By Andy May
“Prediction is very difficult, especially about the future” (old Danish proverb, sometimes attributed to Niels Bohr or Yogi Berra)
In November, 2016 the USGS (United States Geological Survey) reported their assessment of the recent discovery of 20 billion barrels of oil equivalent (technically recoverable) in the Midland Basin of West Texas. About the same time IHS researcher Peter Blomquist published an estimate of 35 billion barrels. Compare these estimates with Ghawar Field in Saudi Arabia, the largest conventional oil field in the world, which contained 80 billion barrels when discovered. There is an old saying in the oil and gas exploration business “big discoveries get bigger and small discoveries get smaller.” As a retired petrophysicist who has been involved with many discoveries of all sizes, I can say this is what I’ve always seen, although I have no statistics to back the statement up. Twenty or thirty years from now when the field is mostly developed, it is very likely the estimated ultimate hydrocarbon recovery from the field will be larger than either of those estimates.
Producing oil and gas from shale was unknown in the 1950’s when the irascible geologist Marion King Hubbert predicted that U.S. oil production would peak in the early 1970’s and decline thereafter. How is that prediction working out? Does the new shale production technology make a difference?
Definition of critical terms
Government regulations impose strict rules on how oil and gas reserves are estimated. Because, proven reserves are used to compute the equity of an oil and gas company, the calculation is very conservative. As long as a company follows the rules (and they do or they risk going to jail) accessing any “booked” proven reserves means drilling a well that is “economic,” completing it and producing the reserves. By economic, we mean the cost of drilling, completing, transporting and selling the oil or gas will pay the company back for its costs and provide a reasonable profit after taxes and royalties to the land owner are paid. Besides proven reserves, most companies keep track of probable reserves and possible reserves, these do not affect the equity of the company, but they can affect how investors value a company, and thus the stock price. Finally, there is one other category, called “technically recoverable reserves.” This is the broadest category, it is simply an estimate of how much oil and gas can be produced using current technology, regardless of cost or profitability.
Estimates of technically recoverable reserves are very broad brush. To make the estimate a geoscientist will typically map an oil or gas bearing formation and use the best estimate of the formations average oil and/or gas content to compute the OIP or oil-in-place after converting the gas to oil-equivalent. Once this volume is computed, it will be reduced by an estimated “recovery factor” to account for the oil left in the ground after the field is abandoned. Generally, very conservative values are used for both the volume of hydrocarbons and the recovery factor.
The US Department of the Interior Bureau of Ocean Energy Management published an estimate of the oil and gas reserves for the Gulf of Mexico Outer Continental Shelf in 2015, here. They estimated that total original reserves of this region of the Gulf of Mexico were 22 billion barrels of oil and 193 trillion cubic feet of gas. How did they define reserves? See figure 1:
Figure 1, source BOEM.
Here, reserves are defined as developed (a well has been drilled and completed that is expected to produce them), proven and undeveloped (field infrastructure has been built, but the well needed to produce the hydrocarbons has not been drilled yet) and justified reserves (these are discovered and mapped and both the government and the company have approved the field for development). The estimate above also includes oil and gas already produced. Contingent resources are mostly producible, but uneconomic, oil and gas left behind in abandoned fields. The undiscovered resources are estimated using statistical techniques, the methodology can be seen here. U.S. onshore reserves are defined differently as are reserves in other countries, but proven, probable and possible “reserves” usually have a commerciality component. Technically recoverable reserves do not have a commerciality hurdle, they only meet a technology hurdle.
Right after a field is discovered a calculation of economically producible reserves must be made because fields are very expensive to develop. Pipelines must be built, wells drilled, facilities constructed and all of this must be done with borrowed money. No oil is produced or sold and no money made until this work is done. As a result, this early assessment will be very conservative. In one field I was involved in, Bohai Bay Block 0436 in China, our initial estimate of proven reserves was only 80 million barrels of oil in the first 20 years. After twenty years, the field had produced 150 million barrels and the field is still producing today. We knew the upside potential of the field at the beginning, but we were only confident enough, with the data we had at the time, in the 80 million barrels. Thus, we used that as the “official” estimate and as the basis for borrowing the development money.
The impact of technology
In the early days of oil and gas, drillers selected the location of their exploration wells based on the presence of oil and gas seeps on the surface, for example the La Brea tar pits in Los Angeles, or the Binagadi tar lake near Baku, Azerbaijan. Figure 2 is a picture of the La Brea tar pits in 1875, you can see the old wooden drilling rigs in the background.
Figure 2, source La Brea Tar Pits Museum.
Once all the seeps had been drilled, early geologists like the legendary Everett Carpenter, found that they could locate anticlinal oil and gas accumulations by mapping surface geology in prospective areas. This new technology was used to find many very large oil fields, like El Dorado in Kansas. Later the development of commercial resistivity surveys (Schlumberger, 1912) and seismic surveys revolutionized oil and gas exploration. Reflection seismic was first tried by Dr. J. C. Archer in 1921 in Oklahoma. It was used to discover oil near Seminole, Oklahoma in 1928 as you can see in figure 3.
Figure 3, source here.
Each of these technologies allow oil and gas to be found and produced that could not have been found before. Other significant discoveries include the Hughes tri-cone drilling bit, patented by Howard Hughes Sr. in 1909. (figure 4).
Figure 4, source Texas Monthly.
That bit allowed wells to be drilled deeper and faster, greatly accelerating field development. These early discoveries were followed by the invention of water flooding old fields, the invention of modern well logging tools in the 1950’s and 1960’s to better assess the production potential of wells, the development of CO2 flooding (1970’s), 3D seismic surveys (1964), horizontal drilling (1980’s) and most recently widespread unconventional shale oil and gas wells (late 1990’s).
At every stage of technology development, it seems, someone says we are going to run out of oil and gas. Near the end of the “drilling surface oil seeps period” in 1885, when it was getting harder and harder to find more oil, the Pennsylvania state geologist proclaimed (according to Daniel Yergin’s The Quest):
“… ‘the amazing exhibition of oil’ was only a ‘temporary and vanishing phenomenon – one which young men will live to see come to its natural end.’ “
That same year John Archbold (Rockefeller’s partner in Standard Oil), when he heard oil had been discovered in Oklahoma, said:
“Why, I’ll drink every gallon of oil found west of the Mississippi.”
Of course, not long after this, modern petroleum geology and Hughes’ famous tri-cone bit revolutionized the oil and gas industry and unimaginable amounts of oil and gas were discovered as a result. And, yes, quite a lot of the oil and gas was found west of the Mississippi River. We have no record of Mr. Archbold drinking any of it, however.
By the end of WW I, the world had entered what Daniel Yergin calls the “Oil Age” and everyone knew it. According to Yergin, Lord Curzon, Great Britain’s foreign secretary once said:
“The Allied cause [in WW I] had floated to victory upon a wave of oil.”
Between 1914 and 1920 the numbers of registered automobiles grew fivefold and the director of the US Bureau of Mines said:
“… the oil fields of this country will reach their maximum production, and from that time on we will face an ever-increasing decline.”
This led President Wilson to say:
“There seemed to be no method by which we could assure ourselves of the necessary supply at home and abroad.”
The entire world came to depend upon oil for its automobiles, trains, ships and for light at night. The Japanese bombed Pearl Harbor for oil, Hitler invaded Russia for oil, the US had a secure supply of oil and prevailed in WW II largely for that reason. What would the world look like today if Hitler had invaded and conquered Azerbaijan and Kazakhstan rather than try and take St. Petersburg and Moscow? Perhaps very different.
At the start of WW II yet another “end of oil” panic started, it even affected the US Department of the Interior which announced:
“American oil supplies will last only another 13 years.”
Then in 1949, the department announced:
“… the end of U.S. oil supplies is in sight.”
After WW II, the US could no longer produce enough oil and did became a net importer for the first time. This led to worries about supplies and, in response, strong alliances with the major Gulf states of Saudi Arabia and Kuwait were formed to ensure a supply. President Truman was not only worried about losing access to Middle Eastern oil, he was also worried about the Soviets taking over Middle Eastern oil fields, especially in Iran. As a result, he ordered a new plan to be developed, according to the Brookings Institution:
“It is no coincidence that much of the early preoccupation with the potential Soviet threat after the end of World War II centered on the remaining Soviet presence in Iran. But unknown to the public until the recent declassification of National Security Council documents (first uncovered by a reporter for the Kansas City Star, Steve Everly) was the extent of Truman administration concern about the possible Soviet takeover of the oil fields. Equally surprising was that the Truman administration built its strategy not so much on defending the oil fields in the face of a possible Soviet invasion, as on denying the Soviet Union use of the oil fields if it should invade.
The administration quickly developed a detailed plan that was signed by President Truman in 1949 as NSC 26/2 and later supplemented by a series of additional NSC directives. The plan, developed in coordination with the British government and American and British oil companies without the knowledge of governments in the region, called for moving explosives to the Middle East, where they would be stored for use. In case of a Soviet invasion, and as a last resort, the oil installations and refineries would be blown up and oil fields plugged to make it impossible for the Soviet Union to use the oil resources.”
However, the 1950’s saw an explosion of new oil and gas technology, not oil fields. Oil and gas exploration expanded worldwide, particularly offshore, and supplies were abundant until the early 1970’s when Middle Eastern politics caused supplies to tighten, resulting in severe oil shortages. Again, the cries that “the end of oil is near” were heard. This time led by an irascible geologist named Marion King Hubbert. In the late 1950’s, using novel mathematics, he predicted that US oil production would peak in the early 1970’s. The rapid growth in oil and gas technology in the 1950’s was slowing at this time and large discoveries had been made so prices were falling. They stayed low during the 1960’s and by the time of the 1973 Arab-Israeli war, supplies and demand were nearly balanced. These two events allowed the Gulf states to engineer a boycott. Then prices spiraled just as many North American conventional oil fields were on a decline. At the time, it looked like Hubbert was correct.
The late 1960’s and the early 1970’s were filled with ominous predictions, in 1972 the Club of Rome predicted oil and natural gas would run out by 1992, in 1968 Paul Ehrlich predicted “65 million Americans will die of starvation between 1980 and 1989.” In 1978, Glenn Seaborg, chairman of the Atomic Energy Commission wrote:
“We are living in the twilight of the petroleum age.”
With higher oil prices, new oil and gas technology was developed at a frenetic pace. The 1970’s and 1980’s saw the development and implementation of 3-D seismic, deep water drilling, CO2 flooding of old oil fields, horizontal drilling, coal-bed methane production, formation image logs, NMR logging and many other critical technologies. The mid 1970’s and the early 1980’s were a wonderful time to be in the business. The new technology worked well, a lot of oil and gas was found, too much as a matter of fact; and the industry crashed in 1986 with the world awash in oil. It took many years to use up the surplus.
Research did not stop during this period, but it did slow down. In particular, UPR (Union Pacific Resources) perfected drilling and hydraulically fracturing (“fracking”) horizontal wells in a Texas formation called the Austin Chalk. At the same time a small oil and gas company, Mitchell Energy, was developing novel methods of hydraulically fracturing shale reservoirs, in particular, the Barnett Shale in Texas. Mitchell was drilling vertical wells and completing them; but having a hard time making the wells “economic” or profitable. George Mitchell, the owner of Mitchell Energy, was a victim of the low oil prices (as low as $10/barrel) of the late 1990’s and had to sell his company to Devon Energy in 2001. At Devon they combined the horizontal well technology that they had in house, with the novel shale completion techniques developed at Mitchell and were very successful. And, lucky for them, oil and gas prices started to rise, making the technology even more profitable.
The early days of shale completions were slow going, but by about 2005 drilling and completion technology, new petrophysical well evaluation technology, micro-seismic technology and new 3D seismic interpretation techniques had matured and the resulting oil and gas discoveries were huge. Unconventional oil and gas (shale production) is very different from conventional oil and gas. Where conventional reservoirs are small and hard to find, but very high permeability (meaning high oil and gas flow rates per foot of reservoir in the well), unconventional “resource” plays are enormous and cover huge areas, but very low permeability. We know where they are, the work is in figuring out how to drill and complete the wells in a profitable way. The author worked as a shale petrophysicist for Devon Energy and saw that it takes four or five wells (minimum) just to figure out if a shale play will work, sometimes more.
It took 17 dry holes and $10,000,000 for Harold Hamm and Continental Resources to figure out how to drill and complete a profitable well in the prolific Bakken Shale. He didn’t drill all of those wells to find the oil, he knew the oil was there, he drilled them to figure out how to successfully place the well in the formation and complete (“frack”) the well. Today, based on what he learned, we could do it with one well. It’s much more a science and engineering problem than an exploration problem. But, the technology worked and once again we are awash in oil and prices are low. It will continue to work and the technology will spread overseas, greatly increasing global production. As Daniel Yergin points out in The Quest:
“Hubbert got the date right, but his projection on supply was far off. Hubbert greatly underestimated the amount of oil that would be found – and – produced in the United States. By 2010 U.S. production was four times higher than Hubbert had estimated- 5.9 million barrels per day versus Hubbert’s 1971 estimate of no more than 1.5 million barrels per day.”
A comparison of actual oil production versus a version of Hubbert’s curve is shown in figure 5 (slightly different from the one Yergin used):
Figure 5, source
Technically Recoverable Reserves
So clearly Hubbert’s Malthusian curve did not predict oil supply correctly, new technology has allowed us to tap into oil that was not part of the potential supply when he did his calculation. Paul Ehrlich’s ominous 1968 prediction in The Population Bomb that 65 million Americans would starve to death in the 1980’s was incorrect for the same reason. He could not have predicted the green technology revolution that included natural gas based fertilizer (the Haber-Bosch process) and Nobel Prize winner Norman Borlaug’s new hybrid strains of wheat, rice and corn. Some might say, well Hubbert was wrong then; but what about tomorrow? Isn’t oil still a finite resource? Let’s examine that idea. Table 1 shows a rough estimate of the technically recoverable reserves of oil and gas known today, using only known oil and gas technology. More deposits will obviously be found and technology will improve in the future.
Table 1
The reserve estimates are in billions of barrels of oil equivalent. NGL and oil volumes are presented as is and natural gas is converted to oil-equivalent using the USGS conversion of 6 MCF to one barrel of oil. The table includes the “proven” worldwide oil, gas and NGL reserves from BP’s 2016 reserves summary. It also includes the 2012 USGS estimate of undiscovered “conventional” oil and gas reserves fully risked, the EIA estimate of unconventional shale oil and gas reserves, and the IEA oil shale (kerogen) and oil sands (bitumen) reserve estimates. Our estimate of 1,682 BBOE in world-wide unconventional shale oil and gas reserves is lower than the IEA estimate of 2,781. The spread in these estimates gives us an idea about how uncertain these numbers are. Our estimate of 781 BBO in oil sand bitumen reserves is lower than the IEA estimate of 1,000 to 1,500 BBO. So, please consider this table very conservative.
The USGS also has a report on oil shale “in-place” kerogen volumes here with different numbers. “Shale oil” is actual oil trapped in shale, for example the Bakken in North Dakota or the Eagle Ford in Texas. “Oil shale” is different, it is kerogen (not oil) trapped in a shale, an example is the Green River Formation in Colorado. Oil shale has been mined in several places around the world since the 1830’s. Shell has completed a pilot production operation, in the Green River oil shale in the Piceance Basin, in Colorado; that proved oil shale could be produced in an environmentally friendly and economic way. They estimate the Green River oil shale could ultimately produce 500 to 1,100 billion barrels of recoverable oil using their technique. Compare that to the 1,242 billion barrel estimate in table 1.
Oil sands are normally estimated separately because they are very heavy oil (bitumen) and sometimes mined, rather than produced with wells. Oil sands were produced in China 800 years ago. The most famous oil sands are those in the Athabasca region of Alberta, Canada. They produce economically from a variety of techniques. About 20% of the production is from surface mines and 80% is from in-situ steam flooding.
Using the BP world-wide annual oil and gas consumption rate for 2015 of 151 million barrels of oil-equivalent per day, the table calculates how many days and years each supply will last. These are “technical reserves” and price is not a factor in their calculation, except for the “proven” category. The total reserve is eight trillion barrels of oil-equivalent for the whole world and a supply that should last at least 148 years. The reserve is very conservative since it only relies on existing technology, remember only 132 years ago, a partner in Standard Oil proclaimed he would drink every gallon of oil found west of the Mississippi! It was innovative oil and gas technology that found billions of barrels of oil-equivalent west of the Mississippi. What will we invent and discover over the next 132 years? Consumption of oil and gas will probably increase over the next 25 years according to ExxonMobil’s 2017 Outlook. This is because they do not expect renewables and nuclear to increase in capacity as fast as demand will grow. But, for simplicities sake, I assumed oil and gas consumption would stay flat for this table.
The moral of the story? Never underestimate the ingenuity of mankind and never assume that technology is static. Also, the resources that technology recognizes today are not all the planet’s resources. There is oil west of the Mississippi!
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Yet as Donald Boudreaux, an economics professor at George Mason University, explained a couple of years ago, running out of oil “is not as much a question of physics as it is one of economics. And economics assures us that we will never run out of oil.”
Never?
Yes, never: “My colleague Russ Roberts explains why in his book The Invisible Heart. Imagine, Russ says, a room full of pistachio nuts. You love pistachios and can eat all that you wish as long as you throw each empty shell back into the room whenever you eat a nut. You might suppose that you’ll eventually devour all of the nuts in the room. Their number, after all, is finite. But…the more you eat…the more difficult it becomes to find uneaten nuts among the increasing number of empty shells. Eventually, it will not be worth the time and effort required to search amidst the empty shells for the relatively few remaining nuts. You’ll voluntarily leave uneaten pistachios in the room.”
http://reason.com/archives/2012/06/01/why-well-never-run-out-of-oil
Same for not popping all the bubbles in a sheet of bubble wrap.
Thanks Andy. Great article.
Andy Oz @AndyOz2 Feb 14
Personally I would love it if every single coal power plant shut down for a few days in Australia. Alarmism would end. https://twitter.com/AndyOz2/status/831745022630453248
I like it. For the US & Europe (especially Germany!).
Like #DayWithoutImmigrants we need #DayWithoutCoal!
Well fortunately for you renewable energy experts are more responsible and only plan to turn stuff off when there’s a replacement.
The EU renewable electricity target is a realistic 80% in 2050
“Well fortunately for you renewable energy experts are more responsible and only plan to turn stuff off when there’s a replacement.”
The current dire situation in South Australia, soon to be repeated in Ontario and probably next year in the UK too, demonstrates you to be lying in your teeth yet again.
Oh, and “renewable energy experts” is as big an oxymoron as you can get.
You are asking the wrong question.
The right question to be asking is “Can daily supply keep up with demand? … and at what price?”
Demand has been growing on average 1.1 MMBOPD/yr since the early 80’s & shows now signs of slowing down.
You might be interested this link :
http://fuelfix.com/blog/2017/02/13/are-shales-days-numbered/
EIA models US shale only adding ~ 6MMBOPD over next 10 years. Great … but good enough to keep up with demand ?? … and if so for how long ?? Other supplies are going to have to come to market to keep prices from skyrocketing (and other energy sources becoming economically competitive) , which is going to take a level of investment not currently seen in the industry.
Again, the key question isn’t will we run out but can we keep up with demand ?
Also of interest & relevant to this discussion :
http://fuelfix.com/blog/2017/02/14/apache-reveals-new-alpine-high-results-disappoints-analysts/
Not a surprise to those of us with knowledge of the play. The initial press releases could be characterized as “fake news” – we certainly did when it came out. There are a couple other “big discoveries” that were announced last year which fall into that category but I will let you do the homework to figure out which ones.
Not true. Demand is growing at about half that rate on average and it shows slowing and spurts that correspond to economic recession.
You are wrong. Down load the data from EIA & do the math yourself.
1.07 MMBOPD/yr since 1980; R^2 = 0.97 …. and we are currently above trend
Jeff,
wrt EIA data … “all else being equal”
I’ve never seen an oil and gas innovation that didn’t have a nay-sayer. Long term the pessimists are nearly always wrong.
“Not a surprise to those of us with knowledge of the play”
Which clearly excludes you…
No,
I didn’t know Yogi Berra was Danish.
I believe he had one every morning.
Aah. That explains it.
The United States has 36 billion barrels of oil in proven reserves. We use 19 million barrels per day. If we were to become “energy independent,” we deplete this reserve in 5.2 years. The U.S. Energy Information Administration estimates that we have another 198 billion barrels of technically recoverable oil in the US. However, much of it is considerably more expensive to extract, transport and refine than today’s conventional oil in proven reserves. It also has a much greater environmental impact in terms of land use, fracking, strip mining of oil shale, etc. Assuming we could recover the entire 198 billion barrels while remaining energy independent, we would use all our recoverable oil up within 36 years. That brings us to 2053.
In 2015, the U. S. imported approximately 9.4 million barrels per day of petroleum from about 88 countries. To make America “energy independent” we would have to double our U.S. oil field production from the peak oil production rates of 1971.
Worldwide we have 1,663 billion barrels of proven reserves. Worldwide demand is approximately 95 million barrels per day. At the current demand, worldwide reserves are depleted in 48 years
Robert L Hirsch, Ph.D., former Assistant Director DOE (ERDA,) V.P. Arco, and Manager of R&D Exxon-Mobil, explains the implication in terms of increasingly higher fuel costs and the impact on the world’s 70 trillion dollar transportation and heavy machinery infrastructure. See: http://science.fusion4freedom.us/hirsch/
We have similar issues with natural gas and coal which will be greatly exacerbated by the need to produce synthetic liquid fuels and increased electrification of the transportation industry.
And we have not mentioned the fact that 3 billion people worldwide live in “energy poverty” while well over 1 billion people live with no electricity. New coal fired electricity plants are now being built in China, India, and other parts of the developing world. They have a life cycle of about 60 years which is roughly the amount of worldwide economically viable coal reserves once this new demand kicks in.
How many decades or generations has it been stated as 5 years of reserves, updated and repeated every few years?
As the guest post explains, that is not the right metric for the big picture.
You can now be more optimistic about natural gas. There is much more shale in the gas window than in the oil catagenesis window. And gas recovery factors are running 12-15% rather than 1.5-3% for oil. The Siluria Technologies OCM and ETL catalysis inventions seem to be scaling to industrial size, which lengthens significantly the liquid transportation fuels runway. Finally, the Fiskars Nanotech announcements offer a glimmer of a viable transport electrification solution, a LIC hybrid device. Guest posted on that at CE last November. Technically plausible, but nothing public even at lab scale yet.
What is predominately leading to production of the shale “gale” vs the “tight” oil is the size of a CH4 molecule vs one of oil. The CH4 molecule is much more easily produced from the tight rocks with their mirocdarcy permeability than a liquid crude oil “drop” with modern completions (enhanced frac technology). Tight shale gas wells are easier to complete successfully to produce large volumes of natural gas and that has led to the depressed natural gas market in the US. It has been a great boon to consumers but a bear for the industry.
I’m sure others have said it, but when you have enough resources for the near future, do you keep looking for more?
Put another way, after you find the right pair of socks in the morning, do you keep looking for another? Is there not a good reason that something lost is subsequently found in the last place you looked for it? Or, after you found it, did you keep looking?
Looking for oil resources costs money, and there are risks that finding that resource too early may not result in you or your company getting to take advantage of it.
But maybe I’m just lazy. I’m going to go looking for some more socks. I’ll bet they’re some in my upper right drawer, but failing that, I’ll check the top of the dryer. I don’t know what good that information will do me, but I gotta do something!
Much of our crude is imported to take advantage of our excess refining capacity to produce finished fuels for export. Our actual crude oil demand to be self-sufficient is significantly lower. The oil business, like all businesses, is about making money in a competitive environment. And nothing is better for national security than a money-making economy. For this reason alone, “oil independence” is a specious argument.
Variable rate hydraulic fracturing boosted production by 18% at the first well where it was demonstrated:
http://www.aogr.com/magazine/frac-facts/variable-rate-frac-boosts-production
No new equipment needed, just a slight change in completion process. Works for oil and gas in the Marcellus and West Texas. Some fields have seen 48% increases in productivity. Who knows what the impact will be once the process is refined.
Fracking is just getting started.
Can existing wells be fracked?
It depends on the state of the existing wells. If the well has been plugged & abandoned, the answer is no. If it’s still a usable wellbore, the answer is maybe. However, most shale wells are horizontal wells. Straight holes aren’t that useful for fracking shale.
MW, DM is precisely correct. For a simple visual ‘technical’ explanation, see essay Reserve Reservations in ebook Blowing Smoke. Second illustration is self explanatory.
Wonderful history and analysis of oil exploration. Really a pleasure to read.
“The moral of the story? Never underestimate the ingenuity of mankind and never assume that technology is static. Also, the resources that technology recognizes today are not all the planet’s resources.”
I would like to point out that Andy May said, “the ingenuity of mankind,” not the “ingenuity of academia.” And there is an enormous difference between the two. (:
The “ingenuity of mankind” requires private property, freedom, and patent law to protect the inventor and bring the invention to the people who can use it. Nations that lack these things have static technology.
“Ingenuity of academia”… isn’t that an oxymoron?
I sure am glad that our ancestors didn’t decide to destroy their economy that helped build our present economy by listening to their gloom and doomers. It appears to me that gloom and doomers have always been around.
Nice historical review, Mr May. The only real way we will run out of oil is politics.
“The future ain’t what it used to be.” — Yogi Berra
I have been looking at the future of oil production for several years. I am not a geologist. I am an economist. One thing became very clear early in my research: how much oil is in the ground is NOT the problem. The problem is one of economics. We have to look at the extraction of oil as a supply chain analysis, starting with the political environment of the nation that owns the oil, and ending at the point where the derived product is consumed. The problem is not how much oil is in the ground, the problem to solve is: how much of the oil in the ground can be made consistently available to the consumer at a price the consumer can afford to pay?
Yes, and the poster child for disconnect of the markets and the resources and policies is in Venezuela.
A timely comparison. In 2001, the 2nd week of George W. (Shrub) Bush’s first term as U.S. President, he kept a campaign promise and established an “Energy Task Force” A.K.A the National Energy Policy Development Group (NEPDG). VP Dick Cheney chaired. By April an organized “resistance” of over a dozen “pro-environmental” NGOs responded accusing the Task Force of very overtly and dangerously “pro-oil”. Throughout the Shrub presidency the policies pursued were derided as ineffective. The war in Iraq was described as a method by which the U.S. could secure its own oil supply by imperial conquest of the Iraqi oil fields. The price of oil climbed as the Iraqi and other middle-Eastern oil instead disappeared from world markets. The 2008 political race contrasted Republican policies (“Drill, baby, Drill!”) with Democrat opponents who argued that “even if we opened new oil fields/deployed new technologies/rolled out new regulations/did what the oil companies wanted/ etc –“it would take ten years before we saw any change in supply or reductions in price.”
In 2009, roughly a decade after Shrub’s fulfilled promise, oil prices plummeted… Prices bottomed out at
Looks to me like both sides of this debate were correct.
Bear in mind that most Democrats and Republicans are “pro-oil”. Lloyd Bentson (D-Tex) ensured the tax breaks for the oil companies during the first Bush era.
It matters what state they are from, not their party.
And then one day he was shootin at some food,
And up through the ground come a bubblin crude.
Oil that is, black gold, Texas tea. GK
Andy,
As far as I’m aware, Shell abandoned their latest efforts to recover kerogen in 2013 as below:
Shell pulls out of oil shale project, leaving one big operator behind
Date: September 25, 2013
Shell is abandoning its decade-long quest to commercially extract shale oil from Colorado, leaving just one major company betting big on the future of that unconventional crude in America.
Shell Oil Co. late Tuesday confirmed it was giving up its Mahogany project in Colorado after investing tens of millions of dollars and 31 years on the endeavor, to focus on other opportunities and producing assets. Chevron Corp., made a similar decision in February 2012, when it said it would abandon its own federal oil shale lease in Colorado’s Piceance Basin
http://fuelfix.com/blog/2013/09/25/shell-pulls-out-of-oil-shale-project-leaving-1-big-operator-behind/
The key point is that Shell demonstrated an in situ process that could work.
True, but at a very high cost. Freezewall ‘solves’ the groundwater and waste rock disposal problems, but at a very high energy and economic cost. Said above themissue is both geophysics and economics. We will never run out of oil. We just won’t be able to afford to use what remains.
Brent, see the report in this comment and my reply:
https://wattsupwiththat.com/2017/02/17/oil-will-we-run-out/comment-page-1/#comment-2429644
Current prices and Obama’s regulations have torpedoed a lot of US projects, but some are still ongoing and oil shale production is still increasing world-wide. Especially in China and Estonia. Many others are being worked on in Israel, Jordan and Brazil.
So what is the newest explanation for how oil is created? I think we have long passed the idea that dead dinosaurs under great pressure became oil. There were that many dinosaurs for one thing.
Dinosaurs have never been considered to be the source of oil.
Plankton, algae and other simple marine and lacustrine organisms are the source of oil.
Yes. Most,oil and gas comes from marine photosynthsizers that ‘died’ into anoxic conditions. The Black sea is a major,oil forming privince today. Of course, takes millions of years for a meaningful accumulation. Then, unlike Green River oil shale, the kerogen rich sediment has to sink into the earth at enough pressure and temperature to undergo catagenesis. Happened with the Permian Basin, sveral times. Never happened to the Green River oil shale, still exposed eroding on the surface 55 mya later.
Don’t forget that some of the more volatile hydrocarbons that were originally part of the coal migrated away and became trapped in geologic traps. This is the source of some types of petroleum.
Whenever I read about this subject my brain just cannot adjust to so much oil and gas being available from dead organisms. Dead organism get cleaned up rather quickly. Coal is easier to understand as a result of geological catastrophes.
I find it a lot easier to accept abiotic processes that oil and gas are produced in the earth core like Titan and some other planets.
My question to the experts here: What’s the latest understanding/consensus on this?
Thanks
Titus
Coal deposits often contain visible fossilized remains of plants, leaves, etc. On a molecular level, bio-markers are also found. All of the bio-markers (chemical skeletons or fossils if you will) found in coal are found in oil also.
That said, there is no way to prove that ancient natural gas has a biological origin.
I was sitting in a NASA Marshall conference room (~1984) when Sir Fred Hoyle announced that all the methane in the solar system was generated biologically. I could hear the sphincters slam shut after that announcement. Sir Fred was pushing his meme of: “Life did not start on Earth; it, in the form of microbes, filtered down from outside”
Abioic oil has been completely discredited; impossible chemistry. Both supposed proofs are junk. sweden involves drilling mud contamination, Ukraine involves really bad geology.
There is minor abiotic natural gas under unusual geological conditions, no question. Largest known deposits are methane clathrates at the bottom of the Framm Strait, catalyzed by iron in the seafloor spreading basalts. You can google from here for verifications.
Thks ristan. You said ‘impossible chemistry’. Do you know how the process works on plants like Titan?
That should be ‘planets’:)
Methane isn’t oil.
There is no oil on Titan. There is methane. Abubdant in primodial,atmosphers. Altered by Earth biology over ~ 3,5 billion years. Learn science more, comment science-void less.
Checked out that ethane and tholine (in large quantities) are still thought to be present. Tholine, I understand is a complex hydrocarbon like tar/bitumen that we’ve used for centuries and always sticks to nice clothing when lying on the beach.
Years ago I had a little theory that when the geological catastrophes (breaks in earths crust) occurred abiotic oil came up and biotic oil from the oceans went down and mixed together. Still seems to hold water!!
Thks for replies.
Yes maybe it will get too expensive to get the oil reserves; but then again, a higher price means we can get fracking. So the Saudi’s and the Greens are on the horns of a dilemma.
And it looks like those who want to regulate and tax our massive, massive natural resources into a top-down planned obsolescence just lost an election.
“Yes maybe it will get too expensive to get the oil reserves;”
Oh brother. Sorry. I do think that the goal of sustainable development is to make drilling, transporting and cracking just too darn expensive. But high oil prices are what I meant to begin the sentence with, because I was leading up to the Forbes article about how the Saudis agreed to artificially lower oil prices in an attempt to destroy the fracking boom in the US.
And the horrible thing about predictions of inaccessibility/scarcity is that people in government base policies on them, and build incredibly expensive energy projects which commit to pay much more than going rates. Because they predict the price of energy will always go up, and not come down, they actually contract for a higher price. But energy prices were coming down in some places because of the fracking boom.
Somehow, I just can’t believe the Saudis could be so ignorant of our economic system as to believe they could drive fracking out of business, then raise prices again. Oh, don’t misunderstand me, they can certainly drive companies bankrupt, but the oil, gas, and technology are still there. What would happen is, someone would buy up the assets of failed companies for pennies on the dollar. Much of the costs of developing the drilling sites are in infrastructure – roads, clearing land, establishing transport routes – and research, and are thus bought at discounted rates. Without having had to pay full cost on these things, the new buyer has a much lower break-even cost. The Saudis could not raise prices to that new, lower cost without facing the same competitive forces again. Our system can be like a mouse trap: the first mouse gets a nibble at the cheese, but the second gets what’s left at reduced risk.
“They estimate the Green River oil shale could ultimately produce 500 to 1,100 barrels of recoverable oil using their technique. Compare that to the 1,242-barrel estimate in table 1.”
Left out the BBOE unit – rather important…
Look at Saturn-moon Titan, which has innumerable reserves of carbonhydrates originating GEOLOGICALLY. There’s no reason why that shouldn’t happen on Earth, too. Forget about the urban myth of “biogen-ptroduced hydrocarbons” on planet Earth, In fact, we are SWIMMING on an ocean fn geologically produced hydrocarbons. Live with it!
So why is there no oil in Precambrian sedimentary basins then?
The same is not true of gas though, from personal experience.
There might be undiscovered oil in some Precambrian basins, although it’s probably not from Proterozoic source rocks…
http://sp.lyellcollection.org/content/early/2012/05/22/SP366.11
Hydrocarbons, not carbohydrates. Methane isn’t oil. Inorganically sourced methane is abundant on Earth and elsewhere throughout the Solar System. Heavier hydrocarbons, not so much.
Not so much equals chemistry zero. ZERO. As in NOTHING. From first principles.
“Forget about the urban myth of “biogen-ptroduced hydrocarbons” on planet Earth”
Bold. Study organic chemistry, specifically chirality, before such a bold – and demonstrably wrong – statement.
Methane may be abiogenic, but oil is not.
‘Oil – Will we run out?’
Answerable by Betteridge’s Law.
And who is “we?”
My daughters’ friend ran out and it wrecked her engine. She didn’t realize that when the warning light came on she would need to alter her behavior in some manner (add oil, change oil, don’t drive, drive to mechanic, ask me, tell someone else, etc.).
So, yes blinders and/or stupidity can lead to running out of oil.
But then again she did have access to oil, she just didn’t do anything about it (see venezuala). So I guess you could argue that she didn’t actually run out; she just ignored what was available.
Either way, the liberaldemocrate types sure do resemble teenage girls in a lot of ways.
Predicting peak oil is a slippery slope. Other than that, oil reserves can be reduced to the number of barrels times the price per barrel with the latter defining the difference between proven and recoverable.
Oil and coal will always be extraordinarily useful resources. One of the ways the environmentalists have plotted to plan the obsolescence of coal and oil is to mandate replacement products. This is a system of mandating new products and gradually outlawing any existing products, and controlling any competition. This is in part what they mean by making it too expensive to use coal and oil.
I see this as a return to mercantilism, in which the governments alone give out licenses to engage in any kind of business. Except the right to give out a license is disguised as an “environmentally friendly” standards.
Oil and coal provide hundreds of products which are benign and inexpensive, and every single one of them is under attack by environmentalists. (I just have to say, I hate that new idiotic plastic packaging that makes noise and tears easily. I really hate it. So much.)
So all the more reason to slash regulations, taxation, and above all, worthless mandates for replacements artificially introduced.
Of course we will run out. We have run out of oil before. We ran out, then went deeper. We ran out then went offshore. We ran out then went to the Arctic. We ran out and started fracking. Each one is its own bell curve that is replaced by a new one representing a new technology.
Wrong on every conceivable level.