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

[ferrelhadley]

http://resourceinsights.blogspot.co.nz/2013/03/oil-is-at-100-and-theyre-telling-us-its.html

Brent Crude, which has become the de facto world benchmark price for crude oil, has also just posted back-to-back years of record prices, higher than even the average daily price in the fateful year of 2008. In that year Brent achieved an average daily price of only $96.94 according to the EIA. But, in 2011 the average daily price was a record $111.26—which was followed by another record in 2012 of $111.63. The price in 2013 has so far averaged about $114.

Peak a boo.....

 

[teqniq]

The World Development Movement have just published a pdf detailing the links between government ministers finance and energy companies:

Carbon Capital: web of power

One third of ministers in the UK government are linked to the finance and energy companies driving climate change.

This energy-finance complex at the heart of government is allowing fossil fuel companies to push the planet to the brink of climate catastrophe, risking millions of lives, especially in the world’s poorest countries.

Government figures embroiled in the web of money and power fuelling climate change include William Hague, George Osborne, Michael Gove, Oliver Letwin, Vince Cable and even David Cameron himself.

If we are to move away from a high carbon economy, this web must be broken, and the finance sector’s investment in fossil fuel energy must be reigned in.

WDM’s new investigation reveals the details of the web of power.

 

[ferrelhadley]

https://class.coursera.org/energy101-001/class/index

 

[Falcon]

New, rigorous assessment of shale gas reserves forecasts reliable supply from Barnett Shale through 2030

Ahem. This report is sponsored by the gas industry. What other conclusion were you expecting? Meanwhile:

Several reports sponsored by the gas industry have estimated the economic effects of the shale gas extraction on incomes, employment, and tax rev- enues. None of these reports has been published in an economics journal and therefore have not been subjected to the peer review process. Yet these reports may be influential to the formation of public policy. This commentary provides written reviews of several studies purporting to estimate the economic impact of gas extraction from shale beds. Due to questionable as- sumptions, the economic impacts estimated in these reports are very likely overstated.

- Kinnaman, T. (2011), ‘The economic impact of shale gas extraction: A review of existing studies’, Ecological Economics

 

[Falcon]

Excellent report published by Tim Morgan at Tullet Prebon - "Perfect Storm: energy, finance and the end of growth" (pdf)

I recommend the whole thing but, if time is short, do read section 5 "the killer equation - the decaying growth dynamic"

The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel.

 

[elbows]

Regardless of our disagreements about precise details and timescales, you know I'm quite prepared to accept that overwhelming trend. I wonder how long we will be waiting before the mainstream dare to consistently join these phenomenon together and acknowledge the relationship between our economic plight and the energy picture. Thats why I dont like to rule out the prospect of them buying a bit more time with unconventional oil and gas, it doesnt change the eventual reality but it does change the timescale of when they have to acknowledge the real plight facing the god of growth. And until that happens I dont have much new to say because only the usual suspects are going to take an interest and I just go round in circles.

 

[Crispy]

Excellent report published by Tim Morgan at Tullet Prebon - "Perfect Storm: energy, finance and the end of growth" (pdf)

I recommend the whole thing but, if time is short, do read section 5 "the killer equation - the decaying growth dynamic"

Very well presented that. (for the excellent presentation) (for the content)

 

[ferrelhadley]

Ahem. This report is sponsored by the gas industry. What other conclusion were you expecting? Meanwhile:

It shows the Barnett has peaked.

 

[Maurice Picarda]

Excellent report published by Tim Morgan at Tullet Prebon - "Perfect Storm: energy, finance and the end of growth" (pdf)

I recommend the whole thing but, if time is short, do read section 5 "the killer equation - the decaying growth dynamic"

It's excellent, but surprised to see it recommended here - the views on the unsustainability of current social protection spend are pretty trenchant.

 

[Bernie Gunther]

Short term, fucking with the benefits system hurts real humans who don't deserve to be hurt.

Longer term, we need something sustainable, see e.g.

http://www.feasta.org/documents/shortcircuit/contents.html

http://theanarchistlibrary.org/libr...ndustry-combined-with-agriculture-and-brain-w

There's no contradiction in wanting to triage the current situation to do the least harm to our fellow humans while wanting to move to something more sustainable long-term.

 

[Crispy]

It's excellent, but surprised to see it recommended here - the views on the unsustainability of current social protection spend are pretty trenchant.

as part of the current economic system, "benefits" probably are unsustainable under the conditions of economic collapse. Doesn't mean social justice is impossible, just that alternative systems must be implemented.

 

[Wilson]

Excellent report published by Tim Morgan at Tullet Prebon - "Perfect Storm: energy, finance and the end of growth" (pdf)

I recommend the whole thing but, if time is short, do read section 5 "the killer equation - the decaying growth dynamic"

As an illustration of the commonality
of energy, imagine filling the tank
of a car with one gallon of gasoline,
driving it until the fuel runs out,
and then paying someone to push
it back to the start-point. The ability
of this person to do this depends, of
course, upon sufficiency of nutrition,
itself an energy equation. Obviously
enough, the energy contained in food
is converted by the human being into
a capability for work, is exhausted, and
requires continuous replacement. But
this process is a circular one, in that the
cultivation of food is a process which
itself requires energy inputs, be they
the labour of human beings (most
simply in planting and harvesting), the
labour of animals, the employment of
machinery or the direct use of energy
inputs such as fertilizers.
The exercise of putting one gallon of
fuel into a car, driving it until the fuel
runs out and paying someone to push
it back to the start-point also illustrates
the huge difference between the price
of energy and its value in terms of
work done.
According to the US Energy
Information Administration18, one
(US) gallon of gasoline equates to
124,238 BTU of energy, which in turn
corresponds to 36.4 kwh19. Since
one hour of human physical labour
corresponds to between 74 and 100
watts, the labour-equivalent of the
gasoline is in the range 364 to 492
hours of work. Taking the average of
these parameters (428 hours), and
assuming that the individual is paid
$15 per hour for this strenuous and
tedious activity, it would cost $6,420
to get the car back to the start-point.
On this rough approximation, then, a
gallon of fuel costing $3.50 generates
work equivalent to between $5,460
and $7,380 of human labour.

my car does an average of around 40mpg (depends on speed obvs.), I reckon I could push it home 40 miles in about 40hours (assuming a flat run) that's $600 not $6000.

 

[Crispy]

Yeah, I furrowed my brow at that bit.
A car is a bad example to make, because the energy required increases rapidly with speed.
He should have used a task that's more easily comparable. Digging a hole or lifting a piece of steel or something.

 

[rover07]

Gasoline is not the only source of energy.

 

[elbows]

as part of the current economic system, "benefits" probably are unsustainable under the conditions of economic collapse. Doesn't mean social justice is impossible, just that alternative systems must be implemented.

Indeed. Its not much of a safety net if it gradually erodes or suddenly breaks.

If the shit hits the fan then we are going to have to disentangle concepts such as fairness and equality from 'maintaining our standard of living'. The former will become more important than ever, the latter will be in tatters. And the situation must be used to promote the former, not serve agendas which deepen the inequality.

 

[ferrelhadley]

OECD predicts Brent price of $190 by 2020

 

[elbows]

Just Brent or the oil price in general? There are good reasons why the Brent index is notably higher than other benchmarks these days, and this trend is likely to accelerate.

 

[elbows]

This appears to be the OECD paper, not read it yet but will:

http://www.oecd-ilibrary.org/economics/the-price-of-oil-will-it-start-rising-again_5k49q186vxnp-en

 

[elbows]

Some highlights from what I've read so far:

• A return of world growth to slightly below pre-crisis rates would be consistent with an increase in the price of Brent crude far above early- 2012 levels. Based on plausible demand and supply equations, there is a risk that prices could go up to anywhere between 150 and 270 US dollars per barrel in real terms by 2020, depending on the responsiveness of oil demand and supply and on the size of the temporary risk premium embedded in current prices due to fears about future supply shortages. These projections account for a negative feedback effect of higher oil prices on GDP.

  • The price increase would be associated with a rise in total oil supply by around 14 million barrels per day. The additional supply is likely to come from unconventional resources such as Canadian oil sands and US oil shale. If oil supply were to increase by respectively 1.3 and 2 million barrels per day less than in the baseline (which corresponds to the growth of the Canadian production of oil sands or the US production of shale oil between now and 2020), the oil price would increase by respectively 10 USD and 15 USD more.

    • The projected oil price paths are also sensitive to world economic growth prospects. For example, if both OECD and non-OECD economies grew each year one percentage point more (less) than in the baseline scenario, the analysis suggests that the oil price could end up about 40 USD higher (lower) in 2020.

 

[elbows]

Looks like there are too many interesting paragraphs for me to quote them all. But here are a few that caught my eye in particular:

While resource depletion does not seem to have been a major factor behind oil price movements in the past, this may be about to change as argued by Hamilton (2009). In this sense the Hotelling rule (Hotelling, 1931), according to which the price of an exhaustible resource should exceed marginal cost even if the market is perfectly competitive, may become relevant. Since the price of an exhaustible resource should increase over time, producers have an incentive to produce less today in order to produce more tomorrow when it can be sold at a higher price.5 Hamilton (2009) argues that the pressure to preserve resources for the future has started to increase in some countries such as Kuwait. If such behaviour is shared by a large proportion of producers, the current price of oil may already reflect a rising scarcity rent.

In line with recent trends, oil demand would only grow in non-OECD economies, but remain flat in the OECD where efficiency gains roughly offset the GDP growth effect. Oil demand growth would be particularly high in China and India (Table 6). They would account for about half of the rise in world demand – so that their share of world oil demand would reach about one-fifth by 2020 (Figure 9) – and for about two-fifths of the oil price increase. If price and income elasticities of oil demand in the two countries were equal to the OECD average, the latter contribution would be halved, suggesting that the high contribution is equally due to their strong GDP growth and to the high (though declining) oil intensity of that growth. At a global level, the baseline scenario entails a further fall in the oil intensity of output, at roughly the same pace as over the past decades.

The rise in the oil price would be expected to trigger an increase in total oil supply by around 16% over the period 2011-20, which is somewhat above the growth rate observed over the past decade (Figure 7, panel B). Still, the need to bring new production capacity on stream would be much greater than the simulated supply increase due to the need to compensate for the fall in production from currently producing fields. According to the International Energy Agency, crude oil production from fields that were producing in 2011 will drop by around 15% by 2020 (IEA, 2012a). Moreover, since – at least in the absence of decisive worldwide action to curb carbon emissions – the production mix is likely to move towards a higher share of light tight oil, natural gas liquids, extra-heavy oil and natural bitumen, major investment in processing facilities for the lighter fluids and upgrading facilities for the heavier ones would be required (for details see IEA, 2010, Chapter 3).

The projected oil price increase could also be dampened by a large increase in supply beyond that embedded in the baseline and alternative scenarios featured in Figure 7. The supply of oil does not only depend on its price, but also on the discovery of new fields, improvements in extraction methods and technological innovations that make available completely new sources of oil and are only partially related to the price. For instance, if the supply of oil were to rise unexpectedly by 25% more than in the baseline scenario, to about 107 million barrels per day in 2020 (while other baseline assumptions were kept unchanged) the oil price would still increase to 150 USD per barrel (Figure 11). To put the assumed total increase in supply in perspective, it would be equivalent to about two times the current production of Saudi Arabia or almost three times the increase in renewable energy production over the past decade.

 

[elbows]

One more I think

This exercise also helps to put in perspective the recent offshore discoveries in Brazil as well as the supply potential of Canadian oil sands and US oil shale. Petrobras expects to extract close to 1.1 million barrels per day from the offshore fields by 2020 (Petrobras, 2010), while the IEA puts the additional supply from Canadian oil sands in the same year at around 1.3 million barrels per day (IEA, 2012). If oil supply were to rise by respectively 1.1 and 1.3 million barrels per day less than implied by the baseline scenario, the oil price would increase by around almost 10 USD more. The price would rise by 15 USD more if the supply increase were curbed by 2 million barrels per day, which corresponds to the IEA‟s projection of additional supply from US oil shale by 2020 (IEA, 2012). This figure increases to around 20 USD when taking into account US production of natural gas liquids (as a by-product of shale gas production), which the IEA projects to grow by 1 million barrels per day between now and 2020.

 

[ferrelhadley]

Just Brent or the oil price in general? There are good reasons why the Brent index is notably higher than other benchmarks these days, and this trend is likely to accelerate.

WTI is out of kilter with the other benchmarks. Brent is relatively in line with the other benchmarks as it is properly exposed to the world tanker markets.

 

[Dr Jon]

Also see:
Fossil and Nuclear Fuels – the Supply Outlook
(pdf)

Conclusion
The figure below shows the supply scenario for all fossil and nuclear fuels. Fuel supply for all fuels is measured in energy units (1Mtoe = 1 million tons of oil equivalent).

According to our study, coal and gas production will reach their respective production peaks around 2020. The combined peak of all fossil fuels will occur a few years earlier than the peaking of coal and gas and will almost coincide with the beginning decline of oil production.

Therefore, the decline of oil production – which is expected to start soon – will lead to a rising energy gap which will become too large to be filled by natural gas and/or coal. Substituting oil by other fossil fuels will also not be possible in case gas and coal production would continue to grow at the present rate. Moreover, a further rise of gas and coal production soon will deplete these resources in a way similar to oil.

The energy contribution of nuclear fuels is too low in order to have any significant influence at global level, though this might be different for some countries. Moreover, like with fossil fuels, easy and cheap to develop mines are also being depleted in uranium production and production effort and cost will continuously increase as a consequence.

Total world fossil fuel supply is close to peak, driven by the peak of oil production. Declining oil production in the coming years will create a rising gap which other fossil fuels will be unable to compensate for.

 

[Falcon]

Gasoline is not the only source of energy.

Rover07 - do you just forget the bits when it is pointed out to you that you can't run things like boats off solar panels? Or do you imagine we do?

 

[free spirit]

Rover07 - do you just forget the bits when it is pointed out to you that you can't run things like boats off solar panels? Or do you imagine we do?

well, some boats will run fine off solar, but only rarely used pleasure craft and the like. It's the massive container ships, ferries and similar that would struggle to be powered for very long before needing to stop for a few days to recharge the batteries - certainly no use for trying to move large quantities of goods from China to the UK.

The trick there I think is to massively reduce the volume of trade needing to be transported such long distances via a reversal of the globalisation trend. Not entirely sure how possible that's going to be while the WTO etc are still intent on ever increasing volumes of long distance world trade.

and mini MS thorium reactors maybe long term.

 

[Falcon]

Not entirely sure how possible that's going to be while the WTO etc are still intent on ever increasing volumes of long distance world trade.

Even less sure how possible that's going to be given solar technology is impossible without long distance world trade. Try building the components of the solar supply chain from the materials available within a 100km radius of where you live.

 

[yield]

Even less sure how possible that's going to be given solar technology is impossible without long distance world trade. Try building the components of the solar supply chain from the materials available within a 100km radius of where you live.

Are there practical alternatives to rare earth metals?

 

[Crispy]

Are there practical alternatives to rare earth metals?

Not for PV, no.
Concentrated solar, on the other hand, needs steel and glass.

 

[rover07]

Rover07 - do you just forget the bits when it is pointed out to you that you can't run things like boats off solar panels? Or do you imagine we do?

You seem fixated by the idea of the solar panels being on the boat. They are on land.

Gas-turbine/electric motors provide the ships propulsion.

Methane is produced using the Sabatier process.

http://en.wikipedia.org/wiki/Sabatier_reaction

It has been proposed in a renewable energy dominated energy system to use the excess electricity generated by wind, solar photovoltaic, hydro, marine current, etc. to make methane (natural gas). The methane can be injected into the existing gas network which in many countries has one or two years of gas storage capacity. The methane can then be used on demand to generate electricity (and heat - combined heat and power) overcoming low points of renewable energy production. The process is hydrolysis of water by electricity to create hydrogen (which can partly be used directly in fuel cells) and the addition of carbon dioxide CO2 (Sabatier process) to create methane. CO2 + 4H2 → CH4 + 2H2O The CO2 can be extracted from the air or fossil fuel waste gases by the amine process amongst many others. It is a low CO2 system and has similar efficiencies of today's energy system. A 250kW demonstration plant was ready in 2012 in Germany.

Hydrogen from electrolysis can also be used to make fertiliser. So no need to worry about that either.

 

[gosub]

Are there practical alternatives to rare earth metals?

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9951299/Japan-breaks-Chinas-stranglehold-on-rare-metals-with-sea-mud-bonanza.html