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

[ferrelhadley]

Powering your car via electicity rather than petrol doesn't really count for shit - the electricity comes from the gas burning power station instead - and gas prices will go up with oil prices due to greater demand.

The point I was making was in relation to OPEC and for them a modal shift in energy consumption does count for shit even if the net energy consumption remains the same.

The point was electric and hybrid which again could\ should lead to less oil demand.

But electric vehicles in theory recharge at night when there is an excess of capacity on the grid. Others may have the figures too hand but for a rather significant amount of energy, taking it off the grid at night would not really lead to a need for more power generation.

 

[Dr Jon]

But there isn't enough recoverable uranium to fuel the sort of nuclear programme that'd make a huge dent, using current reactor technology.

That implies breeder reactors. Which keep not working - sometimes spectacularly.

It will be interesting to see if Accelerator-Driven Sub-critical Thorium Reactors can deliver.

See:
Carlo Rubbia's presentation on Sub-critical Thorium reactors (PDF)

ThorEA

 

[free spirit]

The point I was making was in relation to OPEC and for them a modal shift in energy consumption does count for shit even if the net energy consumption remains the same.

The point was electric and hybrid which again could\ should lead to less oil demand.

But electric vehicles in theory recharge at night when there is an excess of capacity on the grid. Others may have the figures too hand but for a rather significant amount of energy, taking it off the grid at night would not really lead to a need for more power generation.

I've worked through the figures before, and IIRC it works out roughly at us being able to charge up the equivalent of 25% of the current uk car fleet overnight without needing any additional generation capacity, although this would currently involve running the existing gas / coal power stations that currently mainly only operate in the day through the night.

If wind / wave / tidal / hydro etc is to reach the high levels the government's supposedly aiming for, then we'll need a sizable electric vehicle fleet to provide overnight buffering / level off the daytime / night time demand (if mixed with economy 7 & dynamic demand type smart meters / charge controllers).

 

[free spirit]

interesting aside... talking with my dad (prof of fuel & energy) the other day, and he as making the point that once the existing vehicle fleet is replaced by even current levels of efficient internal combustion engine technology this would result in a 50% reduction in fuel use providing the number of miles travelled remains the same.

the last bit being the key point, as previous increases in fuel efficiency have been more than offset by increases in the number of vehicles on the road, and the number of miles per vehicle per year, resulting in continued increases in consumption . pollution.

 

[Bernie Gunther]

Why would car production not increase though?

 

[ferrelhadley]

Stockpiles at US refinaries were about about 1% this week while finished product dropped a similar amount so for the moment there is no supply issues in the US as you would expect at this time of year, heating demand will be well down and driving demand not yet rising. OPEC is umming about releasing more production, so the price should go down you would think, well unless Asian and European consumers are stockpiling.

 

[ferrelhadley]

New C&C record for Dec 10 but its still early figures.

784 795 725
But since 2005 if the worlds economy had grown at around 3% per anum and oil demand with it we should be hitting around 82 million barrels a day. So a lot of this gap may be consumers at the bottom being forced out of the markets. Nothing on magaprojects suggests there will be a big boost in the next two years so we will continue to struggle.

OPEC has this to say.

OPEC believes the oil price is approaching $120 per barrel but unlikely to go higher, a level that is "acceptable" and will not hinder global growth, Iraqi oil minister Abdul-Kareem Luaibi said on Tuesday.

They seem to no longer fear a mass efficiency move towards hybrids, smaller engines, efficiency standards or oil price induced recession.

The winds they are a blowing.

 

[elbows]

I've not got time to look for a proper article about this right now but I note Obama gave some speech on US energy, with some emphasis on maintaining support for nuclear power, but also included this:

''When I was elected to this office, America imported 11 million barrels of oil a day. By a little more than a decade from now, we will have cut that by one-third,'' Obama said.

Calling the new goal as ''reasonable, achievable and necessary,'' he said the United States cannot afford to bet its long-term prosperity and security any more on a resource that will eventually run out.

My source for this was some nulcear news from Kyodo news agency, as thats what I was looking into at the time I stumbled upon this eyebrow raising quote.

http://english.kyodonews.jp/news/2011/03/82130.html

 

[ferrelhadley]

Coal prices hit an all-time high yesterday, with Xstrata persuading Chugoku Electric of Japan to pay almost $130 (£80) a tonne for coal sourced from the miner over the next 12 months – 30 per cent more than the contract was worth last year.

The rising price reflects the boom in demand for energy resources in China and India, as well as supply problems caused by Australia's floods.

Link

 

[yield]

Secret memos expose link between oil firms and invasion of Iraq
Independent. Tuesday, 19 April 2011

The minutes of a series of meetings between ministers and senior oil executives are at odds with the public denials of self-interest from oil companies and Western governments at the time.

I'm shocked.

 

[iROBOT]

Interesting developments

India to pay for Iranian crude oil in rupee

http://www.thehindu.com/news/national/article1989248.ece

After having explored various options to make payments and having run out of them, India is understood to have decided to pay Iran for the crude oil supplied by it in rupee terms.

After discussions between the Finance Ministry and the Petroleum and Natural Gas Ministry, it has been decided that the Ministry will seek the note of the Union Cabinet to switch over to the rupee payment system for the Iranian crude, officials in the Petroleum Ministry said.

Under the newly floated but yet to be approved proposal, National Iranian Oil Co (NIOC) will open rupee account with Indian banks and could use the money to purchase non-strategic items such as railway imports and buy commodities. It will not be able to use the money to invest in India or for buying shares or companies. The Finance Ministry will prepare and submit a list of do's and don'ts for Iranian authorities from the money it gets as part of the crude oil payments.

Is this the first instance of oil being paid in anything other then the Dollar?

 

[laptop]

Is this the first instance of oil being paid in anything other then the Dollar?

Venezuela takes payments in kind, doesn't it?

 

[iROBOT]

Venezuela takes payments in kind, doesn't it?

I do recall Ken Livingstone having a deal with them for the fuel for London Transport.

I have read since my last post that apparently India was paying for oil through Germany in Euros and the USA pressured Germany to stop this, and this is why they are now getting paid in rupees.

If more countries start to move away from the dollar in paying for oil, what impact would this have on the US economy? Plus with the news that Libya was going to go to the gold standard and taking Africa with it there's even more reason to belive all of the USAs policies are to shore-up the dollar in relation to oil. Far fetched?

This seems like major news to me, maybe I'm wrong.

 

[laptop]

If more countries start to move away from the dollar in paying for oil, what impact would this have on the US economy? Plus with the news that Libya was going to go to the gold standard and taking Africa with it there's even more reason to belive all of the USAs policies are to shore-up the dollar in relation to oil. Far fetched?

This seems like major news to me, maybe I'm wrong.

As always, it'd take a lot of countries moving away from the dollar: first, enough to depress demand for dollars for oil and second, enough to challenge the dollar's status as global reserve currency (thereby depressing demand and prices further).

The Euro's not in wonderful shape to pick up the reserve currency mantle, and China has an interest in not depressing the dollar.

Expect India to gain some political concession from the US and return to the dollar - in the short term.

 

[elbows]

I wonder what the eventual reality of Iraq oil output will turn out to be. Looks like the extreme bullshit version is finally biting the dust. To be honest I hadnt realised they were claiming they could get it anything like that high in the first place.

http://www.ft.com/cms/s/0/a7b1b332-7f14-11e0-b239-00144feabdc0.html#axzz1MSLSCoO6

Iraq set to miss oil output goals

By Javier Blas and David Blair in London

Iraq will miss its target to quadruple its oil production by 2017, say senior industry executives and western officials, dealing a blow to hopes that surging output from the country would lower global oil prices by the middle of the decade.

Baghdad last year outlined its ambition to produce more than 12m barrels a day within six years, up from 2.6m b/d currently with the help of oil companies, including ExxonMobil of the US, Lukoil of Russia, the UK’s BP and Royal Dutch Shell, CNPC of China, Petronas of Malaysia and Eni of Italy.

But the executives and officials have told the Financial Times that they are now firmly convinced that the target is beyond reach because of mounting constraints in pipelines and export terminals. They believe that Iraq will soon scale down the target.

“I think the Ministry of Oil would not disagree with a ramp-up in production towards 5m-6m b/d by 2015 or so,” said Gati Al-Jebouri, the head of Lukoil in the Middle East. He said that even the lower target could be challenging. “Whether that is achievable given the infrastructure is a difficult question to answer.”

Those public comments echo private statements by others. A senior western oil official said that Iraq was moving from “propaganda to the reality”, regarding oil output targets.

 

[Maurice Picarda]

Should environmentalists be worried about Peak Concern? They generally seem to believe that the current unfashionability in policy circles of green thinking is a short term anomaly, and that there are deep wells of untapped concern in the general public. But it's possible that reserves of giving a fuck about all this complicated, boring, depressing stuff have simply been exhausted.

 

[TruXta]

Always. But that's a spur to rethinking their strategy moreso than a call to just giving up trying. It needs to be brought down to a more local and immediate level IMO, all this stuff about "the planet" this and "the global" that makes it very easy for people to become a bit blasé and apathetic, thinking "WTF can I do against this massive risk"...

 

[elbows]

Should environmentalists be worried about Peak Concern? They generally seem to believe that the current unfashionability in policy circles of green thinking is a short term anomaly, and that there are deep wells of untapped concern in the general public. But it's possible that reserves of giving a fuck about all this complicated, boring, depressing stuff have simply been exhausted.

It only appears that green policy has vanished because of just how trendy, high-profile and green-washingly spiffing things were around the mid-2000's. The meat & potatoes of things like energy policy have not gone away, as this article demonstrates:

http://www.bbc.co.uk/news/uk-politics-13409404

David Cameron has moved to resolve a Cabinet row over the UK's climate change targets, with an agreement on emissions to be announced on Tuesday.

This will see drastic cuts in greenhouse gas emissions to 2027 and an overhaul of the way energy is produced.

But ministers worried about the impact on the economy and burdens on industry have secured a get-out clause.

The targets will be reviewed if European nations backslide on their own climate commitments.

There may yet be many twists and turns along the way, and I am cynical as to whether public concern was ever really the driving force.

 

[ferrelhadley]

UK to develop near term peak contingency plan.

 

[ferrelhadley]

IEA projections for new oil require unreal recovery rates
Deep water may be simply too risky with current technology.
Unconventionals are not all they are cracked up to be.
Time has ticked away

 

[ferrelhadley]

Shale Gas may turn out to be a ponzi scheme, industry insiders.

The story has been knocking round the online oil patch since at least 06, the wells are expensive to drill and deplete quickly so it takes loads of money to keep a drilling operation going, but as long as new investment is flowing in and your expanding your operations you can promise to turn a profit in the coming years. Eventually you get bought out by the majors.

But will it be able to generate enough income to be self financing once the best wells have gone dry?

“And now these corporate giants are having an Enron moment,” a retired geologist from a major oil and gas company wrote in a February e-mail about other companies invested in shale gas. “They want to bend light to hide the truth.”

But the oppsing view is that innovation and demand will drive costs down (it sometimes does, putting together a bespoke horozontal drilling rig would be more expensive than knocking them off an assembly line if you have enough orders on the book to set up that kind of infrastructure, also things get cheaper as people learn how to do them.)

Others within the industry remain optimistic. They argue that shale gas economics will improve as the price of gas rises, technology evolves and demand for gas grows with help from increased federal subsidies being considered by Congress. “Shale gas supply is only going to increase,” Steven C. Dixon, executive vice president of Chesapeake Energy, said at an energy industry conference in April in response to skepticism about well performance.

“Our engineers here project these wells out to 20-30 years of production and in my mind that has yet to be proven as viable,” wrote a geologist at Chesapeake in a March 17 e-mail to a federal energy analyst. “In fact I’m quite skeptical of it myself when you see the % decline in the first year of production.”

“In these shale gas plays no well is really economic right now,” the geologist said in a previous e-mail to the same official on March 16. “They are all losing a little money or only making a little bit of money.”

Around the same time the geologist sent the e-mail, Mr. McClendon, Chesapeake’s chief executive, told investors, “It’s time to get bullish on natural gas.”

A big attraction for investors is the increasing size of the gas reserves that some companies are reporting. Reserves — in effect, the amount of gas that a company says it can feasibly access from its wells — are important because they are a central measure of an oil and gas company’s value.

As old as the hills this stuff. Regulations change on what can be booked so you book vast amounts of new resources that dont all turn out to be profitable.

“Do you think that there may be something suspicious going with the public companies in regard to booking shale reserves?” a senior official from Ivy Energy, an investment firm specializing in the energy sector, wrote in a 2009 e-mail.

A former Enron executive wrote in 2009 while working at an energy company: “I wonder when they will start telling people these wells are just not what they thought they were going to be?” He added that the behavior of shale gas companies reminded him of what he saw when he worked at Enron.

Richard K. Stoneburner, president and chief operating officer of Petrohawk Energy, said that looking at entire shale formations was misleading because some companies drilled only in the best areas or had lower costs. “Outside those areas, you can drill a lot of wells that will never live up to expectations,” he added.

A review of more than 9,000 wells, using data from 2003 to 2009, shows that — based on widely used industry assumptions about the market price of gas and the cost of drilling and operating a well — less than 10 percent of the wells had recouped their estimated costs by the time they were seven years old.

“Looks like crap,” the Schlumberger official wrote about the well’s performance, according to the regulator, “but operator will flip it based on ‘potential’ and make some money on it.”

“Always a greater sucker,” the e-mail concluded.

 

[Dr Jon]

Lies Our Leaders Tell Us – “Nobody Could Have Predicted”

Think back to all of the stories you've heard in the last several years about natural gas. We have vast reserves right here in the US, right? It can be a great substitute fuel for oil, which many people, including government and government-supported agency officials now acknowledge is reaching its peak of extraction rate (this is a major step since a year ago most of these same officials were denying peak oil). America is saved from having to face a bleak energy declining future.

There is just one little hitch. How true is any of it?

link

 

[Dr Jon]

I just noticed this article... which reminded me of this.

 

[Dr Jon]

I was reading Erik Curren's "'Malaise': The last time a president told the truth about energy", which mentions Jimmy Carter's "malaise" speech from 1979.

I noticed this part of Carter's speech:

In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns. But we've discovered that owning things and consuming things does not satisfy our longing for meaning. We've learned that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose.

Interesting that the worship of self-indulgence and consumption is exactly what was promoted by the Reagan / Thatcher administrations and their successors.

A final frenzy of smash 'n' grab by the elites, while some resources still remained.



As Curren concludes:

The next president to talk to the American people about an energy crisis won't have the luxury of time to implement a plan to build US energy security over decades. Our situation will be much more serious. In that emergency, gas rationing will be only the mildest of measures that the government will propose to keep civil order and try to prevent total economic collapse within weeks or months.

And the worst part is, none of it may even work.

 

[ferrelhadley]

BP's oil production was 11% down on the same period of 2010 due to the suspension of drilling in the Gulf of Mexico, maintenance work on some wells and the sell off of some operations.

Link

Though oil and gas production was 2% lower than the same quarter in 2010, the company said it had benefited from asset sales in the first half of 2011.

link

Both UK based IOC majors report drops in production.

 

[ferrelhadley]

Conocophillips are apparently seriously planning breaking itself up. Extraction is still hugely profitable but the downstream activities of refining and sales are really draggin on some companies. 12 years ago it was the down stream that was providing the profit in the era of ultra cheap oil.

If they do break up (and BP is another with strong rumours) it may herald an era of demergers in the oil and gas sector after 70 years of mergers coming to a its peak with the merging of Standard Jersey (Exxon) and Standard New York (Mobile).

Also with all the ugly manufacturing data, oil could be due for a correction soon. Prices to high to sustain growth so there is a slow down that then means there is an over supply in the market that kills high cost ventures reducing supply rising prices and so on. A lot of unconventional (ultradeep water, tar sands and so on) is allegedly reliant on $70 to turn a profit. I did see the Chinese buy out one failing tar sands producer at $1 per barrel of reserves they had suggesting its not exactly coming out at £35 a barrel as promised.

Word has it there is a glut building up in US refinaries who are running below capacity for this time of the year (near end driving season), folk over statesside have been driving the least since 08.

 

[Pickman's model]

A final frenzy of smash 'n' grab by the elites, while some resources still remained.

that will doubtless be why there have been subsequent 'smash 'n' grabs'

 

[elbows]

Also with all the ugly manufacturing data, oil could be due for a correction soon. Prices to high to sustain growth so there is a slow down that then means there is an over supply in the market that kills high cost ventures reducing supply rising prices and so on.

Well last time this happened we tended to expect to see the same thing again in future, so yeah, won't be surprised if this happens again at any point, especially as there are signs of similar echoes and oscillations on several other fronts, e.g. economic. Bouncy bouncy.

 

[elbows]

that will doubtless be why there have been subsequent 'smash 'n' grabs'

But will those who have done the grabbing get to consolidate their gains? Is their wealth any more real and sustainable than the wealth of the many which seems prone to vanishing before our eyes.

Now then, where are we in the grand scheme of peak oil matters? The last chart I saw on the oil drum gives one picture:

 

[ferrelhadley]

Shale Gas may turn out to be a ponzi scheme, industry insiders.

The story has been knocking round the online oil patch since at least 06, the wells are expensive to drill and deplete quickly so it takes loads of money to keep a drilling operation going, but as long as new investment is flowing in and your expanding your operations you can promise to turn a profit in the coming years. Eventually you get bought out by the majors.

But will it be able to generate enough income to be self financing once the best wells have gone dry?
But the oppsing view is that innovation and demand will drive costs down (it sometimes does, putting together a bespoke horozontal drilling rig would be more expensive than knocking them off an assembly line if you have enough orders on the book to set up that kind of infrastructure, also things get cheaper as people learn how to do them.)

As old as the hills this stuff. Regulations change on what can be booked so you book vast amounts of new resources that dont all turn out to be profitable.

Marcellus Shale reserves cut to only 20%

The decision by the agency to lower the estimates comes amid growing scrutiny from Congress about how the administration calculates its numbers and why it depends on outside and industry-tied consultants to produce some of its reports.

No shit Sherlock.

One is very tempted to assing this scale of cuts to the likes of Barnett and Eagle Ford formations.

Also this may affect the two or three shale gas drilling sites in the UK, I do notice they have had some exposure in the UK media.