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

Iceland, a country with huge reserves of clean energy is being ignored while we destroy the planet, play geopolitical games which leave millions dead, all so a an elite dependent on oil can continue to exploit the whole world?
Now,I'm not a green ideologue and a few years ago I would have had a guilty shrug and thought, tough, but if it keeps me lights on so be it.
But there are practical alternatives out there which, with a bit of political conviction and courage, could transform the whole energy infrastructure within a few years, yet we insist on squeezing the last few drops of fossil fuel out of the earth.
Cameron is giving tax breaks to fracking companies while reducing tax breaks for PV and wind ( the latter I don't mind, as renewables need to move to viable productivity and the WF subsidies have left the sector fat and lazy)
Even the argument regarding "wot happens when the sun don't shine and there's no wind" are becoming increasingly redundant due to new storage techniques being developed.
 
coley said:
Sorry, can't scan it as due to medications( and booze and tinnitus)any sounds really grate at the minute,
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It's a small (5MW), cheap (same price as pumped hydro), scalable, and efficient energy storage system that works by (in the charging cycle) using a piston engine to compress gas to heat it up to 500C and storing that heat in a tank of gravel, then expanding the gas back to ambient pressure, thus cooling it to -160C in a separate tank of gravel. The hot tank gets hotter and the cold tank gets colder. Then for the discharge cycle, the engine keeps turning but the valve timings are altered, so the hot gas drives the engine, generating power. The hot tank gets colder and the cold tank gets hotter. Round-trip efficiency is the same as pumped hydro, but it's deployable anywhere and is a small building rather than a huge lake.
 
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ferrelhadley said:
Saudi and co refusing to cut production. They seem determined to give "a good sweating" Rockerfeller style to the US tight oil producers...
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That's a market-centric view, and tenable.

But my political instinct is that the Saudi motive is to hurt Iran. Russia getting it is not an unwelcome side-effect.
 
Saudi main motive is not to lose market share. What should they do? Cut output so the price goes up and other countries can make more dough and possibly take customers from Saudi? Iran are also onside. Russia is getting shafted though...
 
Both the saudis and the Iranians have been offering decent discounts to the benchmarks for physical buyers for a little while now- this is where the price war is happening. The Saudis are officially argueing their their Aisan punters cant handle high pices, hence the price falling.As an aside, this is fucking up West Africa, who dont seem to be selling their output as expected and are running huge stockpiles, which will likely "erode" if they have around too long
 
New U.S. oil and gas well November permits tumble nearly 40 percent

Could bounce back in a month or could be permanent. No real way to know. But right now the companies are not paying for permits to drill until they have a clearer picture. Could take up to a year for this to work through as they will have had the permits for their next drills for a while and continue working on them. Baker Hughs rig count will be the thing to watch.
 
I can't read that article in full and I'm sure he has got some things ass-backwards, but there is more to the oil price-fracking relationship than only the dimension you mention.

It takes a number of factors to get the price down, the Saudi's etc are able to drive the price down on this occasion by not doing anything to their own production levels. How come? Mostly a combination of present reality & future optimism about US oil production, combined with a distinct lack of optimism about global growth and thus demand.

Where it sounds, from his opening sentences, most likely he has gone wrong is in ignoring some of the implications of the lower price, such as the fracking one you indicate. Even the US's own official energy reports give, as one of several predictions of future fracking production levels and ultimate extraction totals, one thats based on the 'low price' scenario. And its one that certainly doesnt buy capitalism as much time to pull alternatives out of its butt as the higher oil price scenarios do.
 
Just got round to reading the executive summary of the IEA World Energy Outlook 2014.

Seems to mostly continue the trend that must have been going on for over half a decade now, of being better than it was when this thread began in several key respects. In that although it will still come out with some production predictions that don't match the expectations of some on this thread, its not anywhere near as complacent as such institutions used to be before peak oil had its nearly-mainstream, nearly-watershed moments in the 2nd half of last decade. And its narrative attempts to join up many of the different areas that peak oil fans have long since learnt to consider as part of a holistic view of our future. Again not everything, they aren't going to dwell on gloomy scenarios and some of their suggestions for avoiding the bad scenarios are going to be scoffed at. Personally I remain well on the fence as to how much to scoff at them, especially when the last ten years have demonstrated how those who preach imminent doom may have to contend with decades of not seeing their worst case prophesies come to full fruition.

Anyways, they extent their predictions till 2040 this time, and I'm kinda tempted to try and get my hands on the full thing.

Some of the most relevant parts of the executive summary:

Global energy demand is set to grow by 37% by 2040 in our central scenario, but the development path for a growing world population and economy is less energy-intensive than it used to be. In our central scenario, growth in global demand slows markedly, from above 2% per year over the last two decades to 1% per year after 2025; this is a result both of price and policy effects, and a structural shift in the global economy towards services and lighter industrial sectors. The global distribution of energy demand changes more dramatically, with energy use essentially flat in much of Europe, Japan, Korea and North America, and rising consumption concentrated in the rest of Asia (60% of the global total), Africa, the Middle East and Latin America. A landmark is reached in the early 2030s, when China becomes the largest oil-consuming country, crossing paths with the United States, where oil use falls back to levels not seen for decades. But, by this time, it is India, Southeast Asia, the Middle East and sub-Saharan Africa that take over as the engines of global energy demand growth.
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Energy security concerns on the rise

The short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead as reliance grows on a relatively small number of producers. Regional oil demand trends are quite distinct: for each barrel of oil no longer used in OECD countries, two barrels more are used in the non-OECD. Increased oil use for transport and petrochemicals drives demand higher, from 90 million barrels per day (mb/d) in 2013 to 104 mb/d in 2040, although high prices and new policy measures gradually constrain the pace of overall consumption growth, bringing it towards a plateau. Investment of some $900 billion per year in upstream oil and gas development is needed by the 2030s to meet projected demand, but there are many uncertainties over whether this investment will be forthcoming in time – especially once United States tight oil output levels off in the early 2020s and its total production eventually starts to fall back. The complexity and capital- intensity of developing Brazilian deepwater fields, the difficulty of replicating the US tight oil experience at scale outside North America, unresolved questions over the outlook for growth in Canadian oil sands output, the sanctions that restrict Russian access to technologies and capital markets and – above all – the political and security challenges in Iraq could all contribute to a shortfall in investment below the levels required. The situation in the Middle East is a major concern given steadily increasing reliance on this region for oil production growth, especially for Asian countries that are set to import two out of every three barrels of crude traded internationally by 2040.
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From http://www.iea.org/publications/freepublications/publication/WEO_2014_ES_English_WEB.pdf
 
And well they might be concerned about Iraq and US tight oil output levels, for those things enabled their previous reports predicted supply figures to line up with their demand ones.
 

...the overall economic effect of cheaper oil is clearly positive.

Just how positive will depend on how long the price stays low. That is the subject of a continuing tussle between OPEC and the shale-drillers. Several members of the cartel want it to cut its output, in the hope of pushing the price back up again. But Saudi Arabia, in particular, seems mindful of the experience of the 1970s, when a big leap in the price prompted huge investments in new fields, leading to a decade-long glut. Instead, the Saudis seem to be pushing a different tactic: let the price fall and put high-cost producers out of business. That should soon crimp supply, causing prices to rise.

There are signs that such a shake-out is already under way. The share prices of firms that specialise in shale oil have been swooning. Many of them are up to their derricks in debt. Even before the oil price started falling, most were investing more in new wells than they were making from their existing ones. With their revenues now dropping fast, they will find themselves overstretched. A rash of bankruptcies is likely. That, in turn, would bespatter shale oil’s reputation among investors. Even survivors may find the markets closed for some time, forcing them to rein in their expenditure to match the cash they generate from selling oil. Since shale-oil wells are short-lived (output can fall by 60-70% in the first year), any slowdown in investment will quickly translate into falling production.

http://www.economist.com/news/leade...d-some-businesses-will-go-bust-market-will-be
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ferrelhadley said:
New U.S. oil and gas well November permits tumble nearly 40 percent

Could bounce back in a month or could be permanent. No real way to know.
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That's not entirely true. The mechanism supporting the oil price since 2008 has been demand creation through (i) colossal Chinese synthetic debt creation and (ii) quantitative easing in the US and Europe. Both mechanisms are now saturated, demand is contracting, and the price is falling.

Unless some process that replicates those appears (I believe more debt has been created in China since 2008 than the entire US debt position in 2008, so it will have to be large, whatever it is), the underlying trajectory is now more or less fixed.

What won't happen is an increase in supply. Oil co's are now cancelling the production maintenance projects that were required to offset (accelerating) depletion in 2017+, because they can't afford them at oil prices <$90 and the world (absent voodoo finance) can't afford oil >$40.

There will be some price volatility as the interaction between capital persistence and voodoo finance plays out, which confused folks like the Economist will attempt to explain via their 20th century economic models (this is the outfit that once forecast, using these models, permanent $5/bbl oil).
 
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This might as well go in here.

Russian interest rates up to 17%
In a surprise move intended to prop up Russia’s rapidly plummeting ruble, the Russian Central Bank imposed a massive interest rate hike in the middle of the night Tuesday. The move, reminiscent of some of the extreme measures taken during Russia’s 1998 default, was intended to staunch the losses of a currency which as of a day earlier had lost more than half of its value against the dollar this year. But the central bank decision also carried perilous risks for the broader economy, underscoring the limited options available to fight the emerging crisis.

The move, announced on the central bank Web site at 1 a.m., hiked Russia’s main deposit rate to 17 percent from 10.5 percent, a massive and unusual leap.
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Putin on the firtz. :hmm:

Gonna dent people willing to invest in Russia in a big way over and above the huge shrinking of exploration and development budgets. Short term the likely biggest cut backs will be US shale producers, but it should take a year or so for those cuts to feed through to supply. We may still see some supply growth over the coming months as existing projects hit completion and add to the glut. But medium to long term it will be the big ticket projects by the IOCs (international oil companies) that will see substantial cut backs, those will be much more long term. As price begins to recover the shale drillers can begin ramping up production again but the need for high prices in the long term and the low profitability of many of the IOCs will see them shrinking further.

Russia is likely to also shrink as it needs expensive new projects to keep its production up. The Putin years may come to be seen as times of great waste in Russia.
 
World_crude_US_tight_oil_tar_sands_2001_Aug2014.jpg


http://crudeoilpeak.info/world-on-drip-of-unconventional-oil

The conventional plateau is over. The decline is likely to accelerate as deep water\Arctic projects are shelved. The glut has been caused because there is a reasonable amount of oil that can be extracted at $110 a barrel but not enough people willing to buy oil at those prices. US shale supply will continue to increase this year as current drilling is completed. Also much of the cost for many wells has already been sunk, infrastructure built, leases bought and so on. So the break even point for drilling new wells for many will be $50, so US shale wont collapse quickly but be wound down over the next couple of years until there are enough buyers for the oil being produced.
Comparing two graphs.This is a log scaled price of oil graph
B69hkmmCEAESPNH.png


And this is the price of whale oil vs the amount harvested. This is from a 2008 Oil Drum article that predicted that peak oil would mean price volatility rather than endless rising prices as demand destruction could get ahead of supply shrinkage. Off course what we have had is lots of $90+ oil coming to the market and no new consumers emerging to buy it. So an over supply of expensive oil that will take some time to work its way through the system.



TOD_whales_bardi_fig2.gif
 
must admit I'm pretty scared about the price volatility, as I know there are massive layoffs across the oil exploration industry at the moment, back down to levels not seen since the late 90s - worse because the industry has just invested in a whole round of new exploration boats which they're going to struggle to pay for.

Casino capitalism is no way to run such a vital part of the global economy.
 
free spirit said:
must admit I'm pretty scared about the price volatility, as I know there are massive layoffs across the oil exploration industry at the moment, back down to levels not seen since the late 90s - worse because the industry has just invested in a whole round of new exploration boats which they're going to struggle to pay for.

Casino capitalism is no way to run such a vital part of the global economy.
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Mebbes investors will look at renewables in a much more positive light? Given the volatility of oil prices mebbes the market will move away from fossil fuels and who knows, perhaps 'peak oil' will never happen?
 
coley said:
Mebbes investors will look at renewables in a much more positive light? Given the volatility of oil prices mebbes the market will move away from fossil fuels and who knows, perhaps 'peak oil' will never happen?
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well, peak oil is happening now, just the volatile bumping along the top version of peak oil that I'd been predicting since the start of this thread, rather than the rapid drop off in production post peak that Falcon et al had been predicting.
 
free spirit said:
well, peak oil is happening now, just the volatile bumping along the top version of peak oil that I'd been predicting since the start of this thread, rather than the rapid drop off in production post peak that Falcon et al had been predicting.
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Mebbes you can explain it in simple terms?
I thought 'peak oil' was consumers fighting for the last drops, as opposed to what we have now, a seemingly abundance of cheap fuel?
 
coley said:
Mebbes you can explain it in simple terms?
I thought 'peak oil' was consumers fighting for the last drops, as opposed to what we have now, a seemingly abundance of cheap fuel?
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no, nothing like that.

and we don't have an abundance of cheap fuel, we have a temporary excess of production over consumption, but much of that production costs more to produce than the current price would allow, which is why the exploration budgets are being slashed as many companies will be pumping at a loss at the moment, but have to keep pumping at full wack or the cost per barrel they do pump would increase further, and they can't stop pumping or equipment will rapidly breakdown, staff would move on etc.

Essentially everyone pumping at a loss at the moment is doing so on the basis that this is a temporary situation and the price will go back up into profits before they go bust. If that doesn't happen then companies will go bust, output will fall, and the remaining companies and countries will benefit from the longer term higher prices.

At a basic level peak oil is around the point at which oil production ceases to be able to keep pace with oil demand. It's a volatile relationship though, as around this point the price would rise dramatically, which then sends demand downwards, spending on exploration and development of new fields would increase dramatically, particularly in higher cost fields that previously weren't economic, so a few years down the line production would increase again above the level of demand for as sustained period until the price plummets again, leading to collapse in exploration at the same time as potentially stimulating economic growth and demand....... generally referred to as bumping along the peak oil ceiling or similar, as opposed to hitting peak, then production rapidly declining thereafter, which was really the wilder side of the theory that some espoused loudly on here and the oil drum, but wasn't really a very likely scenario.
 
Put another way, the current oil price actually makes it much more likely that we'll hit $200 in a couple of years as the excess of supply over demand swings the other way, as there's not enough investment to bring the new sources online to replace the decline that is still ongoing (and increasing) in many of the older fields, as well as the tight oil fields that I think seem to have fairly rapid decline rates, as well as if the lower price stimulates demand.
 
Well even a somewhat recent official US energy report that chose 'low price' as one of its scenarios, had that scenario delivering significantly less unconventional oil in total. So there isn't much denying that part of the equation and the potential impact. No way I'd like to try to predict the timing and nuances of instability of oil price, supply and demand in the years ahead though, nor whether any interventions will be attempted.
 
It seems that "peak oil" has been countermanded by "peak technology".

Rather Malthusian stuff and very much predictable...
 
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