The R/P Ratio

Guest Post by Willis Eschenbach

In oil, as in other extractive industries, you have what is called the “R/P ratio”. In the R/P ratio, “R” is reserves of whatever it is you are extracting, and “P” is the production rate, the rate at which you are extracting and using up your reserves.

Figure 1. World annual oil production in billions of barrels (blue line), and years left at that production rate (R/P ratio, red line). Right scale shows the proven oil reserves for each year, in billions of barrels (dotted green line). DATA SOURCE: BP Statistical Review of World Energy 2011, a most fascinating Excel spreadsheet. PHOTO Spindletop Hill Gusher, 1901

When you divide the amount you have in reserves by the rate at which you are extracting the resource, you get the number of years the reserves will last at that rate of extraction. Accordingly, I include the R/P ratio in Figure 1 as “Years Left”

A couple of things to point out. First, the “Years Left”, the R/P ratio, is currently more than forty years … and has been for about a quarter century. Thirty years ago, we only had 30 years of proven oil reserves left. Estimates then said we would be running out of oil about now.

Twenty-five years ago, we had about forty years left. Ten years ago we had over forty years left. Now we have over forty-five years left. I’m sure you see the pattern here.

Second, this is only what are termed “proven reserves” (Wiki). It does not include “unproven reserves”, much of which is in the form of unconventional oils such as shale oil and oil sands. Even discounting the unproven reserves, while the rate of production has increased, the proven reserves have also increased at about the same rate. So the R/P ratio, the years left at the current rate of production, has stayed over forty years for almost a quarter century..

Now, at some point this party has to slow down, nothing goes on forever … but the data shows we certainly don’t need to hurry to replace oil with solar energy or rainbow energy or wind energy in the next few decades. We have plenty of time for the market to indicate the replacement.

Don’t get me wrong. I’d love to find a better energy source than oil. In fact, the huge new sources of shale gas will substitute in many areas for things like heating oil, and will burn cleaner in the bargain. And I do think we’ll find new sources of energy, humans are endlessly inventive.

I’m just registering my protest against the meme of “OMG we’re running out of oil we must change energy sources right now tomorrow!!”. It is simply not true. We have plenty of time. We have decades. We don’t have to blow billions of dollars of our money subsidizing solar and wind and biofuels. The world has enough oil to last for a long while, plenty long enough for the market to determine whatever the next energy source might be.

w.

NOTE: Oil figures, particularly reserves, are estimates. Oil companies are notoriously close-mouthed about their finds and the extent of their holdings. The advantage of the BP figures is that they are a single coherent time series. Other data gives somewhat different results. As far as I know the increase in proven reserves despite increasing production is common to all estimates.

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tokyoboy
December 13, 2011 11:56 pm

Where on earth is the good ole Peak Oil??

PaulR
December 14, 2011 12:05 am

Yes, someday the oil will run out. Someday, not tomorrow or the day after or even in the next twenty years. Peak Oil is just another version Chicken Little doom mongering. Good post.

December 14, 2011 12:05 am

Worth a watch. Peak oil on Australia’s ABC
http://www.abc.net.au/catalyst/stories/3201781.htm
The graphs here, if they pan out as described, bode ill for NZ
http://oilshockhorrorprobe.blogspot.com/2011/10/when-might-new-zealands-oil-imports-dry.html#more

Magnus
December 14, 2011 12:06 am

“we certainly don’t need to hurry to replace oil with solar energy or rainbow energy or wind energy in the next few decades.”
mmmmmmmmmmmm… raaainbow energy.

December 14, 2011 12:11 am

The present arguments are tempered by urgency, if “tempered” is indeed a correct term. If we have the time, we should take it, and be very deliberate about finding a solution. But humans being the way they are, there will be some barbaric goings-on as oil dwindles, as those who resisted change cling to the remaining supplies. Ugly-sounding, but look at it. We already have the tip of the iceberg with the implications from Durban. Instead of taking steps to change at a deliberate rate and adapt to any changes (regardless of cause), instead the impetus is to cripple the world’s economy through the urging of unelected groups. That’ll teach ’em! Alarmism has become the engine of change, except that the choice of action is equally emotional….read useless.
Maybe this sounds callous, but I’m glad I’m getting older, because I won’t get to see what happens a few decades from now. Meanwhile, I’ll keep working on flattening the R/P curve, while some very smart people try and find an alternative that doesn’t destroy us all.

DaveS
December 14, 2011 12:16 am

Willis, Thanks for this industry level summary. Please note that the numerator (Reserves) is a consequence of exploration investment decisions, and does not tell us much at all about reserves in a geological sense. Holding reserves beyond 30-40 years makes as much sense as an automotive company keeping a 30-40 year stock of engines in a warehouse. DaveS

Ilkka Mononen
December 14, 2011 12:18 am
Editor
December 14, 2011 12:18 am

I understand that the privately owned oil companies do not report all of their proved resources for tax reasons. I also understand that the nationally owned oil companies do the same for political reasons.
It is obvious that oil will be with us for many a long year to come.
Willis, I enjoy your stuff. Neat, clear and simple.

AndyG55
December 14, 2011 12:29 am

tokyoboy says:
Where on earth is the good ole Peak Oil??
if you look at the red line, you can see it has peaked in 2009. 😉

Richard111
December 14, 2011 12:31 am

By jingo! Just how did this poor little planet support all those critters in the distant past to leave us this wonderfull world wide fossil legacy? /sarc

Leon Brozyna
December 14, 2011 12:36 am

We’ll never run out of oil.
At some point in the distant future, it will become just too expensive a commodity to waste by burning it (gasoline in automobiles or heating oil for home heating). At which point, from out of left field will appear some upstart energy company that’ll solve the problem for the car companies and knock the socks off the oil companies.
Of course, if the “we know what’s best for you” politicians get into the act, we’re doomed.

PaulC
December 14, 2011 12:41 am

Good article.
2 points of comment.
Modern technology will always find more reserves than old technology.
Oil is not a “fossil” fuel. It is being “created” continually by reactions in the Earths’ interior.
Posts on this site have mentioned this a few times. Apparently the Russians are investigating this seriously.
There are no fossils associated with Oil.Oil comes from the bottom to the up. Old oil fields are reported as filling up after many years of being abandoned
Worth following up.

Ken Hall
December 14, 2011 12:50 am

As a layman with no particular expertise in oil production, nor in how they actually work out what the proven reserves are, but I do know that for decades there have been alarmist predictions of things running out and humanity facing catastrophe because of it. From the predictions of food running out when the world’s population exceeded 5 billion, to this, they have all been wrong. We are beginning to see the same false alarmism being proven wrong in regards to climate change.

albertalad
December 14, 2011 12:56 am

Willis,
I would like to point out there are 6000 products made from oil as a base product. Second, with new technics combined with new technology being utilized in the oil sands even as I write our reserves are stretching out further and further every ten years it seems. Once we thought we could not get to the deep oil sands – and of course at that time we were surface mining. Since then much has changed. Of course you are also correct when not mentioning the US and Canadian Arctic reserves nor the offshore reserves off both the US and Canadian west at least. However in the Arctic we have no real idea where all the oil and gas is or in what quantities, however, we do know oil and gas is there and have some idea where it is in a few places. Nor that of Russia and other world offshore oil in multiple locations. And you are more than dead on when you mention oil reserves have been stretching out when compared with past estimates – once again due to new technics and new technology.
BUT for the most part we (as an oil company) never, EVER say outright exactly what our reserves are at any given time (trade secrets). Should the US ever get its shale and offshore on the go then North America will be sitting very nicely for 200+ years or more.
BTW, try living up here in Canada with windmills and solar – or leftists magic gerbil wheels all the way up into the Arctic with six months of darkness. I’ll tell you this much – you’re gonna need a whole lot more clothes than the eco-leftists had in Durban.

Robber
December 14, 2011 12:57 am

Oil is a diminishing resource – 40 years is little time to wean ourselves off oil, and find alternatives. This is a bigger longer term problem than climate change, but agree that the best answer is to let the market find solutions, not have governments trying to pick winners through crazy subsidies. Coal on the other hand I believe has several hundred years of reserves provided we are allowed by the UN to burn it. Or as in Australia under Gillard required to live within a “clean energy future” – rationing anyone?

Another Ian
December 14, 2011 12:59 am

Richard111 says:
December 14, 2011 at 12:31 am
By jingo! Just how did this poor little planet support all those critters in the distant past to leave us this wonderfull world wide fossil legacy? /sarc
Rhyming slang there by any chance?
Are you supporting abiotic oil then?

Christopher Hanley
December 14, 2011 12:59 am

Forgive me for sounding a melancholy note.
Forty years is not a long time.
What alternatives at the necessary scale are even feasible for future heavy road transport and fast air travel?

Don K
December 14, 2011 1:01 am

Willis, I wouldn’t put much faith in “proven reserve” numbers. OPEC sets production quotas partially on reserves. And — surprise — reserve figures for OPEC countries continually increase. Other countries probably have reasons for mis-stating their reserves (Some may be understated).
A question one might ask themselves. If there is all that oil in the world, why are oil prices so high? Market manipulation is certainly one possibility. But I wouldn’t rule out the possibility that the world is producing about as much oil as it can and the reserve numbers are largely fiction. My guess is someplace in between.
On the bright side, Natural Gas Liquids — oil that turns up in natural gas wells (sort of) — seem generally not to be counted in oil reserves and sometimes not in oil production. In the US, a significant percentage of our “domestic oil production” is NGLs, and the number will probably increase.
Note also, that the years left probably doesn’t tell us a lot. It is pretty clear that the 85% of the world that does not live in OECD countries is going to suck up oil on a grand scale in future years — if it can be produced, and if they can afford it.

Richard S Courtney
December 14, 2011 1:05 am

Willis:
Thanks for your graph. It provides a clear, pictorial presaentation of the facts.
The simple truth I always state (and have made on WUWT) to refute the ‘peak oil’ scare is as follows.
Oil reserves were about 40 years throughout the twentieth century and will be about 40 years throughout the twentyfirst century. This is because oil companies have a planning horizon of about 40 years. So, the oil companies pay people to look for more souces when oil reserves fall below 40 years, And they don’t pay people to look for more sources when they have 40 years supply because they don’t pay people to look for what they don’t need.
Richard

Geckko
December 14, 2011 1:08 am

Willis,
Thanks for that antidote to the Peak Oil shills. A few additional points to addd, which you nod to with you reference to this being “proven” reserves only. We need to be cogniscant of the following:
– Additional finds that will occur at current prices
– Additional additional finds that would occur if prices increased (i.e. supply did become more of a problem)
– Additional extraction and recovery that will occur over time with technological progress
– Additional extraction and recovery that would occur if prices increased
– The fungibility of fossil fuels (you gotta luv ’em), which means that, for example, that fracking gas makes these numbers even bigger in real terms (i.e. the MASSIVE amounts of gas new technology is bringing NOW can substitute for oil in many areas)

markx
December 14, 2011 1:09 am

@Ken Hall December 14, 2011 at 12:50 am
Very true.
And climate alarmism has the advantage of putting the blame on a very conveniently measurable, taxable and tradable scapegoat, CO2.

John
December 14, 2011 1:11 am

This doesn’t show demand and if the amount produced will meet demand or how that will affect prices. Also the reserves here are economically viable reserves. I.e. as price goes up reserves go up as it become viable to exploits fields that we know about. New discoveries is actually less than production and not shown on this graph.
The estimates for remaining oil are massive non-conventional reserves are estimated at some 10 times more than the conventional oil produced so far. If you’ll be able to afford it and if they produce it fast enough is another matter entirely

P Wilson
December 14, 2011 1:13 am

wow. There is a correlation between projected oil reserves and projected climate change. The deadline is always 40 years away from any moment, past or present. Difference is, we shall have to do something about oil, and what happens when it gets rare.

jorgekafkazar
December 14, 2011 1:18 am

But what about the precautionary principle? Shouldn’t we be developing the world’s first lunar collector? Of course we should! Solar power doesn’t work at night, but we could protect the world against falling energy reserves by employing lunar green cheese energy collectors at night. Here at the State Pen Energy Research Institute’s Travestron Project, we’ve had unprecedented success* in producing a robust collimated beam of lunar energy on our rooftop at night, using VW hubcaps as parabolic reflectors. A grant of a few billion more dollars is needed to reduce this to commercial practice. Send us your green! [PayPal only; no checks, money orders, euros, or Zimbabwean currency.]
* Except for an incident when Michael, one of our most dedicated researchers, walked into the beam and was afflicted with lunacy, wandered off, and hasn’t been seen since.

Richard
December 14, 2011 1:34 am

Thanks for the post, Willis. I appreciate the effort that must go in to discovering all the data behind your posts.
There’s one other factor (that I know of) that controls Years Left, and that’s the technology used on the consumption side. It gets more efficient and Years Left increases. e.g. when fuel injection replaced carburetors in motor cars and mpg figures increased significantly. I don’t think that technology has stalled.

December 14, 2011 1:34 am

Thanks Willis that is the clearest and simplest exposition I’ve seen. Very helpful, bookmarked.
Now it would be good to consder, who benefits (fiscally) from promoting scare?
However I do agree with you and probably most other commentor here, that even so this is not necessarily an endless supply, that we should be actively seeking alternatives. And (IMHO) I think it is very important to consider “sustainability” – but with decent science behind it, as well as awareness of human reactions to crunch situations. And I think it’s important to search for how best to manage human reactions – starting with one’s own – in which, awareness of truth at many levels is of prime importance.

Les Francis
December 14, 2011 1:35 am

Paul C. Oil geologists know roughly where to look for the oil. It doesn’t appear at lower levels in the earths crust dated pre the Carboniferous Period. There are some deposits at levels dating to the age of the dinosaurs.
There is no sense exploring earths layers that are deeper than the Carboniferous period – there’s no oil to be found.
One point to make.
All the easy oil is gone. i.e. the oil reserves at low depths of the earths crust.which is relatively inexpensive to exploit. We are into the era of higher cost oil. – deeper land and deep offshore wells. Next will be more expensive shale oil.
Eventually as someone as already pointed out, oil will no longer be available for private transportation.

December 14, 2011 1:47 am

PaulC says: December 14, 2011 at 12:41 am

Oil is not a “fossil” fuel. It is being “created” continually by reactions in the Earths’ interior.

Indeed, there is some powerful evidence of this, plus powerful evidence of suppression of evidence (familiar anyone?). However, that evidence also says that such wells are not gushers and have to be pumped pretty slowly. The Russians are, I understand, already doing this using several super-deep wells.
But tread carefully here, be extra careful with facts and politeness. This topic is a bit sensitive at WUWT, or has been in the past. Fringe topics are always sensitive issues liable to be bagged by the William Connolleys or whatever, or leaned upon by interested parties.

ianl8888
December 14, 2011 1:49 am

@Willis E
This touches on one of my professional interests
It is true that both private and Govt organisations (eg. OPEC, Russia) routinely restrict (censor) hard data on oil Resources and Reserves (gold and other minerals as well). This is done for “national security” reasons. It is almost impossible to access accurate, reliable geological/engineering data on these … hence your 40 year “magic pudding” (R)
The future rate of extraction (P) depends on the future rate of consumption. We would need to predict with accuracy the future consumption of China and India over the next 50 years to be in the hunt for a reliable estimate of P. Not much hope of accuracy here, I believe
Whenever Peak Oil advocates rear their wishful thinking (Peak Oil is almost always used to scare people), I list out these two factual questions and inquire whether they have reliable answers. Then the only reply is dead silence

John Marshall
December 14, 2011 1:49 am

It also does not include resources that are not yet legal to extract. When these are legally extractable they become a reserve. Most of Alaska falls into this and Alaska has large coal fields, oil and gas which the rules prohibit us from extracting. There are also clathrate deposits in all oceans and under the permafrosts of the planet. All we need is the political will to do this, and a bit more technology perhaps.

a jones
December 14, 2011 1:55 am

What the graph shows beautifully is the cyclical nature of the oil business which is common to many extraction industries.
When supply is short prices are high and profits good leading to investment which in turn results in a glut and falling prices and profits and a dearth in investment.
This is clearly seen; the high prices of the 70’s spurred development so by the late 80’s oil was cheap, development slowed up, until the steadily rising price towards the turn of the century sparked a new round of exploration.
Only political meddling is buttressing the oil price at the moment, expect to see it fall quite sharply over this decade.
Kindest Regards.

Brian H
December 14, 2011 1:55 am

The trend line is clear: the R/P ratio increases at 0.5% per year.

Brian H
December 14, 2011 1:57 am

Correction: the R/P ratio increases at 0.5 years per year. Or, if it’s exponential, 1% per year.
>:)

December 14, 2011 1:58 am

Oh good, Les Francis. Now please tell us why there are heaps of hydrocarbons on Titan.

Dave
December 14, 2011 2:15 am

My understanding as some one has already posted above is that OPEC countries are notorious for overstating their reserves.
The biggest question to ask about the chart is if oil reserves are not a problem, how come they have not responded to significant increases in consumption from China.
Those increases from china which have not been matched by worldwide oil production have been largely responsible for the ever increasing price of oil (disregarding the 2008 spike)

TimTheToolMan
December 14, 2011 2:15 am

There is only one line on that graph of any worth when considering peak oil and its the blue line. Its the only one which has any sort of reliability of measurement too.
Proven reserves being “large” supports those like Willis who think peak oil is so far off its not a problem.
Proven reserves being “small or unknown” supports those who believe the oil companies are rigging the figures to set their production quotas within OPEC rules.
The blue line, however, is globally visible production and reflects actual reality and if it never gets higher than it is, means we’re already peaking.

David Gould
December 14, 2011 2:45 am

Willis,
Peak oil has never been about peak oil reserves. It has been about peak oil [i]production[/i]. And your graph shows production flatlining since around 2004, which is an indication that peak oil might be upon us.

Fredrick Lightfoot
December 14, 2011 2:53 am

Sigh, Wooden derricks and 100,000 barrels a day at 1,000 feet, the good old days, But !
For political, geographical, and access problems there is still about 40% of the world land mass that has not been explored/seismic surveyed, Note LAND MASS. 75% of the worlds oceans remain unexplored, and as for the graph above, the owner of the biggest reserves of oil in the world would most probably be the U.S. Military and that is just areas marked on maps not barrels Sigh.

PaulC
December 14, 2011 2:55 am

Lucy Skywalker says:
December 14, 2011 at 1:47 am
Indeed, there is some powerful evidence of this, plus powerful evidence of suppression of evidence (familiar anyone?). However, that evidence also says that such wells are not gushers and have to be pumped pretty slowly. The Russians are, I understand, already doing this using several super-deep wells.
But tread carefully here, be extra careful with facts and politeness. This topic is a bit sensitive at WUWT, or has been in the past. Fringe topics are always sensitive issues liable to be bagged by the William Connolleys or whatever, or leaned upon by interested parties.
I am really surprised that topics like this are taboo on WUWT. Oil supplies are close to the most important issue facing this planet.
It sounds like Global Warming all over again

cedarhill
December 14, 2011 3:00 am

Not to worry. The good news is if we ever run out of the stuff in the ground, the folks at Los Alamos have shown that we can simply use nuke power to manufacture hydrocarbons literally out of the thin air and water. Carbon from CO2 (think dry ice); hydrogen from water. Ever since Germany of WWII vintage except they had to use coal.
Nuke material we know about would be good for a billion years or so. And the Greens would just love recycling CO2 and taking dirty water and making clouds out of it. Even my tomatoes would love it.

markus
December 14, 2011 3:02 am

Energy by power source 2008[18] TWh
Oil 48 204 33.5%
Coal 38 497 26.8%
Gas 30 134 20.9%
Nuclear 8 283 5.8%
Hydro 3 208 2.2%
Other RE* 15 284 10.6%
Others 241 0.2%
Total 143 851 100%
Source: IEA *`=solar, wind, geothermal and biofuels
—————————————————————————————————————————
Definition of ‘Barrel Of Oil Equivalent (BOE)’
A term used to summarize the amount of energy that is equivalent to the amount of energy found in a barrel of crude oil. There are 42 gallons (approximately 159 liters) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units (MBtus) or 1,700 kilowatt hours (kWh).
—————————————————————————————————————————
2010 use 30 billions barrels increasing from 23 billion barrels 2000 estimated 2060 production being 30 billion x 31.42% compounded x 5 = 117 billion barrels or 201 423 TWh
—————————————————————————————————————————
In 2008, total worldwide energy consumption was 474 exajoules (474×1018 J=132,000 TWh). This is equivalent to an average energy consumption rate of 15 terawatts (1.504×1013 W).[1] The potential for renewable energy is: solar energy 1600 EJ (444,000 TWh), wind power 600 EJ (167,000 TWh), geothermal energy 500 EJ (139,000 TWh), biomass 250 EJ (70,000 TWh), hydropower 50 EJ (14,000 TWh) and ocean energy 1 EJ (280 TWh).[6]
http://en.wikipedia.org/wiki/World_energy_consumption
————————————————————————————————————————–
If renewables are producing 25% of what they are capable of by 2060 then no wucking furries.

Alan the Brit
December 14, 2011 3:03 am

Ecxcellent post again Willis, clear, logical, rational! I like:-)
PaulC says:
December 14, 2011 at 12:41 am
I also understand this to be the case. Indeed when you Wiki search for oil it merely states more or less that it is generally accepted to be a fossil fule, but provides no evidence to support such an assumption/statement. The Russians, under Jo Stalin, started to reseach the origins of oil to permit them to make newer discoveries of supplies. They believed that oil was in fact mineral based as it contained many minerals found in meteorites. I’ll try & track down the sources of this information as I only came across it by accident, & didn’t download it at the time. If it is the case, it has huge implications for supplies in the future!

ferdinand
December 14, 2011 3:11 am

As you infer in the article – no commodity has ever run out. Alternatives or substitutes always take over. That is why the “running out of oil” theory is an alarm sent to scare climate realists.

meemoe_uk
December 14, 2011 3:11 am

thanks Willis, this underpins the key idea from which peakoil doomers keep themselves in suspended hysteria. Oil companys only ever bother prooving about 20-30 years worth of future oil reserves. The peakoil gang misinterpret this as ‘ only 20-30 years worth of oil left ! ‘ , which combined with their bell curve mean that ‘peak oil is now ! ‘ – always.
I was a peakoi doomer for a couple of years 2006 – 2008. I noticed the day of reckoning keep slipping forward, which spurred a critical review of my belief.

Jeff
December 14, 2011 3:11 am

And of course, herein lies much of the problem…everytime the R/P slope is down, the peak-oil people start crowing about how we are running out of oil. This sends entrepreneurial people out, spending money and devoting their careers to find the replacement, and paying others to devote their careers to finding the replacement, only to have the line moved farther and farther into the future. How on earth do they A. justify their careers, and B. get their money back? Hmmmmm…

David Archibald
December 14, 2011 3:25 am

When does the world produce its last barrel of naturally occurring, free-flowing oil? In about 2160. What happens in the meantime? The production rate goes down to meet that zero flow rate in one hundred and fifty years. What will the decline rate be over the next few decades? It will average about one million barrels/day/year. What will happen to the oil price? It will go up until substitutes come in.

ImranCan
December 14, 2011 3:29 am

Willis
You have it wrong about what ‘proven’ reserves are. It is a term that defines a statistical view of the reserves which have a band of uncertainty with them. For example if there is a probability distribution curve defining the range of outcomes the ‘proven reserves’ would be say the P85 number (85th percentile). The expectation number (mean) is often quoted as ‘probable’ while the P15 number is sometimes quoted as ‘possible’
Also, its not a case of proven vs. unproven. You also have to understand the various definition of the resources. In order for something to classify as ‘reserves’ it has to be developed iof have a solid development plan in place. Sometimes (for larger volumes) it is even required to have the funding agreed and committed. If this is not done then the resources are not called ‘reserves’ but other names like ‘resources’ of ‘scope for recovery’ etc. You also start to get into the discussion about discovered vs. undiscovered etc.

Tom
December 14, 2011 3:29 am

Oil is being continually created, but at rates much slower than we are using it. It makes sense to consider it a finite resource. The Russian and Swedish deep drilling was done 25-30 years ago and found nothing. IIRC the Swedish well found traces of oil but it was never established to be anything but contamination from the drilling process itself.
“Proven Reserves” is not a geologial or engineering number, it is a financial number calculated by very specific SEC rules. It counts only oil proven by existing wells and assumes current prices and technology. It is obviously a very conservative estimate. It is useful because all companies publicly traded in the US have to calculate it the same way, so comparing Exxon’s reserves to Chevron’s reserves is at least an apples to apples comparison, even if it is a lowball estimate. It is of no value in estimating long-term future production.

Paul80
December 14, 2011 3:32 am

Although restricted Alaskan coal fields were mentioned by John Marshall, the production of petrol/gasolene (or other liquid fuels) from coal is barely in the picture as yet – crude oil is still cheap enough not to need it.

Don
December 14, 2011 3:39 am

Good line Brian

Earl Smith
December 14, 2011 3:43 am

Don K said:
December 14, 2011 at 1:01 am
A question one might ask themselves. If there is all that oil in the world, why are oil prices so high? Market manipulation is certainly one possibility.
One of the interesting comments by Ron Paul is about the price of gas.
Back in the early ’60s you could buy a gallon of gas (neglecting taxes) for one thin silver dime.
Today you can still buy the gallon (neglecting taxes) for that same dime. (a silver dime not the Johnson dimes we now use)
The problem is not that prices have risen, rather it is that the government has been robbing us by means of inflation. A 1916 nickel had more purchasing power than todays dollar. The Fed has been busy printing dollars.
Part of the reason OPEC was formed was to get oil prices back in parity with what the were before the rapid devaluations associated with the costs of the VietNam War.

Jimmy Haigh
December 14, 2011 3:46 am

PaulC says:
December 14, 2011 at 12:41 am
[snip . . you need to be a bit more specific or you may be considered a troll. . kbmod]

Reference
December 14, 2011 4:07 am

A little bit of history.
When the UK government decided to permit onshore exploration for oil, Canadian oil explorers looked at the published geological maps of Britain, then applied for and were awarded licences over the Silurian rocks of southern Wales.
Why? Because they were used to finding oil in the Silurian rocks of Canada.
Compositional variability of crude oils and source kerogen in the Silurian carbonate–evaporite sequences of the eastern Michigan Basin, Ontario, Canada.
http://bcpg.geoscienceworld.org/content/48/4/307.abstract#fn-1
Worldwide, the chance of finding oil does not stop at the Carboniferous.

richard verney
December 14, 2011 4:24 am

A good article.
I have not read all the comments so apologise for any repetition of points made. My views are:
1. As you say, oil will not be running out any time soon. It is almost certainly the case that in 30 years time we will still have 40 years worth of proven reserves.
2. Proven oil reserves are under-declared for many reasons both political and financial. Therefore the 40 years worth of proven reserves is an under-estimation.
3. Estimates of unproven reserves are substantial and based upon past experience, we shall be finding new sources of reserves for the next 50 or so years. Indeed, the arctic openning up may yield much in the way of new reserves.
3. It is largely a question of economies of extraction. However, Oil will be a viable resource even at 200 or 300 dollars a barrel. Don’t forget that the price you pay at the pumps is mainly tax. If the tax was reduced (and it is levied purely for political reasons and could easily be reduced) a high barrel price would not limit consumer demand.
4. As the price goes up, the viability of extraction from more difficult fields goes up thereby increasing viable reserves, But also in this scenario, it becomes viable to extract oil from coal and coal reserves are far more substantial.
5. At some stage, but this is long in the future, the use of Oil will have to be directed to manufacturing plastics and the like.
By the time oil reserves become a problem, other energy sources will be available and those will not be wind and almost certainly not solar. We should just press on with business as usual. Technology in the end will solve any problem that we might experience some 50 or 100 years in the future.

Bill Illis
December 14, 2011 4:32 am

The new process of “fracking” has just doubled all the numbers (particularly for natural gas) and extended the depths that fossil fuels can be recovered from. Everyone is now trying out this technique everywhere and it is making a big difference.
Contrary to a comment above, fracking has opened up the deep oil and gas shales which can come from before the Ordovician period. The Bakken oil shale in North Dakota, Montana and Saskatchewan is now putting up huge production numbers (and it is from the late Devonian 360 Mya).
This is important because over the last 480 Mya, all the continents will have witnessed warm wet, shallow ocean, periods where oil and gas could have formed and been buried. It is unknown how many more deep fossil fuel fields will be found.
Look at North America’s gas shale deposits (which should be accessible now).
http://www.estatevaults.com/bol/_oil_shale_basins.jpg

December 14, 2011 4:38 am

Willis, you are way way off base. Your graph does not take into consideration that the production rate has a long tail, mostly trending flat right now, and the issue is “what price will a bbl be as Chinese demand squeezes supply into negative numbers each summer and fall as northern hemisphere demand peaks”
I think strategic petroleum reeserve releases will be the norm to try and keep a lid on prices.
Otherwise, I look to $125 a bbl for sure, maybe $150 a bbl within 2 years.
Yes we will have oil, but some people will not be able to afford it.
The future of the USA is Detroit, ie urban slums, unless the current President is replaced by a President willing to move the USA to natural gas transportstion.
Otherwise, the $150 oil will strangle the economy.
Your chart does not show that.

December 14, 2011 4:44 am

You might be interested to know……….
Twenty years ago, as the first of the original 5 Environmental Auditors, Contaminated Land, appointed in Victoria Australia with state signatory power over site investigations and cleanups, I performed the first such audit for a site where the Japanese government had conducted research at a pilot plant known as BCLV (Brown Coal Liquefaction of Victoria). Brown coal being somewhere on the spectrum between peat and lignite, of which vast reserves exist within Victoria and Siberia, to name just two locales. It was here that the Japanese, as a result of the oil shock of 1974, conducted one research project as a part of their Sunshine Program, directed towards assuring a stable supply of hydrocarbon fuels other than OPEC. The pilot plant was built for a 50 ton/day throughput. At the eventual 5,000 t/d output of a full design the Japanese estimated that in Victoria alone there would be a 500 year supply for Japanese and Australian needs.
Food for thought……….

Lance of BC
December 14, 2011 4:53 am

We will never run out of oil it’s abiogenic and formed at the earths mantel and is being constantly produced. What we have been extracting is what you might call the “low hanging fruit”, deposits that for geological reasons have been easy access. These we are depleting with over extraction, like over use of an aquifers, there’s only so many gallons before demand is higher the supply. But technically we will never run out.
With today’s deep sea drilling we are just scratching the surface and with future technologies we will be able to get at that source better. I’m sure that won’t be running low on oil for hundreds of year, depleting our low hanging fruit yes, running out no.
That said, drilling that deep does come with real environmental risks and we should be working on other alternative energy sources(beside the reason of commodity and political interference), like making nuclear safer and cheaper. There’s also room for solar technology and can be a great alternative when applied in the right circumstances, but for large application the technology is not there yet. Even using nuclear or solar or any source(besides hybrid) for electric powered personal transportation is still pretty unpractable and way to expensive for most to use, someday maybe.
There’s also a thousand other uses for oil beside burning it in your car or heating your home, and most have made our lives easier, healthier and saved our environment from burning up every thing for fuel, so I see no reason to stop using it now!
Sorry about the abiogenic rant, I know some ardently disagree with it, but hey! 🙂

Jean Demesure
December 14, 2011 4:57 am

What’s not widely known is “proven reserves” estimates depend also on… regulations which can make known reserves inexploitable!
In nearly all countries, you own the land, the State owns what is beneath. If more countries had the same properties rights as the USA where landowners also own the underground, there would be much more drilling and proven reserves would be much higher.
Since this legalistic scarcity source is there to stay, it’s a certainty the age of oil will end well before the end underground oil.

Victor Barney
December 14, 2011 4:57 am

[snip. No religious rants, please. ~dbs, mod.]

Brian H
December 14, 2011 5:06 am

DG;
News flash: production matches consumption. When more is wanted, more will be produced.
As a result of frac gas and oil, the long term trend for prices is down.
Deal.

PAUL SCHILIZZI
December 14, 2011 5:10 am

Don’t forget that
STONE AGE DID NOT END BECAUSE WE RAN OUT OF STONES

John Tofflemire
December 14, 2011 5:11 am

I remember well as a child in the mid-1960’s reading an encyclopedia printed in 1928 that boldly stated that the world would run out of oil within 20 years or so. This was stated as if it was an indisputable fact. I remembered thinking at the time that the forecast had clearly been grievously incorrect. Nearly 50 years later such predictions continue to be made and so-called intelligent people profess their belief in such predictions and their belief in the need for government to “solve” the impending “disaster”. And Malthus and his devoted followers have been predicting the imminent demise of homo sapiens since the 18th century due to overpopulation. In each case we are always told that “this time is different”, that the end is neigh. To the contrary, the end is not neigh.

Wyguy
December 14, 2011 5:11 am

AndyG55 says:
tokyoboy says:
Where on earth is the good ole Peak Oil??
if you look at the red line, you can see it has peaked in 2009. 😉
Wow! I see 4 peaks, must be the macular degineration.

Vince Causey
December 14, 2011 5:12 am

Interesting article. It is true that proven reserves always seem to be about 40 years into the future. However, Although I reject the peak oil argument, I still have a nagging doubt.
Oil prices seem to be going up, and I suppose it would be useful to see a graph of oil prices over the same period in inflation adjusted dollars. Worryingly, even though the world is in an economic slump. oil prices are stuck around $100. This is very high. I suspect that oil prices will become a major factor limiting global glowth in the future. If oil shoots up to $150 as soon as there is any sign that the world is moving into economic growth, that could well choke off the same growth. Very worrying.

Luther Wu
December 14, 2011 5:19 am

David Gould says:
December 14, 2011 at 2:45 am
Willis,
Peak oil has never been about peak oil reserves. It has been about peak oil [i]production[/i]. And your graph shows production flatlining since around 2004, which is an indication that peak oil might be upon us.

_________________________________
The entire fossil fuels market is heavily manipulated in order to keep prices inflated. With the western world in dire financial straits and demand curtailed, is it any wonder that production numbers are down?
________________________________
PaulC says:
…Old oil fields are reported as filling up after many years of being abandoned.
________________________________
Old oil fields went to water flood and other techniques as overall production declined. As many have discovered, easing off on the water flood combined with modern extraction methods allows the oil (which was already there), to flow back into the production zone from which it was forced with the water flood.
The Saudis have been engaged in water flooding for some time now.
On another note, the Germans powered their WWII schemes with synthetic fuels made from coal. Is anyone bemoaning a shortage of coal?

Jakehig
December 14, 2011 5:21 am

Let’s not forget the impact of improvements in recovery. The “reserves” are based on what is technically recoverable. I believe we are at +/- 30% today. That means that over twice as much oil as has ever been produced is still where it was found. We know it is there, we just have to get it out. Naturally a lot of effort is going into improving recoveries…the impact of getting just another 5 or 10% will be huge.
As has been said, the eventual decline will be slow; it is not like the end of a drink. That will encourage the switch to alternatives, both for fuel and feedstock: gas, gas liquids, gas/liquids from coal, etc..

Garacka
December 14, 2011 5:21 am

The abiotic oil theory is quite intriguing. My memory is that it came out in the 1940’s from someone in or tied to the oil industry, and it has largely been scoffed at and research has not been institutionally pursued.
What would widespread knowledge that oil is replenished, even if at a very small rate do to oil companies ability to get the hghest price.
What would it do to the piece of the propaganda campaign of the CAGW scaremongers where they say; “But we we’re running out of oil anyway, so we’ve got to tap the rainbow.”

December 14, 2011 5:21 am

[snip . . . OT]

Steve F
December 14, 2011 5:22 am

Paul C, Lucy, etc.
A few years ago when I worked for Weatherford we would do some work for a Chevron (I think it was Chevron) well located in Lysite, WY. At the time the well was over 25,000 ft deep. They are still drilling.

Lance of BC
December 14, 2011 5:26 am
December 14, 2011 5:27 am

Willis
Beware the pretty R/P line fed to investors. Take a closer look at World Oil Production.
Growth: Oil production rose about 43% in the 20 years between 1985 and 2005 from 21 to 30 billion bbl/year while population grew 33% from 4.85 to 6.45 billion.
BUT
Plateau: There has been NO GROWTH in the 6 years from 2005 to 2011 (within a 6% band), while global population grew 8.5% to 7.0 billion.
Skyrocketing prices:
Since 1998, spot prices rose about 10X from $9.8/bbl to $98/bbl (besides spiking to $147/bbl).
This precipitated the housing crisis, the 2008 economic crisis,and the 2010 EU crisis. In Historical Oil Shocks” 2011, James Hamilton shows:

All but one of the 11 postwar recessions were associated with an increase in
the price of oil,
the single exception being the recession of 1960. Likewise, all but one of
the 12 oil price episodes listed in Table 1 were accompanied by U.S. recessions, the
single exception being the 2003 oil price increase associated with the Venezuelan unrest
and second Persian Gulf War.

Prices DON’T t rise from an abundance of supply!
Prices are very INELASTIC: OPEC’s 5% cut in supply caused oil prices to increase 400%.
Backdating reserves: When reserves are backdated to original discovery, consumption has exceeded discovery every year since 1980 and that gap is growing.
The Reserve/Production is deceptive because of SEC reporting rules etc. When a field is first discovered, after a few wells geologists can make a good guess at the total field size. However, they only count as “reserves” the resource immediately around each well actually drilled. Thus the appearance of steadily growing “Reserves” as more wells are drilled into that same oil field discovery.
Jean Laherrere formerly with TOTAL provides the most prolific detailed graphs.
Declining Reserves/Production: Look at the bigger picture. Laherrere (2007) Fig 8 shows global Reserves/Production DECLINED 75% from about 120 during 1910-1950 down to 30 by 2010.
See Laherrere’s critique of the National Petroleum Council Draft.
Supply/Demand Models
See Steve Mohr’s Geologic Resources Supply – Demand Model (GeRS-DeMo). He provides his Excel GeRS-DeMo model free for anyone to explore the actual production depletion trends.
Declining “Available Net Exports.”
If we are swimming in oil, why did the Available Net Exports (after China & India) peak in 2005 and decline 13% since then? <a src=”http://i1095.photobucket.com/albums/i475/westexas/Slide08.jpg” alt=”Available Net Exports”
See westexas at TheOilDrum.com http://i1095.photobucket.com/albums/i475/westexas/Slide08.jpg
Current Available Net Exports are already 15 million bbl/day (5.5 billion bbl/year) BELOW Yergin’s 2005 projection. At this rate, the US and other oil importing nations will have NO oil exports available in 20 years after China & India import their rising demand.
Oil importing nations urgently need to reduce transport fuel demand and increase alternative fuels.

Frank K.
December 14, 2011 5:29 am

Thanks again Willis for yet another great article.
I think our reserves can be stretched even further if all of the (government-funded) climate alarmists and green activists would STOP being hypocrites and CEASE USING ANY FOSSIL FUEL ENERGY OR PETROLEUM PRODUCTS. TODAY! RIGHT NOW! That means YOU Mr. and Ms. Troll (and you know who you are). Thank you for your cooperation in this matter.

Steve M. from TN
December 14, 2011 5:31 am

David Gould says:
December 14, 2011 at 2:45 am
Willis,
Peak oil has never been about peak oil reserves. It has been about peak oil [i]production[/i]. And your graph shows production flatlining since around 2004, which is an indication that peak oil might be upon us.
Production flatlined from 88-95 as well, but it wasn’t “peak oil.” Increase in cost could have reduced demand, causing oil companies to reduce supply. But that’s just a guess.

Pops
December 14, 2011 5:32 am

One thing to watch out for – I believe it came up in the context of CG 2.0 – is the political strategy of sequestering coal, oil, and natural gas resources in “national preserves” of one type or another. The motivation seems to be that when a government is unable to meet its financial obligations to e.g. The Fed or the World Bank, those preserves will be confiscated by the creditor organization, which, just by “coincidence”, will have large energy reserves that can then be exploited for power and profit. I wonder if this might be the motivation for the sanctity (among lefties) of ANWR, or the surprise (as in no public input) creation of the Grand Staircase-Escalante National Monument by Clinton.

December 14, 2011 5:34 am

Willis
See the detailed quantitative graphs and tables by economist James Hamilton in:
Oil Prices, Exhaustible Resources, and Economic Growth. December 9, 2011 (65 pp)

This paper explores details behind the phenomenal increase in global crude oil production over the last century and a half and the implications if that trend should be reversed. I document that a key feature of the growth in production has been exploitation of new geographic areas rather than application of better technology to existing sources, and suggest that the end of that era could come soon. The economic dislocations that historically followed temporary oil supply disruptions are reviewed, and the possible implications of that experience for what the transition era could look like are explored.

http://dss.ucsd.edu/~jhamilto/handbook_climate.pdf
PS James Hamilton’s Historical Oil Shocks 2011 is at http://dss.ucsd.edu/~jhamilto/oil_history.pdf.

Andy Wehrle
December 14, 2011 5:37 am

Don K says:
December 14, 2011 at 1:01 am
“A question one might ask themselves. If there is all that oil in the world, why are oil prices so high? Market manipulation is certainly one possibility. But I wouldn’t rule out the possibility that the world is producing about as much oil as it can and the reserve numbers are largely fiction. ”
Don,
Oil market prices are high, not because there is a paucity of oil, but because there is a paucity of oil refinery capacity. We simply can’t process all the crude pumped in a timely fashion.
So the root cause of scarcity and high prices is the lack of refinery capacity, not crude oil reserves.
There is a long rant about over regulation that follows my last statement – but that’s just beating a dead horse.
Andy

Stephen Harris
December 14, 2011 5:43 am

While there is a lot of oil remaining, the rate of extraction has been essentially flat since 2005. The world is using substantially more oil than is being found. According to industry experts and the IEA an oil crunch is coming in about 2015.
Peak oil should not be thought of as running out of oil. Rather it is running out of oil that can be profitably extracted. And that day is rapidly approaching.
Oil supply cannot keep up with demand. Even in our depressed economy oil is expensive. If the economy picks up to any appreciable degree the cost of oil will spike choking off a recovery.
For good information please go to The Oil Depletion Analysis Centre at: http://www.odac-info.org/welcome

December 14, 2011 5:49 am

See “westexas'” (Jeff Brown’s) Available Net Exports (after China & India)
Jeff Brown responded to Yergin’s There Will Be Oil

An additional metric is Available Net Exports (ANE), which we define as GNE less Chindia’s (China + India’s) combined net oil imports. ANE have fallen at an average volumetric rate of about one mbpd per year from 2005 to 2010, from about 40 mbpd in 2005 to about 35 mbpd in 2010 (BP + Minor EIA data, total petroleum liquids).
At the current rate of increase in the ratio of Chindia’s net imports to GNE, Chindia would consume 100% of GNE in about 20 years. . . .
In a November, 2004 interview in Forbes, Mr. Yergin asserted that oil prices would be back to a long term price ceiling of $38 by late 2005–because of a steady increase in global crude oil production. It turned out that Mr. Yergin’s predicted price ceiling has so far been the price floor. The lowest monthly spot crude oil price that the EIA shows for post-November, 2004 is $39.

TomL
December 14, 2011 5:52 am

Somebody said “Worldwide, the chance of finding oil does not stop at the Carboniferous.”
I certainly hope not. The Woodford shale, which is the source of most of the oil and gas in West Texas and Oklahoma, is Devonian. Oil reservoirs can be any age as long as there is geologic structure that allows the oil to migrate from the source to the reservoir. A lot of West Texas and Oklahoma oil is sourced from the Devonian Woodford and produced from older Ordovician and Silurian reservoirs, as well as younger Carboniferous and Permian reservoirs.
Abiogenic oil makes CAGW look like well established science. It doesn’t just require making a lot of assumptions about things we don’t know, it requires ignoring everything we do know about stable isotope geochemistry, organic geochemistry of source rocks, thermal history of oil and gas, and actual distribution of carbon in the earth’s mantle.

bill
December 14, 2011 5:56 am

A problem in discussing oil reserves is shared by the world of climate science: the statistics are dodgy. Historically they have been a mess; oil companies have interests at different times in under-reporting or over-reporting as stock price or tax issues weigh on them; sovereign states lie for various reasons; communist sovereign states always lie, and always have lied. The BP record Willis uses may be internally consistent, but it is still a construct built on half-truths, ignorance, wishful thinking and downright dishonesty. Very much like Climate Science, in fact.

December 14, 2011 6:00 am

Willis, generally your articles are quite good, but this one missed the mark, by a lot. Yes, oil will last 40 years, likely 100 years or more. But at what flow rate?
The two important measures of oil production is flow rate and ERoEI. Peak oil is, and has always been, about flow rates. The oil shock of the 1970s was caused by a mere 5% loss in production due to depletion starting in the US. It doesn’t take much of a drop in production for the demand to force prices higher, which then triggers a recession. Oil production world wide peaked in 2005 and has been on a plateau since. World oil production in 40 years will not be anywhere near what the world needs today, let alone in 40 years.
ERoEI is vital. It’s the laws of thermodynamics and cannot be sidestepped with technology. In 1960 ERoEI was 100:1. Today it is only 25:1. The Alberta Oil Sands is only 6:1 excluding downstream energy costs. Society needs at least 4:1. Once we have reached 1:1 the world has run out of oil energy, regardless of what’s in the ground.

Luther Wu
December 14, 2011 6:01 am

Due to reduced demand, Gasoline and Diesel fuel are currently being exported from the U.S.
http://money.cnn.com/2011/12/05/news/economy/gasoline_export/index.htm

December 14, 2011 6:05 am

Garacka says:
December 14, 2011 at 5:21 am
The abiotic oil theory is quite intriguing. My memory is that it came out in the 1940′s from someone in or tied to the oil industry, and it has largely been scoffed at and research has not been institutionally pursued.
———
Oil molecules have a close resemblance to animal lips. Abiotic oil was debunked long ago.
http://static.scribd.com/docs/j79lhbgbjbqrb.pdf

OldOne
December 14, 2011 6:06 am

Yes, the abiogenic theory of oil is interesting. I do see some parallels to the climate change controversy. Perhaps this shouldn’t be surprising since it also goes against the “consensus” view.
Here are a couple more links to explore:
http://bit.ly/tmosA3
http://bit.ly/votK01

December 14, 2011 6:12 am

Bill Illis says:
December 14, 2011 at 4:32 am
The new process of “fracking” has just doubled all the numbers (particularly for natural gas) and extended the depths that fossil fuels can be recovered from. Everyone is now trying out this technique everywhere and it is making a big difference.
Contrary to a comment above, fracking has opened up the deep oil and gas shales which can come from before the Ordovician period. The Bakken oil shale in North Dakota, Montana and Saskatchewan is now putting up huge production numbers (and it is from the late Devonian 360 Mya).
——-
Bakken’s production is only 450,000 b/day. Though rising, it won’t last. Yes it is a huge deposit, but because of the geology total production from Bakken won’t surpass 1% of what’s in the ground there.

Alberta Slim
December 14, 2011 6:15 am

Les Francis says:
December 14, 2011 at 1:35 am
Paul C. Oil geologists know roughly where to look for the oil. It doesn’t appear at lower levels in the earths crust dated pre the Carboniferous Period. There are some deposits at levels dating to the age of the dinosaurs.
There is no sense exploring earths layers that are deeper than the Carboniferous period – there’s no oil to be found…………………………………………..
Les, your opinion on Peak Oil, sounds like an Alarmist and CO2.
PaulC says:
December 14, 2011 at 12:41 am ………
Fredrick Lightfoot says:
December 14, 2011 at 2:53 am …..
Mike Borgelt says:
December 14, 2011 at 1:58 am …….
and don’t forget Lucy Skywalker….
Aboitic oil has not been debunked yet, or shouldn’t be.
http://www.usnews.com/opinion/blogs/energy-intelligence/2011/09/14/abiotic-oil-a-theory-worth-exploring

December 14, 2011 6:17 am

meemoe_uk says:
December 14, 2011 at 3:11 am
thanks Willis, this underpins the key idea from which peakoil doomers keep themselves in suspended hysteria. Oil companys only ever bother prooving about 20-30 years worth of future oil reserves. The peakoil gang misinterpret this as ‘ only 20-30 years worth of oil left ! ‘ , which combined with their bell curve mean that ‘peak oil is now ! ‘ – always.
I was a peakoi doomer for a couple of years 2006 – 2008. I noticed the day of reckoning keep slipping forward, which spurred a critical review of my belief.
——
Production from any given field increases to a maximum extraction rate. Once that is reached production does not fall off to zero the next day. It follows a bell curve. Peak oil is not the point of no more oil, it’s the point of that peak in production. This is where we are now. We have peaked in world wide production.

Pamela Gray
December 14, 2011 6:18 am

The reserve figure is used to determine barrel price and profit margin, not to determine actual reserves. R&D within each company needs money to find new and improved ways to use fossil based products and it can’t come out of stock dividends. So the reserve margin is used to justify an inflated price so that money is available for research without pissing off stock holders who remain spoiled on some kind of double digit return for their investment.

Don K
December 14, 2011 6:20 am

Garacka says:
December 14, 2011 at 5:21 am
The abiotic oil theory is quite intriguing. My memory is that it came out in the 1940′s from someone in or tied to the oil industry, and it has largely been scoffed at and research has not been institutionally pursued.
==========
Thomas Gold — an Austrian astrophysicist. http://en.wikipedia.org/wiki/Thomas_Gold A decade or so ago, I used to lurk on a forum inhabited by, among others, petroleum geologists. After the continental drift fiasco where Geologists rejected an important theory proposed by a non-geologist (Alfred Wegner) that turned out to be pretty much correct, geologists are a little more polite and humble than, say, climate scientists. But although they treat Gold’s theory politely, none of them believe that any of the oil/coal currently being produced is abiotic. Because of the high temps within the Earth, it seems likely that any “deep hydrocarbons” would be present as gas, not oil. And there is no evidence that I am aware of that any natural gas deposits currently known are abiotic.

December 14, 2011 6:23 am

Can tar sand and shale be added to a similar chart?
It’s a great summary piece, thank Willis for posting it.

December 14, 2011 6:25 am

ianl8888 says:
December 14, 2011 at 1:49 am
@Willis E
This touches on one of my professional interests
It is true that both private and Govt organisations (eg. OPEC, Russia) routinely restrict (censor) hard data on oil Resources and Reserves (gold and other minerals as well). This is done for “national security” reasons. It is almost impossible to access accurate, reliable geological/engineering data on these … hence your 40 year “magic pudding” (R)
———–
This is true for a number of regions, like Saudi Arabia who over the past 20 years or production continue to claim they have the exact same reserves. Impossible of course. The teltail sign of production potential is current production rates and what fields are in tertiary recovery (like Ghawar is). Fact is the worlds largest fields are all in terminal decline in production. North Sea, Cantarell (peaked a 3.2mb/day now at 400,000 b/day), even off the east coast of Canada, which peaked quickly and is in terminal decline (currently half of what it produced at peak).
———–
The future rate of extraction (P) depends on the future rate of consumption. We would need to predict with accuracy the future consumption of China and India over the next 50 years to be in the hunt for a reliable estimate of P. Not much hope of accuracy here, I believe
—————
China surpased the US in auto production last year. 13 million cars in one year, and they have only dented the potential market. If anything China has the potential to outstrip the US in consumption within 10 to 15 years. The IEA estimates that the world will need some 120bb/day by 2020. They also state that we would need to find 7 Ghawars each year until then for that to happen.
————
Whenever Peak Oil advocates rear their wishful thinking (Peak Oil is almost always used to scare people), I list out these two factual questions and inquire whether they have reliable answers. Then the only reply is dead silence
———–
Not from me.

December 14, 2011 6:28 am

Now, at some point this party has to slow down, nothing goes on forever

True….
But the thing about expert projections are that they are always wrong…
And the 40 years left party could just keep on rocking until the end of time.

The abiogenic hypothesis argues that petroleum was formed from deep carbon deposits, perhaps dating to the formation of the Earth. Supporters of the abiogenic hypothesis suggest that a great deal more petroleum exists on Earth than commonly thought, and that petroleum may originate from carbon-bearing fluids that migrate upward from the mantle. The presence of methane on Saturn’s moon Titan and in the atmospheres of Jupiter, Saturn, Uranus and Neptune is cited[1] as evidence of the formation of hydrocarbons without biology.
http://en.wikipedia.org/wiki/Abiotic_petroleum

MarkW
December 14, 2011 6:30 am

Robber says:
December 14, 2011 at 12:57 am
—-
You didn’t read the article, did you?
The point is that the 40 years of reserve number has held constant for at least the last 40 years.
It is incorrect to assume that just because, at this moment, there is an estimated 40 years of proven reserves, that we will run out of oil in 40 years.
All the oil that has been found but not proven is not included in that number.
All the oil that has not been found is also not included in that number.

December 14, 2011 6:31 am

PaulC says:
December 14, 2011 at 12:41 am
Good article.
2 points of comment.
Modern technology will always find more reserves than old technology.
Oil is not a “fossil” fuel. It is being “created” continually by reactions in the Earths’ interior.
Posts on this site have mentioned this a few times. Apparently the Russians are investigating this seriously.
There are no fossils associated with Oil.Oil comes from the bottom to the up. Old oil fields are reported as filling up after many years of being abandoned
Worth following up.
————-
Please point us to one oil field that has definite abiotic origin.
Every single oil field has been traced back to the biogenic source rocks.
If abiotic oil were true, there would be oil deposits in precambrian rocks. There are none.
Read the book Oil 101 for details of how oil is formed.
BTW, EVERY Russian oil field has a biogenic source.

Ken Harvey
December 14, 2011 6:35 am

In the highly unlikely event that we start running out of oil in forty years’ time, we then have another resource of such magnitude that it has rarely been touched except in close proximity to an iron ore deposit and a rail system. That resource is called coal. There are massive deposits that have been known of for many decades. There are no technical problems whatever. All that is necessary to make these deposits exploitable (or just the few that would be necessary) is demand, capital and railway lines. The end is not nigh and won’t be forty years hence.

MarkW
December 14, 2011 6:38 am

David Gould says:
December 14, 2011 at 2:45 am
Willis,
And your graph shows production flatlining since around 2004,

It could also be an indication that the world wide economy has been pretty much flat since 2004.
Production never exceeds demand. You are confusing a lack of growth in demand for a lack of growth in production.

MarkW
December 14, 2011 6:43 am

Recent price increases in oil can have been caused by the collapse in the value of the dollar.

MarkW
December 14, 2011 6:47 am

Is anyone bemoaning a shortage of coal?

Don’t give them any ideas.

John West
December 14, 2011 7:04 am

PAUL SCHILIZZI says:
Don’t forget that
STONE AGE DID NOT END BECAUSE WE RAN OUT OF STONES

but, but, but, the bronze age…no not that one either, … the iron age … no …
/sarc
Good point!

Brian H
December 14, 2011 7:07 am

John Tofflemire says:
December 14, 2011 at 5:11 am
I remember well as a child in the mid-1960′s reading an encyclopedia printed in 1928 that boldly stated that the world would run out of oil within 20 years or so. This was stated as if it was an indisputable fact. I remembered thinking at the time that the forecast had clearly been grievously incorrect. Nearly 50 years later such predictions continue to be made and so-called intelligent people profess their belief in such predictions and their belief in the need for government to “solve” the impending “disaster”. And Malthus and his devoted followers have been predicting the imminent demise of homo sapiens since the 18th century due to overpopulation. In each case we are always told that “this time is different”, that the end is neigh. To the contrary, the end is not neigh.

Nay, indeed, it’s not nigh. So you can neigh (horse-laugh) at the neos.

Don K
December 14, 2011 7:08 am

jrwakefield says:
December 14, 2011 at 6:31 am
If abiotic oil were true, there would be oil deposits in precambrian rocks. There are none.
===================
Let me make it clear that I am not a believer in “deep oil”. I think there is a small chance that there is a very little abiotic oil and, perhaps slightly more likely, a small amount of abiotic gas. I’d be really surprised if either amounts to much economically.
That said, algae have been around a long time and there are hydrocarbon traces in some precambrian rocks — e.g. in Australia’s MacArthur basin. So far as I know, the (biotic)
oil in rocks up to 1.7 Billion years old is not present in commercially exploitable quantities and is of interest only to a few scientists. But it is present. I believe the reason there is not more of it is that there are very few preCambrian rocks around that have not been bent, folded, spindled, cooked and extensively mutilated.

Brian H
December 14, 2011 7:11 am

To all the abiotic oil deniers: I assume you await with bated breath the first geologic explorations of Titan, to unearth (untitan?) the fossils of the alien ferns and multi-colored algae etc. that decomposed into its lakes of hydrocarbons!
Until then, ….

Curiousgeorge
December 14, 2011 7:15 am

Production and sale of oil, like natural diamonds, is rationed by those who own the resource in order to fetch the highest profit the market will bear. Same as with anything else.

MarkG
December 14, 2011 7:16 am

I remember when I was a kid in the 70s that oil was going to run out before the year 2000 so we must do something to switch to alternate energy supplies before then.
The odd thing about ‘Peak Oil’ is that so many of the ‘Peak Oil’-ers I’ve met are also firm believers in AGW, which makes no sense if oil is about to run out. I can only presume they’ve never met a scare story they don’t like.

Doug
December 14, 2011 7:17 am

Nice post Willis. As usual, there is some good info in the comments, as well as some people who are compelled to post on something about which they have little knowledge.
Oil is biotic in origin. Anyone who looks at enough geochemical data will agree, even the current Russians. Oil does occur below the Carboniferous. Most of my oil income is from the Ordovician.
The parallels to peak oil and climate change are not in that consensus is wrong on origin, they are in the fact that peak oil is built upon faulty mathematics. The esteemed Hubbert’s curve is now off by 10 fold for US gas, and well on the way to similar error bars in oil.

December 14, 2011 7:21 am

Christopher Hanley says:
December 14, 2011 at 12:59 am
Forgive me for sounding a melancholy note. Forty years is not a long time.
In forty years – 2050 – world oil supplies will be projected to last 40 years – until 2090.
Why? Because once reserves reach a certain size it doesn’t pay to do any more exploration. What possible use is it to an oil company to have a million years of reserves? It only hurts the market price of oil.
As reserves drop, the price of oil goes up, and exploration expands increasing reserves.

ChrisH
December 14, 2011 7:24 am

Slightly off topic but the UK Daily Mail Newspaper is currently running a poll on “Should be build more wind turbines to cut carbon emissions?”
To vote go to:
http://www.dailymail.co.uk/debate/polls/poll.html?pollId=1029654
The wind industry seems to have been able to load the voting so let’s redress the balance.

Reference
December 14, 2011 7:33 am

Q. Is anyone bemoaning a shortage of coal?

A. Don’t give them any ideas.
You mean like this?
The Coal Question: An Enquiry Concerning The Progress Of The Nation And The Probable Exhaustion Of Our Coal-Mines

Mark
December 14, 2011 7:37 am

While we all understand the need for alternative sources for transportation, let’s understand that the products that come from a barrel of oil stay standard. Specifically, a barrel of oil usually yields 44-45% gasoline products. There isn’t much to do with this ‘product’ other than use it for transportation. Don’t forget….when Titusville, PA hit, they were refining the oil for lamp oil. The ‘gasoline’ BY-product was dumped into the rivers and streams because there was not a use for it until the automobile was developed. So where there is oil there will always be transportation fuel.

December 14, 2011 7:37 am

I would be very curious to know that if the full continents of South America, Africa & Asia (including offshore) were really explored, how much more oil/gas/shale resources would they find to add to the ‘proven reserves’? I’m sure there are a whole bunch of places they have not looked.
Also, would oil/gas be available in the mid-ocean (off the continental shelf regions) as well?
Jeff

Dave Springer
December 14, 2011 7:38 am

@Willis
“Now, at some point this party has to slow down, nothing goes on forever … but the data shows we certainly don’t need to hurry to replace oil with solar energy or rainbow energy or wind energy in the next few decades. We have plenty of time for the market to indicate the replacement.”
Typically naive. I have cars and motorcycles older than the number of years of petroleum left to power them. Life is short. Several decades goes by quickly. It’s not like we’re talking 400 years we’re talking 40 years.
You don’t seem to have any appreciation for how large the infrastructure is for things powered by gasoline, diesel, and avgas. That infrastructure took decades to build and deploy. It will take as long to replace it with something else. We’re talking trillions upon trillions of dollars in infrastructure.
Consider the end-to-end supply chain for avgas and the air cargo/passenger transportation fleet. Not only is the money bound up in that alone huge and growing there is nothing that can replace it. There are no alternatives. Imagine civilization without air transport. Imagine a million useless airports and 100 million employees in the air transport industry without jobs and all the ancillary jobs like at Boeing and their contractors without jobs.
Nor do you have any appreciation for what happens to the price of commodities that are nearing exhaustion. Do you think gasoline is going to top out at USD $5/gal until the last drop? The globe is mired in the worst recession in 75 years and there’s not a doubt in my mind that the root cause was oil price which in 1998 began rising from $20/bbl to eventually well over $100/bbl where it remains today. Just about every recession since WWII was preceded by a dramatic rise in oil price. I’m not sure how many decades it will take to adjust to $100/bbl oil but it isn’t looking good after the first ten years of prices over $30/bbl. And there’s no end in sight. No light at the end of the tunnel. That light you see in the distance is another train rushing headlong at us.
Nor do you seem to appreciate the fact that demand is growing and consumption is increasing so that 40-year supply is only 40-years at current rate of consumption.
Nor do you seem to appreciate that we had an oil shock some 30 odd years ago. That was a wakeup call. How much have we got done in those 30 years towards a vital, reliable alternative energy supply and infracstructure for it? I’ll give you three chances to say there’s been no significant progress. We’re even more dependent today on oil than we were in 1979 and worse we’re dependent on foreign oil bought from countries that hate western democracy. Isn’t that a fine mess?
So basically, Willis, you are a classic example of fiddling while Rome burns.

kbray in california
December 14, 2011 7:38 am

[[[ MarkW says:
December 14, 2011 at 6:43 am
Recent price increases in oil can have been caused by the collapse in the value of the dollar.]]]
The Dollar is still strong in my neighborhood…
I can still buy a hamburger for 99 cents, it’s been that way for years and years.
The price of oil is manipulated.
A Chevron Exec. said so.

mondo
December 14, 2011 7:38 am

Willis,
A very interesting question to ask the oil majors (BP for example) is “the concept of ‘Reserves’ is an economic concept, meaning that portion of ‘Resources’ that can be economically extracted at a particular oil price. What oil price has been used to calculate the Reserves that you publish.”
For some reason, the oil companies are very reluctant to disclose that number. Some years ago, when I asked BP at their annual public presentation on oil reserves, they declined to answer. A retired oil industry executive was able to tell me that he knew that they had used a price of US25 per bbl, when the actual price was trading in the US$70 range.
Of course, if you use a price of, say, US$100 to calculate economic reserves, many of the alternative sources such as tar sands, oil shale, coal to oil conversion etc become economic, thus dramatically increasing available ‘Reserves’.
On another point, it has seemed to me that all the US has to do to ensure domestic oil supply security is to offer a guaranteed price of, say, $75 per bbl, for a period of, say, 20 years, to emerging projects. Companies other than the oil majors can find it difficult to source funding to develop projects involving alternative sources due to capital intensive nature of such projects, and bad experiences in the past when such projects coming on stream caused an oversupply resulting in prices as low as US$10 per bbl, Low prices resulted in financial carnage. This can easily be sidestepped by providing a guaranteed price for 20 years. I would have thought that such an approach would be sensible and politically acceptable. The mechanisms can be worked out.

Dave Springer
December 14, 2011 7:46 am

MarkW says:
December 14, 2011 at 6:43 am
“Recent price increases in oil can have been caused by the collapse in the value of the dollar.”
This is true to only a small degree. Oil was $20/bbl in 1998. Ten years later it topped $100/bbl and still flirts with that price point today. The value of the dollar didn’t collapse to $0.20 in those ten years. Not even close. Try again.

December 14, 2011 7:49 am

jrwakefield says:
December 14, 2011 at 6:31 am
If abiotic oil were true, there would be oil deposits in precambrian rocks. There are none.
This doesn’t prove oil is abiotic or biotic, only that solid rock does not hold oil or gas.
Oil and gas move upwards through rocks until they reach the surface, unless trapped by a structure underground. This happens because oil and gas are less dense than both rock and water. To accumulate, oil and gas need a porous structure with a impermeable cap. Sedimentary rocks provide this structure. Precambrian rocks do not, because they are solid rock. Thus, oil and gas are not found in precambrian rocks, because it is physically impossible.
So for example, Alberta has oil because it was at one time an ocean, and the sediments that were laid down formed reservoirs to trap the oil and gas released from deeper within the earth. The source of that oil and gas is open to question. It is hydrocarbon. Most of the carbon on earth is trapped in rocks at the bottom of the ocean. These rocks along with water are carried deep within the earth by subduction, where they are cooked under heat and pressure. It is possible that the carbon in the rocks and hydrogen in the water combine to form hydrocarbons. while the oxygen in water combines with the rocks to form oxides.
Most people assume that most of the water on earth is held by the oceans – sort of like giant swimming pools. This is not true. The oceans are simply where the water table in the earth’s crust and mantle is higher than the level of the land. We don’t know how much water is actually held by the earth and how deep it extends within the earth. The deeper you go within the earth, the higher the pressure, the higher the boiling point of water. Can super heated, super pressurized water combine with carbon bearing rocks to form hydrocarbons and oxides?

Lance of BC
December 14, 2011 7:53 am

Just to add fuel to the fire(hehe) on abiogenic oil, here`s Vladimir G. Kutcherov paper
Abstract
There is widespread evidence that petroleum originates from biological processes1, 2, 3. Whether hydrocarbons can also be produced from abiogenic precursor molecules under the high-pressure, high-temperature conditions characteristic of the upper mantle remains an open question. It has been proposed that hydrocarbons generated in the upper mantle could be transported through deep faults to shallower regions in the Earth’s crust, and contribute to petroleum reserves4, 5. Here we use in situ Raman spectroscopy in laser-heated diamond anvil cells to monitor the chemical reactivity of methane and ethane under upper-mantle conditions. We show that when methane is exposed to pressures higher than 2 GPa, and to temperatures in the range of 1,000–1,500 K, it partially reacts to form saturated hydrocarbons containing 2–4 carbons (ethane, propane and butane) and molecular hydrogen and graphite. Conversely, exposure of ethane to similar conditions results in the production of methane, suggesting that the synthesis of saturated hydrocarbons is reversible. Our results support the suggestion that hydrocarbons heavier than methane can be produced by abiogenic processes in the upper mantle.
Full paper to be found at the bottom on link
http://peakoil.com/forums/nature-geoscience-study-abiogenic-oil-and-gas-forever-t55857-30.html#p958045

harrywr2
December 14, 2011 7:56 am

As Willis alluded to –
‘Peak Anything’ is a matter of economics.
We used to generate our electricity, heat most of our homes and drive around in 6 MPG cars all using oil.
We don’t generate much electricity from oil anymore, most homes are heated with natural gas and only the rich can afford to drive a car that only gets 6 MPG.
US Oil consumption today is pretty close to what it was in the late 1970’s, considering we have 80 million more people I would say demand is ‘flat’
http://www.eia.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/dem_image_us_cons_sector.htm

DirkH
December 14, 2011 8:04 am

Dave Springer says:
December 14, 2011 at 7:38 am
“You don’t seem to have any appreciation for how large the infrastructure is for things powered by gasoline, diesel, and avgas. That infrastructure took decades to build and deploy. It will take as long to replace it with something else. We’re talking trillions upon trillions of dollars in infrastructure. ”
You mention “Diesel, gasoline and avgas”. You should have included CNG and LPG. Refitting a gasoline car to LPG costs 2500 EUR. A bit more for refitting CNG. Germany has 6000+ gas stations that also offer LPG, and 900+ that also offer CNG.
What was the problem, again?

Dave Springer
December 14, 2011 8:08 am

Mike Borgelt says:
December 14, 2011 at 1:58 am
“Oh good, Les Francis. Now please tell us why there are heaps of hydrocarbons on Titan.”
For the same reason there is a huge fusing ball of hydrogen at the center of the solar system. It’s primordial. For better or worse the inner planets and moons got stripped of most of their free light elements by the heat of the sun and strength of the solar wind and, as a consequence, they are rocky/metallic things.
Did you really not know that?

alerodriguez69
December 14, 2011 8:15 am

The text is very addequate. Anyway, I think you should say that the scale for the World Oil Production is nor the left or the right one… or better, please give the scale for the production. Otherwise, the plot is misleading.

kadaka (KD Knoebel)
December 14, 2011 8:18 am

Re: Dave Springer on December 14, 2011 at 7:38 am:
Okay, Springer has unloaded the ‘Willis, you’re so ignorant and stupid, you don’t know how ignorant and stupid you are’ rant that I was expecting and waiting for, this time without the added ‘drug-addled war-dodging hippie’ flavorings. Since it’s highly unlikely anything will be said in the comments that will warrant the altering of Willis’ basic yet reasoned post, guess I can stop reading now.
😉

nc
December 14, 2011 8:21 am

Production issues. In western Canada, home of the oil sands, that is oil sands not tar sands.
Supply means nothing if there is no production
http://www.cbc.ca/news/canada/edmonton/story/2011/11/19/alberta-diesel-shortage.html?cmp=rss
http://www.canada.com/reginaleaderpost/news/story.html?id=d2c4b7dc-e369-4867-97bb-dd2eef857f07

December 14, 2011 8:21 am

malagaview says:
December 14, 2011 at 6:28 am
Now, at some point this party has to slow down, nothing goes on forever
True….
But the thing about expert projections are that they are always wrong…
And the 40 years left party could just keep on rocking until the end of time.
——
Not one oil field can be shown to be of abiotic. EVERY oil field has a biological source rock.

December 14, 2011 8:25 am

JKrob says:
December 14, 2011 at 7:37 am
I would be very curious to know that if the full continents of South America, Africa & Asia (including offshore) were really explored, how much more oil/gas/shale resources would they find to add to the ‘proven reserves’? I’m sure there are a whole bunch of places they have not looked.
Also, would oil/gas be available in the mid-ocean (off the continental shelf regions) as well?
Jeff
———-
Except for the Arctic, the entire planet has been searched. The big easy fields have all be found and exploited.
There wont be oil beyond the continental shelfs, wrong geology. Oil deposits are mostly from shallow marine ecosystems. Explained in the book Oil 101.

OldOne
December 14, 2011 8:27 am

jrwakefield says:
December 14, 2011 at 6:31 am
“Please point us to one oil field that has definite abiotic origin.
Every single oil field has been traced back to the biogenic source rocks.
If abiotic oil were true, there would be oil deposits in precambrian rocks. There are none.”

I found this:
The Drilling & Development of the Oil & Gas Fields in the Dnieper-Donetsk Basin
V. A. Krayushkin, T. I. Tchebanenko, V. P. Klochko, Ye. S. Dvoryanin
Institute of Geological Sciences
O. Gonchara Street 55-B, 01054 Kiev, Ukraine
J. F. Kenney
Russian Academy of Sciences – Joint Institute of The Physics of the Earth, Moscow, Russia
Gas Resources Corporation, 11811 North Parkway, Houston, TX 77060, U.S.A.
“The specific formations and depths from which petroleum has been discovered and is now being produced are as follow: …
2.) Production from the Precambrian crystalline basement: In addition to these reservoirs in the sedimentary rock, above, the exploration drilling has discovered five reservoirs in the Precambrian crystalline basement rock complex …
laboratory analyses are described here briefly. …
3.) Bacteriological analysis of the oil and the examination for so-called “biological marker” molecules: The oil produced from the reservoirs in the crystalline basement rock of the Dnieper-Donets Basin has been examined particularly closely for the presence of either porphyrin molecules or “biological marker” molecules, the presence of which used to be misconstrued as “evidence” of a supposed biological origin for petroleum. None of the oil contains any such molecules, even at the ppm level.”
“These results, taken either individually or together, confirm the scientific conclusions that the oil and natural gas found both in the Precambrian crystalline basement and the sedimentary cover of the Northern Monoclinal Flank of the Dnieper-Donets Basin are of deep, and abiotic, origin.”
Source: http://www.gasresources.net/DDBflds2.htm

December 14, 2011 8:28 am

Brian H says:
December 14, 2011 at 7:11 am
To all the abiotic oil deniers: I assume you await with bated breath the first geologic explorations of Titan, to unearth (untitan?) the fossils of the alien ferns and multi-colored algae etc. that decomposed into its lakes of hydrocarbons!
Until then, ….
——-
There is no oil on Titan.

Tom Jones
December 14, 2011 8:28 am

The issue missing from the chart is the cost of oil. For a sufficient price, the supply of oil is infinite. You can always synthesize it from solar energy and raw inputs. Guess who gets priced out of the market? It isn’t the advanced economies. The emerging economies get to sit on their hands while we figure it out, or do something less friendly with them. There are going to be a lot of fireworks long before we use the last drop of oil, or the last pound of phosphate, or the last of any natural resource.

December 14, 2011 8:29 am

Peak oil is a political construct for the time. Those opposed to use of fossil fuels argue we should stop now because we are going to run out soon anyway. Producers can use it to say the costs are increasing so they charge more. It confirms the adage that politics makes strange bedfellows.
The entire issue will disappear because it developed out of the false premise that CO2 was causing planet destroying runaway global warming. The science created to support the politics is now exposed mostly by the failed predictions (projections) and only politics is left as COP 17 in Durban showed.
Climate as a vehicle for a political agenda is failing so the attention is turning back to more emotional and classic vehicles. First is the original Malthusian claim of population outgrowing resources with the recent claim that world population topping 7 billion is seen as a peak beyond which the natural world will collapse. Second is water, an even more emotional vehicle and one at the centre of the Club of Rome list and the focus of UN dynamics in the 1970s. Proof that this issue will be a political vehicle is because they are starting to talk about “peak water”. http://www.forbes.com/sites/petergleick/2011/09/07/is-the-u-s-reaching-peak-water/
As with oil, the business world and the extreme environmentalists will ride the same vehicle.

December 14, 2011 8:31 am

Doug says:
December 14, 2011 at 7:17 am
Nice post Willis. As usual, there is some good info in the comments, as well as some people who are compelled to post on something about which they have little knowledge.
Oil is biotic in origin. Anyone who looks at enough geochemical data will agree, even the current Russians. Oil does occur below the Carboniferous. Most of my oil income is from the Ordovician.
The parallels to peak oil and climate change are not in that consensus is wrong on origin, they are in the fact that peak oil is built upon faulty mathematics. The esteemed Hubbert’s curve is now off by 10 fold for US gas, and well on the way to similar error bars in oil.
———-
Then you misunderstand a Hubbert curve. It’s not about what’s in the ground, it’s about flow rates. He was bang on with the US. Shale gas and oil will be short lived, have low flow rates, and have low ERoEI. Production from those locations won’t offset depletion from aging fields.

Steve Keohane
December 14, 2011 8:35 am

Now I understand what the O-man is doing. Reduce production to zero and we have infinite reserves! Brilliant. /sarc
Thanks Willis.
Dave Springer says:December 14, 2011 at 7:38 am
@Willis[…]So basically, Willis, you are a classic example of fiddling while Rome burns.

Lighten up Dave! It’s not like we’re not going to find any more oil, or make no breakthroughs on technology to use other energy sources.

December 14, 2011 8:37 am

ferd berple says:
December 14, 2011 at 7:49 am
jrwakefield says:
December 14, 2011 at 6:31 am
If abiotic oil were true, there would be oil deposits in precambrian rocks. There are none.
This doesn’t prove oil is abiotic or biotic, only that solid rock does not hold oil or gas.
Oil and gas move upwards through rocks until they reach the surface, unless trapped by a structure underground. This happens because oil and gas are less dense than both rock and water. To accumulate, oil and gas need a porous structure with a impermeable cap. Sedimentary rocks provide this structure. Precambrian rocks do not, because they are solid rock. Thus, oil and gas are not found in precambrian rocks, because it is physically impossible.
So for example, Alberta has oil because it was at one time an ocean, and the sediments that were laid down formed reservoirs to trap the oil and gas released from deeper within the earth. The source of that oil and gas is open to question. It is hydrocarbon. Most of the carbon on earth is trapped in rocks at the bottom of the ocean. These rocks along with water are carried deep within the earth by subduction, where they are cooked under heat and pressure. It is possible that the carbon in the rocks and hydrogen in the water combine to form hydrocarbons. while the oxygen in water combines with the rocks to form oxides.
Most people assume that most of the water on earth is held by the oceans – sort of like giant swimming pools. This is not true. The oceans are simply where the water table in the earth’s crust and mantle is higher than the level of the land. We don’t know how much water is actually held by the earth and how deep it extends within the earth. The deeper you go within the earth, the higher the pressure, the higher the boiling point of water. Can super heated, super pressurized water combine with carbon bearing rocks to form hydrocarbons and oxides?
————
The abioitic process cannot produce bitumen. Read up on the Oil Window. It’s too hot down there for large hydrocarbon chains. Every oil field in Alberta has a biological source rock, deturmined by chemical markers. Not one field shows an abiotic origin.
BTW, much of the precambrian Metasedementary Belt Boundary Zone of the Grenville Province in Ontario, once marine, spaning over to Norway, has any oil in it.

December 14, 2011 8:46 am

For those who think shale gas and shale oil are the answer:
http://www.smartplanet.com/blog/energy-futurist/the-questionable-economics-of-shale-gas/243
Again, it comes down to flow rates and ERoEI.

Jeremy
December 14, 2011 8:48 am

Peak Oil is total BS.
We will never run out.
So far, we have been merely tapping large pools of oil that are trapped in permeable layers. This stuff has oozed out or source rocks (large shales) over tens of thousands of years.
As Oil has now reached $100+ we can now look to actual source rocks themselves and extract oil from those layers too. There are thousands more source rock layers than there are strati-graphically or structural trapped oil pools. We can also look to converting coal to liquid fuels also (by most estimates there is at least 600 years worth of coal left).
Extremely or ridiculously cheap oil is starting to become scarce that is all. This is a combination of rising demand and the extreme government restrictions (high taxes & royalties, regulations and extremely limited access to reserves) placed on Oil companies by every country. Remember that your morning cup of coffee costs far more than the equivalent in gasoline and that most of what is built into the price you pay for gasoline is government take (various forms of taxation).

SP Wells
December 14, 2011 8:52 am

Seems to me there is a larger question than how much oil we have left. What about the damage being done to our environment by using fossil fuels and living in a plastic state of mind. PCBs are even in breast milk now. While I do not agree with fear mongering, I do think we need to stop being in denial about what we are doing. We are not working towards sustainability, but rather, how much time to we have left to keep doing things in the same old way. We need innovators–movers and shakers in the energy field. We have 8 billion people on the planet to house, feed and provide water to. Sustainability is not just about the United States, although it seems impossible to glimpse our own narcissism.

Doug
December 14, 2011 8:53 am

Oldone: Read this article too. Perhaps there is another opinion on the basin, Sounds like some Russian authors.
Palaeozoic source rocks in the Dniepr–Donets Basin, Ukraine
Reinhard F. Sachsenhofer1,*,
Viacheslav A. Shymanovskyy2,
Achim Bechtel1,
Reinhard Gratzer1,
Brian Horsfield3 and
Doris Reischenbacher1
+ Author Affiliations
1 Department of Applied Geosciences and Geophysics, University of Leoben, Peter-Tunner-Str. 5, A-8700 Leoben, Austria
2Shell Ukraine E&P, Rylskogo Lane 6, UA-01025 Kyiv, Ukraine
3GeoForschungsZentrum Potsdam, Section 4.3, Telegrafenberg, B 424, D-14473 Potsdam, Germany
*↵ Corresponding author (e-mail: Reinhard.Sachsenhofer@unileoben.ac.at)
Abstract
ABSTRACT The Dniepr–Donets Basin (DDB) is a major petroleum province in Eastern Europe. In order to understand the regional and stratigraphic distribution of source rocks for the dominantly gas-prone petroleum system, 676 fine-grained rocks from 30 wells were analysed for bulk parameters (total organic carbon (TOC), carbonate, sulphur, RockEval). A subset of samples was selected for maceral and biomarker analysis, pyrolysis-gas chromatography and kinetic investigations. Organic-rich sediments occur in different intervals within the basin fill. Maximum TOC contents (5.0 ± 1.9%) occur in the Rudov Beds, several tens of metres thick. The oil-prone rocks (Type III–II kerogen) were deposited in basinal settings above an unconformity separating Lower and Upper Visean sections. While maximum TOC contents occur in the Rudov Beds, high TOC contents are observed in the entire Tournaisian and Visean section. However, these rocks are mainly gas condensate-prone. Highly oil-prone black shales with up to 16% TOC and hydrogen index values up to 550 mgHC g–1TOC occur in Serpukhovian intervals in the northwestern part of the DDB

December 14, 2011 8:57 am

We are not likely to replace oil with wind or solar regardless. We don’t USE oil to produce electricity anymore. Heating oil however, could be replaced with gas or heat pumps (electricity).

December 14, 2011 9:02 am

Jeremy says:
December 14, 2011 at 8:48 am
Peak Oil is total BS.
We will never run out.
So far, we have been merely tapping large pools of oil that are trapped in permeable layers. This stuff has oozed out or source rocks (large shales) over tens of thousands of years.
As Oil has now reached $100+ we can now look to actual source rocks themselves and extract oil from those layers too. There are thousands more source rock layers than there are strati-graphically or structural trapped oil pools. We can also look to converting coal to liquid fuels also (by most estimates there is at least 600 years worth of coal left).
————-
You need to read Oil 101 to understand how oil is formed and migrates from source rocks.

JPeden
December 14, 2011 9:03 am

Steve Keohane says:
December 14, 2011 at 8:35 am
Now I understand what the O-man is doing. Reduce production to zero and we have infinite reserves! Brilliant. /sarc
Yes, the latte’ Commies love scarcity. If it’s not there, they produce it, whether wittingly, unwittingly, or half-wittedly. That’s why they never create wealth but instead only appropriate and destroy it. Scarcity is also the necessary result of Obamacare. Dr. “Zeke” Emmanuel, Rahm’s brother and a key advisor to Obama, was salivating at the prospect of redistributing healthcare as a scarce item well before Obamacare, because people like him were going to get to dole it out according to their brilliant management skills “complete life” metric whims. While, of course, they saw no necessity to ever enter their own “complete life” values = Zero to Debit amount, into these same equations.
Right, “Communism is dead, long live Communism!”

December 14, 2011 9:04 am

The R/P graph represents the oil sector’s supply chain best practices. It gives stability to the market place. It cannot be used to predict flows ‘cuz it assumes production falls to “zero” in the 46th year. In reality, extraction takes the form of a bell curve. This is derived by estimating demand and bottom-up flows and reconciling them with OOIP (original oil in place) of 19 trillion barrels (Tb), URR/EUR (ultimately economic recoverable resource) of 8 Tb and proved reserves of 1.256 Tb. Technology advancements and secular price increases allow more OOIP to be converted to URR & in turn some URR to proved reserves. In general, each $1/barrel increase adds 30-Gb to URR.
Should oil production seek its natural Geologic Peak (based on long-term demand trend), oil would rise to 105 Mbd in 2030. In reality, the demand growth rate has been waning in recent years and it appears the sector will face a leveling off and ultimate Demand Peak of 100 Mbd in 2029. The main forcing for a dampening of the Consumption growth rate is rising prices. The growth rate will level upon oil surpassing $213/barrel. The threshold is determined by a definitive petroleum/GDP ratio that tracks demand destruction. It was represented by $90 in 2007. Today it is $103/barrel and rises with time (and GDP).
Present resource implies of conventional and non-conv reserves will run out in five hundred years. After that point, there will be an infinite plateau of 6 Mbd BTL (renewable biofuels). Charts of URR, future prices and a depiction of the five century production profile are updated monthly by Trendlines Research: http://www.trendlines.ca/free/peakoil

thingadonta
December 14, 2011 9:08 am

We didn’t leave the stone age because we ran out of stones, and we won’t leave the fossil fuel age because we run out of fossil fuels.
By the way, Iraq had virtually no exploration whilst Sadam was in power-why would you-when you would have to fix social issues, rather than just build another palace for yourself.
And your graphs above don’t count oil shale and tar sands, of which there is vastly more resources than conventional oil.
And for minerals its even more extensive, since minerals are produced by the earth’s crust-they are virtually inexhaustible-we will only run out of e.g. Al, Cu, Au, Mn, Ni, Fe etc etc when we run out of rocks.
A general rule of thumb is: for each 10% lower grade, we have around 3-10 times more resources of that mineral, ie for gold we have about 3 times as much at 0.9ppm Au as we do for 1.0ppm Au, and 9 times as much at 0.8ppm Au as we do at 1.0ppm Au, and so on-the increase with each lowering of grade is exponential, for this reason we will never ‘run out’ of gold, and nearly all other minerals as well (soemthing Elrich and the Club of Rome could never understand). (There is a paper on the ‘resource pyramid’ ie how the size of resources increases with each lowering of grade-by the USGS which explains and is highly recommended, yet every once in a while we hear someone (usually an academic without any minerals training) warning us that we will ‘run out’ of this mineral or that, and because they are ‘non renewable’. (Something can be non renewable, but virtually inexhaustible, and renewable but very limited (a concept the greens never mention)).
There are vast resources of copper for example at about 0.6% Cu which are not being mined now because they don’t compete with what is being mined currently at about 0.8% Cu. But when the 0.8% Cu runs out, there will be about 9 times as much available at 0.6% Cu. Hundreds of years worth, in fact, and thousands of years worth at 0.4% Cu.
The only exception to this general rule, is those minerals not produced by crustal procesees, such as fossil fuels, which are much more limited because they are organically derived, not crustally derived.

Doug
December 14, 2011 9:08 am

jrwakefield says:
December 14, 2011 at 8:31 am
Then you misunderstand a Hubbert curve. It’s not about what’s in the ground, it’s about flow rates.
————–
Actually I understand Hubbert’s work just fine. He is now off 10 fold on gas FLOW RATES in the US.
And please, stop setting up absurd premises such as “we need to find seven Ghawars a year”. All we need to do is keep getting a percent or two more recovery factor from all the existing fields every so often, find some giant deepwater fields, prove up a few billion in old fields like Wattenberg through new technology, apply horizontal drilling to liquid prone shales etc. That is exactly what we are doing, at economical costs and realistic energy inputs.

Jakehig
December 14, 2011 9:10 am

Dave Springer, 07:38
Absolutely correct that there is a huge infrastructure dedicated to vehicle refuelling. Why does that have to be limited to oil-based fuels?
One post has already pointed out the wide-spread use of CNG and LNG in Europe. By the way, that is also spreading to rail and shipping.
Then there are the liquid fuels produced from gas; Shell is leading the way with this. Beyond that, we have long-established technology to derive fuels from coal. And, of course, Biofuels might chip in a bit.
So the fuel infrastucture investment will serve us well for a long time yet, with or without ample supplies of oil.

December 14, 2011 9:10 am

Willis
You missed prices.
Prices are going UP.
Driving the economy DOWN.
Because global oil production plateaued – and is NOT keeping up with population.
Oil prices rise. US costs, OPEC sales hit records

American drivers this week broke a record that will bring them no joy. They collectively spent more than $448 billion on gasoline since the beginning of the year, according to the Oil Price Information Service, putting the previous record for gas expenditures — set in 2008 — in the rearview mirror with weeks of driving still to go. . . .The major reason for the record-setting gas spending in 2011 was that oil prices were consistently high all year. And that probably brought joy at the other end of the pipeline. The Organization of Petroleum Exporting Countries is on pace to top $1 trillion in net oil exports for the first time, or 29 percent more than last year.

JPeden
December 14, 2011 9:12 am

SP Wells says:
December 14, 2011 at 8:52 am
We have 8 billion people on the planet to house, feed and provide water to. Sustainability is not just about the United States, although it seems impossible to glimpse our own narcissism.
“We” don’t have to feed 8 billion people. We have to take care of our own system of Constitutional Capitalism. Strangely, the rest of the world benefits greatly anyway and would benefit even more were it to adopt the same system, which needs to exist somewhere to begin with. Getting panicked back into a Totalitarian Stone Age instead is not a plan.
Take care of your own house first.

OldOne
December 14, 2011 9:14 am

Doug says:
December 14, 2011 at 8:53 am
Oldone: Read this article too. Perhaps there is another opinion on the basin, Sounds like some Russian authors.
Palaeozoic source rocks in the Dniepr–Donets Basin, Ukraine

Doesn’t surprise me that there are differing viewpoints. Would be interesting to see which wells & what depths those “fine-grained rocks” were from, as well as the rest of the article.
Do you have a link to the full article that’s not behind a paywall?
All I could find was the abstract, which you posted.
Thanks

David L.
December 14, 2011 9:17 am

There’s an interesting book titled “Eating Fossil Fuels” by Dale Allen Pfeiffer. He explores this issue from the standpoint of how quickly we run out of oil will deterine if we gracefully adapt or all h377 breaks loose. I think it’s an interesting read for anyone on either side of the AGW debate.
I tend to agree with Willis that there is plenty of fossil fuels left for now and the natural forces of supply and demand will move us in the correct alternative directions in the future.

Stephen Harris
December 14, 2011 9:20 am

Knowledge of our oil situation is really frightening if many of these comments are for real.
– Abiotic oil? Wake up! It doesn’t exist.
– The amount of Shale Oil has be seriously downgraded by the USGS. It will have a short life. It’s also expensive to extract thus having a low EROI. Think bubble.
– There is a serious lack of understanding of just how dependent we are on liquid transportation fuels from oil. The world moves on oil. A massive transition to natural gas is far too expensive for one thing and NG doesn’t have the energy density or transportability as gas. A typical gas station can only store 1/10 the energy of NG as gasoline. NG cars/trucks will remain a curiosity more than a reality.
– Known oil reserves are always upgraded, never downgraded. I wonder why? Maybe it’s because saying you have a large reserve makes investment money easier to come by.
– And speaking of investments the IEA reports that the world needs to spend about $38 trillion dollars by 2035 to meet the projected demand. That’s not going to happen because 1) No one has that kind of money and 2) We’ll be on the down side slope of the oil curve by then.
– The U.S. and German Military are well versed in Peak Oil and have written reports outlining the national security problems that Peak Oil entails.
– Leaked cables from the U.S. State Dept. reveal that the Saudi’s are much closer to peaking than they let on in public. The former head of Saudi Aramco say in private they overestimated reserves by 40%. BTW, all OPEC countries overestimate so they can sell more oil because production quotas are based on reserves. In the middle 1980’s all OPEC members doubled their reserve estimates overnight. Sound fishy?
– All major non-opec producers are in terminal decline; Mexico, Alaska and the North Sea are crashing.
All this means we can expect steadily raising oil prices. The only thing that’ll bring down prices is demand destruction caused by recession. When those born today reach 30 years old they will live in a very different world than we do today.

DirkH
December 14, 2011 9:22 am

SP Wells says:
December 14, 2011 at 8:52 am
“Seems to me there is a larger question than how much oil we have left. What about the damage being done to our environment by using fossil fuels and living in a plastic state of mind.”
A “plastic state of mind” ? As opposed to an elastic state of mind, supposedly? Oh, I see what you mean. Relax. You can make all the plastic you want from starch, or cellulosis.
https://shop.ultimaker.com/en/consumables.html
Imagine that. A “sustainable” world with plastic! A hippies nightmare! One can even make bags out of it!

Doug
December 14, 2011 9:34 am

Stephen Harris says:
December 14, 2011 at 9:20 am
– All major non-opec producers are in terminal decline;
—————————————————————————-
Ummm, actually, US oil production is climbing, gas production and gas liquids production soaring.

Stephen Harris
December 14, 2011 9:40 am

@Doug
U.S. oil production peaked at 9.1 mbd in 1971. It’s been in decline ever since, despite finds in Alaska and the Gulf. Current production is about 4.2 mbd.

December 14, 2011 9:41 am

The existence of reserves does not imply that it is remotely without cost to extract them, or that the extraction will not carry consequences, like oil spills offshore or the contamination of water, air and soil. The role of coal in Britain until the horrific pollution of the 1950s is an example of “we still have plenty of something, but we have to make a switch.”
In addition, there is no reference to the price of oil and oil products. What would I care if there is 40 years of oil left if a fill-up of a 100 mpg vehicle costs $1,000? It becomes as problematic as telling me there is only 40 years’ supply of platinum left in the Earth’s crust: not my immediate concern.
The establishment of a oil-based economy is not merely a matter of access to supply, but the cost of bringing that supply in a refined form to market, and its price that fluctuates in response to its role as a benchmark commodity. See “gold” as a reference, even though gold’s rise since 1970 is not due to its utility, but to the debasement of currencies.
So in sum, the existence of oil reserves is no guarantee that they are easily extractable, or worth (yet) the effort. A move of civilization to a fusion and hydrogen economy, or even an as yet more challenging source, is best done while we still have the leisure of (historically) a cheap energy source as fossil fuels.

Robmax
December 14, 2011 9:51 am

Proven oil reserves is the same as saying recoverable oil reserves, and known oil reserves is oil not yet recoverable with current technology. There is also undiscovered which is anybodies guess. The numbers are always changing. The Alberta oil sands for instance are known to contain at least two trillion barrels of oil, with about 280 billion barrels recoverable with current technology.

OldOne
December 14, 2011 9:53 am

Don K earlier mentioned Thomas Gold.
Gold wrote a very interesting essay in 1989 entitled New Ideas in Science.
It’s also about old ideas & progress in science.
While likely instigated by Gold’s oil & gas experience, it covers a few other examples of what he calls “the ‘herd’ instinct”.
While climate change isn’t mentioned, I think everyone will see how Gold’s article applies to the current climate change controversy.
http://www.scientificexploration.org/journal/jse_03_2_gold.pdf

Rob Potter
December 14, 2011 9:55 am

Without wishing to enter into arguments of proven vs unproven, recoverable, abiotic etc., Norway recently announced two new finds in the North Sea which are the third largest ever discovered – from a region heavily explored for the last 40 years and considered “prospected out” for many years.
Over the last three years, Norway has discovered more new all than any country except Brazil and the US – and only from the North Sea.
When 40 year-old fields can still provide such finds, I think we are along way from worrying about the oil running out.

Gary Pearse
December 14, 2011 9:56 am

A note about “RESERVES”: This is an economic-based number, meaning the amount of measured volume/tonnages that are known to a high confidence level that can be produced at a profit. The methods of determination of these numbers are prescribed in detail by industry technical associations and must be done by properly qualified engineers. They are even subject to audit. Theoretically, this number goes up and down with the price of the commodity but practically, it is the measure as of a given date. Measured resources are those resources which have been measured to a lesser confidence level for which there is a reasonable expectation that they could become economic either through increased price levels or improved technology. A lot of the resources of sub-economic commodities were already known decades ago (like the oil sands, deep deposits, offshore deposits, oil shales and coal deposit methane) but didn’t meet the standards of intensity of measurement and/or the technologies available were not economic. Recently discovered methyl hydrates in the sea floor muds are probably not far off in this chain. This is why the numbers are able to keep pace and this is why a little bit of knowledge is a dangerous thing to groups like the The Club of Rome and the green jihadists. Another factor in very large trends where there is a high degree of confidence that there are abundant resources is that it costs money to drill and develop reserves and so it doesn’t make economic sense to prove up more reserves than you are planning to produce within a certain planning time frame – say 10 years or so. For this reason, companies treat reserves like active inventories and only add to them as required. In another post I used the example of INCO’s nickel reserves in the Sudbury basin of Ontario having only 15 to 20 years reserves of nickel continuously since 1905. In addition, newer deposits found since The Club of Rome linear mob think, have kept reserves rising as demand increased.
For those more interested see:
http://spe.org/industry/docs/Reserves_Audit_Standards_2007.pdf

Don K
December 14, 2011 9:56 am

Just a brief comment on the Hubbert curve. It is treated with respect because it did predict US “Oil Production” fairly accurately. The HC is actually quite rigorous. It depends on a function called the logistic curve P(t) = 1 / (1 +e^-t) which yields a sort of S-shaped curve which looks like exponential growth initially, then flops over and approaches a limit. Plot the rate of change of the logistic curve and you get the Hubbert curve. Those of you who are good at math can investigate the logistic function and Hubbert curve. Don’t ask me for more details as I am horrible at math.
But the logistic curve/Hubbert curve are critically dependent on knowing the amount of exploitable resource. Get the amount of resource wrong, the prediction will be wrong. In the case of US natural gas, the amount of resource was not well known, and Hubbert failed to predict US production peak (twice actually). In the case of world oil, it is very difficult to predict the peak because the data on resource is poor and obsfucated. That’s why guesses are all over the place. However, no sane person thinks the resource is unlimited. We are arguing about when the peak will occur, not whether it will occur.
Also keep in mind that only about 15% or the planet’s population lives in situations where demand for oil is stable or declining. Most folks live in developing countries and their demand for petroleum is surely going to soar in future years. Why can’t they use other energy sources? They can (so can we) but liquid hydrocarbons are portable, energy dense, easy to store. easy to use, and relatively safe. “Oil” is the fuel of choice for many situations — especially transportation.

David L.
December 14, 2011 9:56 am

I’m not sure why this confuses people. There is no crystal ball. Nobody can possibly know exactly how much oil is left. But what the R/P factor shows is we have at least 40 years. That’s a timespan from 1903 with the Wright brothers fooling around with kites to 1943 where planes could fly at 30,000 feet. A lot can happen in 40 years. Think of life in 1970 compared to 2011. We are in the age of exponential technical advancement. What will the world look like in 2051? Come on everyone, pull out your crystal balls.

December 14, 2011 10:01 am

jrwakefield: December 14, 2011 at 8:21 am
Not one oil field can be shown to be of abiotic.
EVERY oil field has a biological source rock.

We evidently read different books…
Or have drawn differing conclusions…
No problem with that.
You are perfectly entitled to think oil has a biological origin.
You are perfectly entitled to assay EVERY oil field [if you can].
However, I am still not convinced by your BOLD claims.

JPeden
December 14, 2011 10:06 am

SP Wells says:
December 14, 2011 at 8:52 am
Sustainability is not just about the United States, although it seems impossible to glimpse our own narcissism.
Btw, one form of narcissism is “do gooder”, “save the worlder”, “we only want to help everyone” narcissism, as a cloak for personal control needs existing in the presence of truly having nothing better to do, like successfully dealing with your own self and immediate situation first. Writ large via Communistic theology and its pseudo-physics and now the “sustainability/equality for your own good, or else!” ethic , it always leads to regressive scarcities which mirror the original scarcity of self or at least the absence of a creative human mind. Or, just take a look at Obama and his regressive policies. He’d make toilet paper impossible.

Dave Springer
December 14, 2011 10:29 am

Several people have brought up the point that reserve estimates are what’s economically recoverable at some price point per barrel. It appears the graph is adjusted for that to some extent.
The inflation adjusted price of oil was between $13 and $18/bbl from 1947 to 1971. US market control ended in 1971. Price doubled to $30/bbl almost overnight and stayed there for 13 years reaching $60/bbl for several years when it 1986 it fell below $30 again and stayed between $20 and $30 for next 16 years until 2004. Who knows where it’s headed now. Even $60/bbl seems like a fond memory at this point. One wonders if $100/bbl is economically sustainable. It isn’t looking good so far.
As far as I’m concerned the price of oil is the #1 issue for the next president of the United States to do something about.
Who here can look me straight in the eye and tell me the US economy wouldn’t rise like a rocket if oil fell back to being stable at around $15/bbl and transportation fuel $0.50 gallon? That’s what we had from 1986 to 2004. This is all political. On 9/11/01 oil was still relatively stable at $25. It started rising on the next day and essentially never looked back. This is the root cause of the ongoing deep recession.
Major advances in biofuel are inevitable. The key is synthetic biology. Evolution just didn’t produce the perfect organism for production of fuel oil or ethanol. Direct production of fuel oil from water, sun, and air is something that has no survival value in nature. Evolution never selected for it so where it exists it’s generally an undesireable byproduct of metabolism that evolution tends to minimize rather than maximize.
Synthetic biology changes all that. There are already patented cyano-bacteria (blue-green algae) that can produce 20,000 gallons/acre per year of fuel at a price equivalent to $30/bbl oil. These algae grow great in municipal wastewater with high nutrient loads, brackish water, and saltwater. Just 10% of the Texas panhandle, a few million acres, could provide all the diesel, ethanol, and avgas for entire US current annual consumption.
How many applecarts would that upset? Imagine if oil exporters like OPEC couldn’t compete at $30/bbl. Imagine if domestic oil producers couldn’t compete at $30/bbl. You see, $30/bbl equivalent is just the opening price for advanced biofuels. Sort of like transisters cost a dollar each in 1960. Demonstrably, once you can design living things like you can design a car or a computer, advanced biofuel plants won’t be constructed but they’ll rather be grown.
I think everyone who’s really aware of the scope of engineering opportunities to be exploited by access to synthetic biology knows that energy is a political problem not a technical problem. Too many vested interests in the status quo would be utterly destroyed by virtually free energy. Nonetheless progress in the infant field of synthetic biology is rapid. It’s mostly a matter of miniaturization, automation, and cost reduction in the synthetic biology lab. This where all the great strides are happening. In the past 10 years for instance the cost of sequencing a human genome fell from $1 billion to under $10,000 and from several years to less than a week. Think of it like being able to read and write. The cost of reading nature’s books (genomes) has dropped precipitously. We’re also interested in writing our own books. We can do that. The first artificial, working genome was written in the past 24 months. It took many months and many millions of dollars. But the cost of doing that is plummetting. This means that experimentation to produce that perfect biofuel-producing organism gets faster and cheaper and eventually it gets to the point where artificial life designed on computer workstation is as routine as writing apps for iPhones.
This is our next technological revolution. It’s coming soon and it’s a biggie as far as revolutions go. I’d say it’s the biggest thing since writing was invented.

Stephen Harris
December 14, 2011 10:32 am

@W.E.
Please see:
http://www.enopetroleum.com/opecoilreservers.html
Notice how OPEC estimates were almost doubled in the same, short time frame in order to take advantage of new production quotas. The new estimates were not based on new discoveries. I hope you don’t think they all just made honest mistakes, and corrected them all at the same time. Oil geology is well understood and reserve estimates of long existing fields is not guess work. A sudden doubling of reserves by OPEC members doesn’t pass the smell test.
It is very much in a producers political and economic interest to fudge reserve estimates. Oil is money. Money is power and influence. When it comes to actual reserves estimates I trust retired industry insiders like Colin Campbell as well as whistleblowers and leaked cables more than the official party line.
But where the rubber meets the road is in production numbers. Those can’t be fudged that much. And the truth is that production has hit a bumpy plateau, despite growing demand. Heroic efforts to drill six miles below the ocean surface or to frack oil precursors in shale formations isn’t going to turn the game around. And why is anyone drilling in such difficult places? Because that’s where the rest of the oil is located. The low hanging, and cheap to produce, fruit has been picked. At best these efforts will give us a little bit of breathing room to come up with a different way to run our industrial civilization.

December 14, 2011 10:35 am

Doug says:
December 14, 2011 at 9:08 am
jrwakefield says:
December 14, 2011 at 8:31 am
Then you misunderstand a Hubbert curve. It’s not about what’s in the ground, it’s about flow rates.
————–
Actually I understand Hubbert’s work just fine. He is now off 10 fold on gas FLOW RATES in the US.
And please, stop setting up absurd premises such as “we need to find seven Ghawars a year”. All we need to do is keep getting a percent or two more recovery factor from all the existing fields every so often, find some giant deepwater fields, prove up a few billion in old fields like Wattenberg through new technology, apply horizontal drilling to liquid prone shales etc. That is exactly what we are doing, at economical costs and realistic energy inputs.
—————
I didn’t come up with the seven Ghawars, the IEA did.
If you understand flow rates how come you keep on about what’s in the ground? None of those you noted will have enough flow to keep up with depletion from aging fields. That is fact, not conjecture. Example, Cantarell has dropped more in flow rate than the Alberta Oil Sands can ever hope to produce.
“a few billion” is tiny in a world that consumes 33bb/year.

December 14, 2011 10:36 am

Stephen Harris says:
“U.S. oil production peaked at 9.1 mbd in 1971. It’s been in decline ever since, despite finds in Alaska and the Gulf. Current production is about 4.2 mbd.”
Plenty of the blame for that decline can be laid at the feet of the enviro-lobby, which has been fighting the extraction of more than ten billion barrels of easily recoverable oil from a three square mile section of ANWR [the tiny red square]. There is certainly more oil to be found on the North Slope, but oil companies are not even allowed to explore for it. [Yet there sems to be unlimited money for failed social experiments.]
And the price of oil seems to be related much more closely to international crises than to actual supply and demand.
The current Administration refuses to allow exploration or drilling around almost all of the U.S., including Alaska. However, the Administration has no objection to China’s drilling in the Gulf of Mexico in partnership with Cuba, only 30 miles off the U.S. coastline. If When there is a Chinese/Cuban oil spill, the fault will be due to the enviros’ obstructionism. But expect them to turn a blind eye toward the Chinese, the Cubans, and the Administration.
There is plenty of oil for our needs. Enviro politics is the only reason it is not being produced. The eco-lobby is directly responsible for the high cost of gasoline, and of all widely used petroleum-based products.

December 14, 2011 10:37 am

malagaview says:
December 14, 2011 at 10:01 am
jrwakefield: December 14, 2011 at 8:21 am
Not one oil field can be shown to be of abiotic.
EVERY oil field has a biological source rock.
We evidently read different books…
Or have drawn differing conclusions…
No problem with that.
You are perfectly entitled to think oil has a biological origin.
You are perfectly entitled to assay EVERY oil field [if you can].
However, I am still not convinced by your BOLD claims.
——-
Pick any field you want, how about Tupi off Brazil? Google its geology.
The fact is the oil industry uses biological markers as a tool to look for deposits.

Robmax
December 14, 2011 10:37 am

With the amount of oil that is released every year through natural oil seeps around the world, it’s got to be coming from somewhere. Just in the gulf of Mexico alone, the equivalent of two EXXON Valdez sized spills are released every year by natural seeps.
An introduction to the modern petroleum science, and to the Russian-Ukrainian theory of deep, abiotic petroleum origins.
http://www.gasresources.net/Introduction.htm

mfosdb
December 14, 2011 10:44 am

Spot on as always. An example of new technology, gas rather than oil, bringing previously untapped reserves into production is the long awaited FLNG. Shell’s video illustrating this feat of engineering is interesting. Sadly they didn’t pay me to post it here :o(

December 14, 2011 10:45 am

jrwakefield said:
“Except for the Arctic, the entire planet has been searched. The big easy fields have all be found and exploited.”
Sorry, don’t buy that the *entire* planet has been searched. It may have been searched for the “big easy fields” as you say but I included shale in my question as well. Looking at the patchwork of shale deposits just within the US which are only recently being tapped, I believe there are other shale deposits in other countries which were ignored in the past or remain undiscovered.
“There wont be oil beyond the continental shelfs, wrong geology. Oil deposits are mostly from shallow marine ecosystems. Explained in the book Oil 101.”
But there *is* oil beyond the continental shelves…they have been progressing into deeper & deeper water depths (away from the shelf) as technology improves. The BP disaster in the Gulf was in over 5000ft of water & many thousands of feet below the ocean floor. Also, that new Brazilian find in the South Atlantic is in very deep water (away from the shelf) as well.
Tell me, what does Oil 101 say is the deepest water depth oil will be found and how deep below the ocean floor is the limit to find oil…eh?
Jeff

Donald Mitchell
December 14, 2011 10:48 am

I think that it is a terrible waste of oil to burn it for heat when it can be a raw material for so many useful products. That said, I feel confident that it will eventually become so valuable as a feedstock that other, cheaper sources will become available for heat. It appears that natural gas will largely replace oil for heating well within the projected time for running out of oil. When natural gas, which can also be used as a feedstock, exceeds the cost of producing power from uranium and thorium, we can stop burning it for power generation. Get the price of electric power low enough and gas will be phased out of home and business heating. If oil and natural gas were only used for feedstock and transportation purposes, the supplies start looking a lot larger. There is also the consideration that, given cheap enough electric power, conversion of coal to methane looks more practical and we have huge quantities of coal.
I do believe that the primary problems of our (USA) energy problems are political. I have very high hopes that the RICO suit filed by Chevron will cause a thorough reevaluation of some of the environmental efforts by various groups including some agencies of the US government.
One immediate need is a requirement that any document presented to (or referenced by our federal government) or produced by our federal government must have all of the original data as well as the analysis procedures available to the general public on servers which are administered by an independent agency. It should also be possible for anyone to post a paper which has been submitted for publication and rejected as long as the reasons for rejection are also posted. There should be significant penalties for presenting fraudulent or incomplete data. I think that this would also significantly reduce the contention that we have in the discussion of global warming.
I do not trust the EPA to present an honest, much less a balanced, picture of anything having to do with their regulations. Until they have to include an analysis of costs versus benefits for any existing or proposed regulation (including, of course, posting the assumptions and methods of calculation). Demonstration of significant error in the cost benefit ratio at any time in the life of the regulation should be cause for cancelling that regulation as well as reconsidering the desirability of continuing to use the input from the individuals who made the erroneous assumptions.
One formative occasion in my disgust regarding our regulatory agencies was the attempt of a local power company to put in the Black Fox nuclear power plant. The attacks on it fell into three primary categories.
1 Physical Safety: While it would withstand a crash by one 747, what if two hit it at the same time?
2 Process Safety: Would it be safer if the peak steam temperature were only 400 degrees Fahrenheit? How about 300 degrees?
3 Cost Effectiveness: Now that we have greatly increased the cost of the physical plant and the cost of all of the permitting as well as significantly decreased its efficiency, how can it still generate electricity at a price lower than a coal fired plant?
4: Environmental Impact: It is my understanding that Black Fox finally failed for the impact on the Verdigris river that it would provide its cooling water. There was no assertion that any pollutants would be added to the river. Instead, by evaporating some of the water, it would increase the concentration of allegedly preexisting pollutants. Would it be petty of me to mention that the name of river, which was given to it by an early French explorer, can be interpreted to mean green grey and that I consider that descriptive?

LarryD
December 14, 2011 10:49 am

The current theory on the biotic origin of oil, is that it is formed from silt-buried plankton in shallow seas. Not from dinosaurs. Which means that Earth has been generating oil for around three billion years. And that’s not to say that all oil is biotic in origin, the theories are not mutually exclusive.

December 14, 2011 10:49 am

Rob Potter says:
December 14, 2011 at 9:55 am
Without wishing to enter into arguments of proven vs unproven, recoverable, abiotic etc., Norway recently announced two new finds in the North Sea which are the third largest ever discovered – from a region heavily explored for the last 40 years and considered “prospected out” for many years.
Over the last three years, Norway has discovered more new all than any country except Brazil and the US – and only from the North Sea.
When 40 year-old fields can still provide such finds, I think we are along way from worrying about the oil running out.
————–
http://www.bloomberg.com/news/2011-08-16/norway-sees-longer-oil-era-as-north-sea-find-offers-hidden-giant.html
“The Aldous and Avaldsnes oil discoveries located on the Utsira High may hold 500 million to 1.2 billion barrels of recoverable oil, according to the Stavanger-based company. The company is scheduled to drill a well next week at the Aldous Major North prospect, which has a 50 percent chance of striking oil and may add as much as 300 million barrels of recoverable oil, Dodson said. ”
Puny. The world consumes 33 BILLION BARRELS PER YEAR. That represents a mere 13 days of world consumption. It will last the Norwgians only 2 years. If that is a “giant” field we are indeed in trouble.

Jeremy
December 14, 2011 10:49 am

jrwakefield,
You need to learn to contribute to a thread instead of making baseless suggestions. Have you looked at North Dakota production recently? Did you know that US production has been increasing recently and in 2010 this was primarily due to Shale Oil.
Google also “Vaca Muerta “Shale oil” – Repsol” – perhaps you, Sir, can learn a thing or two about Oil 101.

Doug
December 14, 2011 10:49 am

jrwakefield says:
December 14, 2011 at 10:35 am
If you understand flow rates how come you keep on about what’s in the ground?
—————————
I haven’t said anything about reserves, I’m talking flow rates. Despite your favorite poster boy Cantarell, flow rates worldwide are doing just fine. US flow rate is climbing. My wells have new horizontal legs and are back to the rate they did 20 years ago.
Hubbert predicted our gas flow rate would be 6 BCFD. It is actually 63 bcfd. Sorry to deal in facts

December 14, 2011 10:52 am

Robmax says:
December 14, 2011 at 10:37 am
With the amount of oil that is released every year through natural oil seeps around the world, it’s got to be coming from somewhere. Just in the gulf of Mexico alone, the equivalent of two EXXON Valdez sized spills are released every year by natural seeps.
An introduction to the modern petroleum science, and to the Russian-Ukrainian theory of deep, abiotic petroleum origins.
http://www.gasresources.net/Introduction.htm
———-
Not sure why this has to be stated over and over, but I will again. NOT ONE oil field can be shown to be abiotic. EVERY oil field found so far have biological source rocks.

Jeremy
December 14, 2011 10:54 am

jrwakefield,
I now see you have posted all over this thread. Chicken Little would be very proud of you!
Sorry folks but the sky is not falling and there will be Oil, Gas and Coal for hundreds and hundreds more years. Long before we run out we will have migrated to other more efficient forms of energy if Mankind’s ability to apply an deliver new technologies continues to progress. I doubt we will ever seem much in the way of meaningful use of less efficient forms such as wind, solar or tidal power. I am thinking fusion or something better.

December 14, 2011 10:56 am

Robber says:
December 14, 2011 at 12:57 am
Oil is a diminishing resource – 40 years is little time to wean ourselves off oil, and find alternatives.

I’m not sure you actually read the blog post. The time to “running out” has been 40 years in the future for the past quarter century. What that means is that 40 years from now we will still be 40 years away from “running out”.

Andrew30
December 14, 2011 10:56 am

PAUL SCHILIZZI says:
Don’t forget that
STONE AGE DID NOT END BECAUSE WE RAN OUT OF STONES
And the Age of Sail did not end because of lack of wind.
And the transcontinetal railway was not caused by of a lack of covered wagons.
And the New York – San Francisco telegraph was not caused by a lack of pony express riders.
Faster, more efficent, less expensive and more reliable, that is how human technologies evolve to improve standard of living, health and well being.

December 14, 2011 10:59 am

JKrob says:
December 14, 2011 at 10:45 am
jrwakefield said:
“There wont be oil beyond the continental shelfs, wrong geology. Oil deposits are mostly from shallow marine ecosystems. Explained in the book Oil 101.”
But there *is* oil beyond the continental shelves…they have been progressing into deeper & deeper water depths (away from the shelf) as technology improves. The BP disaster in the Gulf was in over 5000ft of water & many thousands of feet below the ocean floor. Also, that new Brazilian find in the South Atlantic is in very deep water (away from the shelf) as well.
————
No, the entire Gulf of Mexico is continental shelf. The host sediments are above the basalitic oceanic crust. The Tupi field off Bazil is also on continental shelf, just above the basaltic oceanic crust, and just below a thick layer of evaporite salt.
Please before you boast about this field or that field, check the geology first. Google works.
————–
Tell me, what does Oil 101 say is the deepest water depth oil will be found and how deep below the ocean floor is the limit to find oil…eh?
Jeff
————-
Read it and learn. There are NO FIELDS off continental shelves. Being below the ocean floor does not mean below oceanic basalt, which is what the ocean floor is beyond shelves.

December 14, 2011 11:03 am

TomB says:
December 14, 2011 at 10:56 am
Robber says:
December 14, 2011 at 12:57 am
Oil is a diminishing resource – 40 years is little time to wean ourselves off oil, and find alternatives.
I’m not sure you actually read the blog post. The time to “running out” has been 40 years in the future for the past quarter century. What that means is that 40 years from now we will still be 40 years away from “running out”.
————-
The 40 years is bogus. Means nothing. Oil production does not shut off the day max flow is achieved. It follows a decline curve for years. The issue is not running out of oil. We will never run out of oil. What will happen is the flow rate won’t keep up with growing demand, and there will be shortage, with price spikes that destroys the economy (recessions).

December 14, 2011 11:09 am

Jeremy says:
December 14, 2011 at 10:54 am
jrwakefield,
I now see you have posted all over this thread. Chicken Little would be very proud of you!
Sorry folks but the sky is not falling and there will be Oil, Gas and Coal for hundreds and hundreds more years. Long before we run out we will have migrated to other more efficient forms of energy if Mankind’s ability to apply an deliver new technologies continues to progress. I doubt we will ever seem much in the way of meaningful use of less efficient forms such as wind, solar or tidal power. I am thinking fusion or something better.
—————
Fusion is dead. There are fundemental problems. The oil drum had a good article about it a few years back. Wind will never replace any fossil fuel. In the summer its output is less than 7% capacity, and 30% of the time it produces nothing. Sun in the winter is pathetic. Tidal was tried and failed.
It has nothing to do with being chicken little. It has to do with the evidence:
This is just one report of many:
http://www.ukerc.ac.uk/support/tiki-index.php?page=Global+Oil+Depletion

December 14, 2011 11:11 am

jrwakefield says:
“What will happen is the flow rate won’t keep up with growing demand, and there will be shortage, with price spikes that destroys the economy (recessions).”
You have no faith in the free market. As supply gradually diminishes, costs rise and alternatives become more cost-effective. Economies are not “destroyed”. Recessions occur, but they are part of the business cycle and not due to diminishing supply. An exception was the 1973 oil embargo, when the supply was entirely disrupted overnight. But in a normal free market, the market adjusts.

Fred 2
December 14, 2011 11:12 am

The reserve stays at 40 years for decades and decades because there is no incentive to look for more oil once a company has over 40 years of reserves on the books. Finding oil is expensive, and usually fails anyway, so why spend any more money hunting for resources you won’t need for generations? The engineers may say they’ve got an interesting lead, but the financial types say “why bother?”

elbatrop
December 14, 2011 11:13 am

flow rate only has to start dropping for the economic damage to occur, running out isn’t even an issue nor is it what peak oil is about
the other factor is net energy you get from the resource which has been dropping since oil was discovered
@ jeremy, you have nothing to back any of your assertions while others have posted data and links to back up theirs
I’d like to see this whole mess cross posted at someplace like theoildrum.com and you guys will get summarily torn apart with little effort.

MarkW
December 14, 2011 11:13 am

kbray in california says:
December 14, 2011 at 7:38 am

You buy imported burgers????

December 14, 2011 11:15 am

Andrew30 says:
December 14, 2011 at 10:56 am
PAUL SCHILIZZI says:
Don’t forget that
STONE AGE DID NOT END BECAUSE WE RAN OUT OF STONES
And the Age of Sail did not end because of lack of wind.
And the transcontinetal railway was not caused by of a lack of covered wagons.
And the New York – San Francisco telegraph was not caused by a lack of pony express riders.
Faster, more efficent, less expensive and more reliable, that is how human technologies evolve to improve standard of living, health and well being.
———–
What alternative is there that has the same energy density, in liquid form, as oil? We keep hearing about this mythical alternative, but we never see anything close to oil. It’s going to take decades to switch over, we need to start now if some alternative exists.

MarkW
December 14, 2011 11:17 am

Except for the Arctic, the entire planet has been searched. The big easy fields have all be found and exploited.

That explains why they keep finding new, big fields.

Stephen Harris
December 14, 2011 11:18 am

Here are some links to various reports:
Industry Peak Oil Task Force, UK:
http://peakoiltaskforce.net/wp-content/uploads/2010/02/final-report-uk-itpoes_report_the-oil-crunch_feb20101.pdf
Hirsch report prepared for the DoE: Dated 2005 but still relevant: http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf
Joint Operating Environment. U.S. Military:
http://www.peakoil.net/files/JOE2010.pdf
Peak Oil Report by the German Military:
http://www.energybulletin.net/sites/default/files/Peak%20Oil_Study%20EN.pdf
IEA World Energy Outlook 2011 Summary:
http://www.worldenergyoutlook.org/docs/weo2011/executive_summary.pdf
ASPO International. A clearing house of information:
http://www.peakoil.net/
The Oil Drum. Another clearing house of information:
http://www.theoildrum.com/

December 14, 2011 11:19 am

Smokey says:
December 14, 2011 at 11:11 am
jrwakefield says:
“What will happen is the flow rate won’t keep up with growing demand, and there will be shortage, with price spikes that destroys the economy (recessions).”
You have no faith in the free market. As supply gradually diminishes, costs rise and alternatives become more cost-effective. Economies are not “destroyed”. Recessions occur, but they are part of the business cycle and not due to diminishing supply. An exception was the 1973 oil embargo, when the supply was entirely disrupted overnight. But in a normal free market, the market adjusts.
————–
http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/oil-price-spikes-and-recession-intertwined/article1919899/
http://www.cbsnews.com/8301-505123_162-36743203/oil-prices-and-recessions-40-years-worth/?tag=mwuser
http://www.theoildrum.com/node/8268
http://www.theoildrum.com/node/7562
http://www.theoildrum.com/node/6912
for starters.

MarkW
December 14, 2011 11:20 am

“PCBs are even in breast milk now.”
PCBs have always been in breast milk.
“While I do not agree with fear mongering,”
Then why do you do it?

December 14, 2011 11:23 am

Doug says:
December 14, 2011 at 10:49 am
jrwakefield says:
December 14, 2011 at 10:35 am
If you understand flow rates how come you keep on about what’s in the ground?
—————————
I haven’t said anything about reserves, I’m talking flow rates. Despite your favorite poster boy Cantarell, flow rates worldwide are doing just fine. US flow rate is climbing. My wells have new horizontal legs and are back to the rate they did 20 years ago.
Hubbert predicted our gas flow rate would be 6 BCFD. It is actually 63 bcfd. Sorry to deal in facts
—————
US oil production:
http://www.energybulletin.net/image/uploads/27804/us-production.jpeg

MarkW
December 14, 2011 11:25 am

thingadonta says:
December 14, 2011 at 9:08 am

I’ve said for years, that today’s dumps are tomorrows mines.

elbatrop
December 14, 2011 11:28 am

@ smokey
you fail to understand the nature and relationship of money to energy
oh and the oil embargo was a mere 5% of the total market and it threw the US into turmoil forcing it to capitulate a year later

MarkW
December 14, 2011 11:29 am

Stephen Harris says:
December 14, 2011 at 9:40 am
@Doug
U.S. oil production peaked at 9.1 mbd in 1971.

Isn’t that the year the EPA was founded? It isn’t a coincidence.

Stephen Harris
Reply to  MarkW
December 14, 2011 12:15 pm

Yes. Can’t hide anything from you. It was a conspiracy to steal oil and pour it down the drain………….just for spite.

More Soylent Green!
December 14, 2011 11:32 am

David Gould says:
December 14, 2011 at 2:45 am
Willis,
Peak oil has never been about peak oil reserves. It has been about peak oil [i]production[/i]. And your graph shows production flatlining since around 2004, which is an indication that peak oil might be upon us.

And so what? Does it show anything more than production dropped when demand dropped? We are in the middle of a global economic meltdown. What are conditions like on your planet?

MarkW
December 14, 2011 11:36 am

Yes, oil does mostly form in shallow ocean deposits. However what is shallow ocean one year, can be on a mountain top, or deep ocean, a few million years later.

elbatrop
December 14, 2011 11:38 am

@ MarkW
new big fields huh? like?
when was the last time the world found a field in excess of 100gigabarrels that had a potential flow rate once developed in the millions of barrels per day range?

More Soylent Green!
December 14, 2011 11:39 am

Luther Wu says:
December 14, 2011 at 6:01 am
Due to reduced demand, Gasoline and Diesel fuel are currently being exported from the U.S.
http://money.cnn.com/2011/12/05/news/economy/gasoline_export/index.htm

I’m just getting caught up with the comments here, so please forgive if this has already been answered.
The USA has been exporting refined gasoline and diesel for years. Venezuela, for example, does not have the ability to refine the oil they produce. Venezuela has never had the ability to refine their heavy crude. They have always exported crude oil and import refined gas and diesel.
We have also been exporting diesel to Europe for years. For some reason, Europe does not have enough refineries to meet its needs. (Any guesses why? Any possible suspects come to mind?)

OldOne
December 14, 2011 11:42 am

Brian H says:
December 14, 2011 at 7:11 am
To all the abiotic oil deniers: I assume you await with bated breath the first geologic explorations of Titan, to unearth (untitan?) the fossils of the alien ferns and multi-colored algae etc. that decomposed into its lakes of hydrocarbons!

Brian,
Since NASA says:”Titan’s thick cloudy atmosphere is mostly nitrogen, like Earth’s, but contains much higher percentages of “smog-like” chemicals such as methane and ethane. The smog may be so thick that it actually rains “gasoline-like” liquids”, and we’ve been told (quite dogmatically) “There is no oil on Titan”, perhaps rather than looking for fossils, we should just look for the refineries that have refined all the oil (since there is none there now) into lighter hydrocarbons. They should be much easier to find than those tiny fossils too.

David L.
December 14, 2011 11:42 am

“Twenty years from now the gasoline motor car will be gasolineless, the motor-boat a memory and the airplane a museum curio. Industry dependent upon the derivatives of petroleum will have to look to other sources for fuel and lubrication. All this is true-if the prediction just made by the United States Geological Survey is accurate”. From “The Iron Age” April 6, 1922 page 949

December 14, 2011 11:45 am

MarkW says:
December 14, 2011 at 11:17 am
Except for the Arctic, the entire planet has been searched. The big easy fields have all be found and exploited.

That explains why they keep finding new, big fields.
———
Which ones? Be specific. Make sure you include how much oil is in place and compare that to our rate of consumption.

David L.
December 14, 2011 11:45 am

jrwakefield says:
December 14, 2011 at 11:15 am
———–
What alternative is there that has the same energy density, in liquid form, as oil? We keep hearing about this mythical alternative, but we never see anything close to oil. It’s going to take decades to switch over, we need to start now if some alternative exists.
_________________
Well, it’s not liquid and it has a much higher density than oil, but : Uranium?

Archonix
December 14, 2011 11:46 am

Something to consider, with all the talk of peak oil and 40 years not being enough time to transition to another technology… how long did it take to transition from gas to electrical lighting?
The first practical lighting system was invented in the 1870s or thereabouts (system meaning not merely the incandescent light itself, but also the means to power it in a setting other than a laboratory). Gas lights were almost completely replaced within 40 years.
40 years isn’t such a short time for a new technology to become ubiquitous.

MarkW
December 14, 2011 11:46 am

It’s going to take decades to switch over, we need to start now if some alternative exists.
1) No alternative exits.
2) We aren’t running out for several hundred years, so why worry?

December 14, 2011 11:54 am

For those of you who think the ecomomy will solve any oil shortages by increasing price of oil.
The effects high oil prices has on food.
http://www.energybulletin.net/stories/2011-12-14/soaring-oil-and-food-prices-threaten-affordable-food-supply

TomL
December 14, 2011 11:58 am

Whether the deep water Gulf of Mexico is underlain by continental or oceanic crust really doesn’t matter. Maybe it’s basalt, maybe it’s highly stretched out continental material. The sedimentary rocks that form the reservoirs, like the Eocene/Paleocene sandstones, are of continental origin in any case.
The water depth record for production is currently held by the Shell/Chevron/BP Perdido platform, located in 8000 feet of water in the Gulf of Mexico. Some of the individual wells feeding into the Perdido platform are in over 9000 feet of water.
http://www.offshoreenergytoday.com/usa-shells-tobago-offshore-field-breaks-depth-record-for-subsea-production/

December 14, 2011 12:04 pm

JRWakefield, I can assure you the UKERC report you have referenced is one of the most amateurish efforts (of several hundred) ever reconciled by Trendlines Research over the past seven years. It is a political document that ignored completely the findings of its technical consultant (C Skrebowski). One must remember when reading reports by this fraternity that McPeaksters have declared imminent peak oil virtually every year since 1989. They are a mere cult and are engaged in gross misinformation on this topic.
If instead one views the consensus avg of the 16 tier-1 geologists involved in annual oil depletion projections, it is revealed All Liquids is targeted to occur in 2024 @ 97 Mbd. The sub-category of light sweet crude (regular conventional oil) peaked @ 69 Mbd in 2005 and is presently 64 Mbd of 88 Mbd total flow.
monthly peak oil charts: http://trendlines.ca/free/peakoil

The iceman cometh
December 14, 2011 12:05 pm

mondo says:
“December 14, 2011 at 7:38 am
Willis,
A very interesting question to ask the oil majors (BP for example) is “the concept of ‘Reserves’ is an economic concept, meaning that portion of ‘Resources’ that can be economically extracted at a particular oil price”
I like to tease the Peak Oil mob with the simple question as to why there was only 25 years of reserves in 1945; by 1970, that oil was gone, but we had 30 years of reserves; by 2000, all the 1970’s oil had gone but we had 40 years of reserves. How come? They keep telling me we are about to hit a peak – they clearly don’t even understand the question.
The answer, of course, is that in 1945 we were talking oil at $2/bbl; by 1970 there was no more $2/bbl oil but lots of $10/bbl; by 2000 there was no more $10/bbl oil but lots of $25 oil. Yes, ‘reserves’ are indeed an economic concept. But will the Peak Oil gloomsters understand that simple economics? I haven’t yet found one.

Resourceguy
December 14, 2011 12:12 pm

Resource econ is one area where econ illiteracy is rampant and policymakers are now happy to get it wrong with emphasis applied—see Markey and Waxman. The continuing pattern of extending the years of remaining reserves for decade after decade stems from industry and investment adaptation to price signals with lag times appropriate for that sector. In most cases the lag time to install new capacity or apply new production or discovery technology takes longer than the armchair experts and biased policy distortionists have time for. They look more like short-termers in the stock markets than the industry players and principled investors themselves. I guess the policy distorters are cyclical just like the resource industries, but with countercyclical timing and motives.

MAtthew Epp
December 14, 2011 12:16 pm

jrwakefield says:
December 14, 2011 at 11:15 am
“What alternative is there that has the same energy density, in liquid form, as oil? We keep hearing about this mythical alternative, but we never see anything close to oil. It’s going to take decades to switch over, we need to start now if some alternative exists.”
Man you really are a doom and gloomer. Right now with current technology, automobiles and light duty trucks, ie pickups , the type of vehicles that joe public drives everyday which account for the vast majority of the vehicle miles driven everyday and the oil consumption in the good old USA, can be converted to run on either LNG or gasoline. The reason the majority of drivers are still driving on gasoline is the availability of refilling stations for LNG is limited, however as more vehicles are equipped with this capability, the gas stations owners will see a potential market and will install the necessary equipment to provide the LNG.
It doesn’t have the same punch per pouind that gasoilne has, but it is transportable and readily adapts to current transportation technology. As for depletion of this resource? virtually limitless and currently there are known supplies of 100’s of years.
Relax, take a chill pill and enjoy your day.
Cheers!

jorgekafkazar
December 14, 2011 12:18 pm

Jeff says: “And of course, herein lies much of the problem…everytime the R/P slope is down, the peak-oil people start crowing about how we are running out of oil. This sends entrepreneurial people out, spending money and devoting their careers to find the replacement, and paying others to devote their careers to finding the replacement, only to have the line moved farther and farther into the future. How on earth do they A. justify their careers, and B. get their money back? Hmmmmm…”
That’s why oil shale is the wave of the future, and always will be.

December 14, 2011 12:20 pm

Isn’t that the year the EPA was founded? It isn’t a coincidence.
More Soylent Green! says:
December 14, 2011 at 11:32 am
David Gould says:
December 14, 2011 at 2:45 am
Willis,
Peak oil has never been about peak oil reserves. It has been about peak oil [i]production[/i]. And your graph shows production flatlining since around 2004, which is an indication that peak oil might be upon us.
And so what? Does it show anything more than production dropped when demand dropped? We are in the middle of a global economic meltdown. What are conditions like on your planet?
—–
Demand is down because of demand destruction caused by high oil prices.

Ralph
December 14, 2011 12:21 pm

>>tokyoboy says: December 13, 2011 at 11:56 pm
>>Where on earth is the good ole Peak Oil??
You misunderstand what Peak Oil is.
Peak Oil has nothing to do with reserves, it is all about production rates. The Mid East might have humungous reserves, but oil production has been reducing there because it is harder and harder to get their thick oil out of the ground.
Peak Oil occurs when pruduction no longer meets demand – and the data here does not give us that information. We need a graph of world consumption vs world production, and that will give us a clearer idea if there is going to be an oil shortage (Peak Oil) in the near future.
.

Stephen Harris
Reply to  Ralph
December 14, 2011 12:27 pm

Here’s a great ppt from ASPO on reserves, production, consumption and all that.
http://www.aspo9.be/assets/ASPO9_Thu_28_April_Skrebowski.pdf

December 14, 2011 12:23 pm

The iceman cometh says:
December 14, 2011 at 12:05 pm
mondo says:
“December 14, 2011 at 7:38 am
Willis,
A very interesting question to ask the oil majors (BP for example) is “the concept of ‘Reserves’ is an economic concept, meaning that portion of ‘Resources’ that can be economically extracted at a particular oil price”
I like to tease the Peak Oil mob with the simple question as to why there was only 25 years of reserves in 1945; by 1970, that oil was gone, but we had 30 years of reserves; by 2000, all the 1970′s oil had gone but we had 40 years of reserves. How come? They keep telling me we are about to hit a peak – they clearly don’t even understand the question.
The answer, of course, is that in 1945 we were talking oil at $2/bbl; by 1970 there was no more $2/bbl oil but lots of $10/bbl; by 2000 there was no more $10/bbl oil but lots of $25 oil. Yes, ‘reserves’ are indeed an economic concept. But will the Peak Oil gloomsters understand that simple economics? I haven’t yet found one.
——-
That’s because reserves are meaningless. You are making the same mistake as the others who challenge peak oil. Which is fine. The mistake you are making is look at what’s inthe ground. Peak oil is not about what’s in the ground, it’s about how fast it can be extracted compared to demand. It only takes a small drop in production relative to demand to drive prices through the roof. That’s simple economics.

December 14, 2011 12:27 pm

jorgekafkazar says:
December 14, 2011 at 12:18 pm
Jeff says: “And of course, herein lies much of the problem…everytime the R/P slope is down, the peak-oil people start crowing about how we are running out of oil. This sends entrepreneurial people out, spending money and devoting their careers to find the replacement, and paying others to devote their careers to finding the replacement, only to have the line moved farther and farther into the future. How on earth do they A. justify their careers, and B. get their money back? Hmmmmm…”
That’s why oil shale is the wave of the future, and always will be.
———
Always is a long time. Still making the same mistake. Peak oil is about flow rates. Oil shale will have a low flow rate, low ERoEI. Expensive to develop. Recessions caused by high oil prices will curb demand for oil, dropping the price. the price of oil will never get high enough to make oil shale viable on a large scale. Keep in mind that the Oil Sands up here has an ERoEI of only 6:1 and that does not include downstream energy costs of transportation and refining.

December 14, 2011 12:33 pm

MAtthew Epp says:
December 14, 2011 at 12:16 pm
jrwakefield says:
December 14, 2011 at 11:15 am
“What alternative is there that has the same energy density, in liquid form, as oil? We keep hearing about this mythical alternative, but we never see anything close to oil. It’s going to take decades to switch over, we need to start now if some alternative exists.”
Man you really are a doom and gloomer. Right now with current technology, automobiles and light duty trucks, ie pickups , the type of vehicles that joe public drives everyday which account for the vast majority of the vehicle miles driven everyday and the oil consumption in the good old USA, can be converted to run on either LNG or gasoline. The reason the majority of drivers are still driving on gasoline is the availability of refilling stations for LNG is limited, however as more vehicles are equipped with this capability, the gas stations owners will see a potential market and will install the necessary equipment to provide the LNG.
It doesn’t have the same punch per pouind that gasoilne has, but it is transportable and readily adapts to current transportation technology. As for depletion of this resource? virtually limitless and currently there are known supplies of 100′s of years.
Relax, take a chill pill and enjoy your day.
Cheers!
———–
I already posted a source about the longevity of shale gas. It’s not going to last much longer none of them are making any money at it. Depletion rates are horrendous.

MAtthew Epp
December 14, 2011 12:35 pm

Correction to my previous post. I should have typed CNG (Compressed Natural Gas) not LNG. My bad.
Cheers,
Matthew

December 14, 2011 12:35 pm

jrwakefield says:
“Oil shocks and recessions go together.”
You’re just arguing for the sake of argument. My point was that the free market adjusts to the declining supply of a commodity by pricing alternatives more attractively by comparison. I also noted the exception of price spikes due to international crises. Your links do nothing to negate the fact that events – not the lack of available supply – have caused the price of oil to spike. From the first link you posted, there’s this. [Note the graphic.]
elbatrop says:
“you fail to understand the nature and relationship of money to energy …oh and the oil embargo was a mere 5% of the total market and it threw the US into turmoil forcing it to capitulate a year later”
See my reply to jrwakefield. There is more to the price of oil than energy. There is fear, and artificially manipulating the price [OPEC], and major government restriction of supply, etc. There is ample fossil fuels for our needs, if the government cooperated in allowing production instead of sharply limiting supply. The free market provides – if allowed.
Finally, it does not matter what the total portion of the market that OPEC controlled in 1973. Oil, like any commodity, is priced at the margin. Econ was my minor, but I really don’t think it’s your specialty. If the government announced that drilling would be allowed in ANWR, the price would immediately plunge before a drop of oil was produced.

elbatrop
December 14, 2011 12:37 pm

@ Ralph
actually peak oil occurs when no amount of effort or energy expended is able to raise the production rate of oil
Every oil field exhibits this same characteristic, once it is about halfway depleted of what oil can be recovered more effort and energy cannot raise the flow rate from that field. In fact in most cases you can do permanent damage to the field by trying to over drive it harder than what the geology and physics will allow.
This logically means that once the world hits somewhere around the halfway point of recoverable oil it will no longer be possible to increase the world production rate.
Lots of people jump on the technology bandwagon blindly without checking the data, look at the tertiary techniques versus ultimate recovered oil and the scale of world oil production.
The other part of peak oil is the very nature of how mined resources are discovered and exploited, the low hanging easy to get fruit is picked first. Once the easy stuff is gone you are forced to work at the harder stuff. Take the oil sands for example, it has taken a long time to ramp up production simply because of the physics involved. You can match what has been done in Canada with the oil sands over 10 years in less than a year in Iraq at about 1/5th the cost. Economically that is a huge difference.

December 14, 2011 12:39 pm

Archonix says:
December 14, 2011 at 11:46 am
Something to consider, with all the talk of peak oil and 40 years not being enough time to transition to another technology… how long did it take to transition from gas to electrical lighting?
The first practical lighting system was invented in the 1870s or thereabouts (system meaning not merely the incandescent light itself, but also the means to power it in a setting other than a laboratory). Gas lights were almost completely replaced within 40 years.
40 years isn’t such a short time for a new technology to become ubiquitous.
————–
That’s actually only true for cities. Smaller towns and villages in the boonies didnt have electric light until near WWII or after. And that was a population 1/4 of today. So not only is the change over 4 times larger, it’s also much larger because of the extent the current system is entrenched. 60 years ago I was promised by this time I’d be driving flying cars. Trips to the moon routine. I’m still waiting.

December 14, 2011 12:42 pm

Smokey, I never said all oil price spikes were due to depletion. I said price spikes cause recessions, regardless of the reason for the spike. It’s just today oil price spikes are caused by depletion.

Andrew30
December 14, 2011 12:43 pm

jrwakefield says: December 14, 2011 at 11:15 am
[What alternative is there that has the same energy density, in liquid form, as oil?]
Lot of things have the same or greater energy density, however all of them not as simple, safe, inexpensive, abundant, portable and controllable as petroleum combustion.
Hybrid rocket engines are simple, portable and controllable, but not as safe, inexpensive and abundant.
Liquid fluoride thorium reactors could be abundant and are safe and controllable but not simple, inexpensive and portable.
Volcanoes are inexpensive and simple but not very controllable, abundant, portable or safe. Meteors have similar issues and only a short lived liquid phase.

elbatrop
December 14, 2011 12:45 pm

@ Smokey
ok, explain the rest of the planet where oil is allowed to be extracted without restrictions at all
nothing is stopping the rest of the world from drilling at will, try again
Oil is priced at the margins temporarily, prices are elastic up to a point however long term when talking about the world’s primary source of energy money starts approaching the actual value of energy which in turn means increases in price although leveraged does not mean more production when the cost of production is more than the product can sell for. You don’t spend 10 barrels of oil to get one barrel in return.

December 14, 2011 12:45 pm

David L. says:
December 14, 2011 at 11:45 am
jrwakefield says:
December 14, 2011 at 11:15 am
———–
What alternative is there that has the same energy density, in liquid form, as oil? We keep hearing about this mythical alternative, but we never see anything close to oil. It’s going to take decades to switch over, we need to start now if some alternative exists.
_________________
Well, it’s not liquid and it has a much higher density than oil, but : Uranium?
——————–
Personally I think we should go full tilt on LFTR as well as more nuke plants. That will leave more oil for non-fuel requirements like plastics, essential for food preservation.

December 14, 2011 12:47 pm

jrwakefield says: December 14, 2011 at 10:37 am
The fact is the oil industry uses biological markers as a tool to look for deposits.

And some use a Dowsing Rod to locate oil.
Each have their successes and failures.
How you search for OIL doesn’t determine its origin!

Dowsing is a type of divination employed in attempts to locate ground water, buried metals or ores, gemstones, oil, gravesites,[1] and many other objects and materials, as well as so-called currents of earth radiation (Ley lines), without the use of scientific apparatus. Dowsing is also known as divining (especially in reference to interpretation of results), doodlebugging (in the US), or (when searching specifically for water) water finding, water witching or water dowsing.
There is no accepted scientific rationale behind dowsing, and there is no scientific evidence that it is effective.
A Y- or L-shaped twig or rod, called a dowsing rod, divining rod (Latin: virgula divina or baculus divinatorius) or witching rod is sometimes used during dowsing, although some dowsers use other equipment or no equipment at all.
http://en.wikipedia.org/wiki/Divining_rod

December 14, 2011 12:49 pm

elbatrop says:
December 14, 2011 at 11:38 am
@ MarkW
new big fields huh? like?
when was the last time the world found a field in excess of 100gigabarrels that had a potential flow rate once developed in the millions of barrels per day range?
—————-
None since the 1960’s, thats the problem.

December 14, 2011 12:51 pm

jrwakefield says:
“Peak oil is not about what’s in the ground, it’s about how fast it can be extracted compared to demand. It only takes a small drop in production relative to demand to drive prices through the roof. That’s simple economics.”
We are in complete agreement on that point. The solution to the artificial supply shortage is for government to encourage new exploration and drilling, instead of fighting energy production tooth and nail. The problem of high gas prices and the rising cost of goods and services that require fossil fuel use is entirely due to government interference in the free market.

Stephen Harris
December 14, 2011 12:53 pm

@Smokey
You said: “If the government announced that drilling would be allowed in ANWR, the price would immediately plunge before a drop of oil was produced”.
Not so. The price of oil is determined by how much is available right now on the world market and how high futures markets are being driven by fears of shortages.
If drilling were allowed in ANWR today we wouldn’t see the first drop for about seven years. But then no one is going to drill there even if allowed because the estimate of reserves was downgraded by about 90% by the USGS (an agency that sees the world through rose colored glasses). The return on investment would be very poor and so not worth the cost or effort.
The economic theory of inventing a new widget to replace an old one doesn’t work with non-renewable resources.

Scott Brim
December 14, 2011 12:54 pm

Dave Springer: “I think everyone who’s really aware of the scope of engineering opportunities to be exploited by access to synthetic biology knows that energy is a political problem not a technical problem.”

If this is indeed the case, then we will never run out of a ready supply of energy-dense liquid carbon fuels, at least as long as humans are on this planet and the sun still shines as brightly as it does now.
Dave, let’s suppose your predictions concerning the future emergence of biofuels as a major energy resource are accurate.
Would you care to speculate as to when it will be that the economics of producing large quantities of biofuels employing synthetic biology techniques reaches critical mass, and we will begin deriving a substantial fraction of our transportation fuels from synthetic biology sources?
2020? 2030? 2040?

December 14, 2011 12:55 pm

For all those who dispute peak oil based on what’s in the ground:
Peak Oil matters because ‘The flows matter’

Consumers need delivery flows

Reserves are only useful as flows

Peak oil is when flowscan’tmeet the demand

The oil industry is slow moving and predictable

Flows can be geologically constrained –e.g., the North Sea

Flows can be politically constrained –e.g., Russia, Saudi Arabia

Flows can be physically constrained –e.g., Nigeria

Flows can be skills constrained –e.g., lack of experienced engineers

Flows can be capital or access constrained –e.g., Mexico, Venezuela

Many talk ofreserves andignore flows

Others talk about access and ignore flows
Thanks to:
Stephen Harris says:
December 14, 2011 at 12:27 pm
Here’s a great ppt from ASPO on reserves, production, consumption and all that.
http://www.aspo9.be/assets/ASPO9_Thu_28_April_Skrebowski.pdf

MAtthew Epp
December 14, 2011 1:02 pm

jrwakefield says:
December 14, 2011 at 11:15 am
“What alternative is there that has the same energy density, in liquid form, as oil? We keep hearing about this mythical alternative, but we never see anything close to oil. It’s going to take decades to switch over, we need to start now if some alternative exists.”
Man you really are a doom and gloomer. …
Relax, take a chill pill and enjoy your day.
Cheers!
———–
I already posted a source about the longevity of shale gas. It’s not going to last much longer none of them are making any money at it. Depletion rates are horrendous.
Thanks for helping prove my point. If it isn’t profittable right now then the reserves will be there when we need them and it becomes more economical. Horizontal drilling techniques will only continue to improve and become more efficient and cost effective . As oil becomes more and more expensive, more drivers will add CNG to their vehicles which will increase demand forNatural gas. Hence prices will rise and the drillers and producers will be able to enjoy a profit for the gas. We are in no danger from the supply of oil harming us and our economy, much more so from the govt than oil depletion.
Cheers
Matthew

December 14, 2011 1:11 pm

Stephen Harris,
Announcing a future increase in oil supplies routinely causes the world price to plunge. When President Bush announced in July 2008 that he was lifting executive ban on offshore oil drilling, the price declined by $10 a barrel overnight. The decline continued to $20, but then Congress refused to act, so the price began to rise again.
OPEC members, especially the Saudis, constantly manipulate the markets by front running them – buying and selling puts and calls in the billion dollar range ahead of announcements that more or less oil will be produced. In the long term the price is determined by supply and demand, but oil shocks and international crises are not long term.

John A. Fleming
December 14, 2011 1:21 pm

I think this graph is too simplistic, and overstates the years left. Proven reserves are the total expected extraction. The extraction rate for every well dwindles over time. There comes a point when all operating wells can no longer keep up with demand, and there aren’t enough new wells to make up the difference. That’s peak oil, and it’s closer than 40 years.

Doug
December 14, 2011 1:23 pm

jrwakefield says:
December 14, 2011 at 12:49 pm
elbatrop says:
December 14, 2011 at 11:38 am
@ MarkW
new big fields huh? like?
when was the last time the world found a field in excess of 100gigabarrels that had a potential flow rate once developed in the millions of barrels per day range?
—————-
None since the 1960′s, thats the problem.
———————————————————————————————–
How about this one–2006, 748 TCF of gas, equivalent to 120 billion barrels of oil. Sure that’s gas, but we can substitute gas for oil in many places without an apocalypse (every bus in New Delhi has already done it) A bit of gas substitution, added to all the new discoveries in deep water and all the horizontal multi frac oil, and we are sitting pretty. Like catastrophic AWG, time expose the chicken littles.
“Gaffney, Cline & Associates (GCA) said Turkmenistan’s South Iolotan natural gas field is the world’s second-largest, with an estimated 21.2 trillion cu m (tcm) of gas reserves. Supergiant Iolotan field was discovered in the country’s Amu Daria basin in late-2006 (OGJ Online, Nov. 22, 2006).
In a recent presentation, Jim Gillett, GCA business development manager, said South Iolotan’s latest reserves estimate make it second only to giant South Pars gas field, shared by Turkmenistan and Qatar.
“Turkmenistan’s gas reserves are more than enough for any potential demand over the foreseeable future, whether it be from China, Russia, Iran, or Europe,” Gillett said.
However, Gillet said estimates of the central Asian nation’s reserves could increase even more, noting that in addition to South Iolotan, the country’s Yashlar field has substantial gas, too.”

More Soylent Green!
December 14, 2011 1:28 pm

jrwakefield says:
December 14, 2011 at 12:55 pm

I find a debate over the definition of peak oil useless. What does it mean — not the definition, but what do you think it means? You say we have experienced Peak Oil? So what?
How is it you write so much, yet say very little?

Stephen Harris
Reply to  More Soylent Green!
December 15, 2011 4:02 am

@ MSG:
You asked what Peak Oil means. Here a link to study performed buy the University of Canterbury, NZ on the effects of Peak Oil on urbanism. The short answer is that we’ll have to dramatically change our built environment from a car dependent sprawl to a much higher density living with much more transit: A costly and large undertaking.
The oil shock of 2008 which was the pin that popped the housing bubble showed just how bad it is to be so auto dependent. We are now in the beginning phase of Peak Oil and it will unfold more fully in the years ahead with worse consequences unless we act to change now.
http://ir.canterbury.ac.nz/bitstream/10092/4133/1/12626097_Urban%20form%20and%20fuel%20shortage%20risk.pdf

December 14, 2011 1:29 pm

Smokey says:
December 14, 2011 at 12:51 pm
jrwakefield says:
“Peak oil is not about what’s in the ground, it’s about how fast it can be extracted compared to demand. It only takes a small drop in production relative to demand to drive prices through the roof. That’s simple economics.”
We are in complete agreement on that point. The solution to the artificial supply shortage is for government to encourage new exploration and drilling, instead of fighting energy production tooth and nail. The problem of high gas prices and the rising cost of goods and services that require fossil fuel use is entirely due to government interference in the free market.
————
I’m not against any production. I think we should produce everything we can as best we can that has a net energy return as we transition this society off oil as we return to the 1800s.
The big problem with converting to an alternative source that replaces oil to keeping us going as is will require energy diverted from the ecomomy into changing over. That’s the same as accelerating depletion. We would need vast quantities of oil, removed from society, to move us off oil. Catch 22.

December 14, 2011 1:36 pm

More Soylent Green! says:
December 14, 2011 at 1:28 pm
jrwakefield says:
December 14, 2011 at 12:55 pm
I find a debate over the definition of peak oil useless. What does it mean — not the definition, but what do you think it means? You say we have experienced Peak Oil? So what?
How is it you write so much, yet say very little?
—-
Then you are not understanding. This is what happens. Oil production drops, demand keeps rising. But consumption can only meet the supply regardless of the demand. That small discrepency drives up the price of oil as a spike. That causes everything in society, especially food, to also spike. More money spent on energy means less on other things, like debt payments. Defaults occur, the country goes into recession, the price of oil drops as demand evaporates below production. now the price of oil is too low for alternatives or costly unconventional sources. The ecomony recovers, but hits a lower ceiling of oil production, price spikes, and into recession again. And we drop over decades in these tight cycles of not just no growth, but “negative growth”. The ecomomy over all never recovers, and there is no money, no growth, to pursue other options of energy.
Is that enough?

December 14, 2011 1:40 pm

Doug says:
December 14, 2011 at 1:23 pm
How about this one–2006, 748 TCF of gas, equivalent to 120 billion barrels of oil. Sure that’s gas, but we can substitute gas for oil in many places without an apocalypse (every bus in New Delhi has already done it) A bit of gas substitution, added to all the new discoveries in deep water and all the horizontal multi frac oil, and we are sitting pretty. Like catastrophic AWG, time expose the chicken littles
———–
Shale gas? Way over estimated. You are still making the same mistake as the others. You are focusing on what’s in the ground. FLOW RATE is what counts. Will those deposits flow sufficiently fast enough to supply all those markets? No.

Doug
December 14, 2011 1:40 pm

jrwakefield says:
December 14, 2011 at 10:35 am
US oil production:
http://www.energybulletin.net/image/uploads/27804/us-production.jpeg
—————————————————————————————–
Good of you to truncate your data where convenient. You have a future in climate science. US crude output has gone up 18% since 2008.
http://online.wsj.com/article/SB10001424052970204449804577068932026951376.html?mod=googlenews_wsj
And do you really believe all those companies are drilling all those shale gas wells and losing money? We in the oil business are pretty good at turning a profit. A few wells could be some small company stock hype, but tens of thousands of wells, producing 34% of out total production show that your claims are delusional. Gas prices have dropped from $13 to $3, and we are still drilling.

Septic Matthew
December 14, 2011 1:43 pm

Good essay by Willis. Looking at the production curve, maybe peak oil is now, and the peak is a wide mesa, not a sharp point. It is requiring more and more investment of labor, cash and energy to extract each new million bbl of oil, on average.
Best comment by a reader was this:David L. Hagen says:
December 14, 2011 at 5:27 am
along with David L. Hagen’s subsequent posts.
With cost and availability trend lines as they have been recently, fuel from solar will become cheaper, on an energy-equivalent basis, than fuel from petroleum (as it already is in Brazil, counting cane ethanol as fuel from solar), and only subsequent to that will fuel costs decline, because consumption is going to continue to increase. That’s my expectation, anyway. Thus, peak oil is not a problem precisely because we (US, EU, Japan, China, S. Africa, Brazil) are investing resources to develop alternatives and reduce their costs.

December 14, 2011 1:45 pm

MAtthew Epp says:
December 14, 2011 at 1:02 pm
———–
I already posted a source about the longevity of shale gas. It’s not going to last much longer none of them are making any money at it. Depletion rates are horrendous.
Thanks for helping prove my point. If it isn’t profittable right now then the reserves will be there when we need them and it becomes more economical. Horizontal drilling techniques will only continue to improve and become more efficient and cost effective . As oil becomes more and more expensive, more drivers will add CNG to their vehicles which will increase demand forNatural gas. Hence prices will rise and the drillers and producers will be able to enjoy a profit for the gas. We are in no danger from the supply of oil harming us and our economy, much more so from the govt than oil depletion.
Cheers
Matthew
—————
Then you are not understanding the economic consequences of high energy prices. Once energy cuts in as a higher percent of people’s expenses, then they have less for other things, like paying their loans. Higher prices cause recessions, which drops demand and the price. Thus the price never gets high enough long enough to make difficult deposits viable. That’s not including the thousands each person would have to spend to make the change over.

Alberta Slim
December 14, 2011 1:52 pm

jrwakefield says:
“Not one oil field can be shown to be of abiotic. EVERY oil field has a biological source rock.”
Correct me if I’m wrong, but the people that think that there is abiotic oil, do not disagree that the source rock is biological. They claim that the OIL is abiotic, and the oil was trapped in the biological source rock while migrating.
http://www.viewzone.com/abioticoilx.html

Dave
December 14, 2011 1:52 pm

Chart the breakdown of consumption on that chart and it will tell an altogether more revealing story. Peak oil has already occurred. If world oil production could respond to increased Chinese consumption it would have.
The major issue for the US is that it is now competing for the same oil that China is. Given the strength of the US economy is hugely dependent upon how much it pays for its oil this can only signify continuing trouble for the US.
This will be seen via a weakening US dollar. You could argue that if recessions in EU and the US decrease demand then Chinese oil consumption will eventually flatline but that ignores domestic growth in that country.
Unless world oil production taps these “mythical” reserves I see nothing but severe economic pain for the US, Europe and other Western nations for the foreseeable future.
Australia the company I live in has only been spared (well relatively spared) the type of trouble that Europe and the US are seeing because the strength of our economy is based upon export of massive amounts of raw materials to China.

Ralph
December 14, 2011 1:55 pm

.
The reality of Peak Oil is real. (Peak Oil = demand exceeding production).
This is a graph of US production vs consumption, and the US passed its national Peak Oil point back in the 1950s. This means that if Iran shuts the Straits of Hormuz, as they were threatening to do this week, then the US is already deep inside a Peak Oil induced oil shock. It doesn’t matter how much oil is in the ground – if it is not getting to the USA, there will be a Peak Oil crisis.
http://www.jennyannfraser.com/wp-content/uploads/2011/11/us-oil-consumption.jpg
Here is Mexico, hitting its own Peak Oil in the 2020 mark.
http://geo-mexico.com/wp-content/uploads/2010/12/oil-exports.jpg
Here is Australia, hitting its own Peak Oil in the 1990s (although it could use its vast reserves of coal, if the government would allow it.)
http://1.bp.blogspot.com/-0BlNdzf8SdQ/TtxkHDgCLvI/AAAAAAAAAAQ/kbSSzLHEnV8/s400/AustraliaOilProductionConsumption.PNG
The UK and Europe are also long past their own local Peak Oil points.
This means that the major economies of the world (including China) are heavily dependent on world trade continuing, to plug their local Peak Oil crisis. Any major conflict or disruption to oil deliveries, and all of the developed world will suffering a Peak Oil slow-down.
.
But that is not all. Here is the trend for new discoveries of oil, which has been declining sharply in recent decades.
http://www.beodom.com/assets/images/education/peakoil/world-oil-discovery-10-years-period.jpg
But all those big old oil fields from the 1970s (which may indeed have billions and billions of of barrels in reserves) are getting harder and harder to extract. Thus Peak Oil (stalled production vs rising demand), may come sooner than you think. There is no point counting on oil that is firmly stuck in the ground – that is not simply counting your chickens before they have hatched, that is counting chickens before the hen has even layed!!
“Darn it Martha, I know there’s another chick inside their somewhere…..” 😉
.

Ralph
December 14, 2011 2:05 pm

>>More Soylent Green! says: December 14, 2011 at 1:28 pm
>>I find a debate over the definition of peak oil useless. What does
>>it mean? You say we have experienced Peak Oil? So what?
We are rather presuming that everyone understands the calamity of the 1970s oil shock (a politically produced Peak Oil.)
Lots of things happen in a Peak Oil crisis. Oil prices go through the roof, cars queue for hours at filling stations, transport does not deliver the goods, aircraft tickets treble in price, factories stand idle, people are laid off, holidays are cancelled, business go bust, hotels go bust, people have no money, people have no heating in winter etc: etc:
I could go on, but you get the picture. We have been so isolated from previous dramas, with our reliable modern energy sources, that we have forgotten what it was like to have no electricity once a fortnight. But with today’s economy, with everything dependent on computer wizardry, the consequences of energy shortages may be much worse than in the past.
.

December 14, 2011 2:12 pm

JRWakefield’s verbal diarrhea (misinformation) again requires correction. It matters not there have been no giant fields discovered. Present proved reserves will not be exhausted ’til 2049. Each year last decade, the sector added 50-Gb to proves reserves and consumed only 32.
It is utterly false that “price spikes are due to depletion”. Most are due to geopolitical events and/or temporary refining capacity mismatches.
The only petroleum price induced economic recessions in the last three decades occurred when several G-20 nations fell victim in 2008Q2. This excludes the USA whose economy is too diverse and per capita income too high to make it vulnerable. Steven Kopits (douglas-westwood) & neophyte economist James Hamilton are stalwart in perpetuating the myth with shoddy white papers. Their presentation to Congress this Spring warned of mass global recessions should oil exceed $85. Within several months oil reached $113 and there was no gnashing of teeth. My own studies reveal G-20 petroleum induced recessions cannot occur ’til contract crude surpasses $121/barrel ($105 today).
With full respect to Skrebowski, his worst case scenario (bottom-up) methodology has inherent flaws and he is second only to Colin Campbell in the category of documented upward revisions to Peak Rate and Peak Year.
http://www.trendlines.ca/free/peakoil

elbatrop
December 14, 2011 2:13 pm

@ Doug
Daniel Yergin being cited LOL
his track record has been abysmal
tell ya what take your stuff here and explain it to the rest of the industry and see how you fare:
http://www.theoildrum.com/node/8212

More Soylent Green!
December 14, 2011 2:27 pm

Ralph says:
December 14, 2011 at 2:05 pm
>>More Soylent Green! says: December 14, 2011 at 1:28 pm
>>I find a debate over the definition of peak oil useless. What does
>>it mean? You say we have experienced Peak Oil? So what?
We are rather presuming that everyone understands the calamity of the 1970s oil shock (a politically produced Peak Oil.)
Lots of things happen in a Peak Oil crisis. Oil prices go through the roof, cars queue for hours at filling stations, transport does not deliver the goods, aircraft tickets treble in price, factories stand idle, people are laid off, holidays are cancelled, business go bust, hotels go bust, people have no money, people have no heating in winter etc: etc:
I could go on, but you get the picture. We have been so isolated from previous dramas, with our reliable modern energy sources, that we have forgotten what it was like to have no electricity once a fortnight. But with today’s economy, with everything dependent on computer wizardry, the consequences of energy shortages may be much worse than in the past.

That’s kind of like saying if there’s an ice age, we’re all going to be cold.

December 14, 2011 2:32 pm

Alberta Slim says:
December 14, 2011 at 1:52 pm
jrwakefield says:
“Not one oil field can be shown to be of abiotic. EVERY oil field has a biological source rock.”
Correct me if I’m wrong, but the people that think that there is abiotic oil, do not disagree that the source rock is biological. They claim that the OIL is abiotic, and the oil was trapped in the biological source rock while migrating.
http://www.viewzone.com/abioticoilx.html
————–
Let’s look at Tupi as an example. The host rock is just above the biological source rock, which is just above the basaltic oceanic crustal rock. So their view is somehow this oil made in the asthenosphere migrated through the solid basalt layer, and completely co-incidentally moved through a biological horizon to the current host capped by salt. And ONLY at that location which happened to have a biological layer, and NO WHERE ELSE! Rather interesting co-incidence that EVERY oil field happend to go through a biological horizon, and not one oil field missed a biological horizon.
Where is the physical discriminatory evidence that oil comes from non-biological sources?

otsar
December 14, 2011 2:33 pm

Ajones is quite correct. I [w]as a victim of the oil price crash in 82. I had to go back to college and re invent myself. Some one may have mentioned it, but I may have missed it, is the fact that most of the oil is still left in the reservoir after we stop exploiting it. With better extraction techniques the proven oil reserves go up significantly.

MAtthew Epp
December 14, 2011 2:35 pm

Jrwakefield,
I get the economics of higher energy prices, the markets adapt, people adapt. Gasoline is in the low $3.00/ gallon range, I remember only 8 years ago it was hovering close to $2.00/ gallon and everyone predicted the collapse of society if gas reached $3.00/ gallon.
While we have seen the recession created in part due to higher gasoline prices, we are also seeing a recovery albeit abysmal for other reasons thanks to this administration, but people have by and large adapted to higher fuel prices.
Spending is up this holiday season, which indicates people must have more disposable income or at least the confidence that their income will be sufficient to cover their charges. Either way, the higher prices haven’t been a destructive force.
Admittedly the costs of switching over to natural gas are in the thousands, the price will decrease as more and more people decide to switch over their existing cars and will really become economical once the car companies start manufacturing vehicles as flex fuels.
The cost of gas is cheap relative to gasoline and the convenience of being able to fill up at home over night will begin to appeal to more and more people futrthering the expansion.
Natural gas reserves are extremely plentiful, and not just shale gas.
You tipped your hand however in your reply to Smokey when you talked about us transitioning to the 1800’s? If you really believe that then I apologize for wasting your time talking about the future. You are hopelessly stuck in the past.
Cheers,
Matthew

December 14, 2011 2:39 pm

JRWakefield’s misinformation again requires correction. It matters not there have been no giant fields discovered. Present proved reserves will not be exhausted ’til 2049. Each year last decade, the sector added 50-Gb to proves reserves and consumed only 32.
It is utterly false that “price spikes are due to depletion”. Most are due to geopolitical events and/or temporary refining capacity mismatches.
The only petroleum price induced economic recessions in the last three decades occurred when several G-20 nations fell victim in 2008Q2. This excludes the USA whose economy is too diverse and per capita income too high to make it vulnerable. Steven Kopits (douglas-westwood) & economist James Hamilton are stalwart in perpetuating the myth with shoddy white papers. Their presentation to Congress this Spring warned of mass global recessions should oil exceed $85. Within several months oil reached $113 and there was no gnashing of teeth. My own studies reveal G-20 petroleum induced recessions cannot occur ’til contract crude surpasses $121/barrel ($105 today).
With full respect to Skrebowski, his worst case scenario (bottom-up) methodology has inherent flaws and thus he is second only to Colin Campbell in the category of documented repeated upward revisions to Peak Rate and Peak Year.
http://www.trendlines.ca/free/peakoil

December 14, 2011 2:39 pm

The price of oil increased five-fold in the last 10 years. Nuff said.
It is easy to print dollars and raise the debt-ceiling.
It is very difficult to get oil out of the oceanfloor or from underneath the polar ice.
Peakoil is real 🙂

TimTheToolMan
December 14, 2011 2:39 pm

Willis writes “If we can extract it more cheaply (in an energy sense) the ERoEI goes up, so we can sidestep it with technology …”
But that “more efficient” technology doesn’t exist. You dont want to push ahead with renewable technologies because they’re expensive and you dont want to invest in the R&D now but instead you want to push ahead with fossil fuels even though we dont have the technology yet to keep them lower than renewable cost, let alone know how much it will cost to R&D or how long it will take to get the required infrastructure in place?

December 14, 2011 2:39 pm

those deposits flow sufficiently fast enough to supply all those markets? No.
Doug says:
December 14, 2011 at 1:40 pm
jrwakefield says:
December 14, 2011 at 10:35 am
US oil production:
http://www.energybulletin.net/image/uploads/27804/us-production.jpeg
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Good of you to truncate your data where convenient. You have a future in climate science. US crude output has gone up 18% since 2008.
http://online.wsj.com/article/SB10001424052970204449804577068932026951376.html?mod=googlenews_wsj
And do you really believe all those companies are drilling all those shale gas wells and losing money? We in the oil business are pretty good at turning a profit. A few wells could be some small company stock hype, but tens of thousands of wells, producing 34% of out total production show that your claims are delusional. Gas prices have dropped from $13 to $3, and we are still drilling.
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Why are you shooting the messenger? Its not my study, I just posted a link to a study that shows this to be the case and how they are getting away with it.
US oil production is still far below 1970’s. Currently 9.688 million bbl/day. Far below the 20mb/day it consumes.

December 14, 2011 2:51 pm

MAtthew Epp says:
December 14, 2011 at 2:35 pm
Jrwakefield,
I get the economics of higher energy prices, the markets adapt, people adapt. Gasoline is in the low $3.00/ gallon range, I remember only 8 years ago it was hovering close to $2.00/ gallon and everyone predicted the collapse of society if gas reached $3.00/ gallon.
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That adaption is lost business lost jobs.
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Spending is up this holiday season, which indicates people must have more disposable income or at least the confidence that their income will be sufficient to cover their charges. Either way, the higher prices haven’t been a destructive force.
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Spending via more debt.
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Natural gas reserves are extremely plentiful, and not just shale gas.
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No, convensional gas deposits in NA have been on a terminal decline since 1995. Google it.
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You tipped your hand however in your reply to Smokey when you talked about us transitioning to the 1800′s? If you really believe that then I apologize for wasting your time talking about the future. You are hopelessly stuck in the past.
Cheers,
Matthew
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Not a tip. Logic. Without plentiful energy we will lose our cars, return to local food production, spend more time producing food, transport by horse. In a fuel constrained world fuel will be rationed for only those priorities such as food production. People will move back to horse transport. Star trek will never happen. That’s assuming there is no world war over resources.

December 14, 2011 2:55 pm

Freddy Hutter, TrendLines Research says:
December 14, 2011 at 2:39 pm
JRWakefield’s misinformation again requires correction. It matters not there have been no giant fields discovered. Present proved reserves will not be exhausted ’til 2049. Each year last decade, the sector added 50-Gb to proves reserves and consumed only 32.
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Same mistake over and over. Assume that 50gb is correct. It will not flow as fast as the 32 it replaced. You are still looking at what’s in the ground and ignoring what peak oil is about — production decline, flow rate loss.

December 14, 2011 3:00 pm

Ralph says:
December 14, 2011 at 2:05 pm
>>More Soylent Green! says: December 14, 2011 at 1:28 pm
>>I find a debate over the definition of peak oil useless. What does
>>it mean? You say we have experienced Peak Oil? So what?
We are rather presuming that everyone understands the calamity of the 1970s oil shock (a politically produced Peak Oil.)
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No it was the year US production started its terminal decline and the Saudis refused to make up the difference. The ultimate cause was US peaking production.

December 14, 2011 3:09 pm

The story of forgetting or getting rid of Fossil Based Fuels (FBF) is Ferry Tale for the near futures.
The only way is enhancing technology to have effective fuel consumption until the FBF is no longer needed.
Fortunately! we enough carbon dioxide and the CO2 sources from the ecosystem is 10 times more than man made CO2. We don’t forget that before the OIL ERA, the system was working properly, so we know that however the time will come and the balance between new energies would be changed from oil to new ones, cheaper and more reliable.