Peak Oil Re-visited

Guest essay by Mike Jonas


In January 2012, my article “Peak Oil – the R/P Ratio re-visited” was posted on WUWT. 3 years on, maybe this ever-controversial subject is worth (re-)re-visiting.

In 2012, I said that it was getting ever more difficult to increase production, and that I suspected that we were already at or close to Peak Oil, but that it was still mathematically possible that Peak Oil was many years away. Do I still think that? In a way, yes, but … well, read on …

In this article, I look at the major factors affecting oil supply, look at past oil market behaviour and how the future may develop, see what lessons can be learned from Hubbert’s Peak, and speculate on when Peak Oil will occur and what it may feel like.

Some of the controversy generated by the 2012 article came from different interpretations of “Peak Oil”, so this time, I will start with the definition and a bit more background.

Definition of “Peak Oil”

The definition I am using is simply :When the rate of oil production reaches its maximum.

Please note:

· In this definition:

Peak Oil is not : “when we run out of oil“.

This is not a useful definition, because we’re not going to wake up one morning and find that yesterday’s oil has all gone.

Peak Oil is not : “when we can’t increase the rate of oil production“.

This isn’t very useful either, because “can’t” is always open to argument.

· The period over which the maximum is determined is not specified, so this still isn’t a precise definition. Certainly, any period less than a year is irrelevant. We very likely won’t know when it was until several years afterwards.

· The reason for oil production reaching its maximum is not specified, and possible reasons will be discussed below.

· I am not talking about fossil fuels generally, and I am not talking about oil and gas. I am talking specifically about oil. That does include gas liquids and “unconventional” oil, but not biofuel. (“Unconventional” oil is described later.) s` qA

· Peak Oil is not necessarily a disaster, it could even be a positive. This also will be discussed below.

One idea which surely is not open to argument is the fact that oil production will peak. Here is a long term graph of past and predicted future fossil fuel production – peak production rate is defined as 1, and the red star represents where we are now (or were recently):


Figure 1. World Total Fossil Fuel Consumption, past and predicted – the long view. [1]

Even if those future estimates are very inaccurate, it is inconceivable that fossil fuel production can keep increasing for thousands of years. The graph for oil must fit inside the graph for fossil fuel.

But predicting Peak Oil has always been an unrewarding exercise. As critics love to point out, various people have predicted Peak Oil for over a century and have been wrong every time.

Factors affecting oil supply

The principal factors affecting oil supply are:

  • Geology
  • Politics
  • Demand
  • Price “The solution to high prices is… high prices.” – T. Boone Pickens (h/t John Garrett)
  • Technology

Geology is obviously a factor – geology dictates much of where the oilfields are, how much oil is present, its quality, and how difficult it is to extract.

The other factors are all interdependent, so it is arguable how much impact each factor has.

· Many if not most oilfields now belong to nation states, not to oil companies. Consequently many of the decisions affecting oil supply are political. There are also involuntary political impacts such as wars.

· Demand has grown fairly steadily for many decades, due to living standards increasing in developed nations and many other countries accelerating their economic development.

· To the extent that supply is flexible, production tends to be driven by demand.

· Price is the major balancing factor. High oil prices increase the attractiveness of bringing new sources into production, but can also suppress demand. Low oil prices increase the attractiveness of using more, ie, they tend to increase demand, while discouraging high-cost sources of supply.

· Technology is a two-edged sword. Oil production technology has seen tremendous advances since the start of the oil era, allowing ever more oil to be found and produced, thus boosting supply. But technology also helps to make oil use more efficient and other energy sources more competitive, thus reducing demand.

Should I have listed Discovery as a major factor? Maybe I should, but I chose to regard it as a subset of Geology, perhaps with Politics, Demand, Price and Technology as modifying factors.


Hubbert’s Peak

Most people are by now familiar with Hubbert’s Peak. M King Hubbert’s theory [5] says that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. In 1956, Hubbert famously predicted that US oil production would peak in about 1970. His prediction was remarkably accurate over the next 50 years.


Figure 2. Hubbert 1956 prediction vs US Oil Production . [5]

Predictions that are that accurate over 50 years are quite rare.

For the global bell curve, the upward slope tends to be limited by demand, ie. as much as can be sold at a reasonable price. The downward slope, for regions and fields that have reached it, tends to be limited by geology, ie. the maximum production rate consistent with maintaining reservoir viability. [NB. I’m only referring to general tendency. There are many exceptions of course.]

The overall bell curve is the sum of its components, each of which is a bell curve. Thus a region’s bell curve is the sum of its fields’ bell curves, and each field’s bell curve is the sum of its individual wells’ bell curves. This pattern is demonstrated in, for example:


Figure 3. Historical extraction of crude oil by discovery/field for the Norwegian Continental Shelf (NCS), 1970-2013, plus forecast. [6]

Note that the “bell curves” for the individual fields have a wide variety of shapes. Note also that once a peak has been passed, even a very large field like Johann Sverdrup (Norway’s 4th-largest discovery at 2.9bn barrels) may only produce a brief delay in the decline.

Unconventional Oil

One notable exception is the USA, where very large quantities of “unconventional” oil have recently become viable thanks mainly to technological advances and high oil prices: This surge in “unconventional” oil production can be seen from around 2007 in Figure 4:


Figure 4. USA oil production 1965 to date. [2]

What is “unconventional” oil? A-simple definition is “oil collected by other means than simply drilling for it” [7]. Willis Eschenbach put it differently:

The strange part is, when you open a barrel of unconventional oil to see what conventions were broken in its creation, you find it is indistinguishable from conventional oil. [8]

Both are right, in a sense, but I’ll stick loosely with the “unconventional” idea simply because it’s a useful word for the oil which even under current technology is much more difficult and expensive to produce than the oil we’re used to that satisfied all demand until recently. The definition is loose, but some pictures [9] might help:


Figure 5a. An oil rig blowout in Turkmenistan. The easiest “conventional” oil to produce (with care!) is under pressure.


Figure 5b. West Texas pumpjack. Some “conventional” oil has low pressure and has to be pumped out.


Figure 5c. “Unconventional” oil such as the Alberta Tar Sands are currently being mined.

“Unconventional” oil also includes shale oil, which can be drilled for rather than mined, but tends to be in very tight rock formations that are difficult and expensive to produce from, and tends to require techniques such as horizontal drilling and fracking [11].

Past Oil Production

Before I show the graph of past oil production, it will be helpful to show the graph of oil price. It’s from data in BP’s June 2014 report [2], so doesn’t show the recent fall back towards $40.


Figure 6. Oil Price from 1965. [2]

Looking at the first half of the graph –

· The first major disruption in this period occurred in 1973, when OPEC quadrupled the price of oil.

· The second was the Iranian revolution in 1979 and the Iran-Iraq war starting in 1980.

· These disruptions helped to bring on a massive recession in 1981-2, the most significant recession since the Great Depression.

· Reduced demand because of the recession resulted in the oil price fairly quickly returning to “normal”.

In the second half of the graph:-

· For a decade or so after the start of the 21st century, supply struggled to keep up with demand and the oil price went up …

· … apart from a short sharp dip at the time of the GFC.

· Not shown is the recent sharp price decline, caused by surging US “unconventional” oil production and exacerbated by Saudi Arabia’s decision to maintain high production.

But in spite of the economic booms and busts, it is clear that although the oil price has been volatile at times, oil demand and/or supply have been relatively inelastic:


Figure 7 – Oil Production.[2]

Oil Reserves

Oil reserves are very much a function of technology and price. A generally-accepted definition [3] of Reserves, also called Proved Reserves or Proven Reserves, is:

the estimated quantities of oil which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under current economic and operating conditions

In my 2012 article, I paid too much attention to proved reserves. That was partly because I was responding to a Willis Eschenbach article about the R/P Ratio (Reserves / Production), but mainly because in my mind I overestimated the importance of Proved Reseserves. What really matters is the Technical Reserve (“TR”, the total amount of oil that might be able to be produced at some future time), rather than the more narrowly defined “Proved Reserves”.

So – how much oil is there? That number is surprisingly difficult to find (well for me it is, anyway). The USA is it seems the only country that tries to estimate it. The U.S. Geological Survey (USGS) puts it at 732 Bbbl excluding the USA (565 conventional, 167 gas liquids) [12], plus 42 Bbbl in the USA (32 conventional, 10 gas liquids) [13]. But unfortunately USGS says “Unconventional oil and gas resources, such as shale gas, tight oil, tight gas, coalbed gas, heavy oil, oil sands, may be significant around the world, but are not included in these numbers.“.

Total USA shale oil is put at 2,175 Bbbl plus “significant volumes of heavy oil in the oil sands of northeast Utah” [14]. Outside the USA, total unconventional oil is put at 335 to 345 Bbbl, but with much information missing [15]. [Note: The source here is Wikipedia, but (a) the data isn’t particularly controversial so Wiki should be OK, and (b) accuracy isn’t very important, only the general level.]

Total oil production to date is about 1,440 Bbbl [16].

A possible estimate of global initial TR is therefore about 5,000 Bbbl:

Past production 1,440
USA conventional 32
USA gas liquids 10
USA shale etc 2,175
Non-USA conventional 565
Non-USA gas liquids 167
Non-USA shale etc 345
Total 4,794

Peak Oil date

Looking back at Hubbert’s Peak in Figure 2, it is striking just how accurate Hubbert was for 50 years, and equally striking that after 50 years of impressive accuracy, it went badly wrong (see the production surge from 2007 in Figure 4). So – what happened, and are there good lessons to be learned?

If you read Hubbert’s paper [5], you will note that he bases his estimates on very few numbers. The most important number was the total amount of oil. For the graph in Figure 2, total oil in the USA was put at 200 billion barrels (“Bbbl”). Hubbert didn’t actually know what the correct number was, so he estimated for 150 Bbbl and for 200 Bbbl. The graph for 200 Bbbl proved remarkably accurate.

Where Hubbert went wrong (50 years later) was that he did not make proper allowance for the “unconventional” oil, even though he knew of its existence. The combination of technological advance and high oil prices resulted in a massive surge in USA production of “unconventional” oil from around 2007. There was therefore a major departure from Hubbert’s predictions for the USA (Figure 4).

Put simply, all we have to do in order to correct Hubbert’s predictions for the surge in “unconventional” oil is to update the figure for total oil TR. The other principal figures Hubbert used were current production rate and rate of demand growth, and of course new values for those should be used too.

Hubbert put initial global TR (today’s TR plus all past production) at 1,250 Bbbl, and predicted global Peak Oil in 2010, based on the theory that Peak Oil occurs when about half of the TR has been produced. 2013 production rate was around 32 Bbbl per year, so using Hubbert’s theory and our new figure for TR, we can do a rough calculation on an “all other things being equal” basis, of when Peak Oil will occur (see spreadsheet [16]):

If global initial TR was 5,000 Bbbl and future production growth rate is 3% pa, then Peak Oil occurs around 2036. At lower growth rates (2%, 1%) the date is only slightly later (2038, 2041). The truly fascinating aspect of these figures is that a quadrupling of initial TR from 1,250 to 5,000 Bbbl only adds about 30 years to the likely Peak Oil date.

Over the last few decades, oil production has grown at around 1.3% pa [2] on average. In spite of the recent surge in USA “unconventional” oil production, global oil production has slowed a bit in recent years to about 1.1% pa. With USA shale/tight oil production expected to decline from 2020 [17], it may be difficult to maintain a positive global production growth rate from then on. Peak Oil is when the global growth rate hits zero.


The above calculation putting Peak Oil at around 2036 is simplistic, of course. It implicitly contains some big assumptions about future demand, technological advances, massive mining operations from Alabama to Utah, and a few others no doubt. It is probably reasonable to view it as giving an upper limit.

But maybe we can get more realistic if we look at some of the major factors again:

· Politics : Already, fossil fuels are under savage attack from the Greens worldwide. Hopefully, sanity will prevail, but there is clearly some risk of a politically-enforced early Peak Oil date (and peak everything else). That could be very painful indeed, a disaster on a scale that is hard to imagine. On hopefully a lesser scale, political instability in oil-producing countries is a potential threat to oil supply.

· Demand : From 2000 to 2013, production has gone up from 74,983 to 86,808 bpd [2], an average increase of little over 1% pa. There are increasingly plentiful and cheap supplies of natural gas, which may well eat into the demand for oil. Greater efficiencies, possibly driven by the oil price, may also help to limit demand. However, a period of global cooling, as some think likely, may increase oil demand for heating. Also, a period of renewed global prosperity would surely push up the demand for oil.

· Note: The relationship between demand and Peak Oil date is interesting. In the simple calcs [16] a higher production growth rate gave an earlier Peak Oil date. But under higher demand, if the oil price is strong (but not so high that it knocks demand down again), it is likely that more of the TR will get produced and hence Peak Oil date could even be later.

· Price : The full incremental cost of oil production – the cost of a barrel from new sources taking up-front capital costs into account – is now probably above $US70/bbl [17]. This view is reinforced by the oil futures market, where oil for delivery in future years is in Contango, ie. higher than the spot price by more than the storage cost [19]. For global oil production to keep increasing, a greater proportion of production will have to come from “unconventional” sources, and that does look likely to push the cost up further. As the cost of oil rises, so alternatives such as natural gas become more competitive.

· Technology : Will technology be able to keep ahead of demand by both (a) reducing the cost of production of “unconventional” oil, and (b) increasing the rate at which it can be produced? If it cannot, then Peak Oil occurs earlier. Technology may also work to reduce demand for oil by, for example, replacing it with gas or electricity for some uses, and by enabling more efficient use of oil.

With all these conflicting factors, the future for oil looks difficult to pin down.


A Peak Oil date cannot, I think, be predicted with any reasonable certainty. Although it is mathematically possible for Peak Oil to occur after say 2040, it looks unlikely to be as late as that, and may well be much earlier.

Major advances in “unconventional” oil technology are needed to forestall Peak Oil for more than a few years. Technology has always delivered in the past, and it is reasonable to assume that it can continue to deliver in future.

But there is another possibility : The price of oil is still likely to increase. If alternative energy sources such as natural gas (or even nuclear or solar energy) are available in sufficient quantity, and if the technology is developed for them to compete for some uses of oil, then Peak Oil occurs early and everyone benefits.

So Peak Oil doesn’t have to be regarded as a disaster. With any luck it will be a massive non-event that no-one even notices.


Prediction is very difficult, especially about the future [18]. So I won’t make any predictions. Instead, I will offer some scenarios (don’t take them too seriously, consider them as using “artistic licence”, a bit like climate model “projections” but hopefully more realistic):

Scenario 1. The marginal cost of oil (driven mainly by “unconventional” oil) stays high, while alternatives such as gas become increasingly available at attractive prices. Heating at first, then transport, start converting to the alternatives. Peak Oil occurs early, but the total amount of energy available just keeps increasing while prices remain fairly stable, so there is net economic benefit.

Scenario 2. US shale oil production increases sharply until 2020, then declines. Together with other new sources of supply, the US shale can more than keep pace with declines in existing fields until 2020, but then it is found that other “unconventional” oil sources simply cannot ramp up production enough to keep pace. Total oil production declines quite sharply. In this scenario, Peak Oil occurs around 2020 and the oil price soars. There is then a painful transition period while other fuels scramble to make up the shortfall.

Scenario 3. Technological advances continue to reduce the marginal cost of “unconventional” oil production and to allow ever-increasing production rates. Technological advances also allow increasingly efficient uses of the oil, fuelling economic advances world-wide. A lot more “unconventional” oil is discovered in various parts of the world, and oil production continues to increase steadily until well past 2040. Oil production peaks around 2050, but gas, coal and nuclear keep the energy supply increasing for many more years after that, while solar technology matures and eventually everything (except possibly air transport??) runs on nuclear and solar.

Scenario 3 should be the most likely, but if our politicians continue to get ever more adept at stuffing things up, then the unpreparedness of scenario 2 may be the best we can hope for.

As always, I will be happy to be proved wrong!



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.



[1] “Declining Fossil Fuel Supplies and the Energy Trap“, Tom Murphy, 31 Oct 2011.

[2] Data is from: BP Statistical Review of World Energy June 2014.

[3] BP: Oil Reserve Definitions.

[4] US Energy Information Administration (EIA): Petroleum & Other Liquids.

[5] From Wikipedia 3/9/14: Hubbert peak theory. The graph matches the graph in Hubbert’s 1956 paper, Figure 21, for assumed initial reserves of 200 billion barrels.

[6] Norway crude oil production 1970-2013. Data is from the Norwegian Petroleum Directorate (NPD).

[7] Unconventional Oil Reserves in and Around the US.

[8] Conventional Wisdom, Unconventional Oil, Willis Eschenbach, February 2, 2013.

[9] Oil rig blowout photo from Azhargd Gdin. Pumpjack photo from Wikimedia. Alberta Tar Sands mining photo from Photobucket.

[10] Paleofuture article We’ve Been Incorrectly Predicting Peak Oil For Over a Century

[11] The Bakken Shale Oil Field, North Dakota.

[12] USGS Global Estimate for Undiscovered, Technically Recoverable Conventional Oil and Gas Resources US Department of the Interior Press Release.

[13] USGS U.S. Oil & Gas Reserve Growth Estimates US Department of the Interior Press Release.

[14] Wikipedia Oil Reserves in the United States.

[15] Wikipedia Unconventional Prospective Resources.

[16] Spreadsheet.

[17] Business Insider Australia Breakeven Oil Prices For America’s Shale Basins. Keystone XL Project Draft Supplemental Environmental Impact Statement (Figure 1.4.6-8 Mining Breakeven Oil Price. Note also Figure 1.4.4-8 showing US shale/tight oil production expected to decline after 2020)

[18] Niels Bohr, from The Quotations Page

[19] Futures Magazine Contango crude markets.

390 thoughts on “Peak Oil Re-visited

  1. The question mark in Figure 1 is, assuming a constant standard of living, “nuclear chemistry.” The whole frigging universe runs on it.

      • What a great article! I enjoyed expanding my knowledge and thank the author for his clear and thorough analysis.

      • Yes. Basically, we will use oil as long as we can. Then, we will face down our fears and go nuclear. It is foreordained. All the other “alternative” crap is just denial by people who cannot grasp the enormity of our energy appetite, and cannot run the numbers to see that they can never be more than a drop in the bucket.

      • Leo Smith,
        Astute comment as usual. Bart is right, too. But I don’t think we’ll suddenly ‘go nuclear’. As with all new technologies, as the old one (oil) becomes more and more scarce, the demand for alternatives will escalate. There will be a transition, not an emergency as oil is suddenly gone. ‘Peak oil’, if we’re even there yet, will have a long tail.
        We’re depleting the low-hanging fruit, and we got a reprieve with fracking. But the price of oil will gradually rise. It is not an emergency.
        Even at $200, $300, or $400 a barrel, oil is cheap. Anyone who doesn’t think so is invited to put their car in neutral, shut off the engine, get out, and push it about twenty miles down the road. Then tell us what a gallon of gasoline is worth.

  2. Mike Jonas,

    So Peak Oil doesn’t have to be regarded as a disaster. With any luck it will be a massive non-event that no-one even notices.

    What we’ll notice — what we’ve always noticed — are supply shocks, which to date have been mostly artificial, i.e., not due to actual unavailability but deliberate supply reduction for financial or political purposes. One of the better arguments I can think of to embark on a proactive campaign to roll out fossil fuel replacements starting now is not just because “peak oil” has proven inherently unpredictable, but because dependence on foreign oil gives foreign powers leverage I’d much rather they didn’t have.
    That climate projections are fraught with uncertainty ought to prompt similar thinking — in my mind, rational prudent people argue for stasis, or at least caution, when the estimated effects of future change have got uncertainties wide enough to pilot a New Panamax-incompatible TI class supertanker through.

    • Brandon once again reveals himself to be full of hubris that he can coordinate markets better than a free market and that he thinks there is a qualitative difference between textile dependence and energy dependence.

    • In other words, because oil might get expensive some day in the future, in order to protect the economy we need to start shifting to expensive unreliable energy immediately.

    • swwilkes,

      Brandon once again reveals himself to be full of hubris that he can coordinate markets better than a free market and that he thinks there is a qualitative difference between textile dependence and energy dependence.

      No. However, I am aware that the vaunted free market is quite capable of being full of its own hubris:
      They’re also not always so keen on correctly pricing external costs:
      See also:
      The line between a free market and centrally planned economy is pretty vague because neither have ever existed in pure form on a large scale for the very reason that purist ideologies hardly ever work out in practice as well as their promoters advertize.

      In other words, because oil might get expensive some day in the future, in order to protect the economy we need to start shifting to expensive unreliable energy immediately.

      Well it’s just a hit-parade of inability to read my mind tonight, innit.
      Right off the bat, I would gladly trade every coal-fired power plant for fission. The two are roughly at parity. To replace the natural gas-fired plants, I suggest geothermal, which the US EIA estimates winds up being ~3/4 the total levelized system cost per kW/h without incentives.
      That frees up the natural gas for use in transportation, which is a far better deal than feeding corn to automobiles … the latter practice which should never have been done in the first place and should be ended immediately.
      Solar PV is reaching parity with coal, $130.0 vs. $95.6 per MWh respectively, again without subsidies. The way to look at that is that the previous subsidies have gotten market players into the game and economies of scale are bringing costs down.
      People don’t like wind, and I have to say I’m not a huge … fan … but at $80.3/MWh it beats out hydroelectric (84.5) and is only about 20% more expensive than natural gas (64.4-66.3). Neither solar or wind are dispatchable, which is why I favour nukes and geothermal even though both of those are the more expensive to deploy. It would be prudent to keep fossil fuel plants around for peaking power and/or backup — which is effectively the same redundancy we’ve already got today.
      All figures are for new installations going online in 2019, from:
      Nothing I’ve proposed relies on speculative technology, and none of it requires jacking end-user electricity costs by double-digit percentages. Do yourself a favour and refrain from putting words in my mouth or thoughts in my head which are not there.
      Finally … oil might get expensive some day? Unbelievable. What planet is it that you are living on?

      • The eia (U.S. Energy Information Administration) projections that you reference are based on the following:
        “Under the assumption that current laws and regulations remain unchanged throughout the projections, the AEO2014 Reference case provides the basis for examination and discussion of energy production, consumption, technology, and market trends and the direction they may take in the future. It also serves as a starting point for analysis of potential changes in energy policies.”
        Yes, (manipulated) market trends.
        So, to paraphrase the governments’ projection basis (or more aptly, their disclaimer): Based on the regulatory preference towards wind, and the giant hammer used against gas, coal, and nuclear, we have decided that wind & solar power generation will be cheaper in the future.
        Our head policy maker has stated that will make coal to expensive to utilize…. We all know what a regulatory expense it would be to try for nuclear. (this is taken into account through the “market trend” part of the disclaimer).
        The numbers are not cooked, but they are massaged to reflect desired outcome. It is like making an initial assumption and using that assumption to prove your theorum … it’s generally not allowed, like dividing by zero.
        Brandon, it appears that you have made an emotional decision and you will believe anything, and accept any resource that supports your emotional outlook. I am not trying to “put … thoughts in your head” (that are obviously not there), but if it walks like a duck and quacks like a duck, it is reasonable to say that it appears to be a duck.

      • DonM,

        Yes, (manipulated) market trends.

        Ok, what do the unmanipulated numbers say.

        Our head policy maker has stated that will make coal to expensive to utilize….

        Our head policy maker doesn’t speak for me, and there are days I really wish he’d just put a sock in it. That said, coal already IS expensive to utilize, the free market just doesn’t bother to price it correctly because, in truth, it’s quite difficult to price correctly. Forbes generally agrees with me, something I never tire of pointing out:

        We all know what a regulatory expense it would be to try for nuclear.

        No, “we” don’t “all” know. First of all: France. Nextly, consider that much of the red tape at the NRC was put there by the left, which a sufficiently motivated Obama could make some meaningful progress in cleaning up. What would be sufficient motivation, I do not know, but I suspect it’s something he might actually find some Congressional support for … at the very least in the interest of keeping his veto inkwell from running dangerously low. Alas, horse-trading and compromise seems a lost art these days, but hope springs eternal.

        Brandon, it appears that you have made an emotional decision and you will believe anything, and accept any resource that supports your emotional outlook. I am not trying to “put … thoughts in your head” (that are obviously not there), but if it walks like a duck and quacks like a duck, it is reasonable to say that it appears to be a duck.

        Basically the entire substance of your response was a partisan chant, no alternative figures or analysis whatsoever. No substance in other words. Perhaps you should step away from the mirror.

      • Brandon Gates – I may be misinterpreting what you are saying but you seem to want to pick all the winners. Surely it’s better to get the playing field as level as you can and then let the best ones win.

      • “People don’t like wind, and I have to say I’m not a huge … fan …”…tee hee hee…

      • Using the U.S. financial markets as an example of the free market is a terrible comparison. Between the Federal Reserve, and computer trading programs, and insider information, etc., it is far from being a free market.
        There are much better examples of the free market: electronic products, including computers, printers, smartphones, tablets, etc. Prices have inexorably fallen, while quality and performance have risen. Or consider automobiles. Cars today are much better than they were only 30 years ago. They are cheaper for what you get, safer, better performing, and they last longer.
        But financial markets? No. Too much manipulation to be called a free market.

      • the crisis of 2007 was caused by the housing bubble which derived from gov’t interference in the market and the tragedy of the commons is also NOT a free market example, when no one owns a resource it wont get rationed. ownership of scarce resources is the heart of the free market and would prevent a tragedy of the commons. your examples fail to show any failures of the free market.

      • Mike Jonas,

        I may be misinterpreting what you are saying but you seem to want to pick all the winners.

        I do indeed have opinions about what I think they are.

        Surely it’s better to get the playing field as level as you can and then let the best ones win.

        That assumes the playing field can be levelled without picking horses to win, place and show. The idea of putting a price on carbon doesn’t do that because not all carbon-based fuels are priced the same. Reviewing the EIA numbers cited above, the levelized system costs in $/MWh are …
        coal 95.6
        natural gas 64.4
        … or over a 30 $/MWh spread. Recall also that solar PV is 130.0 $/MWh. To bring natural gas to exact parity with solar, we’d have to set a carbon price which would effectively double the levelized system cost per MWh for a natural gas-fired plant. That would put coal into orbit, which would be double-plus ungood since coal accounts for just under half of electricity generated in the US. More to the point, it would raise end-user electricity prices across the board, significantly so. Not feasible. And a blunt instrument.
        I think it’s better to pick winners by way of subsidy, loan guarantees and/or tax incentives. This shouldn’t be an issue — we already subsidize fossil fuel exploration. I don’t have a categorical issue with doing that, energy security is a strategic concern both economy- and military-wise.
        In short, I look at the AGW problem and see plenty of mid-term opportunity to improve the overall economy for manageable near-term risk. The horses I pick to win, because they’re already cost competitive, have the added benefit of mooting highly uncertain future risks due to CO2. I don’t believe that a laissez-faire market will act in its own best long-term interest. For evidence, once again I cite:
        More free-market players run amok:
        Don’t get me wrong, I love gasoline. But even without my long-term AGW concerns, I can think of gobs of reasons to want to burn something else in its stead. Even more so for coal.

      • tom s,

        “People don’t like wind, and I have to say I’m not a huge … fan …”…tee hee hee…

        I’m always gratified when someone appreciates my subtle (but arguably terrible) puns.

      • chas,

        the crisis of 2007 was caused by the housing bubble which derived from gov’t interference in the market and the tragedy of the commons is also NOT a free market example, when no one owns a resource it wont get rationed.

        From the horse’s mouth:
        Literally, the money quote: “I’ve always considered myself more of a mathematician than a psychologist,” says Mr. Greenspan. But after the Fed’s model failed to predict the financial crisis, he realized that there is more to forecasting than numbers. “It all fell apart, in the sense that not a single major forecaster of note or institution caught it,” he says. “The Federal Reserve has got the most elaborate econometric model, which incorporates all the newfangled models of how the world works—and it missed it completely.” He says JP Morgan had put out a forecast three days before the crisis saying the economy was on the rise. And as late as 2007, the International Monetary Fund also said that global risk was declining. “A few days [after the crisis hit], I run into an article, and it is titled, ‘Do we economists know anything?’ ” he says.
        Mr. Greenspan set out to find his blind spot step by step. First he drew the conclusion that the nonfinancial sector of the economy had been healthy. The problem lay in finance, because of its vulnerability to spells of euphoria and irrational fear. Studying the results of herd behavior provided him with some surprises. “I was actually flabbergasted,” he says. “It upended my view of how the world works.”
        He concluded that fear has at least three times the effect of euphoria in producing market gyrations. “I wouldn’t have dared write anything like that before,” he says.

        Regulation was not the cause — Greenspan was generally quite hands-off, as was W. Bush on economic matters. Someone yelled fire in a crowded theater at the first whiff of smoke in securitized subprime mortgage instruments, and the herd trampled itself to death heading for the exit out of all securitized debt. It was painful to watch — my client at the time was a commercial real estate operator who was overleveraged. After predictably failing to convince any bank in the world to renew their due notes at year end, they got bought out for pennies on the dollar same as most of the subprime mortgage debt did. They were then swiftly evicted and properties rebranded. Very few staff survived the buyout. A very profitable Fortune 500 company vaporized inside of three years like it had never been there over a deliberately obscured fault in a debt market they weren’t even a direct part of. It was astounding.
        For the record, I think that Alan Greenspan was one of the better Fed chairs we’ve ever had judging by his overall record.

        ownership of scarce resources is the heart of the free market and would prevent a tragedy of the commons.

        At the potential expense of stifling competition, in particular by allowing existing powerful market players to collude and create insurmountable barriers to entry for new players who might better develop or allocate those scarce resources. Consumers lose in that scenario, much empirical evidence demonstrates the principle.
        One way that specifically applies to petroleum has already been mentioned: it is a scarce resource which we are most rapidly depleting for energy whereas it also has critical uses in the petrochemical industry which supports a vast host of secondary of industrial activities — agriculture being the one I’d consider one of most critical, but plastics and solvents for manufacturing and feedstocks for the pharmaceutical industry cannot be discounted.
        Another case for tragedy of the commons is when one owner’s economic activities negatively affect other market players due to the unintended consequences of production by-products. AKA pollution. Agricultural runoff causing algae blooms in the Mississippi delta thereby putting a dent in the Louisiana seafood industry’s margins is an example. We’re absolutely better off growing the corn and soybeans, but why do the shrimpers “deserve” to have their family businesses put at risk, especially when there is market demand for their product?
        Markets are not good at resolving those sorts of disputes by themselves.

        your examples fail to show any failures of the free market.

        I’ve noticed that “greed is good” purists have a tendency to be immune to evidence, especially when it comes to how real world capital markets work — or don’t, as the case may be.

      • Brandon,
        Again, the eia projections are based on politics and are essentially make-believe. Keep citing make believe numbers and you will not be able to convince anyone of anything … except your pick and choose bias.

      • DonM,

        Keep citing make believe numbers and you will not be able to convince anyone of anything … except your pick and choose bias.

        Instead of your “the gummint is biased” bias? I’ll stick with informed numerical estimates as the basis for my beliefs, thanks.

      • Brandon @ 3:18,
        Government action was indeed the cause of the financial crisis. The subprime slime was entirely the work of Clinton, Rubin, Frank and Dodd, who required tossing out time-tested requirements for mortgages to permit scrapping the provision of Glass-Steagall that kept investment banking separate from mortgage lending, a move supported by both Democrat and Republican members of Congress beholden to the banking industry. By itself, altering G-S wouldn’t have been so bad, but combined with the subprime slime, it led to mortgage-backed securities and a decade of liars’ loans. Rubin promptly resigned from Treasury to take advantage at Citi of the new scam he created.
        Bush’s and later Congresses’ contribution was not replacing the FBI banking fraud investigators moved to counter-terror duties. However his first Treasury Secretary did try to rein in Fannie and Freddie, but were stopped by Frank, whose boyfriend directed Fannie (so to speak) Mae.
        Greenspan didn’t think that a nation-wide housing bubble could exist, but has since admitted he was wrong, not having taken heed of the warnings of prescient commentators and testifiers in 1998 about what Clinton, Rubin and Democrats in Congress had wrought.

    • The numbers in this post are all over the map. For example, while the official SEC mandated reserves for the Alberta oil sands are approx. 170 billion barrels, those with industry insight in the Alberta oil patch would tell you that the real “proved” number is the other side of 1 trillion barrels and likely more with new technologies coming on line. That changes the entire story, right there.

      • I agree with tetris – the term peak oil reminds me of “global warming” – a scaremongering term completely out of place. There is so much oil-gas in the ground – that we could be producing HCs for decades at rates sufficient to fuel the planet and have street lights and energy in every single household.
        I am talking unconventional, which requires advanced technology to extract and technology is improving which will even increase recovery. Let’s look at some countries oil-output: Russia – they have a steady output of ~10 mmbpd, the USA ~9-13 mmbpd over the last 2 years, Norway ~2 mmbpd, Canada ~4 mmbpd and then Saudi Arabia ~12 mmbpd. Did I mention Columbia, Venezuela, Argentina, Jemen, Oman, UK, Germany, China, Australia or many other countries which have not even started tapping seriously into the unconventionals? Russia with its huge reserves in both shale gas/oil and coal seam (bed) methane – have not even bothered started their unconventional shale exploration at a serious level (like the US, Canada).
        Hence, just say it plainly – Hubbert was completely wrong because all he could see was conventional oil – reminds me of the CO2-debate – some people see a single source as the evil – but we should all know better that there is more to the story and the complexity make it bigger than most people can grasp at the moment. All I see is that our resources will last for another >100 years even at higher consumption.

      • tetris – Yes, if your numbers are right, then one side of the picture does change (the supply side). Every additional trillion barrels adds something like 15 years to the “mathematical” peak oil date. Does the whole picture change? Not if a plentiful cheap alternative appears.
        AnotherQlder – Yes, “Peak Oil” is a term that has been used for scaremongering. My article encourages people to view it differently:- “So Peak Oil doesn’t have to be regarded as a disaster. With any luck it will be a massive non-event that no-one even notices.“.

  3. Mike Jonas: It is not “TAR SANDS”. They are either “oil sands” or more correctly, “bituminous sands”. Using the pejorative is not technically correct. “Tar” is made from different processes and different sources.

    • I embrace the word tar in tar sands. That tar is a staving off economic disaster in Ontario. All Canadians should speak loudly and proudly about the tar extraction in Alberta and Saskatchewan. Over time, our privately funded privately held corporate citizens will complete the massive soil remediation effort now underway. In the mean time everyone else can enjoy the by-product of ethical oil being produced.

    • Athabasca has bitumin sands. Remains of the worlds largest natural oil spill. Bitumen is roughly equivalent to asphalt, with no remaining light fractions prior to hydro upgrading using natural gas. Venezuela’s Orinoco has true tar sands. Below API 10 viscosity. To be technically correct, at least grok the industry technical differences between light, heavy, extra heavy, tar, and bitumen resources. Pretty simple. The amount of gasoline that can be cracked out diminishes with each grade.

  4. I appreciate the effort put into the article. I am one of those who accepts the Russian view of oil’s origin which is that it is produced at depths of greater than 100 km by entirely natural processes which will continue to operate for as long as there are continents to drift and subductions zones taking limestone into the mantle. It rises through great cracks and rises to the surface in some places. In SW Ontario it rises to within a few hundred feet of the surface along the southern edge of the Cambrian Shield.
    It remains quite possible that there is an ocean of oil trapped under the Cambrian Shield. There is certainly one under the Gulf of Mexico. Watch for NW coastal Haiti as the next exploration hotspot.
    Because oil is used for many things that can be replaced by nuclear-generated electricity, demand should fall. There you would have the ‘peak’, as defined, but nothing like ‘the end’. Peak oil is often used to incite fear in people with hints that it really means ‘the end of oil’ which is based on the misconception that oil is a fossil fuel. Peak coal will probably come in 2070 or so but it will still last for many centuries because there is just so much of it. It is easily turned into oil and other hydrocarbon chemicals from polypropylene to creosote.
    The amount of natural gas (which forms at depths greater than 30 km) on the planet is probably far more than the total oil and is more accessible. It is easily and cheaply turned into liquid fuels. Even if ‘oil’ disappears altogether (which is really unlikely) we would still have liquid petroleum fuels in very large quantities. That may continue indefinitely because natural gas is produced naturally from limestone, water and heat.
    The least-resistance chemical paths and the general chemistry of oil from rocks+heat is described in the relevant Russian papers. The oil now produced in Vietnam was discovered on the basis that is it not a fossil fuel, but rises from great depths. The Russian helped them find it. Fifty % of Russia’s present oil production was located on the same basis (that it is not a fossil fuel). Obviously if the general public were aware of this reality the arguments about oil would take on a very different cadence.

    • “I am one of those who accepts the Russian view of oil’s origin which is that it is produced at depths of greater than 100 km by entirely natural processes”
      I’ve worked with a lot of Russians, spoken with them at conferences, followed up their work in Viet Nam, and I never found a Russian petroleum geologist who believed that. Please stop perpetrating this strawman argument. They look for organic source rocks, such as the Bazhenov shale, just like everyone else who actually finds oil.

      • Doug
        I am not sure where you get the ‘strawman’ comment from. The theory is sound, the process has been analysed theoretically with the path of lowest energy steps fully accounted for. A lab has reproduced the conditions and the chemistry and the yield of long chain hydrocarbons fits exactly with the predictions as per the relative abundance of each chain (C1-C13).
        There is no reason for hydrocarbons chains not to form under 100,000 atmospheres pressure at 1550 C. There is twice as much water in the mantle as there is in the oceans so it is not short of Hydrogen or Oxygen. Carbon is all over the place. The experiments used marble dust. Why is anyone surprised?
        I am sure the oil in the Prirazlomnoye and others regions has been found using ‘conventional’ exploration. The regions to the East of the Caucasus, not so much. You may remember the attempt in Sweden in the 60’s to prove there was such a thing as abiotic oil, wherein a hole was drilled to great depth where there was, it was agreed, absolutely no chance at all that oil could be found there. At the bottom they found traces of hydrocarbons. That is not ‘oil’ of course, but supposedly should not be there.
        I find the lab experiments very convincing. If the chemical path was unknown or unproven, if the yield was not in the proportions expected, if there wasn’t so darned much oil all over the place most easily reached where the crust is thin, or where the undersea valleys are deep, or where there are major geologic faults, I would be more skeptical.
        Would it be terrible if oil were naturally produced, like natural gas? Is there some terrible prospect for mankind if it is supplied continuously…forever?
        Deepest hole at more than 12,000 metres which is 1/3 of the way through the Baltic Continental Crust:
        “In addition, the rock at that depth had been thoroughly fractured and was saturated with water, which was surprising. This water, unlike surface water, must have come from deep-crust minerals and had been unable to reach the surface because of a layer of impermeable rock. Another unexpected discovery was the large quantity of hydrogen gas; the mud that flowed out of the hole was described as “boiling” with hydrogen.”
        In the case of Shell’s deep hole drilling, how did such huge quantities of oil get under the 10,000 ft thick impermeable cap of rock, itself under two miles of water in the Caribbean?

      • Doug,
        The Russians are as good as anyone else at telling folks what they want to hear. Do you think that if they are aware of a major source of oil that other nationalities consider to be a fairy tale, that they will go out of their way to try to explain otherwise? Of course not. Of course they are going to pat you on the back and say to you “konechno! Ti shto! Otkuda mozhet buit neft bez drevnii rastenii? Ti nash rodnoi malchik!”

      • Phlogiston – I tried various translator pages, but came up empty. Google translate thinks it’s closest to Uzbek. That and Azerbaijani found the word “oil” in there, but otherwise came up empty. So, what does it say, and what language/dialect is it?

      • Crispin in Waterloo April 18, 2015 at 6:23 pm mentioned the drilling attempt in Sweden. This was actually from about 1986 to 1990 as instigated by Thomas Gold and reported briefly in his book ”The Deep Hot Biosphere” (1998). A worthy book in its own rights and as an example of a brilliant thinker defying a consensus.
        Commonly the results are reported as finding only “trace amounts” of oil. What Gold reports was a pump-up (from 6 km) of 15 tons “looking like ordinary crude oil.” Is that what one calls a “trace”? At least as important is the reason they STOPPED. The well was clogged with a black paste of fine-grained magnetite that kept inflowing. They pumped up 18 tons of that. Gold felt the magnetite was reduced from another oxide by living microbes at that depth.
        Kind of like going to an ATM and finding your card does not work, and concluding the bank has no money!

      • Bart April 19, 2015 at 10:05 am
        Amusing myself with Google Translate while my April 20, 2015 5:39 am Reply to Fernando Leanme April 19, 2015 at 2:04 pm is held up in moderation
        Bart, Phlogiston’s closing lines are written in Russian, but the transliteration is not quite standard. Try this:
        Konecho! Ty chto! Otkuda mozhet byt neft bez drevnij rastenij? Ty nash rodnoj mal’chik.
        конечно! Ты что! Откуда может быть нефть без древний растений? Ты наш родной мальчик.

    • Its possible some oil was produced abiotically, but it cannot be being continuously produced that way. The raw materials aren’t there

      • Carbon and hydrogen are certainly present in the mantle, so what’s missing?
        Here’s an interesting recent paper on hydrogen and water in the mantle:
        Here’s an older paper on carbon there:
        As discussed in a recent WUWT post, methane is produced abiotically on earth. What is to keep methane from forming ethane and longer hydrocarbon chains abiotically as well? The ethane on Titan presumably formed abiotically.

      • Our firsthand knowledge of what goes on in the bowels of our planet is somewhat limited. Consider than we’ve scratched the surface all the way down to 12, 262 meters deep on a sphere with a diameter of 12,756.32 kilometers.

        The Kola Superdeep Borehole (Russian: Кольская сверхглубокая скважина, Kolskaya sverkhglubokaya skvazhina) is the result of a scientific drilling project of the Soviet Union in the Pechengsky District, on the Kola Peninsula. The project attempted to drill as deep as possible into the Earth’s crust. Drilling began on 24 May 1970 using the Uralmash-4E, and later the Uralmash-15000 series drilling rig. A number of boreholes were drilled by branching from a central hole. The deepest, SG-3, reached 12,262 metres (40,230 ft) in 1989 and still is the deepest artificial point on Earth.[1]

      • And how can life go on? Carbon stored as limestone on bottom of the ocean would be lost for life. If there isn’t any mechanism to turn limestone back to atmosphere CO2, life would suffocate long ago. This is the reason of ice ages, life on Earth is going out of Carbon. So there simply must be some cycle to put it back from limestone to gas, oil and back to atmosphere.

      • That oil can be produced biotically doesn’t mean that it can’t be made abiotically. There are important arguments for and against abiotic oil. Proponents have responses to the criticisms, such as the isotopic composition of crude. I’m agnostic.
        If abiotic oil exists, then its supply is likely to be so great that keeping up with demand would be no problem. Drilling for it would be costly, however. Maybe you’re referring to the supposed natural recharge of existing reservoirs.

      • If it is so great how come those supposed deposits dont exist in precambrian rock? How come oil deposits are only found in former marine deposits?
        In Oil 101 you will see that every oil field has a unique chemical signature, which can be directly traced to the original source rock.
        Making oil artificially will have a negative ERoEI.

      • J Richard
        I am not convinced that one argument that supports biotic origins destroys alternative paths. Especially as the principal alternative path has been demonstrated in a lab: 0.6 cu cm chamber, 100,000 atmospheres pressure and 1550 C using water, marble dust and … (what as the other ingredient?) I do not recall it being iron. I have the paper somewhere around. I didn’t expect a quiz.
        “Making oil artificially will have a negative ERoEI.”
        That is quite correct. Hydrocarbon formation is endothermic. Ask SASOL. It absorbs heat in the mantle and turns the raw materials into a substance we call hydrocarbon fuels. Plants do the same thing making cellulose and lignin from CO2. Wood is a negative return on solar energy, but that is how the world works and why we have food.
        The claim ‘it happens’ is far from adequate. The chemical steps must be understood and each step has to be the lowest energy one it order for it to come out right. It does. The ratio of CxHy chains is not even. It is heavily tilted towards CH4, the shortest. That is why there is so much natural gas compared with oil (as far as we know so far).
        Yes it would be difficult to get but maybe they will learn to drill with lasers. We can’t speculate what the production rate is yet. Any tectonically active planet with lots of carbon and water should produce masses of methane, ethane, and of course, oil. The chain length of ‘Paraffins’ is directly related to depth (pressure) and temperature. The Athabasca Oil Sands is the result of a breach in the Shield. It is light oil so we can presume the source depth was between 100-200 km.

      • Sorry don’t have that book, nor do I have the time nor the desire to read every book suggested on every subject. So please enlighten us, why can’t production keep up with demand?

      • Consumption of oil is some 85million barrels per day. If abiotic oil formation was true and it was a fast production, we should see deposits refill at the same rate we consume it. Or at least, continue to discover hundred billion barrel deposits today. But we arnt, and they are not refilling.

      • Care to explain the abundant presence of hydrocarbons -chemically indistinguishable from those found on earth- throughout our solar system – with Titan’s hydrocarbon rains and lakes being an incontrovertible case in point? Or are we to believe that those hydrocarbons also are biotic fermented dino and fern juice?
        Have you had a look at the first findings of the ongoing Deep Carbon Project? It might make you somewhat less certain that abiotic hydrocarbon sources on our planet are just a figment of the imagination of people passing a couple of joints around.
        Reality is that we today have more proven oil and gas reserves [in other words the most conservative estimates] than ever before in the post-1860 era. Peak oil will in all likelihood never hit us, meaning we will leave of lot of the stuff in the ground as we move on to more efficient energy sources/uses – we did not leave the Stone Age or horse & buggy behind for lack of stone or horses.

    • “I am one of those who accepts the Russian view of oil’s origin which is that it is produced at depths of greater than 100 km by entirely natural processes which will continue to operate for as long as there are continents to drift and subductions zones taking limestone into the mantle.”
      I do hope you are joking.

    • Limestone and water are fully oxidized. They (or carbonate more correctly) cannot be converted to methane with heat. Now if one includes a reducing agent, iron or iron carbide for example, then that is a different story.

      • The lab experiment was done with ferric oxide if I remember correctly.
        It is important to realise that oil is found where it is trapped for whatever reason, not necessarily where it was formed (source rocks?) .
        There is a very good description of all the processes etc at which doesn’t require much more than a bit of logic and effort to follow. Be sure to read all the links on the right hand side of the page.
        Steve T

      • And it so happens there is plenty of iron/ iron carbide in mantle..
        Thinking outside the box does not consist of arguing why something is not possible, but figuring out why something might actually be possible. And then taking a hard look at all the data to see what conclusions one can draw.

  5. So the point is that as we transition to an new primary source of especially electrical production the market will create a “peak” production that will never resume. Sort of like what happened to the harvesting of whales with the introduction of fossil fuels. I find it curious though that the paper has the breathtaking supposition that the future energy production will be solar or nuclear. Those, my friend, are mutually exclusive projections for the main source of energy to drive the economy to build and maintain a high standard of living

      • Which is more a conserving resources that aren’t fungible argument than a peak production argument. And with which I wholeheartedly agree.

      • things which we cant get from electricity
        it is cheaper to produce plastic from oil than the alternatives. however, plastic’s are hydrocarbons and there is plenty of hydrogen, oxygen and carbon around, independent of oil.
        you could, for example, make plastic from limestone, sea water and electricity.

    • In what way is generating energy from solar sources mutually exclusive with generating energy from nuclear sources? I can’t see how these two sources conflict with each other?

      • mutually exclusive as a PRIMARY source of energy production to sustain and expand the number of folks living on the planet at a high standard of living. If you expend the resources on solar you will never achieve that (that’s not to say that for some limited applications solar doesn’t make sense) Solar is fun and economical when it is attached to an economy that is driven by far more energy dense and robust forms of energy production. A solar driven research station in some suitable remote corner of the world so we don’t have to transport fuel for generators or build power lines to support it might make sense but really isn’t that something we elect to do instead of have to do? Energy and lots of it is what we need to raise the standard of living and education for the world.
        I don’t get how liberals and environmentalists who profess concern for the poor of the world and the environment aren’t the most rabid advocates of a nuclear economy. Poverty is bad for the environment (hand made charcoal as a fuel has to rate in there as one that has huge deleterious effects and the way oil is distilled for the black market in Nigeria is a nightmare) A high standard of living and education are the only birth control measures that have ever worked if we are to achieve population stabilization. By all means lets get beyond coal for electrical energy production and bring those nukes on line.

      • while the Bakken is big, the Bazhenov — according to a report last week by Sanford Bernstein’s lead international oil analyst Oswald Clint — “covers 2.3 million square kilometers or 570 million acres, which is the size of Texas and the Gulf of Mexico combined.” This is 80 times bigger than the Bakken.
        If Harold Hamm is convinced the Bakken will give up 24 billion barrels, a play 80 times bigger like the Bazhenov would imply 1,920 billion barrels. That’s a preposterous figure, enough oil to satisfy all of current global demand for 64 years, or to do 5 million bpd for more than 1,000 years. Rosneft, says Clint, has already estimated 18 billion barrels on its Bazhenov acreage. Either way, it looks like they’ll still be working the Bazhenov long after Vladimir Putin has finally retired and the Peak Oil crowd realizes there’s more oil out there than we’ve ever imagined.

      • Doug, Hamm was hyping his stock. The Bakken TRR (including the underlying Middle Forks) is between 7.4 (USGS) and 8.1 (EIA) Bbbl. And Bazhenov is completely misunderstood and wrongly cited by MSM. Its areal extent has nothing to do with its TRR. The interesting story is explained in essay Matryoshka Reserves. In a nutshell, minimum TOC is maybe over a fourthnof the area. Some of that is techtonically autofractured, served as the source rock for Sineria’s massive conventional oil fields (samotlor is world’s 6th largest) and drill cores show fully depleted. The remainder has very unfavorable stratigraphy compared to Bakken. Best estimate for Bazhenov is 5.8Bbbl TRR, less than Bakken despite being 80x larger areally.

  6. Like many prediction, some parts turn out correct and other parts incorrect. What is correct may be completely coincidental and we shouldn’t gloss over it just because it turned out to be correct and then try to fix the incorrect parts. As you said, Hubbert didn’t know how much oil there was so he guessed. This means his prediction was just lucky. Throw it out and start with the facts. If you have to guess it isn’t science, its climate science modelling.

  7. Hubbert’s model works if you throw out economics. In the real word, the economic and technological facts change. I’m glad to see people are starting to accept that and look at data, not models

  8. I noticed that statutory limitations don’t seem to be taken into account. For instance, in the 80s oiled boom in ND, USA they pumped unlimited until dry (the little up turn on the peak oil graph). With the new oil fields in the Bakken, they limit how much they pump daily. If this is repeated in other states, this may skew results.

    • Tight shale oil well production follows a decay curve, not a bell curve. USGS estimate for the Bakken as little as 5% of in ground oil can be extracted, compared to a convention field of 40-70% production.

      • So, if we can only get 5% of the oil today, there is a lot left for tomorrow. Just imagine the boost in reserves if we could push that up another 3%

      • North Dakota production rates are not limited. I have testified before that commission many times, and production rates have not been imposed.

  9. Yes, indeed: “Peak Oil doesn’t have to be regarded as a disaster.” Moreover it SHOULD NOT BE.
    To worry about “peak oil” is to repeat the mistake of those who wrung their hands over the impending doom of the telecommunications industry because the world’s copper supply was diminishing rapidly…. then, along came silicon (sand).
    Human ingenuity is**.
    Technological advances (e.g., nanotech) WILL “save the day,” every time,
    So long as socialism (i.e., excessive government control of the economy) does not:
    1) impoverish the world to the point that innovation (education and science are a function of wealth ==> a function of liberty and free markets) is strangled; and or
    2) artificially create regulatory poverty by self-serving policies that bankrupt the “serfs” to enrich the “elite.” (See The Road to Serfdom, Friedrich Hayek (and Milton Friedman’s forward)).

    • re: “So long as socialism (i.e., excessive government control of the economy) does not…”JM
      Socialism destroys itself as it is unstable, self defeating and self consuming.
      Dan Kurt

      • Yes Dan, socialism does eventually destroy itself. But two big problems. 1. Socialism can punish and kill untold millions of people and wreck entire nations before it destroys itself. 2. Socialism is kind of like whack a mole. No sooner does it destroy itself in one place than radical leftists create it in another place. Thus, socialism seems to take on the role of a permanent scourge on mankind rather than a temporary problem.

      • Mods, I am dreadfully sorry.
        Two items. I forgot to close italics at the end of point 3.
        And last paragraph, ‘rely’ should read reply.
        I would be forever in your debt.
        [Done – mod]

    • Human ingenuity will definitely find a solution to having an overpopulated world full of billions of starving Homo sapiens. Some solutions involve the widespread use of high explosives, biological terrorism, killer robots, and other advanced technologies. Others can be limited to machetes.

      • David, I read your blog. But I don’t agree because we are running out of cheap energy, water, and quality space. The first signs are showing in pacific islands, North Africa, Pakistan and places like that. They will fly right past industrial to medieval all over again.

      • Firstly, it is not my blog.
        Secondly, I find you very hard to understand ( I am aware english is not your first language ). I am concerned about your comprehension as you cannot seem to make yourself clear in your “rebuttals”, which are usually off the mark and appear to be attempts to redirect from the points I have made.
        Thirdly, you need to back up the assertions you have made;
        1. But I don’t agree because we are running out of cheap energy, water, and quality space.
        2. The first signs are showing in pacific islands, North Africa, Pakistan and places like that.
        3. They will fly right past industrial to medieval all over again.
        If you can substantiate any of these, I might believe you actually understood the article you claim to have read. Still, because of this reply you posted I am doubtful you have read or understood it.

  10. The definition I am using is simply: When the rate of oil production reaches its maximum.

    Peak Oil is not : “when we can’t increase the rate of oil production“.
    This isn’t very useful either, because “can’t” is always open to argument.

    Last time I checked, maximum of X means X has reached its highest value thus won’t increase anymore. But if it can be increased then a maximum hasn’t been reached, yes?
    What are you really trying to say and what then is your actual definition of “peak oil”? Your current one sounds very muddled.

    • Its perfectly obvious what is meant: peak oil is when the production of oil is at a peak and subsequently declines for any reason whatsoever….

      • 1) a war for example could cause a decline in production and that doesn’t seem to be what “peak oil” is all about to me anyway as “peak oil” seems to imply we can’t do any better from peak on.
        2) So Peak Oil is a peak when what happens?
        The rest or the post is running on an ill defined definition.

      • DAV – “We can’t do any better from peak on” does indeed sound painful. But what if we don’t need to do any better from peak on”? That’s why I tried to discuss the various ways in which the peak could be brought on, and what it would feel like. So Peak Oil is a peak when what happens? That’s the big question. If the peak is forced on us by insane luddite policies it will be very painful indeed. If by a failure to get alternatives up and running and inexpensive by the time they are needed, it will be a bit painful. If by replacement with a plentiful cheap alternative supply of energy, it will be great. I can’t tell you which will actually occur, I can only hope…..

      • Thanks Mile.
        Re: We can’t do any better from peak on” was actually in response to the definition using a subsequent decline that results decrease regardless of the reason including the reason’s status as temporary. Another temporary one is a weather event resulting in a decline as happened to some degree with Katrina albeit mostly confined to the US. I would hardly think of those declines as occurring after “peak oil”.
        I also think that any legislation that blocks oil is inevitably temporary. It certainly wouldn’t affect China for example. Evntually, and maybe after the economy begins to tank, the legislation will be nullified. Sometimes it takes a calamity to set do-gooders into thinking right or at least shutting up.
        “can’t do better after peak oil” seems to fit how most seem to think of it IMHO.
        Indeed. Maybe a better working definition would be “maximum production rate given current technology or current known resource availability, As it is, it is not at all clear what the author has in mind.
        “non conventional oil”: Well one way to be able to claim you weren’t wrong is change its definition to something more convenient. Then one isn’t left floundering about trying to explain why WARMER=COLDER.

    • I agree the definition appears muddled.
      We are about to set an oil production record in 2015, breaking 1970 record.
      Rystad Energy estimates U.S. oil production will average 9.65 million barrels per day in 2015, exceeding the previous all-time record set in 1970.!!
      So what if this has been labeled as non conventional oil which seems like a recent invention of a term. There is no difference in the oil. Some try to label the oil sands as tar to make it different which is a lie. It is oil not tar.
      This article suggests the crude production wil peak in 2020
      U.S. crude oil output to soar till 2020 despite price rout: EIA
      U.S. on track for record oil production in 2015 exceeding the record set in 1970.
      Let’s be honest the “peak” theory was used by the green energy folks to scare us into believing that we needed to invest in “awful” and expensive alternative fuels. No choice!
      Even when US production was increasing, they lied to the public and claimed that this oil boom would not last.
      Keep in mind that these production records are being set mostly on private lands, not US government land since the Administration has strangled production on government leased lands and production there has fallen accordingly, even though there is a lot of oil being held back.
      Peak oil in the US was a Democrat peak by preventing leasing of productive lands including Alaska.

      • The Energy Information Agency has a little trouble estimating oil production forecasts. For example, it looks like North Dakota peaked at the beginning of 2015, but this agency doesn’t seem to grasp it.

      • Sounds like they same thing they are doing with the polar bears. The polar bear population is increasing and overall doing quite well. Yet they claim the exact opposite and when the actual numbers are presented to them they, say, but we are only a few years away from ‘peak polar bear’ and after that the warming will make the population crash. We must act now!!!

  11. A possible estimate of global initial TR is therefore about 5,000 Bbbl:

    USA shale etc 2,175 Bbbl
    Non-USA shale etc 345 Bbbl

    How likely is it that other parts of the world have substantial undiscovered reserves? I would think that the US has a better handle on its reserves than many second- and third-world countries.

    • When oil companies are looking to the Arctic and Antarctic for the little pools of oil there, you can bet most of the world has been checked. Watch the numbers of new discoveries, they are very very small. When compared to global consumption those new fields would last only a few years,

      • There are two ways-creaming curves and probit transforms– to estimate how much oil remains to be discovered. These are best applied by basin. (North Sea being a good example). For conventional oil, this gives 565Bbbl TRR for the entire world. See USGS fact sheet 2012-3024. That compares to 1669 already discovered according BP 2013 Annual Energy Review. About 1/3 more conventional oil to find, ever. Independent of cost of production. Almost all of this is Arctic (Russia’s Yamal Penninsula) or deepwater (Brazil subsalts).

      • “When oil companies are looking to the Arctic and Antarctic…”
        Like London, England, for example. The Romans picked over London for oil a long time ago and found nothing. Oh, wait…
        Does that qualify as another ‘little pool’? And they only got down 3000 ft.
        Someone asked why there is no oil in the Cambrian Shield. Well the whole point is it would be under the Shield, not in it. The Athabasca and Cold Lake oil sands are just to the west of the western edge of the Shield. Makes perfect sense. It is definitely tied to a geological fault:
        “An earth-movement here has created a line of fault clearly visible for seventy or eighty miles along the river-bank, out of which oil oozes at frequent intervals.”

      • Or when the government of Florida, California, Texas and other states have limited drilling off of their coasts, it might just be that government interference is forcing oil companies to such remote places.

      • J. Richard Wakefield April 18, 2015 at 8:03 pm says;
        The Canadian Shield Precambrian rock is some 25 miles thick. That is too deep for oil to survive.
        Please explain the bakken deposit. That oil is in rock that should not contain oil.

      • The old concept of :discovering” a “new field” has gone out the window. Nearly all the massive increase in US production is simply from figuring out how to produce oil we have long known was there. The Bakken, Eagle Ford. dripped oil from samples since the first drill bit. We just could not extract it without horizontal drilling and multi-stage fracks.

      • David, the Bakken formation is soaked with oil. And that’s how it’s supposed to be. If somebody told you it wasn’t supposed to have oil they must have been confused.

      • You have misunderstood me. I know there is oil there, but explain the depth.
        Also, who is “we”?

    • There aren’t that many countries or regions we haven’t explored quite thoroughly. We know there are some areas with significant potential. But those areas can’t contribute sufficiently to make a difference.
      I think I should explain I come at this from a different perspective. I spent 40 years in the industry, and many of those were spent working in the exploration sector. I also have a faint suspicion some OPEC countries have inflated reserves.

  12. Thank you for a very well written article with the kind of comprehensive and thoughtful reflection that unravels the ‘fear dynamics’ used to manipulate people and politics. I will certainly refer the many people I know to this presentation so that cogent discussion and intelligent decision making may happen.

  13. The strange part is, when you open a barrel of unconventional oil to see what conventions were broken in its creation, you find it is indistinguishable from conventional oil.

    With apologies to you an Willis, that’s not quite true. And it’s far enough from truth to be worth addressing. The problem is “Natural Gal Liquids”. And explicitly the fact that they are mostly Ethane, Propane and Butane which are gases at room temperature and pressure. They aren’t useless. Far from it. But neither are they oil in any real sense. They are fairly low energy per unit volume and their price reflects that. And if you put them in your gas tank and you don’t live in Yellowknife in January, they probably will not be there in the morning. Pragmatically, they are more of a Natural Gas equivalent than a petroleum equivalent.
    For complex reasons, a lot — not all — of the asserted increase in US “oil” production is from NGLs that really should not be counted as oil.
    Neither, probably, should “refinery gains” (put 42 gallons of heavy crude into a refinery — 43 gallons of lighter product flow out the other end) be counted as oil production.

    • Don K
      “they are mostly Ethane, Propane and Butane which are gases at room temperature and pressure. They aren’t useless. Far from it. But neither are they oil in any real sense. They are fairly low energy per unit volume and their price reflects that. ”
      Hang on a bit….per volume as a gas or liquid? There is more energy per kg in the lighter fractions because hydrogen has about 4 times the energy per kg as carbon. I just want to know the units before accepting the low energy comments. Such hydrocarbons can easily be turned into liquids if there is any good reason to do so. Propane by compressing it, but others by chemistry. Rather burn it as a gas turbine fuel followed by secondary steam recovery. I think SASOL is going to end up owning half the planet.

      • NGLs are usually handled by the industry in liquified form — e.g. priced by the barrel, not the cubic foot. Their energy content is a bit different for each liquified/compressed gas of course, but for cocktail napkin calculations 90000 BTU per gallon isn’t far off. That’s as compared to 130000 (give or take a bit) BTU per gallon for most petroleum products.
        For the most part they seemed to be used as equivalents to natural gas / compressed natural gas. e.g. if your local gas utility has a pipe out in front of your house/facility, you heat with NG. if they don’t, you heat with Propane or Propane/Butane mixtures. Presumably they are also used as feedstock for plastics manufacture.
        Ethanol BTW is also around 90000 BTU per gallon.

  14. It would take a posting as long as this article to give a fairly complete response. Suffice it to say that 4 key points seem to have been overlooked.
    1) Decline of existing fields is not discussed. Most existing fields are in decline, offsetting new production potential.
    2)Shale oil has repeatedly been grossly overestimated, mainly on the basis of areal extent, but ignoring concentration in “sweet spots” that are the first produced. Production by well declines very rapidly, about 80% in 3 years. At present prices about 50% of rigs have been taken out of production in the major shale provinces, and production is being maintained by rapidly draining the sweet spots. When prices go back up, far more wells will be needed to get the same production, to the point where it can’t be done because of depletion rates. Shale production will probably peak before the end of 2017.
    3)Saudi Arabia has been keeping production up by drilling “maximum reservoir contact” wells for about a decade now, and pumps in water to keep the pressure up. When MRC wells water out there will be no gradual decline as fields have experienced historically. OPECs biggest and swing producer will see production plummet, and that will be long before 2030.
    4)The really big number for technically recoverable includes “oil shales”, as opposed to shale oil. It is doubtful if oil shales will have a net energy production (EROI – energy returned on energy invested) above 1.
    World production has been on a plateau of about 85 mb/d+- 3 mb/d since 2005. That plateau may last a few more years if nwe are lucky.

    • With respect to your point 1, the number is known from IEAs big study published in their WEO 2008. Surveyed 798 fields comprising over 3/4 of Technically Recoverable conventionalmoil reserves and over 2/3 of 2007 production. Average decline that year was 5.1% and slowly increasing.

    • Yes, well it would take a hugely long article to cover everything.
      re 1) decline of existing fields: No I don’t discuss it, but it plays a big part because the decline is in every Hubbert bell curve. There was no attempt to hide the decline!
      re 2) you may well be right. The information I used put it at around 2020. In any case it probably is not very far off.
      re 3) again, you may well be right. Ghawar certainly has been reported as producing a lot more water than oil for some years.
      re 4) I think there is a fair amount of evidence that a lot of the “unconventional” oil can be produced at reasonable cost, and of course technology can keep advancing. If the expected rebound in the oil price occurs, we could see the picture change quite quickly.
      World production does look like it is plateauing, but is that because we can’t produce more, or because the world economy has softened a bit so we haven’t needed as much oil recently?

      • Mike, I suspect oil and condensate are plateauing because there’s market resistance to the $100 + / bbl price range. The current surplus is going to be short lived. I noticed Saudi efforts to drive prices down, but the market is rebounding in spite of the extra oil they pumped in recent weeks. At the same time the rig counts are dropping very fast, and the lower prices are causing project deferments. So in 6 to 18 months we should see oil prices back at $60 and then we’ll just keep see sawing but always demanding higher pretty sure we will never see oil plus condensate (excluding natural gas liquids and the other fillers they like to add) reach 95 to 100 million BOPD. And I’m middling sure we won’t see 90 mmbopd crude plus condensate.

      • My #4 did not refer to unconventional, but to “oil shales”, which are the bulk of the large TTR estimate. IN addition to energy return R Istvan has mentioned the water issue which I didn’t touch on. Also note that world production of light sweet crude has been in decline for about a decade (excluding USA shale oil), and world exports have been mostly in decline for a decade. On an energy equivalent basis fossil oil has been on a plateau for 10 years and can’t stay there much longer. Lower 48 production has already started to decline due to the present price induced cutbacks in drilling, with drilling production efficiencies now being more than offset by the rapid decline rate.

  15. Peak Oil is happening right now in the 2014-2016 time period due to oil price dynamics that have made shale oil uneconomical. Before it becomes economical again Peak Oil in the few countries that are still growing production will make the global decline too strong to overcome. It is a huge problem because without growth in oil and energy consumption our global economy will not grow,
    Oil rigs have already fallen by >50% in North America, the only world region that was growing production. Middle East OPEC is increasing its oil rigs yet they are not getting any production increase from it. Global production decrease is right here.
    The peak in conventional oil in 2005 set the stage for the 2008 economical crisis. The peak in total liquids oil in ≈2015 will set the stage for an economical crisis that will make the 2008 one look like a picnic. Get ready to rock and roll in a couple of years at most.

    • Javier, Hold your horses.
      According to this article, US crude oil production will not peak until 2020 at 10.6 million barrels/day and moderate to 9.4 MBPD by 2040, no crisis here, probably elsewhere. Estimates up this year.
      “U.S. crude oil output to soar till 2020 despite price rout: EIA
      (Reuters) – The U.S. government on Tuesday forecast domestic crude production will rise even more than expected a year ago, undeterred by the worst price rout since the financial crisis.
      U.S. crude oil production will peak at 10.6 million barrels per day in 2020, a million barrels more than the high forecast a year earlier, according to the annual energy outlook by the Energy Information Administration, the statistical arm of the U.S. Energy Department.
      Crude production will then moderate to 9.4 million bpd in 2040, 26 percent more than expected a year ago, the agency said.
      The reference case in the report forecasts Brent prices LCOc1 of $56 a barrel in 2015, rising to about $91 a barrel in 2025, $10 a barrel less than levels expected a year ago. The report uses the 2013 value of the dollar as its measure.”

      • I was going to reply but Fernando beat me to it. He is correct. EIA had Monterey shale TRR at 15-18Bbbl. Since revised to essentially zero. Essay Reserve Reservations. EIA still has Russia’s Bahzenov at 76 by ignoring its geology. A generous ‘geologically correct’ estimate is 6. Essay Matryoshka Reserves.
        Anybody knowing about rig counts and decline curves would predict crude back near ~100/bbl before YE 2016. MSM quote analysts who are themselves just ignorant talking heads.

    • You are confusing correlation with causation. The 2008 economic crisis was not caused by a peak in conventional oil. The crisis caused a slowdown in the world economy and the demand for oil dropped as did production (who wants to increase production during an economic recession). The current drop in oil prices from $100 to $50/bbl is also caused by a slowdown in the world economy. China’s growth rate has dropped, most of the EU is treading water or in recession. Same for Brazil.
      It’s always the same. The price of oil goes up. More exploration and development. More oil. Price of oil peaks. Exploration and development keep increasing. Over supply. Price of oil goes down, oil companies resist dropping production. Oil price drops below break even, companies start to reduce drill count while bleeding red ink. Oil companies losing massive amounts of money. Those with the most debt go under or get merged with healthier companies (we are here now). Production keeps dropping until the point that the over supply begins to dry up. Over supply turns into under supply. It’s always the same.

  16. Another scenario. Peak oil precipitates governments to hoard their in ground supply for their own future consumption, cutting off exports. Those countries which import oil, such as once oil producing countries like Egypt, go into full economic and society collapse as their energy demand is not fulfilled. That in turn precipitates riots and government collapse as food prices skyrocket.
    The other possible to watch for is China buying up future oil production, at the exclusion of everyone else. That too is a type of hoarding.
    The other component in this equation is the world debt crisis. That bubble will burst at some point, and most of the Western world will fall into another great depression as credit evaporates. That in turn will kill off a lot of demand. That in turn will make in ground supply last longer.
    If our past societal conflicts are any indication of our future, then the relative peace and prosperity of the last 100 years will come to an end.
    Peak oil isnt going to hit the world evenly, for some countries, it’s already hit full force.
    The frustrating aspect of all of this is we are ignoring the next great source of energy, which if we did a Manhattan Project could have in 15 years or less — Liquid Fluoride Thorium Reactors. Yet for some irrational phoba about nuclear power, are unwilling to develop. Seems only China is on the ball about hedging their future energy bets.

    • I agree we should be investing much more in 4th generation nuclear generation concepts–not NIF, probably not ITER. But that provides electricity.
      Globally, about 75% of crude oil goes to liquid transportation fuels (petrochem is another 8-10, lubricants and such 5-6, resid fuel oil about 4- 5, and asphalt/petcoke about 5, depending on crude grade). Only about 4% of petroleum is used to generate electricity globally. Except in special circumstances, it is too valuable compared to coal. Partial electrification of autos (hybrids, Volt) and rail helps conserve transportation fuels, but does not solve the airplane, ag, mining, forestry, construction, shipping, trucking,…liquid fuel needs of modern society. The CAGW focus on coal generation is misplaced. Declining oil production pinchs much sooner and harder than any foreseeable climate change.

    • Prosperity, yes. Relative peace, no.
      The century 1914 to 2013 was arguably the least peaceful in history, measured by number of deaths attributable to warfare, tribal violence and associated behavior.

    • No, China is not the only country pursuing Molten Salt Reactors (MSR). See this article from Wikipedia Thorium-based nuclear power.
      With Thorium as the basis for nuclear fuel, Thorium will contribute to the energy needs of this world for at least centuries to come, if not thousands of years.
      Therefore ‘Peak Oil’ becomes redundant in a sense.
      If Polywell fusion (Hydrogen and Boron) becomes viable then we will supposedly also have thousands of years supply of energy.
      Climate Heretic

      • Why oh why is there not a Manhattan project to develop the Polywell fusion concept. Imagine a reaction with no waste radioactivity.
        Dan Kurt

    • “If our past societal conflicts are any indication of our future, then the relative peace and prosperity of the last 100 years will come to an end.”
      Prosperity – yes
      Peace – ? Relative to what? WW1,WW2 and more Asian and Middle East wars than you can shake several sticks at,
      Nothing changes when things get tight.
      Steve T

  17. Your estimate for technically recoverable (at any price) shale oil is far too high. There are probably three classes of issues.
    First, you cannot include the kerogen shales that are also called oil shales (largest being the Green River formation at the intersection of colorado, wyoming, and utah. Independent of production cost and environmental issues (retorted rock has 20% more volume than the hole it was dug from), each bbl of retorted crude from kerogen requires 3-5 bbl of process water. There isn’t any left after the colorado compact. Arizona, Navada, and southern California won’t allow diversions. Lake Mead’s bathtub ring continues to grow. Essay Much Ado about Nothing.
    Second, folding and faulting prevents use of horizontal drilling in many otherwise good oil shales. On that basis alone, in 2014 EIA reclassified California’s Monterey shale from 15-18Bbbl to essentially zero TRR. China’s large Sichuan shale has the same problem. Essay Reserve Reservations.
    Third, there are some really bad EIA TRR estimates for other important shales. For example, the largest source rock shale basin the the world, the Bazhenov in Siberia, was estimated at 74-76Bbbl TRR by ignoring its geology–even though that has been published in English as well as Russian. An estimate including Bazhenov’s actual geology results in 6, not 76. Essay Matryoshka Reserves.
    Global conventional oil peaked in 2008. Essay IEA Fictions. Add in all unconventional (shale globally, Athabasca bitumen, Orinoco <API10) plus creaming curve estimates by basin for yet to be discovered conventional (mostly deepwater/Arctic), and you get a best 'guestimate' for an ultimate peak around 2023, with something like a 5% annual decline thereafter (based on the massive 2008 IEA survey) despite prices over $200/bbl (per a 2012 IMF working paper). Essay Peeking at Peaks.
    The only possible avoidance would be gas/coal to liquids, which except for Qatar' stranded Pars field guarantees prices over $200/bbl crude equivalent. FT is only about 50% efficient; the EROEI is very poor. If the new Silurian OCM and ETL catalysts work at production scale as they have on the pilot line, then natural gas to gasoline, diesel, and jet kerosene would be both cost and EROEI viable, and on a small enough scale to be suitable for stranded gas assets like North Dakota's Bakken, where it is now just flared for want of gas pipeline infrastructure.

    • Rud Istvan,
      I am familiar enough with the field to comprehend most of the acronyms you have employed but, for a layman, you’ve built Acronym Hell.
      Would you kindly confirm or supply definitions for the following?
      EROEI = Energy Return On Energy Investment
      API 10 = American Petroleum Institute 10 (?)
      FT = ?
      Silurian OCM = ?
      ETL = ?
      For those unfamiliar with some of the geology/fields, your reference to “Qatar’ stranded Pars field” is (I believe) also known as the “North Field” (a portion of Iran’s Pars field, the world’s largest known natural gas reservoir) and is the feedstock for Royal Dutch Shell’s Pearl gas-to-liquids plant.

      • Siluria Technologies’ catalyst for converting NG directly to distillates or chemical stocks is discussed elsewhere in these comments.

      • You got the first right. API<10 means American Petroleum Institute viscosity less than 10; essentially tar. That defines the unconventional Orinoco tar sands in Venezuela. FT is the Fischer Tropsch synthesis process which converts carbon monoxide plus water into hydrocarbons. Siluria Technologies is a private Silicon Valley company. OCM is oxidative conversion of methane, a catalytic process producing ethane and ethylene. ETL is another catalytic process for converting ethylene and ethane into liquid fuels. Different catalysts produce gasoline, diesel, and jet fuel. That is why Siluria has attracted so much serious investment from the likes of Braskem, Linde, and Saudi Aramco.
        Sorry about the alphabet soup. Was Intended more as a Google guide to independent research than a complete explanation.

      • I think Rud worked for the U.S.M.C.. Mike, I’m not going to toss acronyms, just a suggestion to identify the natural gas liquids. I think it’s very important for the readers to understand oil production isn’t really increasing, we are seeing a boost from condensates, natural gas liquids, gas to liquids, refinery gains, and in some cases biofuels.
        I think the different energy reporting authorities are deceiving the people by adding the biofuels in particular. But adding the other mix of assorted non crude oils tends to make people overconfident.
        Regarding the abiotic crude oil theorists, I suggest you try to explore for oil in areas where there’s no source rocks as defined by the oil industry. If you find oil you will be richer than Bill Gates. So why not give it a try?

      • API (gravity) less than ten means it’s more dense than water and sinks. Like gauge it’s an inverse scale.

    • Fernando Leanme
      April 18, 2015 at 12:58 pm

      Regarding the abiotic crude oil theorists, I suggest you try to explore for oil in areas where there’s no source rocks as defined by the oil industry. If you find oil you will be richer than Bill Gates. So why not give it a try?

      It’s my understanding that oil is found today in oil-bearing formations which are distinct from the formations where the oil was formed. That is to say that the oil has migrated from one type of geological structure where it was formed, to another where it is pooled.

      the formation of an oil or gas reservoir also requires a sedimentary basin that passes through four steps: deep burial under sand and mud, pressure cooking, hydrocarbon migration from the source to the reservoir rock, and trapping by impermeable rock.

      • The Shale Oil (Unconventional) is the case where the Oil is recovered from the source rock itself, after some mechanical fracturing from the application of high pressure water and proppant.
        The same applies to Shale Gas.
        geological structure where it was formed, to another where it is pooled.
        A bit of a nitpick but the oil most often moves up from a source rock to a reservoir rock in the same structure through faults or thief sands and laterally in the reservoir of the structure flanks.
        Structure to structure migration can happen, such as in the salt structures of the Gulf of Mexico, but most of the world’s oil was trapped once.

    • Steve, in general, oil source rocks are found very close to the oil trap. My suggestion was intended for those who think oil gushes from rather exotic “deep earth” sources we never identified. For example, there are gorgeous non oil source rock bearing basins they could try to explore for oil. For example, they could try drilling in Sweden…

    • You dismiss the kerogen in the Green River Shale formation (and all kerogen by extention) as unrecoverable because we can only consider existing technology. We know nothing about the future. But the shale oil being recovered from the Bakken not all that long ago was also unrecoverable.
      Peak Oil works until technology overturns it. The vast reserve of hydrocarbon in methane hydrates and unconventional oil means we will never run out of oil. Peak Oil will come and then go based on demand and technology. It is a useful term only when you consider existing techniques and reserves. Peak Oil knows nothing about the future. It is not effectively predictive.

  18. I have to admit pleasure at seeing that Mike Jonas picked up my quotation of T. Boone Pickens’ simple yet elegant summation of the effect of high prices in a free market system.
    While I’m no particular fan of Mr. Pickens, when I heard him utter the sentence in a radio interview, I was immediately taken by the adept description of what, to many, is an economic abstraction.

  19. The Stone Age didn’t end for lack of stones.
    Peak stone marks a milestone in human technological development, so too will peak oil.

    • Right about the stone age. Metals worked better and mankind switched.
      What do you have that works better (ease of use, energy density) than liquid transport fuels for trucks, ships, construction, mining, forestry, agriculture, airplanes,… And that can be deployed globally in the next 3-4 decades? I am a firm believer in hybrid vehicles where possible, but partial electrification of autos and rail by itself does not solve the transport fuels problem. The most optimistic assumptions (KiOR projected yields, half of all biomass not presently consumed by humans used for biofuels) gets less than half of todays oil consumption. Essay Bugs, roots, and biofuels.

  20. Saying that world oil production has increased from 74 Mbo/day to 86 Mbo/day since 2004 is highly misleading because it includes natural gas liquids. Conventional crude oil has stayed flat over that period. Counting only lease crude oil and condensate and including shale oil has only raised that to 76 Mbo/day in the last couple of years.
    Natural gas liquids were produced in significant amounts prior to 2004. If you want to include them, they should have added about 10 Mbo/day to that 74 Mbo/day cited for 2004, but NGLs are not a primary transportation fuel. The real issue is a “peak cheap oil” that is available for transportation.
    It is of some interest that U.S. oil imports remain high even though our own storage capacity is full. Refiners do not like the more volatile sweet crudes from shales and tight sands. Thus there is a move afoot to remove the prohibition on exporting our domestically produced oil.

  21. 1998 Campbell & Laherrere Peak Oil Model Accuracy
    In 1988, Jean Laherrere EXCLUDED unconventional oil. Aleklett shows their model to be much more accurate than critics claim.
    How correct were Colin Campbell and Jean Laherrère when they published “The End of Cheap Oil” in 1998?

    For me conventional was primary and secondary recovery production where only pressure was changed with water or gas injection. My 1998 red curve is crude oil less extra-heavy which for me is conventional.

    Declining Oil Growth
    Actuary Gail Tverberg in The End Of Cheap Oil & Its Impact On Financial & Energy Security found oil production increased 7.8%/year from 1965-1973, but the growth rate declined to only 0.4%/year from ~2006-2012.
    Depletion rates
    PeakOil.Net links to numerous studies on oil production and disssertations e.g., M. Höök, 2009 Depletion and Decline Curve Analysis in Crude Oil Production
    Regional Peaking
    See James Hamilton showing production graphs for each State etc., Oil Prices, Exhaustible Resources, and Economic Growth,” in Handbook of Energy and Climate Change, pp. 29-57, edited by Roger Fouquet. Cheltenham, United Kingdom: Edward Elgar Publishing, 2013. Working paper version here.
    Oil Price Shocks Increase Unemployment
    Note the impact of: “Historical Oil Shocks,” in Routledge Handbook of Major Events in Economic History, pp. 239-265, edited by Randall E. Parker and Robert Whaples, New York: Routledge Taylor and Francis Group, 2013.Working paper version here

  22. Now I wish to add a comment I like to make once in a while: if we use a “reasonable” estimate of fossil fuel “economic recoverable” resources, and project it into the future, we can estimate peak CO2 concentrations. I used my numbers and I arrived at something around 630 ppm.
    I didn’t write the figure expecting anybody to use it. I think most of us can grab a spreadsheet and prepare an estimate. Don’t forget that natural gas liquids aren’t oil, that a lot of petroleum is used for chemicals, and some is used to make roads. Whatever you use, I’m sure 97% of scientists will agree the IPCC “business as usual” (RCP8.5) oil production forecast is baloney. This means most of those papers predicting rabbit extinctions and sea level rise up to the Statue of Liberty’s neck are a waste of time.
    Finally, although I’m not as familiar with coal, I’ve been reading about the peak coal concepts. And I think we aren’t nearly as comfy as many people think (my 630 ppm figure includes coal emissions).

    • Fernado, Gaia’s Limits provides a long summary of peak oil, and overviews of gas and especially coal. Coal groundtruthed by country. Extensive footnotes for you. Agree that there is no way RCP could eve be reached. Nor the earlier AR4 SRES A2 ‘business as usual’. Did not bother to try computing peak CO2. Way too complicated with changing sinks. And no need withnlower observational sensitivity.

      • Rud, I simply extrapolated current sink ability to withdraw CO2 from the atmosphere. I studied the carbon cycle to see if I could simulate it, but it’s a can of worms. For example, how the heck do we simulate the addition rate of magnesium ions to sea water due to erosion? Evidently that would change if extreme precipitation events increase. I’m starting to think this system has built in dampers.

      • Actually there is only one limit in this complicated system. On the end all Carbon should end up as calcium shell (CACO3) on the bottom of sea in sediments. There is nothing left for biosphere. There must be some mechanism how to convert limestone back to atmosphere CO2. Is it only coincidence that oil is found on places where marine sediments are?
        There must be pure natural way how to process stored Carbon deposits in form of natural gas, oil, coal back to biosphere cycle.
        By burning oil we are just helping this natural cycle.

      • Peter
        That is a correct assessment. With time, sinking of plankton with calcareous shells, to form limestone, depletes the atmosphere of CO2, which is bad. Thus in a real sense humanity on behalf of the biosphere discovered fossil fuel burning “just in time” considering that in the last Wisconsin glaciation atmospheric CO2 fell to about 180 ppm, dangerously close to 150ppm the level where plant growth gets severely limited. The recent evolution of C4 photosynthesis with more efficiency also shows a biosphere stressed by low CO2.
        Burning fossil fuel does indeed complete the carbon cycle to the benefit of the whole biosphere.

      • Peter, you are correct. But those carbonate sediments get recycled along the tectonic subduction zones, and re emitted by the resulting volcanism. It is estimated that without this process, photosynthesis (so life) would become impossible in about 2.5 million years.

      • That means that CO2 level is exactly dependent on how much limestone is momentarily entering tectonic subduction zones. So current CO2 levels depends on how much marine life was there some millions years ago.
        And another idea, there are places on Earth which are basically untouched for hundreds of millions years. African plate etc. Continents are floating on Earth mantle and are not part of limestone recirculation. There is for sure less limestone deposit on those continents, but there is. Snail shells, bones… And all this sequestration is taking CO2 from atmosphere, but without returning it back as sea floor. So there should be longer life cycle, where all Carbon will end up buried on continents without quick returning to life cycle.

  23. I don’t see “peak oil” ever happening in the manner in the traditional sense. If you look at it only as a finite resource that eventually runs out, sure, the discussion makes sense. I just don’t see that happening. Here’s a couple of game changers:
    1. Batteries; Yup, batteries. Oil and its immediate derivatives gasoline and diesel are of value precisely because their energy density is so high and refueling so short. This makes them immanently practical for all manner of applications ranging from commuter cars to cargo ships. If advances in energy storage (which may well be something other than batteries) provide a medium that rivals or exceeds oil in energy density and refueling time, then suddenly oil is easily replaced (may even have a hard time competing!) with everything from nuclear to coal to wind.
    2. Synthetic oil; Hey, the stuff is just H and C! It isn’t IF synthetic oil is possible, it is a question of cost, Someone comment upthread that it might be practical at $200/bbl. Well, at $200/bbl, quite frankly, that’s cheap. Oil is pretty much the cheapest commodity on earth. The economy was fine at $100 bbl, it will be fine at $200 bb, even $300 bbl. At those prices, the alternatives such as labourers back in the fields to produce food are STILL not just more money but orders of magnitude more money. So, as cost of synthetic continues to drop (and it will) it will at some point make it easily practical to switch from the stuff we pump to stuff we make with the energy sources being nuclear, solar, coal, even wind.
    That’s just the game changers that come to mind. I’m nowhere near smart enough to come up with a comprehensive list, I’m sure there are more out there.

    • DH, good points. The $200 per barrel equivalent is for Fischer Tropsch liquids synthesis. Largest existin plant is Shells Pearl in Qatar. Exxon claims $180 for its alternative methanol route, but there is not even a pilot line to validate those numbers. Another consideration is ‘peak coal’ Alaklett at Uppsala, Dave Rutledge at Caltech (his presentations are on his website) and Patzek of U. texas have all studied that and concluded it comes sometime between 2040 and 2060. That is a problem for coal to liquids subbing for oil.
      Gas is hopeful. First, shale recovery factors are running 15%; for oil it is 15%. Second, there is more gas than oil shale. Simple function of the oil window. So if Siluria works at scale, thenworld buys several decades in which to work on things like better batteries and better nuclear. There are a number of good gen 4 nuclear prospects.
      But having been involved in batteries and energy storage for more than two decades, I can assure you batteries are very difficult in the Japanese sense of very difficult. Death of a thousand papercuts in each of the possible electrochemistries to get suitable combinations of energy and power density and cyclelife needed for transport electrification beyond Tesla toys. The chemical equivalent in fuel cells, ditto. Hydrogen issues solved by methanol FC, but then efficiency is shot. SOFC way to many issues for vehicles. As Bloom Energy shows, not very viable for stationary locations either.

      • iPad typo alert. Shale oil recovery factor is 1.5 %, a tenth of shale gas. A simple viscosity/porosity issue. And that is only in the better basins like Bakken. #2 Eagle Ford is running 1% according to Oil and Gas Journal.

      • ristvan
        SASOL III was put on line with a break even cost of $20 per barrel, and guaranteed $27 per barrel whatever the going price was. At the time, that was ‘expensive’. At $50/bbl they were making a killing. How did someone con a government into thinking it was $200? Good grief. I don’t have a cost per bbl for the Mossel Bay nat gat to liquid fuels. Maybe someone can comment.
        It seems everyone is playing up how expensive it is but indirect process conversion plants are popping up all over. Could it be that, like nuclear, they are deliberately made as expensive as possible to keep the cost high – feeding the construction and maintenance industries well into the future?

      • I completely agree. But fear based on research over now 6 years and part of three books that the peak cod scenario is more likely. Even if Siluria proves out (heavy hitter investment is a promising indicator, but still ‘mad money’ for those large corporations) it buys a few decades, not more. And electricity storage improvement, whether directly or through chemical intermediates like hydrogen for fuel cells, is just very, very difficult. Gabillions of R&D has been thrown at both routes. I have been on the front lines, with lots of battle stories to tell. None good.
        One can never rule out another Einstein. But electrochemistry (batteries, supercapacitors, pseudocapacitors, fuel cells) is a well trampled field for over 100 years. And all the nanotechnology hype in the field (nanotubes, graphenes, self assembled nanostructures [behind the A123 failure]) have failed to pan out for what in hindsight were fundamental physical and chemical reasons.

  24. The Soviet Moho drilling attempt on the Kola Peninsula ended at a depth of 12,260 metres (40,220 ft), and along the way encountered primary water bubbling with hydrogen. Such a magnificent attempt has yet to be replicated. Why?

    • Because the rocks down there are extremely hot and the experts think there’s nothing to be found at 12260 thousand meters. The Soviet Union fell for very good reasons.

      • Hot rocks and “experts think” = Nothing to see here, move along? What is it about rocks being hot that precludes chemical reactions?
        Seemingly, the Soviet Union fell for very good reasons that are apparent in hindsight, but which no one foresaw, or recognized, until after the fact.
        Deep drilling appears to be one of those reasons – do I have that right? – but it seems that the mine shaft gap was on the Western side, so are you arguing that we in the US suckered the USSR into going broke by squandering money on pointless deep-drilling operations?

      • Fernando
        I like it – the “experts” at what is to be found at 12 km down are of course, obviously, not the ones who actually drilled down 12 km.
        Your “experts” don’t think. They just have louder mouths than the rest.

      • Steve, the Soviets were communists. They didn’t understand much about economics. I realize you don’t seem to like experts. But I’m one of those experts. Let’s just say that drilling 12000 meters costs a bundle, and we experts don’t like to risk money that way. However, if you want to drill 12000 meters feel free to ask me for advice. I can think of a couple of places where you’ll find diamonds.

      • Fernando Leanme April 19, 2015 at 2:04 pm
        Russia suffered horribly under the Communist yoke, but it did not make Russians stupid. In any event, membership in the CPSU never exceeded about 10% of Russia’s population.
        Recall that one of the main tenants of communism is redistribution of wealth, so I would take issue with your statement that the Communists didn’t know much about economics. In fact, communism is all about economics, same as the CAGW scam.
        It’s a common mistake to conflate Soviet Communism with the Russian people. The Red Army may have marched under the communist banner, but Stalin was able to rally the Russians in WWII by appealing to patriotism, not politics. It is true, however, that most Red Army formations in The Great Patriotic War were backed up by NKVD troops, just in case love of Mother Russia began to falter in the front-line troops.

        The Kola Superdeep Borehole (Russian: Кольская сверхглубокая скважина, Kolskaya sverkhglubokaya skvazhina) is the result of a scientific drilling project of the Soviet Union

        (my bold)
        Scientific experiments are usually run to gain information, and not necessarily with an eye to any immediate economic benefit.
        Until we have better understanding of natural forces at play in the depths of the planet’s interior, I think it best to keep an open mind about abiotic oil.
        Thanks for your comments here, and for keeping an even keel in responding to others. I commonly listen to experts, but reserve the right to think for myself.

  25. Good grief – the Peak Oil aficionados still banging on about their discredited ideas.
    Meanwhile . . . on planet Earth . . . US oil production is back at 1970 record levels and still increasing. If the only country where fracking is common can do that in the 3 years since Jonas’ last screed you can safely ignore everything he says.

    • I am a peak oil professional. I really didn’t start thinking about this until 1990, when I realized oil exploration was a loser, and we were going to need much higher prices to justify keeping the large exploration department we had.
      Later we saw prices climb as the world approached peak, and the higher prices sure came in handy. To keep producing more oil we will need much higher prices, and eventually marginal consumers won’t be able to afford it. Simultaneously we will see other energy sources try to plug the gap. This is what leads to peak oil. But I suppose amateurs in this business have difficulties grasping all these moving parts.

      • Ah, well there you go. You are a professional, and us amateurs can’t grasp what you, in your professional manner, are talking about. No sense in us even talking to the likes you. It is settled then.
        Are you sure you aren’t also a climate change professional, you talk just like them.

      • Tom, the dude called me an amateur. I happen to be a professional. This means when I can charge for working out numbers, writing stuff, and giving talks about oil related stuff. I just want to make sure it was clear that when it comes to oil I’m the buzz saw.

    • FergalR –
      9,367 bbl/day in 1970 , 8680 bbl/day in 2014 – but definitions changed to include natural gas condensates and unconventional oil. etc. See above.

      • It was 9,320 bbl/day in March – 13% up on last March – close enough for anyone reasonable.
        Why wouldn’t the definition include unconventional oil – since it is oil?
        Why do you object to using lease condensates when they are interchangeable with oil for so many applications?

    • FR, you apparently do not understand the geophysics of shale oil. The trick is the steep decline curves. That is where Harvard’s Maugeri lost the plot in 2012. Fracked shale well output declines 70-75 percent in 12 months, and reaches not more than 10% of initial production in less than 3 years. Stripper status ‘forever after’. Refracking only helps a little sometimes. Prior to the Saudi engineered price squeeze using 1.6mbpd overproduction on a base daily demand of about 93 at present, US shale production would have peaked in 2019 and fallen by 80-90 percent in three years thereafter. With the US rig count halved, that shale peak is pushed back to about 2024. Still within the next decade. Expect oil prices back to ~100/bbl before end of 2016. (Saudis know what they are doing. The shale well decline curves are public information for Bakken, Barnett, and Eagle Ford).

      • Us drilling rig count has halved in the last 9 months.
        If you’re right – for once – US production will be in the toilet in a few short months.
        Better get your next excuse ready.

    • On the BP figures, US oil production in 1971 was 11.156m bpd. In 2013 it was 10.003m bpd. (I don’t have 2014 data). In spite of the US spike in production, global production in recent years hasn’t been far above flat, and the US will not necessarily be able to keep increasing production for more than a few years. Sure, if everyone develops every oil deposit to its maximum then oil production can keep increasing for some decades. But … that might not happen and, as I tried to indicate, whether Peak Oil is beneficial or painful then depends on why it doesn’t happen.

  26. Hubbert’s blunder wasn’t the concept of “Peak Oil”. The blunder was the conclusion that the curve was bell shaped, and symmetric. If you assume symmetry, you can make forecasts about the future that you cannot make if you assume a right skew.

    • I’ve meant to look into it and have never found time and interest at the same time. But my impression is that Hubbert was more interested in suggesting a better way to predict future oil production than the look at known reserves and guess how long it will take to drain them with current demand approaches that were common in th1940s and 1950s … and were always really wrong.. I believe that Hubbert initially put up a chart with a bell shaped curve and didn’t specify the nature of the curve. He was more interested in making the valid point that production for any resource starts at zero and ends at zero. I think that only when pressed did he suggest using what has come to be known as the Hubbert Curve.
      It’s always seemed to me that there is no reason the production curve’/time has to be a tidy mathematical entity and that it’s shape for any resource is likely to be determined things like cost of production, importance of the resource, willingness of consumers to pay what the product costs and the availability of cheaper or more satisfactory alternatives.
      But what do I know?

    • Absolutely correct. He used symmetrical logistics functions (which have fatter tails than bionomial ‘normal’ bell curves). Wrong, proven by North Slope and North Sea basins. (essay Peeking at Peaks explains.) The ‘correct’ functional form is a gamma distribution having a long declining tail. Has to be fit with two parameters, but easy to do empirically in Excel.
      BUT, the front side (up to the peak production) of gammas that reproduce actual history do not vary significantly from logistics functions. In other words, peak production timing is not much affected. There is a (thank goodness) substantially longer slower glide path to exhaustion thereafter. That is quite important for post peak production estimates, and how rapidly the ‘peak’ pinches. The IEA’s WEO2008 contains some additional important observational insights on this. Essay IEA Fictions.

      • Murrayv, MRC horizontal wells are one of several EOC things enabling long tail gamma distributions, mostly in carbonate rather than sandstone conventional reservoirs (2/3). True. But do not much change timing of peak production. Since to avoid water cut, pumping still must be slowed.

    • I just prepared an estimate of Venezuela’s oil reserves. Just for kicks I added an oil rate versus cumulative oil curve. It sure has lots of ups and downs. An interesting issue about Venezuela is the sheer size of its “oil country”. It has tranches of oil reserves associated with three groups go giant pools. I tend to agree the symmetry isn’t necessary nor a given.

  27. “…but gas, coal and nuclear keep the energy supply increasing for many more years after that…”
    “Energy” is not one big pot of mashed potatoes, but more of fruit salad. These various sources are not easily nor cheaply interchangeable. Coal is for electricity. Oil/gasoline is for transportation. NG is for residential/commercial/power production. Crossing outside these current applications will not be easy or cheap.

    • Agree. But maybe a bit of lateral thinking can suggest some crossings ….. much transport will occur within city boundaries, ie. over modest distances, and electric vehicles may become economically viable for that. Then we will have gas, coal and nuclear energy powering transport. Heating is another oil market, and it is easy to see gas eating into that.

      • Per EIA oil for heating is a tiny percentage.
        Can’t envision much electric transport on the I-10, I-40, I-70, I-80 corridors. “Modest distances” does not apply west of the Mississippi.
        Ponder the copper needed to electrify the transportation sector. The industry is running short as is. And the amount of central station power to charge them all. Big NG demand = big NG price.

      • Doesn’t have to be all, just some. And we don’t know how new technologies will transform the picture.

      • Mike, Heating represents only about 5% of US oil usage and that amount is shrinking — limited by the fact that changover to cheaper natural gas requires expending some capital. So it tends to only get done when the furnace needs replacing anyway. Furnace lifetimes are around 20 years. And it requires access to NG, which is expanding, but far from universal
        Electric powered vehicles are limited primarily by battery technology and secondarily by charge time. PR puff pieces notwithstanding, batteries suck and are improving only slowly. However, improvement in vehicle mileage has been steady and seems likely to continue for at least a few more decades. It is also perfectly possible to run vehicles (but probably not jet aircraft) on natural gas. Conversion of fleet vehicles and trains to NG is proceeding in the US. Passenger cars can run on NG and a lot of them do in Iran and Pakistan(!!!). In North America, NG conversion is discouraged by a lack of fueling stations and an unfortunate emissions control regulatory structure that makes conversion unnecessarily expensive.

  28. I can not imagine a geological reason why Non-USA shale etc will only be 345 while USA shale etc totals 2,175.
    IMHO opinion much more likely Non-USA shale etc will turn out to be multiples of the USA shale etc number.

    • The US shale number is wrong. It confounds oil with kerogen. See upthread. The most recent EIA global shale oil estimate (TRR, 6/10/13) was 345Bbbl. That is overstated by more than 100Bbbl, just based on Monterey, Bahzenov, and Sichuan misestimates. Details in the Blowing Smoke essays. The devil is in the details.

      • The overestimates seem to be based on compartmentalizations (the blocks are too small to fit the horizontal wells), and oil properties. But I wonder if someday we may not have some sort of mini drill motor driven with latex mud, hung at the end of coil tubing, cased with some sort of super plastic liner? We could drill a zillion little wells from a single mother bore?

    • Yes, but I couldn’t find any more credible-looking numbers. There don’t appear to be any, and I thought that making them up wasn’t too good an idea. Maybe there’s a lot more oil elsewhere, or maybe some like the Monterey will “disappear” ( – “U.S. officials cut estimate of recoverable Monterey Shale oil by 96%” – caution, it refers to “existing technology”). Perhaps the key point is that large changes in TR give relatively small changes to Peak Oil date.

      • You are mathematically correct, using either logistic or gamma distributions. A large variance in abundance makes a small change to peak oil production timing. This is basically because so much has already been undeniably consumed. See essay Peeking at Peaks for some calculations using simple logistic functions.

    • David L. Hagen

      US Government Predicts Peak US Oil

      Funny. For a moment there I thought that I had seen that quote before. For 1919’s oil production.

  29. “Oil reserves are very much a function of technology and price.” – Very good and correct. Good article, I enjoyed reading it. You make some very good points, but leave out some key points. We should all reflect that the first estimates of the end of oil were made in the 1920’s, this has been repeated (incorrectly) periodically since. The value of work provided by a gallon of gasoline varies, but a reasonable number is around $400 on average. One gallon of gasoline and a chainsaw can do the work of 20 men in a logging operation, for reference. This is a primary support for our standard of living. Unconventional oil, what is that? Oil from shale, oil from water floods of existing reservoirs, oil from Carbon Dioxide floods, NGL floods, bacterial floods, steam floods, surface mining of oil sands in Canada and other places. For all practical purposes the TR reserves are infinite. I’ve seen, up close, enormous untouched reserves in Russia, Venezuela, Argentina, Indonesia, Canada, Europe, the US and other places. These are all awaiting regulatory approval, the right price, and the financing. To get the financing most of these reserves need a stable government that is reasonably corruption free and will stick by signed contracts. Most technically recoverable oil in the world that I know of is trapped by either corruption (think Venezuela) or regulation (think US and Europe) or extortionate contract terms (Russia, China, Indonesia, Malaysia, most of Europe. The oil is there, the technology is there, eventually the governments will be there. The difference in the value of the oil versus the alternatives is too high to ignore. Besides technology and price, the cost of corruption and regulations need to be considered. Often they are decisive in the development decision and the financing. I’ve seen many projects abandoned for these reasons. War and instability make a difference in many places also, Syria, Chad, Nigeria are examples. The USGS estimate of technically recoverable reserves is very conservative, way too low in my opinion.

  30. As always, I will be happy to be proved wrong!
    Regrettably Mr Jonas, even though I enjoyed your analysis, you are wrong as you have left out transformation technologies and innovation.
    Coal to liquids has been mentioned. The oil price has dropped significantly but the thermal coal price has too. So as far as I know the CTL plants in South Africa and China are still in production.
    The amount of coal in the world is huge: trillions of tonnes were recently found under the North Sea.
    It is correct that price is always going to be an issue but it is not that much of an issue since the cost to transform coal to oil is (a) relatively fixed by the technology and (b) likely to decline about 1% per year as it does for all other industrial processes – due to innovation, automation and cost control. Therefore all that will happen is a plateau in price will occur as CTL becomes the swing producer, then eventually the main producer.
    There is enough coal around the world for many centuries of use. CO2 is not an issue because ECS is low, below 1 C/doubling. Which means it is harmless. After coal becomes uneconomic the same replacement can occur to nuclear, for which we almost certainly have tens of millenia of fissionable fuel, then millions of years of deuterium once fusion is cracked. And it is relatively easy to produce a liquid fuel such as methanol using nuclear power.

    • Bruce, you say I have “left out transformation technologies and innovation“. OK, I didn’t exactly emphasise them, but the intention was to recognise them in statements like “technology also helps to make [..] other energy sources more competitive” and “if the technology is developed for [alternative energy sources] to compete for some uses of oil“. In a smart world, the field would be open for all alternatives to compete, rather than having governments trying to pick winners or enforce losers.

    • Bruce, I wrote specifically about those misreported Norwegian coals in essay Much Ado about Nothing. They lie in the Haltenbanken, 150-200 km offshore, 2400 to 4600 meters under the seafloor with water depths from 300-1200 meters. Source ‘rock’ for the Haltenbanken deepwater oil fields-why the drill cores existed. TRR is zero, likely for all time.

  31. Over time most people came to the conclusion that there’s a lot at play in oil production, and that simple fact like “we’re seeing the number of rigs dropping” doesn’t mean it is inevitable. Yet you still see the doom-mongers leap in with their absolute insistence it is inevitable and soon. Apparently some people just can’t help projecting their own fears on the rest of the world.

    • So facts don’t matter. The conventional Peak Oil in 2005 didn’t matter and the global economy is doing just fine. Russia’s Peak Oil in Nov. 2013 doesn’t matter. Saudi Arabia inability to raise production for the last six years despite the Libyan crisis, high prices, and increased drilling doesn’t matter. The shale oil beating due to low prices doesn’t matter. The decrease in global oil exports doesn’t matter. If we just close our eyes and don’t look at what is happening we won’t feel any fear about the future. Everything will be fine because oil is too important to us.
      I’ve got news for you. Facts do matter. Our global economy is going to get crushed again, and then we will have a debt implosion because debts that are too big are not serviceable during economic crisis (ask the Greeks), and then we will have a monetary crisis because money is supported by too much debt and too much paper and too little actual goods. By then we won’t be needing much oil so we won’t mind that Peak Oil took place a few years before. Few people will recognize that the cause was that we hit Peak Oil and the blame will be placed on the usual suspects. With diminishing oil, economic recovery will not be possible and we will be just happy to stabilize things for a while.
      Where I live (Southern Europe), I look through the window and I see Peak Oil taking place: >20% unemployment, lower salaries, 25% less oil consumption, electric energy overcapacity, more expensive electric bills, underused infrastructures, deflation. Welcome to Peak Oil. It is here. It is now. You think you can escape because US has some shale oil? Good luck with that. We live in a global economy nowadays and most countries are going to start rolling over, taking the rest with them.

      • So, peak oil is the scape goat for the uneconomic policies that resulted in the crash?
        Why am I not surprised.

      • What you see is not oil peak, but death spiral caused by European government taxation and social programs. All this is cause by energetic poverty, caused by inflating gas prices by taxes. Market price for 1l of gas is 70 eurocents, but anyway government is causing selling by 1,5 Euro.
        Europe is shooting herself to both legs by not allowing people access to cheap energies.

      • You are both deceiving yourselves if you think that with different economic policies you can escape the inevitable energy descent of Peak Oil. It is not the price at which oil is sold that matters since that is determined by supply/demand. It is the cost of oil production that matters. If the cost of production is high and you sell it cheap you destroy production as it is happening now. If the cost of production is high and you sell it expensive you first destroy consumption and then production. We are running out of cheap to produce oil. Our economy will not grow with increasingly expensive and diminishing liquid fuels. The reduction in ERoEI gets reflected in an increasing cost of production.
        That you are not able to see that the end of conventional cheap to produce oil is behind all our global economic woes does not surprise me. But it is a physical limitation and therefore it cannot be solved. We have reached the Limits to Growth.

      • The sum of uneconomic and hostile business policies is a drop in GDP.
        No escaping that fact.

  32. Some astute peak oil guys will make 10 fold their investments in beat up junior oil/gas stocks over the next 4 years. The first double off the bottom has already happened. (COS). The rest of you.. well.. enjoy being a believer in new energy miracles.

    • I put my pencil to it and bought in January. Now I’m waiting for the Guardian’s divestment campaign to get traction, so I can buy more shares. But this takes patience, the overhang in supply should be over by early 2017 at the latest.

      • ?Who do you like in this field, good management and reserves available at a low cost in a stable even if all hell breaks out country?

  33. We have 1315.2 billion barrels of oil equivalent, not counting one hundred billion barrels of heavy oil and the two hundred billion barrels of oil discovered in North Dakota and Ohio within the last decade.
    The US has easily replaced Russia as the world hydrocarbon resource leader, not counting the grinding up the Rocky Mountains for oil laden rock and not counting the extraction of vast reserves of methane hydrate on the ocean floor.
    See U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary

  34. “One idea which surely is not open to argument is the fact that oil production will peak.”
    What if the planet extracts heat energy from the planet, carbon from the atmosphere and hydrogen from the sea and stores it all as oil? This would leave only oxygen to find it’s way to the ozone hole an be ionised by the same UV the hole lets in. Problems would only begin if oil production is ever allowed to peak.

  35. Just a few technical comments on the article.
    1) Hubbert’s model was based upon a single geologic basin that was expanded to include the US lower 48. The basic premise of his model is that the bigger more prolific fields are discovered and developed first and the subsequent smaller fields will not produce enough to offset the decline of the bigger fields. The model does not include the effects of pricing & technology.
    2) The “Shale plays” have been grossly over estimated as far as their deliverability and long term effect. The increase is more of a result of $100 oil and vast amounts of capital being available rather than any wonderful new technology. The technology in the shale plays has been utilized in the same areas exploiting the coventional carbonate reservoirs that abut the shales above and below the shale source rocks. In fact, it is more likely that the “shale wells” are actually producing oil from these same carbonates as the hydraulic fracturing is going up and down out of the shale horizon.This developement had just about hit the wall anyway such that had drilling continued at the same rate the new production would only be able to offset the rapid decline. Look for a massive deliverability drop in the next 12 months as the rigs are layed down.
    3) As far as world peak oil, there are vast amounts of oil that are not being exploited because they are controlled by government national oil companies. These conventional resources if developed by a free market as in the US would actually increase daily production enormously.
    4) The real wild card on oil is the Arctic once the technology is in place to exploit, that the Russians are pursuing. This virtually untested basin could be a real game changer, just looking at the results of the minimal exploration on the fringes.

    • Billy Jack, I worked developing projects in the Russian Arctic. What technology are you thinking of, and where do you think all this oil will be found? The Kara? Chukchi?
      Also, I’m sort of an expert in Venezuela. Is that what you have in mind? I don’t think Venezuela can kick in to make much of a difference, it won’t get online fast enough to avoid a peak sometime within the next 20 years.

  36. Fracced tight oil wells, even in naturally fractured rock, decline rapidly and the potential for secondary recovery is very limited. So shale oil, IMHO, will flounder sooner than we would hope unless prices are high. Also, infill conventional wells that have been drilled and completed over recent years in response to high oil prices will begin declining as will the older neighboring wells in the same reservoirs, and owing to their small drainage areas will not justify any further production enhancements. My gut feel after 37 years as a petroleum engineer is that the current low price / high production status will reverse within 12 months, not completely but significantly. It had better, then I can go back to work!

  37. Who are these guys making such an authoritative analysis of future oil production?
    “On the internet, nobody can tell you’re a dog.”

    • Well, in my case I like to join peak oil and global warming at the hip. I happen to think CO2 causes some warming, but I believe the IPCC has a serious disconnect with reality. Maybe this global warming scare is intended to make us cut back because the real EIA (not the fake EIA we know about) says we are about to reach peak oil?

  38. How about running vehicles on natural gas, as is common in South America and increasingly common for trucks in the US?
    Coal liquefaction is promising IMO if its cost in energy can be reduced, but gasification seems like a better deal to me.
    Whatever may be the case with crude oil, the planet’s hydrocarbon reserves appear to me effectively limitless. And of course with enough fission or fusion power, hydrocarbon products could be made to order from sources of carbon and hydrogen.

  39. Seventy percent of the Earth’s surface is covered by oceans. Right now it’s only feasible to extract oil from land, or from shallow seas. But surely the technology to retrieve oil from the ocean depths would not be impossible to develop—imagine crawlers that begin drilling, not from the ocean surface, but from the sea bottom.
    /Mr Lynn

  40. I want to thank Jonas for a great article and all the commenters for their humourous, if not bizarre, opinions.
    I feel compelled to add my own, so here it is: biocrude will, sooner or later, run our world and it will be a better world.

    • Thanks but Hmmm. Current global oil production is over 4 billion tons pa. Current global wood production is hard to find, but it’s maybe a bit over 1.5 billion tons pa including firewood ( (1.5bn cu m / 45%) * say 0.5 tons/cu.m). So quadrupling the global wood production would do the trick. For a while. Good luck.

      • For ‘exact’ biofuel ‘calculations’ read my simple essay Bugs, Roots, and Biofuels.. Only need to estimate three numbers. Done.

      • Mike, it is an essay in the energy section of ebook Blowing Smoke: essays on energy and climate. Foreword is from Dr. Judith Curry. Available iBooks, Amazon Kindle, Nook, Kobo,…
        Many other essays that would also interest you and provide information for your next post here on this important topic. And, thanks for this one.

    • Wish I would have commented up-thread, if only to be included in the “humourous, if not bizarre, opinions”
      you mention.
      I’m sure it wouldn’t have taken much effort on my part 🙂

    • One of the thoughts on why the Roman Empire collapsed was they ran out of wood. It was all either burned for fuel or used for construction. England also suffered from deforestation. They had to look outside the UK for ship building wood.

  41. Peak oil is is a fundamentally flawed approach: it only focuses on the production side of the equation (as does this article) and ignores the many factors that limit demand, it assumes the only factor limiting production is difficulty of extraction, and it assumes that this difficulty is a monotonically increasing function that technology can never reverse. This author continues to double down on his mistaken understanding of the magnitude of the resource and the factors that govern production and consumption. He seems determined to join this crowd of failed prognosticators ( ).

    • Funny thing is that quite a lot of the article was taken up with discussing factors other than production – such as technology for example: “Major advances in “unconventional” oil technology are needed to forestall Peak Oil for more than a few years. Technology has always delivered in the past, and it is reasonable to assume that it can continue to deliver in future.“. I’m not sure how this translates into “assumes that [difficulty of extraction] is a monotonically increasing function that technology can never reverse
      Nice graph though. Well it would be if it was at all accurate. I note that Hubbert put global peak oil at 2010 but your graph shows 2000. Not impressed..

      • Jonas, you are apparently ignorant of your own prophet. You should read Hubbert’s 1956 paper that introduced the world to peak oil. Figure 20 on page 22 is particularly relevant as it shows a peak in global oil production in the year 2000 exactly. . I have studied Hubbert’s work in detail and followed his revised predictions over his lifetime. Even in 1956 he was aware of offshore and Alaskan oil (though many of his apologists try to deny it), and you will see in the paper that he factored into his calculations new discoveries. He was right about our ultimate need to migrate to nuclear power, but he was massively wrong about ultimately recoverable oil (only 2.2 trillion BBL of production by the year 2200) and about the inability of technology to dramatically rebaseline marginal costs and expand reserves by accessing previously inaccessible and unknown resources. If you are unimpressed by facts, there is not much that can be done.

      • BTW, where exactly in your article above did you discuss consumption, and how demand-side economic factors such as buying power and substitution drive production side factors such as carrying capacity and market share? Of course, these don’t have a place in classic peak oil theory, where production is driven purely by scarcity of the resource without regard to market forces and variable demand.

      • Yes it was indeed 2000, not 2010. My mistake. But regarding your question “where exactly in your article above did you discuss consumption, and how demand-side economic factors such as buying power and substitution drive production side factors such as carrying capacity and market share?“, you are bogging yourself down in unnecessary and/or irrelevant detail. None of those factors count at the level that we are discussing. Consumption for example is what you end up with after production, demand and price have done their dance.
        You appear to be accusing me of arguing that “production is driven purely by scarcity of the resource without regard to market forces and variable demand“, yet I have been arguing precisely the opposite : that there is strong interaction between production, demand and price. If that’s not having regard to the forces in your market then you live in a very strange market.

      • Ike, so where is the new technology that allows us to re baseline costs? So far this century we are seeing much higher costs per barrel. Do you realize we have people getting laid off at $50 per barrel oil price? What was the equivalent price in 2000?

      • For Leanme,
        Oil industry layoffs were all the news in 1986 when oil prices collapsed and took the Texas economy along with them. Yet, this ushered in a 17-year period where global oil was $20-$30 a barrel and world economies boomed, including that of the USA. Instead of peddling doom, you should study the economic history of oil. It follows a repeating pattern of perceived scarcity that generates a price spike that spurs massive wildcatting and capital investment, that inevitably lead to massive development of new resources, overproduction, and glut, which then causes a price collapse that halts capital investment and forces the oil companies to live off their fat and sell oil below sustainable margins for a decade or more before the next cycle begins again with perceived scarcity and a price spike. During the lean years of sustained low price, the major oil companies with vertical integration and refineries make their living off of the crack spread and downstream operations, and those without refineries typically get starved out and absorbed into the majors. We just saw BG get absorbed by Shell. That is only the beginning. Where in the world is oil production trailing off? Where capital investment and technology evolution has lagged for various reasons, such as Mexico, Venezuela, the North Sea, etc. Where is it booming? Where capital investment and technology evolution has been vigorous, such as GOM, Malaysia, and US terrestrial shale plays. Huge amounts of oil have been tapped and capped since 2003 and will come online progressively over the next decade even without further campaigns of exploration and drilling. Increasing efficiency from technology improvements will make some of today’s uneconomic oil economically producible in 5 and 10 and 15 years. But there will eventually be another price spike, and the peak oilers will start to crow again, and then, when the next glut comes, complain that the new massive influx of pre-salt oil and methane hydrates should not be counted because they are not “conventional oil” and were not foreseen by Hubbert.

      • Oil production decline is a very real issue for Norway as they have a very costly welfare system that will not be affordable in about 30 years or less.

        • A self-inflicted wound to be sure.
          Europe’s largest resources remain untapped beneath shale rock.

  42. All I can say according to the experts in the 1970 we were suppose to be out of oil by now, funny ask any oil man and we are going to run out in thirty to forty years that was true in the 1920s and it is true today.

    • Just because they were wrong then, doesnt mean they are wrong today. As noted, every super giant field is in terminal decline. We are consuming it faster than it’s being discovered. Most large producing countries are in terminal decline in production.

      • Would you say the Spraybury of West Texas is in terminal decline? I would sat it is jus getting started.
        “Pioneer Natural Resources, the Irving-based company that ranks as one of the country’s largest independent oil and gas firms, is estimating the recoverable oil in a single field in West Texas’ Permian Basin at 50 billion barrels of oil and gas.
        At almost twice the estimated reserves in the Eagle Ford, that would make the field, named the Spraberry/Wolfcamp, the largest in the country and the second-largest in the world behind the Ghawar.”

    • No expert ever said that. You are confusing peak production with exhaustion. They are very different, by hundreds of years. See the main post, which makes this distinction clear.

  43. Jonas and other peak oilers are stuck on the symmetric sigmoid that M. King Hubbert derived based on linearly increasing cost of extraction of a finite resource. There is another curve that fits the data better: it is the conventional sigmoid. US oil production was on a conventional sigmoid path to 9.5 MBPD (3.5 BBPY) of production in the 1970s and 1980s until the oil price collapse in 1986 shifted global market share to cheaper producers overseas and caused a discontinuity in the curve in the form of a precipitous drop. In 2014 the USA was again on a sigmoid curve to again achieve 9.5 MBPD of production when another price collapse occurred and has begun to shift market share to cheaper production overseas. 9.5 MBPD seems to be a natural global tolerance or carrying capacity for US oil production where the global price can no longer be sustained. On the basis of the curve below drawn in 2012, I predicted a 1986-like collapse of global oil prices before the summer of 2016 as US oil production again approached 9.5 MBPD. The US production surge from shale was a bit more rapid than I anticipated, but the collapse happened at the predicted production threshold, if not the exact year. It is time to swap sigmoids and pursue a more sophisticated approach to predicting future oil (and other resource) production and consumption.

    • Ike Kiefer’s statement that Hubbert based his findings on “linearly increasing cost of extraction of a finite resource” is quite simply incorrect. Hubbert’s calculations were made without reference to price. Indeed, what he actually said was rather different: “secondary recovery techniques are gradually being improved so that ultimately a somewhat larger but still unknown fraction of the oil underground should be extracted than is now the case.“.
      Interestingly, Hubbert did show a sigmoid-like curve – but for nuclear energy (figure 30 in his 1956 paper, see [5])..

      • Cost and price are two different things (basic economics again). Cost reflects the difficulty of extracting the oil; price reflects what a consumer is willing to pay. To generate a Hubbert curve one has to apply some cost v. price function that starts at 100% marginal profit for the producer when no resource has been extracted and reaches 0% marginal profit when all the economically-extractable resource has been extracted (by definition). The usual way to do this is a linear function of increasing cost (decreasing margin) per unit of resource extracted. Without such a cost function, the area under the curve is unbounded and you have infinite production.

        • “The upper bound of the area under the curve is the total amount of oil. Period.”
          Now Mr. Jonas reveals he does not understand the difference between resources in place and ultimately recoverable resources. Peak oilers who genuinely understand Hubbert’s theory and his curve realize that the oil produced (the area under the curve) is always a tiny fraction of the oil in place (the total amount in the ground), and that the amount produced is a function of continuously declining economics.
          There happen to be an infinite number of curves with an area equal to a given value. Production could follow an increasing ramp to a cliff, or be a rising then falling symmetric sawtooth, or be a square on/off pulse to name a few. To get a symmetric sigmoid requires a unique cost function that increases linearly with cumulative production. It is the same curve one gets for distance traveled in a tractor pull. At the beginning the engine is running full blast and the brakes are off and there is maximum acceleration. But the brakes (the weight rising up the ramp on the sled) apply linearly increasing drag proportional to the distance the tractor proceeds down the track. At the peak speed (aka “distance production”) curve, drag equals thrust. At the tail of the curve, drag has overwhelmed thrust and decelerated the mass to a standstill, even though there is a whole lot more pull left in the engine and a whole lot more track out in front of the tractor. Oil technology throughout history has had the dual effects of both removing weight from the drag sled (improved extraction efficiency), and adding more track in front of the tractor (discovering more producible resources). Both are very real and very valid factors one must consider if pretending to be able to predict the future of oil.
          Mr. Jonas should not be presenting himself as an authority on peak oil, nor Hubbert, nor any aspect of energy until he gets some further education in the subject. Perhaps he should attend some tractor pulls.

      • Ike Kiefer – “To get a symmetric sigmoid … “. I am not the least bit interested in getting a symmetric sigmoid, or a symmetric anything, or an anything sigmoid. I state that the bell curves have a wide variety of shapes. Now, regarding the area under the curve : Let’s move to the hypothetical future situation where oil production has ended, IOW the curve has been completed. Now the area under the curve is exactly the total amount of oil that has ever been produced. The only thing you can say with mathematical certainty is that it cannot exceed the amount of oil that was there to start with. It is indeed possible that the total amount of oil produced is orders of magnitude lower than the amount initially present, but every barrel of unproduced oil is unproduced because of some combination of technology, demand and price. (Include cost if you insist).

    • All you are seeing is the left half of a classic bell curve. There is no way oil production will remain at the flat level at the top of that curve, not when every super field is in terminal decline.

  44. Seems to me that “peak oil” occurs when we must spend a barrel’s worth of energy to extract a barrel — when the EROEI reaches 0, oil will no longer be an energy source. It might still be mined for non-energy purposes (e.g., for plastics), of course.
    Iirc, in the early half of the 20thc, 50 barrels of oil were produced from one barrel’s worth of energy/effort. By the close of the 20thc, that return had fallen to four barrels retrieved for every barrel “spent”.
    Is there any reason why that ratio will always be positive?

    • While I wouldn’t argue that EROEI is irrelevant, I think it is more helpful to look at ERO$I. If it makes a buck it makes sense, and more bucks makes more sense. That’s one of the themes in the post – as the cost of oil rises, so alternatives can become more attractive.

      • Except the Energy Trap would take hold. Energy would have to be diverted from society to get that energy from oil. That would drive up the price of the energy source being used to extract the oil.

    • Thank you for bringing up EROI. EROI is the real driver of the cost function for the oil production curve. It limits carrying capacity for a logistic curve (the conventional sigmoid I advocate above). However, it is a misperception that oil production EROI (even for conventional oil) has always been decreasing. I will let the experts like Dr. Charles Hall speak for themselves, but the current hindcasts of conventional oil production EROI have been moderated to agree that it was probably never much higher than 30:1, and today the estimate is between 10:1 and 20:1 as a global average. It has probably dipped to about 6:1 or 8:1 at times and rebounded. The EROI estimates for unconventional oil and gas are much higher. Mean EROI for Marcellus gas from a study of 300+ wells has been estimated at 85:1, and that is why some production is sustainable even at today’s low prices.
      Oil was original extracted using human labor — four men bouncing a drill bit into the ground and able to drill only 2 or 3 feet of rock a day — very low EROI. Then drills were spun by horses on treadmills and that improved EROI and production rates. Then steam engines and rotary drilling rigs were incorporated and that made much deeper oil much more easily accessible — another increasing step function in EROI. When Howard Hughes Sr. invented that bi-conic drill bit, it revolutionized the efficiency of drilling again, and made much deeper oil accessible. More recently we have had continuing technology revolutions in seismography, directional drilling, horizontal drilling, deepwater drilling, measurement while drilling (i.e., borehead sensors and telemetry), well bore casing, sequential fracturing, and proppants, among many other things. We are now drilling 20 horizontal wells from the same surface site, and extracting energy at such high efficiency that it is often more economical to use a small fraction of the produced energy to desalinate water from local saline aquifers deep beneath the surface to use for the next fracking operation and recycle the fracking formula ingredients and purify the water after use onsite rather than paying to truck everything in and truck the waste water out and impound it underground. Fracking may well be a significant part of the answer to global water scarcity as it offers an economical means to produce both water and energy. tapping universally available source rock directly instead of hunting for the shallow reservoirs of migrated oil that are accidents of geology. With ultra-deepwater drilling and deep drillling in general, we have now discovered “pre-salt” oil far below the zone where conventional biogenic and thermogenic oil theory can explain. And vast amounts of methane hydrates await a technology to make them economically recoverable, even has it has been newly discovered that some is generated abiotically and may represent a renewable resource ( ).
      In short, EROI is a function both of the nature of the target resource and the technology used to extract it. Both are subject to dramatic change, and that is why Hubbert curves are poor predictors. When the wax and wane of economic cycles and market forces are also factored in as they must be, the actual production is best described by a logistic curve with some oscillations about the asymptotic peak.

  45. Very busy article, well woth the time to read along with all the comments. Thanks to Anthony and Mike for bringing this to WUWT.

  46. This peak oil theory is mainly based on the supply side, but what about the demand side.
    Demand is high at the moment. However over time demand in the west will decrease as we switch to more efficient energy production and uses as we are doing at the moment. At the same time demand is increasing in developing countries. But these developing countries will become developed countries in time. Then they will start to decrease their demand just like the west is doing.
    Plus the population of the developing countries will become more like that of developed countries and stagnate rather than grow. This will happen naturally as the need to keep producing babies to counter high mortality rates decreases as the developing countries become better at health care just like the west is doing.

  47. Well, all this ignores a few things
    1. All/nearly all the shale oil found is on the North American continent. Do you really believe that the geological history of this continent was profoundly different than all the rest of them?
    2. There is a sharp price break between the cost of drilled oil like that of Texas and Arabia versus shales and oil sands. The evidence I have seen is that we are indeed past “peak oil” in the 20th century definitions about “cheap” oil (what a mushy phrase that is–“cheap” is not a precise thing). We have now reached a switch-over point where shale oil is more practical. But there’s still enough “cheap” sweet crude to enable Saudi Arabia to break American oil producers–for a while. So we have a jumpy transition.
    3. The Russians prepared beautiful chemical explanations of abiotic oil. These have been rewritten by Westerners so they are nowhere near as clear and do not acknowledge the Russian discoverers. Certainly, the oil found in sedimentary rock was mostly produced by decay of once-living organisms (fossils). But before Earth had life–where was the carbon? The origin of Life was abiotic oil bubbling up from undersea volcanoes and deep-sea vents. This would have been far indeed from equilibrium when it came into contact with sea water. This powered the emergence of life, all of which gets its energy from phosphate-rich compounds using energy produced by the oxidation of carbon compounds. (A couple billion years later, certain bacteria found a way to recharge the carbon by using sunlight to reduce carbon dioxide. These became incorporated into green plants as chloroplasts, and now form the basis of all land life).

    • 1. No. But as I said in reply to another comment, I used the best data I could find rather than make it up, and details don’t matter as much as the total.
      2. Yes.
      3. Pass!

      • 3. Once again, someone who has never worked with a single Russian petroleum geologist putting words in their mouths. Amazing how much time they spend analyzing biomarkers and source rocks if they think the oil is from elsewhere.

    • The origin of Life was abiotic oil bubbling up from undersea volcanoes and deep-sea vents. . .

      Do you have a reference for this hypothesis about the origin of life?

      • Abiotic oil has long been theorized and has been produced in laboratories under conditions plausible to exist underground. Now, according to this paper in Geology ( ), it has been found and with a geochemical mechanism to explain both its origin and its continued production and accumulation. Much about it remains to be quantified, including its global prevalence and its rate of generation. On what basis will Leanme now cling to his disbelief and mock others for views comporting with the evidence?

  48. The problem with predicting the future is that nobody knows what is going to happen. It is the paradigm shifts that make a nonsense of even the most sage like predictions. Previous ‘peak oil’ predictions have proved useless due to unconventional reserves being tapped. As mentioned in the article, these were known about but it was not thought they would be a factor. To quote Rumsfeld, this was a known unknown that has affected forecasts. The factors that really derail the predictions are the unknown unknowns. One example, prior to the invention of the jet engine the forecasts for the air speed record were based on piston engine, propeller driven, aircraft. A safe, practical, supersonic aircraft was considered highly impractical. So much for prediction.
    Where there is money to be made, some ingenious person will crack the problem. It is the denial of this fact that is the most unpleasant aspect of the green machine and its scaremongering (Please note, that comment was not aimed at the author whose article is extremely thought provoking).

    • I guess we’ll have to find the super unconventional oil. I’ve given that some thought. For example, if we could build nano robots equipped with tiny spatulas they could go down there and recover the oil we left behind?

  49. “I am not talking about fossil fuels generally, and I am not talking about oil and gas. I am talking specifically about oil.”
    Stopped reading right there. What matters is “peak hydrocarbons,” which is a long ways away.

    • What matters is the cost of those hydrocarbons. It is clear that throughout the last 50 years higher energy costs forces economies into recession. That drops demand, which collapses prices, which makes expensive extraction of hydrocarbons unprofitable.

    • TJA – What matters is … peak oil? peak hydrocarbons? peak energy? peak prosperity? peak human happiness? I’m trying to get people away from the idea that “Peak Oil” is a looming disaster by placing it in a wider context. If, for example, other hydrocarbons take over smoothly from oil, then Peak Oil is a non-event. If nuclear energy, for example, takes over smoothly from hydrocarbons, then Peak Hydrocarbons is a non-event. The future doesn’t have to frighten.

      • Well, you could have hinted at that earlier. I have read so much nonsense about “Peak Oil,” all heavily documented, full of charts and graphs, and all studiously avoiding the main point, which is that there are still plenty of fossil fuels in the ground or under the oceans after the easily extracted oil is gone, and that we get richer in technology every year, so the price keeps going down. The hydrocarbon age isn’t going to end because we run out of hydrocarbons any more than the stone age ended because we ran out of stones.

    • Well after a three day blow from the south late in the summer, I get plenty of compostable seaweed on my beach. Harvesting seaweed from lakes that are choked because of ag runoff and surrounding camps with inadequate handling of sewage always seemed like a win-win to me. Use thermal depolymerization and you can not only extract oil, but you could slowly separate and remove the mercury dumped there by centuries of burning coal.

    • Philip,
      Thank you for that wonderful link. Jevon’s was a brilliant mind and he built much upon the foundation laid by Adam Smith. I was unaware of this particular work. O what a wonderful education is available today now that Vannevar Bush’s memex is a reality via the internet. It is inexcusable that so many live in ignorance of history and rely on the media and the popular memes and the short span of their own life experience to inform themselves, and thus are susceptible to the charlatans and doomsayers of the age.

  50. Much of the decline in oil from developing countries is due to the rapacious way those governments treat the oil: as a pot of liquid to be drained rather than something that needs continuous investment. Venezuela and iran are 2 examples. This bad management is usually accompanied by nationalizing the oil industry.

    • I just did four reserve estimates for Venezuela under four scenarios. In three of them I assumed regime change. I couldn’t come close to their official reserves unless I got rid of Maduro and his cronies. They have an extremely serious problem with the Orinoco region reservoir performance. If they allow pdvsa to keep doing what they are doing they will ruin those reservoirs.

  51. Interesting article and great commentary by Rud, Wakefield, Fernando and others who have studied oil resources and production. Typical WUWT. One can learn things here.

  52. A possible estimate of global initial TR is therefore about 5,000 Bbbl

    USA shale etc	  2,175
    Non-USA shale etc   345

    Come on, how likely is that? The US occupies 6% of global land area, therefore a better lower estimate for global “shale etc” is 36,000 Bbbl.
    Which alone puts peak oil many years into the future.
    Then there’s Fischer–Tropsch and coal is abundant indeed. One can even supply Hydrogen to the process using advanced nuclear, in which case its energy requirements are covered for the rest of Earth’s lifetime (one ton of ordinary granite, the default stuff continents are made of, has as much recoverable energy content as fifty tons of coal). And, with some additional energy, carbon can be extracted from limestone.
    How soon you’d expect either peak water, peak granite or peak limestone? It’s not all gloom and doom, after all.

    • How likely? Good question. Please note that Saudi Arabia is under 1.5% of world land area yet is ~8% of TR (with TR at 5,000 Bbbn).
      I haven’t counted F-T as oil, as I regard it as being energy from coal.

    • China has more shale than the US, but it is a different kind of shale, and so they will have to develop their own technology to extract it, minus market incentives, of course.

    • That up tick is because of fracking for the most part, like the Bakken. Except oil extraction from fracking is completely different from conventional extraction. The biggest problem with fracking is the decline curve is immediate. As noted above by others, the drop off of flow from a single well is 80% within 3 to 4 years. There is no secondary nor tertiary recovery methods (so far). Once a well is done, it’s done. The USGS is predicting that the Bakken is at or near peak production as the best locations have been sucked to the limit. So expect that spike to not last, especially now that OPEC is screwing with us by their flood of conventional oil, all with the full intent of killing off expensive unconventional extraction in the US and Canada.

      • OPEC can leave the taps wide open as long as they can stand it but the Bakken and other such deposits will still be there when they have to throttle back to increase income for internal economic reasons. Oilies come and go but the resource stays until it’s pumped out.

      • Bakken peaked. I think Eagle Ford will peak in a few months. Russia has peaked. Argentina peaked. Colombia peaked. Mexico is cratering. Norway peaked. UK peaked. Indonesia peaked. Australia peaked. Azerbaijan is done for.
        Let me ask you guys, why do you think the really important low permeability oil and condensate plays are in North Dakota and Texas? Why not in California? What happened to the Polish unconventional oil play? Why aren’t the Chinese drilling their “shale” fields with 10 million Chinese? Why isn’t anybody doing it in Norway? What about Kansas? Or Louisiana? What do you think is going on?

      • I don’t look as those wells as having a steep decline, I see a gangbuster start which provide very fast return of investment. You get your money back fast, and drill another well. Soon you have a huge portfolio of wells chugging along at a low rate, but they are all paid for and don’t much production to turn a profit. That tail is going to be very very long.

        • Doug

          You get your money back fast, and drill another well. Soon you have a huge portfolio of wells chugging along at a low rate, but they are all paid for and don’t much production to turn a profit. That tail is going to be very very long.

          Rather, you buy 30 wells. Pump three for three years, rotating one each year. Put the next three on for three years, cap them, go to the next group over over. 27 years later, you pump the first group again for three years – unless something new has come along, or some new “solvent” or new pipe or new technology has come along.
          Regardless, you PLAN AHEAD for the long-term. Now, today in the southern US for example, all of the US paper products are from company-owned tree farms and plantations, and the paper and wood companies are harvesting what was planted 15-20 years ago. And so they are planning to continue to do so for the next 450 years. It is the government that is FORCING false assumptions into the planning process. The COMPANIES are trying to do it right.

      • When oil gets expensive enough, the artificial restraints on developing ANWR will fall, and there is a lot of oil still on federal land. I am not sue if herding people into collective yurts is going to be a successful electoral strategy.

  53. Although i disagree with Mike Jonas on cllmate change, he has done some good analysis in other areas. However, he has missed the elephant in the peak oil room – the impending disruptive switch to electric ground transportation.
    Around half of oil is used for transportation with 70-80% of this for ground transportation. Ships are highly efficient. Air transportation uses much less oil than ground transportation and bigger planes and more efficient engines are likely to put a cap on the potential increase in oil for aviation, despite increasing demand.
    Ignoring battery considerations for a moment (they are addressed later), oil is far more expensive than electricity as a fuel for land vehicles – calculations based on the sources below indicate oil is 2.5 to 3 times the cost of electricity as a fuel for ground transportation.
    Current average gas prices are $2.50 and average consumption is around 25 mpg (US gallon), giving a fuel cost of 10 cents / mile. That’s based on recent oil prices, assumed to be $50 / barrel. At last year’s high oil prices gas prices were $3.7 / US gallon which is 15 cents / mile.
    Residential electricity prices average 12 cents / kWh across the USA with commercial prices half that. Electric vehicles get around 3 miles per kWh, giving a retail power price of 4 cents / miles and an “industrial” price of 2 cents / kWh, with commercial use somewhere in between. Very little oil is used in power generation.
    So oil is actually very expensive as a fuel for ground transportation – 2.5 to 3 times the cost of electricity, more for commercial use, and considerably more for last year’s oil prices at which most new oil production would become economic once more.
    This is probably not a surprise to anyone. Let’s get on to the bit which might be.
    The big problems with electric vehicles in the past have been due to batteries. There include 1) weight 2) availability of fast charging outside the home and 3) high battery costs. Problems with “range anxiety” are a symptom of not being able to afford the capacity to get a decent range so are another symptom of high battery cost.
    Lithium ion batteries and other technologies such as the newly announced aluminium battery generally solve the weight problem. li-ion comes in at 200 Wh/kg or better which is 5 kg / kWh. For a decent range of,say,180 miles you need 60 kWh, which would weight 300 kg – light enough not to be a problem compared with the weight of a petrol engine.
    For the daily commute home charging is fine, but what do you do if you want to travel over 100 miles? Tesla is solving the problem for its customers (who have all spent huge sums on their luxury EV’s) by setting up networks of free, fast charging stations in the USA, Europe and other regions. Lower cost, bigger batteries and thus a larger range also assist in solving this.
    So that just leaves battery cost. With the exception of the battery an electric car is simpler and cheaper than an internal combustion engine drive train.
    The US EIA estimates that $300 / kWh is the break-even point at which EV’s will be competitive in the general market, which price the EIA believe would be reached around 2020.
    from .
    The best evidence is that the big hitters in the EV market are already at $300 / kWh. We needn’t wait until 2020.
    Volume production at the Tesla battery megafactory is expected to reduce battery costs by 30%, giving $210 kWh. We are now talking lifetime costs for an EV (slightly higher total purchase price plus much low fuel costs and reduced maintenance) which are cheaper than lifetime costs for an internal combustion engine vehicle – and with a decent range too.
    Within a five to ten year timeframe it looks increasingly likely that the ground transportation new vehicle market will move to electric vehicles, driven by reductions in existing battery technology costs caused by the move to high volume battery production.
    Hence, when discussing peak oil, the smart money should be on :
    Scenario 4 – with the advent of large-scale lithium ion battery megafactories, in the 2020-2025 timescale road vehicle production moves mainly to electric vehicles. This dramatically reduces the demand for oil (eventually down to 50% of 2015 levels), production levels from existing wells reduce gradually and prices remain at rock bottom. No new oil wells are economic.

    • Except the metals and plastics for the batteries come from oil. Without them, no batteries.
      Battery powered cars may have some small intrusion on the roads, but not trucks, buses, aircraft or trains for that matter (too expensive to switch over).
      Electric cars might do OK in California, but the northern states and Canada in the winters, they will flop. Between heating the car, wipers going, lights on, stopped in traffic… Well, you get the picture. A lot of dead cars blocking the roads…

      • Richard said

        Except the metals and plastics for the batteries come from oil. Without them, no batteries.
        The average car uses around 600 lbs of plastics, and this is going to apply to both EVs and ICE (internal combustion engine) cars. Not much plastic goes into a large EV battery compared to the 600 lbs in the car. Average car mileage is around 10,000 miles/year which is 400 gallons at 25 mpg, weighing 2,400 lbs. So it is going to take the oil for at most six month of fuel to make the plastics parts in a car. If cars last for 5 years before scrapping then oil use over the lifetime of a car will reduce 90% when comparing ICE cars with EVs.

        Battery powered cars may have some small intrusion on the roads, but not trucks, buses, aircraft or trains for that matter (too expensive to switch over).

        The decision to replace a fleet vehicle (train, bus, truck) to use a cheaper fuel is easier than a personal decision to replace a car, because fleet vehicles travel considerably further each day than the average personal daily commute which is around 40 miles. So fuel costs are a much bigger factor in the equation.
        Commercial air flights are a different matter because you need a minimum energy to weight ratio out of the fuel, but see the comments below on low-end flight.
        The trains on lines which are not electrified already are ideal application for electrification using batteries – you really don’t mind the weight penalty and you know they stop periodically at places where you can recharge them. You can even recharge them as they go along by electrifying limited stretches of line.
        There are now a number of supercapacitor buses in operation in China – which can go 10km without recharging. Supercapacitors are great for bus charging, because they can charge at a tremendous rate. But a combination of supercapacitors and battery would extend range much further, allowing longer stretches between bus stops equipped with charging capabilities. New technology batteries with much faster charging rates would spell the economic death of diesel buses for cities, but may be some years off, and my point is that current battery technology with volume manufacturing is going to bring on peak oil just on its own.
        Small electric powered planes are already available and much cheaper to run than jetfuel-powered planes. Electric trainers reduce the cost of learning to fly by up to 70% – because it is mainly fuel cost.

        Electric cars might do OK in California, but the northern states and Canada in the winters, they will flop. Between heating the car, wipers going, lights on, stopped in traffic… Well, you get the picture. A lot of dead cars blocking the roads…

        Although electric cars are pretty efficient, they are not 100% efficient and the battery and motors do give out heat as they go along. As in a gas-powered car, this can be used to keep the occupants warm while travelling. In fact air conditioning is a bigger consumer of power, but not a show stopper.
        LED lights (as used on most electric cars) use around 10% of the power of halogen lights, so lights and wipers need very little power. And the EV really comes into its own when stopped in traffic as the motor just stops dead, ready to spring to life when the lights change.
        Canada when at minus 30 degrees is a little more of an issue, because the battery might need pre-heating before a journey to ensure it can deliver power initially. Once the journey starts it will produce enough waste heat to keep itself warm. But many more people live in USA than Canada, so the Canadians on their own are not going to delay peak oil by much.

      • Except the metals and plastics for the batteries come from oil. Without them, no batteries

        Plastics apparently are mostly built up from short chain hydrocarbons — frequently ethane. While those can come from petroleum, they can equally well come from natrural gas or Natural Gas Liquids. You’re right about electric cars in Canada and the Northern US (Not that anyone much seems to deal in reality wrt to limitations). But hybrid vehicles offer substantial reductions in petroleum consumption in urban environments and also throw off waste heat which will surely be much appreciated by Northern drivers and their passengers.

      • The latest London Transport “Route Master”, bus, is fully diesel electic. That’s the way to go! I so miss the original London “Red Bus”, the route master. It was so way ahead of its time!

        This is a pilot to see if all-electric buses are feasible in London too.
        And they are trialing inductive charging of the new hybrid London buses while waiting at their stands at either end of the route. Inductive charging at normal bus stops is also possible in the future, of course.
        There are 800 New Routemaster hybrid buses delivered and on order in total. They are 40% more efficient than the old diesel buses, even without going pure electric.
        If you live in London and are over 60 you get free bus and tube travel. And guess what…….!!

    • Climate Pete; I admire your optimism, but when it comes to risking my own $$$, I’ll stick with investing in fossil fuels for the time being. 🙂

      • Jbird,
        Just make sure you time your exit right. I bet you’ve taken a bath on oil company share prices over the last 6 months already.
        The time to really start worrying about your oil shares is when Iran signs on the dotted line for their new anti-nuclear weapon commitments. Because at that point they are going to start producing and selling oil again on the world market. This will increase the Saudi-induced surplus even further.
        And as for coal – see .

        As Deutsche Bank summed up, US coal burning has become a “dead man walkin’ “…..
        …. just four companies accounted for over half the coal mined in the USA. All four have seen their stock price fall between 26% and 77% over the last two years. Other large US coal mining companies have seen stock prices fall by 90% or more.

        Hope you didn’t hold coal shares.

    • I suspect many consumers have chosen the configuration that I use: an economy car for commutes and an SUV for hauling people on longer trips or heavy goods as desired. Sometimes I take the SUV on commutes when my spouse wants to take the economy car into dense population areas with small parking spaces. Even if our situation was two people working full-time, I would still keep one economy car and one SUV, because of the added maintenance and insurance costs of owning a third vehicle. An all-electric vehicle fits this scenario now, and the economics will improve with time.
      Many people reject all-electric vehicles based on their perception that they are inadequate (range anxiety), or on principle (green-government giveaway program). They come up with far-fetched excuses why EV won’t be accepted (plastics as discussed above). Most of these people will come around as the economics of electric transportation becomes unassailable, and some will not, just as some may be reading this post on a CRT instead of an LED display.

      • We have two cars in London. My wife uses hers daily, but mine sits in the street and does less than 2,000 miles per year while I use public transport each day. When mine finally expires there seems no downside to replacing with an EV which we would use only around London. If we need to make a longer trip then we would use my wife’s ICE (internal combustion engine – petrol) car. I can’t see why we would both need to drive cars outside London on the same day, but if we did, we could always hire one.
        Many households have two cars and will be in the same position – make one an EV but keep the fossil-fuelled car for the longer trips. No range anxiety in all this.

  54. I just picked up four LED lights to replace four burned out bulbs. Now these sweet little replacements will shine on for years and at a fraction of the cost. My desktop is soon to be replaced by a dongle. I’m seeing a trend. Those who imagine a world where our energy needs are approaching gluttony aught to be aware of the trends. I’m not the least bit worried as usual. Choose whatever energy creation you like. Robots are getting smaller and more efficient.

    • You are speaking about only marginal energy usage. Main usage is caused by heating water and houses. In most of world if you change your bulb for LED light, 9 months of the year heating will have more work for replenishing missing heat from bulb…
      I would say 90% of households energy consumption goes for heating/cooling, 8% for heating water and only 2% for rest. And there much more visible trend for going down with energy for heating/cooling.

      • I converted my house from natural gas heat to ground source heat pump. Our costs to heat and cool were negligible until the Ontario government tripled our power rates with their wind turbines… Geoexchange is still the most energy efficient method to heat and cool a home.

        Lighting in the UK is generally just less than 20% of total domestic electricity use. I believe USA is similar. In the report above the graphs for electricity use indicate :
        – lighting – 17 TWh
        – appliances – 60 TWh
        – cooking – 15 TWh
        so lighting is 17 / 92 = 18.5%.
        (space heating is 330 TWh and hot water is 86 TWh)
        That’s before wholesale replacement of incandescent and halogen bulbs with LED and compact fluorescent bulbs which have the potential to reduce lighting energy and costs by a factor of 5 or 10.
        And although lighting TWh are only 3.4% of total energy, electricity generation is inefficient. You get 30% or maybe 40% of the TWh out of a generating station that you put in as fossil fuel, and it is costly. In UK electricity costs are often on a par with gas boiler space and water heating costs, so lighting could cost you 10% of your annual energy bill. But the power / natural gas ratio will vary hugely as both power and natural gas prices are very depending on location

      • Even at $8 a bulb, my payback time on LED bulb is one year. As soon as I can no longer stand those hideous CFL bulbs, they get replaced by LED.

  55. DME as a direct drop in replacement for gasoline. LFTRs providing electricity during the day and during off peak hours produce DME and desalinate water. First step? Wait for someone else to develop LFTRs. Second step? Buy it from them after missing the boat that we designed in the first place.
    I pick LFTR as it is the most likely at this point. It could be fusion or LENR or something nobody has on their radar yet.

    • Why not do the obvious thing – store heat at night from the LFTR’s running all the time then generate power during the day from the stored heat. And let batteries take care of ground transportation so charge them at night from the LFTR’s too.

  56. ladylifegrows: “The origin of Life was abiotic oil bubbling up from undersea volcanoes and deep-sea vents.
    L. E. Joiner: “Do you have a reference for this hypothesis about the origin of life?
    There’s a lot of evidence in support of the hypothesis on my webpage “Life from Petroleum.” I recently added a link to this abstract:

    Based on a review of our present understanding of the biochemistry and biophysics of acetogenic, methanogenic and methanotrophic pathways and on a phylogenetic analysis of involved enzymes, we propose that a variant of modern methanotrophy is more likely than traditional WL systems to date back to the origin of life.

    There’s a link under my pseudonym if your interested.
    Fernando Leanme
    April 19, 2015 at 3:20 pm
    I suggest believers go find the abiotic oil and come back to tell us about it.
    Here you can find the equivalent of 500 years of OPEC output on a tiny, abiotic pebble:

    • I suggest believers go find the abiotic oil and come back to tell us about it.

      Surely, abiotic hydrocarbons, if any, are going to be mostly methane (gas) not petroleum. It there is one thing about the interior of the Earth that is non-controversial it is that it is HOT down there. Even if long chain/complex hydrocarbons somehow form deep in the Earth, I’m skeptical that those molecules would stay intact for long.

      • They cant. It is beyond the oil window. Oil breaks down into light gases at that depth. That alone debunks abiotic oil.
        The other aspect of oil that debunks abiotic theory is that there are many molecules in oil which have clear lipid properties. I find it VERY unlikely that abiotic chemistry could produce the complex chains of lipids. DNA is needed to do that.
        Besides all that, as I noted above. All oil fields have a unique chemical signature. That chemical signature allows geologists to pinpoint the source rock, and it is almost always a shallow marine environment under warm conditions. The deep oil fields off Brazil are an example. The oil field sits above the source rock, which is a clear shallow marine environment, sitting on top of basalt. As the south Atlantic started to open, the sea was teaming with life, which produced that oil some 200 million years later.

  57. I thought that Hubbert’s argument was about EROEI, energy return on energy investment. “Easy oil,” the kind under pressure at shallow depths that gushed out of the ground had a great energy return because it didn’t cost a lot of energy to get it out. However, as time goes by, the oil must be pumped out, and drilled for at greater and greater depths, so more and more energy was required to extract it. Easy oil is now gone, and at some point, the amount of energy required to retrieve any oil EQUALS the amount of energy the oil delivers, and then you are finished. Of course, before that point arrives, the oil becomes too costly (in terms of dollars) to make a profit and you stop pumping anyway. The actual dollar cost runs up against competitive technologies like nuclear, but EROEI is something that is ultimately independent of dollar cost and technology. It is useful to think in terms of energy cost, because the actual dollar cost of things gets obfuscated by inflation, deflation, variable market factors and so forth.

  58. Peak oil is an incorrect concept, that arises over and over again. Julian Simon’s work has proved that human ingenuity grows exponentially in a manner similar to compound interest. Rapid increases in knowledge and technology will either discover new ways of extracting oil or substitutes for the oil.

    • Yet countries around the world are experiencing terminal decline in their output of oil, and it’s causing them grief. The uprising in Egypt coincided with their having to start to import oil. Prior to them peaking they exported their oil to pay for food. Egypt can only provide some 15-20% of their food requirements. Without income from oil exports, they have to borrow money to buy food for their country, and borrow more money to import oil.

      • Production decline is highly correlated with government owned assets and industries in resource-endowed areas. See VNZ and Mexico if you have any further questions. You don’t actually think that production is down in VNZ because the Orinoco Belt is running out of hydrocarbons do you?

      • JR You ignore the bigger picture. I am not saying that oil production won’t decline in some countries or for some period of time. However, over the long haul, over broad markets, innovation will ensure either an increase in the supply of oil or the development of alternatives. For instance, whale oil used to be a substantial fuel for lighting, but it was replaced by electricity and the lack of production of whale oil is now irrelevant. There have been many warnings over the course of the last century that we would run short of oil. They have all been proven wrong.

      • Blaming the Arab spring on peak oil is a hoot. You’re too late. The climate alarmists already blamed it on CO2. If you actually go back and read the headlines, the Egyptian insurrection began as bread riots because the Egyptian government could no longer afford to subsidize grain. The proximate cause was not oil, it was a spike in the global price of grain in 2007 and 2008 that persists to this day. A series of studies commissioned soon thereafter by the World Bank and a consortium of international food aid charities attributed much of this spike in price to the redirection of global agricultural resources from food to biofuel in response to US and European biofuel subsidies and mandates beginning in 2005 and escalating over subsequent years. The definitive study on the topic reveals how 10 International Agencies including FAO, IFAD, IMF, OECD, UNCTAD, WFP, the World Bank, the WTO, IFPRI and the UN HLTF formally petitioned the G20 starting in 2010 to “remove provisions of current national policies that subsidize (or mandate) biofuels production or consumption”
        ( ).
        Peak oil alarmists blame everything bad on oil. Climate change alarmists blame everything bad on CO2. Neither will acknowledge that both oil and CO2 have made and continue to make huge positive impacts on the world and that the “cures” advocated for them are often worse than the diseases. Fossil fuels have saved the whales from becoming lamp fuel, have saved the worlds forests from becoming firewood, and have pulled billions of humans out of the poverty and brutally short lifespan of subsistence living in underdeveloped agricultural economies. CO2 is increasing plant growth, plant fertility, crop yields, and topsoil around the world, and the net effect of its increase to date is calculated in the trillions of dollars of gain to the world’s GDP. It requires 2 more degrees C of warming to bring the negative effects of climate change (mostly sea level rise) to a point where they offset the positive effects. This is what the consensus of integrated resource models say, not my personal opinion. Of course, the positive effects that are demonstrably happening right now are generally ignored by the media and artfully hidden by the alarmists, while the negative effects that have yet to be seen and are yet only the predictions of grossly flawed models are trumpeted from the rooftops.

      • Ike Kiefer – I get the impression that you have glanced at the article headline and assumed that I’m a Peak Oil Alarmist. Please note that my “Conclusion” ends:- “So Peak Oil doesn’t have to be regarded as a disaster. With any luck it will be a massive non-event that no-one even notices.“. Is that alarmism?

    • Yes, Peak Oil is an incorrect concept. Suppose the commodity was TV sets and we tried to model it without import substitution, tax policy, labor policy, alternate media switching, price elasticity of demand, and host of other factors outside the model. It is low price and investment risk as much as anything that limits investment and therefore future production. Those factors are on top of the usual problem of lag times in market adjustments in the medium and long run.

    • JD Ohio – I am somewhat bemused by your comment “Peak oil is an incorrect concept,“. I define it at the start of the article, and it seems a pretty clear concept. Obviously it differs from your concept, so maybe your concept is “incorrect”? You then go on to say “Rapid increases in knowledge and technology will either discover new ways of extracting oil or substitutes for the oil.“. Well, the funny thing is that apart from the word “Rapid”, that’s pretty much what I was saying.

  59. Moderator,
    my April 20, 2015 5:39 am Reply to Fernando Leanme April 19, 2015 at 2:04 pm was held up in moderation for some time, and has now disappeared.
    I do have a copy.
    [Reply: Please re-submit. Cannot find the original; probably a WordPress glitch. Sorry. ~mod.]

  60. Thank you Mod, my referenced post has now re-appeared; I do have regular problems with the Flash player crashing here, and elsewhere, and at times my pc is very sluggish.

  61. Good luck with your estimate.
    I tend to figure that for every barrel we draw out of the ground, there will likely be three found and placed into the technical reserves for the foreseeable future. Our technology for finding oil is actually increasing faster than our technology for extracting oil. As our ability to peek into crust of the earth improves, the amount of oil recoverable will grow in leaps and bound and Peak Oil will likely be put off for over a century from date.
    So mark me down for 2170 as the date for peak oil.

    • There’s no reason why the supply side should dictate peak oil, and that is the only side you are looking at.
      Demand for oil is hardly increasing at all, even with the current low oil prices, yet world GDP is still rising. The time is close where land transportation will start to electrify. See my post above for comprehensive details.
      If you don’t believe it, look at what has already happened in China – electric bike use has gone from zero to 150 million in ten years. Would anyone have predicted this ten years ago?
      History shows that disruptive change like this usually takes longer to arrive than anticipated, but, when it does arrive, it happens faster and more comprehensively than predicted.
      So, however much oil this is in the ground, if no-one wants as much tomorrow as they need today, then peak oil will have been reached.

  62. No matter what happens with the (currently bloated) oil supply, demand is sure to peak prior to 2050, perhaps well prior to 2050.

  63. Oil is found in the minds of men.
    Peak oil will happen when peak demand happens. No sooner; no later.

    • Peak oil will happen when peak demand happens.“. In a sense, what you say is necessarily true. But what really matters is what causes peak demand. If a price increase because of difficulty increasing supply, or political interference limiting supply, or political interference limiting demand, then that is likely to be quite painful. But if it is replacement by cheaper and more plentiful alternatives, then that is just great.

  64. “Peak Oil” is a minefield. Discussing it leads to endless debates with people who have decided they 1) know exactly what the term really means and 2) they know it’s already happened.
    Peak Oil is a long ways off if we’re talking about supply and demand and technology. Add the regulatory environment into the equation and all bets are off. Our current administration, for example, would love to make peak oil happen right now by chocking off exploration, production and consumption through regulation and taxes.

  65. The G20 have already said they will remove fossil fuel subsidies, and there is the big climate meeting in Paris in November, at which all the national governments are going to agree to some specific level of reductions in CO2 and other emissions. Decarbonisation of electricity generation will take priority. Coal will be targeted and oil is also on the radar.
    Inevitably the agreements are going to result in actions taken to reduce oil and gas consumption – from better insulating houses, to switch to electric heat pumps and away from burning gas and oil for building space heating. Oh, and solar panels for hot water.
    We are going to need oil for petrochemicals for a long long time, so the oil industry is not going away. But by 2050 it will not be selling oil for transport or heating.

    • re the idea that they will “remove fossil fuel subsidies”.
      Contrary To Reports, Rich Countries Do Not Subsidise Fossil Fuels By $88 Billion A Year
      We’ve the latest report out trying to convince us that fossil fuel companies, those exploring for coal, oil and natural gas, are subsidised by some vast amount by the rich countries. More specifically that the G-20 countries cough up $88 billion a year to aid in the exploration for such fuels. I’m afraid that it’s not true and they reach this number by doing some quite delightful statistical dodging.
      We should first note though that there are very substantial subsidies paid to fossil fuels. I’ve a note on that here. $500 billion a year is the usual rough estimate and we’ll not go far wrong with that. However, this is direct subsidies and almost all of it is taking place either in poor countries or in fossil fuel producers. The subsidy of gas to make sure that Siberians don’t freeze in the winter, below market prices for petrol in places like Venezuela. The biggest subsidiser used to be Iran but thankfully they’re gradually changing their system.

  66. Recent Peak was oil caused by government restricting drilling on Federal Lands.
    Oil production has declined from federal lands in the last 6 years although the administration has tried to take credit for increased US production while attempting to kill it in any way possible.
    Now we see that the royalties are not “fair” and the government wants a bigger slice although they do not contribute to the effort.
    Lease fees paid to the US treasury have declined as the result of the environmental interest taking more and more lands off the table and not holding auctions. Lease fees are a significant part of our revenue.
    The bad news, the lease bids will likely decline today because the current glut in crude and natural gas, so the public will be punished for foolish green agendas.
    Obama moves forward on new oil and gas rules for public lands
    WASHINGTON — The Obama administration on Friday took the first formal steps to boosting the royalties that energy companies must pay for oil and gas they pull from public lands.
    The Bureau of Land Management’s announcement that it would be proposing changes — and inviting public comment on the scope of them — marks the first major effort in decades to update onshore royalty rates that are among the lowest in the world.
    “It’s time to have a candid conversation about whether the American taxpayer is getting the right return for the development of oil and gas resources on public lands,” said Interior Secretary Sally Jewell.
    Royalty rates are currently locked in at 12.5 percent of the value of oil and gas extracted from public land — in contrast to the 18.75 percent charged for production from federal offshore leases.
    The Government Accountability Office has repeatedly cast the United States’ royalty rates and rental payments as too low — below what many states and private landowners charge. Some lawmakers insist the current approach means oil and gas companies are paying far less than fair market value for the fossil fuels they harvest on federal lands.
    Report: Taxpayers not getting fair return from drilling
    “The royalty rate for oil and gas on U.S.-owned lands has lagged behind the royalty rate of states and for offshore areas like the Gulf of Mexico, and has been costing local governments and taxpayers hundreds of millions of dollars in lost revenue,” said Matt Lee-Ashley, the director of public lands at the liberal Center for American Progress. “This is a common sense step toward delivering a fairer return for taxpayers from the oil and gas boom and leveling the playing field within U.S. energy markets.”
    more at the web site.

  67. An exemplary post, with comments refreshingly free of the usual trolls. Thanks for keeping me awake more rewarded than from some ‘friend’s’ kittens YouTube.

  68. Let’s see now, the rise in the peak oil graph corresponded with cheap oil and oil use in making electricity among other things for its easy transport characteristics. As oil prices adjusted higher in real terms, uses of oil was reset back to transportation and chemicals. After that point, world oil became dominated by government owned oil companies and the diversion of oil profits into the global game of populist vote buying alongside socialist vote buying with public debt in the non-oil region of Europe. Today we mostly have an oversupply of public debt and mostly under-invested oil plays.

    • Anyone who doubts that Peak Oil is not government made needs to look at the US government proposed plans for leasing.
      “CERA 2015: Interior secretary signals five-year offshore plan could be reduced
      Houston (Platts)–20Apr2015/645 pm EDT/2245 GMT
      US Interior Secretary Sally Jewell indicated Monday that the Obama administration’s five-year plan for offshore oil and gas leasing could include fewer lease sales and fewer offshore plays before it is finalized, despite an industry push for the plan to include more sales in additional offshore areas.
      The plan, which Interior unveiled in January, calls for 14 potential lease sales in eight of the 26 possible offshore planning areas from 2017 to 2022, including a possible sale off the US East Coast. But the plan, to the frustration of the industry, does not include sales in the Pacific nor offshore Florida’s coast and just three sales in federal waters offshore Alaska.
      During a news conference at the annual IHS CERAWeek conference in Houston, Jewell indicated the plan may change before it is proposed and finalized by 2016, but those changes would only be reductions in lease sales. Interior will not consider more sales than what it has already proposed, she said.
      “There’s two more bites at the apple here from what we’ve put out on the table as a proposed plan,” Jewell said.”
      More at:

  69. Just a reminder that Hubbert’s bell graph was based on vertical drilling experience in basins and with significant technical improvements allowed for. It did not allow for a radical shift from conventional vertical targets and risk reward relationships in a basin to a horizontal target set within hydrocarbon source beds (shales) in the basin. That is a very different risk reward regime and goes well beyond the innovations included in the basin development experience up to that time. Even the assertion of total hydrocarbons in a basin is open to question if such source beds were previously excluded at the outset.


    “Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”

    Sheikh Yamani, June 2000. He was Saudi oil minister from 1962 to 1986 and now in charge of an energy consultancy.

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