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

[ferrelhadley]

Prudohoe Bay to become stranded oil?
http://www.theoildrum.com/node/8294

If the flow of oil drops below 500 000 barrels a day the oil will cool to such a point that ice and wax will start to form. Somewhere between 500 000 and 300 000 barrels a day the damage to the TAPS will make it no longer viable to operate. Unless a technical solutions is found one of the great elephants of the US oil fields will no longer have an outlet.

In other news
Petrobras is reporting declines of up to 20% in its exsting fields. The now world famous presalts in the ultra deep Tupi, Sugar Loaf and other fields are about a decade away from production, it could be a hard few years with them experiancing Mexican like drop offs in production before the last great new province (and a damned expensive one) comes online.

 

[free spirit]

that oil drum piece is really interesting, and slightly concerning to know that the alaskan pipeline is currently running so close to the point of freezing up. If that did happen this winter, that could have some massive implications for the US economy, particularly if they couldn't get it restarted - the US upping it's oil reserves a few years ago makes a lot of sense now, but how long could it cope without alaskan oil for?

 

[ferrelhadley]

that oil drum piece is really interesting, and slightly concerning to know that the alaskan pipeline is currently running so close to the point of freezing up. If that did happen this winter, that could have some massive implications for the US economy, particularly if they couldn't get it restarted - the US upping it's oil reserves a few years ago makes a lot of sense now, but how long could it cope without alaskan oil for?

Its all now a gamble. It seems no one knows at what point the pipeline ceases to work, but its somewhere between now and them hitting 300 000 barrels a day. Prudhoe Bay went a long way towards Americans avoiding the consaquencies of the drop in the lower 48 fields. But even ultra deep fields like deep water horizon and thunderhorse are not really bringing enough new oil online to make up for the depletion any more. Mexicos Cantarell has been depleting at 14% per anum for a couple of years and even Nigerian Bonny Light has been on the wain.

At some point over the next ten years the trans Alaskan pipeline will give up the ghost for the winter, those will be hard times for US currency reserves and hard times for people with 4 by 4s.

A hard rain is a comming.

 

[free spirit]

still, at least they'll be able to start bringing it out by tanker in the summers soon eh...

 

[ferrelhadley]

still, at least they'll be able to start bringing it out by tanker in the summers soon eh...

In the 70s they fitted out a tanker as an ice breaker to test whether that would be cheaper than the pipeline (SS Manhattan) so it is in theory possible to have year round tankers running. The other option would be to heat the oil by burning some of it. The advantage of the former is that if they do open up new fields the tankers could service them.

The Russians are building a few new ice breakers to earn cash escourting ships across their ice free regions of the Arctic and with a possible eye on servicing some of the new gas fields they have identified in the very far north.

 

[Dr Jon]

Just spotted The End of Energy Policy.

We may as well say it out loud: Not only is fiscal and monetary policy running into limits in the advanced industrial (or OECD) countries, so that growth and jobs increasingly seem a question of luck; energy policy also is running into a brick wall. Everywhere in the rich countries of Europe, North America, and Asia, budgetary shortfalls, a reluctance to do anything that would further jeopardize growth, and the fallout from the Fukushima nuclear catastrophe have trumped energy and climate objectives.

...

For OPEC's biggest customers, "energy independence" is as distant a goal as it was a generation ago.

 

[Dr Jon]

North Sea gas production falls 25%

 

[ferrelhadley]

North Sea gas production falls 25%

Thats going to bugger the balance of trade, the cost of electricity and the governments coffers from the royalties.

 

[elbows]

Here is the report on which the story was based:

http://www.decc.gov.uk/assets/decc/11/stats/publications/energy-trends/2871-trends-sep11.pdf

Its got rather a lot of interesting numbers in it, here are just a couple of other highlights:

Production
Indigenous production of energy was 5.3 per cent lower in 2010 than in 2009, continuing a year on year decline for each year since 2000. Coal and other solid fuel production rose by 5.0 per cent, petroleum production fell by 7.7 per cent, gas production fell by 4.0 per cent and primary electricity output fell by 8.2 per cent.
Petroleum accounted for 42.0 per cent of total indigenous production in the second quarter of 2011 while natural gas accounted for 33.6 per cent, coal and other solid fuels 10.9 per cent and primary electricity output 13.5 per cent. A year earlier the proportions were petroleum 43.7 per cent, natural gas 38.7 per cent, coal and other solid fuels 9.4 per cent and primary electricity output 8.3 per cent.

Dependency
In the second quarter of 2011 net import dependency was 32.1 per cent, up 6.4 percentage points from the second quarter of 2010. This rise was due to falls in oil and gas production as a result of maintenance activity and slowdowns.
Dependency on fossil fuels in the second quarter of 2011 was at a record low of 85.7 per cent, down 3.7 percentage points from the second quarter of 2010.

There is loads of other stuff that gives a good sense of the UK energy picture.

 

[Bob_the_lost]

that oil drum piece is really interesting, and slightly concerning to know that the alaskan pipeline is currently running so close to the point of freezing up. If that did happen this winter, that could have some massive implications for the US economy, particularly if they couldn't get it restarted - the US upping it's oil reserves a few years ago makes a lot of sense now, but how long could it cope without alaskan oil for?

Not really, they can always just burn a bit of it to heat it at another staging post. It's wasteful but it's not difficult.

 

[what]

See below. Are these finds for real?

http://www.guardian.co.uk/world/2011/oct/02/turkey-gas-search-tensions-cyprus?INTCMP=SRCH

http://minnesota.publicradio.org/features/npr.php?id=140784004

 

[elbows]

I find it rather hard to tell. It seems foolish to take the most giddy predictions at face value, but to dismiss this stuff completely may lead to a view of medium-term oil & gas availability that is well out of step with the reality. If they do manage to scale this stuff up and many traditional oilfields manage to plateau for quite some years rather than starting a sudden steep decline imminently, then the sorts of stances many of us have taken in this thread may indeed turn out like another version of the 1970's scares about this stuff. i.e. we thought we were standing on the edge of the precipice, but in fact we were years ahead of our time. I'd be fine with that if we actually spent the time we'll gained with these discoveries wisely, to start the transition in a meaningful way rather than just delay the inevitable further. Perhaps it might work out that way this time, for many of these finds are only viable when the price of oil & gas remains high, so even if they come online the price of energy will still be high enough to encourage alternatives.

Im not sure thats what will actually happen though. I'm really unsure about the oil, its a little easier to see some of these gas finds as genuine and there have been signs for some years now that gas supplies might not fall off a cliff in the way people were suggesting less than a decade ago.

And regardless of whether the recoverable gas around cyprus meets the huge expectations, the political ramifications are real enough right now, scary situation.

 

[ferrelhadley]

See below. Are these finds for real?

http://www.guardian.co.uk/world/2011/oct/02/turkey-gas-search-tensions-cyprus?INTCMP=SRCH

This article talks about 10 trillion cubic feet of gas, probibly that will be in place rather than recoverable.

The North Dome\ South Pars field has about 1200 trillion cubic feet recoverable (1800 trillion cubic feet in place).
Its some like 0.75% of an actual really big fas field.

It may be there (IIRC and this is going on memory the Israeli stuff was something like Miocene lake sources)

 

[what]

This article talks about 10 trillion cubic feet of gas, probibly that will be in place rather than recoverable.

The North Dome\ South Pars field has about 1200 trillion cubic feet recoverable (1800 trillion cubic feet in place).
Its some like 0.75% of an actual really big fas field.

It may be there (IIRC and this is going on memory the Israeli stuff was something like Miocene lake sources)

Cheers for the context. Further probing here http://205.254.135.24/forecasts/ieo/nat_gas.cfm suggests that 10 trillion cubic feet is the worlds usage for one month. That is staggering amounts

 

[what]

I find it rather hard to tell. It seems foolish to take the most giddy predictions at face value, but to dismiss this stuff completely may lead to a view of medium-term oil & gas availability that is well out of step with the reality. If they do manage to scale this stuff up and many traditional oilfields manage to plateau for quite some years rather than starting a sudden steep decline imminently, then the sorts of stances many of us have taken in this thread may indeed turn out like another version of the 1970's scares about this stuff. i.e. we thought we were standing on the edge of the precipice, but in fact we were years ahead of our time. I'd be fine with that if we actually spent the time we'll gained with these discoveries wisely, to start the transition in a meaningful way rather than just delay the inevitable further. Perhaps it might work out that way this time, for many of these finds are only viable when the price of oil & gas remains high, so even if they come online the price of energy will still be high enough to encourage alternatives.

Im not sure thats what will actually happen though. I'm really unsure about the oil, its a little easier to see some of these gas finds as genuine and there have been signs for some years now that gas supplies might not fall off a cliff in the way people were suggesting less than a decade ago.

And regardless of whether the recoverable gas around cyprus meets the huge expectations, the political ramifications are real enough right now, scary situation.

I agree Elbows we need to change our ways whilst we can and new discoveries should only be seen as an opportunity to invest in demand reduction and renewables.
Also from the decc report

, 3.3 per cent of energy consumption in 2010 came from renewable sources;

Shocking

 

[Dr Jon]

Oil And Gas 'Could Last Just 17 Years' If Production Continues At Current Rate

17 years sounds a bit optimistic to me.

 

[elbows]

17 years on its own isn't optimistic because it tells us nothing about what rate production has dwindled to at that point and for the years leading up to it.

They have arrived at that number with a stupidly basic calculation, taking an estimate of recoverable reserves and dividing it by the level of production for last year. Whatever happens, we won't see production continue at those levels for years and then just fall to 0 suddenly.

So I could say that we won't run out for 50 years, if I take the same reserve figures and factor in a really low production rate for very many of those years. This sort of stuff is one of the reasons people focussed on the peak, rather than finally running out, in the first place.

And lets not forget the economic issues, we cannot presently be sure at what point the economic incentive to exploit north sea resources dies. Clearly the tax on this stuff has pissed off people in the industry, and seems to be primary motivation for the sort of story you have found there. This is just one more reason to be suspicious of reserve estimates right now.

 

[ferrelhadley]

Chevron, the second-biggest oil company in the US by market capitalisation, followed the industry trend in reporting a drop in production even as its third-quarter earnings more than doubled on higher prices for crude oil and refined products.

Chevron’s global net oil-equivalent production was 2.6m barrels per day in the third quarter, down from 2.74m bpd in the same period last year, on maturing fields and maintenance-related downtime.

http://www.ft.com/cms/s/0/22719532-016b-11e1-ae24-00144feabdc0.html#axzz1cMPPaR4u

ExxonMobil, BP and ConocoPhillips also noted production declines in the quarter, with only Royal Dutch Shell reporting a third-quarter rise, driven by its oil sands projects in Canada and gas in Qatar.

Everyone seems to be struggleing to make production figures.

 

[rover07]

Oil exploration has been limited to continental shelves, which form only a fraction of the seabed.

In future, oil will be drilled at much greater depths on the Abyssal plain which covers 50%of the Earths surface, average 3000m depth.

There is no shortage of oil for the forseeable future.

 

[ferrelhadley]

Oil exploration has been limited to continental shelves, which form only a fraction of the seabed.

In future, oil will be drilled at much greater depths on the Abyssal plain which covers 50%of the Earths surface, average 3000m depth.

There is no shortage of oil for the forseeable future.

You just made that up didnt you. There are several good reasons oil will not be drilled on the abysal plain. First to form oil requires the accumulation of organic matter in an anerobic enviroment, this would require a biota rich region to be over a portion of the plain where there is an anerobic bottom. Not impossible but biomass rich regions tend to be located near the continental shelf. Then to form the kerogen needs to be buried by sedmintry depositation. There is not a lot of that going round the plains, sediment accumulates near land. And even if it was buried deep enough to begin breaking down the kerogen into lighter hydrocarbons there is also the problem that the abysall plain has a much steep thermal gradient than continents, that means the oil window, the region where it is warm enough to form oil but not too warm that it break down into methane or even back into carbon is pretty thin parts of the Atlantic have geothermal gradients of 200C/km. That would leave an oil window of less than 1 km. Then there is the geology for forming traps, the need for tectonics to create anticlines where the oil can flow too and be trapped by. Anti clines form in geologically active areas, while most of the abysall plain is fromed by flood basalt at the divergent boundry of plates, not the convergent boundry likely to buckle and form an anticline.

Then offcourse there is the age, the floor of most oceans is much less than 125 million years old. That is old enough for only one of the great oil formation ages to have been underway when they were formed that being the mid creatacious super greenhouse era (the saurian sauna). The ocean floors that were there for the other major eras like the Jurrasic and Devonian are simply gone, subducted.

It is possible there will be deposits of oil in the ocean floors. There will be near the continental margins where there is a likely hood of some sedimentry burial.

But someone is going to have to come up with something damned spectacular to explain why they think there will be large economically viable amounts of oil having formed.

The geology is not adding up.

 

[ferrelhadley]

A world bank energy consultant is warning of a supply crunch over the next 4 years.

His premise seems to be to scare OPEC into opening up more production. They do tend to know that a big oil driven recession tends to crater the oil price after the high, demand destruction. OPEC does like high prices but it has always been a goal of sustainably high prices as when prices become too high alternative energy sources become economically viable.

ABU DHABI - There could be a severe global oil crunch by 2015 due to drastic changes in the oil market fundamentals, a World Bank consultant told the 17th Annual Energy Conference of the Emirates Centre for Strategic Studies and Research (ECSSR).
Addressing the ECSSR conference in the UAE capital, Dr Mamdouh Salameh, Consultant on Oil and Energy Affairs for the World Bank, said: “Unfortunately, the current alignment of these fundamentals can only lead to a severe tightening of the oil market. Other major factors impacting on the global oil market are China and the declining influence of OPEC. An analysis of these fundamentals indicates that a severe oil crunch could be in the offing, probably by 2015 or thereabouts, with oil prices projected to exceed the level reached in July 2008.”
He further added in the face of a looming oil crisis, OPEC will soon reach a crossroads. “It must ramp up supplies very significantly to stem the projected steep rise in the oil price or risk becoming irrelevant,” he warned.

The other side of this is as always the Export Land Model. That is to say as prices spike up oil exporters get richer. Those countries tend to hold down prices artificially locally in order to apease the locals while more mony comes into the economy and locals buy up more fuel. This means that even if production remains flat, exports decline.

Oil is back up over $112 for Brent and most of the other benchmarks. We are not talking a huge leap here towards $150.

 

[elbows]

This years IEA World Energy Outlook came out today. I haven't had time to ready the stuff that is available for free, or many press stories yet, but it sounds juicy in a few places.

http://www.worldenergyoutlook.org/

WEO-2011 further analyses some of the most pressing issues faced by the energy world this year by looking at the implications of a possible delay in oil and gas sector investment in the Middle East and North Africa and also by presenting a “Low Nuclear Case” to investigate what a rapid slowdown in the use of nuclear power would mean for the global energy landscape.

As a starter I will continue my approach of often thinking peak oil when climate change is discussed, and on that note here is a Guardian story about the IEA's look at how investment in new fossil-fuel plants will lock us into the old ways for decades to come, and how they reckon we only have 5 years left before the opportunity to guard against devastating climate change is lost 'forever'.

http://www.guardian.co.uk/environment/2011/nov/09/fossil-fuel-infrastructure-climate-change

 

[elbows]

The executive summary is interesting as ever, even though some bits of it need to be heavily decoded in order to match the expectations many of us have about actual availability of oil.

http://www.worldenergyoutlook.org/docs/weo2011/executive_summary.pdf

 

[ferrelhadley]

The short answer is given a 30 year life span for energy producing infrastructure and extrapolating current infrastrucutre being built and what is replacing it.

Kiss 450ppm goodbye. Above 400ppm, the closest analogies we have in the record is over 3 million years ago during the Pliocene when sea levels were 25 meters higher.
After 450 we start heading into Miocene climate with yet again higher sea levels temperatures from 3-6C warmer than today. However while we may be on course for a 2m sea level rise this century a full 25m sea level rise could take a couple of centuries.

The IEA seem to have woken up to the fact that in the wider political world no one is paying attention except Germany, Denmark and the like. It was originally founded as a counter to OPEC, to collate the information for long term energy planning to prevent the oil crises of the 70s being repeated. It has been guilty over the past 20 years of grossly inflating oil reserve numbers. But it starting to get to grips with that over the past two years.

 

[ferrelhadley]

Saudi to go solar with 10% of its electricity from solar in 10 years.

Kevin Smith, chief executive of U.S. solar developer SolarReserve wants to put one of his company's solar thermal power plants in the Saudi desert.
He said it's not just short-term profits motivating the Saudis.
"The Saudis, one of the largest oil producing nation's, realize that there's limitations as to how long that's going to last," said Smith. "They are looking at their long-term energy plans."

And then there is this 'the dog ate my homework' from Saudi.

Saudi claims it is not developing new resources because another 6 million barrels a day in unconventional oil will be coming online by 2025. Oh yes, really. So they are anticipating zero depletion in existing fields round the world (i.e. a sudden halt) and minimal growth in demand for the next 15 years.

We seen with the Libya crisis they have some surge capacity. But with oil at $112 for most baskets and the global economy on the brink of a new recession, they are not opening up the values to drive down prices and feed growth. They are explicitly not and have failed since 2005 to act as the swing producer they had asserted they were since 73. There long term promise of maintaining price stability since the late 70s, a role they have repeatedly played (except when they descided to crush the price go for market volume after widespread quota cheating in 85) during the Iran crisis, the Kuwait invasion and the American invasion of Iraq, is now gone. At $100 a barrel alternative energy sources are being so intensly invested in they are arrowing in on grid price parity perhaps in a decade.

The past decade of very high energy prices has produced efficiency savings like hybrids, driven forward electric vehicles, created demand for renewables and opened whole new provinces for exploitation. It has made the IOCs flush with money for exploration and produced the market conditions for ultradeep like Thunder Horse in the GOM and Tupi in Brazil.

In short by not driving down the price of oil Saudi is in effect ceding huge amounts of ground to the competition. Given the inevitability of carbon pricing in the near future, they are living on borrowed time.

They know this. There does appear to be a major shortfall in oil coming onto the market over the next five years. They appear to have little left to prevent further price rises other than a global recession.

And in completely unrelated news, renewables booms in AsiaPac

The surge of Newcastle thermal coal prices in the past 3 years (i.e. a benchmark for Australian exports) logic would seem to dictate countries start rapidly diversifying energy supply.

Edited to add if Saudi is currently burning 10% of its oil to generate electricity this means 950 000 barrels a day at $112 or about $39 billion a year.

That is some bloody waste of money.

 

[ferrelhadley]

link

The little planes that connect America's small cities to the rest of the world are slowly being phased out.
Airlines are getting rid of these planes — their least-efficient — in response to the high cost of fuel. Delta, United Continental, and other big airlines are expected to park, scrap or sell hundreds of jets with 50 seats or fewer in coming years. Small propeller planes are meeting the same fate.
The loss of those planes is leaving some little cities with fewer flights or no flights at all.
The Airports Council International says 27 small airports in the continental U.S., including St. Cloud, Minn., and Oxnard, Calif., have lost service from well-known commercial airlines over the last two years. More shutdowns are planned.
Travelers in cities that have lost service now must drive or take buses to larger airports. That adds time and stress to travel. St. Cloud lost air service at the end of 2009 after Delta eliminated flights on 34-seat turboprops. Now, passengers from the city of 66,000 have a 90-minute drive to the Minneapolis airport 65 miles to the southeast.

Then jet fuel prices soared. They're at $3.16 per gallon today, up from 78 cents in 2000. That's changed the economics of small planes.
For airlines, it all comes down to spreading fuel costs among passengers. A Delta 50-seat CRJ-200 made by Bombardier takes 19 gallons of fuel to fly each passenger 500 miles. Fuel usage drops to just 7.5 gallons per passenger on Delta's 160-seat MD-90s over the same distance.

 

[elbows]

Wally Neil, a 25-year-old wholefood salesman, from Raleigh North Carolina, was determined to stand out from the crowd by not getting a driving licence and a car as soon as he was old enough.
But it was a decision made easier by the fact that he could speak to his friends online and play games with them over the internet so did not feel he was missing out.
"We were all pretty closely connected, even before Facebook.
"So we were not driving to our friends' houses, there was the gaming network and all that. We were putting the car on the back burner.
"There is a lot to be said for the video game killing the need for a car for a lot of kids."

In 1978, 50% of 16-year-olds had obtained their first driving licence. In 2008, according to the US Transportation Department, it was just 30%.

Car use began falling in 2007, when average gas prices almost doubled to $4.12 a gallon, and the economy started its slide into recession.
But there are signs it is back on an upward trajectory and America remains a country dominated by the automobile.

http://www.bbc.co.uk/news/magazine-15847682

 

[ferrelhadley]

American Airlines just filed chapter 11. Guessing jet fuel prices are going to be a big part, that and a cratered economy.

 

[elbows]

From the autumn budget statement today:

1.13 Over the past 18 months, the economy has been hit by a series of shocks, the largest of which was the sharp increase in global commodity prices that began at the end of 2010. As Chart 1.1 shows, oil prices remain 40 per cent higher than the 2010 average due to a combination of growing demand from emerging economies and supply disruptions in the Middle East.4 Food prices also increased sharply.
1.14 High commodity prices have pushed up inflation, reducing real incomes and weighing on growth around the world. The OBR estimate that since the June Budget 2010, for the UK economy “most of the weakness can be explained by an external inflation shock constraining real household consumption”.5

They even have a graph of brent oil price in there. http://cdn.hm-treasury.gov.uk/autumn_statement.pdf

 

[elbows]

A $1bn (£640m) bet by a British firm to find commercial quantities of oilin the Arctic has ended in failure and there is now mounting speculation there will be no more drilling by Cairn Energy next year.
The controversial exploration off Greenland was physically opposed by Greenpeace but Cairn has been forced to retreat by complex geology and growing criticism in the City.
Shares in the business, which was set up by the former Scottish rugby star Sir Bill Gammell, fell by as much 6% at one point today to make it the biggest faller in the FTSE-100 index of leading companies after admitting no significant finds with its two latest wells off Greenland.

http://www.guardian.co.uk/business/2011/nov/30/cairn-dry-oil-wells-greenland