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Peak Oil (was "petroleum geologist explains US war policy")

The black art of oil pricing

http://www.sundayherald.com/51252

Houston-based investment banker Matt Simmons, who argued in his recent book, Twilight In The Desert, that Saudi Arabia’s oil fields are at or near their peak, is one of the world’s gloomier commentators. Simmons’s fear is that the world is approaching its peak oil supply at a time of rapidly rising demand and that Saudi Arabia – which accounts for 13% of current global production but 25% of global reserves – has systematically over-stated its reserves for years.

Leading oil commentator Daniel Yergin, president of the Boston Massachusetts-based Cambridge Energy Research Associates (CERA) is more positive. He argues additional supplies will come to the rescue from 2007. He says : “Prices around $60 a barrel, driven by high demand, are fuelling the fear of imminent shortage – that the world is going to begin running out of oil in five or 10 years. This, it is argued, will be amplified by the substantial and growing demand from two giants: China and India.

“Our new, field-by-field analysis of production capacity leads to a strikingly different conclusion: there will be a large, unprecedented build-up of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil could grow by 16 million barrels a day – from 85 million barrels per day to 101 million barrels a day – a 20% increase. ”

Yergin predicts additional supplies will come from Canada, Kazakhstan, Brazil, Azerbaijan, Angola and Russia. Among Opec countries, he detects significant growth potential in Saudi Arabia, Nigeria, Algeria and Libya.

He insists his organisation’s forecasts are not speculative. “Many of the projects that embody this new capacity are already under development and were approved in the 2001-03 period, based on price expectations much lower than current prices.”


He adds: “This is not the first time the world has ‘run out of oil’. Cycles of shortage and surplus characterise the entire history of the oil industry. A fear of shortage after world war one was one of the main drivers for cobbling together the three easternmost provinces of the defunct Ottoman Empire to create Iraq.

“In more recent times, the ‘permanent oil shortage’ of the 1970s gave way to the glut and price collapse of the 1980s. A common pattern in the shortage periods is to underestimate the impact of technology. Once again, technology is key.”

Yergin believes the share made up of “unconventional oil” – which includes the product of Canadian oil sands, ultra-deep-water developments, and natural gas liquids – is set to rise from 10% of total global capacity in 1990 to 30% by 2010.

Sandy Nairn, founding partner of investment management house Edinburgh Partners, is no less optimistic. He believes that given the long-term realities of supply and demand, the current oil price should, in fact, be no higher than the mid 30s – [around $35 per barrel].

He explains: “Most of the current oil price is actually down to bottlenecks of supply. The trouble is we don’t know how long those bottlenecks are going to last. The finding and extraction costs have gone up – but nowhere near enough to justify the current price.”

Citing figures from the BP Statistical Review of World Energy, Nairn says: “In 1984, the world had 35 years’ of proven reserves at the then existing production rate, and between then and now we have used up 70% of those reserves. But we currently have 42 years’ of proven reserves at today’s production rates. So we have extracted more oil than we expected to, yet the level of known reserves has gone up, not down.”

McLaughlin says: “The amount of oil we consume and produce is a function of price and technology. That’s the fundamental economics of this. As the price rises, the use of substitute fuels, such as biomass, coal and nuclear, starts to become more attractive again.”


Conservation will also kick in, with gas guzzlers disappearing from the roads and even SUVs becoming more fuel efficient. Voluntary reductions in consumption will also kick in. As a result, the oil price tends to slide back down again.

McLauglin adds: “With the price at $50-$60, oil firms have the incentive to invest in new technology, for example, to extract oil from the deep sea bed.

“Every year the supply curve moves up and to the right. The world’s oil is never going to run out. The stone age did not end because we ran out of stone, but because technology moved on. We haven’t run out of stone, wood or coal.”
 
zceb90 said:
I've just joined this forum <snip>

3) There's a comprehensive report prepared for US DOE in Feb'05 by Robert L Hirsch entitled 'Peaking of World Oil Production: Impacts, Mitigation, & Risk Management', Hirsch Mitigation Report. There's 91 pages here but it's a really good read.<snip>
This is very good and I've been looking for something like it for a while. Thanks.

What I think it's particularly strong on are the likely transition scenarios and the constraints affecting them. He's also very good at explaining the basic problem.
World oil demand is expected to grow 50 percent by 2025.

To meet that demand, ever-larger volumes of oil will have to be produced. Since oil production from individual reservoirs grows to a peak and then declines, new reservoirs must be continually discovered and brought into production to compensate for the depletion of older reservoirs.

If large quantities of new oil are not discovered and brought into production somewhere in the world, then world oil production will no longer satisfy demand. That point is called the peaking of world conventional oil production. When world oil production peaks, there will still be large reserves remaining.

Peaking means that the rate of world oil production cannot increase; it also means that production will thereafter decrease with time.
and
Because oil prices have been relatively high for the past decade, oil companies have conducted extensive exploration over that period, but their results have been disappointing. If recent trends hold, there is little reason to expect that exploration success will dramatically improve in the future. This situation is evident in Figure II-1, which shows the difference between annual world oil reserves additions minus annual consumption.

The image is one of a world moving from a long period in which reserves additions were much greater than consumption, to an era in which annual additions are falling increasingly short of annual consumption. This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production.
 
bigfish said:
You left a bit of that out bigfish.
But what about the longer term? Robert Kaplan, professor at Boston University’s Centre for Energy and Environmental Studies, says he expects that the production peak – after which producing oil will become much more expensive (but before which the price is unlikely to rise much above $60 per barrel) – to occur in 2015-25.

Contributing to a blog on WSJ.com, Kaplan predicts the transition to alternative energy sources will be painful. “The 20th century could be called the petroleum age,” he writes. “Inexpensive oil means goods can be imported and exported at little extra cost, people can live far from work and a small fraction of the workforce can feed those that produce the goods and services we associate with modernity. All this may change after the global peak in oil production. As such, the peak isn’t just an economic problem, it’s one of the biggest social and political challenges for this century.”
 
zceb90 said:
<snip> New oilfield technology does indeed raise overall recovery rates somewhat but, much more important, it alters the production profile from Hubbert's curve in that production rises much steeper on the left hand side of the curve (suits 'big oil' and Gov'ts - they retrieve payout / taxation revenue that much sooner). In some cases the onset of decline is postponed until nearer 60% than 50% of EUR has been produced. Now comes the payback - much steeper decline curves than has been seen in the past i.e. N Sea at 10% pa which is hugely different to the 1.5% - 3% pa seen in oilfields developed in 1st half of 20th century using traditional technology. If decline rates anywhere near approaching those of N Sea are seen in Saudi or Russia the oil consuming world will indeed have a big problem.

Chris
Given that the lead time for mitigation and/or adaptation is quite long in many important cases, e.g. building all the expensive infrastructure required to make enough liquid fuels for transportation to carry on as normal, then the rate of decline becomes a serious matter of concern.

If it's a matter of falling off a steep cliff within a decade or so, which is what the current demand trends and production figures (reliably known out to say 2010 or so) all seem to be indicating, then it's very likely that we're talking somewhat catastrophic adaptations rather than reasonably sane mitigations.

It's all very well economists claiming that price trends will fix it all. Markets can have an impact up to a point I think, but they would need to be mandating the necessary mitigations more or less right now to be of much use and they have not done so as far as I am aware.

In any case, as that Hirsh paper explains rather clearly, actual data on IOR/EOR and stuff like that, indicates that it is still bounded by geological limits, although it can get production 10-20% closer to those limits if the price of oil will sustain all the fancy technology you have to use to get at that 10-20%.

Abiotic oil, as anything more than a lab curiosity, seems to me a bit of a fairy story for people who don't want to take the issue seriously and deal with it.

Shales, heavy oils and tar sands, like nuclear energy are incredibly expensive in terms of energy and other inputs (*lots* of water use) and pretty disgusting in terms of their environmental impact, especially if you take a realistic view about how many accidents occur per plant and scale it way up to represent greatly increased use of these generally very dirty technologies.

As for conservation, market signals do have some impact. If people can't afford to buy petrol for their cars in the west they can't drive them, but they'll get very upset if you put them in that position. While they're upset about petrol, many won't be able to afford food in the third world (oil price generally affects food price, especially to the extent that people are dependent on industrial agriculture and hence on the price of chemical feedstocks and fuels)

Clearly though, demand for fuel and still more so the demand for food, is relatively inelastic and failing to satisfy it politically explosive.
 
bigfish said:
http://www.sundayherald.com/51252

“Our new, field-by-field analysis of production capacity leads to a strikingly different conclusion: there will be a large, unprecedented build-up of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil could grow by 16 million barrels a day – from 85 million barrels per day to 101 million barrels a day – a 20% increase. ”

Yergin predicts additional supplies will come from Canada, Kazakhstan, Brazil, Azerbaijan, Angola and Russia. Among Opec countries, he detects significant growth potential in Saudi Arabia, Nigeria, Algeria and Libya.

He insists his organisation’s forecasts are not speculative. “Many of the projects that embody this new capacity are already under development and were approved in the 2001-03 period, based on price expectations much lower than current prices.”

According to recent analysis by Chris Skrebowski and others the world is currently loosing 1.14m bopd pa of conventional oil to depletion i.e. ongoing decline in producer nations in 'type 3 depletion' (the kind where the whole nation is in decline). This number looks very realistic given that UK (228k bopd) and US (160k bopd) alone accounted for 388k of that decline between 2003 and 2004 and at least 18 major oil producers are reported as being in decline. The overall decline by such nations looks certain to rise to at least 1.4m bopd pa from 2006 as China and Mexico pass their 'tipping points'.

If we assume for a moment that Yergin's forecasts of increased production are indeed correct (to me a big assumption) let's take a look at what the current rate of exponential growth (3% pa) actually means. Current demand is approx. 85m bopd (or 31.02 Gbbls pa); daily demand would reach 98.5m bopd by 2010 which leaves just 2.5m bopd to compensate for declines in mature oil provinces....which in 1st para above will be at least 6.74m bopd by 2010. Thus a supply 'gap' of 4.24m bopd opens up, a trend which is pretty well in line with Chris Skrebowski's mega projects review.

I'm also struggling to see how the statement that 'some of this extra production will come from Russia' stands up. Already we've seen output growth in Russia stall these past few months and the possibility that their secondary peak has already been achieved is being widely discussed (main Russian peak was in 1987). Further research is available in the Communication presented by Ray Leonard entitled 'the Reality of Russia' at ASPO 2005 workshop. Ray's report can be downloaded from the workshop site and I'm repeating link I posted in my 1st post for convenience: ASPO 2005 Workshop Communications . The message in Ray's report is clear - without a complete change in tax and investment climate in Russia sufficient foreign investment to develop new prospects will not be forthcoming. Russian output will fall by 2010 at the same time as their internal consumption is growing hence volume available for export will decline faster than actual reservoir output declines. One should also not loose sight of the remote locations and transport difficulties for future prospects in Russia which mean 'the dye is pretty well cast to 2010' as lead times are longer than the time we have left until then.

With regard to SA, unless / until we see real field by field data I can see no reason not to exercise caution. Personally I don't care whether Matt Simmons is a necon or not; neither am I concerned about the (staunch Republican) politics of Congressman Roscoe Bartlett. The point here is that Matt was one of the very few who predicted an early peak for NS back in the mid 1990's in his presentations in both Aberdeen and Stavanger - within 4 years UK sector had peaked and he was vindicated. Now when such varying political views as Simmons and Bartlett agree with likes of Jim Kunstler and George Monbiot (which they sure do re PO) I for one am going to listen. Matt is warning that, based on the SPE papers he has reveiwed, and with 90% of SA production coming from 6 giant fields which are on average around 5 decades old depletion is about to become a serious issue, even in SA (which has long been considered by many as virtually immune to depletion). On this basis I'm just not confident that we really will see the increases the likes of Yergin talks about (and any increases we do see will very likely be heavy, sour crude). Also how can such optimists justify their position given that no numbers have been made public for almost 30 years?

We can engage in endless debate on what we think will happen to supply v demand over the next few years but without data transparency from key producers such as the Gulf States and Russia it's really guesswork. What's not in doubt, however, is that at some point the largest oilfields on the planet will experience serious output declines just as N Sea and Prudhoe Bay, for example, already have. Given the age of the key fields (and nearly all super giant fields in the world are over 4 decades old due to declining discovery trend since 1964) and the fact that vertical wells in Ghawar's sweet spots are obsolete we should prepare for world output declines sooner rather than later. Furthermore the fact that MRC wells are being extensively used in some older giant oilfields mean that future production collapses cannot be ruled out given that water encroachment tends to reach horizontal wells 'all at once'. It's better to start steps to mitigate PO early than end up being too late.
 
bigfish said:
http://www.sundayherald.com/51252

Sandy Nairn, founding partner of investment management house Edinburgh Partners, is no less optimistic. He believes that given the long-term realities of supply and demand, the current oil price should, in fact, be no higher than the mid 30s – [around $35 per barrel].
Above is pretty well in line with the price for 2005 that Michael Lynch predicted last year....and we're around double that right now. The age old issue is again putting in an appearance - 'economists are always a whole lot better at finding oil than geologists'. So much so, in fact, that geologists sometime express the view that they wish the economists would send them the UTM coordinates of the 'prospects' they have identified....would save a bunch of seismic interpretation. Colin Campbell explained a historic example to us at the Depletion-Scotland (Edinburgh) workshop in April'05 - back in 1960 he was prospecting for oil in the interior of Columbia but the financial officers in the company insisted they prospect on the coast instead where infrastructure was in place and transportation costs were much lower. Colin tried to explain that 'there was geologically very unlikely to be any oil there' but the 'bean counters' carried the day and it was to be 25 years before someone had the courage to fund exploration in the interior and thus make a discovery. LOL.
 
Robert L Hirsch

bigfish said:
<snip>
Well, another “official” report and surely a good read, but so what. I would expect to find at the bottom of it the usual disclaimer stating that the DOE does not necessarily endorse the views reperesented in this report… And who is Robert L. Hirsch? I've never heard of him until now.
Dr Hirsch is an ex VP of ARCO, here is outline CV I've tracked down for him: Dr Robert L Hirsch .
I attended one of his talks recently and had an opportunity for a chat with him; a lot of quality research went into his presentation and it was extremely well received.
 
zceb90 said:
Dr Hirsch is an ex VP of ARCO, here is outline CV I've tracked down for him: Dr Robert L Hirsch .

ARCO, Exxon.. Hirsch is straight out of the Rockefeller domain, just like Campbell and Leherrere and most likely Simmons the billionaire energy banker too.

No thanks!
 
Bernie Gunther said:
... Abiotic oil, as anything more than a lab curiosity, seems to me a bit of a fairy story for people who don't want to take the issue seriously and deal with it.


Your dismissive comment on abiotic oil reminds me of something Bill Bryson wrote in his book "A brief history of almost everything".

On the history of tectonic plates chapter 12 The Earth Moves: Bryson first notes that just before his death in 1955, Albert Einstein wrote the foreword to a book by Charles Hapgood dismissing the tectonic hypothesis, called "Earth's Shifting Crust: A Key to some Basic Problems of Earth Science". In the book, Hapgood informs that a few gullible souls had noticed "an apparent correspondence in shape between certain continents". Noting that a couple of geologists (K E Caster and J C Mendes) had done extensive fieldwork on both sides of the Atlantic and had established beyond question that no such similarities existed, Bryson declares "Goodness knows what outcrops Messrs Caster and Mendes had looked at, because in fact many of the rock formations on both sides of the Atlantic ARE the same - not just very similar but the same."

The idea of continental drift was first proposed by an amateur geologist, Frank Bursley Taylor in 1908, and although his view didn't go far in the US it was taken up in Germany by a meteorologist, Alfred Wegener, who studied plant and fossil anomalies - "Animal fossils repeatedly turned up on opposite sides of the ocean. He also noticed the same for coal seams. He therefore invented the idea of a single land-mass, Pangaea. His ideas were unacceptable, however, to the geology profession, especially as he wasn't even a geologist, and these people invented "land bridges". Notes Bryson, "None of this ... was supported by so much as a grain of evidence ... yet it was geological orthodoxy for the next half century.... As late as 1964, when the Encyclopaedia Britannica discussed the rival theories it was Wegener's that was held to be full of numerous grave theoretical difficulties."

In 1944, an English geologist, Arthur Holmes, published his "Principles of Physical Geology", laying out today's basic theory of continental drift. It was still radical and was heavily criticized in the United States... "where resistance to drift lasted longer than anywhere else." However, Reginald Daly of Harvard supported Holmes view. "Oil company geologists had known for years that if you wanted to find oil you had to allow for precisely the sort of surface movements that were implied by plate tectonics."

There were various problems with the continental drift theory, but these were resoved one by one over the years. One of these was that the ocean floors had been assumed to be static (hence "continental" drift). Others showed that the ocean floors were also in motion. A Canadian geologist came to this conclusion, but his paper was rejected by the editor of the Journal of Geophysical Research who told him: "Such speculations make interesting talk at cocktail parties, but it is not the same sort of thing that ought to be published under serious scientific aegis." But a symposium held by the Royal Society in London in 1964 agreed that the Earth was made up of a mosaic of interconnected segments. Nonetheless, the opposition persisted. By 1980 it was estimated that one American geologist in eight still didn't believe in plate tectonics.
 
With the exception of a few economists who place their faith in markets to make new fields appear as if by magic, most qualified opinion puts world conventional oil peak somewhere between in the next couple of years and say 2025 or so.

If abiotic oil is to prevent the occurrence of that peak, it would need to be making a difference by now. It isn't.

It is making no evident difference to production. It is making no impact anywhere but in a few curious lab results (... and apparently also as a matter of faith in what seems to be some sort of ongoing shit-fight between two rival factions of online 911 conspiracy theorists. Which is getting tiresome whenever those standards of evidence and debate spill onto this thread.)

The US lower 48 is in a fairly advanced stage of depletion already and the North Sea is not far behind. If this deus ex-machina was going to make any difference, I think that we'd have noticed by now.

Unless of course *they* are keeping all that secret oil to themselves ....
 
bigfish said:
Yes, that was my Pavlov's Dog experiment. Thanks for confirming the expected result by homing in on it.
So, let me be quite clear about this. You cleverly laid a trap, by leaving out the one paragraph of the article that contradicted what you were trying to claim.

The confirmation of your fiendishly clever theory here being, that someone quotes the bit that you left out ...

Yes right. That's extremely ... er ... cunning of you.
 
Hirsch Report on PO Mitigation

bigfish said:
ARCO, Exxon.. Hirsch is straight out of the Rockefeller domain, just like Campbell and Leherrere and most likely Simmons the billionaire energy banker too.

No thanks!
Let's not loose sight of where Dr Hirsch used to work as VP i.e. Arco. On February 10, 1999 Arco chairman, Mike R. Bowlin, addressed an industry meeting with the words 'the world is entering "the last days of the Age of Oil," and the energy industry must respond wisely or face the consequences' Arco CEO Speech, Feb 10, 1999 . As for Arco's actions, within a year they had 'merged' with (sold out to?) BP (then BP-Amoco). On this basis even if one is uncomfortable with the background of a few individuals once multi-billion dollar corps. with access to some of the best oilfield experts start to 'vote with their feet' I for one try to take notice.

If I recall correctly Hirsch's report deals primarily with options for mitigation of the worst impacts of PO rather than dwell over much on the date of the peak itself (which, as we've said, depends on many variables including much 'suspect' data on reserves). To this end I and many others feel that Hirsch and his team have done a good job. Very few experts still believe in 'no peak' and once we have accepted that peaking is inevitable and given the lead time of 2 decades + for major infrastructure changes that the declines are likely to require it would seem most prudent to start planning for such changes now rather than wait for the declines to hit. On this basis I'm confident that Hirsch has produced a valuable report.
 
zceb90 said:
<snip> If I recall correctly Hirsch's report deals primarily with options for mitigation of the worst impacts of PO rather than dwell over much on the date of the peak itself (which, as we've said, depends on many variables including much 'suspect' data on reserves). To this end I and many others feel that Hirsch and his team have done a good job. Very few experts still believe in 'no peak' and once we have accepted that peaking is inevitable and given the lead time of 2 decades + for major infrastructure changes that the declines are likely to require it would seem most prudent to start planning for such changes now rather than wait for the declines to hit. On this basis I'm confident that Hirsch has produced a valuable report.
I thought the report was very useful. I don't agree with his priorities in mitigation, because he's coming from a mainstream US point of view, but he's thought clearly and intelligently about that mitigation, about what is feasible and what isn't, which is in itself valuable.
 
North Sea Divestments

Bernie Gunther said:
With the exception of a few economists who place their faith in markets to make new fields appear as if by magic, most qualified opinion puts world conventional oil peak somewhere between in the next couple of years and say 2025 or so.

If abiotic oil is to prevent the occurrence of that peak, it would need to be making a difference by now. It isn't.

It is making no evident difference to production. It is making no impact anywhere but in a few curious lab results (... and apparently also as a matter of faith in what seems to be some sort of ongoing shit-fight between two rival factions of online 911 conspiracy theorists. Which is getting tiresome whenever those standards of evidence and debate spill onto this thread.)

The US lower 48 is in a fairly advanced stage of depletion already and the North Sea is not far behind. If this deus ex-machina was going to make any difference, I think that we'd have noticed by now.

Unless of course *they* are keeping all that secret oil to themselves ....
Again I'm guided by the actions of the oil companies themselves. One of the UK N Sea 'elephants', Forties, virtually made BP in the N Sea and yet they sold it to Apache about 3 years ago. At that time Forties had produced some 2.5 Gbbls but output, which peaked in 1978 at 500k bopd, was already down to 45k bopd i.e. a decline of some 91% in just 24 years. BP also disposed of the nearby Montrose and Arbroath fields acquired in 1999 via the Amoco 'mega-merger'.

It didn't look like BP with all their expertise believed that Abiotic oil or any other form of revival would arrest the long term trend in Forties hence their decision to pass the 'end game' on to a lesser player. Trying to extract the last bbls from mature oilfields followed by offshore platform abandonments ties up a disproportionate amount of engineering and management time per bbl hence divestment decisions. I know Amoco were similarly trying to divest NW Hutton in the late 90's prior to the BP merger but neither they nor BP managed to attract a buyer hence BP are now having to go through the expensive and time consuming abandonment process.

The Forties disposal is far from unique - BP similarly disposed of 14 NS gas fields in 2003 plus pipelines and its interest in the Bacton gas terminal to Perenco. Again this disposal included a couple of former 'elephants' i.e. Indefatigable and East Leman. The press notice stated that the 14 gas fields combined were producing 150 mmcfd; that's quite a contrast from the late 60's when some 450 mmcfd was being produced from just a single Leman platform.

If we now add the latest news that Kerr McGee is pulling out of the N Sea as part of their policy of withdrawing from areas 'in decline' we start to build up a clear picture as to what 'big oil' thinks of the prospects of a production revival in the area. I'm sorry but for those still in denial depletion is all too real - already it is happening in at least 18 major oil producer nations and in due course declines will inevitably set in elsewhere. The oil consuming world remains totally unprepared for the consequences.
 
Roscoe Bartlett's Addresses to US Congress

Bernie Gunther said:
Quite so. Unfortunately a system has evolved hellbent on maximising that rate of exploitation (and consequently decline) whatever the human cost.

Wicked first post by the way ;)
Thanks for the comment; I'll admit that I'm not new to this subject even though I'm new to the board!

I referred briefly to Roscoe Bartlett in an earlier post; despite his staunch Republican background he's been telling US Congress an awful lot about PO recently (and has been using highly detailed research which looks pretty much spot on to me). His 4 x 1hr long presentations can be found here: Roscoe Bartlett's Presentations to Congress re PO .

The way I see things is that, given that the vast majority are still unaware of (or in denial of) what looks like becoming one of the defining issues of our time, I'm more than happy to see awareness being raised from whatever the source. This is one issue which imo should rise above political affiliations.
 
Resource Conflicts

In his latest chronicle the columnist James Kunstler points to a clear link between the overwhelming dependence on the car culture in US and current military deployment. The most relevant sentences are quoted below, for full article refer link at bottom of this post.

"Because if anyone asked me to define what the war is about -- and people have asked -- I would say the war is a desperate attempt by the US to stabilize the region of the world where two-thirds of the remaining global oil supply exists in order for Americans like Harry Shearer to continue enjoying a lifestyle of extreme car dependency.
<snip>
Harry Shearer with his attitude of moral superiority reminds me of my neighbor here in Saratoga Springs, the lady with the "War Is NOT the Answer" bumper sticker on her Ford Expedition. For people who want to keep on enjoying an easy motoring utopia, war is the answer."

Full article (refer to section dated August 15, 2005): James Kunstler Chronicles
 
Some interesting stuff from zceb90, there. Thanks. :)

-

Oil at record $68 as demand soars

Oil prices have hit a record $68 a barrel after the US reported a fall in gasoline stocks, while China said its crude imports had risen sharply.

http://news.bbc.co.uk/1/hi/business/4182878.stm

-

I went along to a 'peak oil' talk last night in my local town (Penzance).

I was pleasantly surprised that it was so well attended (~40 people) having seemingly only been advertised word of mouth.

The speaker made an interesting and succinct comment regarding China that bears repeating (in light of the BBC comment above). He pointed out that China's demand for energy and resources is fuelled to a great extent by the displacement of manufacturing and industrial production from the US and Europe - basically, China needs the resources to make crap to sell back to us so that we can throw it away.

He also made a comment regarding proponents of 'abiotic' theory - he called them 'loonies'. :eek:

I pointed out that there is no need to resort to such name calling (no matter how accurate it might be). All one need do is ask the 'abiotic' theorists to point out some evidence that their theory (if true) is replenishing any well anywhere at a rate which might be anything but utterly negligible in it's effect regarding delaying depletion/peak.

We agreed that when they turn round and try to explain the complete absence of any such evidence by suggesting that the whole oil industries 'misconception' regarding the nature of oil formation has lead them to be looking in the wrong places, it's ok to call them whatever you like. ;)
 
Forgot where I read it, but saw some figures the other day that used some OPEC data to show that light sweet crude might have peaked already.

If that were so does it tie into the stuff we hear this year about refinery capacity being near limit? I mean obviously increased overall demand has pushed refining capacity to near limit, but if they also have to deal with more heavy sour stuff then that requires even more refining?

And from that, if they dont bother to build much more refining capacity, is this an admission that the establishment also believes in imminent peak oil? Could that be a reliable marker of opinion? eg if there is a lack of refining capacity, why wouldnt they invest in more unless they fear a lack of future supply of oil to be refined?

Then again I havent actually checked to see if there is much refinery capacity increase planned across the world - any ideas?
 
The OPEC data I think you've seen is on page 4 of the August 2005 OPEC Monthly Oil Market Report. (pdf!)

One of the main consequences of these production trends was the rebalancing in a relative short period of time of the crude types produced by non-OPEC, as measured by API and sulphur content. In 2000, non-OPEC crude output was 66 mb/d and the split of non-OPEC crude production by light (>35 API), medium (26 to 35 API), and heavy (<26 API) was approximately 41%, 44%, and 15%, respectively. However, in 2004 with production at 70 mb/d, the split was 34%, 49%, and 18%, respectively. In terms of sulphur content, 47% of crude production in 2000 was sour (sulphur >0.5%) whilst in 2004 it was 51%. These changes can be explained by the fact that the net increase in non-OPEC crude production was 73% medium and 26% heavy in API terms, and was predominately sour, while at the same time there was a net loss in light, primarily sweet crudes (see Graph 1)...

cont.
(Sums done for us here).

-

You raise a good point there, elbows. I've never quite understood exactly how running up against refining capacity limits is supposed to contribute to a price rise in unrefined oil - surely if there is more crude oil on the market than refing capacity to deal with it, the price would drop. :confused:

Any economists care to fill me in on that one, as I must have been asleep for that bit. ;)
 
A brief history of organic geochemistry

Sometime around 1830 an english geologist named Hutton was examining coal under the microscope and found organic structures, spores, plant cells and so on. Subsequent work by Stach, Fayol, Seyler and Stopes confirmed this and was able to come up with a classification scheme and correlated the different stages of composition with depth. In D.W. van Krevelen "Coal, Typology, Physics, Chemistry", Constitution (1961, reprinted in 1981) these findings and the parallel findings in the chemistry of coal are summarised and analysed.

Teichmüller, M. (1958) "Métamorphisme du charbon et prospection du pétrole." showed that there is a predictable relationship between coal formation and petroleum deposit formation.

The first person to hypothesise an organic origin for oil was probably Pasteur, but the recent orgins of the hypothesis lie with the Canadian geologists Hunt and White around the turn of the century.
White thereby concluded, as already done by T.S. Hunt, that the formation of petroleum and natural gas reservoirs and coalification were two aspects of the same mechanism of progressive transformation of organic matter in the sediments during their burial. He also stated that the intensity of this transformation could be calibrated with a simple parameter, the carbon content of the coals found in the sedimentary series.
source (I'd recommend this source for further information on organic geochemistry, I used it extensively here)

By 1912 Engler had shown experimentally that substances similar to petroleum could be produced by pyrolyzing a variety of animal substances in the laboratory (fish, molluscs, whale oil). His method required higher temperatures than seemed plausible however. (I don't know whether he "squashed" the fish first but this seems quite possible ... if it's important.)

A key breakthrough occurred when Treibs, A. (1934) published "Chlorophyll und Häminderivate in bituminösen Gesteinen, Erdölen, Erdwachsen und Asphalten. " Ann. Chem. 510, 42-62 in which he demonstrated that porphyrins, organic compounds found in oil formations, have a very strong resemblance to chlorophyll, being derived by chopping off the phytl side-chain and retaining the tetrapyrolic molecule. This work has been extended today into a fairly sophisticated understanding of organic biomarkers in oil deposits.

The crucial work demonstrating a strong predictable relationship between time and temperature of the deposit, the relationship with depth/pressure, and the resulting mix of hydrocarbons produced (in effect showing that Engler was basically on the right track, but that the complexities of the geology and of processes occurring over geological time were at issue) was peformed by:

Philippi, G.T. (1965) "On the Depth, Time and Mechanism of Petroleum Generation". Geochim. Cosmochim. Acta, 29, 1021-1049.

Louis, M. and Tissot, B. (1967) "Influence de la température et de la pression sur la formation des hydrocarbures dans les argiles à kérogène." 7th World Petr. Cong. Proc., 2, 47-60. and

Albrecht, P. and Ourisson, G. (1971) "Biogenic substances in sediments and fossils." Angew. Chem., Internat. Ed., 10, 209- 286.

Tissot then showed just how these observations could be accounted for using standard chemical kinetics. See e.g. Tissot, B. and Welte, D.H. (1978, 2nd edition 1984) "Petroleum Formation and Occurrence", Springer Verlag. This meant that reactions over thousands of years could now be usefully modelled based on experiemental and theoretical work to refine those models.

A classic paper of Tissot available online which discusses this stuff is here

Durand, B., (et al) (1980) "Kerogen, Insoluble Organic Matter from Sedimentary Rocks", Éditions Technip, Paris. Mapped out the process of thermal cracking of kerogens against the experimental data from actual deposits and showed that it led to formation of oil, ashphalts, bitumens etc.

Since then, significant work has occurred, but in response to some requests specifically for peer reviewed paper on experimental (and I would argue that the mathematical models are equally important here as explained above) kerogen cracking and other relevant processes, here is a list of references:

Behar, F., Vandenbroucke, M., Tang, Y., Marquis, F.and Espitalié, J. (1997) Thermal Cracking of Kerogen in Open and Closed Systems: Determination of Kinetic Parameters and Stoichiometric Coefficients for Oil and Gas Generation. Org. Geochem., 26, 5/6, 321-339.

Braun, R.L. and Burnham, A.K. (1990) Mathematical Model of Oil Generation, Degradation, and Expulsion. Energy and Fuels, 4, 132-146.

Espitale, J., Ungerer, P., Irwin, H. and Marquis, F. (1988) Primary Cracking of Kerogens. Experimenting and Modelling C1, C2-C5, C6-C14 and C14+ Classes of Hydrocarbons Formed. Org. Geochem., 13, 893-899.

Lewan, M.D. (1997) Experiments on the Role of Water in Petroleum Formation. Geochimica and Cosmochimica Acta, 61, 3691-3723.

McNeil, R.I. and BeMent, W.O. (1996) Thermal Stability of Hydrocarbons: Laboratory Criteria and Field Examples. Energy and Fuels, 10, 60-67.

Pepper, A.S. and Corvit, P.J. (1995) Simple Kinetic Models of Petroleum Formation. Part I: Oil and Gas Generation from Kerogen. Marine and Petroleum Geology, 12, 3, 291-319.

Pepper, A.S. and Dodd, T.A. (1995) Simple Kinetic Models of Petroleum Formation. Part I: Oil and Gas Cracking. Marine and Petroleum Geology, 12, 3, 321-340.

Sweeney, J.J., Burnham, A.K. and Braun, R.L. (1987) A Model of Hydrocarbon Generation from Type I Kerogen: Application to Uinta Basin, Utah. AAPG Bull., 71, 8, 967-985.

Tissot, B.P. and Espitalié, J. (1975) L’évolution de la matière organique des sédiments : application d’une simulation mathématique. Revue de l’Institut français dupPétrole, 30, 743-777.

Ungerer, P. and Pelet, R. (1987) Extrapolation of Kinetics of Oil and Gas Formation from Laboratory Experiments to Sedimentary Basins. Nature, 327, 52-54. (some of this work, including several discussions of laboratory kerogen cracking, is online here)

source of references

I do hope this is helpful ;)
 
Seems like oil prices are going to keep going up and up after reading this. As it points out, Hurricane season isnt over yet.

Katrina damage raises oil prices

The clean up after Katrina may take months and cost billions of dollars
Oil prices remained high on Wednesday as initial reports showed Hurricane Katrina had caused extensive damage to facilities in the Gulf of Mexico.
As the US Coast Guard said seven rigs were adrift and eight refineries had closed down, US light crude hit $70.48 a barrel in early Far East trade.

On Tuesday US light crude touched a fresh record high of $70.85, before falling back to close at $69.81.

Gas production has also been hit in the US, sharply increasing its prices too.

Damage assessments

Anglo-Dutch oil giant Shell was one of many firms to see damage to its Gulf of Mexico facilities.

The scary thing is that the hurricane season is not over yet...so I don't see prices coming down

Aerial photos have shown significant damage to the top of its giant Mars platform.

The rig usually produces 220,000 barrels of crude and 220 million cubic feet of natural gas per day.

"The markets are jumpy amid all the uncertainty and confusion, with much offshore production still shut in," said oil analyst Tom Wallin of Energyintel.

"Initial damage assessments from companies are mixed, but the rumours on the second day are that the damage could be heavy and extensive, supply curtailments could be long."

http://news.bbc.co.uk/1/hi/business/4199584.stm
 
Bernie Gunther said:
... A key breakthrough occurred when Treibs, A. (1934) published "Chlorophyll und Häminderivate in bituminösen Gesteinen, Erdölen, Erdwachsen und Asphalten. " Ann. Chem. 510, 42-62 in which he demonstrated that porphyrins, organic compounds found in oil formations, have a very strong resemblance to chlorophyll, being derived by chopping off the phytl side-chain and retaining the tetrapyrolic molecule. This work has been extended today into a fairly sophisticated understanding of organic biomarkers in oil deposits.

Round and round in circles we go.

As a matter of fact, BG, I dealt with these porphyrin and chlorophyll claims back in March in post 728 on this very thread, in a response to Crispy citing the dreaded Richard Heinberg. I'm surprised that such a punctilious professional as you managed to miss it. Heinberg's splutterings appear to be little more than a recapitulation of the 1934 offering of Treibs that you are presenting now.

Richard Heinberg: In addition, oil typically contains biomarkers—porphyrins, isoprenoids, pristane, phytane, cholestane, terpines, and clorins—which are related to biochemicals such as chlorophyll and hemoglobin. The chemical fingerprint of oil assumed to have been formed from, for example, algae is different from that of oil formed from plankton. Thus geochemists can (and routinely do) use biomarkers to trace oil samples to specific source rocks.

J.F. Kenney et al: The types of porphyrins, isoprenoids, terpines, and clorins found in natural petroleum have been observed in material extracted from the interiors of no fewer than fifty-four meteorites.. 9, 12, 13

The observations of such molecules in meteorites thoroughly discredited the claims that their presence in natural petroleum might somehow constitute evidence of a biological connection. Because especially strenuous (and especially erroneous) claims are often made particularly about the porphyrins observed in natural petroleum, those molecules will be discussed in modest detail.

Porphyrins comprise a class of molecules designated cyclic ionopheres, a special class of polydentate ligands for metals. Porphyrins are heavy, approximately planar, chelating molecules, found in both biotic and abiotic systems. Several porphyrin molecules are of special biological significance: vitamin B12; chlorophyll, the porphyrin which is the agent of the photosynthesis process in plants; and the heme molecule, the porphyrin component of the protein hemoglobin which is responsible for the transport of oxygen in mammalian blood. As an example of the high molecular weight of porphyrins, hemoglobin has the empirical chemical formula, [C738H1166O208N203S2Fe]4. Neither vitamin B12, nor chlorophyll, nor heme (nor hemoglobin), nor any biotic porphyrin has ever been observed as a component of natural petroleum.

The porphyrin molecules found in natural petroleum possess different side-groups than do those of chlorophyll or heme. The central chelated metal element in chlorophyll is always magnesium; in heme, it is iron. In porphyrin molecules found in natural petroleum, the central chelated metal element is typically vanadium or nickel.

As stated, porphyrin molecules evolve both biologically and abiologically. During the 1960’s and 1970’s, porphyrin molecules, which are the same as those found in terrestrial natural petroleum, were observed in the hydrocarbon fluids extracted from the interiors of carbonaceous meteorites.

The observations of petroleum-type porphyrins in the hydrocarbon fluids extracted from the interiors of carbonaceous meteorites destroyed, a fortiori, the claims that such molecules constitute “evidence” for a connection of petroleum with biological matter. Additionally, after the observations of porphyrins in carbonaceous meteorites, those petroleum-type porphyrins were synthesized abiologically in the laboratory under chemical and thermodynamic conditions specially set to mimic the abiotic conditions in meteorites.8, 14

The “porphyrin evidence” claims were destroyed by the investigations of carbonaceous meteorites approximately thirty years ago, and are well known throughout the community of scientists working in the field of petroleum. Every compound designated as a “biomarker,” and not otherwise identified as a contaminant, has been either observed in the fluids extracted from the interiors of meteorites, or synthesized in laboratories under conditions comparable to the crust of the Earth, - or both.

Such scientific facts, and the general knowledge of same, not withstanding, every textbook published in the English language purportedly dealing with the subject of petroleum geology, including the ones cited above, continues to repeat the old discredited claims that the presence of (abiotic) porphyrins in natural petroleum provide evidence for its origin from biological matter.15-17 Such assertions, thirty years after having been demonstrated scientifically insupportable, must be acknowledged to be intellectual fraud, pure and simple.

See: Dismissal of the Claims of a Biological Connection for Natural Petroleum.
 
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