Not having worlds enough, and time.

Let me begin by pointing out one of the nice things about writing for a site like this. When a topic comes up there are times when you can say "Ah hah! But we wrote about that already!" and go back to the particular entry and there are all the references, so you don't have to look them up again. And this lets me pick up the topic that Prof G just referred to.

So let me begin by explaining what the Saudi Minister is talking about, since it is not really evident from what he said. As Aramco first began developing the Saudi oilfields it found, back in around 1957, an oilfield at Manifa. In the map we posted on June 2nd it is the one marked in black. And the reason that it is marked in black is that, although the Oil Ministry list it as one of the sources of the oil that will allow them to reach 11 mbd (also in that entry), the very significant 1 mbd that could come from that field is not currently refinable. To requote from Prospect Magazine as we did on April 4th.
Beneath the seabed off the coast of Saudi Arabia is an oil field called Manifa. It is giant, and its riches are almost untapped. There is, however, a snag. Its oil is heavy with vanadium and hydrogen sulphide, making it virtually unusable. One day the technology may be in place to remove these contaminants, but it will not be for a long time, and when, or if, it becomes possible, it will do no more than slightly reduce the rate at which the world's oil supplies slip away towards depletion. Even this field has one advantage over the massive reserves of oil which middle east suppliers are said to hold, ready to secure the future of industrial civilisation. Unlike those fantasy fields, Manifa does actually exist.
Were the world to develop a place to refine this oil (which would take several years), the Saudi Arabian Oil Ministry could almost immediately start pumping it, since the field is developed. But there isn't, and they can't. Which must be quite frustrating, since they keep commenting on it.

And this brings up the real issue that, too often, those who claim there is no problem are only too glibly willing to gloss over. To develop an oilfield takes time. In some of his articles (see blogroll & Oil Depletion Scotland for example) Matt Simmons gives the times it takes to carry out some of the activities involved in getting a field into production:
2.5 years for an onshore rework (Saudi AFK)
3-4 years for new onshore projects (Algeria)
5-7 years for a major offshore field development
5-6 years for a new refinery
Over 2 years for a new sulphur removal plan

He gets those numbers (and you can check them out) by looking at the contracts that companies enter into to do this sort of work. They appear regularly in Rigzone and the Oil and Gas Journal, to name but two sources.

For example just checking at the Oil and Gas Industry News on the blogroll (which leads you to Rigzone) brings up the news that Thai and Chinese companies will be developing the Saveh and Kouh-Dasht oilfields in Iran.
Mohaddess said the exploration and development period for the contracts is 10 years on which another 15 years can be added for the return of the contract value and interest.
As a rough rule of thumb it appears from prices quoted recently that it is going to cost around $1.3 billion per 200,000 bd of new oil developed in the Middle East.

Which brings us around to Mr Berman's article at the Houston Geological Society site. And I suppose that the problem with geologists is that they have a different sense of time than the rest of us. Ten years to them is somewhat quicker than the flip of a hummingbird's wing, and so perhaps he does not understand that finding lots of oil really isn't the issue here.

Chris Skrebowski has carried out a study of projects that are coming up in the next five years, and made the following list:
2003 saw 7 new projects
2004 had 11 new ones
2005 expects 18 new ones
2006 plans 11 new projects
2007 has 3 projects planned
2008 has 3 projects planned
None planned thereafter
The study indicated that this would not cover the increase in world demand in that time frame. (The full report is available as a pdf through the article).
"There are not enough large-scale projects in the development pipeline right now to offset declining production in mature areas and meet global demand growth beyond 2007," said Chris Skrebowski, author of the report, editor of Petroleum Review and a recently appointed Board member of the Oil Depletion Analysis Centre (ODAC) in London.

"Since it takes, on average, six years from first discovery for a mega project to start producing oil, any new project approved today would be unlikely to come on stream until the end of the decade," Mr Skrebowski noted.

The report, "Oil field mega projects 2004", analysed all known projects with estimated reserves of over 500 million barrels and the claimed potential to produce over 100,000 barrels of oil a day. Projects on that scale account for about 80 percent of the world's oil supplies.
It takes both money and drilling rigs to develop an oilfield. And in certain parts of the world there are not enough of either (see May 23rd entry). And after world production peaks new fields will continue to be found, and be developed. It is merely that there will be less produced each year.

In regard to Mr Berman's first point about peak oil where he says
Peak oil production is like having a birthday. You know it's coming, it arrives, you are officially one year older, you have a party and you carry on.
Um! And on day two when those customers who were getting oil on day one cannot, I suppose that Mr Berman will offer them cake!

In regard to point two, if I follow the theme, it is that we just aren't looking hard enough. For example
Perhaps the best example of ineffective exploration practice by a national oil company is Mexico. Figure 6 shows world reserves by region with Mexico shown separately. That country has effectively written down or depleted 75% of its reserves since 1999 when it had nearly 50 billion barrels, compared to only 15 billion barrels remaining in 2005 (Figure 7). Mexico has not had a giant discovery since 1977 when Cantarell and its satellites were found except Sihil which is a deeper pool within the Cantarell complex. Until this month, Mexico was claiming over 50 billion barrels of probable reserves in the as yet undrilled deepwater region of the Mexican portion of the Gulf of Mexico. A few weeks ago, that number was cut in half.
I don't suppose that this could conceivably be because people have gone out to some of the sites, drilled some holes, and found that the supposed oil wasn't actually there? Believe it or not, not every hole that is drilled into the ground finds oil. Even Saudi Aramco has not been successful in every hole that they drill. (They even dropped the overall recovery factor at Abqiaq from 72% to 60% this year according to Laherrere). And can you guess why drilling companies prefer that they drill with your money rather than theirs in the United States ?

Mr Berman goes on
The probability of discovering significant new reserves in Russia using private capital and technology is very promising but is currently not possible.

A similar situation exists in the Middle East where under-explored or under-developed countries like Iran and Saudi Arabia currently do not allow foreign investment.
Um! Well just look a little higher in the post (Rigzone quote). But also again the problem that the world has is with time, if they ain't found it yet it will not be here to help as demand grows in the next few years, and wishing for the tooth fairy doesn't make it happen. There have been a lot of aerial surveys in the Middle East and somehow I don't think that Aramco would be drilling 3,000 bd wells in a new field if they thought that drilling somewhere else would bring in 20,000 bd.

Moving on to China, I am not quite sure that I was surprised at the growth in Chinese demand for energy (after all the bulbs that I put in last night were made there). And I also continue to think that current projections of growth even this year are an underestimate (see May 18th). The surprise is not the problem, the size of their need is the problem, and the way in which they are moving to meet it is fully within their national interest. But it leaves less for the rest of us.

The comments on refineries relate to the discussion with which I began this post, and does not need further refinement.

The paragraph
I do not think we are entering a permanent energy crisis nor do I accept the commonly held view that the United States is an extravagantly wasteful country when it comes to energy. We have great demand for petroleum and create substantial wealth for the world as a result. How, for instance, could China have developed economically without U.S. investment and trade? I agree with Michael Economides that the United States is perhaps the most efficient country on Earth in its use of energy: we just use a lot.
I am going to leave to Ianqui and ProfG to answer, since the evidence that we quote, and which is increasingly being recognized by the MSM is obviously not convincing to Mr Berman. Particularly since
It seems for the present, at least, that the world economy can tolerate high oil prices.
I am sure the Japanese sitting without his suit in an office in Tokyo at 82 degrees would heartily agree.
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Well, Heading Out and Prof Goose are at least being more...thoughtful...than I was when I read the Berman article, but here were my thoughts. I promise, they get more serious as I go on.

1. First of all, the dude makes his graphs in Excel. But at least he has the sense to change the default gray background to white. (OK, snarkiness aside. I use Excel sometimes too.)

2. I have a bigger problem with the fact that he doesn't cite anything. He doesn't even really cite sources that support his position, much less ones that refute them.

3. This was not a particularly helpful analogy for me (and while I'm at it, the Y2K comparison is old. Get a better one.):
"I understand and respect the position of those who warn about the implications of peak oil production, but data does not suggest that the world is facing a permanent energy crisis. Nor does it seem particularly useful to know when peak production will occur. Peak oil production is like having a birthday. You know it’s coming, it arrives, you are officially one year older, you have a party and you carry on."
How is this? If we know the time scale that we're talking about, we'll be better able to plan for the future. This guy is why we're not currently feeling the crunch to really develop alternative technologies.

4. I also don't really understand the point of the section on undiscovered fields. In fact, the section isn't about not-yet-know fields, it's about all of the fields that have been discovered in the past decade or so. Correct me if I'm wrong, but these have probably been factored into the latest estimates of global proven reserves.

5. "nor do I accept the commonly held view that the United States is an extravagantly wasteful country when it comes to energy"...65-70% of our oil use goes to transportation. And all of those families where each person owns a car and commutes 30+ miles a day to their jobs? This isn't wasteful? The landscape of the US didn't have to develop the way it did (nowhere else in the world is the same), but since it did, it makes us wasteful.

As soon as you get to the birthday analogy, you know you can dismiss Berman's writing; anyone who doesn't see how ridiculously far off base that comparison is doesn't understand the fundamentals of the situation. (And yes, that's the polite version of what I wanted to say.)

Even though my degree is in economics, I've spent the vast majority of my adult life programming and working with computers. When Berman says, "What ever happened to the famous prediction of the Y2K disaster in which all the world’s computers would stop working when the calendar changed from 1999 to 2000? Billions of dollars were spent preparing for this event and yet nothing happened", he manages to make his birthday comments sound positively brilliant. Y2K was an e-fricking-normous problem, and the only reason we avoided a major disaster was because we spent billions of dollars on remiediation efforts and used the skills of many thousands of programmers, managers, and project planners. (My wife was a Y2K project manager at a company I guarantee that everyone here has heard of, so I had both the background to know what was going on plus a front-row seat to watch a huge remidation project play out over many months.)

The Y2K/PO comparison is indeed old, but more to the point it's a terribly innacurate one. The best way I know to describe the difference is by comparing squeezing through a hole in a wall (Y2K) to entering a tunnel (PO). To traverse the hole you have to get your entire body through, but once you're through, that's it, your ordeal is over. (In Y2K, when you fix a program it stays fixed months and years after 1/1/2000.)

Crawling through a tight, and narrowing, tunnel is a whole other thing. You have to either figure out how to get all the way through the tunnel without getting stuck (bridge to a post-oil world with the oil we have), or you have to find a loophole in the situation, such as a way to break through the wall of the tunnel (e.g. make fusion or really cheap oil/tar sands oil recovery work and redefine the problem).

I'll stop there, as I have neither the time nor the blood pressure points to spare in a longer critique.

You know, it really isn't good for your health to spend your time refuting every nitwit with an internet account.

SW: If your comment was for me, then I want to respond. This particular guy (Berman) isn't just another goofball posting from Mommy's AOL account on his basement PC. He's an editor of a geological online publication, so he gets quite a bit more attention than said nitwit. I feel that those of us who have informed opinions about the things he writes about so inaccurately have an obligation to respond.

People like Berman may think they're being sensible and helpful (and I'm sure he has nothing but good intentions), but they're actually making the situation just a little bit worse by reinforcing the wrong attitudes and beliefs.

Besides, I can't say no to a challenge or a chance to be an activist.

Well, at least his conclusion is right - the world can tolerate higher oil prices as they stand today, and probably 2-3 times what we are currently paying today, provided we move to active conservation measures. Other countries have done so very successfully.

And THAT is a BIG problem.

Congress is making noises about doing something - great! But what they simply will not understand is that this isn't going to go away. Whatever they come up with will be helpful, but it in no way alters the depletion facts. Without an exit strategy from petroleum, we will face the same thing again and again in the next 10-20 years. Each time it will become more and more critical, each bump will be more disruptive than the last.

The Apollo approach, while not necessarily the most efficient, is one the American people can buy into and understand. It is our Alzheimic (?) government reps finally providing a focus and a general direction, in the only successful way they can remember. The Internet is buzzing with so much worry that it has bubbled into the MSM. Even politicians can see that the Saudis are saying one thing and producing another. Big Oil has already weighed in with the Peak Oil crowd, albeit tacitly. Perhaps more importantly, the Pentagon is now looking at their long range vulnerability. A nuclear engineer friend has told me that he has been contacted about a decades old proposal for micro-nuke powerplants in tanks! It will now become an issue, and everybody will have to take the favorable position, based on polling.

I'm with SW here - Peak Oil is no longer a "crank issue". It is manifesting itself rapidly in the national unconsciousness. As we continue down the current economic overshoot path, consumers will be forced to tighten their belts in ways unfamiliar to them. But they will be forced to nonetheless, and energy costs will repeatedly come to the fore as they continually increase.

What we have to do is shift the solution discussion to something big and long term, rather than the normal government band-aid approach (like drilling up everything in sight). The normal band-aids will just not work as demand rises with depletion. The support for energy independence is out there, across party lines and in BIG numbers.

I am getting a little more optimistic as various pressures increase on Americans. The last thing the PTB want is a pissed off Joe SixPack. What they actually want is continued money and power, which is more likely to happen with a massive Apollo-type push (lots of opportunities for Pork barreling, corruption, returning favors, etc). An Apollo-type program announced by the Bushites could be rolled into an exit strategy for Iraq, if they would just be a little creative.

But then again, there is the madness of King George....


I don't consider nuclear to be either a short term or long term solution. Issues surrounding nuclear, have been succinctly said at

f uranium limits force a shift to breeder technology, the amount of weapons-usable plutonium circulating in global commerce would be about 5 million kilograms per year; only 10 kilograms are needed to make a nuclear weapon.

Perhaps we will find more uranium and not require breeder technology. In that event, this scenario would require 2,000 uranium enrichment facilities around the world. If they were making fuel for pebble bed reactors, each plant would be doing about 84 percent of the enrichment necessary for producing weapons grade uranium. Suppose a plant chose to start with the pebble bed fuel and make weapons grade uranium instead -- each facility could make 875 bombs per year. Weapons grade uranium bombs, in sharp contrast to their plutonium cousins, are almost foolproof to design and require no testing, an important distinction for diplomatic intervention.
The answers to global warming lie elsewhere -- in improving energy efficiency, adding wind, solar, geothermal technologies, and perhaps coal with carbon byproducts into stable geologic formations.

Of course, I think the Berman piece points out the importance of talking about the impending decline in oil production in as measured tones as possible. Berman was able to use Kunstler as a whipping boy because Kunstler was wild with his facts, extreme with his conclusions, and poor with his track record (i.e., the Y2K mess).

Sites like this one are important because they take a level-headed approach to discussing what's happening and what needs to be done. Folks who go on about how we'll soon be eating the elderly as the sit in their immobile SUVs are every bit as worthless as those who deny there's an upcoming problem at all.

Rajiv -

I never said anything about nuclear being the answer. I was simply reporting to the readers that a friend of mine, nuclear engineer by trade, had been contacted by a defense contractor concerning something he had worked on fresh out of the navy.

My opinion is, in case anybody is wondering, that home energy needs should be taken care of by solar as much as possible. Commercial should be similarly worked, with special emphasis on efficient working hours, business locales, co-generation and telecommuting where possible.

A mix of regionally abundant energy resources (solar out west, hydro where possible, wave/wind along the coasts, etc) should be tapped to offset and eventually replace oil. Nuclear will be a necessity due to the northern winters and peak demands, and if we are to use nuclear at all, then I am a huge proponent of breeder simply because the halflife of the waste is in double digits.

Uranium reactors pass massively radioactive waste on to future generations, and yellow cake has a depletion curve similar to oil - isn't oil enough of a learning experience? Uranium ore is relatively simple to find compared to oil - there may be a slight uptick in world volume, but it is still very finite resource.

I think ANY uranium waste is crazy to produce. DU employed in the Middle East by the United States will eventually be revealed as a monstrous crime, but not until the current administration have all passed away. The only real way to get rid of Uraniwaste is to space it, and the volume and mass we have now would break the world bank to do so.

I am of the opinion that if someone truly wants to build a bomb, then they can. Most engineers could - the knowledge has been out there for years. But if destruction and killing is the goal, biologicals are much easier, far cheaper, and an order of magnitude more destructive in todays globe-hopping economy. The precautions we use with uranium may need to be tightened for plutonium, but they are sufficient enough to deter all but the most maniacal.

No society has ever legislated or ordained away murder, or even mass murder, from existence. Man has somehow always managed to kill his brother. If you want to build a human society where killing is impossible, you will need to cut off our hands and pull all our teeth. And being creative, I can even think of ways men could kill each other sans hands and teeth...

Now that is my opinion, subject to revision in light of new knowledge.

Rajiv -

One other item. The source you cite is, like mine, an opinion piece.

And they also admit that the nuclear magii is out of the bottle with respect to weapons enrichment. Using uranium in lieu or plutonium with this fact in front of you is akin to closing the barn door after every cow is already out.

I think your goals laudable, and I respect your opinion. I am uncertain that we can do as you outline without a very significant change in energy consumption, essentially a giant reversion to agrarian life, or else a rethinking of our system of value with respect to time.

Yet I also believe that few people truly understand the insidious nature of radioactive waste, few can think in geologic time, and even fewer can put the two together. And you must think in these terms when the waste halflife is measured in tens of thousands of years!

I think by now I know quite well where you are coming from :-) My post was rather aimed at many who are now considering Nuclear to be a viable option.

Berman certainly disses the nationalized oil producing nations. If only the "free market cavalry" could come to the rescue -- as it did in South America (more on this in a moment) -- Mexico, Russia, Saudi Arabia and Iran would be rupturing oil so fast we couldn't consume it all! The petroleum geologists in these countries are probably sitting around the table saying "if only we were as clever as those guys at Exxon/Mobil...."

It is a mistake -- a BiG mistake -- to divorce the peak from geopolitical conditions. Berman does just this. Remember the 70's? Here are some of the things I worry about:

1) Rebellions by the people in South America against the expropriation of their fossil fuel resources. Venezuela is the obvious example and have you seen what's happening in Bolivia lately?

2) Osama and friends want the Kingdom back. That has always been their main goal. Osama thinks oil prices at about $200/bd is about right. Terrorism here in the US is one thing but a successful attack disrupting supply (or worse) in Saudi Arabia is quite another.

3) Russia locked the door on his mafia-like "free market" system because in large part he wanted Russia to control its own resources. See Vladimir Putin and Russia's Oil Policy. How Russia deals with China's needs in the future is an issue. Speaking of...

3) China! Either they are going to be very aggressive getting oil to feed their burgeoning demand or they are making promises they can't keep. Which will it be? If the latter, then "regime change" could be in the offing and those guys definitely want to keep their jobs. Look at how they crack down on Falun Gong, which they perceive as an important threat.

4) Iran is most definitely trying to create nuclear weapons and the US, Israel and Europe will never accept this. What if (as the rumor goes) we or Israel -- same thing really -- decide to take those nascent nuclear facilites out? What do you think would happen to oil prices then? I told Kunstler I thought we'd be at $100/bd within a week of such an event.

5) Iraq! What's going on is a civil war there between Sunni and Shia Islam though this is not generally acknowledged. The Kurds are aligned with the Shiites but actually are solely interested in their own autonomy, which really worries the Turks because of their own indigenous Kurdish population. Hits on the oil pipelines there are a daily occurence. Meanwhile, the US is running around fighting the Sunnis (and some outside jihadis) for the Shiites/Kurds. This situation is very unstable, stay tuned.

And this is not a complete list of geopolitical unstabilites that could affect oil prices. Now that demand is now beginning to outstrip production, the added factor of a geopolitical crisis is just the thing to push peak oil scenarios quickly to reality as described by such films as "The End of Suburbia".

Berman lives in a dream world. Finally, when that day comes that Americans are no longer getting their oil fix, what will those Red State people with the political power demand that we do?


Dude, you got to watch 'The End of Suburbia'?

How cool - I think they outlawed that film here in Texas (we're one of those Red states).

Sure wish I could watch that flick

Yes, I think there is a heavy does of racism mixed in with free market fundamentalism that causes these people to think that the state run oil companies in the Middle East are incapable of efficiently exploiting their resource. For the last thirty years, these folks have sent their best and brightest to the finest universities in the world. Oxford, Cambridge, Cal Tech, MIT, The Colorado School of Mines etc. These people have gone back home and used their copious oil revenue to employ the most modern technologies and best practices available. After all, for most of these countries, these nationalized oil companies represent the government's primary source of income. And if there is one thing a government is generally focused on it is collecting revenue.

Grinzo & SW -

I think that Berman is the typical American geologist. This encompasses a very US-centric POV, complete faith in technology (3D seismic with 4D visualization is definitely mesmerizing), and ultimately a faith in benign intentions of national oil companies. He is a very busy man, and it appears to me he just tossed a lot of history onto the wall, poo-poo'ed Hubbert due to the change in the SIZE of his curve (the slope changes would have been nearly invisible considering the rise in consumption), and made the assumption that we will always be able to find enough, because we always have. If not, then it must be due to looking in the wrong places. - stock geologist answer from my drillers POV. They (geologists) always have another deeper or farther out, more expensive zone to look at, or else some new play based on reworking the numbers.

I think SW's point is well taken - Russia and most other big national oilcos are not idiots. Where their people may be unsure about something, a US consultant, oilco or consulting firm is usually called in with expertise in the required area, as second opinions or to posibly find a new technological angle to exploit.

The Schlumbergers and Halliburtons and Hughes' of the world are not shy about extending these companies help. Bear in mind that it has been the OIL SERVICE COMPANIES that developed all the new technologies, not the oilcos and their geologists. All the new software goodies and visualization stuff was developed on oilco budgets BY OIL SERVICE COMPANIES in most cases - as an example. Service companies actively sell their technologies everywhere, as opposed to oilcos, who tend to retain technologies as proprietary tools or intellectual property.

I'd like to see Berman and Campbell debate.

Very important to understand is US Imperial policy is essentially the same today as it was 110 years ago. The world can easilly see this track record, the increasing harsness and selfishness of its policy is increasingly isolating. For a quick primer, look at the recent US demands upon Africa if any of its debt is to be relieved. It is also very important to understand that this policy is bipartisan, as the only nationwide anti-imperial party is the Greens. These are all facts taken from the publicly available internal record.

Unless there's a drastic policy change soon, I see the slowly growing, de facto, isolation of the Empire morphing into one of open containment. This will result in either WW3 or the drasticly needed policy change to cooperation instead of confrontation.