Guest post by Mike Jonas
On Dec 13, Willis Eschenbach posted a convincing (and eloquent as always) argument “The R/P Ratio” against Peak Oil being imminent. I would like to present a different view. In fact I draw the opposite inference from the same statistic.
From the BP data [1], Willis argued that the “R/P ratio” – the ratio of reserves R to production rate P – is higher than ever, and that therefore the world is even more able to continue producing oil at today’s rate than it was yesterday at yesterday’s lower rate.
My argument is that the high R/P ratio shows that it is getting very difficult to increase P in spite of a high R and a high oil price. This argument is based on two factors of which Willis took no account – the reliability of stated reserves and the quality of the oil.
Reliability
The first major hiatus in the oil world occurred in 1973, when OPEC caused the price of oil to quadruple. The second was the Iranian revolution in 1979. Their effects are clearly seen in the historical oil price:
Figure 1 – Historical Oil Price – click image to enlarge
Over the following years, 1980 to 1988, the world’s oil reserve increased by 331.5 billion barrels, of which 329.6 were OPEC.
Figure 2 – Historical Oil Reserve – click image to enlarge
What is thought to have happened is that certain OPEC countries artificially inflated their reserves so that they could sell more oil, because OPEC production quotas were based on official reserve figures [17][22]. It is quite possible that none of this reported increase in reserves actually exists. There has recently been supporting information from Wikileaks [2].
Questions about the reliability of reserve figures are not restricted to the reserves declared between 1980 and 1988. For example, the UAE’s official reserve has been stuck on exactly 97.8bn barrels since 1996 (and was at 98.1bn barrels from 1989 to 1995), in spite of total production of 15bn barrels over that period (21bn barrels 1989-2010) and no major discoveries [21]. That’s mathematically possible, but rather unlikely.
Some other countries have similar patterns – Iran reserve at 92.9bn barrels from 1986 to 1993 (9bn barrels produced), Iraq 100.0 from 1987 to 1995 (5 produced) and 115.0 from 2001 to 2010 (8 produced), Kuwait 96.5 from 1991 to 2002 (8 produced) and 101.5 from 2004 to 2010 (7 produced), Saudi Arabia in a tight range 260.1 to 264.6 from 1989 to 2010 and not falling more than 0.1 in any one year (75 produced).
It does appear likely that a significant proportion of stated reserves do not in fact exist.
Quality
After 1988, the next significant increases in world reserves occurred in 2002 and 2008-9.
Figure 3 – Annual change in reserves – click image to enlarge
In 2002, most of the 60.7 billion barrel increase was in Russia, Iran and Qatar, and I haven’t checked it. I have no reason to suppose that it was anything but a genuine increase in good quality oil. However, of the 123.0 billion barrels increase in 2008-9, 111.8 were in Venezuela. This is an ultra-heavy crude, difficult and expensive to produce at high production rates [3].
This is where the problem lies. Much of the easy oil has gone. We are into the difficult and expensive stuff. It is a major challenge to maintain high production rates. Heavy and unconventional oil are now dominant in world reserves [4] …
Figure 4 – Total World Oil Reserves by Type – click image to enlarge
[http://en.wikipedia.org/wiki/File:Total_World_Oil_Reserves.PNG]
… to the extent that actually being able to increase the total production rate may prove to be out of reach [8].
Global oil production has basically flatlined for the last 5 or 6 years …
Figure 5 – World Oil Production – click image to enlarge
… while the oil price has surged over the same period (Fig.1). I would argue that a high R/P ratio does not necessarily indicate an ability to increase production. Rather, a high R/P together with a high oil price would seem to indicate that it is difficult to increase production. Note that for 5 years now the price of oil has been higher (in 2010 dollar terms) than it was after the 1973 oil shock.
In Venezuela (heavy and very heavy oil), the production rate has declined nearly 30% from 1965 to 2010. In 2006, before the large 2008-9 increases in reserve, its R/P was already high at 85, but was still exactly what it had been in 1985. From 1985 to 1998, production did increase markedly, bringing R/P down to 60, but production has been in decline since.
It is possible that the major factor here was Hugo Chavez being elected president in 1998, so let’s look at all the countries with above average R/P –
| R/P | |
| Venezuela | 233.9 |
| Iraq | 128.0 |
| Kuwait | 110.8 |
| UAE | 94.0 |
| Iran | 88.4 |
| Libya | 76.6 |
| Saudi Arabia | 72.4 |
| Kazakhstan | 62.1 |
| (World average) | 46.1 |
– maybe Venezuela, Iraq, Iran and Libya have political reasons for relatively low production rates. The UAE, whose oil is chiefly in Abu Dhabi, does have difficulty increasing production [10]. Kuwait [11][12] and Saudi Arabia [13] do too.
For comparison, Canada’s Alberta Tar Sands, which began production in 1967, have an R/P of 662. It is hoped that it may in future come down to around 150 (reserve 174bn bbls, prodn 720k bpd, target 3m bpd [6]).
[bbl = barrel, bpd = barrels per day]
There is a clear tendency for high R/P to be associated with heavy and unconventional oil, that is, oil for which high production rates are very difficult.
The Future
The oil industry has been successful in maintaining reporting a world R/P of 40+ since 1988.
Figure 6 – World R/P – click image to enlarge
But in order for the rate of oil production to keep increasing, a lot has to go right. Things like:
· Major new conventional oil discoveries.
· Technological progress in heavy and unconventional oil production.
· Political stability in producing countries.
· Political stability in consuming countries.
· A high oil price.
· Increasing demand in spite of the high oil price.
· Oil remaining competitive with alternatives.
· Non-obstruction by governments (think “carbon” trading and taxes, USA offshore exploration ban)
More optimistic estimates of the Peak Oil date range from 2014 [7] to the IEA’s 2035 or later [5][5a]. But in the IEA presentation, note that although foil #8 “Oil production becomes less crude” …
Figure 7 IEA forecast – click image to enlarge
… shows production increasing to at least 2035 , there is enormous (heroic?) reliance on “fields yet to be developed or found” which are more than half of all oil production by 2035. Note also the relatively low contribution from “unconventional oil”, and the rapid decline of currently producing conventional fields.
There is another figure worth keeping an eye on for the next few years – Saudi Arabia’s production rate. The IEA presentation [5] expects Saudi Arabia to increase production by 50% between 2009 and 2035.
Figure 8 – IEA forecast by country – click image to enlarge
In mid 2008 Saudi Arabia announced that they would increase production by 500k bpd [14], but production fell 8% over the next two years. Perhaps this confirms that the producing Saudi fields are already in decline [15]. In June 2011, Saudi Arabia again stated that they would raise production [16]. It will be interesting to see if they are able to.
Saudi Arabia’s (2010) R/P is 72. They do have some as yet undeveloped fields, but none are anything like as large as the now-declining Ghawar [20].
Conclusion
The increasing world R/P, together with the high oil price, probably means that it is getting ever more difficult to increase production, rather than that Peak Oil is obviously many years away. I suspect that we are already at or close to Peak Oil, but it can only be identified in retrospect [see footnote 4].
It is, admittedly, still mathematically possible that Peak Oil is many years away. I would agree that “Peak Oil & Gas” and “Peak Energy”, as opposed to “Peak Oil”, are many years away – provided sanity returns to western governments.
Footnotes
1. All production and reserve amounts, associated amounts (eg. R/P), and graphs, are from or derived from the BP data [1] unless otherwise indicated. BP’s reserve data includes “gas condensate and natural gas liquids“, but does not include the Canadian oil sands.
2. Oil reserves are relative to economic and operating conditions, so they can increase without new discoveries.
3. Why did I quote the IEA 2010 report instead of the 2011 report? Because in 2011 the IEA lost its marbles and interlaced everything with the need to reduce CO2 emissions [18]. When the world wakes up to the fact that CO2 emissions are not dangerous, much of the 2011 report will be useless. FWIW, in the 2011 report oil production is still expected to increase by a similar amount by 2035, with OPEC increasing its share [19].
4. I understand “Peak Oil” to mean the point in time after which global oil production does not materially increase. The peak in oil production does not signify ‘running out of oil’ [9]. It doesn’t mean that oil production cannot physically be increased, simply that it does not increase. Peak Oil can therefore be influenced by factors such as price, changes in use and efficiency of use, and competition from alternatives. Basically, it is only possible to identify it in retrospect.
Mike Jonas
Jan 2012
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Mike Jonas (MA Maths Oxford UK) retired some years ago after nearly 40 years in I.T.. He worked for BP in the 1960s and 70s, including 3 years in Abu Dhabi.
References
[1] BP Statistical Review of World Energy, Jun 2011.
[2] Time report “Have Saudis Overstated How Much Oil Is Left?” Feb 2011
http://www.time.com/time/world/article/0,8599,2048242,00.html
[3] Wikipedia “Oil reserves in Venezuela”
http://en.wikipedia.org/wiki/Oil_reserves_in_Venezuela
[4] Wikipedia “Oil Reserves”
http://en.wikipedia.org/wiki/Oil_reserves
[5] IEA “World Energy Outlook 2010” Presentation to the Press Nov 2010
http://www.worldenergyoutlook.org/docs/weo2010/weo2010_london_nov9.pdf
NB. See Footnote 3 above.
[5a] Gail Tverberg, Comment on IEA “World Energy Outlook 2010”, Nov 2010.
http://www.countercurrents.org/tverberg101110.htm
[6] Popular Mechanics “New Tech to Tap North America’s Vast Oil Reserves” Oct 2009
http://www.popularmechanics.com/technology/engineering/4212552
[7] msnbc.com “Peak oil production predicted for 2014” Dec 2010.
http://www.msnbc.msn.com/id/35838273/ns/business-oil_and_energy/ – .TumIeGAch0I
[8] AAAS Member Central “Peak Oil Production May Already Be Here” Mar 2011.
http://www.sciencemag.org/content/331/6024/1510.short
[9] Energy Bulletin “Peak Oil Primer”
http://www.energybulletin.net/primer.php
[10] My comment on JudithCurry.com, re Zakum, Tupi and Peak Oil. Nov 2011.
http://judithcurry.com/2011/11/24/emails/ – comment-144017
[11] H. M. Shalaby “Refining of Kuwait’s Heavy Crude Oil: Material Challenges” Kuwait Institute for Scientific Research. Dec 2005
http://www.arabschool.org/pdf_notes/20_REFINING_OF_KUWAITS_HEAVY_CRUDE_OIL.pdf
[12] Bloomberg “Kuwait Reduces Its 2020 Heavy-Oil Production Target by More Than Half”. Oct 2010.
[13] WSJ “Facing Up to End of ‘Easy Oil’”. May 2011.
http://online.wsj.com/article/SB10001424052748704436004576299421455133398.html
[14] The Independent “Saudi King: “We will pump more Oil”” June 2008
http://www.independent.co.uk/news/world/middle-east/saudi-king-we-will-pump-more-oil-847830.html
[15] Energy Security “New study raises doubts about Saudi oil reserves” March 2004
http://www.iags.org/n0331043.htm
[16] NY Times “Saudi Arabia, Defying OPEC, Will Raise Its Oil Output” June 2011
http://www.nytimes.com/2011/06/11/business/energy-environment/11oil.html
[17] Telegraph article “Oil reserves ‘exaggerated by one third’” Dec 2011.
[18] IEA “World Energy Outlook 2011” Presentation to the press Nov 2011
http://www.worldenergyoutlook.org/docs/weo2011/homepage/WEO2011_Press_Launch_London.pdf
[19] IEA “World Energy Outlook 2011 Fact Sheet” (see “Global oil production”)
http://www.worldenergyoutlook.org/docs/weo2011/factsheets.pdf
[20] NY Times “Forecast of Rising Oil Demand Challenges Tired Saudi Fields” Feb 2004
http://www.nytimes.com/2004/02/24/business/24OIL.html?pagewanted=all
[21] Gerald Butt “Oil and Gas in the UAE”
http://www.geopowers.com/energie/sites/default/files/images/PDF – VAE.pdf
[22] Dr. Jean-Paul Rodrigue, Hofstra University “Changes in Major Crude Oil Reserves, 2001-2006” http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/oilreserves.html
Mike Jonas wrote:
‘Note that oil consumption already exceeds oil production by about 6% – that’s a non-trivial amount of ‘other stuff’ already, and it’s only the ‘other stuff’ that can be counted as oil. The fact that this ‘other stuff’ is uneconomic and politically-driven isn’t too relevant to the argument (although it is very relevant to the people of the western world who have to pay for it), because politics is part of the problem.”
The fact that we already have a significant amount of alternative liquid fuel production is more proof that peak oil is a non-issue. And certainly, alternative transport systems such as EVs should be considered as an alternative to required oil production.
A common argument for peakers is that alternatives are “uneconomic”. Yet at the same time, they claim oil prices will reach several hundred dollars/barrel. You simply can’t have it both ways.
@Mike Jonas
“Observed reality” for global warming in the 21st century is 0. Quite a bit less than the .5 degrees alarmists have been predicting.
Most conventional wells being drilled in Alberta today are coming on at 300+ bbls/day and settling in a month or 2 later to consistently produce 100 – 200 bbls/day for the rest of their life-span.
Not physically possible. All wells follow a skewed bell curve. The downside after peaking steadily drops off. Wells do not flow at a fixed rate and then suddenly stop.
In effect, the new technologies of horizontal drilling and multi-stage fracing are resulting in a 5 – 10-fold increase in individual well production. This is being accomplished in old, once thought to be played-out fields.
Post a link of such cases. Seems Alberta has what no one in the world with dying fields has and would love to have. Extracting oil from a deposit too fast destroys the deposit (I’ll let you find out why) and you ultimately get less from a field than if you have extracted the oil slower.
John Bronson says:
January 6, 2012 at 12:44 pm
jrwakefield wrote:
“You are making the mistake of thinking that peak oil is geological peak. It’s not. It’s about flow rates. Doesn’t matter what’s in the ground, it’s how fast it can be extracted to meet demand.”
“Geological peak” is what most peakers claim.
Then you are reading the non-experts on the subject. Peak oil has always been about flow rates.
Of course you can make up your own arguments. What’s often quoted as recoverable reserves is 1.2 trillion barrels, or 40 years supply. “Recoverable reserves” are only a small percentage of total oil in place. As new reserves are discovered, and as new technology is developed, recoverable reserve numbers grow.
Discoveries peaked in the 1980’s
You can go back and look at EIA data 20 years ago, and see that the US had the same 20 million barrels of reserves then. Without “reserve growth”, that oil would have all been used up by now several times over. What is the total amount of oil in place? A recent Scientific American article estimated 12 trillion barrels. As long as there is sufficient “oil in place”, flow rates can be maintained by simply drilling more wells. Or in the case of heavy oil, applying more equipment and labor to the operation.
This shows you don’t understand oil recovery. Adding more wells DOES NOT mean more oil extracted. In fact, adding more wells destroys a field. One only has to look at what happened in Texas in the 1960’s.
Ghawar is drilling more periphery wells to inject sea water to keep the pressure up (absoutely essential), yet their water cut is growing, less oil per well, less oil over all. Fact is fields go into depletion, reduced flow rates. Oil in place is irrelevant.
There are currently vehicles on the market (and many on the road already), that get 70 cents/gallon equivalent running on CNG or electricity. Oil will be substituted long before it “runs out”.
You’re still not getting it. It’s not about running out. It’s about loss of flow vs demand. Soon as demand exceeds supply someone does without the oil they need. That drives up the price and causes recessions.
BTW, electric cars are going to be failures. It’s now being found out they do not produce the range they claimed the vehicles should have. Batteries cost a fortune to replace and have short lives (plus it just puts the fossil fuel consumption somewhere else, mining the metals, creating the power). They will be a grand failure in places like Canada with our winters.
@jrwakefield
Hirsch is as expert as it gets. Perhaps your speakers don’t work, and you missed the part where he says peak oil is a geological problem.
Demand is not exceeding supply. If it were, there would be shortages. Not only are there no shortages, but there are billions of barrels of oil in storage.
Europe has paid much higher fuel prices than the US without causing recessions. The last recession in the US was caused by the failure of the sub-prime mortgage market, not peak oil.
With regards to EVs, perhaps you should have shared your brilliant insight with the car manufacturers before they dumped billions of dollars into the technology. You obviously know more than them, lol. In reality, Lithium batteries last for several thousand cycles. This has been proven with actual use.
EVs and othe alternatives are a big problem for doomers. So according to doomers, they don’t work. Peak oil, (like global warming) is goal oriented. With the goal being the end of the world, unless everyone does what the doomers (lefties) say. Cars represent individual freedom of mobility. Lefties want only public transportation that can be centrally controlled. This is one of the major planks of socialism.
John Bronson says:
January 6, 2012 at 5:08 pm
@jrwakefield
“With regards to EVs, perhaps you should have shared your brilliant insight with the car manufacturers before they dumped billions of dollars into the technology. You obviously know more than them, lol. In reality, Lithium batteries last for several thousand cycles. This has been proven with actual use.
EVs and othe alternatives are a big problem for doomers. So according to doomers, they don’t work. Peak oil, (like global warming) is goal oriented. With the goal being the end of the world, unless everyone does what the doomers (lefties) say. Cars represent individual freedom of mobility. Lefties want only public transportation that can be centrally controlled. This is one of the major planks of socialism.”
John,
May I have your special kind attention?
Have you ever been in Moscow? Or a city like that? In greater cities we have the problem of real real real air pollution. In many points of such cities there are electronic bill boards showing the pollutions of CO2, SO2, CO etc. In many days, the view is too short, things are invisible the weather is dark grey, you cannot even breathe. What should you do for millions of people living in such city. Am I a doomer? Are these people all doomers? OKAY! Forget about EVs. What do you suggest?
Let me explain you more, it doesn’t mean I want to say I know something, not at all, really I want to know better, please:
In greater cities, Metro/Underground is working well, no way out.
The system is quite different from what we see in North America, except some cities.
Should we let the people go down in Metro, and travel with diesel powered engines locomotives?
The space above the cities is the same as this example. They say there were mistakes about global warming because the weather temperature were extracted from instruments located inside the cities and those measured temperatures were obviously above the reality because of certain correct matters (no need to talk about it here). Do you believe in the so called cities, air pollution is correct or not, for the temperature hopefully you agree with it. Is it right?
Somebody has come and given a proposal to the people, as EV. What do you put on the table as your own proposal? What is your idea? The people are dying John. I am not talking about the whatever gas is good/bad. You may say nothing found so far, as evidence that the GASs X,Y or Z is the reason for the death of the people. There are records, showing in some days, more than 310 individuals are dying due to air pollution. If the GAS is good or at least neutral to human beings, why we use electric powered locomotives in Metro/Underground?
I would be very much appreciated to have your good comments.
I wonder. Does a day go by when an Ontarioian doesn’t try to impress an Albertan with his vast knowledge of our oil industry? I’m sure Texans feel the same way about “information” offered by New Yorkers.
I’m sure Mr. Wakefield is just as capable of typing “Cardium, Viking or Montney” into the Google search as the next person so I’m not going to put a whole lot of effort into troll-satisfying but just to prove that he has no knowledge of what he blathers…
http://www.slideshare.net/fullscreen/NALenergy/corporate-presentation-november20114/3 (see pages 14,18)
http://www.andersonenergy.ca/pdfs/2011/AXLPR111026.pdf
http://www.delphienergy.ca/PDF/news_releases/2011/DEE-2011-12-22.pdf
http://www.petrobakken.com/wp-content/uploads/2011/12/PBN-2011-12-14-corp-pres.pdf (See page 20 for flow results).
Poptech – I thought the reference to RealClimate made it obvious. The point is that a consensus or an argument from authority can be wrong and has to be checked against the evidence. That is what WUWT has been all about.
John Bronson – Yes, peak oil may turn out to be a non-issue, but a peak nonetheless. Yes, oil will surely be substituted long before it “runs out”. As I said, “Maybe Peak Oil will come not with a bang but with a whimper”.
Alan Clark of Dirty Oil-berta – I was pencilling in Alberta for about 3m bpd, about in line with your numbers. I don’t think the techniques making a big difference in Alberta can or will necessarily be applied successfully everywhere else. Oilfields vary a lot.
What I think is happening is a combination of various factors.
1. A fairly high proportion (probably over half[*]) of major oil producers are in decline. Technological advances may slow the decline, may even increase production here and there for a while, but decline they will.
2. Not all oil-producing countries will produce as much as they can, preferring to keep a supply for later on. Not all producing countries will be politically stable and cooperative, thus their producing capability may be reduced.
3. With the high oil price of the last few years, the search for alternatives has intensified, as has the push for greater efficiencies. There has always been the argument that technological advances can increase oil reserves and production, but the other side of the coin is that technological advances can also reduce demand.
4. Fossil fuel has come under intense attack from greenies, leveraging off the “global warming” fraud. This has increased the political risk of investing in oil production.
The result is a limit on oil production, as evidenced by the high oil price of recent years. Some of the investment amounts required to increase oil production in some places are eye-watering. Maybe the money will be made available in future, as it always has in the past, but the increased political risk makes it just a bit less likely.
It’s always dangerous to make predictions, but the scenario I envisage is one of highly variable oil prices as news and sentiment fluctuates, a gradual reduction in the proportion of world energy supplied by oil, and the realisation in years to come that the golden age of oil ended in the first decade or so of the 21st century.
[*] Producers in decline. It’s not possible to know for sure, of course, but given that world production has flat-lined for 5 or 6 years while the oil price has increased rapidly, it might be reasonable to suppose that a country that hasn’t increased production since 2005 is likely to be in decline. Those countries, the year of their maximum production, and their proportion of world production in 2010 are:
Russian Federation 1987 12.5%
Saudi Arabia 2005 12.2%
US 1970 9.2%
Mexico 2004 3.6%
Kuwait 1972 3.1%
Nigeria 2005 2.9%
Norway 2001 2.6%
United Kingdom 1999 1.6%
Indonesia 1977 1.2%
Oman 2001 1.1%
Colombia 1999 1.0%
Countries under 1% 7.4%
Total so far 58.3%
Iran 1974 5.2%
Venezuela 1970 3.0%
Iraq 1979 3.0%
Libya 1970 2.0%
Total 71.5%
I have separated the last four, because they may be in the table for political reasons. Maybe Nigeria should be separated too.
You can see that Saudi Arabia, and whether it is in decline, is an important factor. That’s why their production over the next few years will be so interesting.
The following article has some excellent information regarding the issue of prices (including in inflation adjusted $$ over many decades) and various political situations associated with both prices and production. I think anyone reading here would be interested in the info: http://www.wtrg.com/prices.htm It also seems pretty likely to me that production issues are far more tied to political circumstances than actual technical production abilities…
Also note that frankly I’ve primarily seen ‘peak oil’ discussed as a technological issue that does NOT include political machinations… once the latter is thrown in, the term effectively looses all meaning, because politics of various countries is so changeable and dependent on circumstances, not ability. Look at the current USA situation – there is an effective partial moratorium on deep sea production being imposed by the Obama administration (leasing, permitting, etc., is all drastically down since the BP spill), drilling off the eastern sea board and most of the western sea board is all off limits again due to government regulations… toss much of Alaska into that category. Much of the oil available from shale deposits is under federally controlled lands that are also off limits.
Meanwhile, the USA just became a net EXPORTER of petroleum products recently – for the first time since the 1940’s. http://online.wsj.com/article/SB10001424052970203441704577068670488306242.html and http://hotair.com/greenroom/archives/2011/12/19/how-we-became-a-net-petroleum-exporter-again/
By the way, Mike, you’re showing Russia as peak production in 87, but apparently they’ve reached a post Soviet Union high this year…. and it sure seems to me that comparing output prior to the fall of the USSR to post USSR isn’t likely to be very meaningful considering the upheaval involved… http://www.businessweek.com/news/2012-01-03/russian-crude-oil-production-rose-to-post-soviet-high-in-2011.html
This chart is also useful, showing historical oil production by region from 1965 to 2008 – and it certainly seems to show that when one region significantly drops in production, others step in to fill the void… http://chartsbin.com/view/wyw
Poptech, thank you for posting the reminder about the impact of Nixon/Carter price controls – I had incorrectly laid the blame almost entirely on OPEC – I stand corrected and much appreciate the reminder/refresher on the issue. I’d learned that long ago, and am ashamed to have forgotten it/misplaced the blame again over the years.
jrwakefield says, “Poptech, I fully agree that as long as money is to be made, negative ERoEI will be ignored. That can last a long time. However, it will come to an end. Eventually the net energy returned will turn on economics (one can argue that one such event was 2008). The second law of theromdynamics rules supreme. A few people make money while the rest of the society get’s starved for energy.”
It is not that it is ignored, it is that it is irrelevant. Energy sources such as oil are invaluable as transportation fuels thus their high demand due to no economically viable alternatives means sacrificing EROEI using other forms of cheaper energy (natural gas, nuclear ect…) to extract it is acceptable.
As the price of one form of energy increases, that creates a market incentive to locate more or find an alternative. No one gets “starved” of energy. The only way that happens is through government intervention in the economy.
The 2007-2008 oil price shock was due to inflation caused by government monetary policy. The CPI does not reflect true inflation because it does not include food and energy prices. Food and Energy are the first places inflation shows up and the economically illiterate politicians blame it on “price gouging” or “speculators” or some other nonsense, anything but the real cause,
The Oil-Price Bubble (Frank Shostak, Ph.D. Economics, June 2, 2008)
“We suggest that there is a high likelihood that the massive increase in the price of oil is the manifestation of a severe misallocation of resources. The loose monetary policy of the Fed from January 2001 to June 2004 is the likely key factor behind this misallocation. (The federal funds rate was lowered from 6% to 1%.) The tighter Fed stance from June 2004 to September 2007 should undermine the existence of various nonproductive activities and in turn reduce upward pressures on the price of oil.
Regrettably, the loose monetary stance that the Fed has adopted since September of last year, coupled with still very buoyant Chinese economic activity, is likely to counter any downward pressure on the price of oil. The Fed’s current policy of fighting an emerging economic slump is, in fact, a policy of deepening the misallocation of resources, thereby promoting higher prices for oil. If our thesis regarding the oil market bubble is valid, then it is the Fed’s policies that must be blamed for the erosion in consumers’ living standards and not the rising price of oil.”
jrwakefield, “False. You are making the mistake of thinking that peak oil is geological peak. It’s not. It’s about flow rates. Doesn’t matter what’s in the ground, it’s how fast it can be extracted to meet demand.”
Yes I have heard all this nonsense before. Flow rates cannot be a measurement of “peak oil” because they are artificially restrained by governments. Price controls, taxes, subsidies, environmental regulations, land use restrictions, inefficient state run oil companies ect… all artificially restrict flow rates.
“Peak oil is ANY reason that curtails flow rates,”
According to your logic if Saudi Arabia bans oil production tomorrow even though it has massively huge reserves still in the ground that means peak oil is reached!
“…including producing countries consuming more of their own oil, and exporting less. It also includes when one country goes around the world making contracts to supply them with oil. That’s what China is doing, which takes less exportable oil off future markets.”
Contracts are normal part of a market economy. Just because one country intelligently and successfully makes various contracts is meaningless. All this will do is have an affect on the price of the remaining available supplies of oil. If the price rises enough the intelligent countries who made short term contracts will sell to the highest bidder not just China. A higher price spurs exploration or new reserves and development of existing ones. If the price gets high enough the next most viable source of energy gets used. This is all basic economics.
Yes I have heard all this nonsense before. Flow rates cannot be a measurement of “peak oil” because they are artificially restrained by governments. Price controls, taxes, subsidies, environmental regulations, land use restrictions, inefficient state run oil companies ect… all artificially restrict flow rates.
“Peak oil is ANY reason that curtails flow rates,”
According to your logic if Saudi Arabia bans oil production tomorrow even though it has massively huge reserves still in the ground that means peak oil is reached!
You are finally understanding 🙂 That is quite correct. You need to move out of the “whats in the ground” and look at what is AVAILABLE to the market. Indeed if SA were to shut in all their oil for export it indeed would reduce flow rates on the world, and someone would do without the oil they need. Agree or not, peak oil has ALWAYS been about flow rates.
As for China, every drop of future oil they secure for themselves is a drop that is not exported to countries who need it. Take a simple example. You need a loaf of bread every day to feed your family. But your neighbour secures bread for the next twenty years from that bakery, all of it. You then can’t get any more when your contract runs out. Now you starve. Why? Because there isn’t enough supply of bread to keep up with growing demand. Someone does without, you.
Peak oil is like musical chairs with a twist. Not only is a chair removed at the end of a song (depletion of oil), but a dancer is added to the floor. More people chasing deminishing resourses.
It is clear from your posts you do not understand the mechanisms of oil supply and the crutial roll it plays. You are too fixated on what’s in the ground. And oil fields do deplete, regardless of what’s thrown at them. The list of dying fields is long. Mexico’s Cantarell peaked some 15 years ago at 2.3mb/day. Today it’s only 450km/day. There is nothing they can do to stop that. The US peaked in 1974 declining since. There is nothing they can do to stop that.
I guess you will have to find out the hard way.
It is not that it is ignored, it is that it is irrelevant. Energy sources such as oil are invaluable as transportation fuels thus their high demand due to no economically viable alternatives means sacrificing EROEI using other forms of cheaper energy (natural gas, nuclear ect…) to extract it is acceptable.
Maybe acceptable, but thermodyanmically it’s suicide.
Governments do not set the price of oil, markets do. Oil production in 2005 was the same as 2008, yet demand was still increasing. That’s why the price went up. Now the question is, why didn’t production increase? It couldn’t, production was a full maximum in 2008, there was no spare capacity. Thus the rate of flow was LESS than the demand. People did without the oil they needed. Who? Everyone who went to the gas station to fill up and found they could not afford to fill their tank. They drove less. I know this for a fact, because that’s what happened to me and just about everyone I knew. We just stayed home more.
http://www.petrobakken.com/wp-content/uploads/2011/12/PBN-2011-12-14-corp-pres.pdf (See page 20 for flow results).
That graph shows dropping flow rates. Consistent with what happens to shale deposits.
BTW, Ontarians can be just as informed as Albertans. We all have the Internet.
Hirsch is as expert as it gets. Perhaps your speakers don’t work, and you missed the part where he says peak oil is a geological problem.
Hubbart was about as expert as it gets, he said it was flow rates.
Demand is not exceeding supply. If it were, there would be shortages. Not only are there no shortages, but there are billions of barrels of oil in storage.
It did between 2005 and 2008. Supply was flat, demand kept increasing, price spiked and popped the subprime bubble.
Stratigic reserves are kept for emergencies, and if I recall during 2008 the US did open up some of it’s 15bb of strategic reserves. BTW, that 15bb is less than 2 years of US consumption. All US producers are required by law to set aside 15% of their production to fill the SR, or pay equal amount in money. That oil is kept in old salt mines.
With regards to EVs, perhaps you should have shared your brilliant insight with the car manufacturers before they dumped billions of dollars into the technology. You obviously know more than them, lol. In reality, Lithium batteries last for several thousand cycles. This has been proven with actual use.
Yet we have a post here at WUWT of someone sueing because their batter life isn’t what was claimed. Fact is, up here we need more lights on, snow to get through, and heating of vehicles. No way a EV will do as well up here.
EVs and othe alternatives are a big problem for doomers. So according to doomers, they don’t work. Peak oil, (like global warming) is goal oriented. With the goal being the end of the world, unless everyone does what the doomers (lefties) say. Cars represent individual freedom of mobility. Lefties want only public transportation that can be centrally controlled. This is one of the major planks of socialism.
I’m no socialist, quite conservative. For Ontario to go all EV we would have to build at least a dozen more nuke reactors.
As far as I can tell, the exhaustion of *cheap* carbon power is an eventual certainty. It is being extracted at a rate that exceeds any believable rate of abiotic or biotic production. The chart shown in figure 7 does seem to confirm that we are on a declining trend for traditional petroleum production and any increases in production are now the result of exploiting oil from previously ignored, extraction resistant sources that will cost ever more to produce. The question on depletion of the Earth’s economically recoverable sources of carbon power does not appear to be whether it will happen but of when it will happen.
I believe the primary message here is that we should be thinking about the post carbon future. Once that energy is exhausted, there remain two basic options for an energy source: solar-renewable and nuclear.
Many seem to believe that solar-renewable or naturally renewable power is the only ‘good’ source of energy for man. It may also turn out that there is no sustainable or practical method for the generation of artificial power on a scale equivalent to carbon power as we know it. I believe that anyone content to rely on natural or green power for the future should also be content with the knowledge that they may only have a ten to twenty percent chance of having any descendents after that change is effected. I base this latter estimate on the understanding that a nineteenth century population is the only reference we have for a world supported primarily by green energy. Modern technology might improve that a little, but I doubt that would be enough to support our current population. My *guess* is that each person on Earth would require something like an acre of solar energy collectors to support their existence. A rice plant qualifies as a solar energy collector.
Nuclear power, as we know it is based on the fact that free neutrons may be captured by any atomic nucleus. As a neutron has no electric charge, there is no repulsive force to block its attachment. If the neutron-augmented nucleus is stable, then nothing more happens except for a minor change in physical properties, but if the result is unstable, the stage is set for one or more forms of radio-active decay—the most common being beta-decay in which the nucleus expels an electron transforming the extra neutron into a proton and thus advancing the nucleus one step higher in the periodic table of elements.
For transuranic (uranium and bryond) element isotopes (same element but differing numbers of neutrons) this resulting nucleus may be so unstable that it breaks in two, releasing a large amount of energy and more free neutrons that can disrupt other nuclei. Fissile isotopes tend to be rare because they are naturally unstable and have largely decayed over the lifetime of the Earth. Objections to this method of energy generation center around the relative scarcity of naturally fissile isotopes, the creation of dangerous, neutron contaminated radioactive waste, including the generation of long-lived plutonium isotopes, and the inherent risk of explosion with the high-pressure, superheated thermal exchange fluid (water).
Breeder reactors operate on the principle that a neutron capture can cause a more plentiful, fertile non-fissile isotope to undergo radioactive decay which eventually transforms it into a fissile nucleus. If that nucleus creates more than two free neutrons on fission, it can support fission of like nuclei and the ‘breeding’ of more fissile nuclei. The standard process involves the conversion of non-fissile uranium, U-238 to U-239 by the added neutron. U-239 then becomes fissile plutonium, Pu-239 by beta decay. In what may have been one of the great miscarriages of science in the twentieth century, the Nixon administration was persuaded to push the development of this technology to the exclusion of any other option. After spending more than five billion dollars on the Liquid Metal (sodium) Fast Breeder Reactor (LMFBR) project, concerns were raised about the weapons grade plutonium produced and potential environmental contamination and thus, President Carter, a solar energy proponent, cancelled the project. Bill Gates is recently reported to be working with China on a novel concept to exploit this breeding cycle.
Another possible breeding process involves plentiful thorium, Th-232 converted to Th-233 by neutron capture, which, in a two-step process, decays into protactinium, Pa-233 and then into fissile uranium, U-233. This cycle seems best likely to be exploited by the fluid-state, Liquid Fluoride Thorium Reactor (LFTR) concept, which allows continuous processing of the fissile and pre-fissile components, but its minimal development was throttled down, after promising initial tests do to an apparent administration policy to concentrate on the LMFBR project which the government then believed to be the sure ticket to energy independence. The thorium cycle does have the advantage of stopping one place lower on the periodic table and it is not as conducive to the generation of weapons grade fissile materials. The continuous reaction process tends to consume almost all of the dangerous transuranic wastes that current reactors leave behind. The remaining wastes are short-lived and not considered a long-term problem. There do remain a number of materials design issues to be resolved as a complete unit was never constructed and tested. As the system operates at ambient pressure, it is thought that these units would be much safer and smaller than current reactors because no expensive high-pressure containment vessels would be required.
Nuclear Fusion, the power that drives the sun, has been a dream for the last sixty years. So far, it has stubbornly resisted the efforts of our best minds. Unlike neutron-induced fission, fusion requires two strongly repulsive positively charged nuclei to collide. This requires a combination of high temperature, to get the nuclei moving fast enough to overcome the repulsion, and high pressure, to cause a sufficient collision rate, which has not yet been obtainable on Earth. The primary advantages of this method are a higher potential energy yield than fission and minimal production of radioactive wastes.
Who has any idea about energy sources, please step forward and put the required money on this table of energy.
Spector,
As I understand from your comment, man should not stay quiet until the TODAY energy comes to him and say IT IS FINISHED. Pilot projects are for this important matter.
Other energy sources, now are BABY ENERGIES, they must study and grow up, here we may have Hitlers, Pastors, Nobel prize winners in medicine, in economy, in whatever:
– atomic energy: we have many concerns,
– Fossil Based Fuels: we have concerns of its sustainability, global warming(don’t worry about listing this one),
– Hybrid: Limited, leave it for doomers,
– Solar: long way to go, no just for traffic lights,
– Hydro: Fish concerns,
– Windmills: Birds, not efficient for large scales,
– LPP: http://www.lawrencevilleplasmaphysics.com/
-Please add one: and say what is your concern,
jrwakefield wrote:
“Hubbart was about as expert as it gets, he said it was flow rates.”
Hubbert was wrong. You can see his prediction for world peak here:
http://www.oilcrisis.com/hubbert/natgeog.htm
He was wrong because he didn’t consider deep water, or heavy oil production.
“Yet we have a post here at WUWT of someone sueing because their batter life isn’t what was claimed.”
In the world of marketing, very little is as good as claimed. However, Lithium batteries are light years ahead of the Nickel batteries used in the Honda.
“For Ontario to go all EV we would have to build at least a dozen more nuke reactors.”
You obviously don’t understand power plant operations, or electrical demand load curves. There is enough spare capacity at night to charge 80% of the auto fleet with existing power plants. With regards to colder climates, most of the worlds population live in warmer climates. So what may not work well in Siberia, Alaska, Antarctica, Canada, etc., is really not that relevant.
Spector wrote:
“My *guess* is that each person on Earth would require something like an acre of solar energy collectors to support their existence. A rice plant qualifies as a solar energy collector.”
1 acre for vegitarians, 2 acres for meat eaters, 1 acre fro 10,000 miles on corn ethanol, 1/44th an acre of PV for 10,000 miles in an EV.
“For Ontario to go all EV we would have to build at least a dozen more nuke reactors.”
You obviously don’t understand power plant operations, or electrical demand load curves. There is enough spare capacity at night to charge 80% of the auto fleet with existing power plants. With regards to colder climates, most of the worlds population live in warmer climates. So what may not work well in Siberia, Alaska, Antarctica, Canada, etc., is really not that relevant.
That didn’t come from me, it was from a study done by experts here in Ontario. Again the problem here is our nights in winter are long, starting around 5pm. People will be coming home from work and plugging their cars in right at the hieght of demand time. During the summer people will also be plugging them in at work charging during the highest demand times.
@ACCKKII
There is technology to mitigate pollution from coal plants, etc. It’s up to the people living in those cities to take action on their own behalf.
John Bronson says:
January 7, 2012 at 1:32 pm
@ACCKKII
“There is technology to mitigate pollution from coal plants, etc. It’s up to the people living in those cities to take action on their own behalf.”
This is not my right expected reply from John Bronson. Coal Plants in Centre of the Cities Like Moscow! Bangkok! Cairo! Almost all Asian greater Cities! New York! We are talking about transportation system of the cities.
My view if you like:
there is nothing to do except you change the fuel from petrol to Gas Liquid, EV, Motor Cycles and even in some parts of the cities the Bicycles ONLY. This is what is happening right now except removing PETROL and substituting EV.
This would not affect your ideas, air pollution management and traffic are sister and brother. In Undergrounds you so the same work, let the CO2 get out of the tunnels and stations, and make the air clean inside underground, you manage your case here same should be done on the streets of the cities. Okay I expect you are a democrat gentleman, that leaves the work of the people to be solved by the people, now if I am the people, do you mind what I do? Then don’t you have any objection or criticize about what I do for EV? I did it John.
jrwakefield wrote:
“Again the problem here is our nights in winter are long, starting around 5pm. People will be coming home from work and plugging their cars in right at the hieght of demand time. During the summer people will also be plugging them in at work charging during the highest demand times.”
Most people (Ontarians included) work during the day, and sleep at night. Peak demand is during the daytime when stores and other businesses are open. There is a spike when people come home from work, but there is very low demand (50%) after 11:00 pm, when most people are sleeping. The ideal time to plug-in is before you go to sleep. Electric companies that promote EVs offer discounted rates for off-peak charging. Unless you work more than 50 miles from where you live, there’s no need to plug-in at work.
Rational Debate – Fair point re Russian Federation. BP data for Russian Federation is “n/a” until data starts in 1985, peaks in 1987 at 11484, drops to 6114 in 1996, and is now on the increase again at 10270 in 2010. Your article shows 10270 for 2011 but maybe that’s just a typo. Putin calls for 10000+ for a decade, so it will be interesting to see whether they can get up past the old mark. IEA (2010) does not see Russia with increased production by 2035 because Russia is not in the “More oil from fewer producers” table. Maybe Russia really has peaked. In any case obviously some of its production history did relate to politics, but politics is part of the equation, not outside.
I’m temporarily (I hope) short of time, but will get back to various other points raised here as soon as I can.
For John Bronson,
amendment:
“In Undergrounds you “DO” the same work”