The other side of the Peak - oil depletion rates
Posted by Heading Out on May 16, 2005 - 7:14am
The news this past week that world oil demand is likely going to be no more than 1.7 mbd over last years peak level is at first reassuring. A reduction in demand of some 500,000 bd initially makes it more likely that the purported remaining excess production in the Gulf can come quite close to matching the increase in world demand, at least for this year.
There is, however, as always, a catch. In the growing discussion as to when Peak Oil will arrive, and what its effects will be, there is relatively little discussion as to what the back shape of the curve will look like. There are rough numbers thrown around, and many of the curves that are put up anticipate that, for initial modeling purposes, the depletion of oil in a field will mirror its original growth. In other words, production follows what is known as a Gaussian distribution, such as the picture that we have over on the right of this site. Depletion will start out relatively slowly and then accelerate, in the same shape to the right of the peak, as on the left.
Historic numbers for the start of depletion in a field might be around 5 – 6% and then increase as fewer new wells come on line and more drop out of production. The acceleration is also, in part, because later wells in the field are drawing from a smaller remaining resource and thus have a shorter productive life, in general.
In recent years oil field production methods have become more sophisticated. Oil flows out of a well in part as a function of how long the section of the well is that is within the rock that has the oil in it. So if we have (and this is a very simplified case) a well in the rock that is 500 ft long it may produce 5 times as much oil per day as a similar well that only penetrates that rock by 100 ft. This basic idea led to the change from drilling vertical oilwells to ones where the drill turns 90 degrees when it reaches the oil bearing level, and drills horizontally from there through the rock. In this way if the oil layer is only 100 ft thick, one can still have an oil well that has 500, or 1,000 or 5,000 ft of exposure to the oil-bearing rock.
(In our old cream in the coffee cup analogy this would be the same as going from just dipping a straw in the cream to slowly remove it to changing to a straw that is laid across the top of the cream, with holes along the straw and then sucking across the full width of the cup at one time).
Remember, however, that the total amount of oil in that rock has not changed, so if we are drawing the oil out at a much faster rate, there is a downside. And the downside is that when the oil starts to run out, the drop in production can be a lot faster than it would be from the straight vertical wells. Figures from Oman, for example, found that the rates could get up to around 14% a year. This technique is now becoming predominant in the Middle East and routine in Saudi Arabia.
There are two different impacts to this, one of which is fairly visible, that is where the whole country goes past its peak, and suddenly all can see the decline and configure the numbers into a global assessment. The other is where the overall production of oil in a country is still going up. Here the amount of new production that has to be set aside just to compensate for drops in production in existing fields can be more difficult to determine. But the effect can be brutal, because on a declining curve you have to replace that lost production every year just to stay even. So that if, for example Saudi Arabia had to use 800,000 bd of new production last year, just to offset production losses in Ghawar, Abqaiq and Berri, then next year it has to find another 800,000 bd to match the further drop in their production. And so it goes.
And for the world that means that at present just over 1 million bd in new oil must be found each year just to match production declines. So when you hear all the news about how many new supplies are being found, remember to take away the declines before you start with the additions. (For more info Chris Skerbowski talked about this at the Peak Oil Scotland meeting last month).
The concern however is that this enhanced recovery technique will mean that the downside of the slope will be faster than is currently being expected, and that next year might get grim a little faster than expected.
Technorati Tags: peak oil, oil
There is, however, as always, a catch. In the growing discussion as to when Peak Oil will arrive, and what its effects will be, there is relatively little discussion as to what the back shape of the curve will look like. There are rough numbers thrown around, and many of the curves that are put up anticipate that, for initial modeling purposes, the depletion of oil in a field will mirror its original growth. In other words, production follows what is known as a Gaussian distribution, such as the picture that we have over on the right of this site. Depletion will start out relatively slowly and then accelerate, in the same shape to the right of the peak, as on the left.
Historic numbers for the start of depletion in a field might be around 5 – 6% and then increase as fewer new wells come on line and more drop out of production. The acceleration is also, in part, because later wells in the field are drawing from a smaller remaining resource and thus have a shorter productive life, in general.
In recent years oil field production methods have become more sophisticated. Oil flows out of a well in part as a function of how long the section of the well is that is within the rock that has the oil in it. So if we have (and this is a very simplified case) a well in the rock that is 500 ft long it may produce 5 times as much oil per day as a similar well that only penetrates that rock by 100 ft. This basic idea led to the change from drilling vertical oilwells to ones where the drill turns 90 degrees when it reaches the oil bearing level, and drills horizontally from there through the rock. In this way if the oil layer is only 100 ft thick, one can still have an oil well that has 500, or 1,000 or 5,000 ft of exposure to the oil-bearing rock.
(In our old cream in the coffee cup analogy this would be the same as going from just dipping a straw in the cream to slowly remove it to changing to a straw that is laid across the top of the cream, with holes along the straw and then sucking across the full width of the cup at one time).
Remember, however, that the total amount of oil in that rock has not changed, so if we are drawing the oil out at a much faster rate, there is a downside. And the downside is that when the oil starts to run out, the drop in production can be a lot faster than it would be from the straight vertical wells. Figures from Oman, for example, found that the rates could get up to around 14% a year. This technique is now becoming predominant in the Middle East and routine in Saudi Arabia.
There are two different impacts to this, one of which is fairly visible, that is where the whole country goes past its peak, and suddenly all can see the decline and configure the numbers into a global assessment. The other is where the overall production of oil in a country is still going up. Here the amount of new production that has to be set aside just to compensate for drops in production in existing fields can be more difficult to determine. But the effect can be brutal, because on a declining curve you have to replace that lost production every year just to stay even. So that if, for example Saudi Arabia had to use 800,000 bd of new production last year, just to offset production losses in Ghawar, Abqaiq and Berri, then next year it has to find another 800,000 bd to match the further drop in their production. And so it goes.
And for the world that means that at present just over 1 million bd in new oil must be found each year just to match production declines. So when you hear all the news about how many new supplies are being found, remember to take away the declines before you start with the additions. (For more info Chris Skerbowski talked about this at the Peak Oil Scotland meeting last month).
The concern however is that this enhanced recovery technique will mean that the downside of the slope will be faster than is currently being expected, and that next year might get grim a little faster than expected.
Technorati Tags: peak oil, oil
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The political aspect of depletion also must be considered and will increase the slope of the curve, implying that depletion rates are faster than anticipated. This aspect relates to the logical choice of an oil exporter to produce only for its domestic market. It is at this point that the "open door" I mentioned earlier will rear its ugly head again as the US Empire demands the oil it deems it has a "right" to. In a similar vein, it's also possible that resource wars and demand destruction will flatten the downward slope. In either case, however, the price of oil will continue to rise as long as the current market structures remain in place.
One detail that should never be overlooked is the cost of enhanced oil recovery (EOR) in terms of less oil extracted from the field over its lifetime. Matt Simmons spoke about this at the ASPO meeting on 4/25. Water and gas injection will let you pull oil out of the ground quicker, but it will also exhaust the field much sooner and leave more oil in the ground in an unrecoverable state.
I don't know how many billions of barrels of oil will be orphaned because of EOR (and the Saudis are injecting 7.1 million barrels per day of sea water into fields). Is it enough to have delayed the peak by one or more years?
It is an interesting problem. The optimists are looking at things like shale and tar sands to push the peak into the future. Of course given the lead time for that stuff I think the best that can be hoped for is that they will influence the slope on the backside of the cure. So we can add these as second order positive effects to the negative effects you've outlined. It will be interesting to see how it shakes out.
One of the problem with tar sands and oil shale is that the technology relies heavily on the use of natural gas to extract a petroleum grade product from these deposits. So the net energy contribution from them is going to be much more limited than is generally assumed by the petroleum optimists.
Natural gas is plagued with its own issues. See Catton's "High Noon for Natural Gas"
http://billtotten.blogspot.com/2005/03/high-noon-for-natural-gas.html
From my POV, this is all tempest in the Peak Oil teacup.
Neat things to know: most horizontal wells are not candidates for EOR. The oil/water contact barrier is relatively close to the horizontal borehole, in an already thin formation. In most cases, when a horizontal well "waters up", it is junked. And in many cases, the high rates of these horizontal wells also include a very high initial "water cut" or percentage of water, sometimes on the order of 60% or more. These type wells also require drilling of a nearby injection well to get rid of the salt water produced with the oil. Thus a rapid production rate is desired to pay back these additional expenses.
Once the oil/water contact rises above the producing zone of a well, no amount of retooling will bring additional oil into that well. Only those wells that have been drilled into the upper part of the reservoir will be able to produce. The drilling of these "high-on-structure" wells has been standard practice for a long time. The outlying wells were simply to increase production volume, which they will not be able to do once the oil/water contact rises above their producible zones.
Many fields are what we call "compartmentalized", where the oil is in discrete but producible pockets. However, over time, faulting, rock formation growth or improper producing methods have made the deposit discontinuous. These fields require pinpoint drilling to produce, and water flooding is not usually economical. They must revert to "stripper status" once the initial production rate declines.
We are routinely drilling into reservoirs where there is NO pressure. In these fields, we must pressurize the productive zone to force the oil out. There is no EOR option for most of these fields, and they too must revert to stripper production.
But all of the pundits and talking heads and experts are still of the belief that the oil is there for the taking, not that we are running out. Until this finally crashes into the collective consciousness of these people, the word "conservation" will remain anathema. Conservation mode is where we need to get to quickly, to avoid the nasty possibilities implicit in this situation. And yet it seems the PTB will continue to posit that things are normal, and it's business as usual, but with a higher price tab.
While decline in demand is a nice thing to hear, it is nowhere near the amount of decrease needed to mitigate this issue.
I'm fairly new to the concept of peak oil, and what I would like to know is, if peak oil is for real, shouldn't we see governments and large corporations taking it seriously and making greater preparations for it? I've read that Bush has been briefed on it, yet he seems to be doing very little other than increasing the SPR and kissing Saudi princes. Likewise, corporations like Wal-Mart seem to be doing very little to nothing about the price volatility that it seems has already begun. I know enough to know that corporations like Wal-Mart commission reports on oil and fuel prices so that they can plan and set prices accordingly. Shouldn't the Wal-Marts of the world be doing something? I've read Kunstler's opinion that most people are engaging in delusional thinking because they can't deal with the cognitive dissonance that the thought of cheap oil depletion brings, but that doesn't really make sense. When governments and corporations were confronted with the problem of the Y2K bug, they didn't engage in delusional thinking. They recognized that a problem existed and took action accordingly. I'm sure it wasn't pleasant for people to think about the possibility of widespread system failures, and the cost of the solution was daunting, but that didn't result in everybody denying that a problem existed. So why should peak oil be different? Why aren't governments and corporations planning for it?
PR: welcome. PO is indeed for real and inevitable. The real question is when and how quickly society will feel the pressures. If you read below a few pieces, you'll find that a few experts have already "called the peak," meaning we are at maximum supply capacity. Demand, on the other hand, is going to continue to expand, unless it is "destroyed" some other way (big economic downturn, taxes, etc.).
Your comparsion to Y2k is prima facie, quite apt. It's the same one I made when this whole thing made my purview. (look back a few posts, maybe two weeks, and you'll see that comparison...). It's quite different and much worse than y2k, sadly.
The other question is: how quickly will things get bad? Some have said a slow secular decline, others have said, it will be quick and nasty for a very long time. The more you read, you will come up with your own ideas on that.
Welcome to our little piece of the nightmare. Learn what you can, and feel free to contribute!
PR, Some of the answers to your question may be found at
http://billtotten.blogspot.com/2005/05/problem-of-denial.html
What would a business like Wal-Mart do to prepare? Move to much smaller stores close to downtown train stations?
When your entire business model depends on cheap foreign products shipped long distances and deliveries to your store that are so reliable that you can schedule 15-minute windows for the trucks to show up, I don't think there's a lot you can do to prepare for peak oil.
There's a lot society at large could do, and some things individuals can do, but I don't think there's much that a company like Wal-Mart could do. If you have some good ideas, I bet Wal-Mart would be interested to hear them (because I bet there are smart managers at Wal-Mart thinking about this and wondering if there's any strategy that makes more sense than just raking in as much cash as possible as quickly as possible).
The difference between Peak Oil and Y2K was that Y2K had an obvious solution (albeit, one that required some expense and effort). Peak Oil does not have an obvious solution, and the ones that are presented involve a level of effort and expense that makes Y2K look like a drop in the bucket.
In essence, delusional thinking didn't happen with Y2K because the path to a solution was clear. The path is not clear with Peak Oil.
Y2K is an interesting comparison, because it was solved by new technology. Realistically, we should have started fixing the problem in earnest back in the early- to mid-90s, and upper management just stuck its thumbs in its ears and refused to listen.
As of 1997-98, we were disasterously unprepared (Yourden wasn't as crazy as he sounded). But over the next few years, we saw tons of different code remediation technologies appear, and upper management decided to do triage--to decide which systems were worth the effort of saving, and which systems had to be scrapped. And in the end, we made the deadline in all but a handful of cases.
Do these lessons apply to cheap oil, and if so, how? I can see a few things worth learning:
1) Decision makers tend to ignore problems until very late in the game.
2) Once the people in charge realize we're well and truly screwed, technical progress can happen surprisingly quickly.
3) Once an emergency is in full swing, certain sacrifices and tradeoffs may become possible.
(1) and (2), in particular, are a race, and there's no guarantee that you get the technology you need in time.
WRT technology fixing the mess, I still maintain Y2K was technically straightforward to a degree that Peak Oil never was and never will be. Also, no fundamentally new technologies needed to be developed (just a lot of programmers trained and hired).
Y2K was an obvious problem with an obvious (although expensive) solution. Peak Oil is not amenable to obvious solutions, and is therefore much more dangerous.
The longer comment by "Anonymous" above is fascinating. My only addition is that the word "conservation" will remain anathema, because it is now extinct. Conservation means saving during a surplus for a possibly scarce future. The scarce future is now at our doorsteps, and we are faced not with conservation but deprivation. We can no longer conserve. We can only scrimp. Conservation is a choice. Deprivation is a condition.
Roy: Y2K was actually an extremely hard problem, well beyond our ability to fix in 1998. Even though each individual fix was easy, solving Y2K involved billions of fixes. There simply weren't enough Cobol programmers in the world at the time--each programmer would have to be superhumanly productive to meet the deadline.
So what happened? Huge improvements in tools, mostly. Automated code analysis and remediation tools allowed Cobol programmers to fix bugs far faster than ever before. Sure, we'd always known these tools were theoretically possible--just like we know solar power, biodiesel and flywheels are possible--but they weren't practical in 1998.
Unfortunately, I think Peak Oil is a harder problem than Y2K, and our decision makers will wait until oil gets over $100/barrel before taking any steps at all. My point? We'll wait until the last moment, make enormous strides, and the outcome is highly uncertain.
I see energy refugees whose numbers will make those from the Depression pale in comparison. In this sense, the Fossil Fuel Peak is very different from Y2K.
Eric, most folks are living in a dreamworld when it comes to Peak Oil. The world has long been working on a way to replace the 84 million barrels of oil (and many more millions of cubic feet of natural gas) used by the selfish and aggressive two-legged occupants of this planet, each and every DAY. It took mother nature several hundred millions of years to create the storehouse of ancient sunshine lying beneath the ground, and it has taken humanity a piddling 150 years to squander most of it. It really is quite pathetic.
The Y2K thing was easily fixable, requiring time, monkeys, and typewriters (I worked as one of the monkeys). Were any lives lost because of Y2K? I doubt it.
Peak Oil has the potential to kill off very large numbers of people, over time, perhaps billions. How so? The energy inputs into food have been estimated at 10 calories in for every 1 calorie utilized by the human body. As energy costs increase, food becomes much more expensive, and as a result there will be a signicant decline in production. This means many of the 6.5 billion inhabitants on earth will go without food and die. This also means that people living on the edge will either not have children, or will let them die.
What will replace fossil fuels for transportation (tractors, cars, trucks, construction, airplanes, all of which play a big role in food production and distribution)?
Will it be hydrogen? It's an energy carrier and must be compressed to be utilized. The energy input to produce usable hydrogen is greater than the output, so no gain there.
Will it be battery power? Imagine batteries powering an 18 wheeler.
I'm looking for answers here, help me out.
One more thing that made a difference for Y2K. It had a rather specific and well known time of occurance. This is not the case should peak oil be on the near horizon. We won't know that the world has truly peaked until it has already passed. This will mean that any fixes will need to take place during a phase of accelerating decline in production, and a widening gap between production and global demand. This will throw decision makers into crisis mode, and sound decision making rarely comes out of such crises. Imagine what would have happened if decision makers had decided to wait until January 2nd, 2000 to try and fix the Y2K problem...
Dilbert, you're in the ballpark on the 10:1 fossil fuel:solar ratio for American agriculture, AFAIK. But this is one of the relatively fixable problems.
Basically, our food system is economically insane. We heavily subsidize water in the southwest, which makes farming elsewhere in the country uncompetitive (I generalize!). Lots of food is shipped from southern California to New York, for example. We rely heavily on chemical fertilizers and pesticides (both oil-based).
But we could sharply reduce these oil requirements if we switched to regional, IPM-based agriculture, and took better care of our soils. Much of our household's food, for example, comes from local sustainable farms. We pay about 2x the going rate for vegetables, and 4x the going rate for meat.
Transportation will definitely suck, though. No easy answers there unless we get vastly better energy-storage technology.
The point with switching back to regional agriculture is a relative increase in vulnerability to bad harvests. If this years wheat harvest would fail in Europe, it still has access to American or Ukranian wheat within days. In the future this could mean local famine. See also this part from a William Catton book, especially the part on Liebig's law:
http://www.energybulletin.net/4632.html
Anonymous here. (was in a hurry earlier - grin)
Kunstler has the issue spelled out here. I live in suburbia. I do not have access to sufficient land to feed my family even if I want to. The best I can do is supplement. Liebig is very accurate IMHO. And this is why suburbia has to be retooled. I think EVs can take care of the commute situation provided the grid can handle it. I think local just-outside-metro-area agriculture can handle the food issue. We have lots of sustainable practices and organic methods that can work. Just by using a greenhouse one can sunstantially increase the growing season. If we get our rail system retooled to run on nuclear or something like solar assisted, dynamo enhanced hybrid...well, that could take care of the regional needs for trans-shipping.
The problem is that there is simply too high a concentration of population in most metro areas. The Cubans found this out quickly, and sent their excess metro populations out to support their cities. It worked.
We will need to relocate, change business models, provide education and incentive for people to leave the city and support it for a living. It will require a general lowering of material expectations for people, and that is the jagged little pill.
The reason it will be so hard to swallow is that the great American Dream has turned out to be the principal ingredient in our nightmare.
P, even if we switch to regional agriculture, that doesn't mean we can't ship food in case of outright crop failure. The overall system would still use far less energy. The risk of crop failures can also be reduced through diversification.
If you're interested in what modern technology can do for regional agriculture--even up here in the cold northeast--you might want to check out Coleman's Four Season Harvest. Coleman has studied energy issues, modern (unheated!) greenhouses, alternative crops, and organic farming.
Also Google for "Integrated Pest Management", which adapts organic growing techniques for use with modern farming. By intelligently targeting pesticides and herbicides, farmers can sharply reduce the amount of petrochemicals sprayed on their fields.
J, in the north, we also need to consider home heat, much of which is provided by oil. Electric heat works, but it's expensive along much of the Boston-NY corridor, and would require major improvements to the grid.
Now is a lovely time to invest $10,000 in new windows and to reinsulate the attic. :-)
I think if oil climbs in price slowly and predictably over 10 years, we've got a pretty good chance of adapting. But if the price goes up quickly, we're in a world of hurt.
That's Chris Skrebowski.
I think one of the biggest problems with Peak Oil is that the price is more likely to spike up quickly in the face of market panics and supply disruptions rather than rise up smoothly like it would in the ideal (and completely mythical) world of classical economists. That fact may cause massive disruption, if not outright failure, of the financial system, which will have huge negative impacts on every aspect of our lives which is dependant on the economy.
Eric -
All I can say is that geothermal is the answer....we walk on it every day, and it can take care of the heating if your house is nice and cozy already. I had a home heated with this in Montana, and it was quite bearable. We didn't run naked down the hallways, but it was a nice 40-50 degrees without any heat source other than the pump, which was set at that temp. But you will not find heating/cooling people pushing this, because they last too long, are too simple, and most of them don't understand how to install them. Heat pump geothermal is about the same price as windows you quoted too, depending on the size of your home.
I wouldn't live north of the Mason/Dixon line without a geothermal heat pump... ;)
I also experimented with quad-pane windows in Montana. You can make them yourself with a table saw, glass and glazing putty. These are better than triple pane you buy at the store, because of the "true" dead air in the middle sandwich. Throw in some shutters for use at night, and it can really up the cozy factor.
As to oil spikes - well, that is entirely in the hands of politicians. So we know what to expect, right?
J,
Geothermal depends heavily on electricity. The cost of electricity will skyrocket if the peak oil nightmare happens. What will you do then?
Andy -
You have to just let go of the entire idea of cheap energy. The cost of electricity will rise - no doubt. It will likely be the only game in town, and their is a good chance we will go through black and brown and every other kind of outage as we load the system in lieu of oil-fired heating. But when chep oil is gone, everything will rise in price. Then the game becomes efficiency - getting the most for your energy dollar. As it should have been all along.
The alternative to paying the high prices is freezing - I know which I would choose. But most homes do not even have heat storage capability in the north (water tanks or other radiant masses). Most do not even have geothermal heat pumps. You and everybody else will be forced to do something, or freeze.
I am in the middle of installing an "air pump" which only uses fans to drive air and regulate temp. We have run the numbers on it, and it seemed it would work. We will know how many feet of underground will be needed for the cubic feet to be regulated in the next month or two. But assuming it does work out, then we are talking about a pusher and a puller fan, some PVC pipe, and some digging. Hardly close to the typical central air system or even the heat pump as it exists today.
Does anyone here realize that if we used our drilling rigs to drill geothermal wells, we could provide power to everyone? Geothermal isn't steam, it's temperature differential between ground and surface.
The DOE is not looking for small solutions, and so they have written off everything that isn't steam from their list of geothermal possibilities. But using their own data and technology, there are multitudes of places where geothermal heat could be used by neighborhoods to generate electricity. But cheap oil makes them "uneconomical".
The solutions are out there, but nobody is motivated to explore them yet. Necessity IS the mother of invention - yet another reason I think we will have to crash before we get serious.
Andy, why will Peak Oil make electricity expensive? Something like 3% of our electrical power comes from oil.
I can see plenty of scenarios where Peak Oil could increase electrical prices for a while, but I don't understand your reasoning here.
Eric,
the electricity price will increase because the demand for electricity will increase to make up the loss of petroleum bvased energy. For example, if the price of NG increases dramatically, people will shift from cooking over NG, or heating their houses with NG to using electricity. If however, electricity production cannot be concommitantly raised, you will have dramatic price rises there too.
All of the equipment and workers that support the production of electricity rely on oil; so, the price of electricity will rise as will the price of carrots. Furthermore, most electricity is produced by burning other fossil fuels that will also rise in price as they're depleted, with the first of these being NG. I had the pleasure to live in Hawaii during most of the 1980s, and almost 100% of its electricity is made by burning oil.