Guest Post by Willis Eschenbach
Dramatis Personae:
The “EIA” is the US Energy Information Agency, the US agency in charge of data about energy production, consumption, and use. It has just released its January 2014 Short Term Energy Report, with current and projected oil production figures.
And “M. King” is Marion King Hubbert, the man who famously predicted in 1956 that US annual oil production would peak in 1970, and after that it would gradually decrease.
——–
So why is the King meeting the EIA? Figure 1 shows why.
Figure 1. US crude oil production. Data from 1965 to 2013, projections for 2014 and 2015. As is customary, “crude oil production” includes what are called “natural gas liquids”. Data from the BP Statistical Review of World Energy and the EIA.
Now me, I see that as a testament to human ingenuity, as fantastic news for the planet, and as another example of the futility of betting against said ingenuity. As my dear dad used to say, “Imagination is free.”
I don’t really have much more to say about this great news, other than I see it as a huge opportunity for the poor. The implications are clear. Cheap energy is the salvation of the poor, and this can only be good news for them … not to mention good news for the rest of us as well.
Best regards,
w.
PS—Folks, don’t bother telling me it is “unconventional oil”. That is a meaningless distinction, invented by supporters of Hubbert’s peak oil theory, to try to salvage Hubberts moribund claims. For example, when fracking was done in vertical wells for fifty years, it was counted as “conventional oil” … but now that the drilling is done horizontally, suddenly fracking produces “unconventional oil”. And given that for many centuries oil was collected from surface seeps, in historical terms all modern oil production is “unconventional”. See my post Conventional Wisdom, Unconventional Oil for a full discussion.
PPS—If you disagree with something that I or someone else said, please QUOTE EXACTLY WHAT THE PERSON SAID in the comment where you discuss your objections. I can’t tell you how many times I’ve been attacked over things that I never said … so quote it if you want to discuss it. I’m going to get more hard-headed on this one, I’m tired of picking spitballs off the wall. I’m happy to defend my words if I know which ones you are talking about … but I can’t defend your interpretation of my words. Quote it or lose it.
Fantastic news. I just wish the price were coming down faster.
Great post.
“Peak Anything” is an economic argument.
Peak $2/$20/$30/$40/$50 barrel US domestic oil production occurred a long time ago.
What has changed is the idea that the Saudi’s would undercut anyone with $50+/barrel production costs in order to control market share.
Ah Willis … the man who thinks he’s a fisherman 🙂
The graph offered of “US Past and Project Oil Production” ~ 1963 to (projected) 2015 shows an “effect” of a very complicated process that involves a lot of forces — economic, technical, innovative, legislative, regulative, social — taking place in a real world in a real country that went through the Viet Nam War, sveral wars in the mid-East, social upheaval, the environmental movement (from flower power to monkey-wrenching), whipsawing politics, amongst other things. It is not like the US oil industry has been allowed to drill and pump oil as hard and fast as it could all those years, dependent only on its ability to find the natural resources in the ground and the technical ability to get it out. Thus, to use the graph to judge the success or failure of Hubbert’s peak oil theory is the height of folly.
Jeff L says:
January 12, 2014 at 9:08 am
Perhaps you were misled by a graph with one of the two lines on the graph being a big bright red line labeled “Data to 2013, projections after”.
Or perhaps you think folks are just stupid. After reading not most but all of the comments, to me it seems that for most people it was perfectly clear.
As I said, QUOTE PEOPLE’S WORDS if they are relevant. Your handwaving claim that “hardly anyone” understood the graph or noticed the red line is a joke without extensive citation. Your claim would mean that 80% or 90% of the people didn’t notice or understand the red line, and that doesn’t even pass the laugh test.
w.
The Recurring Myth of Peak Oil
The Peak Oil theory maintains that world production of conventional oil will soon reach a maximum, or peak, and decline thereafter, with grave socio-economic consequences. Some proponents of the theory argue that world oil production has already peaked, and is now in a terminal decline. Although, on the face of it, this sounds like a fairly reasonable proposition, it has been challenged on both theoretical and empirical grounds. While some critics have called it a myth, others have branded it as a money-making scam promoted by the business interests that are vested in the fossil fuel industry, in the business of war and militarism, and in the Wall Street financial giants that are engaged in manipulative oil speculation.
Regardless of its validity (or lack thereof), the fact is that Peak Oil has had significant policy and political implications. It has also generated considerable reactions among various interest groups and political activists. … continue at http://alethonews.wordpress.com/2009/12/03/the-recurring-myth-of-peak-oil/
Jeff L says:
January 12, 2014 at 9:29 am
Thanks, Jeff. I agree completely.
While everything you say is perfectly true, I am reminded of the story of the spherical cow …
You’ve put your finger on the problem, which is that for Hubbert’s predictions to come true, the inexorable advance of technology has to come to a screeching halt, and not change over the ~ 50 year time horizon of the prediction … so yes, in a world where cows are spherical and the technological clock is stopped, Hubbert’s method works just fine.
w.
Thanks Willis – I feel so much smarter now that you have enlightened me !
/sarc
Vangel Vesovski says:
January 12, 2014 at 9:41 am
Vangel, given the chart in Figure 1 your claim that shale oil production is “not economic”, that the US oil companies are stupidly throwing good money after bad, and that it is all being financed by loans are what I would term “extraordinary claims”. As such, they necessarily require “extraordinary evidence” to establish their veracity.
However, in place of extraordinary evidence to back up your claims, you’ve given us … well, no evidence at all. Zero. Bupkis. Nada.
This is a scientific site, and here, claims such as yours that are unadorned by facts are either laughed at, or just roundly ignored.
I’m just giving you the courtesy of a heads up. If you don’t have evidence to back up your claims … don’t bother.
w.
michel says:
January 12, 2014 at 4:05 am … “and I do think it will probably follow the Hubbert curve for any well explored area.”
+++++++++++++
First Michel, I noticed wrote your name wrong unintentionally -and apologize.
Since we are discussing THIS post, Michel, I don’t see the value in your conclusions and statements. Oil in the US is not even yet well explored, as people believed half a century ago. I’m tired of people telling us we’re going to run out, because people act on that notion and cause forced energy starvation on the populous. This represents a huge cost to productive people and devastation to the lives of poor people. That is really happening today, but not because of peak oil, or peak coal. There is no [peak] some half a century after we were supposed to peak –and that is the point of this post, I believe.
So let’s extrapolate your thoughts with candor. What do you want society to do with your version of information? Do you want tax payers funding solar panels, bio-fuel and wind mills so that in 200 years, we can be ready? Is that your ulterior motive –to act now for some misguided altruistic cause? Please tell us what your stance is on so called “green” technology so that I can try to understand what you are really trying to say.
Alan Robertson says:
January 12, 2014 at 10:21 am
Run my car on drip gas when I lived in New Mexico? No, never … well, almost never …
w.
Stephen Rasey says:
January 12, 2014 at 10:26 am
And despite your over-confident claim, Julian Simon won his bet … and the inflation-adjusted price of gas hasn’t risen in 100 years.
Do you just do your best to ignore the facts, Stephen, or are you actually immune to them?
w.
mbur says:
January 12, 2014 at 10:35 am
You are correct, mbur, but the devil is in the details. The problem is that to date, the cost of algae based fuels is like $18 per gallon or something. Craig Ventner teamed up with Exxon Mobil to try to bring that down using genetically engineered algae, but no results yet.
w.
Ah, but sir Willis, if we plot the price of gold also on that graph (all three values, of course, in “constant dollars” or as “barrels of oil per ounce of gold”) (to remove both inflation and dollar manipulation from the plot) the linearity is remarkable.
JR says:
January 12, 2014 at 11:47 am
Say what? I am a fisherman. I have worked extensively commercial fishing from Southern California to the Bering Sea, and also as a guide for sport salmon fishing … so I fear your comment makes no sense, with or without the smiley.
w.
I’m 59. Well on my way 60. Since I was old enough to pay attention I can’t remember a time when somebody out-there wasn’t screaming some alarm about whatever energy civilization used. Oil. Nuclear. Hydro. The “alarm” always seemed be rooted in some kind of “environmental” impact. Sometimes, at the start, there was a concern for people but it always morphed into something that put “nature” ahead of people.
I have several comments. First, the decline in domestic production in the early 1970’s was a direct result of the major multinationals plugging domestic production and importing (mostly) cheap Saudi crude. This was a purposeful manipulation by Kissinger et al and, like most government interventions in the marketplace, left us vulnerable, which is what we were in 1973, when the embargo sent a wave of inflation through the economy.
Second, Hubbert’s work would have been lost in the world of technical publications had it not been picked up by the Club of Rome and used as a tool to push AGW and the notion that humans are bad.
There is some evidence that oil and natural gas reservoirs do in fact recharge themselves so the notion that there will be a precipitous decline in oil and gas production at some point in the future is wrong. And also, there are plenty of areas in the contiguous 48 states that have not been tested and probably will not be tested for the next 100 years.
Finally, the marketplace is manipulated. We in no way have a “free Market” especially in oil and gas. Crony capitalism and corportism have propped up the price of oil to protect petro-dollar. If there was a “Free Market” oil would be trading around $25.00/bbl, there wouls be a real economic recovery based on “cheap” energy, and wealth would be moving back into the middle class from the 1% (or mor accurately, the 0.1%).Of course the elite can’t have that because they would have to compete with their brain power and business accumen, not the fact that they control all of the money.
Great article. Thanks. If you have the 1969 editions of National Geographic, read the issue devoted to ‘running out of oil by 2000’….However, if you have read Daniel Yergin’s “The Prize”, the history of oil, you know that at the end of WW2, the US government decided to NOT use its own oil, rather preserving it in case of another war, as oil won both WWI and WWII. Fooling the public via ‘peak oil’ might have been a political ploy to prevent drilling on US federal lands.
As for the EROEI argument repeatedly invoked above, according to that theory nobody could ever produce electricity because it always requires more energy than you can produce, often much more.
With hydro power you can get as much as 90% back, two-cycle gas plants can reach 60 %, coal and diesel about 40 % and nuclear about 30 %. Wind Turbines are about as efficient as coal and can’t even theoretically become as good as two-cycle gas is in practice.
US crude oil and liquids production peaked at 9.7 mmbopd in 1970. Currently US crude oil and liquids production is 7 mmbopd. Forecast for 2014 is 8.5 mmbopd then a decline in 2015. The prime shale liquid (crude oil and natural gas condensates) locations are being drilled currently. It is problematical if the US 1970 peak crude oil and liquids production peak will ever be exceeded. Go to:http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=A
Shale has very little natural permeability. The connection to the wellbore is due to the fracturing and sand props. The connections are already closing in many of the shale wells and must then be re-fractured. Some of the wells in the Barnett Shale field and have already been re-fractured four times. The re-fracturing cannot continue beyond four times. The wells will continue to produce for a long time but at reduced rates.
Crude oil was about $3 per bbl in 1956 and currently is about $100 per bbl. This 30-fold increase in price has allowed drilling in extremely difficult locations: very deep water, Arctic ice covered waters, 35,000 feet deep, high geopressures and high concentration of hydrogen sulfide. Such locations are extremely costly to drill and develop. The drilling is risky, witness BP’s Macondo blowout in the Gulf of Mexico in 2010 which resulted in a world record spill.
I don’t know where you got your chart, Willis but you need to double check the data. There could be some mix up between the EIA data and the BP data.
Thank you for the reply to my comment . I was ignoring the cost, because i thought I could do it ,myself? garden/roof/garage.!? When we start to run out of oil, will that not cause other/new tech. to emerge?like other phenomena.Market Forces will drive it ,so to speak.?
JFD says:
“I don’t know where you got your chart, Willis but you need to double check the data. There could be some mix up between the EIA data and the BP data.”
The data is here: http://www.eia.gov/forecasts/steo/report/us_oil.cfm?src=Petroleum-b1
US production was 10.03 MBPD in 2013 and is prognosticated to reach 11.97 MBPD in 2015..
Willfully Ignoring Hubbards actual statments on the matter doesn’t become you willis. Crude oil production is not even close to the 1970 levels. Moving the bar to discredit a dead man is very poor form.
But I don’t believe that either for oil or copper this process of new discoveries can go on indefnitely
We haven’t worked the asteroids yet.
There are still severe questions on just how well fracked wells for oil perform over time.
I’d also note that a significant part of the already existing increase in oil production isn’t new wells, it is fracking performed on existing wells. Why does this matter? Because in this case, the production is literally only accelerating what was already going to be produced.
Or in other words, robbing Peter to pay Paul.
Time will tell…