$160 of cost onto said barrel of oil.
Peak oil is a complete myth outside of the government banning oil/restricting it to the point of a ban.
One can look at any country where socialism takes hold and see production steady drop… a great case study is mexico where they’re oil production has plateaued not because they’ve run out of oil but because they refuse to reinvest in they’re oil company and thus its failing apart and not exporting for more oil.
This is much the same in the US where the government and the handful of big oil companies have both locked out all oil companies and have basically prevent small oil companies from competing with the big names.
I have no doubt that as socialism expands and gets more and more a grip on the US that oil production will drop like a rock… this until your arguments has been proven time and time again throughout history.

Here is a link to NG production in the US
http://www.eia.gov/dnav/ng/hist_chart/N9010US2a.jpg
In the case of EagleFord, the production is considered a wet or liquid NG well due to the extremely high API and sweetness they are seeing. This condensate liquid is mixed with heavy sour crudes to generate a WTI equivalent product.
http://www.rrc.state.tx.us/data/production/ogismcon.pdf
Check the ramp up of NG production in Texas from 2005 – 2011. The US as a whole is increasing its NG production profile. In fact it has increased its production to the point the US is now the largest producer of Natural Gas in world.
Here is a link to U.S. Natural Gas Gross Withdrawals (Million Cubic Feet) data for the first link. Check out the ramp up in production that is visible. The US is suffering from a glut of NG, and in 5 years it will have a glut of oil.
http://www.eia.gov/dnav/ng/hist/n9010us2A.htm
I mean no disrespect, but the data is clearly showing that the world has multi generational supplies of UN-conventional sources, which have barely been tapped into. These unconventional wells are going to change the US and the global energy dynamics significantly.
The US is poised to be exporting LNG in 2015, instead of being the estimated largest importer of LNG in 2015 per the models of 2005.
The amount of oil and sweet natural gas liquids that are being unlocked is more then the current infrastructure (pipelines, rail, truck) can get it to market. Here is a link to a brand new industry of barging crude. The number of barges has grown by 10x in the last 10 years or so.
“…Between 140 and 150 barges industrywide are currently
carrying crude oil, more than 10 times the number in operation
ten years ago, Joe Pyne, Kirby’s chairman and chief
executive officer told analysts during the company’s thirdquarter
conference call on Thursday.
“We used to be able to count on less than two hands the
number of crude barges,” said Joe Pyne, head of Kirby.”
https://customers.reuters.com/community/newsletters/oil/InsideOil20111028.pdf
The supply of unconventional energy is going to erase the Hubbard Peak Model’s usefulness. Yes it worked great on conventional production. Its shattered by the unlocking of source rock.
Best Regards,
Jack H Barnes Jr.

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

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

Dave Springer

The U.S. has trillions of barrels in oil shale and trillions more equivalents natural gas and coal.
I thought pretty much everyone knew it was a strategic decision to drain the light sweet crude reserves of any foreign countries willing to sell it to us for as long as they’re willing to sell it to us at prices we can afford. When it’s gone guess who, with probably half the world’s known oil shale, is left holding all the marbles?
Oil shale is economical to produce well under $100/bbl which is why OPEC walks a thin line once they get up in that ballpark with light sweet crude. It would take us ten years to ramp up production of oil shale in the grossly vast deposits in Wyoming and Colorado but persistent $100+ imports would inspire it. OPEC can screw with us by letting LSC get to $140/bbl for a few months or a year but know very well we’d balk and replace them before that lasted very long at all. Hence it didn’t last very long.
Rick Perry wants to revive the US economy by unleashing fossil fuel recovery in this country putting a couple million people to work in good high paying jobs in the energy sector and simultaneously stabilizing for the forseeable future oil at $60/bbl produced domestically from oil shale.
It’s doable. Everyone knows it. Politics is all that stops it.

Joe Prins

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

BCBill

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

Logan in AZ

The 28th of October is E-Cat day. If it works as expected, the remarks here, and much else besides, will no longer have any relevance.
http://peswiki.com/index.php/News:October_28%2C_2011_Test_of_the_One_Megawatt_E-Cat
And, then other radical energy concepts will finally get a fair hearing.

Dave Springer

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

Thomas U.

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

john douglas

Logan in AZ BEAT ME TO IT..

I’m suspicious of the peak oil calculations as they all assume conventional oil production. I’d like to see what happens to the peak-oil calculations when one factors in Alberta’s oil sands, which are currently rapidly expanding and US oil shale. As others have mentioned methane clathrates are currently almost unexploited and represent a vast energy source.
Right now in Canada, the political climate is favorable for the next 4 years so that Alberta’s oil sands can expand dramatically. Whether this oil gets exported to the US or China depends on how receptive the US government is to “ethical oil” (to use Ezra Levant’s terminology for oil sands crude). In online discussions on other sites I’ve been told by people working in the oil industry that natural gas is so cheap now that there isn’t even a theoretical interest in constructing nuclear reactors in Northern Alberta to provide the heat necessary in extraction of bitumen from the oil sands.
In the long run we need a large scale nuclear reactor construction program. I’d far rather see money being spent on this than constructing bird-blenders that produce only a tiny fraction of their rated power output and serve primarily to create environmental disruption and destabilize the electrical grid. Where I live in British Columbia, the provincial government has decreed that no new hydroelectric projects will be built which is utter insanity. Hydroelectric power is a true renewable resource and water falling down a gravitational gradient has a far higher energy density than an intermittently flowing gas. Guess what choice for energy production the moonbats in power in BC have decided upon. Hint: BC is one of the few places on the continent that has a carbon tax.
What I’d be interested in seeing is peak oil calculations done with and without the effects of watermelon policies which restrict both oil exploration and production in very large portions of N. America. Given the ubiquity of gasoline fueled vehicles around the world, likely it would prove cheaper in the long run to use nuclear power to produce synthetic gasoline rather than try to switch to electric vehicles. Until batteries with much higher energy densities are available, and not requiring rare elements for their construction, electric vehicles will just be a novelty reserved for the rich (aside from the ubiquitous golf-cart in some retirement communities in the southern US).

John Marshall

Much oil in the US remains in the ground due to state laws preventing extraction. Due to this these reserves are not counted in the reserve total but remain a resource only. Same in the UK. the discovery of shale gas resources reduced fears of cold winter homes till the government stopped fracking because of earthquake fears (actually the same as a heavy lorry passing 50 ft away at 40mph- not actually earth shattering) so no gas available.
The stupidity of governments never ceases to amaze me.

Andrew McRae

The oil optimists commenting here should remember one important logical and practical conclusion:
There is a world of difference between saying that peak oil has not happened versus saying peak oil will never happen. Peak oil is inevitable due to both physical and economic limits. The only question is when. Once you have rejoined the sane by recognising oil production will cease at some future date, you might have a hope of using real evidence to put an actual use-by-date on your optimism – because there is one (irrespective of our ability to predict it).
When both ASPO and the IEA and everyone else who has investigated the numbers are all telling you that peak oil occurred in 2008 and that global production will go into decline within a few years, it is time to stop denying that the earth is a finite sized object and start figuring out how we can maintain the highest standard of living possible with only a tenth of today’s oil production.
Biofuel as a liquid from algae or crops is a total waste of time, space, and energy, not only for the fact it competes with food production for arable land, but because the rate-determining step in photosynthesis is less than 1% efficient. Biogas (methane) is a potential maybe based on current landfill trials.
Oil is wasted on stationary power production. I’d say the same for natural gas. For the electricity grid there are several alternatives, some of which are sustainable at any high scale (concentrated solar with energy storage), some of which are sustainable only at lower volumes than would be required for current demand (eg photovoltaic), and some of which are totally unsustainable at any scale in the longer term (100+ years) for the same reason as oil (eg nuclear reactors consume fuels too).
Wind power is a joke, but may be of some supplementary help in isolated residential settlements.
Of course neither PV nor concentrated solar power can deliver totally reliable power, which disrupts both industrial output volume and schedule but does not prevent current industry from continuing on a more stochastic output curve.
For land transport we may postpone the inevitable by converting most existing cars and trucks to LNG at the expense of luggage space. Peak gas will happen at some date much further in the future than oil. The electric car is practically still in the shop, not quite ready for prime time, especially when the resulting doubling in electricity demand is considered. Electric trains and trams are superb ideas, though converting one lane of every highway to a train line is going to be expensive.
For aviation there is presently no substitute for kerosene, though of course R&D continues on both battery technology and artificial carbohydrate fuel production processes.
The sooner the world starts seriously contemplating solutions to the inevitable decline in oil the sooner these solutions will reach a level of efficiency and maturity that can help us take the edge off the societal unpleasantness that is going to happen (around 2018) when for the first time ever global oil supply cannot meet global demand.
Life will go on, somehow, just not with oil.

David Archibald

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

Knut Witberg

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

Bulldust

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

DirkH

What I never liked about the “logistic decline” plots is that one variable – Q – occurs in both axis, and Q – cumulative production – is dependant on P (being P’s integral). Using a 2D plot to show one variable over a value derived from that one variable sounds so wrong.
Imagine that P – production – stays constant – say at 1 – , and Q is the integral of this constant function so it just goes up linearly over time.
The logistic decline plot will in that case take the shape of a hyperbel: y = 1/x.
And when you look at fig 1, it has a certain similarity to a hyperbel. A lot of data points on the left are far above the trend line. Without the newest data points, the trend line would have been steeper…
So, it would be interesting to compute a hyperboloid trend instead of a linear trend for fig. 1. I’m not saying that the resulting hyperbel will have a horicontal asymptote; but it would match the data better, and maybe allow better projections. (Or alternatively, just use P over time; the “logistic decline plot” is IMHO more of a tool to frighten the chicken than one that shows data in a clear way)

jim hogg

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

PaulR

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

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

paul

predicting future oil reserves cant be an exact science
but calculating what we have used is
Its approximately 216 cubic kilometers
Thats a cube thats 6 kilometres long/wide/high
Thats all , if it was all in front of you you could see it all
and given that everyone who currently wants to buy some petroleum/gas
gets some ,I do not think we are going to run out soon

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

William

A liquid fluorine thorium reactor may not be a practical design.
http://en.wikipedia.org/wiki/Advanced_CANDU_Reactor
Canada has commercially available third generation advanced heavy water reactor design that can consume either slightly enriched uranium or thorium.
Thorium is roughly four times as abundant as uranium and does not produce significant amounts of plutonium.
India is a developing a commercial heavy water thorium reactor (the hydrogen in heavy water, deuterium has an extra neutron).
http://www.barc.ernet.in/publication…chapter1/1.pdf
http://www.theregister.co.uk/2011/02…a_thorium_bet/

JohnL

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

Dave Springer says: October 27, 2011 at 11:37 pm
The U.S. has trillions of barrels in oil shale and trillions more equivalents natural gas and coal. I thought pretty much everyone knew it was a strategic decision to drain the light sweet crude reserves of any foreign countries willing to sell it to us for as long as they’re willing to sell it to us at prices we can afford…

Thanks Dave. That looks credible. Like to do an article for WUWT???
Dave Springer says: October 27, 2011 at 11:57 pm
There are currently insurmountable engineering difficulties with thorium reactors. There just aren’t any known materials that can simultenously resist both embrittlement from exposure to high level of radiactivity and corrosion from molten salts…

Again, Dave, many thanks. But I would like clarification (another article???) because I’d understood that the US did have a thorium reactor running for a considerable time, so that thorium was of proven feasibility.
Look forward a lot to replies on both fronts. Dave that’s a double thumbs-up.

cedarhill

Discussions about oil production are intellectually stimulating due mostly to the complex interaction of Western governments continual suppression of oil and coal production. Go read this review from Chu’s Department of Energy for 2011:
http://205.254.135.24/forecasts/ieo/index.cfm
And check out the charts by clicking the “read more”.
There are some things to note about the DOE report:
1. Chu is 100% nut-case greenie so the “reference case” of renewables is questionable at best and laughable in reality.
2. But even as green as the DOE is, the “liquids” projections continue to increase through 2035.
Which means the issue is not “peak” oil but global energy production to meet global consumption. DOE touches on the underlying issue in that energy prices serve as a governor on GDP. That is if one trashes the “core CPI” fiction and uses the real economy.
Energy should be a large part of your investments. You have artificially forced decrease in supply and almost unlimited growth in demand (think about the African that would really like an electric pump to obtain fresh water).
Peak oil is interesting but only as a footnote as the world continues to search for it’s peak energy consumption.

William

For those who have not noticed Canada is now constructed a LNG (Liquefied natural gas) export terminal at its West Coast to export natural gas. A few years ago Canada was planning to construct a port at the same location on its West coast to inport LNG. What changed? The discovery of massive reserves of deep earth CH4. North America suddenly has a massive surplus of “natural gas”. Why?
Saudi Arabia has 25% of the planet’s oil reserves half of which is contained in only eight fields. Half of Saudi Arabia production comes from a single field the Ghawar. Again why?
As most are aware a large mars sized object struck the earth roughly 500 millions after the formation of the solar system. The impact formed the moon and stripped the planet’s mantel of most of the volatile lighter elements. As 70% of the planet’s surface is covered by water a natural question to ask is: Where did the water come from, as the earth’s mantle contains almost no water or hydrocarbon?
Also interesting is the recent discovery that the solar wind strips water vapour from the earth atmosphere. If one does a basic calculation it indicates there should be no water left on the planet particular as the solar wind of the sun was significantly stronger when the sun was younger.
There are two theories to explain how water and hydrocarbons came onto the earth: the late veneer theory and the deep CH4 theory. The late veneer theory hypothesizes that comets struck the early earth after the big splat event covering the very hot earth with hydrocarbons. There are multiple problems with that hypothesis (See Thomas Gold’s Book Deep Hot Biosphere for details. One of the key problems is the observation that the percentage of gaseous isotopes in the earth’s atmosphere does not match that of comets (Comets are residues of the early solar systems. The comet elemental composition does match that of the sun). The late veneer theory’s explanation for the miss match of isotopes in the earth’s atmosphere to that of comets is that the early solar system had a close encounter with another solar system which temporary provided a limited source of comets to cover the earth but not significantly change the element composition of the sun.
The second hypothesis is the deep earth hydrocarbon theory. This theory hypothesizes that massive amounts of hydrocarbons (5% of the total core mass) are located in the earth’s core. As the core cools these hydrocarbon (CH4) are released. At very high pressures the CH4 forms longer chain molecules.
The release of CH4 is still occurring as the upper surface of the ocean is saturated with CH4 which indicates that CH4 is being released from some source.
The next question is could the deep earth CH4 also be the source of liquid hydrocarbon? I will leave that one for a different comment. Why does “heavy oil” have high sulfur and heavy metals in it? Where do the heavy metals come from? What is the source for the Alberta massive heavy oil field?
See Carnegie Institute of Sciences Deep Carbon Workshop presentations if you interested in this subject.
https://www.gl.ciw.edu/workshops/sloan_deep_carbon_workshop_may_2008
This is also interesting.
http://www.sciencedaily.com/releases/2009/09/090910084259.htm
http://www.nature.com/ngeo/journal/v2/n8/abs/ngeo591.html

Tom

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

Should have included the current US price, to show that in fact fuel prices and civilisation are correlated.
Now to comment on the substance, is that actual and model timeseries data spliced together that I see? A neat trick. I’ve seen it before somewhere. Especially flagrant in figures 6 and 7, but figures 2 and 5 are also pretty bad. Several of these are outright lies – what is labelled as model data is only model data for the future, and is actual data for anything up to the present. The effect is very misleading. On first glance, it looks like the model has predicted perfectly up to now, and the model’s next prediction is for a ghastly decline. Terrible, right? Wrong. These plots tell you nothing at all about how effective the model has been in the past. Or perhaps they do tell you something – they tell you that the author doesn’t want to show you the model’s past performance.
Look closely at all these plots. Notice how in almost every one, production is increasing right up to today, when the model data takes over and the production forecast is declining? Again, I’ve seen this technique somewhere before. It’ll come to me in a minute.
The only exception is US production which, as others have pointed out, only fits the thesis if you ignore the past five years.
The comparison to how the IPCC treats temperature model data is just too obvious to ignore. Every time the model is proved wrong, the model is adjusted so that it fits past data exactly and then presented as a perfect model with an undeniable future prediction. Every four years the process is repeated because every four years the model is dead wrong.

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

Marek

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

Peter Miller

The concept should be of “Peak Easy Oil”, not “Peak Oil”.
The ‘not easy’ oil is mostly found in tar sands and oil shales. It is just a matter of economics, i.e. a sufficiently high price, sufficient capital investment and keeping the loonies/greenies in their box.
Obviously, nuclear power is the only rationale answer at the moment for our long term energy needs; once again it is just a matter of sufficient capital investment and keeping the loonies/greenies in their box.
Sadly, the tsunami in Japan brought a sharp rise in the shrill shrieking of the loony/greeny brigades against nuclear power. The subsequent political reaction of dithering and rejecting nuclear power has guaranteed widespread future electricity brown outs for many parts of the world, most notably in Germany and the UK.

Myrrh

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

I must say, I’m rather disappointed to see this presented here with no commentary from Anthony. It’s pretty much just unjustified alarmism.
37 years in the oil business here, and counting.