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

[Dr Jon]

The Oil Drum calls it a day.

Just spotted The Oil Drum Demise:

Imagine something like the Huffingtonpost for energy and the economy

Any billionaire readers fancy funding that?

 

[ferrelhadley]

Peak oil lives, but will kill the economy

This is how capital intense all these new tight sources of oil and gas are.

That giant figure for the US represents 1 million barrels a day vs the 75 million barrels a day the worlds conventional fields are producing. Most are in decline, when the new fields coming online cannot match, over all decline will set in.

This is all

US drill rig increases have stalled.

Production kind of lags drill rigs by about 2 years.

So on the whole shale oil in the states is unlikely to get too much more than its current 810 000 barrels a day that is being reported for May. It is also very telling that the most profitable place to stick a drill rig is an unconventional well in the US rather than the supposed bounty of conventional sources around the world.

 

[Crispy]

http://www.theoildrum.com/node/1009...&utm_campaign=Feed:+theoildrum+(The+Oil+Drum)

Good "final" post from Euan Mearns on TOD. Covers the current events that are pushing the peak further into the future, and how we are in a different global energy environment than we were before 2008.

tl;dr: The good stuff has peaked. We're going gangbusters on low quality replacements. This will hurt the economy. Plans for getting off fossil fuels for primary energy supply remain ineffective.

 

[gosub]

http://bronzeyegroupcommodities.wor...ld-leap-to-10-2trn-boe-according-to-research/

 

[ferrelhadley]

Attack on ship in the Suez
http://www.bbc.co.uk/news/world-middle-east-23918642

Foil, ships are pretty hard targets without a tonne or two of explosives.

But there is something much softer.

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

This pipeline delivers 2.5 million barrels a day to the Med side. Pipelines are notoriously vulnerable. Increasing instability in the MENA and someone might stick a bomb under one.

 

[ferrelhadley]

Given all the assurances being given about how safe certain drilling techniques are in the UK, I thought this might interest some people.

The Elgin gas leak was caused by the corrosive fluids used in the drilling

A corrosive drilling fluid that triggered the North Sea's worst gas leak in 20 years could threaten similar deep-sea wells across the world, and operator Total has already warned Shell that its nearby Shearwater field may be at risk.

The corrosive fluids implicated in the leak at Total's Elgin field, such as calcium bromide, are commonly used in such deep-sea wells, and experts fear a recurrence as operators, under pressure to offset declining output from conventional reservoirs, turn to deeper, hotter and higher pressure fields.

"Bromide brines have been used in thousands of wells since their introduction in the 1980's," John Downs, a chemical engineer who runs his own consultancy group, told Reuters. "An extensive well repair programme may be needed if the stress corrosion cracking caused by bromide brine in Elgin is also happening elsewhere."

Different fluids to those in Fracking but given all the sweetness and light that is being blown around about how good our drilling regulations are.....

 

[Dr Jon]

Oil and Gas Limits Underlie Syria’s Conflict

Even if damage to pipelines and transmission lines get fixed, the depletion issue will continue, and the population will need to be fed.

 

[Dr Jon]

I posted a link to this interview with Al Bartlett, who died last weekend, on this thread in UK politics, but I'm re-posting it here in case folks missed it.

 

[Dr Jon]

Interesting piece from Nafeez Ahmed in the Graun:

A former British Petroleum (BP) geologist has warned that the age of cheap oil is long gone, bringing with it the danger of "continuous recession" and increased risk of conflict and hunger.

link

 

[Dr Jon]

Think “peak oil” is a discredited idea? Think again

The most recent edition of World Energy Outlook, published this past November, was a lot more circumspect. Yes, shale oil, tar sands, and other unconventional fuels will add to global supplies in the years ahead, and, yes, technology will help prolong the life of petroleum. Nonetheless, it’s easy to forget that we are also witnessing the wholesale depletion of the world’s existing oil fields and so all these increases in shale output must be balanced against declines in conventional production. Under ideal circumstances — high levels of investment, continuing technological progress, adequate demand and prices — it might be possible to avert an imminent peak in worldwide production, but as the latest IEA report makes clear, there is no guarantee whatsoever that this will occur.

 

[Dr Jon]

Another good piece from Nafeez Ahmed:

US Army colonel: world is sleepwalking to a global energy crisis

"A lot of high-ranking officials are starting to ask exactly these hard questions about the sustainability of the current energy system. You've got to remember that for the military, it doesn't matter what you want to do. What matters is what you can do, and it's our top priority to make sure we understand potential limits to our operational capability. Even the EIA is forecasting that we could see a peak of shale production by 2018 followed by a plateau and decline, and the Pentagon knows this. But our transport infrastructure is totally dependent on liquid fuels. How are we going to sustain that infrastructure with these decline rates? That's why serious questions are being asked by high level US military officials as to what exactly the Army, as well as American society in general, is going to do to address this challenge."

 

[Dr Jon]

Energy Crunch: Will Britain get on board with fracking?

Three things you shouldn't miss this week

1. America's Feel-Good Oil Bonanza -What the EIA says matters—regardless of its veracity or substantiation. In this light, let's take a look at what the EIA is now saying in AEO 2014.
2. Commentary: 6 reasons why there's no community in fracking - Fracking is too capital intensive to allow communities to set up and run their own wells, even if they wanted to...Income such as is being proposed is only one small part of the bigger picture of thinking about what a resilient community needs.
3. Commentary: In brief: The EU’s new 2030 climate and energy package - The European Commission today announced new energy and climate targets for the EU.

 

[Dr Jon]

An informative post from Gail Tverberg:
A Forecast of Our Energy Future; Why Common Solutions Don’t Work

http://ourfiniteworld.com/2014/01/29/a-forecast-of-our-energy-future-why-common-solutions-dont-work/

 

[ferrelhadley]

Big Oil Has Big Problems

Some of the world’s largest oil companies are reporting pretty ugly earnings. Profits at Exxon Mobil (XOM), the biggest U.S. oil company, are down 27 percent off its worst fourth-quarter earnings in four years. Royal Dutch Shell (RDS.B), Europe’s biggest oil major, saw its profits tumble 48 percent.

Chevron (CVX) reports on Friday, but given some of the issues it has faced maintaining production levels, there’s not a lot of optimism out there. ConocoPhillips (COP)reported a 74 percent jump in fourth-quarter net income, mostly from all the “non-core”assets it has unloaded recently. Production from continued operations is well below where it was a year ago.

In a way, the world’s major oil companies all suffer from some version of the same problem: They’re spending more money to produce less oil. The world’s cheap, easy-to-find reserves are basically gone; the low-hanging fruit was picked decades ago. Not only is the new stuff harder to find, but the older stuff is running out faster and faster.

There business model is dying.

 

[laptop]

The world’s cheap, easy-to-find reserves are basically gone; the low-hanging fruit was picked decades ago.

Erm... aren't there considerable relatively easy reserves in Iran and Iraq?




Physically easy, not politically, that is.

 

[elbows]

Erm... aren't there considerable relatively easy reserves in Iran and Iraq?

Physically easy, not politically, that is.

Even if we make a partially false assumption right now, that they are easy and plentiful in all important regards, I don't think its enough to change the global picture in its totality.

I would look at it like this... When people say the era of cheap & easy oil is over, they don't (or shouldn't) mean there are literally no cheap & easy fields left on the planet. But there are not enough left to dominate the picture. Especially when we consider the angle that most of the press & western studies are coming from: The projected growth in demand in the next few decades, and the OPEC vs non-OPEC(including oil majors) balance of production.

 

[laptop]

But there are not enough left to dominate the picture.

OK, so the difference made by Iran and Iraq is a matter of a few years before hardship hits?

Such pieces should acknowledge this uncertainty, no?

 

[elbows]

OK, so the difference made by Iran and Iraq is a matter of a few years before hardship hits?

Such pieces should acknowledge this uncertainty, no?

I wouldn't put it like that either. A hefty chunk of this thread is made up of people arguing about timescales, in large part due to wide variations in expectations of what the 'hardship' we face actually is.

Some different examples of hardship, that may occur at different times in the process in different countries and regions, excluding the sort of dramatic collapse that drove much of the most passionate debate about peak oil:

Oil majors falling on hard times / OPEC making up far more of the global supply picture.
Effects of the oil price staying fairly high for prolonged periods.
Effects of shift from light, sweet crude to heavier stuff.
Effects of fuel subsidies for the poor etc being cut in many countries.
Effect on specific countries as their oil production wanes and imports increase.

The above are already in effect to one extent or another, despite the absence of the 'big one' that many were seeking on this thread. Things have come along, and others have the potential, to prolong the current phase we are in. But there are so many inter-relating factors that I cannot really look at some of the prospects and put a simple timescale on them. For example if Iraq manages to ramp up production notably, it makes a big difference whether this happens at a time when some other major conventional sources of supply start to decline notably (e.g. Saudi giant field or Russian exports), or at a time when these other traditional sources of supply remain at least in plateau of not continued growth.

If we look at a lot of the original peak oil expectations expressed on this thread and elsewhere over the last 10+ years, there is no doubt in my mind that reality has unfolded in a different way, so far at least. A period where great difficulties were experienced in growing production occurred, and this ushered in a recognition that the cheap & easy oil age was over. Tapping of unconventional oil, and a period of demand destruction ensued, which has bought us an unknown amount of time. Peak oilers and other interested parties are left arguing about how much time has been bought. Equally or even more important is what is done with that time, whether it just leads us to a moment where we end up with even further to fall . i.e. if unconventional etc oil coupled with unlocking of remaining conventional oil fields and propping up of most existing ones means we can get the total global production figures to increase way past the current level before things run out of steam, but don't actually prepare any better for the moment when these numbers start to shrink forever.

 

[Dr Jon]

Interesting piece in Chemistry World:
Peak oil is not a myth

 

[elbows]

An interesting attempt to link the large amount of unrest seen around the world in recent years with food prices and other regressive economic stuff tied to the end of cheap fossil fuels.

http://www.theguardian.com/environm...ests-end-cheap-fossil-fuels-ukraine-venezuela

I'm not sure this does the entire story justice but I certainly buy into the idea that its a very significant factor.

 

[Coolfonz]

I'm surprised you peaky-deakies haven't posted this yet, you'll luurrrrve it, major energy consultancy, supply constraints...very good talk and basically correct. Undulating plateau, an undulating plateau...

http://energypolicy.columbia.edu/ev...arket-forecasting-main-approaches-key-drivers

 

[free spirit]

An interesting attempt to link the large amount of unrest seen around the world in recent years with food prices and other regressive economic stuff tied to the end of cheap fossil fuels.

http://www.theguardian.com/environm...ests-end-cheap-fossil-fuels-ukraine-venezuela

I'm not sure this does the entire story justice but I certainly buy into the idea that its a very significant factor.

He hugely underplays the role of speculators in the food market, something that was illegal until around the turn of the millenium.

Not to say that energy prices haven't impacted on food price, as obviously they have, but it's the speculators who massively exacerbate the big price spikes, and it's the big price spikes that really lead to people kicking off.

 

[Bernie Gunther]

You might say energy prices are a potential primary cause for food price rises, but that speculation creates a feedback loop that is going to amplify any effects.

 

[Coolfonz]

What are speculators speculating on?

 

[Bernie Gunther]

In The Great Hunger Lottery, the World Development Movement has compiled extensive evidence establishing the role of food commodity derivatives in destabilising and driving up food prices around the world. This in turn, has led to food prices becoming unaffordable for low-income families around the world, particularly in developing countries highly reliant on food imports.

Nowhere was this more clearly seen than during the astonishing surge in staple food prices over the course of 2007-2008, when millions went hungry and food riots swept major cities around the world. The great hunger lottery shows how this alarming episode was fueled by the behaviour of financial speculators, and describes the terrible immediate impacts on vulnerable families around the world, as well as the long term damage to the fight against global poverty.

In the report we describe how the current situation came to pass, the risks of another speculation induced food crisis, and what specifically can be done by policymakers here in the UK as well as in the US and EU to tackle the problem.

- See more at: http://www.wdm.org.uk/food-speculation/great-hunger-lottery#sthash.UgE89cDh.dpuf

 

[free spirit]

What are speculators speculating on?

food prices, thereby forcing the prices to swing far more wildly than they ever did before that sort of financial speculation was allowed.

 

[ferrelhadley]

EIA numbers. Peak is here.

 

[Coolfonz]

You can't discount shale oil and say it's not real oil.

And `speculators` don't drive prices, it's always the fundamentals. Speculators are just excuses for high prices given by governments/companies/OPEC...

 

[yield]

You can't discount shale oil and say it's not real oil.

Shale oil is high low energy return on investment (EROI) though. All the easy fruit have been taken.

And `speculators` don't drive prices, it's always the fundamentals. Speculators are just excuses for high prices given by governments/companies/OPEC...

I disagree. Speculators at the large institutions can have a big effect. You see it with food and I'm sure with oil and gas too.

 

[Falcon]

You can't discount shale oil and say it's not real oil.

That rather depends on your definition of "real oil".

One useful definition of "real oil" is "oil which is available at a price less than that price at which growth is unsustainable."

As a process funded by a Ponzi scheme on the verge of a bubble collapse, "shale oil" is not "real oil" by this definition.