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

[Azrael23]

I was about to give this a sly bump () to try and provoke a little neo-con response, as none of the usual champions of free-market economics seem to want to touch this one with a sh*tty stick.

I`m not a neo-con, bout as far away as you could get really, but..

Free-markets are the answer. The point is that we don`t have a free-market do we? In order to have a free market everyone must begin with equal purchasing ability. The free markets mentality began with the aristocracy owning everything through the first corporations like the East India Company.
If all the factors of production are held by an upper class its just invisible feudalism.

In a free-market your not supposed to have debt-based money creation, fractional reserve, privately held money supply, an international cartel selling us our oil/energy...

 

[bigfish]

North Sea bonanza as 730m new barrels are found

it seems Peter Odell was right. There's lots more oil under the North Sea if you look for it.

THE near doubling of exploration in the North Sea and a revival in high-risk, wildcat drilling has discovered 732m barrels-worth of oil and gas – ahead of all expectations.

While nowhere near enough to bring the UK’s oil production back above the amount it consumes, the improved discovery rate puts the UK oil industry on track to find the 23bn-27bn more barrels industry consultant Hannon and Westwood estimates is needed if the North Sea is to stay producing for another 30 years.

Hannon and Westwood managing director Jim Hannon told The Business: “The overall result for UK plc was very positive. The statistics are showing that it pays to drill wildcat wells.”

Exploration in the North Sea has surged over the past two years. Last year 57 wells were drilled. Only 48 were drilled in 2004, 34 in 2003 and 36 in 2002.

Drilling in the UK in 2005 found an average of 13m barrels of oil for every well, the survey found.

Assuming each well costs an average of $15m, this puts the cost of finding a barrel of oil in the North Sea at slightly more than $1 a barrel.

Hannon said: “A dollar a barrel is quite a good finding rate worldwide. It may not compare to some of the huge new basins, but in this day and age a dollar a barrel is good value.”

The survey revealed “wildcat wells” discovered between two and three times as much oil per well drilled as those next to existing fields.

Hannon said: “In the past 10 years, because oil prices have been low, the major oil companies have said ‘we are not going to spend money on wildcat exploration, we are going to focus on so-called ‘snuggle wells’.

“You’re only drilling prospects where you already know there’s a small amount of oil, and then people start to say ‘you can only find small fields in the North Sea’. When you saw [the very large] Lochnagar and Buzzard discoveries a little light went up.”

The Department of Trade and Industry (DTI) launched the Fallow Initiative in 2002, which forces companies to hand over exploration licences to other companies if they were not willing to spend money exploring them.

More: http://www.thebusinessonline.com/Stories.aspx?StoryId=B46A5846-556E-4B65-9355-BDD79208762F&page=0

 

[bigfish]

I think they`re just trying to manufacture scarcity.

Precisely!

 

[clv101]

While nowhere near enough to bring the UK’s oil production back above the amount it consumes, the improved discovery rate puts the UK oil industry on track to find the 23bn-27bn more barrels industry consultant Hannon and Westwood estimates is needed if the North Sea is to stay producing for another 30 years.http://www.thebusinessonline.com/Stories.aspx?StoryId=B46A5846-556E-4B65-9355-BDD79208762F&page=0

That's an interesting point - new finds are "nowhere near enough to bring the UK’s oil production back above the amount it consumes".

We have only just very recently become net importers, the difference between indigenous production and consumption is tiny at the moment. If these new finds can't even make that difference up it's fair to say that they can't actually increase the extraction rate at all. They will just slow the rate of decline form (say) 10% without new finds to 6% with the new finds.

That's exactly in line with peak oil theory. Even the most pessimistic peak oilers expect at least another 138GB of recoverable regular oil to be found.

 

[bigfish]

Here's some miscellaneous reserve increases from various non-OPEC countries, covering the period 1980-2004, taken from the BP statistical review:

Canada: 8.7Gb(1980) => 16.8(2004) = 93% increase
Brazil: 1.3Gb(1980) => 11.2(2004) = 761% increase
South/Central America minus Venezula: 7.3Gb(1980) => 24Gb(2004) = 229% increase
Angola: 1.4Gb(1980) => 8.8Gb(2004) = 529% increase
Asia Pacific minus Indonesia: 22.2Gb(1980) => 36.4Gb(2004) = 64% increase

...and, finally, here are the numbers for Britain's fellow North Sea oil producer, Norway: 3.6Gb(1980) => 9.7Gb(2004) = 169% increase

It's interesting to note the continued growth of Norway's North Sea oil and gas reserves, while reserves in the UK sector have apparently peaked.

 

[Crispy]

But the important figure is extraction rate, surely? Everybody knows there's lots of oil left. Getting it out of the ground is the tricky part.

 

[Falcon]

Ah yes. The BP Statistical Review.

That's the review that recorded, without comment, OPEC reserves increasing by 300 billion barrels in the period 1984-1988 without drilling a single well (37% of world reserves at the time), three years after OPEC introduced reserves-based production allocation and therefore a massive incentive to inflate estimates.

It's the review that has added ~8 billion barrels to Canada's reserves, even though that 8 billion is unconventional oil (tar sand) which (1) has a different (lower) probability of recovery from the conventional reserves comprising the other quoted reserves and (2) has a energy yield of between 0.5 and 0.0 i.e. is almost entirely accounted for by the energy consumption of the process used to manufacture it and therefore presents net zero reserves additions, without any corresponding reduction in the reported gas reserves of the quarter of total remaining Canadian gas necessary to produce it.

It's the review that sums non-mean probabilistic quantities arithmetically to derive regional and global estimates, even though elementary (high school) statistics teaches 15 year olds that you can only sum mean values and must combine P10 with P50 (which the report provides) by Monte Carlo methods - a practice which results in instantaneous overestimation of reserves but long term inflation of apparent reserve growth.

It's the review that records reserves revisions in the year of the revision in accordance with financial reporting practices, rather than in the year of the associated reserves first discovery in accordance with geological evaluation practices, presenting an underlying annual reserves shrinkage of 11 billion barrels per year as an apparent growth of 20 billion barrels per year, in order to portray to shareholders smoothly increasing reserves figures and therefore present company value, and mask exploration failures and therefore endangered future company value.

9.7 Gb = 4 months global consumption.

 

[bigfish]

http://www.peakoildebunked.blogspot.com/

... In a nutshell, the peak oilers are saying the OPEC countries are lying (see above post, for example). They fraudulently inflated their reserves to expand their production during the "quota wars" of the 1980s.

Halfin from the Oil Drum, however, has an excellent rebuttal to this argument which needs to be brought to the forefront. To see what he is talking about, let's look at the status of non-OPEC* reserves over time from the BP Statistical Review of World Energy
...
Non-OPEC countries have no incentive to exaggerate their reserves to secure larger quotas, and yet look at the reserve growth. Non-OPEC reserves grew by about 28% from 1980 to 2004. Even more astounding is this. Working from the BP figures, we find that in 1980, the non-OPEC countries had 232.5Gb of reserves, and in 2004 they had 298.2Gb of reserves. In the period from 1980 to 2004, the non-OPEC countries produced 376Gb of oil. This means that, over 24 years, the non-OPEC countries produced 160% of the reserves they had in 1980, and still ended up with 30% more reserves than they started out with it. So Campbell's point that the OPEC reserves "have barely changed since, suggesting that subsequent production has not been deducted" is obviously a crock. If we simply deducted non-OPEC production over 1980-2004 from non-OPEC reserves in 1980, non-OPEC would currently have reserves of -143.5Gb. The actual value is +298.2Gb, so (as I said) Campbell's criticism is a crock.

 

[Falcon]

it seems Peter Odell was right. There's lots more oil under the North Sea if you look for it.

This chart (click for a bigger version) is based on DTI and UKOOA data.

It shows annual discovered volumes against associated drilling activity, and breaks out the only >200 million barrel finds of the last 13 years. It is reasonable to suppose these 'elephants' (by North Sea standards, actually about 2-3 days worth of global consumption each) will continue to diminish in size and frequency of discovery. The residual (red bars) is the underlying discovery rate for the North Sea i.e. around 100 million barrels per year, declining (Compare with 732 million barrels quoted in the source.)

It shows that drilling frequency lagged the collapse in exploration success rate in 1996-1997, i.e. exploration failure led to a reduction in drilling, not the other way around. This is confirmed by the 50% increase in drilling rate 2003-2004 in response to the confirmed rising oil price trend resulting in a 75% reduction in "base" discovery rate.

Hannon and Westwood make money by talking up the North Sea's prospects to potential investors. However, we need to be a little more discriminating and look at the underlying data when evaluating actual performance.

There is very little oil under the North Sea. Much of what could have been produced in this decade at $70/bbl was accelerated by 'technology' into the 1990's, when the price touched $14/bbl.

It is a relatively straightforward exercise to divide the assumed remaining reserves (which are overestimated) by the average discovery size (which is small and diminishing) and multiply by the current wildcat failure rate (one of the poorest in the world and deteriorating) and cost per well (amongst the industry's highest) to work out that industry would have to spend more on drilling to access the remaining reserves than the produced oil would be worth, even at today's prices. That's why industry data shows that 80% of all global oil companies have lost money on Exploration world wide over the last 10 years, on a deteriorating trend.

 

[clv101]

bigfish, instead of copying from POD please take the time to LEARN what the numbers actually represent.

Read this article: http://www.iaee.org/documents/06spr.pdf (page 6-14)

to understand the difference between 'proved' and P50 and see that OPECs revisions are not comparable to non-OPECs.

 

[Falcon]

Non-OPEC countries have no incentive to exaggerate their reserves to secure larger quotas

Quite true. Instead, non-OPEC countries and private companies incentive to exaggerate their reserves derives from a number of sources:

- Poor non-OPEC countries use their reserves as collateral in securing economic aid and loans for food and weapons, as a mechanism for strengthening their currencies, and as a device for attracting foreign investment.

- The Former FSU quoted P90 (i.e. probable, possible and potential) reserves data throughout that period (Quote: "[the FSU resource base was] strongly exaggerated due to inclusion of reserves and resources that are neither reliable nor technologically or economically viable", E.M. Khalimov, Soviet Deputy Oil Minister).

- And commercial firms value and therefore shareprice was and is strongly correlated with the appearance of increasing reserves, leading to Shell's write down of 20% of its reserves in what industry expects to be the first of a series of downward revisions across the industry arising from the widespread practice of inflating reserves estimates in order to manipulate the share price.

In addition to suffering deliberate exaggeration, non-OPEC reserves estimates suffered from gross inflation through the mishandling of the aggregation of P10 US reserves, P50 World reserves and P90 FSU reserves, together with the misapplication of growth functions derived from US historical reserves growth performance to estimations of non-US reserve growth.

28% growth in non-OPEC reported reserves isn't in the least bit astounding, I'm afraid.

Zittel's "Future world oil supply" (PDF) chapter 6, "Difference between Reserves in Public Domain Statistics and Industry Databases" will give you some distinctions to help you better understand the failure of the argument you've quoted.

 

[laptop]

As is traditional here - Falcon, welcome, have a hobnob and don't lend dub a fiver.

From the tone of your posts so far, Dub would be well advised to lend you £5k...

 

[bigfish]

... Zittel's "Future world oil supply" (PDF) chapter 6, "Difference between Reserves in Public Domain Statistics and Industry Databases" will give you some distinctions to help you better understand the failure of the argument you've quoted.

Thanks, but I've already studied the global hydrocarbon reserve numbers in various reports and studies; and critiques on so called "peak oil", written by people like Peter Odell of the LSE and Michael Lynch of MIT, for instance. You could try reading them - I've posted most of them up on previous pages here. That way, I wont have to keep on repeating myself to new guys when they parachute in.

World oil reserves grew from about 550 billion barrels in 1970 to 1.28 trillion barrels as of January 1, 2001 (Radler, 2000). This increase occurred despite the fact that the world consumed over 800 billion barrels over the same period.

Saudi Arabian proven reserves were estimated at about 88 billion barrels in 1970. Today, the estimate is 261 billion barrels and rising, despite 35 years of intervening production... a nearly three-fold increase in proven reserves in 30 years.

Russia exported 204 million tons of oil in 2005 to non-CIS countries -- including transit volumes, that is an increase of 11.5 percent compared to the previous year. Azerbaijan exported 13.3 million tons of crude in 2005, a 50.3 percent rise over 2004. Turkmenistan produced 9.5 million tons of oil in 2005, nearly 1 percent less than the previous year. Kazakhstan produced 55.4 million tons of oil and 6.1 million tons of gas concentrate in 2005, an increase of 4 percent on 2004.

"Expert estimates on the ultimate recoverable resource base have consistently grown over the past few decades, even though the world has been guzzling oil as if there was no tomorrow." The Economist 2005

“Every ten or fifteen years since the late 1800’s, ‘experts’ have predicted that oil reserves would last only ten more years. These experts have predicted nine out of the last zero oil-reserve exhaustions.” C. Maurice and C. Smithson, Doomsday Mythology: 10,000 Years of Economic Crisis, Hoover Institution Press, Stanford, 1984.

 

[vimto]

Thanks, but I've already studied the global hydrocarbon reserve numbers in various reports and studies; and critiques on so called "peak oil", written by people like Peter Odell of the LSE and Michael Lynch of MIT, for instance. You could try reading them - I've posted most of them up on previous pages here. That way, I wont have to keep on repeating myself to new guys when they parachute in.

World oil reserves grew from about 550 billion barrels in 1970 to 1.28 trillion barrels as of January 1, 2001 (Radler, 2000). This increase occurred despite the fact that the world consumed over 800 billion barrels over the same period.

Saudi Arabian proven reserves were estimated at about 88 billion barrels in 1970. Today, the estimate is 261 billion barrels and rising, despite 35 years of intervening production... a nearly three-fold increase in proven reserves in 30 years.

Russia exported 204 million tons of oil in 2005 to non-CIS countries -- including transit volumes, that is an increase of 11.5 percent compared to the previous year. Azerbaijan exported 13.3 million tons of crude in 2005, a 50.3 percent rise over 2004. Turkmenistan produced 9.5 million tons of oil in 2005, nearly 1 percent less than the previous year. Kazakhstan produced 55.4 million tons of oil and 6.1 million tons of gas concentrate in 2005, an increase of 4 percent on 2004.

"Expert estimates on the ultimate recoverable resource base have consistently grown over the past few decades, even though the world has been guzzling oil as if there was no tomorrow." The Economist 2005

“Every ten or fifteen years since the late 1800’s, ‘experts’ have predicted that oil reserves would last only ten more years. These experts have predicted nine out of the last zero oil-reserve exhaustions.” C. Maurice and C. Smithson, Doomsday Mythology: 10,000 Years of Economic Crisis, Hoover Institution Press, Stanford, 1984.

So there's shit loads of oil to still to be dug up Bigfish?

At what cost?

 

[vimto]

You make me laugh at times

 

[clv101]

World oil reserves grew from about 550 billion barrels in 1970 to 1.28 trillion barrels as of January 1, 2001 (Radler, 2000). This increase occurred despite the fact that the world consumed over 800 billion barrels over the same period.

Saudi Arabian proven reserves were estimated at about 88 billion barrels in 1970. Today, the estimate is 261 billion barrels and rising, despite 35 years of intervening production... a nearly three-fold increase in proven reserves in 30 years.

I guess you didn't read this article yet? http://www.iaee.org/documents/06spr.pdf (page 6-14)

 

[bigfish]

I guess you didn't read this article yet? http://www.iaee.org/documents/06spr.pdf (page 6-14)

If you're unable to highlight the points you wish to make from that rather long pdf document yourself, then perhaps your local social services can send someone round to help.

 

[Backatcha Bandit]

If you're unable to highlight the points you wish to make from that rather long pdf document yourself, then perhaps your local social services can send someone round to help.

Look, Bigfish, mate.

I don't want to appear harsh, but if all you've got is the opinions of cornucopian economists like Odell and Lynch (who's opinions we've already examined here before and found to be somewhat lacking in substance) and reams of cut and paste (that you appear to be trying to pass off as your own? ) of numbers you are uncritically regurgitating without ever taking the time to understand what they represent, you might as well not bother.

You're getting to sound like a stuck record.

Did you actually read that article: http://www.iaee.org/documents/06spr.pdf (page 6-14) ?

No one's going to sit and break it up into nice little chucks and spoon-feed it to you. If you can't cope with reading it for yourself, have you considered the possibility that perhaps it is you with the literacy problem?

-

Welcome, Falcon, BTW.

 

[bigfish]

Look, Bigfish, mate.

I don't want to appear harsh...

No, please, be as harsh as you feel you need to be...

but if all you've got is the opinions of cornucopian economists like Odell and Lynch...

Simply labeling Odell and Lynch "cornucopian economists" doesn't really amount to much of a critique, does it?

...(who's opinions we've already examined here before and found to be somewhat lacking in substance)

"Which planet is Odell on? ...er... not this one, apparently."

Once again, asking "which planet is Odell on" and then answering your own question in the negative, doesn't really amount to much of a critique of his work, now does it?

and reams of cut and paste (that you appear to be trying to pass off as your own? ) of numbers you are uncritically regurgitating without ever taking the time to understand what they represent, you might as well not bother.

But I'm not uncritically regurgitating production figures. The figures I've cited accord entirely with the growth of proven worldwide reserves - which have doubled since 1970 to their current all time historical high.

You're getting to sound like a stuck record.

But every ten years or so various merchants of doom, such as yourself, have been coming along squawking on about an imminent global catastrophe due to oil scarcity... and every time you've been proven wrong!

Did you actually read that article: http://www.iaee.org/documents/06spr.pdf (page 6-14) ?

No one's going to sit and break it up into nice little chucks and spoon-feed it to you. If you can't cope with reading it for yourself, have you considered the possibility that perhaps it is you with the literacy problem?

So you can quote the actual page numbers but not the text... weird!

 

[Backatcha Bandit]

...proven worldwide reserves...

It's your failure to fully understand the meaning of this term that leads to your confusion.

On another thread, you ask:

How on Earth can a country with the second largest proven reserves of crude oil anywhere in the world (133 billion barrels at the last count) have possibly "peaked" in 1976?

It beats me!

I feel confident that it will continue to 'beat you' until you take the steps to educate yourself as to the meaning of the word 'proven' as used in the context of oil reserves.

Again, I urge you to read the article Falcon posted. http://www.iaee.org/documents/06spr.pdf (page 6-14)

Open wide, I'll spoon-feed you a little chunk:

The fundamental reason for this divergence of view is the
existence of two very different data sets. The industry ‘P50’
data on oil discovery indicate that the conventional oil peak
is imminent, and the gas peak not too distant. But if proved
reserves are used a very different picture emerges, namely
one that supports a cohesive economic view which dismisses
any near-term threat to hydrocarbon supply.

Have you not wondered why you appear to be alone in your apparent inability to grasp such a simple concept?

Read it.

 

[zceb90]

Investment by 'Big Oil'

Putting aside for a moment whether the global peak is close at hand (or decades away as USGS / CERA etc might have us believe) let's remind ourselves of the scale of investment required to meet projected energy demand thru 2030. According to this report http://business.timesonline.co.uk/article/0,,9072-1861493,00.html it's no less than $17 trillion, or $680 billion pa.

Recent announcements by 2 of the most prominent members of 'big oil' indicate that we have not got off to the best of starts if such a massive investment target is to be anywhere near achieved. Firstly Exxon Mobil who have just announced an increase in their stock buyback program from $5bn per qtr to $6bn per qtr. With earnings in past 2 qtrs being $10.7bn and $8.4bn respectively XOM are thus spending more than 50% of their earnings on stock buybacks: http://news.yahoo.com/s/nm/20060427/bs_nm/energy_exxon_earns_dc

Secondly BP plan to return $65bn to shareholders over the next 3 years in form of stock buybacks and dividends: http://www.thisismoney.co.uk/news/article.html?in_article_id=408069&in_page_id=2

Production problems are one of the reasons behind the group's disappointing share-price performance - mitigated by a massive buyback programme that could see the group return $65bn to shareholders over the next three years.

BP has underperformed the oil and gas sector by 40% since 2002 and was able to replace only 95% of the oil and gas it produced last year with new reserves.

We are seeing a trend here - the world's largest IOC's spending far more on stock buybacks and dividends as opposed to exploration / development drilling and addressing the industries well documented bottlenecks such as refinery capacity (especially that for heavy / sour crude). It's therefore hardly surprising to read in these financial announcements that 'production has been flat'.

The question I keep asking is "if the biggest IOC's aren't making the necessary level of investment to meet future demand (as projected by IEA etc) who will? I would suggest that no one will hence maximum production capacity and IEA projected global demand will diverge at some point....and well before 2030. That point may / may not coincide with global peaking of production; either way supply will fail to meet demand and much higher prices will ensue to achieve necessary level of demand destruction. Btw WTI = $72.10 this evening.

Chris

 

[zceb90]

Oilfield Technology and Decline Rates

I came across this very useful report today entitled 'Technology and Petroleum Exhaustion: Evidence from Two Mega-Oilfields.' The authors have compared 2 mega-oilfields in different regions where both have good transparency of well / reserve data, namely the Forties field in UK N Sea and the Yates field in west Texas. Both have had EOR (enhanced oil recovery) i.e. new oilfield technology extensively applied which had the effect of boosting flowrates for a time but was then followed by much more aggressive decline rates. Report is located here:
http://www.economics.rpi.edu/www/workingpapers/rpi0512.pdf

Having read thru the report I believe it adds weight to the comments by Matt Simmons and others that the main consequence of extensive application of new technology is an earlier and sharper peak rather than significant increases in overall recovery. I would cite a couple of other examples where EOR has had similar impacts, namely Prudhoe Bay in Alaska and Yibal in Yemen; both have now declined substantially from peak. Of course EOR has been extensively applied elsewhere, not least in Ghawar (SA) and Cantarell (Mexico), the largest and 3rd largest oilfields on the planet respectively. When (note not if) these fields also experience steep decline rates it will be extremely hard, if not impossible, for the industry to drill new wells fast enough with sufficient productivity to offset the declines in an increasingly mature production base. The 'jury is still out' as to exactly when this will happen but I would not be at all surprised to see it happen this decade especially if recent OPEC reports that 'everything is flowing more or less flat out' are correct.

The world's top 20 oilfields and their decline status was discussed on the Oil Drum last month here (note that Cantarell is already projected for a 14% decline rate based, I recall, on Pemex's own forecasts): http://www.theoildrum.com/story/2006/4/18/2149/32950

Chris

 

[Rich Lyon]

.

 

[Falcon]

The figures I've cited accord entirely with the growth of proven worldwide reserves - which have doubled since 1970 to their current all time historical high

Companies have to choose, when publishing reserves revisions, whether to record the revision in the year the revision was determined, or in the year of discovery of the reserve to which the revision relates. For the purpose of representing the value of the company, it doesn't matter (1 year old unproduced reserves and 20 year old unproduced reserves have the same net present value). For the purpose of estimating the prospects of future discoveries, it is essential to distinguish between new discoveries and revisions of prior discoveries, and to preserve the pattern of discovery by backdating revisions to the year of the discovery to which they relate.

Proven worldwide reserves as represented by financial data i.e. with reserves revisions recorded in the year of the revision, rather than in the year of the discovery to which they relate, suggest that reserves are growing at around 20 billion barrels a year. Unfortunately, extrapolations of data compiled for financial reporting have no real-world correspondence.

Proven worldwide reserves as represented by geological data i.e. with reserves revisions backdated to the year of the discovery to which they relate, show that reserves are shrinking by 11 billion barrels per year. According to BP Statistical Review of World energy, with revisions backdated per Exxon's analysis, Global remaining reserves were around 1.1 trillion barrels in 1970, rose to a peak of around 1.3 trillion barrels in 1980, and now stand at just over 1 trillion barrels.

Companies choose to present the data in financial form because it is a simple and effective way of misdirecting the unsophisticated into believing that reserves are rising and future revenues are secure, thereby supporting the share price. Internally, they analyse projections on the basis of backdated data and occasionally it slips out. For example, a senior executive at BP (Francis Harper) let it slip that world production would peak between 2010 and 2020 on the basis of falling remaining reserves.

But every ten years or so various merchants of doom, such as yourself, have been coming along squawking on about an imminent global catastrophe due to oil scarcity... and every time you've been proven wrong!

From Bentley's 'Submission to the Cabinet Office Energy Review':

[The Hubbert] forecasting technique was applied by a range of competent authorities, at various dates during the 1970’s and early 1980’s, to calculate the date for the peak in the world conventional production. These authorities included the UK Dept. of Energy, Esso, Shell and the World Bank. All used estimates for the world’s original endowment of conventional oil lying somewhere in the region of 2,000 billion barrels (Gb), and hence calculated that the world conventional oil peak would occur around the year 2000... the same calculation done today gives essentially the same prediction, but with the date of peak shifted to compensate for the reduction in global demand following the 1970’s oil shocks.

I think it is incorrect to classify Exxon, Shell and the World Bank as 'merchant's of doom'.

 

[Hanoipete]

It also depends what you mean by `peak oil`. If you understand that oil is finite, decayed organic matter produced under pressure and heat for at least 1 million years (ish ish), then basically everyone is a peakist. If you pump it long enough eventually you will get near half way be that now, in 20 years or 120 years.

But normally it just desends into a slanging match about dates. Which is very boring. Plus various people start writing long (lucrative) books that human society will die off, become fascist, become an eco-paradise...whatever you can think of. On the other hand free market freaks start writing (lucrative) books saying waste is good, we'll never run out. It's very very tedious.

Oil supply problems (better phrase than peak oil) are exacerbated by demand, economics and special factors. One important one being the global transport system. It can also be a very western orientated argument. Already 3bn out of 6bn have energy shortages, they never had any in the first place...

There are however serious problems with trying to match anticipated demand, Zoltan is right over investment, share buybacks and so on...now all the majors are following the same path, buying their own shares to prop up their share prices. Meanwhile the small e&p guys are digging up everywhere around the world they can think of, at $70 pb it makes sense. There is a company about to list on the AIM that has proven reserves of 10.1 million barrels!! Thats it. And even with proven reserves you can never extract it all, sometimes even then you can get as low as 10% or 20% if you dont get it right. But 1million barrels gives you a company with a cap of $70 million!! Skim off 2 or 3 for yourself and bingo...

There is a difficlut convergence at the moment of increased demand form the USA, China and INdia, plus slow investment, slow turnaround, declining mature fields and a general move by mid-poor nations to become consumer societies like the west. As regards energy its a dangerous cocktail especially when 5% of the worlds population in the USA consume (waste) 25% of the worlds oil...

 

[clv101]

(lucrative) books...

You're kidding right? I spoke to Richard Heinberg last year and his two books had sold something like 25,000 and 10,000 and of course he only sees a small fraction of the cover price - he still had day job and mortgage.

 

[Hanoipete]

yeah but when you can write one in ten days its a pay-off

no true some are more lucrative than others. but those book figures arent to be sniffed at. selling 35,000 books is pretty good for an academic, and his day job isnt exactly too bad either. Kunstler and Jared Diamond and all those bods, i really dont respect that kind of soothsaying stuff, likewise on the other 'side' Odell, the man is a buffoon...

anyway...

 

[Falcon]

But normally it just desends into a slanging match about dates. Which is very boring.

From The Bush/Cheney Energy Strategy: Implications for U.S. Foreign and Military Policy:

What we have, therefore, is a two-pronged strategy that effectively governs U.S. policy toward much of the world. One arm of this strategy is aimed at securing more oil from the rest of the world; the other is aimed at enhancing America’s capacity to intervene in exactly such locales. And while these two objectives have arisen from different sets of concerns, one energy-driven and the other security-driven, they have merged into a single, integrated design for American world dominance in the 21st Century. And it is this combination of strategies, more than anything else, that will govern America’s international behavior in the decades ahead.

 

[Falcon]

Google Trends result for Peak Oil

 

[Hanoipete]

Klare is reasonably sensible chap. But when has US foreign policy NOT been about that since the 1930s ish ? `Security` and energy...

Heh...thats a funny graph i like it! What do all the little flags mean?