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

[zceb90]

Energy Economics

Presumably though, while the energy economics might make no sense, the obvious political factors might cause our government to actually even subsidise extraction, because we're so badly under-prepared to do otherwise.

It would depend on what type of energy was having to be utilized to continue extraction of oil (but choices are somewhat limited when dealing with a remote offshore platform). As an extreme example if as much oil was having to be consumed in powering the platform, pumping the oil, powering supply boats and helicopters etc as the wells were producing it would never make sense to continue. If some of the energy could be produced from (say) windfarms at or near the offshore location and from nuclear power via an undersea cable (very expensive unless platform is close to the shore) then it might well be worth a negative energy equation simply to recover the most versatile form of primary energy i.e. oil.

I think the way to look at it is to consider the North Sea as 'being a totally different animal' versus the US lower 48 for example. Half the wells in that area of the US (which is effectively everywhere on the mainland excluding Alaska) are producing less than 6 bbls per day but the typical energy return on energy invested (ERoEI) was reported to have fallen below 2:1 a few years back. Based on stats for a NS platform I was dealing with (and spent some time on) as a 'ball park' number I reckon the cutoff point would be some 50x that i.e. minimum output of 300 bbls/day per well (and that probably rises to more like 500 bbls/day per producing well given that water injection wells are normal in N Sea). I just can't see how the energy economics could shape up much below this point.

 

[Bernie Gunther]

Very informative and helpful. Thanks.

 

[zceb90]

Saudi Arabia

To what extent are these new production methods being employed to boost output in Saudi and other massive provinces that have (apparently) yet to peak?

These 2 presentations by energy investment banker, Matt Simmons, pose some extremely challenging questions re Saudi oil: Saudi Oil Miracle and Hudson Institute .

Despite the traditional secrecy with regard to hard well and reservoir data since nationalisation in 1980 it's widely known that Saudi Aramco is making extensive use of MRC (maximum reservoir contact) wells in its ageing giant oilfields. The problem here is that once the water reaches these (horizontal) wells production tends to collapse as we've already observed in Yemen's Yibal field. Water is steadily encroaching as the reservoirs age, for example 7m bbls/day of water has been injected into Ghawar since the late 1960's to try to maintain reservoir pressure. If the field still has vertical producing wells water encroachment gradually shrinks the oil column thus production declines gradually. If you now imagine a horizontal well it's easy to see how water encroachement would rapidly affect the whole well.

There are some reports on the web which point to vertical wells being near obsolete in some of Saudi's giant fields as a large proportion of the oil column has been replaced by water. The use of intelligent MRC completions (nicknamed 'bottle brush drilling') enables the remaining section of the formation which still contains oil to be focussed on and the various segments of the completion in individual wells automatically shut off when water encroaches. This practice points to production from the area being mature which explains why Matt Simmons has concerns as to just how long they can stave off steep declines.

 

[Bernie Gunther]

The implication of that being that once the remaining big fields e.g in Saudi start to go, they're also going to drop off really quite quickly, taking with them a large percentage of global production (compared to the North Sea) ?

 

[slaar]

Thanks zceb90, really informative.

 

[zceb90]

Saudi Oilfields

The implication of that being that once the remaining big fields e.g in Saudi start to go, they're also going to drop off really quite quickly, taking with them a large percentage of global production (compared to the North Sea) ?

There's a lot more at stake in Saudi v N Sea, for example a 3% decline in Saudi would roughly equate, in volume terms, to a 14% decline in UK N Sea (based on existing rates of production). It's hard to come up with exact production data for Saudi and the estimates tend to originate from spotters who simply count tankers departing their oil terminals and estimating how low they are in the water! Unscientific but that's what it takes when there is really no data.

Comparing the 2 oil provinces, EUR for UK N Sea is 32 Gbbls whereas 261 Gbbls EUR have been reported for Saudi. Output in N Sea generally is lighter crude than in SA thus the wells can flow faster relative to size of reserves. There is also the pressing economic need in high cost, hostile environments such as the N Sea to ramp up production quickly and recover as much oil as possible in a relatively short timeframe. This rapid exploitation was much encouraged by Gov't back in the 70's and 80's to enable UK to become independent (for a while!) from Middle East oil politics in view of the 2 (then) recent oil shocks. As discussed in earlier posts this evening N Sea will have a relatively sharp cutoff as output will eventually no longer justify extensive maintenance / replacement works needed to mitigate the effects of the corrosive environment. By contrast I'd expect Saudi to still be producing oil a century from now but not at rates meaningful to industrial society. As we've seen in US lower 48, thousands of land wells can go on producing for the best part of a century even though over half of them now produce less than 6 bbls / day; land wells in Middle East have similarly low costs and can thus still produce economically at a tiny fraction of their initial flowrates.

Looking at Ghawar, it really is the 'king of kings' at 60 Gbbls EUR based on the last study before nationalisation. That 1975 study was conducted by the best experts from Exxon, Mobil, Chevron and Texaco and was done by hand as opposed to the computer based models used today. More details of Ghawar and the 1975 study are shown on slide 31 of the following presentation: SPE GCS Reservoir Study Group, Feb'05, Houston . The 1975 study concluded that Ghawar's EUR was 60 Gbbls whereas Saudi Aramco now claim there are a further 125 Gbbls still to recover. It's very hard to imagine how such a group of reservoir experts could have 'missed' by a factor of 3 given that the field already had some 400 producing wells and 24 years of production history in 1975. Obviously recovery techniques have moved on since the mid 70's and recovery factors tend to be higher which might point to a revised EUR of around 70 - 75 Gbbls but this has to be just a guess as there's been no data made public since 1980. To date the field has produced around 57 Gbbls thus if the 1975 study is accurate we are getting close to the end.

Apart from the vast size of Ghawar, another reason why production has held up so well relative to most other oilfields, even after 54 years of production is that Saudi Arabia has been the 'swing producer' for many years up until around 2002. In much of the 1980's and 1990's the world had up to 15m bopd of surplus capacity thus many of Ghawar's wells would have been shut in for years at a time. By contrast N Sea wells were flowed at full rates, even at just $8/bbl in the mid 1980's.

It's interesting to compare the size of the largest field in UK N Sea (Forties) at 2.7 Gbbls with Ghawar at 60 Gbbls (1975 study). Even after 54 years of production Ghawar still produces between 5% and 6% of the world's oil so if (or more accurately when) production enters steep decline it will be a 'world class event'. The best recent analysis on Ghawar and other SA oilfields is detailed in Matt Simmons' recent book 'Twilight in the Desert - the Coming Saudi Oil Shock and the World Economy'. Book review and option to order online here: Twilight in the Desert . Matt has based a lot of his analysis on a review of 200 SPE papers written by petroleum engineers who have been involved with Ghawar over the past several decades - Saudi Aramco does not make public any well or reservoir production data and simply says 'trust us'.

My personal views are that Ghawar and the other ageing Saudi oilfields are likely to enter steep decline within a few years. There are reports that Saudi Aramco is currently engaged on an urgent search for more rigs - if production in these giant fields was as healthy as they say it is why do they need all these rigs?

There's a Saudi saying - 'My father rode a camel, I ride an automobile, my son flies a jet airplane, his son will ride a camel'. Whoever thought up that saying was not far wrong!

Chris

 

[Bernie Gunther]

So we're going to lose what, up to 10% of global production over 5 years or so if a bunch of the big fields go around the same time?

 

[bigfish]

Hubbert's theory is not just a US phenomenom, it applies too all oil provinces. The US is just usually mentioned since it's big (once the worlds largest producer) and it was a long time ago. Many other major provinces have already peaked including Norway, Venezuela, UK, Indonesia etc.

Looks like we've got yet another neo-Hubbertist on board. So anyway civ, can you explain to the forum how and why Lynch is getting it so wrong in the paper linked below?

The New Pessimism about Petroleum Resources: Debunking the Hubbert Model (and Hubbert Modelers)

The Hubbert Curve

The initial theory behind what is now known as the Hubbert curve was very simplistic. Hubbert was simply trying to estimate approximate resource levels, and for the lower-48 US, he thought a bell-curve would be the most appropriate form. It was only later that the Hubbert curve came to be seen as explanatory in and of itself, that is, geology requires that production should follow such a curve. Indeed, for many years, Hubbert himself published no equations for deriving the curve, and it appears that he only used a rough estimation initially. In his 1956 paper, in fact, he noted that production often did not follow a bell curve. In later years, however, he seems to have accepted the curve as explanatory.

This particular example demonstrates a major theoretical flaw underlying the curve: for a closed system, such as the US gas market, demand determines production, not geology. (High gas transportation costs mean that overseas gas plays a trivial role in the US market.) Globally, the recent slowdown in demand has suggested to some that the peak has already occurred.[3]

That the curve appears to have some validity can be easily explained: a bell (or logistic or Gaussian) curve represents exponential growth and decline, which is typical of large populations and/or persistent capital stock. Oil production can only grow slowly in any mature province, as no new field will represent more than a small proportion of existing supply. And the amount of equipment operating can usually only grow fractionally, as industry finds it inefficient to maintain the capacity necessary to double its manufacturing stock in a brief period. Conversely, even with no additional investment, production decline will be slow as existing producing capital has been paid for and is allowed to decline and depreciate, but is not immediately closed in. Therefore, exponential growth and decline is normal, and while the bell curve is not necessarily the precise path likely to be followed, its presence is hardly proof of an immutable, natural, scientifically-determined law.

Revival of the Hubbert Method

The recent authors, notably Campbell and Laherrere have apparently rediscovered the Hubbert curve, but without understanding it, at least initially. Campbell and Laherrere initially argued that production should follow a bell curve, at least in an unconstrained province. But this is demonstratively not the case in practice: most nations’ production does not follow a Hubbert curve. In fact, Campbell (2003) shows production curves (historical and forecast) for 51 non-OPEC countries, and only 8 of them could be said to resemble a Hubbert curve even approximately.

The authors initially responded to this weakness by arguing that the Hubbert curve could have multiple peaks, which of course means it would not follow a bell curve at all, and destroys the explanatory value of the bell curve. As the alleged value of the Hubbert curve lies partly in demonstrating the production decline post-peak, not knowing whether any given peak is the final one renders this useless, nor would the peak imply that midpoint production had been reached (indicating URR).

Recognizing this, the theory has been modified again, to “The important message from Hubbert’s work, which is often forgotten by economists, is that oil has to be found before it can be produced.” (Laherrere 2001b, p. 4) In other words, the Hubbert curve, originally held as scientific and inviolable, is of no particular value. Yet the authors have not only mistakenly believed in its properties, they have not been forthcoming about their own errors.

What are you saying? Are you suggesting a deviation of the last 45 years falling rate of discoveries? You're on your own if you are. No one is suggesting there are significant new discoveries to come....

He is far from being on his own and you are talking complete nonsense!

 

[bigfish]

The rest of the world will follow the same pattern of production as the US i.e. the same type of bell shaped curve. Curves for individual giant fields are readily available on the web (will post links on request). Examples are Forties (UK NS), Prudhoe Bay (Alaska, US) and Samotlor (Russia).

The downslope of Hubbert's curve for US lower 48 is in fact rather benign compared with many other oil producing regions. Output in US lower 48 has fallen by approximately 50% in 34 years whereas UK N Sea output is already down 40% in just 6 years. As a general rule oil provinces where a large part of the original development and production was performed using more traditional oilfield methods the declines post peak will be relatively gentle, maybe around 3% pa. Such areas include US lower 48, Middle East etc. By contrast oil provinces (usually in high cost areas) which have made extensive use of new oilfield technology virtually from inception will experience sharp declines post peak. An excellent example is N Sea where 10% decline has been experienced in UK sector and the Norwegian sector has recently reported steep declines in 21 oilfields.

I must say zceb, you paint a very gloomy picture indeed!

Just to make sure that you're not talking utter and complete nonsense, do you think you could provide the forum with the sources for all of these rather scary numbers you're throwing around? Thanks.

 

[LostNotFound]

I must say zceb, you paint a very gloomy picture indeed!

Just to make sure that you're not talking utter and complete nonsense, do you think you could provide the forum with the sources for all of these rather scary numbers you're throwing around? Thanks.

I don't know how he can suggest that everything simply follows the bellcurve - such an assumption seems to deny the complex interlinked structure of natural systems.

 

[clv101]

Looks like we've got yet another neo-Hubbertist on board. So anyway civ, can you explain to the forum how and why Lynch is getting it so wrong in the paper linked below?

No you're quite right, I'm talking complete nonsense. Good luck for the future.

 

[ViolentPanda]

No you're quite right, I'm talking complete nonsense. Good luck for the future.

bigfish is a cultist. You deny his g-d (abiotic oil), therefore he will give no credence to anything you say.

Sad, isn't it?

 

[Bernie Gunther]

Thing is though, it isn't about whether Hubbert curves are a valid way to proceed. You get much the same results without them. For example, here we've got a report from some guys at Oak Ridge National Laboratory in which they take Campbell's "adjusted" data, plus the data that people like Lynch and McCabe would prefer to believe and model them both based on r/p ratios.

http://www-cta.ornl.gov/cta/Publications/ORNL_TM_2003_259.pdf

The result is that if you believe Campbell's data, we're at the (Non-OPEC conventional) peak right now, wheras if you believe the un-adjusted USGS figures, then it's a decade or two away.

 

[zceb90]

The End of Cheap Oil - Presentation by Jack Zager

I must say zceb, you paint a very gloomy picture indeed!

Just to make sure that you're not talking utter and complete nonsense, do you think you could provide the forum with the sources for all of these rather scary numbers you're throwing around? Thanks.

I do my best not to talk nonsense! You will appreciate that many assumptions have to be made on both sides of the argument due partly to reserve estimates being an inexact science and, critically, due to long term policy of data secrecy in some key oil producer nations. If I'm not sure of the data I try to qualify my posting with words to the effect 'recent reports indicate....' . Anyway here are references to the numbers you are questioning:

Steep Decline in 21 Norwegian Oilfields . This press report is in Norwegian and I can't find an English version but a Norwegian has translated the key parts of the report here: 21 Norwegian Oilfields in Steep Decline (English)

US lower 48 production is displayed graphically on chart 21 here: The End of Cheap Oil - Presentation by Jack Zagar . You will note that production from US lower 48 has actually fallen by more than 50% in the past 35 years.

On further checking the '40% fall in UK North Sea oil production since peak' was slightly out - according to DTI actual fall between peak in November 1999 and May 2005 (the latest month shown in DTI data) was 44.3%: Monthly UK N Sea Oil Production (DTI). Until 2004 DTI issued an annual plot showing historic and forecast N Sea oil and gas production thru 2020, copy located here: DTI North Sea Oil + Gas Production Forecast .

I don't see why looking at historical data should be considered 'very gloomy' - I would have thought it was far better to deal with the reality of the situation rather than remain 'in denial'. The more we face up to reality on this very important subject the better chance we have of persuading Gov'ts to also start facing up to the issue of oil (and gas) depletion and to start redesigning the entire way we do business so as to become much less dependent on finite fossil fuels before Nature goes right ahead and makes the changes for us.

In the absence of a totally unexpected oil production surprise on the upside or demand destruction caused by a widespread economic depression then high oil prices are here to stay. We will all have to learn to deal with this situation....and the enforced energy savings won't be all bad, for example EU uses roughly half the amount of oil per capita as US does and yet standards of living are comparible. We can do a whole lot more, for example what percentage of vehicles on UK roads at peak hours contain just the driver?

 

[zceb90]

I don't know how he can suggest that everything simply follows the bellcurve - such an assumption seems to deny the complex interlinked structure of natural systems.

Bell shaped curves representing production profiles are well documented and they apply to other extraction industries also - coal, for example.

In a presentation in Edinburgh in April 2005 the petroleum geologist Colin Campbell showed a number of examples from oil fields / provinces around the world of bell shaped curves for oil production: Colin Campbell Presentation, Edinburgh, April 2005 .

The classic bell shaped curve (known as Hubbert's Curve) for oil production can contain variations due to both natural and unnatural events. For example the curve for UK N Sea output contains a big dip at the end of the 1980's following the Piper Alpha disaster. The world curve shows a dip commencing in the early 1980's due to demand destruction following the 2 large 'oil shocks' of the 1970's.

 

[zceb90]

So we're going to lose what, up to 10% of global production over 5 years or so if a bunch of the big fields go around the same time?

That's difficult to quantify but there are some areas where production is still growing and can continue to grow for some years. Examples include Deepwater Brazil and the oil sands at Fort McMurray.

On the downside we could easily loose 1m bopd in Mexico's Cantarell field in the next 5 years and as much as 3m bopd if Simmons' analysis of the risks to future production in Saudi's giant but ageing oilfields turns out to be correct. Much of SA's output from these fields now relies on MRC (horizontal) wells and while they greatly improve recovery rates for a time they have a downside in that once the water reaches these wells production tends to collapse. On above basis Mexico and SA have potential to contribute to around a 5% world decline in next 5 years but some of this would be offset by growth in area such as Brazil and Canada.

It's hard to determine course of events even a few years ahead as there are several key variables - rate of demand growth, consumer reaction to high prices, questionable (or mis-reported) reserves in a number of key oil producer nations, stability of Iraq, business climate in Russia etc. Earlier this month I attended a presentation which indicated we could probably get thru to 2013 without bad problems if demand grew by no more than 1.6% pa from 2004 but we know already that demand grew by 3.7% in past 12 months. This variance had the effect of compressing nearly 2-1/2 years' forecast growth into just 12 months; a couple more years like that and it would bring the 2013 situation forward to 2007.

So far much of the demand destruction which has occurred in view of $60+ oil has been poorer countries either buying less or quitting importing oil. These countries don't use much oil therefore in order to see more demand destruction cutting in we need to see people in US, EU and China, for example, driving and flying less and the growth in automobile units needs to pretty well cease for this to happen. Right now I don't see this happening so after a period of consolidation it would not be surprising to see a further hike in the oil price until it does.

 

[Bernie Gunther]

It'd be interesting to get an economists view of the likely consequences of that, alongside the rapidly swelling US deficit, the disintegration of Iraq into civil war, with consequent regional destabilisation (particularly if it spreads to Saudi, which it might) and the possibility of investors holding large quantities of US treasury paper losing confidence in Bush and his team.

Consequences of oil price rises could be pretty nasty long-term. I expect you're familiar with the potential consequences of that for food security?

 

[zceb90]

It'd be interesting to get an economists view of the likely consequences of that, alongside the rapidly swelling US deficit, the disintegration of Iraq into civil war, with consequent regional destabilisation (particularly if it spreads to Saudi, which it might) and the possibility of investors holding large quantities of US treasury paper losing confidence in Bush and his team.

Consequences of oil price rises could be pretty nasty long-term. I expect you're familiar with the potential consequences of that for food security?

It's a distinct possibility that unsustainable debt levels precipate an economic shock before the effects of peak oil really start to cut in; the ensuing recession due to enforced debt deflation would have the effect of cutting consumption thus postponing the impact of declines for several years, maybe more. Japan is a good example of the effects of deflation / stagnation following years of boom ending in the late 80's.

More specifically the UK is going to have a major issue with energy imports within a very few years. Assuming price of barrel of oil (or bbl oil equivalent for natural gas) reaches $100 by 2010 and remains at those levels and based on current levels of consumption UK import bill for oil and gas alone would reach £25 bn by 2010 and £50 bn by 2015. Note that neither oil nor gas need to peak for this to happen; it's simply the consequences of UK maintaining present levels of consumption of oil and gas in light of the sharp N Sea output declines forecast in DTI's 2004 graph (copy on the ASPO site, link a few posts back). In other words by 2015 UK trade deficit is likely to have more than doubled from present levels of around £3 bn per month. Those taking on mortgages and other debt would be well advised to consider what size of interest rate hikes would be needed in future to maintain value of British currency and borrow necessary funds abroad (new mortgages typically have 25 year term therefore events in 5 to 10 years will become extremely relevant long before mortgages expire).

With regard to food security I'm only too aware of the possibilities; the following scientific papers are extremely thought provoking (but they make for uncomfortable reading): The Bottleneck by Edward O Wilson ; Eating Fossil Fuels by Dale Allen Pfeiffer .

Chris

 

[slaar]

It's definitely a possibility. There's a very strange dynamic going on in the global economy right now, where marginal demand is coming from the US in the form of debt, and marginal supply from China which is undergoing an astonishing and ongoing transformation. It's in both countries' interests to keep that going, so it's arguably energy developments in these two countries that are crucial to the world economy as a whole.

 

[bigfish]

Opec output hike no solution to high oil prices: analysts

http://www.gulf-times.com/site/topi...o=53162&version=1&template_id=48&parent_id=28

PARIS: Opec oil ministers who meet in Vienna tomorrow are expected to increase their output quota to appease oil-importing countries struggling with record prices, but experts say the move would not resolve the real problem of global refining capacity.

On Thursday, Prince Sultan bin Abdul Aziz of Saudi Arabia, the world’s biggest oil exporter and Opec member, pledged his help in combatting the spiralling price of oil, which has raised fears of an economic shock for rich countries and angered car owners who are feeling the pinch at the gasoline (petrol) pump.

“While expressing our concern about the rise in oil prices, we affirm our readiness to do all that we can to compensate shortage in supplies and meet increase in demand,” said Prince Sultan.

A spokesman for Organisation of Petroleum Exporting Countries, which accounts for about 40% of world oil production, underlined that a similar proposal had been made by Opec president Sheikh Ahmad Fahd al-Sabah.
“One option is, as the president has proposed, to increase the official ceiling by another 500,000 barrels which would see real oil coming into the market,” spokesman Abdulrahman al-Kheraigi told AFP.

Opec information director Omar Ibrahim said on Monday that a quota increase had the support of a number of countries.

This seemed the likely outcome of the 137th ministerial conference of the 11 Opec ministers – taking place tomorrow and Tuesday - but analysts said it would amount to a symbolic gesture for a number of reasons.

First, Opec is already producing more than its current official quota of 28mn bpd and most members were believed to be extracting at near full capacity.

On September 4, Sheikh Ahmad told the official Kuwaiti news agency Kuna: “Opec is currently producing 30.4mn bpd ... This production is more than the market needs to allow the building of strategic and commercial stocks in order to stabilise prices.”

Manouchehr Takin at the Centre for Global Energy Studies (CGES) agreed, saying in reference to the oil alliance: “They continue to produce above quotas.”

Secondly, the reason behind the inexorable rise in oil prices of the last few months is not a lack of crude oil, but of refining capacity, a situation exacerbated by the devastation wrought by Hurricane Katrina on the Gulf coast of the US.

“They will raise the ceiling but it is a symbolic gesture. In fact, the market cannot take the extra crude,” said Deborah White, an analyst at Societe Generale. “Everyone except Saudi Arabia is producing at full capacity.”
Furthermore, any additional crude production is likely to be heavy grade and rich in sulphur, which is more difficult to refine into useable oil products.

“Crude is not really the problem, it’s the refining,” said Simon Wardell at economics consultancy Global Insight.

White also noted that Opec had been increasing its production quota since April with no effect on oil prices, which were at $64.35 in New York and $63.25 in London on Friday.

“They (Opec ministers) will explain again that the problem is refining,” she said.

Oil prices have eased slightly in the past days, and on Thursday Opec lowered its estimate for global oil demand in 2005 for the fifth time in row owing to slower-than-expected economic growth in the US and China.
...
There were also signs that reconstruction of oil production and refining installations on the US Gulf coast was progressing after the International Energy Agency said it had decided not to release any more emergency oil stocks to compensate for the disruption.
...
Simon Wardell of Global Insight said the initial decision to release extra crude had helped illustrate the lack of appetite for unrefined oil.

Of the 30mn barrels of crude released from the US strategic reserves, “they have only sold 11mn,” he said. “There were 19mn barrels that no one wanted.” – AFP

 

[clv101]

And why is refining the problem? Because the proportion of light sweet crude is falling having already peaked, any marginal capacity is heavy sour for which there isn't the refining capacity. Is that a refining problem or a crude oil supply problem, my money's on the latter.

 

[bigfish]

bigfish is a cultist. You deny his g-d (abiotic oil), therefore he will give no credence to anything you say...

Well that would depend on how one defines a "cultist" VP.

For your information, my one and only "g-d" is called SCIENCE. The inorganic theory of the deep origins of petroleum is firmly rooted in science, which, in turn, has been validated and revalidated many times over through its practical application in the field of petroleum exploration - to the point where it forms the defining principles guiding petroleum exploration in the nation-states of the former Soviet Union and a growing list of other countries too. On the other hand, the theory of "Peak Oil" is hopelessly hogtied to the thoroughly discredited finite "fossil fuel" hypothesis (otherwise known as the cult of the squashed fish). Peak oil theoreticians are pretty thin on the ground too. In fact, if you examine peak oil theory in any meaningful detail, you quickly find yourself returning time and again to the same handful of fabled gurus. On the other hand, the list of opposing theoreticians is both long and distinguished. For example, it includes the acclaimed chemist Sir Robert Robinson* who was awarded the Nobel Prize for chemistry in 1947 "for his investigations on plant products of biological importance, especially the alkaloids."


*note: should you wish to examine Dr Robinson's study of the chemical analysis of the constituents of petroleum, then you will need to get the reluctant permission of the oil giant Shell, who have kept this important work hidden away ever since his death in 1975.

 

[bigfish]

I don't know how he can suggest that everything simply follows the bellcurve - such an assumption seems to deny the complex interlinked structure of natural systems.

Well put. I completely agree with you.

 

[bigfish]

And why is refining the problem? Because the proportion of light sweet crude is falling having already peaked, any marginal capacity is heavy sour for which there isn't the refining capacity. Is that a refining problem or a crude oil supply problem, my money's on the latter.

Clearly you are wrong. Crude oil supply is adequate to more than meet current demand. That the United States and Europe currently lack the capacity to refine heavy sour in sufficient quantity to meet domestic demand, is a reflection of the (deliberate) failure of the refining industry to adapt itself to a changing crude market, which, in turn, has resulted, rather fortuitously, from the point of view of the oil cartels, in a rise in pump prices and a massive rise in there grossly obscene profits.

It's the OLD ENRON ARTIFICIAL SCARCITY SCAM, road tested on the state of California and now let loose in the global arena. "Peak Oil" is merely one of its propaganda foils.

By the way, given your confidence in the mythical qualities of Hubbert's curve, can you perhaps explain from your own point of view how and why Lynch has got it so badly wrong on this score?

 

[Ae589]

Well put. I completely agree with you.

bf - i asked you earlier on (but it must have got lost in this 40 page thread!), if abiotic oil exists, and replenishes the oil we used, why do fields run dry? Why didn't oil make up a more significant % of our earth if it had been 'growing' for years?


If it's me that missed the answer, apologies.

 

[elbows]

I repeat my earlier question: If your position is that any manifestations of an oil supply crisis are simply as a result of cartels etc, and that there is no genuine supply problem, under what conditions would you change your mind?

How far do you think OPEC and oil companies could push it? If apparent failures to meet demand, for whatever reason, start to cause serious, very serious economic problems for major powerful countries, at what point do you think 'the national interest' would step in and use force to change things. At what point does stability come before profit?

I ask these things because I expect you are not alone, and assuming the crisis deepens, I want to see how long the 'its a false manufactured crisis' theory can remain credible.

 

[Crispy]

bf - i asked you earlier on (but it must have got lost in this 40 page thread!), if abiotic oil exists, and replenishes the oil we used, why do fields run dry? Why didn't oil make up a more significant % of our earth if it had been 'growing' for years?

And further, even if it is replenishing - we don't seem to be seeing any increase in production. Surely this indicates that the process is too slow anyway?

 

[zceb90]

Clearly you are wrong. Crude oil supply is adequate to more than meet current demand. That the United States and Europe currently lack the capacity to refine heavy sour in sufficient quantity to meet domestic demand, is a reflection of the (deliberate) failure of the refining industry to adapt itself to a changing crude market, which, in turn, has resulted, rather fortuitously, from the point of view of the oil cartels, in a rise in pump prices and a massive rise in there grossly obscene profits.

It's the OLD ENRON ARTIFICIAL SCARCITY SCAM, road tested on the state of California and now let loose in the global arena. "Peak Oil" is merely one of its propaganda foils.

By the way, given your confidence in the mythical qualities of Hubbert's curve, can you perhaps explain from your own point of view how and why Lynch has got it so badly wrong on this score?

Then why are we seeing a 5.7% increase in NYMEX crude price today and are at a price of $66.60 rather than the $30 for 2005 which Michael Lynch had forcast a year ago? If the capacity constraints were solely at the refinery stage as you suggest we'd expect to see the crude price falling as there would be too much supply for the amount of refineries in operation. Furthermore it can't be solely due to Katrina as crude price had reached $68 before the storm in GOM occurred.

 

[clv101]

...can you perhaps explain from your own point of view how and why Lynch has got it so badly wrong on this score?

Life's too short to engage in pointless endeavours, there is nothing I could write to convince you that Lynch has got it wrong. If you want to partake in a discussion on Lynch I can suggest this thread to you: http://www.peakoil.com/fortopic4138.html

 

[bigfish]

bf - i asked you earlier on (but it must have got lost in this 40 page thread!), if abiotic oil exists, and replenishes the oil we used, why do fields run dry? Why didn't oil make up a more significant % of our earth if it had been 'growing' for years?

But not all the fields run dry Ae. In the Persian Gulf, for example, there are 6 super-giant oil fields: two in Saudi Arabia; one shared between Kuwait and Iraq; two in Iraq proper at Kirkuk and Mosul; and one in (next stop) Iran. These are all fields with proven reserves of more than 500 billion barrels or more. All of them were discovered before WW2, and most of them have been under accelerating and sustained production, ever since the 1950's. In 1970 Saudi Arabian proven reserves were put at 88 billion barrels, today they stand at 265 billion barrels, from the same super giant fields (and by some accounts higher), not withstanding 50 years of accelerated extraction as the worlds number one producer. To the best of my knowledge, there are two or possibly three more super-giant fields that we know of in the world right now (there may well be others yet to be found): one is in Alaska; one is in the FSU; and one, ominously, is in (next stop but one) Venezuela. "Recent applications of the inorganic theory have also led to claims for the possibility of the Middle East fields being able to produce oil "forever" (Mahmoud and Beck, 1996) and to the concept of repleting oil and gas field in the gulf of Mexico.(Gurney, 1997) More generally, it is argued, all giant fields are most logically explained by inorganic theory because simple calculations of potential hydrocarbon contents in sediments shows that organic materials are too few to supply the volumes of petroleum involved." (Odell 2000)

As for smaller fields running dry, then one needs to understand that the planets petroleum system is continually erupting primordial hydrocarbons from great depths, from where under enormous pressure it migrates via geological faults into reservoir plays of various sizes from super-giants down to the smallest wildcats and at all horizons. These migration routes are determined and develop according to tectonic or seismic activity which, in turn, opens up new migration opportunities and closes off old ones. In any event, "petroleum is present, in large or small quantity, but in all horizons below any petroleum accumulation". This statement has since become known as "Kudryavtsev's Rule" and numerous examples of it have been noted. Thus petroleum exists in reservoir plays stacked beneath those presently being produced - a phenomena that has been almost completely neglected so far by the western oil giants which, to the present, have simply set about extracting as much of the shallower and therefore cheaper to produce plays as the geopolitical climate would permit in any given period. Why should the Anglo American oil cartels invest heavily in further developing the North Sea when a plan to lay claim to the super-giant fields and huge proven reserves in Iraq (and probably Iran and Venezuela too) was being hatched on their behalf in Washington and London?

Average depth of continental crust: 40 km = 24.85 miles
Average oil-well depth in US in 1997 = 4925 feet = 0.93277 mile
Average oil-well depth in Russian Caspian area, 2003 = 3.5 km = 2.17 miles