Report: Oil 'peak' not coming soon
http://www.businessweek.com/ap/financialnews/D8AS7V980.htm?campaign_id=apn_home_down
http://www.businessweek.com/ap/financialnews/D8AS7V980.htm?campaign_id=apn_home_down
Peak Oil (was "petroleum geologist explains US war policy")
- Thread starter Bernie_Gunther
- Start date
elbows
Well-Known Member
Anybody read the full communiqe from the G8? The first section on global warming throws energy security and sustainable development into the mix, and many of the suggested measures are also compatible with peak oil possibilities, albeit still on a timescale longer than most peak-oilers go on about.
totaladdict
Well-Known Member
Haven't seen this mentioned specifically yet:
Twilight in the Desert: the coming Saudi oil shock and the world economy by Matthew R Simmons
It's been out a few months, but there's a decent review by John Gray (of all people) in the New Statesman:
http://www.newstatesman.com/Bookshop/300000101087
Matthew R Simmons is convinced that Saudi oil production is near its peak, or indeed may have passed it, a development with awesome implications.
Simmons's analysis suggests that the current phase of worldwide industrialisation is crucially dependent on the uncertain reserves of a single Gulf kingdom facing vast and potentially insuperable challenges. As he shows in a superb digression, the most formidable of these is population growth. The kingdom's current population of roughly 22 million is expected to rise to roughly 50 million by 2030, and unless there is a large and sustained rise in the oil price, living standards are bound to fall steeply - as they have been doing since the early 1980s.
Simmons makes a formidable case for the pivotal importance of Saudi Arabia, but he may actually have understated the impact of peak oil. One reason is the central role of oil in intensive farming. Contemporary agriculture relies heavily on oil-based fertilisers, pesticides and herbicides. At bottom, the green revolution was about the extraction of food from petroleum, and a peak in world oil production could trigger a peak in world food production. A second is climate change.....
---
Seems like the dependence of agriculture on oil is finding it's way into an increasing number of articles.
Twilight in the Desert: the coming Saudi oil shock and the world economy by Matthew R Simmons
It's been out a few months, but there's a decent review by John Gray (of all people) in the New Statesman:
http://www.newstatesman.com/Bookshop/300000101087
Matthew R Simmons is convinced that Saudi oil production is near its peak, or indeed may have passed it, a development with awesome implications.
Simmons's analysis suggests that the current phase of worldwide industrialisation is crucially dependent on the uncertain reserves of a single Gulf kingdom facing vast and potentially insuperable challenges. As he shows in a superb digression, the most formidable of these is population growth. The kingdom's current population of roughly 22 million is expected to rise to roughly 50 million by 2030, and unless there is a large and sustained rise in the oil price, living standards are bound to fall steeply - as they have been doing since the early 1980s.
Simmons makes a formidable case for the pivotal importance of Saudi Arabia, but he may actually have understated the impact of peak oil. One reason is the central role of oil in intensive farming. Contemporary agriculture relies heavily on oil-based fertilisers, pesticides and herbicides. At bottom, the green revolution was about the extraction of food from petroleum, and a peak in world oil production could trigger a peak in world food production. A second is climate change.....
---
Seems like the dependence of agriculture on oil is finding it's way into an increasing number of articles.
Bernie Gunther
Fundamentalist Druid
I do hope so.totaladdict said:
Backatcha Bandit
is not taking your calls
What's in a name?khaleejtimes.com said:
Backatcha Bandit
is not taking your calls
Whatever happened to the 'free market'?
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Another day of record prices:
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Anyone feeling the pinch yet? Noticed how that 'tenners worth' doesn't get you to work anymore?
Grauniad comment on why Peak Oil means the end of globalisation:
http://www.guardian.co.uk/comment/story/0,3604,1542015,00.html
One of the cheerleaders of PO theories so needs to be considered in that context, but sobering content. I'm dubious as to how much parallels can be drawn between 1914 and now, but if it is true that oil is going to become increasingly scarce then it's a plausible view.
http://www.guardian.co.uk/comment/story/0,3604,1542015,00.html
One of the cheerleaders of PO theories so needs to be considered in that context, but sobering content. I'm dubious as to how much parallels can be drawn between 1914 and now, but if it is true that oil is going to become increasingly scarce then it's a plausible view.
Backatcha Bandit
is not taking your calls
From slaar's article above:
You tell 'em, Jim!
You tell 'em, Jim!
Backatcha Bandit
is not taking your calls
Here's another article (from last week) that I found interesting:
Best start collecting sticks now, then.
Best start collecting sticks now, then.
Bernie Gunther
Fundamentalist Druid
Perhaps it's time for a thread on the many virtues of pellet stoves and other solid fuel appliancesBackatcha Bandit said:
Bernie Gunther
Fundamentalist Druid
Backatcha Bandit
is not taking your calls
Nice try, Bernie. 
I'll bump that one when the weather gets a little colder. 
-
Another day, another few dollars...
It's not just the Saudi 'security situation'...
I'll bump that one when the weather gets a little colder. -
Another day, another few dollars...
It's not just the Saudi 'security situation'...
Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse
by William R. Clark
(Friday August 05 2005)
by William R. Clark
(Friday August 05 2005)
I've just joined this forum and have worked thru much of this v interesting thread. I'm trying to avoid posting info which has already been covered but as I say I'm a newbie and it's a very long thread!
Against a background of yet another new high around $64/bbl this week here are some comments and useful links:
1) Lifting costs for many land based oilfields are reported to be as low as $4/bbl. With huge margins v market price it seems most unlikely that either 'big oil' or the state oil cos. are producing anything other than at full capacity.
2) There has been much discussion re abiotic oil but I tend to work on what the industry is actually doing rather than try to digest lots of arguments on either side of the debate. If we look at US, the country with the greatest history of oil expertise in the world and the most business-friendly oil concessions there is no evidence that production declines since 1970 have been arrested by the presence of abiotic oil. Other producer areas such as N Sea, Australia and Yemen, for example, have seen steep production declines. On this basis abiotic oil, to me, has to remain just a theory but one which is not being widely reflected in production trends. Concise explanation: Abiotic Oil
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.
4) Chris Skrebowski of ODAC gave a detailed presentation to the 'Depletion-Scotland' conference in Edinburgh in April 2005 based upon an update to his 'Oilfield Mega Projects Review'. Given the industry-typical lead times for new land based and offshore oilfield projects and the transparency re ongoing projects this analysis provides a good indication of just how much extra capacity is coming online between now and 2010. When compared with projected demand and ongoing decline rates in mature oilfields Chris' conclusions indicate that we may well have a supply / demand problem by 2008 and maybe somewhat sooner. Edinburgh Conference Proceedings (incl Chris Skrebowski's presentation)
5) Both Dr Hirsch and Chris Skrebowski gave presentations to the ASPO 2005 Depletion Workshop in Lisbon. These (and many other presentations) are available for download: ASPO 2005 Abstracts & Proceedings . Note that Skrebowski's presentation at Lisbon overlaps somewhat with his Edinburgh presentation (but the latter contained expanded examples of individual N Sea oilfield depletion).
I've been looking at the whole issue of oil and gas depletion for some time now and my conclusions are that we really do have a problem....and soon. The idea of solutions such as remedial work on existing mature oilfields or use of abiotic oil being available and yet not significantly contributing to supply solutions just won't wash as far as I'm concerned. The price has barely been under $20/bbl for 5 years now and has generally been much higher, especially in past 2 years. On this basis why has the industry not brought additional capacity online or has many more projects ongoing? Btw lead time for remedial projects in likes of SA is just 2-1/2 years so there's been time.
Looking at specific examples we've seen unusually steep decline rates in a number of provinces where new oilfield technology has been extensively applied - N Sea, Australia and Yemen's Yibal field; Permex are now reporting Cantarell is headed the same way with 14% projected decline rates. US (decades ago), Indonesia and Australia have moved from net exporter to net importer status and UK is about to join this club. Indonesia has additional problems in that its new oil consumers are suddenly having to go short as imports cannot be readily afforded. I just can't see how industry and Gov'ts of these countries would stand by and let the situation so deteriorate unless there really was an issue of depletion.
On this basis I've totally bought into the comments raised by Matt Simmon's 'Twilight in the Desert....' book which I've been reading. 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
Against a background of yet another new high around $64/bbl this week here are some comments and useful links:
1) Lifting costs for many land based oilfields are reported to be as low as $4/bbl. With huge margins v market price it seems most unlikely that either 'big oil' or the state oil cos. are producing anything other than at full capacity.
2) There has been much discussion re abiotic oil but I tend to work on what the industry is actually doing rather than try to digest lots of arguments on either side of the debate. If we look at US, the country with the greatest history of oil expertise in the world and the most business-friendly oil concessions there is no evidence that production declines since 1970 have been arrested by the presence of abiotic oil. Other producer areas such as N Sea, Australia and Yemen, for example, have seen steep production declines. On this basis abiotic oil, to me, has to remain just a theory but one which is not being widely reflected in production trends. Concise explanation: Abiotic Oil
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.
4) Chris Skrebowski of ODAC gave a detailed presentation to the 'Depletion-Scotland' conference in Edinburgh in April 2005 based upon an update to his 'Oilfield Mega Projects Review'. Given the industry-typical lead times for new land based and offshore oilfield projects and the transparency re ongoing projects this analysis provides a good indication of just how much extra capacity is coming online between now and 2010. When compared with projected demand and ongoing decline rates in mature oilfields Chris' conclusions indicate that we may well have a supply / demand problem by 2008 and maybe somewhat sooner. Edinburgh Conference Proceedings (incl Chris Skrebowski's presentation)
5) Both Dr Hirsch and Chris Skrebowski gave presentations to the ASPO 2005 Depletion Workshop in Lisbon. These (and many other presentations) are available for download: ASPO 2005 Abstracts & Proceedings . Note that Skrebowski's presentation at Lisbon overlaps somewhat with his Edinburgh presentation (but the latter contained expanded examples of individual N Sea oilfield depletion).
I've been looking at the whole issue of oil and gas depletion for some time now and my conclusions are that we really do have a problem....and soon. The idea of solutions such as remedial work on existing mature oilfields or use of abiotic oil being available and yet not significantly contributing to supply solutions just won't wash as far as I'm concerned. The price has barely been under $20/bbl for 5 years now and has generally been much higher, especially in past 2 years. On this basis why has the industry not brought additional capacity online or has many more projects ongoing? Btw lead time for remedial projects in likes of SA is just 2-1/2 years so there's been time.
Looking at specific examples we've seen unusually steep decline rates in a number of provinces where new oilfield technology has been extensively applied - N Sea, Australia and Yemen's Yibal field; Permex are now reporting Cantarell is headed the same way with 14% projected decline rates. US (decades ago), Indonesia and Australia have moved from net exporter to net importer status and UK is about to join this club. Indonesia has additional problems in that its new oil consumers are suddenly having to go short as imports cannot be readily afforded. I just can't see how industry and Gov'ts of these countries would stand by and let the situation so deteriorate unless there really was an issue of depletion.
On this basis I've totally bought into the comments raised by Matt Simmon's 'Twilight in the Desert....' book which I've been reading. 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
Matt Simmons, energy investment banker and author of 'Twilight in the Desert....' has been interviewed by Jim Puplava of Financial Sense Online. It's a long (1hr) yet compelling interview; to me the key point was when Matt was asked if price would rise to $75 - $80/bbl were a shortfall of supply v demand of between 2m and 5m bopd to occur in winter 2005/06. His reply - 'No, no, no. Oil prices could easily go up 5-10 times.'
The above conversation occurred some 38 minutes into the interview. Personally I can't see oil reaching his upper potential limit (which amounts to $600) unless much more output than 5m bopd were lost but from the comments I'm reading posted by road users in US, UK etc few seem willing to reduce distances travelled due to rising fuel costs. On this basis prices could well seriously spike in event of shortages until demand destruction cut in and demand once again matched supply. Matt Simmons interviewed by Financial Sense Online (audio downloads are also available from this site).
The above conversation occurred some 38 minutes into the interview. Personally I can't see oil reaching his upper potential limit (which amounts to $600) unless much more output than 5m bopd were lost but from the comments I'm reading posted by road users in US, UK etc few seem willing to reduce distances travelled due to rising fuel costs. On this basis prices could well seriously spike in event of shortages until demand destruction cut in and demand once again matched supply. Matt Simmons interviewed by Financial Sense Online (audio downloads are also available from this site).
zceb90 said:
The economics textbooks tell us that as profits rise in any given industry, so firms enter that industry, i.e. investment increases and prices will fall. This will also, in theory, lead eventually to a diminution in the rate of profit, and a new equilibrium will be achieved at lower prices and more output; then firms will exit the industry, and we go back to where we started, until something pushes prices up again, and so on ad infinitum. Of course, this is in an imaginary world, and ignores the questions of uncertainty and time, among other things. Even though the corporate structure is highly oligopolistic in the oil industry, this has not prevented such things from occurring in the past.
I was looking at something on oil in the mid-90s recently. Back then the price was falling and had fallen to about $16 a barrel by 1998 (coinciding with a strong dollar). How come? I'll willingly admit to not having the full story, but I do know that everyone and his uncle had “discovered” oil – i.e. countries that had not originally been involved to any degree began exporting the stuff. And that’s presumably why the price was falling – because so many people were supplying the market (and for other reasons, I suppose, but that certainly appears to be the main one). However, now we come to the interesting bit. Time. It takes time to establish new facilities, and I’m reliably informed that several years for such are involved in the oil industry. The investment carries great risk, because if prices drop after investment has got under way, all that capital could be lost. The pundits are saying that prices are going to go on rising (demand from China etc.). But are the companies and the countries that exploit crude convinced? They had a torrid time of it at the end of the 90s and 2000 remember, when prices were all over the place. If the economic outlook continues to look good, then they will chance investing, but this depends very much on such questions as America’s war policy and China’s outlook – both of which are open to many doubts. Maybe they are investing, but we shall not see the results for a while yet, and who says prices won’t fall then? However, this has nothing to do with the depletion of petroleum and everything to do with the situation of general over-capacity in the world economy.
In the present situation, however, as in the 1970s, it seems to be the case that the oil cartel (by which I mean the “Slippery Sisters”, i.e. the remaining Big Oil corporations, not OPEC) is able to impose a shortage – although I cannot explain how the whole mechanism works. Many oil industry people don’t seem able to believe that such things are possible, but economic theory certainly points to them, and the dominance of the powerful in the oil industry is self-evident. However, quite how small producers are discouraged from stepping up production I don’t know, but this must surely be going on to a certain extent.
Hardly convincing, is it? When you bear in mind that a lot of oil that’s been coming out of the ground for some time can be explained by abiotic theories. It’s not a matter of believing one or other theory but trying to explain how this oil that we are using now actually got there and from this trying to predict where more will be found. It is, therefore, as I have pointed out elsewhere in the thread, well known that abiotic theory has guided oil extraction in various parts of the world, to recover oil that “shouldn’t be there” according to the biotic theorists. China for example, is pumping oil from depths of up to 10 kilometers.
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.
continued...
I don’t doubt that we may have a supply/demand problem in 2008. I don’t doubt that we have one at the moment – after all, oil at US$60 a barrel is preposterous. The question is surely not whether we have one now or then but whether there are economic rather than geological reasons for this. I would say there are economic reasons, and that these have to do with what I refer to above as well as the strategy of the US imperialist oligarchy and its allies in the face of a massive overproduction problem on all fronts.
Well, ditto, we have a problem. No one doubts that. He doesn’t mention West Africa where there are variously estimated to be X billions of barrels of oil awaiting exploitation, but little investment forthcoming – as far as I know, although I don’t follow these things in microscopic detail. I’ve read several reports in the past year of giant finds in various parts of the world. But if the US controls the extraction machinery and the capital and has somehow excluded the involvement of others, then large finds can easily denigrated and ignored.
Certainly, all these concrete examples need looking at, but I haven’t the time at present. I’ve read opposite views on Pemex, as I'm sure you have too.
Governments do not appear to be standing by. Governments aren’t about saving the world for the whole of humanity either, they are only interested in saving the capitalist world for their respective elite's.
Well I'm very sorry, but I’m certainly not going to “totally buy into” the comments raised by any of Bush’s neocon side-kicks, not for all the tea in China I'm afraid. On the declining extraction rates I would recommend you take look at Dr. Peter Odell's stuff – he doesn’t seem at all convinced by the story for the North Sea, or anywhere else, for that matter.
Welcome to the boards by the way.
I don’t doubt that we may have a supply/demand problem in 2008. I don’t doubt that we have one at the moment – after all, oil at US$60 a barrel is preposterous. The question is surely not whether we have one now or then but whether there are economic rather than geological reasons for this. I would say there are economic reasons, and that these have to do with what I refer to above as well as the strategy of the US imperialist oligarchy and its allies in the face of a massive overproduction problem on all fronts.
Well, ditto, we have a problem. No one doubts that. He doesn’t mention West Africa where there are variously estimated to be X billions of barrels of oil awaiting exploitation, but little investment forthcoming – as far as I know, although I don’t follow these things in microscopic detail. I’ve read several reports in the past year of giant finds in various parts of the world. But if the US controls the extraction machinery and the capital and has somehow excluded the involvement of others, then large finds can easily denigrated and ignored.
Certainly, all these concrete examples need looking at, but I haven’t the time at present. I’ve read opposite views on Pemex, as I'm sure you have too.
Governments do not appear to be standing by. Governments aren’t about saving the world for the whole of humanity either, they are only interested in saving the capitalist world for their respective elite's.
Well I'm very sorry, but I’m certainly not going to “totally buy into” the comments raised by any of Bush’s neocon side-kicks, not for all the tea in China I'm afraid. On the declining extraction rates I would recommend you take look at Dr. Peter Odell's stuff – he doesn’t seem at all convinced by the story for the North Sea, or anywhere else, for that matter.
Welcome to the boards by the way.
Backatcha Bandit
is not taking your calls
Bernie Gunther
Fundamentalist Druid
Quite so. Unfortunately a system has evolved hellbent on maximising that rate of exploitation (and consequently decline) whatever the human cost.zceb90 said:
Wicked first post by the way
Who cares that people die while we type? Hah!
Bernie Gunther
Fundamentalist Druid
Well that is a good point. High oil prices mean high food prices.Raisin D'etre said:
Not a big deal here in the UK, but not being able to afford food is fatal if there is any serious degree of scarcity due to drought, locusts etc (e.g. in Niger)
Let's not kid ourselves. Whatever inconveniences we suffer here in the UK, over the course of the next century it is highly likely that hundreds of millions in the third world are going to die unpleasantly, become refugees etc.
Outed.Bernie Gunther said:
Bernie Gunther
Fundamentalist Druid
?Raisin D'etre said:
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