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

[Crispy]

Expensive, and slow to extract. Production rates, Bigfish, production rates. We could have 5,000 gigabarrels of oil known to exist, but if it comes out at a trickle, we're still screwed.

 

[paimei01]

About that oil found in Brazil, we need the SF technology to get to it :
http://www.bloomberg.com/apps/news?pid=20601109&sid=aOspOz2AMLLU&refer=home

April 28 (Bloomberg) -- Brazil's plan to become one of the world's biggest oil exporters hinges on exploiting crude 6 miles below the ocean surface in deposits so hot they can melt the metal used to carry uranium to nuclear plants.

Tapping what may be the biggest oil finds in the Western Hemisphere in three decades will require equipment that can withstand 18,000 pounds per square inch of pressure, enough to crush a pickup truck, pipes that can carry oil at temperatures above 500 degrees Fahrenheit (260 Celsius) and drill bits that can penetrate layers of salt more than one mile thick

 

[Crispy]

Precisely. Quite a bit more tricky and expensive (in money and energy terms) than tapping an old-time Texas gusher.

 

[david dissadent]

Not to mention a lack of refining capacity in the US and Europe. I wonder how much blame we can attribute to that often overlooked detail?

This is largely due to the steady decrease in oil quality. Most of the light sweet crude varieties are now depleating rapidly. The US refinaries are increasingly relying on heavier more sulpherous oils that take longer to refine and more energy having lower EROI. This lowers refinary profit margins and increases the cost of finished product.

Presumably, this might help explain why Gordon Brown last week called on BP to invest at least some of its unseemly profits boosting production in the North Sea.

Gordon Brown lecturing Shell on petrolium geology on breakfast television. Dali was less sureal.

Anyway the time has passed for playing footsie around the issue. Time for people to start getting to grips with the economic and social consaques of this issue.
Time to discuss how we can nationaly and personaly mitigate against the downside risks of hydrocarbon depletion.

 

[david dissadent]

One more intersting point I thought I would add. The US is currently buying 1 million barrels a day to fill the SPR. Its a minor news story over there as its a contributer to the 'gas' prices.

But think of this, an administration run by oil people is buying oil for long term storage when the prices are at record levels.

Either they are deliberately tanking the US economy or they are bullish on oil prices. The SPR was run down in the post Katrina period. One more big cat 4 running through hurricane ally and taking out Galviston or a few platforms and that SPR is going to be damned urgently needed. Especialy as the Mexicans are in depletion from hell with Cantrells production gone of a cliff.

 

[gorski]

We made all sorts of new technologies possible, when everybody who's somebody in an area of dispute kept saying "dream on, buddy...". This is no different. Watch it happen, if it's essential, if there's a political will...

 

[Crispy]

Yes, I think eventually we will make the switch to non-fossil fuels. But that switch can be smooth and clean, or it can be messy and abrupt. I'm no Doomer, I believe that there's a way out, but I don't see enough movement towards it right now.

 

[Kaka Tim]

Some 'financial expert' was on the radio this morning saying that -

'the price of oil is extermely volitile and its difficult to predict weather it will go up or down'

Non financial expert me thought that the price of oil has not been 'volitile' at all but has been steadily rising for the past 5 years and looks likely to carry on like that.

Was he being stupid or is it soft soap to play down the impending oil price based economic crash/recession/slump/implosion?

 

[Crispy]

On a daily/weekly basis he's right.

 

[gorski]

But will the change to other sources of energy be followed up by a fair and enlightened transfer of technology to the "great unwashed" of the world, Crispy... I think that's THE Q... for another thread, I suppose...

 

[bigfish]

Expensive, and slow to extract. Production rates, Bigfish, production rates. We could have 5,000 gigabarrels of oil known to exist, but if it comes out at a trickle, we're still screwed.

Do you think you could be a little more specific, Crispy? Rather than simply cobbling ad hoc hypotheses together on the fly, why don't you try supporting whatever the point is you are trying to make about production rates with reliable data?

In the meantime, Peter Odell, in a recent Guardian CIF reply to a doom lade piece by Jeremy Leggetts (one of the "stars" of the doomster video posted by dave above), explains the current situation thus:

Countries outside the Organisation for Economic Cooperation and Development, together with the OECD members Norway, Italy and Austria, are now at the forefront of the world's oil and gas industries. Between them they account for almost 95% of proven oil reserves and thus dominate the supply side. They already supply more than 65% of total production, and this figure is set to rise.

And countries outside the Organisation of Petroleum Exporting Countries - such as China, India, Brazil and Malaysia - not only have large proven and probable reserves, but are intent on enhancing production at as high a rate as possible. There is a similar situation in some of the former countries of the Soviet Union - most notably Russia, Kazakhstan and Azerbaijan, all of which are already significant exporters and which have great potential for increased production.

Meanwhile, all member countries of Opec continue to increase their annual production (currently 42% of the world's total), and collectively enjoy a reserves-to-production ratio of over 70 years. Recent high oil prices have created funds to expand Opec members' oil production at relatively low costs.

http://www.guardian.co.uk/commentisfree/2008/feb/15/oil.climatechange

 

[Crispy]

That figure (the percentage of total oil production) is set to rise, because everybody in the world apart from those countries is already in decline. If world oil production gets over 100mb/day I will come to this thread and prostrate myself, self flagellate, and say just how wrong I was. Promise.

 

[A Dashing Blade]

Some 'financial expert' was on the radio this morning saying that -

'the price of oil is extermely volitile and its difficult to predict weather it will go up or down'

Non financial expert me thought that the price of oil has not been 'volitile' at all but has been steadily rising for the past 5 years and looks likely to carry on like that.

Was he being stupid . . .

Think of financial "volatility" as volatility around an average.

 

[david dissadent]

In the meantime, Peter Odell, in a recent Guardian CIF reply to a doom lade piece by Jeremy Leggetts (one of the "stars" of the doomster video posted by dave above), explains the current situation thus:

Peter Odell is an economist. He disagrees with petrolium geologist like Ken Dreyfuss and Hubbert King on how much oil is in the ground. This is because he follows the economists idea that God or the oil fairies put oil in the ground if you turn up with a cheque.


Here is a transcript of a 2005 debate between Odell and Drefuss on oil and other hydrocarbons.

http://www.energybulletin.net/4483.html

Do you think you could be a little more specific, Crispy? Rather than simply cobbling ad hoc hypotheses together on the fly, why don't you try supporting whatever the point is you are trying to make about production rates with reliable data?

The amount of oil extractable from a field is not based only on the OOIP or oil in place in fact there are widely divergent percentages of extractable oil depending on the nature of the reserve. Amoung the key components are the permiability of the wet rock, the nature of the capping rock (not quite the correct term, apologies I am not a professional geologist) that is to say to esure that the resivour has a imperiable cap above it, the pressure of the resevoir and geological nature of the reseviour rock; if it is too fractured or disjointed the oil flow will be very inconsistant and forcing the oil to the wells with water can lead to the oil headed in other directions. This all means that oil reseviors can can have anything between less than 1% recoverable (i.e. the Bakken shale) to around 60% (some really shit hot rocks in Saudi).

The flow rate is depenent mostly on the permiability and pressure of the well. The permiability is the amount of space and gaps in the rock that the oil can flow through. There needs to be some permiability for the rock to sit in a resiviour. The wider the gaps the more oil can flow. So the more oil you can get out per well stuck in the ground. (other factors like the geological fracures in the rock which offer the path of least resistance for the oil are also important). The more pressure the oil is under the faster it comes out of the well. However once pressure starts falling a 'gas cap' froms that can distrupt the reseviour. So water or gas is pumped into the reseviour to maintain pressure and push oil that has become trapped in pockets towards the wells. (Secordary and tertiary flushing* of a well). Again geology can play a part as water can break through and increase the water cut making the wells oil unprofitable. Once the takes more energy to pump water in or so on than the energy to extract it or more to the point once it costs more than is worth from the oil extracted (notice cost of oil extraction goes up with the cost of oil on the market) then the oil is put to be and shuttered in.

There are some technologies that help extracting speeds and even make some kinds of reseviour extractable such as fracturing pores to increase permiability although this only works in the very short term and horozontal drilling to reach smaller reseviours with one well penetration (saves costs).

The data for production rates in various resiviour types can be garnered from analysing the production rate of the Bakken shale from the North Dakota government
https://www.dmr.nd.gov/ndgs/bakken/newpostings/07272006_BakkenReserveEstimates.pdf
Which is within a few percentage points of the latest USGS (April 2008) estimates with that of say the North Sea Brent field.

you can get a bit of an overview of Brent field management here
http://ior.senergyltd.com/issue10/articles/shell/

But the DTI also has a page on UK oil production from which all the data you require can be gathered.

You see some fields produce more than other due to Geology not Economics.

So any questions folks?

*I think the term may be sweeping.

 

[david dissadent]

And countries outside the Organisation of Petroleum Exporting Countries - such as China, India, Brazil and Malaysia - not only have large proven and probable reserves, but are intent on enhancing production at as high a rate as possible. There is a similar situation in some of the former countries of the Soviet Union - most notably Russia,

Chennai June 16 How long will India's oil reserves last? Just another 19.3 years at the current rate of production, according to the BP Statistical Review of World Energy 2007, which was released by the British multinational early this week. Last year, the same study had said that India's reserves would last about 20 years. The lower estimate now reflects the country's inability to add to its proven oil reserves.

However, compared with BP's review five years ago (in 2002) when the country's oil reserves were projected to last 17.8 years, the current year's estimate is an improvement.

There are basically two reasons for this marginally more optimistic assessment. First, increase in the estimated domestic proven reserves to 5.7 billion barrels as of end-2006 from 4.8 billion barrels as of end-2001. There have been some medium-size oil finds in the last five years including Cairn Energy's discovery in Rajasthan.

Second is the almost stagnant production level in this period. The country produced 0.807 million barrels of crude oil a day in 2006 compared with 0.780 million barrels in 2001. Meanwhile, consumption has grown by almost 13 per cent to 2.57 million barrels in 2006 compared with 2.28 million barrels in 2001 leading to higher dependence on imported oil.

Static then falling production against rapidly growing consumption. Less exports India
http://www.thehindubusinessline.com/2007/06/17/stories/2007061703280100.htm

Malaysia is not expected to find significant new reserves; its output has already peaked and is expected to decline gradually through the end of the projection period, to less than 500,000 barrels per day in 2030.

The ever boyant EIA on Malaysia
http://www.eia.doe.gov/oiaf/ieo/oil.html

Russia could be the newest member of the peak-oil club. The International Energy Agency reported that Russian oil production in the first quarter declined for the first time in a decade. Russian oil executives are gloomy about keeping production steady, let alone increasing output at the world’s No. 2 producer.

http://blogs.wsj.com/environmentalcapital/2008/04/15/peak-oil-da-say-russian-oil-execs/

Russia actualy peaked in the 80s, this is its second, much lower peak.

 

[Barking_Mad]

Last weekend I was speaking to a man who works for Shell in Houston, Texas. And I asked him about 'Peak Oil' and he basically said it was simply not accurate. There's still plenty of oil in the ground, the problem is getting it to the surface. Which is of course a problem in terms of finance and at what point it becomes too expensive to do so.

 

[Crispy]

Last weekend I was speaking to a man who works for Shell in Houston, Texas. And I asked him about 'Peak Oil' and he basically said it was simply not accurate. There's still plenty of oil in the ground, the problem is getting it to the surface. Which is of course a problem in terms of finance and at what point it becomes too expensive to do so.

The 'problem in getting it to the surface' is exactly what is causing the peak!

 

[david dissadent]

Last weekend I was speaking to a man who works for Shell in Houston, Texas. And I asked him about 'Peak Oil' and he basically said it was simply not accurate. There's still plenty of oil in the ground, the problem is getting it to the surface. Which is of course a problem in terms of finance and at what point it becomes too expensive to do so.

When oil busted the records in 1980, no new production offset decline. In the bull run since 2003 no new production has offset decline.

I could drag out the rig count graphs, but they have shot up.

OOIP vs URR.

 

[Barking_Mad]

hey, don't shoot the messenger!

 

[david dissadent]

hey, don't shoot the messenger!

Sorry. Did not mean to come across abrasive.

 

[Barking_Mad]

Sorry. Did not mean to come across abrasive.

hah, no it's ok, i wasn't offended, just pointing out what he said......He's well up in Shell's finance division. Sadly I didn't get time to talk to him and ask him some serious questions as we got sidetracked by eating/drinking.

 

[bigfish]

Peter Odell is an economist. He disagrees with petrolium geologist like Ken Dreyfuss and Hubbert King on how much oil is in the ground...

From the transcript supplied:

Kenneth Deffeyes: M. King Hubbert was an American geologist, geophysicist, and lived 1903-1987, and in 1956 he predicted that the American oil production would peak around 1970, which it did. There was a lot of controversy when he made his prediction but then it turned out to be correct. Doing something very similar for world oil, I wind up saying that world oil is going to peak in production on Thanksgiving Day, 2005.


So, according to Ken Deffeyes, a former Shell geologist and colleague of King Hubbert, world peak supposedly arrived on Thanksgiving Day in 2005. Lol!

The New Pessimism about Petroleum Resources: Debunking the Hubbert Model (and Hubbert Modelers) by Michael C. Lynch

http://www.gasresources.net/Lynch(Hubbert-Deffeyes).htm

 

[david dissadent]

So, according to Ken Deffeyes, a former Shell geologist and colleague of King Hubbert, world peak supposedly arrived on Thanksgiving Day in 2005. Lol!

Based on crude and condisate figures there has been a near stable platue since 2005. We have not poped above it since then although there is a possibility we may have poked above the monthly average for May 2005 in January 2008. Possibly being the operative word but the late 2005 figure seems currently a rather strong one. Certainly the days of major % increases per year are gone.

Most of the current growth relies on converting natural gas into fuels, that and other liquids. Although the growth is very dubious and within a range that does not suggest sustainability but short term production spurts.

The New Pessimism about Petroleum Resources: Debunking the Hubbert Model (and Hubbert Modelers) by Michael C. Lynch

http://www.gasresources.net/Lynch(Hubbert-Deffeyes).htm

Mike Lynch again. round and round we go. There is NO ABIOTIC OIL Bigfish. The rest of your argument is will-o-whisp picking discredited sources and ignoring the current production data.

You are 4 years behind events.

 

[bigfish]

Perhaps 60% of oil prices today pure speculation

Goldman Sachs and Morgan Stanley today are the two leading energy trading firms in the United States. Citigroup and JP Morgan Chase are major players and fund numerous hedge funds as well who speculate.

In June 2006, oil traded in futures markets at some $60 a barrel and the Senate investigation estimated that some $25 of that was due to pure financial speculation. One analyst estimated in August 2005 that US oil inventory levels suggested WTI crude prices should be around $25 a barrel, and not $60.

That would mean today that at least $50 to $60 or more of today’s $115 a barrel price is due to pure hedge fund and financial institution speculation. However, given the unchanged equilibrium in global oil supply and demand over recent months amid the explosive rise in oil futures prices traded on Nymex and ICE exchanges in New York and London it is more likely that as much as 60% of the today oil price is pure speculation. No one knows officially except the tiny handful of energy trading banks in New York and London and they certainly aren’t talking.

By purchasing large numbers of futures contracts, and thereby pushing up futures prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy even more oil and place it in storage. A refiner will purchase extra oil today, even if it costs $115 per barrel, if the futures price is even higher.

As a result, over the past two years crude oil inventories have been steadily growing, resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices.

Compelling evidence also suggests that the oft-cited geopolitical, economic, and natural factors do not explain the recent rise in energy prices can be seen in the actual data on crude oil supply and demand. Although demand has significantly increased over the past few years, so have supplies.

Over the past couple of years global crude oil production has increased along with the increases in demand; in fact, during this period global supplies have exceeded demand, according to the US Department of Energy. The US Department of Energy’s Energy Information Administration (EIA) recently forecast that in the next few years global surplus production capacity will continue to grow to between 3 and 5 million barrels per day by 2010, thereby “substantially thickening the surplus capacity cushion.”


Dollar and oil link

A common speculation strategy amid a declining USA economy and a falling US dollar is for speculators and ordinary investment funds desperate for more profitable investments amid the US securitization disaster, to take futures positions selling the dollar “short” and oil “long.”

For huge US or EU pension funds or banks desperate to get profits following the collapse in earnings since August 2007 and the US real estate crisis, oil is one of the best ways to get huge speculative gains. The backdrop that supports the current oil price bubble is continued unrest in the Middle East, in Sudan, in Venezuela and Pakistan and firm oil demand in China and most of the world outside the US. Speculators trade on rumor, not fact.

In turn, once major oil companies and refiners in North America and EU countries begin to hoard oil, supplies appear even tighter lending background support to present prices.

http://www.engdahl.oilgeopolitics.net/Financial_Tsunami/Oil_Speculation/oil_speculation.HTM

 

[david dissadent]

Although demand has significantly increased over the past few years, so have supplies.

Ummm show me data from the IEA or EIA or whoever to the extent that supplies have increased over the past 3 years in any meaningful fashion.

As for the speculator argument it is pure bullshit. a) Any future trade in any comodity is inherently speculation. So its hardly new.
b) The oil price normaly quoted is a three month contract price for West Texas Intermediate crude on the NYMEX (although trades on other exchanges are often also quoted and in the UK it will ocasionaly be Brent). Oil has virtualy not dropped below $100 all year. This means since about the first of march people have been taking delivary of $100 dollar barrels of oil at the refinaries and processing them into finished product and selling this on to the consumer. This means there is a market price for $100 oil. Not speculation but a market for it. The price may be a bubble and in three months time people will stop purchasing petrol and diesel at $100 a barrel costs and then the price drop a bit but for the moment that is its market price.

 

[bigfish]

Thanks for all the imput, dave. However bitter experience has taught me to disregard the mountains of disinformation being shoved down peoples throats by agenda driven doomsday bods like yourself.

All the best, bf

 

[Crispy]

Thanks for all the imput, bigfish. However bitter experience has taught me to disregard the mountains of disinformation being shoved down peoples throats by agenda driven cornucopian bods like yourself.

All the best, C

 

[Fruitloop]

In other bigfish news:

http://www.revisionism.nl/Moon/The-Mad-Revisionist.htm

 

[Fruitloop]

Oh noes!

http://zapatopi.net/belgium/

 

[david dissadent]

I am curious to find out what the readers of this thread think will happen over the next couple of years and whether there is enough being done to prevent serious consaquencies of resource depletion.

Actually what people think the date of peak oil will be?