Technology will solve the problem, but not tomorrow

Advanced technology has been touted as the secret weapon to solve the problems that the upcoming oil shortfall will bring. There hasn't, however, been a lot of detail as to what these new ideas might be, and it is a little bit disconcerting to see that at a recent industrial panel on new technology that it was a merchant banker that was listing the areas that needed development.

The meeting was the Offshore Technologies Conference and the banker was Matt Simmons.
"We need breakthrough R&D that leapfrogs current programs," he said. He went on to note that the industry should be thinking about such things as developing ways to change unconventional oil and gas to conventional "without the energy intensity required," figuring out an inexpensive way to drill more appraisal wells and core and plug them, and inventing new forms of energy."
Quotes from other panelists included
"The main drivers of innovation are financially starved entrepreneurs." And "VC providers say entrepreneurs also must have customers first before funding will be provided. Yet without sufficient start-up cash or operating capital they cannot attract customers," and ""Desperation is the mother of invention. The best developments have come out when competitors are breathing down necks."
(From The Oil and Gas Journal).

These are a background to my response to a discussion in comments on whether we are at the peak of technology. To disagree with J let me say that I suspect that the peak years of technology will be about ten years from now.

As oil prices rise to what the public will call a crisis, the government will institute a program. Following the Homeland Security model it will give most of the money to large corporations and national labs that (Halliburton excepted) don't have a lot of background knowledge but do have political connections. Because the energy business is actually relatively complex a couple of years will be then be wasted. But, by finding and talking to the right experts (if still around), they will get a program growing in about 3 years and after a couple or three more years useful product will appear. Some good ideas can come from the national labs (Sandia, for example, did a lot to develop polycrystalline diamond bits). However few of the national experts are now familiar with the real problems that exist in a muddy hole deep in the earth and education is very expensive.

It will take a few more blogs to talk about some of the things that can be done, but let me give an example – to give some possible hope to Matt and J. For many years there was little incentive to develop a drill that would go faster than 200 ft/hour through rock. This is because that is about the fastest that the crew on a rig could assemble the pipe segments that are attached, one behind the other, as the drill goes deeper into the ground. More recently that speed limit was removed when this feed pipe was changed from segments to one continuous tube. This is brought to the site in a great coil and just unspooled down the hole as it is drilled. Coiled tubing has a lot of drawbacks (it doesn't turn so you have to put a motor at the bottom to turn the drilling bit and then you have to get power to that motor, for example). But at a meeting this week on a totally different topic, unrelated to the energy business, I saw something that might replace coiled tubing. The chances of this idea (being demonstrated in the hall) being even looked at by the industry is, in the short term, almost non-existent. But it is an example of how inventors from other fields can help and perhaps open the way to faster drilling.

Unfortunately there are other problems. The way in which research funding, from both industry and government, is allocated depends on the interests of those making the decisions. In general terms, if you have a mechanical solution to a problem, and the funder is only looking for a chemical answer, since that is his background, then regardless of effectiveness you will not get funded. But the problems of getting funding are really for another day. Innovation will ultimately give us an answer, it is just that to return to my one-month baby analogy, it can do nothing to help the problems that we are going to see in the next few years.

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The White House is calling for oil to return to $25 per barrel:

Are they smoking crack or do they know something we don't?

The WH has to look like it's doing something...and the press covers it as if a call from the WH matters re: the oil market.

But, no, pretty much you're right, they're all smoking crack.

Oil prices can easily drop below $40 provided the U.S. dollar keeps strengthening, as it has been lately. Just don't ask me why the USD is getting stronger.

The only things that make sense are: (1) there may be a perception that U.S. interest rates will rise significantly; or (2) the 'intelligent' money knows about some untoward future world event that will drive money to the traditional safe haven of the world reserve currency, the U.S. dollar.

For example, maybe the credit system is wobbling under the covers, something that you or I would be the last to know about, or perhaps there is another foreign invasion being planned by the egomaniacs in power (something that would likely also drive the price of oil up, even if the dollar did strengthen).

I am certain, though, that oil and other commodity prices can easily drop if the dollar rises vis-a-vis other currencies. Commodity prices in general rose as the dollar declined, and will fall when the dollar rises. It's like walking on a waterbed.

I think the thing to remember about research is that it will give you breakthroughs ... but not always the ones you expected.

As an easy illustration, compare the "future" predicted by decades of Popular Science covers to the "future" we got.

Both futures are weird and advanced, but not exactly in the ways people predicted.

(See also "City of the Future")

Color me skeptical. Faster drilling?

Increasing the fraction of a field that is economically recoverable will serve a purpose, and that is all that the technological fix is going to do for us. But what that purpose will be is to simply change the slope on the backside of the production curve. A good and worthy goal. Indeed, absolutely essential. But not salvation. Not a reprieve. Not a fundamental change in the basic outlook. Indeed, it is a deadly illusion. One that generates lethargy and worse.

I think it best from a planning standpoint to assume no new technology related to increasing the supply of conventional oil, while we might assume some marginal tech additions that increase the EROEI for oil sands and shales.

We might also expect some tech advances at the user end.

I should note that this tech discussion revolves around oil, with nothing said about NG. As I've stated before, it's the coming NG shortage that will be the first true energy crisis the USA faces, and I think most will agree. A very large opportunity was missed during the recent housing boom to mandate far greater energy efficiency in all house systems, and while there're a few smart buyers and builders who understand the need to build efficient houses, many are ignorant because of how the housing industry works and the lack of news regarding the onset of these crises.

I agree karlof - oil technology, well, it's almost a moot point anyway; kind of like arguing whether this is peak oil year or not. Oil is not sustainable, regardless.

I'm ready for rolling blackouts or whatever. But it's going to hit hardest in places like Texas, where there isn't any hydro, little coal, token nuke and lots of NG.

Those houses are only supposed to last 30-40 years anyway. We don't build to last anymore. The Mexicans have laughed at us for years as builders of "stick houses". Even the poorest Mexicans build their homes of cinder block. Of course, we are waay too smart to legislate anything like that where hurricanes roam...

Forget petroleum technology. It will only be used for plastic resin and lubrication in 50 years, if we are lucky, rather than as a fuel.

Perhaps of more importance would be to discuss other technologies with which to replace petroleum? I feel this is valid, because the reach of petroleum into our lives is most insidious. And since it will require many and multiple solutions, that might be a better tech discussion?

As far as resin and lubrication, the following may well be the technology to rely on thermodepolymerization