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

[elbows]

Indeed, and that FT article says many things which fit the notion of peak oil better than they fit bigfish's stance. eg:

The effort was led by Saudi Arabia, which had come under increasing pressure for doing too little to compensate for lower supplies from countries outside Opec, where growth has been lacklustre as fields have aged in countries such as the UK and Mexico.

and

Tuesday’s preliminary data of Saudi shipments proved sceptics were both right and wrong. According to the IEA, Saudi Arabia did increase its production but not to the degree promised. In July, despite Saudi officials worrying about the impact the slowing economy and high petrol prices were already having on US driving habits, Saudi Arabia increased its output to 9.55m b/d, up 100,000, Tuesday’s report said.

Anyways the event of the year is that oil finally got to a price where demand destruction has set in, albeit to a limited extent. From the same FT article:

The IEA cut its global oil demand growth to 790,000 barrels a day, down from July’s estimate of 890,000 b/d. Some of the demand in rich countries will be lost for ever, it noted, saying: “Even if retail prices ease, it seems unlikely that motorists who have purchased smaller cars will revert to gas-guzzling vehicles.”

We are entering a recession which is at least partially sponsored by the high price of oil, as is inflation. Considering the pain this recession is going to cause, I am in no mood to humor those who think we have no fundamental energy woes to confront in our lifetime. Woetime already here.

 

[bigfish]

Why Does Abiotic Oil Theory Ignite Peak Oil Theorists' Fulminations??

Abiotic Oil, calling into question the overarching theory that the origins of fossil fuel are of biological/organic origin was touched upon in my previous post, "Oil's Big Dirty Secret as Producers Rake in Hundreds of Billions," 04.12.08.

The comments to the post were wide ranging and the Peak Oil missionaries were apoplectic that one dared question their gospel intoning the sanctity of the biological origin of fossil fuels and its rapidly diminishing availability. Clearly the words "Abiotic Oil" stir up heated passions and clear concern among those in the oil patch who would be impacted were the theory to take hold. My post highlighted the issue without offering an opinion on Abiotic Oil Theory's viability. It did however attempt to outline the reasons why the oil industry would happily not have the concept of "Abiotic Oil" taken with any grain of seriousness.

A comment on my post was posted by one Rolo Tomassi simply stating:

Here's a site for those interested in the abiogenic side of the discussion: gasresources.net/

I would like to share excerpts from this link with you and would encourage you to read the full text. They raise some startling questions and give frightening credence to the points raised in my previous post. Here the entire issue of Abiotic Oil Theory and the willful obstruction to objective scientific examination by the Peak Oil minions and the oil industry to whom they are beholden is laid bare. In stunning clarity the text further indicts in large measure those in the American and British community of petroleum geologists and their institutions for being willful parties to stonewalling professional dialogue on this issue.

Now reading these excerpts is a bit of a slog, but if you have any interest in this subject you will find it extraordinarily informative and well worth your time.
....
Who is right, who is wrong? I am not qualified to comment. But clearly something is afoot in the attempt to quash any and all discussion of the "Abiotic Oil Theory." One needs ask why the oil industry and segments of the scientific community are so reluctant even to confront the theory. Perhaps the stakes are higher than we can imagine!

http://www.huffingtonpost.com/raymond-j-learsy/why-does-abiotic-oil-theo_b_118845.html

 

[elbows]

Oops double post.

 

[elbows]

As previously mentioned, the only way I can think that abiotic oil should be taken seriously, is if it can produce actual results, do something to daily production rates. The theory could even be true but would make no difference unless it gets real results.

Considering how much more effort it is for the USA to get its oil overseas, all of the effort it has to put into international geopolitics, war etc, why did they let their domestic oil production decline so drastically since the 70's, if Abiotic oil could have saved them.

So never mind the theoreticals of where oil comes from, if you know of a way that such oil could be brought to the surface for human use, pray do tell what it is. Is this oil laying in regions that the oil companies arent looking for? Is there something wrong with their current methods for finding oil that should be corrected?

I dismiss Abiotic oil not because of the existing scientific dogma about the origins of oil, but because I strongly believe companies and countries are very interested in finding all the oil they can, they are not well known for ignoring resources that make them rich and powerful.

 

[david dissadent]

the Precambrian (pre-life!) crystalline basement.

Oh christ no. Ok bigfish do you not realise that there is good evidence for life 3.5 billion years ago, infact some decent evidence 3.85 billion years ago? OR is this another bigfish spectacular where all of science is wrong and life only emerged in the Cambrian era (starting 542 million years ago).

To put it another way: the precambrian accounts for about 85% if the time life existed on earth.

 

[Crispy]

I would say the dominant factor is not the time that life has been around, but the total mass in that time. I have no idea how that affects the 85% figure

 

[laptop]

Oh christ no.... is this another bigfish spectacular where all of science is wrong and life only emerged in the Cambrian era (starting 542 million years ago).

I'm still trying to figure out how abiotic oil production in the deep continental crust knew the internal combustion engine and drilling rigs had been invented, and it was time for it to kick in...

 

[david dissadent]

link

In response to concerns about Hurricane Gustav, CME Group, the world's largest and most diverse derivatives exchange, today announced that it has revised its Labor Day holiday trading schedule (all times are Eastern time) for NYMEX energy products. On Sunday, August 31, all NYMEX energy products trading on the CME Globex(R) electronic trading platform will open for trading at 2:30 p.m. (Eastern), with a 2:00 p.m. (Eastern) pre-opening, for a September 2, 2008, trade date. NYMEX ClearPort(R) Clearing and NYMEX ClearPort(R) Trading will also now re-open for trading on this schedule on Sunday, August 31.

The comodities markets are opening today especialy to deal with Gustav.

He is going to tear through some of the biggest platforms and refinaries in the US, plus possibly take out the LOOP,
http://en.wikipedia.org/wiki/Louisiana_Offshore_Oil_Port

This is a very important port and the only one on that coast that can handle the larget oil tankers.

Expect a small rally in the price of oil at least.

 

[david dissadent]

Saudi New Oil Field, Khursaniyah, Starts Production, MEES Says

By Maher Chmaytelli

Sept. 5 (Bloomberg) -- Saudi Arabia has begun production at the Khursaniyah oil field that will eventually pump 500,000 barrels a day, said the Middle East Economic Survey, citing an unnamed official at state-owned oil company Saudi Aramco.

The field was initially due to come on stream at the end of 2007, the Cyprus-based weekly newsletter said, attributing the delay to contractors' inability to deliver equipment on time.

Saudi Arabia pumped about 9.5 million barrels of crude a day last month and has a production capacity of about 10.8 million barrels a day, according to Bloomberg estimates.

Aramco is also working to add production capacity at its Shaybah, Manifa and Khurais oil fields and by 2009 aims to have boosted its production capacity to 12.5 million barrels a day.

There is an OPEC meeting due soon with oil falling rapidly and low and behold an oft delayed field is magicaly brought up to production.

link

The significance is that through the summer Saudi could not pump anymore high API oil and bring the price down. But now Saudi can go to an OPEC meeting with new apparent spare capacity in its armoury. This is basicaly to prevent (in there eyes) a rerun of the 80s. The huge spike in the price of oil in 79-80 due to capacity being shut in by the Iranian revolution then the Iran Iraq war was followed by a huge dip in demand as everyone economised and many of those economies were permenant. This caused a price crash, esepecialy as North Sea and Alaska Slope ramped up. With this big stick where Saudi can threaten a repeat of its 1985 flooding of the markets and killing the price in exchange for regaining market share it can then threaten the other OPEC members to cut supply and not cheat. Better getting a share of $100 oil than a smaller share of $70. But if this is the case then it speaks volumes. Everyone knows the price of oil is a huge drag on the world economy. If the Saudis are settling on $100 its a world away from the floor price of 3 years ago of $30.

But some are questioning if the capacity is really there yet. The problem with this field has been a gas processing plant and there is no indication that that has been resolved. This is all slotted to go to spare capacity, not new output.

These megaprojects are long anounced but now becoming desperately needed as Mexico has been in steep decline and Russian output is now falling while foriegn investment is drying up and the North Sea is turning into a very minor player.

http://www.theoildrum.com/node/4419

The price of oil is not at $106. Falling demand increasing refinary capacity and the last flurry of Saudi seem to be bringing some slack back into the market. But it is a very bad vote on the economy that they will no longer put there money on energy use keeping up with the slim growth in supply.

 

[david dissadent]

Oil trades below $100 today. And while a hurricane is lashing Galviston.

 

[Darios]

Oil trades below $100 today. And while a hurricane is lashing Galviston.

Didn't think I'd see the day tbh.

 

[david dissadent]

Didn't think I'd see the day tbh.

With Ford and Chrysler closing down factories that manufacture SUVs, airlines going bankrupt and others slashing the flights they offer, Americans panicking about incomes and the general global economy getting the jitters its not that big a suprise. The rally from $90 to $145 was based on a relatively small amount of extra demand (or speculation if you believe that). Demand destruction can easily exceed lack of growth\ resource depletion.

However there is a huge surge in the cost of petrol stateside this weekend as Ike has pummeled GOM oil and gas platforms together with many of the countries largest refinaries. If they have taken the hit it appears, oil will be going back up and finished product will be getting purchased from Europe sending our prices up.

 

[david dissadent]

http://news.bbc.co.uk/1/hi/world/americas/7615480.stm

Fuel shortage fear after Ike.

I really really hope there is not a big death toll with this one, but I have a bad feeling about this. Watched him form of off africa and roll through the carribean. I think there will be a bigger death toll from Ike than people are reporting.

 

[david dissadent]

Crude oil prices on Monday jumped $25 a barrel – the largest one-day rise – as financial investors betting on falling oil prices were forced to cover their positions ahead of the expiry of the current benchmark futures contract.

The jump to an intraday high of $130 a barrel – a rise of about $40 a barrel from last week’s low – was exacerbated by a weakening US dollar and data showing weaker supplies from Mexico, Nigeria and Saudi Arabia in recent weeks and surging imports by China.

Investors who had bet that oil prices would continue falling were forced to close their positions ahead of Monday’s expiry of the October oil futures contract at the New York Mercantile Exchange, traders and analysts said. The process is known in the industry as short covering.

link

The FT is putting much of the blame on the rise in price on speculators who were betting on a lower oil price having to cover there positions before next monday.

It seems at least one big hedge fund has 'taken a bath'.

Once again the great hulking shadow of oil is being cast over the markets, reminding everyone that CDOs and house prices are not the only beasts in town.

 

[elbows]

I think it was today rather than next Monday that was the last trading day for october futures.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aa2880cO2dNU&refer=us

Given the way that all the other stuff going on in the economy is interacting with oil prices, and that the sort of economic woes we are seeing could really reduce oil demand in future, Im finding myself paying less attention to the price of oil. I may never find out if the shrinking gap between supply and demand was a main trigger for all the other financial woes we are now seeing, whether realisations about oil supply restraints and how they neuter the god of growth, helped everything else come undone.

Large scale economic disaster leading to lots of demand destruction and a long lasting barrier to growth, is one way we might end up dealing with peak oil, without it being generally seen as such.

 

[Crispy]

well quite. it's the barrels/per day that's the important figure to watch. incidentally, the EIA (or is it the IEA?) recently revised their figures for the last three yearas or so. The 'plateau' has actually been a very gentle rising trend. The current record production rate was sometime this year.

No I can't be bothered to go and look it up

 

[darkfibre]

I think it was today rather than next Monday that was the last trading day for october futures.

Could soon be the last, full-stop?

Sept. 23 (Bloomberg) -- U.S. lawmakers may seek to include commodity speculation limits in legislation designed to rescue banks from bad mortgage investments after a squeeze in oil trading sent crude to a record gain.

Crude oil for October delivery yesterday climbed more than $25 a barrel in New York Mercantile Exchange trading, before settling 16 percent higher at $120.92 as the contract expired. The fluctuation, the biggest since Nymex crude trading started in 1983, prompted the Commodity Futures Trading Commission to say it was ``closely monitoring'' prices for manipulation.

``I know for a fact that some members of Congress are working to include speculation legislation in the financial markets legislation,'' CFTC Commissioner Bart Chilton said yesterday in an e-mail. ``Those efforts, I think, may get fueled by the large spike in oil prices.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajniJ54PUWSg&refer=us -- snap!

 

[bigfish]

GEP-13 Abiotic deep origin of hydrocarbons: Myth or reality?

GEP-13 Abiotic deep origin of hydrocarbons: Myth or reality?
List of papers snipped - the full list can be viewed at the URL below - Crispy

http://www.cprm.gov.br/33IGC/Sess_182.html

 

[kyser_soze]

Link does not work.

 

[Crispy]

Does for me, although I can't get any of the papers to load.

I'm yet to see a decent estimate for the production rate of abiogenic oil, by the way. It'll have to be high enough to account for the amount we see, yet low enough to account for fields not re-filling and us not to be knee-deep in oil already.

 

[Mr. Shaman]

If electricity were able to substitute for oil, which it can't in many very important cases, we'd need approx 6300 new nuclear reactors by 2031 to fill the gap.

Nukes are dead-tech. The only reason to support Nukes, would be the (obvious) support of The Grid. Anyone who assumes The Grid is indispensable should consult with those whose homes/communities were devastated (by natural-disasters), and have to wait for their local energy-providors to repair The Grid (before they can do any kind of repairs/reconstruction).

The Future is home-generation.


Mix-that-in with a little clean-water, and we could solve a lot of the World's national-security issues.

http://blogs.takepart.com/2008/03/21/dean-kamen-shows-steven-colbert-how-to-filter-water/

 

[Kaka Tim]

Is anyone linking the Peak Oil theory to the current financail meltdown?

Im not an economist or any sort of expert but it seems to me that the soring price of oil over the past 18 months serously fucked the global economy and the dramatically laid bare the pie-in-the-sky/emporors new clothes nature of the system. A system based on a shared delusion of ever expanding market. Peak oil means this hit the buffers of resource depletion - and oil is the resource - its economic oxygen.

Now oil prices are coming down - but thats based on the assumption of contracting economies which means less demand for oil over the short term.

Now it looks like a global recession (depression?) is very much on the cards - which means oil prices will come down. After a while the economy will pick up and they'll start to climb again - until the point where they put a brake on growth again. So I'm imagingin a global ecomomy on a up and down slope - with oil prices matching it in an inverse curve (oil price up - economy down - oil price goes down - ecomony goes up) - but with each economic peak being lower then the previous one.

Am I talking bollocks? Or is the scenarios for the next 20 years one of a rollercoaster ride as we painfully readjust to a more sustainable economic model and a steady growth in use of alternative energy sources. (thats the most optimistic scenario)

 

[elbows]

Is anyone linking the Peak Oil theory to the current financail meltdown?

Well Ive long felt that the markets could not handle the possible truth about peak oil, that they would be more likely to handle the idea of climate change destroying the world, than resource limits killing the god of growth.

I also assumed that if oil price went high for a long time, the very least we could expect would be a bad recession.

But it seems impossible for me to say with any certainty that oil supply constraints did start the domino's falling, as there are clearly other bubbles bursting which have triggered much of the bank woes.

So no I cannot tell who is wagging who, but Im pretty sure that a prolonged economic poop will cause oil demand destruction, and thus peak oil will not be seen as the driving force behind our woes, it will be masked by the financial catastrophe. We had a vaguely similar thing in the 70's and early 80's I suppose.

 

[Dr Jon]

Yes, it's hard to say what started the dominoes falling, but I'd guess that the financial chaos we see now is partly because money juggling parasites tried (and most succeeded) to amass vast fortunes before the PO shit hit the fan.


I mean peak oil is hardly a secret is it? - this thread has been running over 5 years now...


I was listening to a piece on PO on R4 the other week with Heinberg, Simmons, et al: they were saying that governments need to admit that this is the problem the world is facing, rather than pretending they can resuscitate the carcass of capitalism.

 

[Kaka Tim]

Found this quote from the indendant from June 2007.

"Last year (2006) that gap (between production and consumption) all but disappeared. The consequences of a shortfall would be immense. If consumption begins to exceed production by even the smallest amount, the price of oil could soar above $100 a barrel. A global recession would follow."

http://www.independent.co.uk/news/s...ter-than-expected-warn-scientists-453068.html

Thats looks pretty much on the money to me.

The financial crash seems to be - essentially - about the fact that theres is not as much projected wealth in the system as people thought -and thats primarily been brought about by the price of oil.

We're not at the 'tinned food and guns' stage - but things look ever bleaker by the day. And the heads are still resolutely stuck in the sand.

 

[david dissadent]

http://tonto.eia.doe.gov/dnav/pet/hist/wrpupus2w.htm

eia figures seem to suggest that US petrol consumption is really dropping quite quickly. Seems to be headed to mid 90s levels. $50 oil might be back on the menu. This offcourse is awful news in a peak oil world. It means that expensive oil production schemes like Brazils Tupi fields and other deepwater projects will be big losers in the coming years, while credit markets collapse leaving little financing for them.

Already I am hearing that the poster child of tight gas Chespeak Energy which has been getting all the headlines is shutting in some of its developments. This will mean a bit of a drop in US natural gas production. Why this is important IMO is that the way that tight gas fields are developed. They have high capital costs but very high initial flows that rapidly diminish in just over a year or two and settle at about 20% of initial flow. They need high energy costs and lots of liquidity. They are an energy source for a cash rich economy. Losing these tight gas developments could see US facing a pretty serious gas generated electricity problem in the next 5 years.....

May you live in......... etc etc

 

[darkfibre]

A couple of factors exacerbating supply problems in Altlanta are that since the state enacted 'anti-price gouging' laws is that retailers are simply closing shop if they cannot sell gas at a profit.

Also, there is still a fair bit of old infrastructure (pumps) that cannot be set higher than $3.99 per gallon.

 

[david dissadent]

In the article linked here, written prior to the US conquest of Iraq, the country possessing the second largest reserves remaining, Dr Colin Cambell, discusses the relationship between the geological characteristics of existing oil and gas reserves, especially their properties with respect to depletion, and the rising international tensions centred on the Middle East. Together with other sources of information, some of which I'll link below a bleak overall picture starts to emerge.

Due to political constraints on Middle East production, the non-Middle East reserves, which are much smaller, are approaching depletion more rapidly than those in the Middle East. Some relatively unexploited areas also remain in places like Central Asia. The implication of depletion is that over the next decade or so, competition for Middle East oil, and any other un-depleted resources like those in Central Asia, is likely to increase greatly.

Depletion has already progressed to the point where the markets now react to tiny signals, but this just disguises the overall trend.

The major oil companies and producer countries have a tendency to lie about and otherwise distort the facts with respect to overall depletion. This tends to conceal the fact that most of the current alternatives to Middle East oil are heading towards the point where they'll be unable to meet demand, leading to increasing dependence on and competition for the remaining Middle East reserves. The US government is focussed on guaranteeing that their heavy domestic consumption can continue at everybody else's expense. This leads them to find justifications to use force to secure their ability to continue consuming, rather than working with the rest of us to find ways to deal with the enormous challenges presented by the peak of hydrocarbon production.

Further Info:

Hubbert Peak

Reading University: Oil Depletion Analysis Group

Business Week: Taming the Beast

Foreign Policy In Focus: The Oil Reckoning

The Nation: Oiling the Wheels of War

Thought Id quote the OP for this one.....

The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London.

BP, Shell and ExxonMobil are all expected to attend a meeting at the Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.

Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces.

Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.

Al-Shahristani is expected to reveal some kind of "risk service agreements" that could run for up to 20 years, with formal offers to be submitted by next spring and agreements signed in the summer

guardian

Seems the Iraqis are going to be auctioning off there oil.... Id not really want to be paying too much for it up front. Im not sure the current coalition will be in power over the coming years.

 

[Bernie Gunther]

Looks like everybody was too distracted by the credit crisis to notice that ...

 

[Crispy]

Note that, according to the EIA, October recorded a new record high of crude production of 75.1mbpd