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.
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).
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
re: Ramon Leigh says: October 28, 2011 at 10:06 am
I’d love to see some of those advances pan out. Even if they do, we would still be a LONG way away from “the death of gas powered personal vehicles.” Not only are there electrical grid and electrical production issues, charging stations, etc., etc., but the majority of people can’t afford to just scrap the vehical they have and buy a new vehicle, no matter how cheap the operating costs of the new vehical are. Let’s say gas costs $4 gallon, you drive 15,000 miles per year, and get 20 mpg. $3000 a year for gas in a vehicle you aready own (or owe thousands on) is far cheaper than losing the value of the vehicle you currently own entirely, and paying $30,000 to ??? for a new vehicle (or indebting yourself for that amount plus all the additional interest if you finance) .
re: Kum Dollison says: October 28, 2011 at 3:20 pm
You REALLY think that locating, getting the appropriate permits and doing all the required studies etc., then setting up a rig, drilling, and putting into production can respond that fast? You really think the price of oil has nothing to do with the worldwide value of the US dollar? That wars and uprisings in various parts of the world have no effect on price of oil?
I believe you need to check your own assumptions before casting aspersions on others.
re: Jeff L says: October 28, 2011 at 3:48 pm
Well, here’s another study for you, by a different group, discussed here:
http://hotair.com/archives/2011/07/22/study-picking-up-the-gulf-oil-permitting-pace-could-result-in-230000-jobs/
Study: Picking up the Gulf oil permitting pace could result in 230,000 jobs
“A new study by IHS Cambridge Energy Research Associates shows the current (slow) pace of permitting for Gulf oil exploration and production continues to cost the country in jobs, government revenues and oil production….
…Specifically, compared to historical trends, pending oil exploration plans are up by nearly 90 percent, but approvals are down by 85 percent — and the approval process has slowed from an average of 36 to 131 days. Over the past year or so, the backlog of deepwater plans pending approval has increased by 250 percent. Drilling permits for both shallow- and deepwater have declined by 60 percent.
Aligning the permitting process with the industry’s production capacity could result in 230,000 American jobs and more than $44 billion in U.S. gross domestic product — all by 2012. That would mean more revenues for the federal government and less money going to foreign governments.
The employment effects would not be limited to the Gulf states. One-third of the jobs would be generated outside the Gulf region in states like California, Florida, Illinois, Georgia and Pennsylvania….” (full article & link to pdf study online)
Jeff L,
Thanks for the reply, and while we may agree to disagree, I am enjoying our conversation. I will start off with “trading” some points made. Agree that WM is a paid consultancy with a buttered side to the bread. I also will give you that based on history the Atlantic portion is completely hypothetical. It could be significantly richer or poor then estimated at this time.
I believe that California off shore and on shore is however significantly under counted for what it is capable of producing. Specifically, the string of pearl fields untouched heading out to sea which I am sure you are aware of.
Secondly, the shale source rock for California’s production has not been tapped yet.
Yet being the key word, one of the Majors in Southern Cali is requesting the ability to drill hundreds of new wells into their shale zone. They are going to use acid treatment at this time, skipping the hydro fracking.
If my envelop math is correct, there is 1-2 MMboepd in growth cooked into the next 5 years for the US going forward. I am now bearish on CL prices (WTI) as historical basins are reevaluated for their source rock. The US will start to export crude selectively again based on refining capacity needs.
We are going to be exporting LNG around 2015, instead of importing LNG due to demand needs. I used to be a peak advocate, however, in the last few years technology has changed the whole dynamics of the game. I accept that everything I believe, has changed, when the facts changed.
The US has increased its production of NG to the point its the largest in the world again. The US is actively growing its natural gas supply’s organically. The US has grown its crude & liquids production for the last 3 years. The US is on pace to produce an additional 1 million boepd in the next 3 years and 2 million boepd over the next 5 years. When you include major tar sand projects, there is close to 3 million boepd in North America of new production arriving in the next 5 years.
A significant drop in longer term average prices in crude is going to happen. Slowly. Which will help the US economy both at the consumer level, but also at the business transportation costs and finally at the balance of payment side, keeping capital or better said liquidity in the US instead of exporting it.
There is a much bigger problem than the supply of oil.
The Obama Administration only allows drilling in the green area. The immense reserves in the red areas are off limits. Why?
re: Kum Dollison says: October 28, 2011 at 4:03 pm
Interesting that you picked a single month 6 years ago as a comparison. If one wants to look more rationally at the issue, you’d consider the recent violatility in oil prices, and try looking at the average annual inflation adjusted values. That’d be far more representative. If one does so, even for your 6 year period, your claims really fall apart. It would seem that 2005 avg. inflation-adj. crude price was $57.57. Far higher than your claim. Meanwhile, 2011 isn’t quite complete yet (especially if one factors in inflation), but the 5 year comparison would be to a 2010 avg. inflation-adj. price of $73.44. I do believe that’s a little over 1/4 higher – and nowhere near 3x higher.
http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_chart.asp
http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp (<–for the annual figures)
Please, take your own advice and find that nice quite room for some serious contemplation.
OPEC Oil Production vs. Price 1973-2011: http://www.wtrg.com/oil_graphs/PAPRPOP.gif
Non-OPEC Oil Production vs. Price 1973-2011: http://www.wtrg.com/oil_graphs/PAPRPNT.gif
Many other charts with discussion here: http://www.wtrg.com/prices.htm
I picked July because July of 2011 was the last entry. Many fields go down for maintenance at the same time every year. It seemed like a rational comparison. But, if you go Jan of 2005 to July of 2011 it doesn’t make much change.
Prices were jumping around quite a bit from 04 to 06 ( But if you want to call ’05 as $55.00 that’s okay, too. If you average Brent, Tapis, Louisiana Light, Prudhoe, Nigerian Bonny Light, Minas, etc it will come out to about $115.00, today. So that would be at minimum, a Doubling of Price with a loss of 20,000 bbl/day of global production over a Six Year Period.
I could have gone back to ’98/’99 and come up with a 1,000% Increase with, maybe, a ten or fifteen percent increase in production. The fact is: Oil Prices have been rising ballistically for a Decade, and Production stalled out Six Years Ago. And, the Huge, Smart Money Bet is that you’re only a year or two away from the beginning of the decline.
Oh, and don’t even think of using WTI. It’s, presently, a “land-locked” puddle of crude that does not affect world oil prices, nor even the price of the gasoline/diesel you purchase down at the corner.
The most representative, widely-used index is Brent (70% of oil contracts are benchmarked to it.)
The logistic model is woefully underpowered and a realistic study is authored by me
http://TheOilConundrum.com
cedarhill says:
October 28, 2011 at 2:42 am
The reason why Chu and the other nut-case greenies have liquids supply increasing is because if generated a realistic assessment then that would become the number 1 problem, not AGW.
Luboš Motl says:
October 28, 2011 at 6:16 am
Love your work Lubos. No matter what its shortcomings, Hubbert was able to predict US oil production 35 years in advance using the methodology he pioneered in the oil patch. This was when the official estimates had US oil reserves at three times what Hubbert said they would turn out to be.
mike g says:
October 28, 2011 at 6:22 am
Yes the Chicomms are going gangbusters on CTL. Not a peep of interest from anyone in the Western media because it would mean that all the AGW sacrifices would be for nought.
Jeff L says:
October 28, 2011 at 12:19 pm
Jeff, I also explore for oil for a living. I operate 8 .6 million acres and have a net position to my company of 4.0 million acres. That ground has only got seven wells in it. I expect to be poking holes in it for at least the next 20 years. A neighbouring permit recently had a 20 million barrel recoverable discovery. As well as that, I do climate science and medical research (in that I am the inventor of a drug for benign prostatic hyperplasia).
Jack H Barnes says:
October 28, 2011 at 12:47 pm
Wood Mackenzie sold their souls very cheaply to write that rubbish.
Kforestcat says:
October 28, 2011 at 1:26 pm
The US consumes about 64 BCF per day of natural gas. If the US wanted to replace 9 million barrels per day of oil imports by switching to CNG, that would take 54 BCF per day. As the oil price rises, that switching will take place. Increased demand for natural gas from its use as a transport fuel will send the natural gas price back to parity with the No 2 fuel oil price. Don’t plan on low natural gas prices for longer term investment decisions. In Australia here, the LNG market is taking natural gas prices to oil price parity despite an apparent abundance.
One of the better investments at the moment might be conventional natural gas fields with their value currently suppressed by the shale gale.
Mike C. says:
October 28, 2011 at 3:44 am
“I must say, I’m rather disappointed to see this presented here with no commentary from Anthony.”
Why? I think it is interesting. The post is nonsense to me, but reading the comments is lots of fun.
The funniest thing is that it seems to be some underlying urge to ask governments to do something about “it”. Like if a government was ever able to to anything to solve such a “problem”. It is like asking a government to set the price on eggs. Won’t solve a thing. Will only create another even bigger problem down the road. To many, or to few eggs. Peak egg.
Apart from electricity supply problems, another point about electric vehicles that take power directly from the grid is that they could cause many state financial models to experience “peak fuel tax” issues. 🙂
Many countries derive a significant amount of their revenue from liquid fuel taxes.
http://en.wikipedia.org/wiki/Fuel_tax
And electric vehicles avoid the collection point, i.e. the gas station. Ask your local politicos how they might feel about all that spending power slipping through their fingers. “Not until Hell freezes over!” (or words to that effect), will likely be the dismayed reply.
Richard Courtney @ur momisugly 5:26am said:
“The usage of a resource may “peak” then decline, but the usage does not peak because of exhaustion of the resource.”
This statement is mostly true and beside the point. It is devoid of worth. As you then go on to correctly point out, the ratio of Energy Returned on Energy Invested is often the deciding factor, even before complete exhaustion of the material. Whatever is not recoverable is not a resource in the economic sense of the word, which is why economists love to argue that adding more capital and technology expands the “resource” base. But the “basic economics” does not alter the basic reality. You have spent a lot of words effectively supporting my point whilst remaining under the impression that you have argued against it. It’s as though you don’t understand the meaning of Peak Oil theory. The relevant peak is the extraction rate, not total reserves. Total reserves are just a rough indication of when the peak rate will be hit. Declining extraction rate leads to declining EROEI which is the physical basis for the Hubbert logistic model and other non-Hubbert models of oil production. So your argument here is against a strawman.
But this next part was the insanely hilarious part:
“In the real world, for all practical purposes there are no “physical” limits to natural resources so every natural resource can be considered to be infinite.”
Wow.
So trees are unlimited? Tell that to the Britons of 1700, the Japanese of 1900, and the ex-inhabitants of Easter Island.
So arable land is unlimited? Tell that to the Mayans whose population exceeded their agricultural output.
So oil is an infinite resource? Tell that to the lower 48 USA states, which peaked almost exactly on the schedule predicted by Hubbert, despite no restriction on exploration and production, no lack of demand, and no better alternative resource for transport energy being available. That’s exactly the effect you say does not happen. The fact that they moved exploration outside the usual continental zones to get more oil is just changing the question and moving the goalposts. That can’t be used to argue against the validity of current Peak Oil concerns because when you hit the peak extraction rate of Earth’s total recoverable resources there is no other planet to tap into.
A critical error in your thinking is that you presume the economic and physical limits are disjoint. A physical limit of extraction rate manifests as an economic event of price comparison. Just because your economically rational actor decides it’s time for a better alternative does not deny the physical origin of the event that prompted that economic decision.
A given discovery rate, extraction technology, and consumption rate leads to a fixed date of peak extraction rate for global oil. Improving technology stretches the curve to the right, but at a higher production cost subject to diminishing returns. At this point you will likely claim that non-conventional fuels will be brought online. EROEI kicks in and if you are still using oil to power your non-conventional production and it costs 1 BBL of conventional oil to deliver 1 BBOE of alternative to market then the project will not even go ahead. But even if the EROEI is viable, if these alternatives are not ready *at scale* and *on time* when the physical limit is reached you will still get enormous economic disruption due to oil shortages. To fail to plan is to plan to fail.
The reality is that natural resources are limited physically in cumulative size (eg consumables) or supply rate (eg renewables), and practical economic supply cannot be expanded beyond what is real, regardless of price and technology. Oil is geologically limited in both size and production rate – it must be on a finite size planet. Sure, you may not reach any physical limit for 50 years… right up until the day you hit the physical limit, and at that point “basic economics” will be of no help. We don’t want to hit the physical oil limit or the price limit without a feasible alternative, but you deny there is even a limit that can be hit. The irony is that it is this same complacency about the physical limit that makes it more likely you will be hit – by not sufficiently executing a transition plan in enough time. e.g. it will take more than 8 years to convert hundreds of millions of cars to run on CNG.
If you do not have knowledge of any feasible plan to avoid the economic impact of oil shortages then you are in the same Peak Oil boat as the rest of us whether you admit it or not.
If I understand you correctly, you are saying that because we are so clever and industry is always on the lookout for a better deal, Peak Oil will not be a problem because it will only occur as we voluntarily switch to other better sources of energy (or new oil resources) when conventional oil costs exceed the new alternative. In other words, the rate peak is determined by the advent of substitutes rather than a physical peak necessitating substitutes.
What you are effectively saying then is that all these predictions of an oil decline during this decade are not necessarily doom but are just a prediction that during the next 8 years a new resource will be discovered that can adequately substitute for both the oil capacity and production rate of two Saudi Arabias and will be developed and deployed so widely that it triggers a measurable voluntary switch away from conventional oil before 2020, AND the oil business already has a plan for doing all of this, AND they are already executing it.
Richard, I hope you turn out to be correct. However, that is a high hope and hope is not a plan.
All I have heard so far from you is that because Peak Oil doomer predictions have been wrong in the past the Earth must therefore have an unending chain of recoverable resource types which started with flint and extends to infinity, which is insane. Your analogy of peak flint would have been greatly troubling to those in the neolithic flint business, and the peak flint theorist was proven right in the end. But your flint analogy is devoid of worth because recyclable reusable materials for structural purposes are not in the same league as consumable energy sources. Unlike oil production, the flint business did not use flint as its energy source. Cherry picking an example in which a physical limit was not reached does not disprove physical limits to resource usage generally. Pretending that finite resources are practically unlimited is the mentality that has got us into this problem.
Far from being “devoid of any worth”, my own assertion about the inevitability of an oil peak simply held no value to you. So it all boils down to the date. You believe the Peak Oil hype is unfounded because, deep down, you know there is a physical peak in carbohydrate production in the future but you think it is far enough away that it is worthless to begin making expensive preparatory changes to our civilisation any time this decade. I would like to know what evidence there is for this apparent optimism. There must be a carbohydrate peak date, so in your opinion what is it really? Why? What do you know about this problem that is not known to people who’ve spent the last 15 years studying the facts? If somebody else were to tell you that this whole Peak Oil issue is nonsense because we have enough oil to power transport at current demand for another 900 years, how would you know that they were talking rubbish but you aren’t?
Gasguy has it exactly right.
– Bucky’ Brock—CEO of Brock Exploration 1982
– M. A, Adelman (The Real Oil Problem)
Michael Lynch and others with relevant experience in the area of oil production estimation have shown why the Peak Oil doomsayers have been wrong time and time again. Their theories of total recoverable resources are just not accurate. They join a litany of other false eco-prophets such as The Club of Rome (Limits to Growth, 1972), Paul Ehrlich (The End of Affluence, 1976), etc. who have predicted the end of certain finite resources, only to be proven wrong – multiple times (http://www.reason.com/news/show/34758.html“>http://www.reason.com/news/show/34758.html).
http://www.masterresource.org/2011/03/lynch-power-hour-interview/
http://blog.aynrandcenter.org/power-hour-episode-2-peak-oil-with-michael-lynch/
http://www.masterresource.org/2011/02/simmons-failed-wager-iii/
http://www.masterresource.org/2011/02/end-peak-oil-theorist-simmons-i/
http://www.masterresource.org/2010/12/peak-oil-puff-on-huff/
http://sepwww.stanford.edu/sep/jon/world-oil.dir/lynch2.html
http://www.energyseer.com/NewPessimism.pdf
http://sepwww.stanford.edu/sep/jon/world-oil.dir/lynch/worldoil.html
http://www.condition.org/sm4602.htm
http://www.forbes.com/home/free_forbes/2006/0724/042.html
RE: Main Article, Figure Three
I find the most telling data in this regard is figure three in the main article, which plots the rate of oil discovery against the rate of extraction. If you accept this plot, showing the rate of oil discovery peaked in the early 1960’s, then there is no way that you can reject the idea that we will exhaust this supply of energy in the next century, unless you believe that the ‘end of time’ will occur first. Figure three tells the whole story. It shows we are now extracting oil twice as fast as we are finding more.
I believe the message of ‘Peak Oil’ is this: we must now make a serious effort to find a new source of cheap energy or prepare for being forced to live with less energy available. The latter case may include a naturally forced global population reduction to those levels extant before the exploitation of the petroleum resource.
One complaint I have is there do not appear to be authoritative public listings of the data used to create these plots. The website for the US Energy Information Administration (EIA) has a confusing multitude of detailed plots for production from diverse sources and fuel classifications. In one case there is an Excel table with a line of global totals that runs from 1980 to 2010. This does not quite agree with a similar, but less current table from BP that covers a longer interval of time. I believe the EIA should be providing a simple, authoritative year-by-year *global* oil production table over the last century.
I note that the emphasis is always on total production, rather than the per capita global-population production. This figure has peaked long ago due to increasing global population. Reduced per capita oil production may be reducing personal comfort levels.
One Canadian economist, Jeff Rubin, is saying that he believes the current recession was triggered by high oil prices that drove the price of gasoline over four dollars a gallon in the United States in July 2008. He has been predicting that the end of the global recession will, within a year, result in the return of high-cost oil to near double the previous prices.
“Michael Lynch and others with relevant experience in the area of oil production estimation have shown why the Peak Oil doomsayers have been wrong time and time again. Their theories of total recoverable resources are just not accurate. ”
Those who dispute peak oil make the same mistakes time and time again. They look at what’s in the ground. Peak oil has NEVER been about what’s in the ground. Peak oil is about production, flow rates. Canada’s oil sands is a case in point. Yep, there is a lake of bitumen there. But because it is not easily flowing oil, it has to be mined, with only a very small percent attempting to flow the bitumen (with a very low ERoEI). This means the flow rate from that deposit will always be slow. Currently 1.5 million barrels per day (compared to Canada consumption of 3mb/d, and the US 20mb/d). Hence the flow from all these other sources will not be able to compensate for the loss of flow from other sources. Example, Cantarell was producing some 3mb/d. Less than 10 years after peak and it’s down to 0.45mb/d. That field alone fell in production more than the oil sands produces.
This is an interesting read: http://www.theoildrum.com/node/8526
Richard Wakefield says:
October 29, 2011 at 7:41 am
“Those who dispute peak oil make the same mistakes time and time again. They look at what’s in the ground.”
That is even more ridiculous than the stuff posted on the oildrum. People should realize that their posts reveal more about them than they are aware. Thanks Richard.
For those wishing to seriously look at the evidence, see:
Jeffrey Brown, Three Strikes and Your Out.
See his graph: Available Net Exports
A 13% Decline in 5 years, 2.6%/year in oil exports available to other oil importing countries.
Wake up, listen and understand.
US 48 states oil production peaked in 1970, UK about 2000, Norway in 2005.
Jean Laherrere shows Global LIGHT OIL oil discoveries peaked ~1965. Global peak LIGHT oil production is peaking about now.
See “westexas” graph of:
Available Net Oil Exports
Available net global exports (after China + India imports) DECLINED 12% from 2005 to 2010
“21 of the top 33 net oil exporters showed net export declines from 2005 to 2010.”
See Robert L. Hirsch, The Impending World Oil Mess:What It Is and What It Means To YOU! ISBN 978-1926837-11-6
May 2011 ASPO conf. Presentation PDF or Video
See solutions in: Edwin Black The PLAN – How to Rescue Society When The Oil Stops – or the Day Before,
and especially:
Turning Oil to Salt Gal Luft, Anne Korin
Meanwhile , in the real world, the October 3 Oil and Gas Journal lists a few hundred projects coming on stream in the next few years:
This much is free, to read the whole article one must subscribe, something that would help inform many of the doomsdayers.
“Brazil, Canada, Iraq, Australia to have largest production increases10/03/2011
By Guntis Moritis
The projects in three countries with the highest increase in oil production are Brazil, Canada, and Iraq, while Australia has the projects with the highest increase in gas production, according to OGJ’s review of major projects listed in the accompanying table. The table lists projects in 44 countries that are in the construction or planning stages, with peak production from these projects occurring in 2011 or after. If all the projects’ peak production rates occurred in the same year, world production capacity would increase by 36.7 million b/d of liquids and 74.3 bcfd of gas. The list includes both individual fields and, in some cases, the accompanying infrastructure”
David L. Hagen says:
October 29, 2011 at 8:42 am
You and your “real evidence” ignore completely the fact environmental restrictions are the real cause of reduction in oil. You can fool some of the people some of the time, ……..
Those Malthusians who have courageously “put their money where their mouths are” give us memorable stories of what happens when you let your pet theories get in the way of understanding reality:
“Five years ago, Matthew R. Simmons and I bet $5,000. It was a wager about the future of energy supplies — a Malthusian pessimist versus a Cornucopian optimist — and now the day of reckoning is nigh: Jan. 1, 2011.
The bet was occasioned by a cover article in August 2005 in The New York Times Magazine titled “The Breaking Point.” It featured predictions of soaring oil prices from Mr. Simmons, who was a member of the Council on Foreign Relations, the head of a Houston investment bank specializing in the energy industry, and the author of “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.”
I called Mr. Simmons to discuss a bet. To his credit — and unlike some other Malthusians — he was eager to back his predictions with cash. He expected the price of oil, then about $65 a barrel, to more than triple in the next five years, even after adjusting for inflation. He offered to bet $5,000 that the average price of oil over the course of 2010 would be at least $200 a barrel in 2005 dollars.
I took him up on it, not because I knew much about Saudi oil production or the other “peak oil” arguments that global production was headed downward. I was just following a rule learned from a mentor and a friend, the economist Julian L. Simon.
…
The past year the price has rebounded, but the average for 2010 has been just under $80, which is the equivalent of about $71 in 2005 dollars — a little higher than the $65 at the time of our bet, but far below the $200 threshold set by Mr. Simmons.
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Maybe something unexpected will change these happy trends, but for now I’d say that Julian Simon’s advice remains as good as ever. You can always make news with doomsday predictions, but you can usually make money betting against them.”
http://www.masterresource.org/2011/02/simmons-failed-wager-iii/
David Archibald says @October 28, 2011
Addressing your comment about the use of natural gas as a transportation fuel.
A good deal of my time is spent in strategic planning for a major utility. Because power plant investments require a long payback period, utilities spend a considerable amount of time forecasting fuel cost and other considerations. Usually the timeframe examined is from the present to thirty years out. One of our primary tools are complicated economic forecasting models that develop/examine world market supply/demand curves for multiple resources (oil, coal, gas, etc.) based on known resources and economic projections. Within the models, old oil facilities, power plants, etc. are dropped and replaced with newer facilities based of the expected marginal cost of individual plant type/fuel type and so on. At present, most models are projecting sufficient natural gas to supply in the United States to meet the U.S. electrical utilities needs for some time to come. These models show electrical demand being met primarily with a mixture of nuclear, coal, gas, and wind (in select – shall we say “unique” markets). The exact mix depends upon the scenario being run.
Plainly put, for about the next to 20-30 years, the numbers simply don’t show crude-oil competing with natural gas enough to warrant concern about a run up of overall natural gas prices (in the U.S.).
To place this in perspective you have to understand that only about 60% of a barrel of oil ends up in transportation fuels. The income derived from the other 40% provides considerable price leverage for crude in the transport market. (i.e. the price of transport fuel can go down while the price for the other 40% goes up).
The above said, I think you are missing the primary point of my previous post. Specifically, that any uncertainty regarding the actual amount of recoverable crude-oil remaining in the world is simply not important…because we have many alternative ways to economically produce non-crude oil as a transportation fuel.
Even if natural gas were to become a primary transportation fuel in the U.S., this would simply mean demand for crude-oil would drop in favor of cheaper natural gas. Once we ran out of affordable natural gas, the market would simply turn back to crude. And once that was depleted, it would gear to coal, tar sands, and shale oil.
In my view, there simply is no creditable evidence the world is going to run out of affordable oil resources in my life time or in my children’s life time.
Best Regards,
Kforestcat.