Peak Oil (was "petroleum geologist explains US war policy")
- Thread starter Bernie_Gunther
- Start date
New record price today.
Why are oil prices going up? Here's why.
What can we do about it? Change the political discourse on energy.
Why are oil prices going up? Here's why.
What can we do about it? Change the political discourse on energy.
The Oil Drum said:
John Hopkins’ researcher Roger J. Stern’s data point to an abundance of untapped oil reserves in the Middle East. He states:
“We hypothesize that threats do arise in the oil market, not from the oil weapon, but from the cartel’s management of abundance… If oil were scarce, the cost to recover it should rise over time. The opposite has occurred.”
Among other things, he notes that:
“...only 17 of 80 Iraqi fields are in production… Iraq may possess ‘reservoirs that have been completely overlooked’... [while] much of Iraq has not been explored at all. Similarly, of 80 Saudi reservoirs, only 23 are in production.”
The reason oil prices have climbed so high is due to MASSIVE POLITICAL INSTABILITY in the Middle East. The source of this instability is the United States of America and its poodle the UK.
Saudi Arabian Oil Fields Brimming
http://www.saudi-us-relations.org/newsletter2004/saudi-relations-interest-08-25.html
http://www.saudi-us-relations.org/newsletter2004/saudi-relations-interest-08-25.html
That quote is from August 2004:
"Saudi Arabia could easily pump up its production rate by using nearly 2 million barrels per day of spare capacity but that such a move is not called for by current market conditions."
When SA extraction was 9.5 million barrels per day and the price was ~$45.
Since then the price as increased some $30 yet SA production has actually fallen recently after being flat as a pancake for some 18 months.
The other interesting behaviour for a country sitting on spare capacity is the increased rig count. From 2000 to 2004 there was only ~16 drilling rigs operating in SA. From 2004 to today that number has increased to over 40, at a time when the cost of rig hire have risen dramatically.
I beleive in 2004 SA lied (or their 2 mbpd spare capacity oil was of such low quality that it's no use to anyone).
"Saudi Arabia could easily pump up its production rate by using nearly 2 million barrels per day of spare capacity but that such a move is not called for by current market conditions."
When SA extraction was 9.5 million barrels per day and the price was ~$45.
Since then the price as increased some $30 yet SA production has actually fallen recently after being flat as a pancake for some 18 months.
The other interesting behaviour for a country sitting on spare capacity is the increased rig count. From 2000 to 2004 there was only ~16 drilling rigs operating in SA. From 2004 to today that number has increased to over 40, at a time when the cost of rig hire have risen dramatically.
I beleive in 2004 SA lied (or their 2 mbpd spare capacity oil was of such low quality that it's no use to anyone).
I'm not sure where the author is obtaining these figures, certainly not from N Sea. As we've discussed a few posts up the decreasing size of discoveries (20m bbl / boe and falling) has the effect of increasing both finding and lifting costs per barrel.
Neither am I comfortable with lifting costs per barrel falling on a global basis. EOR (enhanced oil recovery) can help but these days even a 500m bbl discovery is rare whereas between the 1930's and 1960's 1Gb+ discoveries were commonplace and there were a number at 10Gb+. Not only has the average size of new discoveries fallen greatly but the industry has had to move offshore and recently into deep water, polar regions etc. These trends are incompatible with recovery costs per barrel trending downwards.
Not least here is one of a number of recent reports of big cost over-runs for the Athabasca tar sands projects: Costs explode at Shell Canadian Venture. The article references a cost over-run of up to 50% for a 100k bbl/d expansion project; new costs are reported to total C$11bn i.e. US$10bn. Let's assume a 10 year cost recovery (most oil companies work on less given the risks); capital costs of expansion project amount to $27.4/bbl. Add in operating costs and it's hardly surprising to read that even at $50/bbl Athabasca projects are both marginal and risky. Don't forget that the resulting product i.e. heavy synthetic oil is not valued as highly as Brent / WTI - price differentials of heavy sour v sweet light (WTI / Brent) have been reported as wide as $15/bbl recently.
Now the key point to note here is that Shell, Syncrude and others are engaged in large scale expansion plans for Fort McMurray and, quite simply, they would not be prepared to take such risks and commit such large sums were global oil lifting costs really falling - they would either commence projects elsewhere or, in the absence of necessary licenses, they would likely buy into existing projects. With world oil demand currently at around 85m bopd and rising by 1.5 - 2% pa it's not only the lifting costs of land based oilfields discovered decades ago which counts but the incremental barrels necessary to deliver (say) the last 20% of daily demand. Low cost oil such as that from Ghawar and Burgan can nowhere near meet global demand thus customers are forced to bid up the market price to obtain incremental supplies which are hugely more expensive.
To suggest that lifting costs are low and falling is misleading to say the least - if that really is the case why has WTI risen from c$10/bbl in 1999 to $78/bbl in July 2006?
Iraqi oil potential as been referred to several times by former National Iranian Oil Co senior advisor Dr Ali Samsam Bakhtiari including in PM Radio (Australia) short interview with Dr Ali Samsam Bakhtiari . Dr Bakhtiari does indeed believe that Iraq has the most prospective unexplored acreage on the planet. He has also repeatedly stated, however, that with the exception of Iraq the other key ME producers' reserves are greatly overstated; furthermore he states that Iran, Kuwait and Saudi Arabia have all passed peak production.
Even assuming Iran, Kuwait and SA could hold present output until 2012 (the date being 6 years out when Iraq might reasonably be expected to bring new discoveries to market assuming exploration commenced now) there would still be supply constraints in the absence of a reversal in global oil demand growth. The world is currently consuming 31Gbbls pa which would grow to between 34 and 35Gbbls pa by 2012 at the same time as a number of key oil producers such as Indonesia, Mexico, Norway, UK and US will either continue or enter terminal decline. Potential new output from Iraq could not reasonably be expected to make up such a gap i.e. both offset ongoing production declines and accommodate global demand growth.
All of the above assumes that the security situation in Iraq will undergo a major sudden and early improvement; it's simply unrealistic to expect necessary oilfield experts (even if there wasn't already a global shortage of them) to reside in Iraq when oilfields installations, living quarters etc are under threat of attack.
The recent report by independent geologists Saudi Arabia: Hubbert Linearization shows SA cumulative production at 58.1% of Qt i.e. 58.1% of URR has been produced to date. How could this be assuming production has only occurred from 23 our of 80 oilfields? We've gone into some detail a few posts above as to how 'elephants are found first' in N Sea and we've every reason to expect that Saudi will be no exception to this oilfield trend which has been observed in almost every oilfield province. Even after 60 years 90% of SA production comes (and has always come) from 6 giant oilfields discovered decades ago (refer Twilight in the Desert etc). The 53 oilfields reported as 'unproduced' are likely to be much smaller, more difficult to develop and deliver poorer quality product.
Oil prices have been rising steadily since 1999 and land based developments take between 3 and 4 years thus there's been ample time for SA to have drilled all these extra prospects and brought production online. I suspect CLV101 has it 'spot on' - much of the potential incremental production is poor quality crude which the market doesn't want. Saudi Aramco themselves have recently admitted the their 'realistic' estimate of production c2011 is now reduced to 12m bopd (some earlier quotes by SA were 15m+ bbls). Even if SA really can deliver what amounts to an extra 2.9m bopd in 2011 it's nowhere near enough to cater for more than 18 months' global demand growth and the extra is likely to be unuseable in most refineries.
Gong back to the independent geologists' report - if SA is indeed at 58.1% of Qt then it's extremely unlikely that their output will rise from here given that no other oil producer has even been able to increase and sustain the extra production from such a level of depletion. We should know within 3 years whether all the extra rigs operating in SA actually deliver extra output. In the 1970's / 1980's Texas embarked upon a crash drilling program and yet their output has declined in every one of the 33 years post their 1973 peak. Based on this historic example we should remain extremely cautious as to whether additional SA production will actually materialise.
zceb90 said:
You seem obsessed with the North Sea story. Actually, Stern obtained his figures from: Adelman, M. A. (1993) The Economics of Petroleum Supply (MIT Press, Cambridge, MA). See note 22 of his PNAS paper here: http://www.pnas.org/cgi/reprint/0503705102v1
In addition, "Saudi Aramco's finding and development costs are about 50 cents per barrel, far below the industry average of $4 to $5 per barrel. Full-cycle costs, which include the cost of finding, developing and producing a barrel of oil, are less than $3 per barrel of oil equivalent (BOE), compared to average full-cycle costs of $7 in Brazil, $8 in Russia, $10.50 in the North Sea and $14.50 in the United States' Gulf of Mexico (according to a Cambridge Energy Research Associates cost study in late 2002)."
2002 cost estimates are old hat in this business - rig dayrates have more or less trebled by then. In any event finding and development costs of $0.50 /bbl in SA, assuming they are still this low, is of acedemic interest to UK and its consumers given that buyers are bidding up to $78/bbl on world markets and UK imports are going to be on a sharply rising trend. Finding and development costs are no longer determining oil prices, scarcity is.
To me CERA have very little credibility - they were predicting $38/bbl for 11/1/05 (I believe date is in US format i.e. Nov 01, 2005) hence July 13 has been designated Daniel Yergin Day.
To me CERA have very little credibility - they were predicting $38/bbl for 11/1/05 (I believe date is in US format i.e. Nov 01, 2005) hence July 13 has been designated Daniel Yergin Day.
bigfish said:
fan·tas·tic (fn-tstk) also fan·tas·ti·cal (-t-kl)
adj.
Quaint or strange in form, conception, or appearance.
Unrestrainedly fanciful; extravagant: fantastic hopes.
Bizarre, as in form or appearance; strange: fantastic attire; fantastic behavior.
Based on or existing only in fantasy; unreal: fantastic ideas about her own superiority.
Wonderful or superb; remarkable: a fantastic trip to Europe.
n.
An eccentric person.
(dictionary.com)
On the other hand, Aramco's outgoing President of Exploration, Husseini, described America's calculation of future Saudi oil reserves as a dangerous over-estimate.
Remember, if Saudi loses U.S. confidence that it is the coke-dealer of choice for U.S. addiction, it loses U.S. protection. That will mean the end of power for the ruling family. They will say anything. As BigFish's extract neatly demonstrates...
You have to hope some of what they say is true - OPEC added 300 billion barrels of reserves without drilling a single well in the 80's - maybe they can find some real reserves to match, or else we have 10 years less than everyone thinks.
[edited to correct some atrocious spelling and grammar - sorry]
Just to help us understand the magnitude of the porky BigFish is relaying on behalf of the saudi-us-relations propaganda machine:
In other words, SA would have to increase production by 6% every year for 20 consecutive years in order to supply world growth. The only way that could be conceivably possible would be if there ware vastly more reserves than even they have hitherto laid claim to. It really is becoming quite desperate.
Meanwhile:
Exploration, delineation and development efforts have increased Saudi Aramco's oil initially in place* * from 600 to 700 billion barrels during the past 20 years. The article missed out the biggest source of increase: outrageous and utterly spurious reserves inflation driven by the 1980's OPEC quota war.
Vast unexplored acreage exists in the Rub al--Khali desert region, etc They are unexplored for oil in the same way that Kosher butchers are unexplored for pork - the circumstances simply do not lend themselves to its discovery. Oil exploration is as much about where not to look as it is about where to look. To find oil, you need (1) source rock, (2) reservoir rock, (3) a trapping structure, (4) a cap rock and (5) an absence of fractures. The absence of any one component makes the accumulation of significant volumes of oil impossible, each component by itself is relatively rare and all 5 components occuring simultaneously is extremely rare. While it is extremely difficult to locate the presence of oil, it is relatively straightforward to map the locations of the various component sequences and this has been done to a high degree of precision for the entire globe. Oil exploration, therefore, is not about finding oil, but about eliminating areas which cannot contain oil (which is almost everywhere), and then looking in what is left. Rub al-Khali is unexplored precisely because it is known not to contain source, reservoir, trap, cap and/or fractureless sequences. Even then, while it is necessary for all 5 conditions to be present for oil to be present, it is not sufficient, and even exploring in regions that may contain oil is not guaranteed to find it. [I can imagine, for those not familiar with the exploration process, that it is reasonable to suppose that oil exploration is about sticking a hole in the ground near where other people have found oil and hoping for the best, and therefore that saudi-us-relations.org propaganda sounds entirely plausible.]
USGS 2000 projections point to additional recoverable oil resources ranging from 29 to 161 billion barrels The International Energy Agency attempted to reconcile 2020 production with USGS 2000 projections and were compelled to invent a category called "unidentified unconventional production" to account for 18 million barrels per day of production. As one industry analyst commented, no matter how atttractively labeled and precisely quantified you make it, "not there" is still "not there".
etc.
In other words, SA would have to increase production by 6% every year for 20 consecutive years in order to supply world growth. The only way that could be conceivably possible would be if there ware vastly more reserves than even they have hitherto laid claim to. It really is becoming quite desperate.
Meanwhile:
Exploration, delineation and development efforts have increased Saudi Aramco's oil initially in place* * from 600 to 700 billion barrels during the past 20 years. The article missed out the biggest source of increase: outrageous and utterly spurious reserves inflation driven by the 1980's OPEC quota war.
Vast unexplored acreage exists in the Rub al--Khali desert region, etc They are unexplored for oil in the same way that Kosher butchers are unexplored for pork - the circumstances simply do not lend themselves to its discovery. Oil exploration is as much about where not to look as it is about where to look. To find oil, you need (1) source rock, (2) reservoir rock, (3) a trapping structure, (4) a cap rock and (5) an absence of fractures. The absence of any one component makes the accumulation of significant volumes of oil impossible, each component by itself is relatively rare and all 5 components occuring simultaneously is extremely rare. While it is extremely difficult to locate the presence of oil, it is relatively straightforward to map the locations of the various component sequences and this has been done to a high degree of precision for the entire globe. Oil exploration, therefore, is not about finding oil, but about eliminating areas which cannot contain oil (which is almost everywhere), and then looking in what is left. Rub al-Khali is unexplored precisely because it is known not to contain source, reservoir, trap, cap and/or fractureless sequences. Even then, while it is necessary for all 5 conditions to be present for oil to be present, it is not sufficient, and even exploring in regions that may contain oil is not guaranteed to find it. [I can imagine, for those not familiar with the exploration process, that it is reasonable to suppose that oil exploration is about sticking a hole in the ground near where other people have found oil and hoping for the best, and therefore that saudi-us-relations.org propaganda sounds entirely plausible.]
USGS 2000 projections point to additional recoverable oil resources ranging from 29 to 161 billion barrels The International Energy Agency attempted to reconcile 2020 production with USGS 2000 projections and were compelled to invent a category called "unidentified unconventional production" to account for 18 million barrels per day of production. As one industry analyst commented, no matter how atttractively labeled and precisely quantified you make it, "not there" is still "not there".
etc.
Have been discovered. As in, are no longer being discovered. Because all of the fracture-free places within the empty quarter in which there is a source, reservoir, trap and cap have been looked in. And everywhere else, one or more are missing (principally, in the case of the empty quarter, source rock).
Don't worry about these elementary mistakes - the truth is, most people are in the position of having to learn very quickly about a subject they have never needed to know about, but think they do know something about.
Don't worry about these elementary mistakes - the truth is, most people are in the position of having to learn very quickly about a subject they have never needed to know about, but think they do know something about.
Crispy said:
A wise policy!
Meanwhile the Saudi's seem reasonably optimistic that future production will grow:
http://www.gulfoilandgas.com/webpro1/main/mainnews.asp?id=2639
Bernie Gunther
Fundamentalist Druid
One thing we've not really discussed on this thread, although nanoexpresso and I almost got into it somewhere a couple of years back, is the possibility of a plausible alternative fuel picking up the slack. I normally look at this stuff from an assumption that there isn't a plausible alternative and that we have to look to radical reductions in demand until we've come up with one.
I find the abiotic oil idea fairly unconvincing, but I think it's reasonable to ask are there any technical fixes that we can imagine, that might plausibly form the basis of a viable high-energy future?
For example, suppose we started a programme right now to build a Lunar mining and industrial colony, supporting solar energy generation in space for microwave transmission to Earth and providing fuel for D3He fusion power by say 2050? Here's an analysis which suggests that if we could do something like that, we might be able to pick up the "slack" and keep growing. Even to the point of expanding across the Solar System.
http://fti.neep.wisc.edu/neep533/SPRING1999/LEC38/0slide.html
How much of that is plausible though? The solar power stuff is just engineering, we know we can probably do that if we spend enough money.
Fusion power is a different kettle of fish however, especially D3He fusion, which for various reasons is a desirable objective for space industry (less radiation, less weight, more efficient, Helium 3 readily available etc)
I find the abiotic oil idea fairly unconvincing, but I think it's reasonable to ask are there any technical fixes that we can imagine, that might plausibly form the basis of a viable high-energy future?
For example, suppose we started a programme right now to build a Lunar mining and industrial colony, supporting solar energy generation in space for microwave transmission to Earth and providing fuel for D3He fusion power by say 2050? Here's an analysis which suggests that if we could do something like that, we might be able to pick up the "slack" and keep growing. Even to the point of expanding across the Solar System.
http://fti.neep.wisc.edu/neep533/SPRING1999/LEC38/0slide.html
How much of that is plausible though? The solar power stuff is just engineering, we know we can probably do that if we spend enough money.
Fusion power is a different kettle of fish however, especially D3He fusion, which for various reasons is a desirable objective for space industry (less radiation, less weight, more efficient, Helium 3 readily available etc)
In 2003, the proved world oil reserves was 156.700 million metric tonnes.
In 1999, it was 147.785.
In 1995, 141.928.
In 1991, 139.048... In 1987, 124.558... In 1983, 98.620...
Recognise any patterns there?
The oil reserves of the world are not exactly running out, somehow miracoulously, they seem to be running up!
http://earthtrends.wri.org/text/energy-resources/variable-1209.html
In 1999, it was 147.785.
In 1995, 141.928.
In 1991, 139.048... In 1987, 124.558... In 1983, 98.620...
Recognise any patterns there?
The oil reserves of the world are not exactly running out, somehow miracoulously, they seem to be running up!
http://earthtrends.wri.org/text/energy-resources/variable-1209.html
The history of oil prognostication is littered with scaremongers proclaiming false declarations of approaching oil famine. In fact, doom merchants have used oil as a vehicle for "end of the world" scenarios since before World War I.
Consider:
* In 1914, the U.S. Bureau of Mines declared that the United States would run out of oil in 10 years.
* In 1939, the US Department of the Interior predicted that oil reserves would last only 13 more years.
* In 1950, when the world's estimated reserves were thought to be 600 billion barrels, the Department of Interior again projected the end of the age of oil by 1963.
* In 1973 the Arab oil embargo prompted the highly respected journal Foreign Affairs to publish an article on "The Oil Crisis: This Time the Wolf is Here."
* In 1981 it was predicted that the United States was entering a 125-year-long energy gap, expected to be at its worst in the year 2000 with dire consequences to our standard of living.
* In 1995, a prominent geologist predicted that petroleum production would peak in 1996 and that after 1999 many of the developed world's societies would look like Third World countries.
* In 1998, a Scientific American article titled "End of the Age of Oil" predicted that world oil production would peak in 2002 and that we would soon face the "end of the abundant and cheap oil on which all nations depend."
All of these predictions were wrong. In fact, from 1950 to the present, the world's recognized oil reserves have increased virtually every year (see above post).
The current USGS world estimate of 3,000 billion barrels of conventional crude is probably conservative. Consider Iraq. Only 2,300 oil wells have been drilled in Iraq, compared with over 1 million wells drilled in Texas. Furthermore, only 22 of the more than 80 major Iraqi oil fields have been fully explored.
Iraq is reported to have 112 billion barrels of oil reserves. But based on unexplored reserves, many geologists believe that actual number is more than twice current estimates.
A classic example of oil reserve understatement is the Kern River field in California, where production wells were first drilled in 1899. By 1942, after 43 years of continuous pumping, remaining Kern River oil was estimated at 54 million barrels. Pumping continued, and over the next 50 years, the field produced over 736 million barrels. In 1986, using 3D mapping technology, the reservoir was reported to contain an additional reserve of over 970 million barrels.
Eventually the world will move from an oil-based economy to something better. But given the huge reserves of world oil, it's likely that technology will drive this change, not scarcity.
http://www.ncpa.org/pub/bg/bg159/
Consider:
* In 1914, the U.S. Bureau of Mines declared that the United States would run out of oil in 10 years.
* In 1939, the US Department of the Interior predicted that oil reserves would last only 13 more years.
* In 1950, when the world's estimated reserves were thought to be 600 billion barrels, the Department of Interior again projected the end of the age of oil by 1963.
* In 1973 the Arab oil embargo prompted the highly respected journal Foreign Affairs to publish an article on "The Oil Crisis: This Time the Wolf is Here."
* In 1981 it was predicted that the United States was entering a 125-year-long energy gap, expected to be at its worst in the year 2000 with dire consequences to our standard of living.
* In 1995, a prominent geologist predicted that petroleum production would peak in 1996 and that after 1999 many of the developed world's societies would look like Third World countries.
* In 1998, a Scientific American article titled "End of the Age of Oil" predicted that world oil production would peak in 2002 and that we would soon face the "end of the abundant and cheap oil on which all nations depend."
All of these predictions were wrong. In fact, from 1950 to the present, the world's recognized oil reserves have increased virtually every year (see above post).
The current USGS world estimate of 3,000 billion barrels of conventional crude is probably conservative. Consider Iraq. Only 2,300 oil wells have been drilled in Iraq, compared with over 1 million wells drilled in Texas. Furthermore, only 22 of the more than 80 major Iraqi oil fields have been fully explored.
Iraq is reported to have 112 billion barrels of oil reserves. But based on unexplored reserves, many geologists believe that actual number is more than twice current estimates.
A classic example of oil reserve understatement is the Kern River field in California, where production wells were first drilled in 1899. By 1942, after 43 years of continuous pumping, remaining Kern River oil was estimated at 54 million barrels. Pumping continued, and over the next 50 years, the field produced over 736 million barrels. In 1986, using 3D mapping technology, the reservoir was reported to contain an additional reserve of over 970 million barrels.
Eventually the world will move from an oil-based economy to something better. But given the huge reserves of world oil, it's likely that technology will drive this change, not scarcity.
http://www.ncpa.org/pub/bg/bg159/
On this basis we would expect to note a steady downward trend in oil prices to reflect the growing reserves (and btw there's been plenty of time to bring reserves discovered up to or a bit after 1999 into production). By contrast exactly the opposite of what we might expect has occurred - oil prices have risen 6 fold since 1999. Why is this - has the market 'got it wrong' or are the reserves either questionable or difficult to produce?bigfish said:
Here's price graph on logarithmic scale for WTI since 2000:
Log (base 2) of West Texas Intermediate spot price in nominal US dollars Jan 2000-Jun 20th, 2006, together with linear and quadratic fits to the data from Nov 15th, 2001 onwards (the low before the recent price run-up). On this scale, 4 is $16, 5 is $32, and 6 is $64. Graph is not zero-scaled. Source: EIA.
The graph shows that the price increase has been steep and more or less relentless since 4th Qtr 2001. Are we really to understand that political factors have driven a change of such magnitude or could the fact that there have been more buyers than sellers in the market i.e. supply constraints relative to demand have been a major factor? More detailed discussion here.
Log (base 2) of West Texas Intermediate spot price in nominal US dollars Jan 2000-Jun 20th, 2006, together with linear and quadratic fits to the data from Nov 15th, 2001 onwards (the low before the recent price run-up). On this scale, 4 is $16, 5 is $32, and 6 is $64. Graph is not zero-scaled. Source: EIA.
The graph shows that the price increase has been steep and more or less relentless since 4th Qtr 2001. Are we really to understand that political factors have driven a change of such magnitude or could the fact that there have been more buyers than sellers in the market i.e. supply constraints relative to demand have been a major factor? More detailed discussion here.
Texas is indeed an excellent case history, more or less the original 'home' of the oil industry and with probably the most business-friendly leasing arrangements found anywhere. Oil production peaked in Texas in 1973 and a massive drilling program was then conducted over a number of years in an attempt to replace output from their declining wells. Here's how an independent geologist summarises the situation:bigfish said:
Let's also look at some stats quoted here by Jean Laherrere:
Thousands of additional wells were indeed drilled in Texas in an attempt to mitigate the 1973 peak but the usual oilfield rule of 'elephants are found early' applied - the new wells encountered much smaller reservoirs which declined faster than their much earlier counterparts. There are now tens of thousands of stripper wells in Texas i.e. wells producing <10 bopd and a large proportion of these wells are operated by 'poor-boy independents' as opposed to 'big oil'. Despite this huge amount of drilling activity production has declined relentlessly for 33 years and is now less than 25% of its 1973 peak. Denial, however, runs very deep and there are still some who believe that Texan output can recover but, to date, there are no signs to that effect regardless of how much money is spent.
I'm perfectly willing to accept that additional drilling taking place / planned in OPEC countries will make new discoveries, especially in Iraq which has the best prospective unexplored acreage. Peak oil supporters recognise such potential deposits as 'yet to find' volumes but believe that such 'ytf' amounts will total no more than 150 Gbbls globally based on linearization plots. It should be recognised however that the long tail of production which will eventually be experienced in the Middle East will likely be quite different to that of Texas - it's rather hard to imagine activity by 'poor-boy' independents happening on any major scale given that state oil companies such as Saudi Aramco hold a virtual monopoly. It's also hard to see how such state oil companies would focus on <10 bopd stripper wells but maybe at some point in the future it will happen in order to maintain national oil supplies at a time when significant exports are no longer possible. Either way supplies from OPEC stripper wells will be unlikely to reach OECD consumers.
Drilling thousands of additional wells in OPEC nations would obviously raise production somewhat but such regions are not immune from the 'elephants are found early' rule and new discoveries will in no way match the oilfield kings and queens discovered either side of WWII. Even another 50 Gbbls found today would only postpone the peak by a few months and thus I agree with many of the speakers at this week's ASPO 5 depletion workshop in Pisa - 'all liquids' production is likely to peak globally around 2010. For those still denying the possibility of such a global peak it should be noted that two completely separate methodologies i.e. oilfield megaprojects review and Hubbert linearization plots are pointing to this same conclusion. To quote Chris Skrebowski in his speech at ASPO 5 on July 18 'there are just 1500 days to peak and by tomorrow there will be 1499'. (On this basis CS would be assuming there are now 1495 days left).
Of course estimates by CS and others are 'round numbers' and could move either way based on many factors including demand rates. We shouldn't dwell on the actual date of the peak itself but should focus on how we, as a society, should address the long production decline which comes into view on the other side of the peak. As Dr Robert Hirsch said again this week at ASPO 5 - 'massive mitigation steps need to be initiated 20 years prior to peaking if we are to avoid major economic dislocation'. Increasingly few analysts of this subject offering substantial data to support their case believe we have anything like 20 years....and yet precious few mitigation steps are anywhere in sight.
Bernie Gunther
Fundamentalist Druid
Just out of interest, where in Iraq is that 'prospective unexplored acreage' ?
Iraq's Western Desert region as referenced here (and by numerous other articles): US Intentions.
See also this paper entitled On Middle Eastern Oil Reserves by Dr Ali Samsam Bakhtiari. Dr Bakhtiari was a senior expert for National Iranian Oil Company and has long taken the position that oil production would peak globally relatively soon. He does state, however, that Iraq is more or less unique among the OPEC Gulf states in that its reserves are more likely to be understated than overstated (as he believes is the case for SA, Kuwait etc).
See also this paper entitled On Middle Eastern Oil Reserves by Dr Ali Samsam Bakhtiari. Dr Bakhtiari was a senior expert for National Iranian Oil Company and has long taken the position that oil production would peak globally relatively soon. He does state, however, that Iraq is more or less unique among the OPEC Gulf states in that its reserves are more likely to be understated than overstated (as he believes is the case for SA, Kuwait etc).
One point about potential for new drilling to turn up new discoveries:
In Saudi Arabia, 80% of the oil was discovered with the first 20% of the wells drilled, the last 20% of the wells drilled has only discovered 1% of the oil.
Bigfish, it's quite a simple concept, the big reserves are easy to find and get found first. The chance of new significant discoveries being made now is slight.
In Saudi Arabia, 80% of the oil was discovered with the first 20% of the wells drilled, the last 20% of the wells drilled has only discovered 1% of the oil.
Bigfish, it's quite a simple concept, the big reserves are easy to find and get found first. The chance of new significant discoveries being made now is slight.
Bernie Gunther said:
Almost all of Iraq's known reserves are located in the valley between the Tigris and Euphrates rivers, but substantial exploration opportunities exist throughout Iraq. The western desert region, which borders Jordan and Saudi Arabia, is considered to be highly prospective, but is yet to be explored. The Iraqi authorities put nine exploration blocks up for offer in 1998. Of Iraq's 74 discovered and evaluated fields, only 15 have actually been developed.
Michael T. Klare, Five College Professor at Hampshire College, stated in his article "Oiling the Wheels of War":
• "Iraq possesses vast areas of promising but unexplored hydrocarbon potential.
• These fields may harbor the world's largest remaining reservoir of unmapped and unclaimed petroleum -- far exceeding the untapped fields in Alaska, Africa and the Caspian.
• Whoever gains possession of these fields will exercise enormous influence over the global energy markets of the twenty-first century."
Cue USuk invasion!
Similarly in Iran, where hydrocarbon extraction is largely concentrated in the south, there is huge potential for further development in the north of the country, especially in the Caspian region and the northwestern province of Kurdistan (and elsewhere too).
Cue massive USuk destabilization operation!
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