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

[david dissadent]

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

These figures tend to be subject to revision and on past experiance they get rivised downward. And should they not be waiting for October to end first?

 

[Crispy]

Oops. September

 

[david dissadent]

Oops. September

Digging around on this I found this post on TOD
http://www.theoildrum.com/node/4430#comment-395595
Interesting but Ill be sticking with the IEA data for the minute.
This is the all liquids figure, for once falling

In part Id guess oil sands projects shelved

Some people are suggesting that Saudi opened the wells full bore after the very strong pleading by Bush, like they did in 80 when the Iran Iraq war broke out and again in 90/91 when Kuwait was invaded. These brief periods of overproduction can damage oil wells but the object was to crash the price and help the US economy. It will take a bit more analysis of where the oil has come from and so forth. I would also guess that the new Indian refinary able to handle 450 000 barrels of heavy sour crude a day may have brought some of that onto the market.

 

[david dissadent]

Oct. 28 (Bloomberg) -- As many as 20 of the 100 deepwater oil rigs on order worldwide may be delayed or canceled as loan availability erodes, possibly slowing developments including the biggest petroleum discovery in the Americas in three decades.

About half of the 20 rigs in question are rented for when they're completed in two to three years -- no longer enough to ensure financing for units that can cost $800 million to build, said Brian Uhlmer, an analyst at Pritchard Capital Partners in Houston. The drillers building those rigs are mostly fledgling contractors and may lack enough cash to satisfy lenders amid a global credit crunch, he said.

Norway's Sevan Marine ASA has lost 70 percent of its value this month amid concern it won't get financing for two drilling units. Houston-based Atwood Oceanics Inc. said Oct. 16 that it won't exercise an option to build a deepwater rig at Jurong Shipyard Pte. Ltd. in Singapore. New rigs were being ordered to ease a shortage of deepwater gear needed to exploit offshore prospects like Brazil's Tupi, announced in November by Petroleo Brasileiro SA, or Petrobras.

The number of oil and gas rigs active around the world climbed in September to 3,557, the highest since 1985, according to a count by Baker Hughes Inc. U.S. rig counts will drop by about 400 as producers cut spending amid declining natural-gas prices and tightening credit, Barclays Capital Inc. analyst James Crandell said this month in a note to clients.

The shortage of deepwater rigs brought inexperienced contractors to the industry in the past several years, and those are the drillers now in jeopardy of failing to deliver on new rigs, said Jeffrey Chastain, vice president of investor relations at Pride International Inc. Houston-based Pride, which has lost 71 percent of its market value since the end of June, has four offshore rigs on order.

Link

Falling prices and squeezing credit to constrain the availability of new rigs to drill. Adding to the news of tar sands projects getting put on the back burner. Blimey Tupi\ Sugar Loaf, and to do all that 'drill baby drill'ing of the US coast. The key thing to remember about an aging field is that it takes more and more rigs to maintain a static production. This will not affect oil production this year, but will mean that we will not have as much coming onstream to offset decline in North Sea, Alaska North Slope, Russia, Cantrell in Mexico, Burgan in Kuwait and on and on and on.....

Looks like peaks back on the menu boys

Still this only affects the haves and the have a bits. The have fucking shitloads do not notice credit crunches and the like*

Khurais still on schedule to delvier 1.5 million barrels a day

Saudi Arabia will bring on stream its 1.2 million barrel a day Khurais oil field development in mid-2009, the country's oil minister Ali Naimi said Friday.

"Come June 2009 and you will see Khurais (oil field) on stream," Naimi said, speaking after agreeing with fellow OPEC members to cut the group's crude output by 1.5 million barrels a day to stem a decline in oil prices.

Naimi said the 500,000-barrel a day Khursaniyah oil field, which was originally due to start pumping crude at the end of 2007, was now on stream.

*well in terms of scheduling new megaprojects. But Im sure there princelyness notice that there black gloop is now selling for about $70 odd less than at its hight.

 

[david dissadent]

Has the current ecomic woes changes anyones mind about the impact of the peak? Moved more to the fast crash or do you think that the supression of demand and economic activity will make the 'long emergency' scenario more likely?

 

[Crispy]

impossible to say. Greater instability is what the peak brings. It was never going to be a smooth curve over the top, with the economy responding in neat linear ways. It's not the only factor, so it an't be used as a great big predicting tool.

 

[Barking_Mad]

there was a piece on the radio in the middle of the night thsat I caught, saying that a report on 'easily obtainable oil reserves' showed that there was less of it thatn they had previously thought. No idea where the report was from, half asleep I was.

 

[elbows]

Its all over, the day of awakening has finally arrived!

http://www.ft.com/cms/s/0/e5e78778-a53f-11dd-b4f5-000077b07658.html

World will struggle to meet oil demand
By Carola Hoyos and Javier Blas in London
Published: October 28 2008 23:32 | Last updated: October 28 2008 23:32
Output from the world’s oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows.

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de mand. The effort will become even more acute as prices fall and investment decisions are delayed.

The IEA, the oil watchdog, forecasts that China, India and other developing countries’ demand will require investments of $360bn each year until 2030.

The agency says even with investment, the annual rate of output decline is 6.4 per cent.

 

[laptop]

Its all over, the day of awakening has finally arrived!

Presumably, later this afternoon GMT, we'll see how the New York Times spins this - it's bizarrely taken a "there'd be no problem if only the oil industry were unshackled from regulation and, er, tax" line. Bizarrely, 'cos that's the Washington Times's job.

 

[Crispy]

The full version of the IEA report comes out on Novmber 12th, by the way. The draft was leaked months ago.

 

[elbows]

The full version of the IEA report comes out on Novmber 12th, by the way. The draft was leaked months ago.

Interesting, I wonder why the FT just decided to talk about it?

 

[Crispy]

Clarification - the substance of the report was not leaked, but this conclusion - that production decline was steeper than thought - was.

 

[Kaka Tim]

Cue Bigfish with his inexhaustible well of nonsense.

 

[david dissadent]

Peak by 2012ish: Chris Skrebowski

Link

The report, from the Peak Oil group, warns that the problem of declining availability of oil will hit the UK earlier than generally expected - possibly within the next five years and as early as 2011.

Oil supply could then rapidly decline, or even collapse, the report warns, with potentially devastating implications for the UK economy.

...

The new report marks the first time a group of businesses has weighed into this debate. At its core are two newly commissioned assessments of future oil production: one from Chris Skrebowski, consulting editor of Petroleum Review, and one from Shell.

Skrebowski predicts that global oil production will peak in the period 2011-2013 and then decline steadily, with non-conventional sources such as tar sands failing to fill the gap in time to avoid a serious energy crunch. He also warns that supplies could collapse if a handful of huge, long-established oil fields go into terminal decline simultaneously.

Shell, by contrast, foresees oil production rising until 2015, and then remaining on a plateau until the 2020s, with unconventional sources balancing out a decline in regular crude extraction.

Having examined the evidence, the taskforce considers that Skrebowski's peak-and-fall scenario is the "highly probable" outcome, with the collapse scenario also possible.

This view contrasts starkly with the position of the British government. A statement from the new Department of Energy and Climate Change reiterates the government's established view on this issue.

"The government's assessment is that global proven reserves are larger than the cumulative production needed to meet rising demand until at least 2030," the statement says. "This is consistent with the assessment made by the International Energy Agency in its 2007 World Energy Outlook that lead to the conclusion that global oil resources are adequate for the foreseeable future."

Chris has 38 years experience in the Oil Industry, starting work in 1970 as a long-term planner for BP. His career has been divided between industry planning/market analysis and oil journalism. He was Senior Analyst for the Saudi Oil Ministry in London (1985-1994) [11], Editor of Petroleum Economist (1994-97) [12] and Editor of Petroleum Review (1997-2008)[13]. He comments regularly on oil and gas related subjects in the international media.

Chris Skrebowski

Chris started off by arguing against peakers, refuting there position but over the years he changed his POV and is now a leading member of the association of peak oil and gas.

 

[Crispy]

He's posted on this thread at times as well, IIRC

EDIT: No he hasn't. I completely mistook him for someone else

 

[david dissadent]

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

Extra investment. Ah yes all the investment getting pulled from the oil and gas world due to credit concerns.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de*mand. The effort will become even more acute as prices fall and investment decisions are delayed.

Ok what do these three have in comon, well they are all being produced using the very latest technology, 3D siesmographs, horozontal drilling, gas and water lift,fracturing and so on. These have all enhanced production rates. They also are either in democracies or have the oil majors heavily involved where production and reserve estimates are closely audited by securities and exchange comissions. So we have a very solid baseline on the like decline rates of all major oil producers once they go over the top of the peak, irrespective of how dodgy we think there reserve estimates are. 9% has been a good figure for that for a while now. This kinda means its solid.


But we really really dont want to see 9% decline rates in global production. If we do we could be looking at halfing the world oil production in something like 6ish years. That is so ugly its game over. But I dont think we will see those figure globally..... (ok this is a hunch not a fact)

“The future rate of decline in output from producing oilfields as they mature is the single most important determinant of the amount of new capacity that will need to be built globally to meet demand,” the IEA says.

No shit sherlock

It expects oil consumption in 2030 to reach 106.4m barrels a day, down from last year’s forecast of 116.3m b/d.

Which oil fields are these figures going to come from? Ghawar at 70 billion barrels he is the great elephantine god of oil fields? But surely hes near his peak and getting old. Burgan and Cantrell nos 2 and 3 are falling rapidly. Tupi at 8 billion barrels has barely had a test well and may not be as big as Prudhoe bay (13 billion) let alone the mighty Ghawar... whats in the rest of the world.... Kashagan at least has about 30 billion barrels, Sakhalin, Russias great hope is only a pissy 14 billion.

Someone please show me where the new production is going to come from. Please. Ok I can accept a huge amount of untapped reserves in Kurdistan. Ive seen the maps and posted them here. Its possible we may have 100 billion more barrels there but that is still just nothing like enough with the most optimistic complexion on it.


Power down. Use less energy, adjust while we still can.

Oh has anyone mentioned EROI yet?

 

[Crispy]

"The government's assessment is that global proven reserves are larger than the cumulative production needed to meet rising demand until at least 2030," the statement says. "This is consistent with the assessment made by the International Energy Agency in its 2007 World Energy Outlook that lead to the conclusion that global oil resources are adequate for the foreseeable future."

This assumes flowrates can be maintained. A 100 litre tank is no use if it can only dribble.

 

[david dissadent]

The Financial Times carried a cover page article this morning and a second article on page 4 allegedly reporting on the findings of the forthcoming WEO 2008. This article was drafted without any consultation with the IEA. It appears to be based on an early version of a draft from several months ago that was subsequently revised and updated. The numbers in the article can be misleading and should not be quoted or considered to be official IEA results. We are dismayed that such a comprehensive and important IEA report was made public without our input and verification.

The IEA will present the final and accurate results of the World Energy Outlook 2008 officially as planned at a press conference in London on 12 November. At that time, we will be happy to discuss the results and their implications for the global energy and climate in full detail.

Link


Needed a bit of touching up methinks.

 

[boskysquelch]

I think I see the trick, now. When depletion causes a price rise which in turn causes economic collapse, blame the inability to meet demand on the economics. Neat.

are we there yet...

 

[elbows]

Interesting to see the IEA having a go at the FT, I wonder what the final numbers will be.

Still the basic theme will be much the same I assume, based on the following story which has quotes from the IEA head. A bit of wishful thinking about investment to take the edge off the scary reality that is now dawning on them.

http://www.guardian.co.uk/business/feedarticle/7942913

"Supplies from OPEC will decline. But supplies from non-OPEC producers will decline even more sharply," Tanaka told Reuters.
"Without significant investment, even maintaining the current production volume will be a difficult task. Providing evidence for that argument is the key message this time."

 

[darkfibre]

AP
Exxon Mobil posts biggest US quarterly profit ever
Thursday October 30, 12:23 pm ET
By John Porretto, AP Business Writer
Exxon Mobil shatters own record for largest profit from operations by a US corporation

HOUSTON (AP) -- Exxon Mobil Corp., the world's largest publicly traded oil company, reported income Thursday that shattered its own record for the biggest profit from operations by a U.S. corporation, earning $14.83 billion in the third quarter.

Yet numbers contained within the company's most recent financial report revealed production numbers that continue to sag, and shares slipped 3 percent in midday trading.

The Irving, Texas-based company has reported unprecedented back-to-back quarters, the end of the most recent coinciding with a rapid plunge in crude prices. Benchmark oil prices fell another $2.91 to $64.59 Thursday on the New York Mercantile Exchange, about 56 percent off record highs in July.

Exxon said net income jumped nearly 58 percent to $2.86 a share in the July-September period. That compares with $9.41 billion, or $1.70 a share, a year ago.

The previous record for U.S. corporate profit was set in the last quarter, when Exxon Mobil earned $11.68 billion.

Revenue rose 35 percent to $137.7 billion.

(Continues)

 

[darkfibre]

Is this thread going to be published as a book someday?

 

[darkfibre]

Something else I came across which is probably more relevant to this thread than any other...

Iran opens new naval base at mouth of Persian Gulf
• Move boosts Tehran threat to choke vital oil supply
• Extent of forces at site remains unclear

* Julian Borger, diplomatic editor
* The Guardian,
* Wednesday October 29 2008

Iran yesterday signalled its intention to extend its military presence in the world's most important oil conduit, opening a new naval base at the mouth of the Persian Gulf and adding weight to its threats to choke off oil supplies, if the Islamic Republic came under attack.

The inauguration of the new base at Jask was announced by Iran's naval commander, Admiral Habibollah Sayyari, who said it represented a new line of defence, blocking the entry of the "enemy" into the Persian Gulf and the strategically vital Strait of Hormuz, the gateway through which 40% of the world's traded oil passes each day.

http://www.guardian.co.uk/world/2008/oct/29/iran

 

[Crispy]

This is pretty major. The following companies; Arup, FirstGroup, Foster and Partners, Scottish and Southern Energy, Solarcentury, Stagecoach Group, Virgin Group, Yahoo; have formed a "UK Industry Taskforce on Peak Oil & Energy Security" and release their report today. Foreword from Lord Ron Oxburgh, former chairman of Shell.

You can read the whole thing here:

http://peakoil.solarcentury.com/wp-content/uploads/2008/10/oil-report-final.pdf

This is very mainstream stuff now.

 

[elbows]

Cheers I'll take a looksie at that later.

THe FT had another article about the forthcoming IEA report, they got a newer version of bits of it, it seems to be pointing in the same direction as their last story about it, perhaps even more so. In about a week when its released it will be interesting to see how much coverage it gets.

Its been interesting to see peak oil slowly go mainstream and tap loudly at the door. Its probably clear by now that I take the view that many important people, overnments etc have been aware of peak oil for a long time, they just choose not to go on about it publicly very much. They might have been optimistic till the last few years, and thought we had another 20 years to go, or they may still be thanking their lucky stars that offshore prevented us from having to make too much progress on this journey away from the peak back in the 70's/80's. Back in approx 2002 there was a BBC Money Program about it, and since the price started going up it has obviously become a more discussed issue. But for whatever reason, government would prefer to talk about the issue in terms of climate change and energy security. I guess they dont want panic, or panic in the markets, but in any case the economy, climate change targets and oil rhetoric in general seems to be aligned on pretty much the same path now. We can see how the plateau and start of decline is going to be addressed, via a mix of economic decline and carbon diets. Its not clear what will happen once decline rate really picks up, whether the headline will ever read 'not enough oil to meet demand' or whether it will always be 'oil price rises' and 'economic decline causes demand destruction'.

 

[david dissadent]

IEA. Era of cheap oil over

12th of November the official reports comes out. This is now the second leak.

Oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030, the International Energy Agency will say in its flagship report to be published next week.

"While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over," the report states.

The developed world's energy watchdog has doubled its long-term price expectation from last year's $108 a barrel for 2030 and assumes oil prices will rebound from today's $60-$70 a barrel to trade, in real terms adjusted by inflation, at an average of more than $100 a barrel from 2008 to 2015.

The IEA's World Energy Outlook has come to this conclusion largely because it believes companies will struggle to pump enough new oil to offset the steep production declines of the world's older fields.

"Current global trends in energy supply and consumption are patently unsustainable," the report states.

In its WEO report, an executive summary of which has been obtained by the Financial Times, the IEA estimates that by 2010 oil companies will have to commit to projects producing almost as much oil as Saudi Arabia - or about 7m barrels a day - if the world is to avoid a supply crunch by the middle of the next decade.

The IEA refused to comment.

The stark assessment comes as companies cancel projects from Kazakhstan to Canada because the collapse in oil prices makes them uneconomical.

The industry will have to invest $350bn each year until 2030 to counter the steep rates of decline of existing fields and find enough extra oil to satisfy the growing demand of countries such as China, the report states.

Output from the world's oil fields is declining at a natural rate of 9 per cent, the IEA found, following the most comprehensive review of its kind.

This decline rate is curtailed to 6.7 per cent when current investments to boost production are made. However, even with such investments, the decline rate worsens significantly to 8.6 per cent by 2030.

The declining rates are steeper than the industry had previously assumed.

They are also slightly steeper than an earlier draft of the report because the IEA has expanded the study to 800 oil fields, adding 250 smaller fields

link

 

[david dissadent]

Link
Low demand for petrol and a glut of refinaries will likely see some US refinaries go out of bussiness. This year Valero were trying to flog off a couple of there refinaries. The assumption is that many fo the big western refinaries will try to move away from petrol to socalled middle distillates. Diesel and the like, but new refinary capacity in the emerging markets will swamp the world with refining capacity perhaps forcing many western refinaries out of bussiness in the coming years.

New Saudi refinaries are focusing on heavy sour grades (Like say the stuff they will be pumping from Manifa soon?) US refinaries are less suited to refining that kind of oil (Although I think BPs Texas City got an upgrade on that score recently).

Intersting article.

 

[elbows]

Well there is probably plenty of other news to keep this away from the main headlines, but as the report is out today some articles are appearing:


After the credit crunch, the oil crunch: watchdog warns over falling supplies

http://www.guardian.co.uk/business/2008/nov/12/oil-gas-companies-credit-crunch

Shrinking investment gets the blame!

also:

The unprecedented wake-up call comes as the European commission says in a report due out tomorrow that while oilfields decline, the balance of supply and demand will become "increasingly tight, possibly critically so".

and:

World needs four new Saudi Arabias, warns IEA

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5133757.ece

And more of the investment spin and focus on price/demand growth rather than peak:

http://news.bbc.co.uk/1/hi/sci/tech/7723576.stm

 

[david dissadent]

Dr Birol, a 50-year-old Turk who worked for Opec in Vienna before joining the IEA in 1995, said that decline rates were faster in the smaller fields than in so-called “supergiants”, such as Ghawar in Saudi Arabia.

Ghawar is the world's largest oilfield and pumps about five million barrels per day, or roughly 6 per cent of global supplies.

“In Russia and the North Sea we are seeing significant declines,” Dr Birol said, adding that the supergiants were still showing low rates of decline.

From the times article. Ummm can I just point out the worlds second largest field, Mexicos Cantarell is declining at a rate of 14% pa for the past two year?

Almost all the growth in production will need to come from the national oil companies of Opec states, as this was where the bulk of the remaining reserves were to be found, he said.

This is the advice the UK government will use to plan our energy future. We are up shit creek and these buggers are throwing paddles over board.

 

[elbows]

To oversimplify, it seems that how hard you milk the fields is more relevant to their decline rate than their actual size? So whether the sort of 'conservative production rates' by some Opec countries that are sometimes criticized, are actually true, is sort of important. But there appears to be no room for the idea that it might be better to ultimately recover more oil, but at a slower rate, even though they are now calling for sustainability.

As usual Opec didnt like this report, we've seen the IEA change its tune in recent years but the song Opec sings has not been updated:

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5141848.ece

The following should be an eyeopener for any business people who have so far managed to disbelieve oil peak fears, and brings peak oil agenda even more into alignment with the rhetoric of climate change. Now all we need is actual action...

Speaking at the London launch of the IEA's 2008 World Energy Outlook report yesterday, Nobuo Tanaka, the agency's executive director, a leading energy expert, adopted a markedly different tone, sounding a grave warning about the energy challenges facing the world. “Current trends in energy supply and consumption are patently unsustainable - environmentally, economically and socially - they can and must be altered,” Mr Tanaka said. He added that an “energy revolution” was needed urgently to meet surging global demand, which he predicted would soar by 45 per cent by 2030 - driven mainly by China and India - while also adopting low-carbon sources of power to prevent catastrophic climate change.


“We cannot let the financial and economic crisis delay the policy action that is urgently needed to ensure secure energy supplies and to curtail rising emissions of greenhouse gases,” Mr Tanaka said. “We must usher in a global energy revolution by improving energy efficiency and increasing the deployment of low-carbon energy.”

I say an eyeopener to business because as far as I can tell this stuff is not being reported by the mass media in a way that most people would actually notice its a big story.