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

[rich!]

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.

I love this post

 

[Lemon Eddy]

So since 2013, there's been more increase in renewable energy output than fossil energy output:

http://www.bloomberg.com/news/articles/2015-04-14/fossil-fuels-just-lost-the-race-against-renewables

The race for renewable energy has passed a turning point. The world is now adding more capacity for renewable power each year than coal, natural gas, and oil combined. And there's no going back.

The shift occurred in 2013, when the world added 143 gigawatts of renewable electricity capacity, compared with 141 gigawatts in new plants that burn fossil fuels, according to an analysis presented Tuesday at the Bloomberg New Energy Finance annual summit in New York. The shift will continue to accelerate, and by 2030 more than four times as much renewable capacity will be added.

See also http://www.bloomberg.com/news/articles/2015-03-26/california-just-had-a-stunning-increase-in-solar

California is now the first U.S. state to get 5 percent of its annual utility-scale electricity from the sun. But that's really understating what just happened.

The chart above, released this week by the U.S. Energy Information Administration, shows that in just one year, big solar jumped from 1.9 percent to 5 percent of the state's total power generation. California isn't just producing the most utility-scale solar electricity of any state; it's producing more than all the other states combined.

And that's only what the major electricity producers are generating—it doesn't include rooftop solar, in which California is also leading the nation. In small-scale solar, capacity for another 2.3 gigawatts has been installed, according to the California Public Utilities Commission.
Renewable energy, including hydro power and rooftop solar, now constitutes about a third of California's electricity, a remarkable feat accomplished through renewable requirements for utilities and incentives for homeowners.

So unless people are going to claim that for some reason renewables will get more expensive to produce as production ramps up, in a fairly unlikely reverse economy of scale, I take it we should switch to something else get all Malthusian about. Helium maybe?

 

[Coolfonz]

You get windy sunny Sundays in Spain and the whole country's power is generated by renewables.

But if you want to stay peak oily there are a hell of a lot of countries who want to get to EU/US GDP-per-capita with all the resulting additional increase in hydrocarbon demand.

 

[gosub]

http://www.bloomberg.com/news/artic...ent-coming-with-millions-of-barrels-to-vanish

 

[Falcon]

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.

Eight months on. China's synthetic debt chickens are coming home to roost. China's wealthy elite are relocating their "assets" overseas (good luck with that). Chinese firms likewise with their cash. The government is propping up both the debt and stock market, most visibly by devaluing the yuan twice last week. Oil's biggest consumer is distinctly unwell.

The price is now highly volatile. The incurious associate volatility upswings with a refutation of peak oil. The more curious note that volatility is occurring around a rising extraction cost trend and declining fuel quality and extraction capability trend (layoffs, investment collapse, asset decommissioning, etc.)

Project the trends. Not the volatility.

 

[gosub]

OPEC faces a mortal threat from electric cars

 

[Coolfonz]

Electric cars are here, doubling sales in a year, in markets i know, now between 1 and 2pc market share.
Met someone, posh, had a BMW 4wd, 3 kids, was costing £100/week to fill a year ago. Got a BMW electric, costs £10/month.

 

[gosub]

Electric cars are here, doubling sales in a year, in markets i know, now between 1 and 2pc market share.
Met someone, posh, had a BMW 4wd, 3 kids, was costing £100/week to fill a year ago. Got a BMW electric, costs £10/month.

Can't work out the monthly cost til after you replaced battery,.

 

[Coolfonz]

Sure, i'm not saying it's all net savings. Also anecdotal, also petrol/diesel prices change. But still...you see the direction...

 

[coley]

OPEC faces a mortal threat from electric cars

Sheikh Yamani predicts price crash as age of oil ends
There are a few who think the Saudi position is flog it at whatever cost while it still has a ' commodity value'
And if they can screw Iran, Russia etc in the process, just icing on the cake

 

[coley]

Can't work out the monthly cost til after you replaced battery,.

Just done the maths a leaf on lease would save me £43 PM, compared to the Safira I currently drive, a lot more if I was in an area that had 'congestion charges'
Why I haven't made the change is down to a number of factors, but the No 1 was the total lack of interest from the dealers, they just don't want to know.

 

[coley]

Can't work out the monthly cost til after you replaced battery,.

You don't, you lease for 2/3 years and replace before battery degradation.

 

[coley]

Electric cars are here, doubling sales in a year, in markets i know, now between 1 and 2pc market share.
Met someone, posh, had a BMW 4wd, 3 kids, was costing £100/week to fill a year ago. Got a BMW electric, costs £10/month.

And the drop in fuel prices ( just under a £1 a litre here at the moment) has hardly dented the uptake in EVs, In (give or take a small % either way) 10 years time the only buggers driving ICE powered vehicles will be nostalgia buffs

 

[Falcon]

Reports of Peak Oil's demise (promulgated by Oil Optimists) are premature.

Shell's former Chief Economist Professor Michael Jefferson has recently published a new peer reviewed study demonstrating that remaining reserves are only 50% of standard estimates.

Half the overestimate comes from OPEC's political decision in the 80's to significantly relax the definition of 'proved' reserved (in layman's terms, from 'definitely exist' to 'might exist, might not'). The other half comes from the decision to abandon the distinction between actual oil and the tar like substances bound up in Canadian and Venezuelan sands.

Significance? At historical rates of increase of consumption, actual remaining reserves are fully exhausted in less than two decades. There are no viable replacements and current investment in finding replacement, already decimated by current prices, assume the higher reserve figure and will be terminated once reality is accepted by the oil cos. There are no viable substitutes at the scale of energy usage. Expect a massive shift to coal (5-10x climate impact), rather as a junky shifts to injecting into his penis after his veins collapse.

CONCLUSION: The World in the 21st Century is faced with huge challenges that go far beyond, but importantly include, energy challenges on the supply, access, and use sides. So severe are these challenges, mainly arising from the demands of a rapidly increasing human population onthe Earth’s limited resources, that the future existence of large numbers of people may be threatened with extinction. In that sense, we may be observing the twilight of the Anthropocene (Human) Age. Energy transitions, as Vaclav Smil has constantly reminded us over the years, are protracted affairs. But as Julius Caesar wrote: ‘The unusual and the unknown make us either over confident or overly fearful’. We should not assume either inexorable progress or unavoidable collapse

Source: Jefferson, "A global energy assessment", WIREs Energy Environ 2016, 5:7–15. doi: 10.1002/wene.179 (link)

 

[coley]

Expect a massive shift to coal (5-10x climate impact), rather as a junky shifts to injecting into his penis after his veins collapse.

Coal usage is collapsing, even in China, most Western coal producers are already bankrupt, or in the US, filing for chapter 11 bankruptcy protection.
Gas has a limited, but possibly a highly lucrative, if short lived prospect, the future is in renewables, as the 'markets' are increasingly realising.
Nuclear, in the shape of Hinckley is a sad joke, but that's not to say it has no future.
But all in all, the future of the energy market is increasingly in the direction of renewables, even the denialists last gasp, intermittency, has lately proven to be easily solvable.

 

[pocketscience]

I'm particularly enamoured with Isentropic Isentropic - Commercial

Looks like they've hit hard times:

Isentropic Ltd is in administration. Mark Robert Fry and Kirstie Jane Provan were appointed as joint administrators of Isentropic Ltd on 22nd January 2016. The affairs, business and assets of Isentropic are being managed by the joint admninistrators who act as agents of the company without personal liability.
Mark Robert Fry and Kirstie Jane Provan are authorised to act as insolvency practitioners by the Insolvency Practitioners Association.

Isentropic - Home

 

[Crispy]

Well shit
Always the way with British R&D. Expect to see the IP sold off for a song and we'll be buying the machines from China within the decade.

 

[pocketscience]

Well shit
Always the way with British R&D. Expect to see the IP sold off for a song and we'll be buying the machines from China within the decade.

I bet Shell & BP divvied-out all the IP rights long ago.

 

[gosub]

Texas shale oil has fought Saudi Arabia to a standstill

 

[Crispy]

Interesting times.

Without another year's data, I can't say anything for sure, but this graph and its caption sure raised my eyebrows.


US shale oil output has risen exponentially, and the latest dip is just a temporary setback
CREDIT: EIA

 

[elbows]

Yes I noticed that one. Made me want to reach for the EIA report to see what they actually said, but I haven't had time and don't know how much of that section is freely available.

 

[Crispy]

You'd want to see individual curves for each field to know whether it's an external force, or the sum of different peaks. Those stacked charts are terrible for comparing the constituent parts.

 

[gosub]

How much shale (tight) oil is produced in the United States? - FAQ - U.S. Energy Information Administration (EIA)
How much shale (tight) oil is produced in the United States?
The U.S. Energy Information Administration (EIA) estimates in the Annual Energy Outlook 2016 (AEO2016) that about 4.9 million barrels per day of crude oil were produced directly from tight oil resources in the United States in 2015, or about 52% of total U.S. crude oil production. Tight oil is oil embedded in low-permeable shale, sandstone, and carbonate rock formations.

 

[Falcon]

Interesting times. Without another year's data, I can't say anything for sure, but this graph and its caption sure raised my eyebrows

Shale oil is sub-economic at current oil prices. Production is funded by debt. A graph of production is therefore a graph of debt.

So how are these operators doing financially? Terribly, despite preposterous stories of technology gains, costs approaching zero, and single-well EURs of 1 million barrels of oil equivalent. Figure 7 shows the main rig operators in the Permian, Bakken and Eagle Ford plays. These companies spent an average of 4 times as much as they earned in the first quarter of 2016. And it’s been going on for years. Imagine doing that yourself. Among Permian operators, Parsley spent more than 10 times cash flow and Energen, more than 6. Pioneer and Chevron spent 5 times more than they earned. Anadarko had negative cash from operations meaning that it didn’t even earn enough to pay for well operations...It would take top tight oil rig operators an average of 10 years to pay off debt if all cash earned from oil and gas sales were exclusively for that purpose based on first quarter 2016 financial data–in other words, no drilling, no salaries, no nothing except debt payments

Art Berman, “The Price Rally is Over: Capital Drives the Oil Market to Low Prices” 27 July 2016

 

[Bernie Gunther]

Interesting article here that perhaps makes uncomfortable reading for proponents of 'sustainable capitalism'

He's using steel as his worked example, but most of what he says applies to any non-renewable resource.

Embodied energy obviously needs to be considered to apply the model to fossil fuels.

The influence of recycling on resource preservation is negligible for any raw material with a greater than 2% per annum increase in world production. It is only if the annual raw material consumption growth rate is below 1% that recycling has a significant positive impact. It can then provide over one hundred years of respite. However, … a growth rate in total material consumption below 1% is insufficient on its own, and, in addition, requires a very high recycling rate (more than 60 to 80%) in order to delay significantly the resource depletion rate. The time shift for cumulative consumption is highly sensitive to the growth rate of total material consumption (primary + secondary). The slower the growth, the more recycling contributes to ‘buying time’ before resource depletion. Recycling has a higher impact if material residence time in the economy is short; conversely, its impact is smaller for a long residence time. Finally, the impact of recycling must be analysed in relation to present economic parameters (as trends), not on the basis of an assumed future slowing down of consumption. As a whole, the relative impact of cumulative present-day recycling becomes negligible after a few decades in view of global production growth.

Quasi-Circular Growth: a Pragmatic Approach to Sustainability for Non-Renewable Material Resources

 

[Falcon]

Interesting article here that perhaps makes uncomfortable reading for proponents of 'sustainable capitalism'

This is a variant of Greer's "How civilizations fail: A Theory of Catabolic Collapse"

 

[Idris2002]

Interesting?

 

[elbows]

Some relevant quotes from the executive summary of the World Energy Outlook 2016:

Oil markets could be in for another bumpy ride

A near-term risk to oil markets could arise from the opposite direction – a shortfall of new projects – if the cuts in upstream spending in 2015-2016 are prolonged for another year. In 2015, the volume of conventional crude oil resources that received development approval fell to its lowest level since the 1950s and the data available for 2016 show no sign of a rebound. A lot of attention is focused on the remarkable resilience of US ght oil output through the current downturn and its potential ability, because of a short investment cycle, to respond in a matter of months to movements in price.

But there is a threat on the horizon to the “baseload” of oil output, the conventional projects that operate on a different rhythm, with lead times of three to six years from investment decision to first oil. We estimate that, if new project approvals remain low for a third year in a row in 2017, then it becomes increasingly unlikely that demand (as projected in our main scenario) and supply can be matched in the early 2020s without the start of a new boom/bust cycle for the industry.

Over the longer term, oil demand in our main scenario concentrates in freight, aviation and petrochemicals, areas where alterntives are scarce, while oil supply – despite a strong outlook for US tight oil – increasingly concentrates in the Middle East. There are few substitutes for oil products as a fuel for trucks and planes and as a feedstock for the chemicals industry; these three sectors account for all of the growth in global oil consumption.

Total demand from OECD countries falls by almost 12 mb/d to 2040, but this reduction is more than offset by increases elsewhere. India, the largest source of future demand growth, sees oil consumption rise by 6 mb/d.

On the supply side, projected US tight oil output has been revised upwards, remaining higher for longer than in last year’s Outlook, although non-OPEC production as a whole still goes into retreat from the early 2020s.
OPEC is presumed to return to a policy of active market management, but nonetheless sees its share of global production rising towards 50% by 2040.

The world becomes increasingly reliant on expansion in Iran (which reaches 6 mb/d in 2040) and Iraq (7 mb/d in 2040) to balance the market.

The focus for oil trade shifts decisively to Asia: the United States all but eliminates net imports of oil by 2040.

http://www.iea.org/publications/fre...dEnergyOutlook2016ExecutiveSummaryEnglish.pdf

 

[elbows]

It also had some numbers relating to electric vehicles and potential impact on oil demand by 2040:

The worldwide stock of electric cars reached 1.3 million in 2015, a near-doubling on 2014 levels. In our main scenario, this figure rises to more than 30 million by 2025 and exceeds 150 million in 2040, reducing 2040 oil demand by around 1.3 mb/d.

If these policies, including tighter fuel-economy and emissions regulations as well as financial incentives, become stronger and more widespread, as they do in the 450 Scenario, the effect is to have some 715 million electric cars on the road by 2040, displacing 6 mb/d of oil demand.

 

[elbows]

Last one, promise.

The main stimulus for upstream oil and gas investment is the decline in production from existing fields. In the case of oil, these are equivalent to losing the current output of Iraq from the global balance every two years.