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Peak Oil Media Guide
Posted by Prof. Goose on July 13, 2008 - 10:15am
This is a guest post by Chris Nelder, author of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century. Chris will have another book (with Jeff Siegel) coming out soon, Investing in Renewable Energy: Making Money on Green Chip Stocks, but it doesn't come out until October. This is a media guide that Chris has been putting together that he wants feedback on, so help him out. Also, this document goes well in tandem with Gail's Peak Oil Overview that can always be found in the top guidebar that goes a bit further in depth. Gail's is meant to be extensive, this one is meant to be "short but bulletproof."
Recent media coverage of peak oil, and the energy options for the future, has been fraught with misinformation. In such an environment, the average person has little chance of knowing whether oil from ANWR or the Arctic can save the day, or whether there are 1.2 or 12 trillion barrels of recoverable oil out there. But confusion breeds apathy, and that's not something we can afford anymore. I believe that the impending energy crisis is too urgent to allow misinformation about peak oil to go unanswered. We need to bring the public up to speed on the realities of energy before we can have any sort of intelligent conversation about reforming energy policy.
It is my hope that the Guide will be a “living document” which can be updated and enhanced as time goes on by knowledgeable experts such as those on TOD, and I welcome their input. I'd like it to be as short and to the point as possible, but also as bulletproof as possible in presenting solid information.
This is a short summary of important concepts about peak oil and world oil production, prepared for the benefit of the media. Last revised: July 9, 2008
1. It’s not the size of the tank which matters, but the size of the tap.
Peak oil is not about “running out of oil,” it’s about the peak rate of oil production. It’s not the size of the tank which matters, but the size of the tap.
When the production rate of oil reaches its geological limit and begins to decline, the world’s economies will be forced to live within a shrinking, not expanding, energy budget. The economic impact of peaking oil production is what concerns us, not the amount of oil yet to produce, because all economies depend on continuous growth. We won’t “run out of oil” for another 100 years or more, but it will be produced at ever-declining rates.
This is an essential concept. Talking only about the number of barrels of oil that might exist somewhere, without also talking about the rate at which that oil can be produced, and when, entirely misses the target.
Oil production rates generally follow an irregular bell-curve shape. It is simply the nature of petroleum extraction that it gradually ramps up, reaches a peak or short plateau (sometimes with a secondary peak) when roughly half of the recoverable oil has been produced, and then declines.. This observation has been made in thousands of oil fields (and oil producing nations) worldwide, and is named “Hubbert’s Peak” in honor of the geologist who first described it, Dr. M. King Hubbert.
For the world, ASPO-Ireland’s working model of past and future oil production looks like this:
![[image]](http://www.theoildrum.com/files/POMG_Fig1.png)
Figure 1 ASPO-Ireland World Oil Production Model
Source: Colin Campbell, ASPO-Ireland Newsletter No. 90 – June 2008
This model is based upon a detailed study of all the world’s major oil fields, with all forms of petroleum taken into account.
According to the June 2008 revision of this model, the peak of all petroleum liquids—including heavy oil from Venezuela, deepwater oil from the Gulf of Mexico, oil from the Arctic and Alaska, and natural gas liquids—is this year, 2008. But the exact date of the peak is almost irrelevant when considering the implications of peak oil.
2. We are now at, or “close enough” to the peak.
Right now, the world is producing between 86 and 87 million barrels per day (mbpd) of “all liquids,” and that rate has changed little since 2005. Crude oil production has been stalled at roughly 74 mbpd. The rest of the “oil” counted in the “all liquids” numbers includes natural gas liquids, tar sand production, biofuels, and refining gains, and it is these alternative liquids that have been responsible for nearly all of the growth in world oil production for the last several years.
The world has reached a bumpy production plateau, as shown in the following chart.
![[image]](http://www.theoildrum.com/files/POMG_Fig2.png)
Figure 2 World Liquids Fuel Production January 2002 - May 2008
Source: Oilwatch Monthly, June 2008.
After a serious review of the flow rates of the world’s oil producers, we conclude that world production is unlikely to ever exceed 90 mbpd, and in fact, might not increase more than 1 or 2 million barrels above where it now stands. It appears we are now on the peak oil plateau, or close enough to it that the date of the technical, absolute peak doesn’t matter.
As ASPO founder Colin Campbell has said, “Arguing endlessly over the precise date of the peak also rather misses the point, when what matters is the vision of the long slope that comes into sight on the other side of it.”
Within the next three to six years, the world will likely reach the end of the peak oil plateau and go into terminal oil production decline.
At that point a growing world population will be forced to live with an ever-decreasing supply of oil. Many of the adaptation strategies we are counting on, like increasing the share of renewable energy and replacing the vehicle fleet with more efficient vehicles, will require decades and enormous investment to make much difference.
Unfortunately the world no longer has decades to make the necessary changes. Not only are we “close enough” to the peak, we’re far too close to it.
3. Oil production in the U.S. is well past its peak and is in long-term decline
The U.S. uses about 20 mbpd of petroleum and other liquid fuels, and produces about 7 of that (only 5 of which is actual crude oil). The other two-thirds is imported. There is no possible way that we could produce another 13 million barrels per day domestically, no matter where or how quickly we drilled.
The potential flow rates of the remaining U.S. deposits are formally unknown (we’ll get to that in a moment), but their contribution cannot fundamentally change the basic trend line of our petroleum production. Here is a chart of historical U.S. oil production:
![[image]](http://www.theoildrum.com/files/POMG_Fig3.png)
Figure 3 - US Oil Production 1900-2005
Source: Jean Laherrère
The 38-year decline in U.S. oil production was not the result of politics. It is simply the nature of petroleum extraction.
In spite of major technological advances since the U.S. peaked in 1970 (3-D seismic, horizontal drilling, CO2 flooding, computer processing power, etc), our oil production is still declining. Indeed, despite the discovery of the largest oil field ever found in the U.S. (Prudhoe Bay), we were unable to get back to the production level at the peak in 1970.
4. Oil shale: the fuel of the future…and it always will be.
After four decades of fully authorized, commercial, even subsidized attempts to develop oil shale into a usable liquid fuel, no one has ever been able to make it economically feasible. Part of the reason for that is that it’s not even really oil—it’s kerogen, an immature precursor to oil. Kerogen is a solid, like a low-grade, high-ash coal.
The most ambitious oil shale project in the country is a pilot project in northwest Colorado operated by Shell. Their plan is to drill several hundred holes into a football-sized plot of land, into which heating elements are inserted. They will heat up the “pay zone” of hydrocarbons, which is often buried 2000-4000 feet deep, to temperatures up to 700 degrees F, and keep it there for three to four years in order to cook the kerogen into a liquid.. That takes a great deal of energy input.
In order to keep the heated zone from leaking oil into the surrounding water table, a “freeze wall” is built around it, which will use even more energy to freeze the ground with giant chillers.
The net energy of this process isn’t yet known, but it’s so energy-intensive that we’re willing to bet this technology is unlikely to ever produce more than a modest flow (though perhaps a very long-lived one) of extremely expensive synthetic oil.
ASPO’s Randy Udall puts it this way: “Suppose you owned $100 million dollars, but the bank would only allow you to withdraw $100,000/year. You would be rich…sort of.”
5. ANWR and the continental shelf are no panacea.
The potential flow rates of the conventional sources of hydrocarbons locked up in ANWR and the continental shelf cannot be known until they are produced. But we can make ballpark estimates.
All of these areas have been well explored, and we have an idea of what they might produce: a slight bump in the bell curve of U.S. oil production, like this:
![[image]](http://www.theoildrum.com/files/POMG_Fig4.png)
Figure 4 –US Oil Production 1860-2100
Historical data (1860-2006, red symbols) and model predictions for US oil production rates in billion barrels per year. - Dashed line: Base case with 231 billion barrels ultimate cumulative US oil production. - Solid line: Production curve with 42 billion barrels of new oil resources (273 billion barrels of ultimate cumulative production).
Source: Dr. Kyriacos Zygourakis, Rice University, “Commentary: On Quenching Our “Big Thirst” for Oil,” Peak Oil Review, May 5, 2008.
That model is a best-case scenario of US oil production if all off-limits federal lands were opened to drilling.
There are limits on all of the remaining U.S. oil reserves, for numerous technical reasons that would be beyond the scope of this summary. To cite just one example, let’s look at the capacity of the Arctic National Wildlife Refuge (ANWR).
There is only one pipeline that could transport oil from ANWR: the 800-mile Trans Alaskan Pipeline System (TAPS), which serves the Prudhoe Bay field. No other oil pipeline from Alaska’s north slope would ever be built, due to the cost and logistical issues. TAPS can transport a little over 2 mbpd, and carried about 740,000 bpd last year. Therefore, if we brought ANWR online today, it could at maximum deliver about 1.25 mbpd. But in reality, it would take 8-10 years after approval to begin producing the first of that oil. Furthermore, preliminary estimates by the USGS indicated that ANWR would likely only produce around 750,000 barrels per day at peak.
If we are currently on the peak/plateau of global oil production, and production starts to fall within the next five years, then 10 years from now, at a reasonable average 2.0% rate of net depletion, world oil production will be down 11 mbpd—about 12%—from where it stands today.
In total, we believe that if all limits on domestic drilling were removed, it could only increase US oil production by a maximum of 2-3 mbpd. Once it came online bit by bit, given the loss in global oil production by that time, the additional oil from ANWR and all other undeveloped federal lands will be underwhelming..
The U.S. Department of Energy estimates that drilling in ANWR would only reduce the price of gasoline by less than four pennies per gallon—20 years from now!
Although every barrel we can produce domestically will be welcome and would slightly reduce our dependency on imports, the idea that we can somehow drill our way to independence from imported oil is misleading in the extreme. At the rate that the U.S. currently uses oil, the chance of producing all of our own needs domestically is zero. The only way we can truly become energy independent is by severely curtailing our oil demand, and switching loads over to renewables.
Indeed, we should recognize, as the Saudis have, that the oil that remains will only become more valuable as time goes on, and it makes sense to save some for future generations. Burning every last bit of it as quickly as we can makes no sense at all.
6. Oil prices aren’t all about us.
It’s an all-too-common belief that if only we had authorized more domestic development of oil, our gasoline prices would be lower.
Even though we are the proverbial 8,000 pound gorilla, consuming about one-quarter of the world’s energy, oil prices are not all about us. The increasing consumption of countries in Asia, South America, Russia, and the Middle East have more than made up for the slight declines in petroleum consumption we have experienced this year. Global consumption is expected to increase another 1 mbpd this year, even as consumption declines in the U.S.
The fact is that oil is a globally traded commodity. Since the U.S. imports two-thirds of the oil it consumes, the price of domestic oil will always maintain parity with global prices. Therefore, no matter how much we drill up the remaining resources, it will not significantly change the price of fuel.
With the global supply and demand balance as tight as it is for oil, natural gas, and coal, it is highly unlikely that a slight increase in U.S. production could make any noticeable difference in our gasoline prices.
Once we take into account the decades it will take to bring new domestic resources online, any additional production we can manage will only slightly nudge the decline curve in global oil production, and only slightly depress domestic prices for gasoline, for a short while.
Congress can do little to change that.
7. Depletion is relentless.
Depletion is another frequently misunderstood issue.
As discussed above, all oil fields peak and go into decline. The depletion rates after the peak can vary widely, from about 2% per year for a well-managed onshore field, to 20% or more per year for deepwater fields like Mexico’s Cantarell field, and other deepwater fields in the Gulf of Mexico. Of the top 21 oil producers in the world, 11 are past their peaks. For a summary table of the world’s top oil producers and their depletion rates, see “Commentary – The Oil Production Story: Pre- and Post-Peak Nations,” Peak Oil Review, June 16, 2008..
The concept is simple: Oil production first must make up for the depletion of mature fields before any net additional oil can be counted. It’s like pouring water into a bucket with a hole in it.
Anyone familiar with a balance sheet should understand this concept, but many observers routinely miss it. World oil production must first struggle against a background decline rate of about 4.5% from mature fields before it can manage any increases. Currently, the net increase in global oil production is about 1% per year.
8. Expectations for the future are shrinking.
Peak oil deniers often like to point to the International Energy Agency’s estimate of last year, which projected that world oil production will rise from 85 mbpd today to 110 mbpd by 2015, and to 116 mpbd by 2030. Others still quote the IEA’s previous estimate, that world oil production would eventually rise to 130 mbpd.
What they don’t realize is that the IEA’s estimates, along with those of the Energy Information Administration (EIA) and other analysts, have been continually shrinking for the last several years. After a long history of predicting that oil supply would meet whatever the demand was projected to be, the IEA started to reduce their targets about two years ago, when it became clear that net oil production had stopped growing.
Reality is setting in.
In May 2008, the Wall Street Journal previewed the IEA’s upcoming report on the world's top 400 oil fields, including for the first time a detailed study of their individual depletion rates. The IEA concluded that the depletion of aging oil wells, combined with the dampening effect of skyrocketing costs on new field development, means that the world will have a hard time reaching 100 mbpd within the next two decades. Their projected supply curves are now sharply reduced, while their global demand projections continue to show about a 1.5% annual rate of growth.
Fatih Birol, the IEA's chief economist, said: "One of our findings will be that the oil investments required may be much, much higher than what people assume. This is a dangerous situation."
9. Improved technology cannot move the peak.
The potential of enhanced oil recovery (EOR) techniques is well known, after over four decades of experience in the field.
What that experience has shown is that (with a few minor exceptions) improved technology cannot move the peak. What it does is increase, over time, the overall amount of oil that can be produced. On the bell curve, it thickens and lengthens the tail. But it does not change the time at which production peaked.
Deepwater drilling, another relatively new oil field technology, has been similarly oversold. What we have found is that deepwater fields tend to “crash” at up to 20% rates of depletion once they pass the peak.
Some oil analysts, such as Peter Jackson and Daniel Yergin of CERA, have routinely overstated the potential of improved technology as a way of denying the reality of peak oil. ASPO-USA’s direct challenge to their estimates remains unanswered.
About the Peak Oil Media Guide
The Peak Oil Media Guide is a living document updated by an ad-hoc group of knowledgeable energy analysts. Current contributors are listed below.
We welcome additional input and updates to this document. Please send comments to Chris Nelder at chris.nelder@getreallist.com and include “PO Media Guide” in the subject line.
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
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This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
I'd suggest there are two other sections you need:
Demand > Supply = Unlimited Prices
How demand destruction is created and how prices have to rise dramatically to reduce demand even slightly. A taste of how prices will have to rise to deal with declining supply, the relationship with recessions and how post peak there is no way to climb into growth again (permanent depression)
It matters because...
How car journeys are not the only uses of oil and how the systems of society can be come linked and destroyed by the declining supply of oil. In particular the way in which food can become linked to oil price, and thus create shortages and famine. Also trucks, linkage to natural gas prices, electricity, etc.
Great work and much needed.
I would move the section about the USA to the beginning. Few people appreciate that US production has been declining for decades. It is a simple fact and it well illustrates the concept of oil peaking.
I think it may be more convincing to the unconvinced than starting out with references to models and projections produced by true believers. Put all references to Hubbert in a separate section towards the end.
Watch out for phrases like "geological limits" which the average person does not understand. They think oil is produced, not extracted.
Also, is it not the case that most oil analysts agree that production rates will peak at some time, the dispute is over WHEN? In other words, "peak oil" is an established, mainstream concept, not a fringe one. It would be a step forward if the media began handling it that way.
(This may be an uncomfortable line of argument for those of us who prefer to be on the fringe rather than the mainstream.)
I personally think geological limits is an extremely useful term in explaining peak oil. It sounds "liberal"ish, but provides a glimpse of a larger framework, as people who don't know what it means work out what it means.
Understanding net energy is important to understanding Peak Oil. The main reason we pump oil is to burn it for energy. As we substitute lower EROEI oil for depleting higher EROEI oil, the amount of energy available decreases even if production stays constant. This can happen on the production side (i.e. deep water oil has a much lower EROEI than East Texas fields had). It can also happen during refining (i.e. coking heavy oil is more energy intensive than fractional distillation).
It is insufficient to focus on raw production numbers, because raw production doesn't capture any of this. If production is flat and EROEI is declining, then net energy is declining and prices will go up.
In addition net exports is an important part of the picture, at least for countries that import oil. IMO, the combination of the two -- declining EROEI coupled with declining net exports -- is why oil prices have risen so far, even as the G7 economies slip into recession.
Declining EROEI is nearly impossible to quantify, however. It also involves more than oil, e.g. natural gas is a significant input into both Canadian tar sands and ethanol. But I think the effect is real. We are feeling it. It is going to get progressively worse. And it is nearly entirely below the radar. I don't know how to make the case in more than arm-wavy sorts of ways.
In my public speaking on peak oil, I have found that explaining EROEI complicates matters and actually is not necessary for people to understand the problem and that we have to move urgently. It is an important element, absolutely, but not necessary to achieve those two goals (we have a problem and it's urgent).
I would keep a discussion of EROEI out to keep the document brief and to keep people focussed on the core issues. Sending the thought process sideways with that extra wrinkle will hurt the cohesiveness of the document, not help it.
Great job, Chris.
Well done. Maximum tap flow is the key. Comment on ANWR are on target. Shale? The big question mark. The tar sands already are creating an environmental nightmare that can be seen from space.
Darn right the tar sands is a nightmare.The Athabasca River is toast; many autochthonous people in the region are suffering from a very high rate of cancer due to the environmental carnage. Can you imagine what would happen to the Green River (a tributary of the Colorado River) if they started open pit mining for oil shales?
Possibly environmental Armageddon for the Southwest USA.
It is my view that if the media is going to write about peak oil, they need year-by-year data points that they can plot as to what future oil production will look like under peak oil, so they can illustrate their article with some easy-to-understand graphic. They are also likely to need someone to point them to historical EIA data that they can graph that corresponds to the forecast.
The graph from the ASPO Ireland newsletter does not work for this purpose, because it is way too complex for the average reader, and the data points are not given so that the media can reproduce this. Currently, the way media can do this, if they figure it out, is contact me at GailTverberg at comcast dot net or Nate or editor at TheOilDrum dot com, and we will provide something like an interpolation of the data points in the ASPO Ireland newsletter, and also point them to EIA data.
It seems like the media guide should either provide such data or should tell the media who they can contact for information of this type.
It is fantastic to see the ASPO putting out a media guide! Congratulations!
I agree with Gail. Most media will want to create high quality charts and graphics. And having the data for each of your graphics available would really help (and perhaps ASPO should spring for a graphic designer to polish up the graphics in this guide).
My other recommendation would be to take a look at the Scientific American article by Campbell and Laherrere. That article does a nice job of sketching multiple lines of evidence supporting peak oil. HL is just one.
Here is one on line version
http://dieoff.org/page140.htm
Of those, I think it is very valuable to show that discoveries have been falling since the 1960s. People hear about new oil field discoveries every day and feel that peak oil cannot possibly be true. But once you can see that we are not finding nearly as much oil as we are using, then those stories about Jack 2 wells become much, much less convincing.
You might also consider including a chart showing the relative sizes of oil, coal, natural gas, and wind and solar just so people understand that the transition will be time consuming and difficult.
Here is such a graph from Wikipedia.
http://upload.wikimedia.org/wikipedia/commons/8/8a/World_energy_usage_wi...
I agree on the relative size of oil, coal, natural gas, wind and solar being a worthwhile thing to understand. This is the one I have been using, which is in my overview post. If the media is looking at both, they don't need to see the same graphic both places.
I take your point, Gail. If you'd like to suggest a different graphic, or perhaps a SHORT table of data that could be incorporated as a sidebar, I'll insert it. If the table is too big though, in the interests of keeping this piece short and to the point, then maybe referring to your other doc and the EIA site is the way to go.
Gail,
I agree completely that part of our job is to make it easier for others (media, policy makers, general public) to access the raw data, generate graphics and come to their own conclusions about what has happened in the past, what is happening today and what is likely to happen in the future.
Removing the hurdles to working with the raw data is the entire premise behind the Energy Export Databrowser. The goal is to make generation of high quality data graphics as easy as possible. Chris Nelder recently used several of these graphics in his The Impending Oil Export Crisis article. If you haven't looked at the databrowser since Robert Rapier's article last month you should have another view. The user interface has been updated and it now includes the coal, oil and gas worksheets from the 2008 version of BP's Statistical Review.
And I've tried to make access to the raw data as easy as possible. The Statistical Review comes as an Excel workbook with various inconsistencies that have been cleaned up and converted to ASCII CSV that anyone can use. These files are available from the data page linked from the databrowser.
I have focussed on the historical data from the Statistical Review rather than projected output but I think the same approach would be useful for any of the datasets that we want the media to make use of. The basic principles are:
If we are going to move away from preaching to the choir we need to empower those disinclined to hear our message with tools that will allow them to educate themselves. The data really do tell a pretty interesting story all on their own.
Happy Exploring!
-- Jon
Yes Jonathan, this indeed an excellent, very easy to use tool, well done - there is an excellent help page as well!
Others, test it out for yourselves - try France as an example and see how much oil,gas and coal they produce themselves - if you were them would you have gone for nuclear in a big way?
It will be interesting to see how France fares with meeting their mandatory 20% targets for reducing CO2 emissions by 2020, since nuclear emits lots of CO2 during initial power station build and decommissioning - guess what they are soon going to have to do in a big way?
Quantify lifetime CO2 emissions of nuclear plant relative to coal plant. Scale by power produced.
I agree. All too often we are presented with complicated compound graphs that try the patience of even experts. Ordinary folk won't even look at them. T Boone Pickens knows how to do it. "oil is 85 million and demand is 87 million" Period, end of story. That people can understand. I thought his presentation on CNBC was excellent. He's a good teacher.
"T Boone Pickens knows how to do it. "oil is 85 million and demand is 87 million"
If you use that quote, you have to be ready to answer the question "Then why aren't there shortages at the pump?"
People will ask it, and if the answer is not satisfactory, they will dismiss the whole idea.
RC
The reply I give is " Because a third of the world does not want to walk or ride bicycles anymore "
Then give Matt Simmons's price comparisons re cups of expresso coffee,water and soft drinks etc.
Well, Econ 101 informs us that when demand exceeds supply the price rises until more is supplied and/or less is demanded. If an external agency (government) places an artificial/arbitrary ceiling on prices that is below the natural market price, the supply/demand mismatch will then manifest itself as a shortage. Then there is the whole issue of what 85M is...conventional oil, GTL/CTL, biofuels, etc? The non-conventional oil complementary/substitute liquids could very well be supplying the difference if they are not included in the 85M number. A good question is what is the World elasticity of demand for oil? How do country oil subsidies to consumers affect the resource depletion curves and the price? American consumers have a notoriously short and over-optimistic memory: Gasoline prices have tended to rise in a sawtooth fashion...going up quite a bit, then backing off by a quarter, a third, etc, then rising again to exceed the previous peak. During the price regression part of the sawtooth, consumers rejoice, do high-fives and tell themselves that the nay-sayers are idiots and do not understand the (fictional) 'free market',then they go back to driving large SUVs and driving like there is no tomorrow. Most people have no idea that oil was ~$29/barrel back in 2001. The vast majority of people have no concept of PO, and furthermore are ill-equipped to understand even the most basic precepts of PO, and even worse, they don't want to know. Watch 'Three Days of the Condor', and pay rapt attention to the final dialog. Last man (nation) standing is where we are going...Mad Max, anyone?
IMO peak oil is about crude + condensate, the stuff that comes out of the ground as a liquid, has peaking characteristics and decline rates and we haven't produced more than ~74 mbpd for about 4 years.
IMO it isn't about all liquids since that includes ~11 mbpd of so called 'alternates'.
IMO the only reason you would mention 'all liquids' is to show that they clearly aren't adequate alternates despite heavy subsidy and environmental degradation.
An excellent point, and an issue I struggle with. Almost everybody uses the all liquids numbers, but that tends to mask the reality of crude production. I am thinking that perhaps a simple two-line graph showing just c+c (or even just c) on one line, and all liquids on another, would be the best solution. If anybody knows of such a graph, please send me a link or post it.
It depends who your intended audience is, but actually, if they live in a 'net importing' country then the outright decline of 'net exports' in recent years is much more important than peak oil itself.
It is the 'net exports' that are the 'marginal' barrels that determine the current high prices.
http://netoilexports.blogspot.com/
Peak oil is not a problem while you live in an oil exporting country, so I suspect you do mean to just inform people who rely on imported oil?
You can't have your cake and eat it too. Oil is either going to be much scarcer and therefore much more valuable by then or your entire scenario makes no sense. You know what nonsense that prediction is, its disingenuous to include it.
Actually, I think the DOE's estimate makes intuitive sense. A 0.50 - 0.75 mbpd increase in US oil production 20 years from now, vs. say, a 78 mppd global production rate by then, probably would have an impact of pennies on a gallon of gasoline. If you don't agree, then please "show your work."
It was an EIA report. Its based on the same business-as-usual growth projects as the rest of their publishings. I forget the exact details but its based on something like 115mbpd being pumped at the time ANWR comes online.
Good point. To resolve this issue, I doubt it would be worthwhile to try to recalc the number based on, say, what Campbell's model says production will be in 10-20 yrs time, because who knows what the cost of oil will be? Perhaps a write-around is the way to go...but intuitively, I can't see the additional production making that much of a price difference. So maybe it's ten cents, or fifty, on a $10 gallon...by that time, it's still a negligible impact.
Thanks PG for posting this. I expect it will be greatly improved once it has been tempered in the TOD forge. Some excellent points have already been made.
Unfortunately I must be away from my desk for most of today, but please keep those comments coming! I will review all suggestions and incorporate changes accordingly when I return.
Although Peak Oil is a tough sell, my experience is that most people can get. After all many credible sources say we are at peak now, such as the U.S Army Corps of Engineers.
But show people that all of the best scientific study shows that we can't make up a fraction of liquid fuels lost in declining oil production. Most people, and even many Peak Oil experts are ignorant of this basic literature.
I show audiences the best scientific and independent government studies there are, and even scientific thinkers can't face reality. Ideology, especially for Americans) often dominates the psyche, and it is often stronger than scientific thinking.
So, I am really pessimistic about the media or policy makers getting it so that they will begin to focus on risk management, that is, reducing the number of mass fatalities that will come soon:
According to Matthew Simmons, global oil production is now declining, from 85 million barrels per day to 60 million barrels per day by 2015.
During the same time demand will increase 12%. This is like a 40% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted.
Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.
We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from "outside," and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.
I think you need to be careful what you are comparing to what. The 85 million barrels a day number you mention is 2007 production on a total liquids basis. I think it is fairly clear from Matt's presentations that most of his analysis is on a crude and condensate basis. Because of this, I don't think it is reasonable to compare his 60 million a day forecast for 2105 with the 85 million barrel a day total liquids forecast.
I haven't myself noticed Matt's forecast of 60 million barrels a day for 2015. Do you have a link? The number I have been using is 65 million barrels a day for 2013, which is fairly similar.
Assuming Matt is talking crude and condensate, the appropriate comparison is 74 million barrels a day in 2008 to 65 in 2013 to 60 in 2015. While this is bad, it is not nearly as bad as declining from 85 million barrels a day of total liquids in 2007 to those amounts. Also, there may be increases in some of the "other liquids" categories, partly offsetting the declines, so that the total liquids percentage decline will be less than what is implied by going from 74 to 65 to 60 million barrels a day.
Gail, thank you so much for making these kind of clarifications!
I have seen dozens of the type of comparisons you just corrected thrown around in the last couple of years. The use of such esoteric calculations undermine the credibility of the whole "peak" concept. It is possible, if you massage the numbers just right, to prove that oil production will be effectively ZERO in just a few years.
Using various "shock models, ELM (export land models), dis-allow of all reserve growth, dismissal of all discovery and drilling efforts (even though these efforts have always delivered given time, or the oil industry wouldn't spend billions on them!) and combining them just right, and projecting a cascading collapse of world economies starts to sound like the "Y2K" hysteria to the public, and becomes just one more apocalyptic vision in a media driven world that loves to peddle them. Be very careful of overreach.
RC
GAIL, PICO, AND THISISITIMOUT
Here is the source for Simmons:
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_...
I have commented several times here on TOD about this, and I assume that this reference is on Energy Bulletin, and probably on TOD too.
Some people on TOD asked why Simmons was is so pessimistic. I said here on TOD in the last few day that Simmons knows all of the production scenarios, plus he knows, and has been talking about the number of rigs, sad state of the rigs, personnel, bad investment environment, few and weak platforms, and rusting infrastructure which he has talked about for years.
The collapse in oil production will come much faster than even Simmons imagines. Maybe he read my report (I sent it to him) and maybe he has become more pessimistic as a result. I suggest that you read the report too.
Thanks for the link. You are right--it does look like the author is comparing the 40 to 60 million barrel a day range to the 85 billion. Since it is the TimesOnline, you would think they would have checked the quote with Simmons before they ran the piece. I can see why it might be reasonable to assume these numbers are correct. I am sorry if I questioned what was a reasonable assumption.
With such low numbers, I would be interested in what is going into Simmons' thought process. Did he really intend the comparison that was made? I can imagine that production might drop to 40 million barrels a day by 2015 if there is a financial collapse of much of OECD. I wonder if this is the kind of thing he was thinking of with the lower end of his range, or if he had something else in mind.
In any case, I can't see using Simmons' numbers without some good published data to back it up. I feel more comfortable using Campbell's model, for that reason...but if anybody wants to argue otherwise, have at it.
Humpty Dumpty sat on a wall.
Humpty Dumpty had a great fall.
All the king's horses and all the king's men
Couldn't put Humpty together again.
Why oil production can collapse rapidly:
Interdependence in the Production of Energy
The production of each type of energy is highly dependent on other types of energy. Shortages or high energy prices for one type of energy will limit the production of other energies. Oil is critically important in the production of all forms of energy. Shortages in oil will mean shortages in gasoline, diesel, and jet fuel. Thus oil rig workers won’t be able to travel to the oil fields and off-shore platforms; coal won’t be mined or transported; electric power won’t be generated in some plants; roads and bridges won’t be maintained; and spare parts won’t be delivered for oil drilling and refining, electric power generation, and for natural gas production. Shortages of natural gas will limit the generation of electric power and production of Canada’s oil sands (unless equipment modifications are made so that the oil sands can be used to generate heat for processing of the oil sands).
Inflation and Scarce Capital
High energy costs will generate rising inflation in most sectors of the economy. As inflation and unemployment increase, individual investing will shrink, resulting in reduced capital formation. Scare capital will also result from the need to spend more and more national wealth on buying oil needed for food production, transportation, heating, and energy production. As the price of oil rises, the construction of nuclear power plants, coal GTL plants, and solar based alternative energy projects will become more and more costly. Individuals will lack resources for: building new homes close to agricultural production, buying energy efficient vehicles (especially because the trade-in values for low-gas-mileage-vehicles will plummet), and retrofitting homes with passive solar installations, insulated dormitories, and wood stoves.
Limits of Market Economies
Corporate enterprises exist mainly to make financial profits. Over last two and half centuries, abundant coal and oil energies bolstered expanding economies and corporate profits, and over the last century oil, natural gas, and technology explain the expansion of economies for the last century. Oil depletion and ever-deepening recession will erase profits and most corporations will fail.
In an era of high inflation and deepening depression, individual investors will lack funds for investing. In addition, investments in banks, equities, and bonds will shrink in value. Investments in banks, bonds, equities, and pension and retirement funds represent promises to provide future products and services that require oil, natural gas, and coal. As the cost of energy increases, the real value of these investments will decline. In a few years, such investments will lose value, and some years later they will be worthless. When investors and the public understand these realities, they will avoid investing in financial institutions. Chris Shaw is correct in writing that energy “is the one true currency,” it always was and always will be.”
Because of ever-worsening economic depression and rapidly rising energy costs, banks will hesitate in making loans for projects that have uncertain profitability due to high future energy costs. Such projects include: ultra deep water production of oil and natural gas; development of coal GTL; construction of nuclear power plants and wind turbines; relocation of populations from metropolitan areas to agricultural areas; and development of cargo rail, passenger rail, and public transportation.
Quicksand Effect
Chris Shaw explains a “quicksand effect” for energy production: it takes energy to get energy, and because the highest quality oil is extracted first, high quality oil must be expended to extract oil that is of lower quality. And as depletion progresses, we must spend more and more energy to get less and less in return, until the difference between energy invested and energy returned is zero. To produce oil in the future, more and more oil must be consumed by constructing more and more oil rigs for drilling smaller and smaller oil pockets. For off-shore oil drilling, more and more rigs, platforms, ships, and pipelines must be constructed to extract oil from greater and greater depths. Matthew Simmons indicates that the replacement of aging oil rig, refinery, and pipeline equipment and infrastructure will cost a great deal in capital investments in the coming years. The manufacturing and transport of this equipment and infrastructure will use much oil. Canada’s oil sands is another case of the quicksand effect. In order to produce low quality oil high quality natural gas and oil are expended for processing and refining; the manufacture trucks, processing equipment, pipelines, new houses, and airplanes (for transporting workers); and the energy used by trucks, processing equipment, airplanes, and pumps. In addition, oil sands operations contaminate local water supplies and generate much air pollution and carbon dioxide. Similarly, the GAO study found that “EOR [enhanced oil recovery] technologies [to extract additional oil from depleted oil fields] are much costlier than the conventional production methods used for the vast majority of oil produced,” and “operating costs for deep water rigs are 3.0 to 4.5 times more than operating costs for typical shallow water rigs.” The same concept applies to the use of high quality oil and natural gas energy to produce alternative sources of energy, such as corn ethanol, bio-diesel, wind turbines, and nuclear power plants.
As oil depletion progresses, more and more oil is used to produce oil. When the amount of oil used to produce a barrel of oil equals the amount of oil produced, it is pointless to continue oil production. In addition to the oil used on site to produce and refine oil, energy is used in all of the processes for the machinery, equipment, and personnel used in the extraction, transport, and refining processes. For deepwater oil production, this would include all of the ships, platforms, steel piping (many kilometers of pipes on-site and to onshore locations), and their employees, including the energy used in making the hundreds of thousands of parts, the energy used in the factories that make the parts, the energy used in transportation of all of the parts and employees, as well as the energy that is consumed when employees and stockholders spend their salaries or dividends on goods and services (food, automobiles, yachts, airplanes, recreation vehicles, vacations, consumer purchases, etc.). Because there are a number of confounded energy input variables, it is difficult to measure all of this consumption of energy, but it is an economic reality that is shown in corporate decisions about the profitability of deepwater oil projects. For deepwater, heavy oil, tar sands, and extraction where special techniques are used, the point at which energy consumed in production equals the energy produced will be reached rapidly. For this reason, some oil that is classified as recoverable (for example deepwater oil, heavy oil, and the Bakken formation) may never be recovered.
Multiple Crises and a Grid Lock of Crises
Peak Oil means that the U.S. lacks the energy necessary to provide for transportation, food production, industry, manufacturing, residential heating, and the production of energy. Oil shortages and natural gas shortages will generate multiple crises for the nation: (1) Shortages in gasoline, diesel, and jet fuel will limit travel to work for oil rig/platform workers and technicians, coal miners, highway maintenance personnel, and maintenance workers for electric power generation stations and power lines. (2) Without truck and air transport, spare parts for virtually everything in the economy won’t be delivered, including parts needed for highway maintenance and energy production equipment. Simmons notes that 50,000 unique parts are necessary to create a working oil field. Many more parts are necessary for ultra deep water drilling operations, including a variety of high tech ships, remotely operated underwater vehicles, seismic survey equipment, helicopters, and technologically complex platforms (see The New York Times and click on Multimedia Graphic). Thousands of corporations around the globe manufacture these parts, and many of these corporations will fail in the Peak Oil crisis. (3) States governments will lack funds for maintaining the Interstate Highway System, including snow plowing, bridge repair, surface repair, cleaning of culverts (necessary to avoid road washouts), and clearing of rock slides. A failure in one section of the Interstate highway will cut off transportation for that highway and everything it carries: food, emergency supplies, medicine, medical equipment, and spare parts necessary for energy production. (4) The power grid for most of North American will fail due to a lack of spare parts and maintenance for the 257,000 kilometers of electric power transmission lines, hundreds of thousands of pylons (which are transported on the highways), and hundreds of power generating plants and substations, as well as from shortages in the supply of coal, natural gas, or oil used in generating electric power. Power failures could also result from the residential use of electric stoves and space heaters when there are shortages of oil and natural gas for home heating. This would overload the power grid, causing its failure. The nation depends on electric power for: industry; manufacturing; auto, truck, rail, and air transportation (electric motors pump diesel fuel, gasoline, and jet fuel); oil and natural gas heating systems; lighting; elevators; computers; broadcasting stations; radios; TVs; automated building systems; electric doors; telephone and cell phone services; water purification; water distribution; waste water treatment systems; government offices; hospitals; airports; and police and fire services, etc. Phillip Schewe, author of “The Grid: A Journey Through the Heart of Our Electrified World,” writes that the nation’s power infrastructure is “the most complex machine ever made.” In “Lights Out: The Electricity Crisis, the Global Economy, and What It Means To You,” author Jason Makansi emphasizes that “very few people on this planet truly appreciate how difficult it is to control the flow of electricity.” A 2007 report of the North American Electric Reliability Corporation (NERC) concluded that peak power demand in the U.S. would increase 18% over the next decade and that planned new power supply sources would not meet that demand. NERC also noted concerns with natural gas disruptions and supplies, insufficient capacity for peak power demand during hot summers (due to air conditioning), incapacity in the transmission infrastructure, and a 40% loss of engineers and supervisors in 2009 due to retirements. According to Railton Frith and Paul H. Gilbert (National Research Council scientist testifying before Congress), power failures currently have the potential of paralyzing the nation for weeks or months. In an era of multiple crises and resource constraints, power failures will last longer and then become permanent. When power failures occur in winter, millions of people in the U.S. and Canada will die of exposure. There are not enough shelters for entire populations, and shelters will lack heat, adequate food and water, and sanitation. (5) Water purification and water distribution systems will fail, leaving millions of metropolitan residents without water. (6) Waste water treatment systems will fail, resulting in untreated sewage that will contaminate the drinking water for millions of residents who consume river water downstream. (7) Transportation and communications failures will cripple federal, state and local governments -- leaving and residents without emergency services, emergency shelters, police and fire protection, water supplies, and sanitation etc. (8) Mechanized farming will cease, and harvested crops won’t be transported more than a few miles. (9) Food won’t be transported from the Midwest, California, Florida, and Mexico to the U.S. population. (10) Fertilizer, pesticides, and herbicides won’t be produced. (11) Due to limited farm acreage near cities (much of it destroyed by suburbanization), most cities and towns will be unable to support their populations with sufficient food from local farming (see Paul Chefurka and Paul Chefurka). (12) Homes across the U.S. will lack heating and air conditioning. Even if homes are retrofitted with wood stoves, local biomass is insufficient to provide for home heating, and it will not be possible to cut, split, and move wood in sufficient quantities.
In the coming years, the U.S. faces multiple energy crises. Each crisis will generate delays in handling other crises, thus making it more and more difficult to address multiplying problems. The worse things get, the worse they will get. A grid lock of crises will paralyze the nation.
Not much of a result for poor old Humpty Dumpty ... but then I blame the King/management for giving the horses first go at the repair job!
A horse's hoof is about the best tool for crushing an egg shell, not repairing it - horses aren't very dextrous as they don't even have an opposable thumb - so, clearly a deliberate/planned bad result for Humpty Dumpty!
The moral? ... never assume that other people's plans consider your best interests in any way.
cjwirth,
Regarding: "According to Matthew Simmons, global oil production is now declining, from 85 million barrels per day to 60 million barrels per day by 2015."
Do you have a source for that? Not doubting you, I do trust Simmons and that is a very profound drop off of production in seven years.
Gail, Cliff, Roger, Pico et al.
Thanks for looking at details.
Here is the only production numbers quote from the article Cliff references:
"Matt Simmons, chief executive of Simmons & Company, a Houston energy consultancy, said that global oil production had peaked in 2005 and was set for a steep decline from present levels of about 85 million barrels per day. “By 2015, I think we would be lucky to be producing 60 million barrels and we should worry about producing only 40 million,” he told The Times."
1) Cliff's statement that Matt used the 85 mpd number ("today") appears to be substantiated by this reference. Since it's not a direct quote, it may be a mis-attribution. It also could be a number the author looked up, as opposed to hearing directly from Matt himself.
2) Likewise, from what I can see, Matt does not (in this quote) specify whether C+C or All liquids for any of his numbers.
3) Please note the section "...and we should worry about producing only 40 million".
This is quite a bit lower than the number quoted by both Cliff and Gail. Note how Matt states it. This should mean something, coming from someone who is focussed on data.
4) Does someone want to either do the legwork or ask Matt for clarification on the initial reference number?
Good work Aniya,
Wait for his next interviews. He is probably recovering from the CNBC interview.
Down to 40 million barrels crude from 75 million by 2015. Yikes!!! I'm heading for the hills. Actually, I already have :)
Dryki's comment from yesterday's peak oil media post:
Exactly, hardly anyone wants to read or hear my policy analysis of the Peak Oil future. And, unless people face the music, they will continue to avoid planning for the real future, instead of the one they want.
Because it was so depressing, I procrastinated for days before returning to write about the collapse that will lead to the horror that looms. I have never written about the actual horror that I know will occur, and never will.
But it helps if one realizes that 99.99999999% of human history was working to just survive, day to day. Now it is back to most of the time.
It also helps to get an individual and community plan of action.
"The media won't do it; they need to sell cars and houses."
Prof Goose - I'm curious what effect you think the trashing of the fairness doctrine in the mid 80's has had on this predicament?
Funny you ask soup, I was just talking Fairness Doctrine yesterday with a friend.
For those unfamiliar, The Fairness Doctrine was...
As I tell my students in the civil liberties section of my intro course, it all depends on how hard you want to push the veil of free speech (it is not a binary), and whether or not monetized/corporatized speech should be equal to individual speech in its liberty.
(You could make a related point about Buckley v. Valeo (1976) and how money was equated with free speech--perpetuating monetized/corporate involvement in elections--as the monetization gives a much larger bullhorn that effectively quashes other voices. However, does one restrict someone's free speech just because they have money? It's always a great case to talk about with students...it's a real cluster****)
Would it have mattered on this predicament? I think it likely would have kept the media less corporate, yes, and therefore more of a functioning watchdog as opposed to the shill that it is these days. Would that have mattered on the key data and secrecy problems? Perhaps not, but we might have had more reporters paying attention well before now.
Good piece and up to date. I have a few comments that will either help or reflect my ignorance:
o Canterell field has water depths of 35-40 Meters. Is this really "deep oil"? The depletion rate during the 3 year period from 2004 through 2007 was 31% or ~10%/year. Seems more reasonable to average unless it has shown a sustained acceleration in the depletion rate.
o You cite the USGS estimate for ANWR at ~3/4 mgd. The USGS also predicts a peak at 2035. Be prepared to support/defend ALL their estimates.
o You assert that enhanced recovery cannot delay the peak but merely "thickens and lengthens" the tail. That's more area under the curve and you rightly say that production is increased but why couldn't this delay the peak if you increased production worldwide using this technology? It just seems counter-intuitive. I don't know that you get a lengthened tail as much as a fat, stubby one reflecting a steeper decline slope.
o The proverbial gorilla usually weighs 800 lbs but perhaps he's been pigging out.
the USGS is a political agency under the Sec of Interiosr, that produces mythical figures to make industry happy, same with EIA. The GAO lambasted them by recommending that they produce credible data about future energy production.
I wouldn't totally discount the USGS. I am a hydrogeologist and I use their surface water and ground water data regularly and it is, for the most part, solid, well QCd stuff. The oil info is obviously politicized though. My point was that the author was swinging a two-edged sword.
And it's a good point. I have tended to trust certain estimates from USGS and distrust others, but I admit that's a judgement call. So then the question is: how to resolve that tension? Based on the opinions of experts I respect, the 0.5 - 0.75 mbpd projection is probably in the right ballpark. (Not sure if you really meant ~3/4 mgd or if I need to convert that to barrels to see if they match up.)
The rate of decrease of the Cantarell field (A.K.A. Akal Nohoch has been accelrating in time. May's data put the decrease at an annual 33% but the line graphing the rate has been accelerating.
Please look at the link:
http://bp0.blogger.com/_tA_IJcExzYc/SBUZ8WhsRvI/AAAAAAAAAKA/Tmgvhjx0OSo/...
i have no doubt that this increased rate of decline will flatten and turn up (which doesn't mean production will increase, just slow its rate of decline) next year when we reach around 650,000 barrels a day, but meanwhile Cantarell has quietly left the club of the great producing fields falling below 1,000,000 b/d in may. exact # at the mexican government information site is 994,414 b/d.
http://sie.energia.gob.mx/
"Canterell field has water depths of 35-40 Meters"
The company I worked for until 2000 supplied flexible pipes to connect to an FPSO for a portion of Canterell that was in 85m (285') of water. I don't know if that is representative of the rest of the field.
"Is this really deep oil ?"
Certainly not, but something it had in common with some of the deeper water fields was the lack of local already-built infrastructure (it's in the Bay of Campeche), so in that sense it can be compared to deepwater fields. It's a lot more similar to Mars (GoM field in 3000'/900m, one of the first) in that respect than Ghawar.
As an aside, in 1998-2000, depletion of Canterrel was not on anyone's radar that I knew. The amount of *overflow* that the system we installed could sustain (and it was dual redundant pipes) was mind-boggling.
Dave Voss
The depth cited was from the Pemex website.
Still trying to find a definition for "deepwater". I know that's deep enough to sink my boat in but...
kyop,
Deepwater Definition? Used to be 200m, but now 300m. Increasing with technology and common practice:
http://www.deepwater.co.uk/info.htm
http://www.gomr.mms.gov/PDFs/2002/2002-031.pdf
http://www.otcnet.org/2005/presentations/pdf/OTC05_CollaborationPanel_Sa...
http://www.richtechusa.com/information/industry.html
Chris,
In section 4, paragraph 2, perhaps you meant "football field-sized" instead of "football-sized"? (Although I'd be quite impressed by the latter.) Then again, maybe it's just implied.
Quite good work though. I love how you get straight to the point about flow rates, which IMO continues to be the #1 misunderstanding.
I still like the simplicity of the 40 year factor. Peak US production happened 40 years after peak discovery and we are now 40 years past peak worldwide discovery. I also prefer an annual production figure which has been around 30 billion barrels. This put discoveries like Jack 2 in perspective. If we could get 15 billion barrels from Jack 2 then the world would use it up in only 6 months.
I try to avoid that tack because of the importance of flow rates. In reality, there is no way that 15 billion bbls could be extracted from Jack 2 in only 6 months. I think it's important to emphasize that even new elephants can't much change the basic shape of the production curve.
You and I know it takes 10-20 years to extract most of the oil from any field but comprehending such facts may be beyond that of Joe Sixpack. They don't understand why some of those oil well pumps only run a few days each month. They drive by them and see evidence that the oil companies are deliberately holding down production just to keep prices high.
Suggestion1: either add tar sands as a topic, or expand the shale oil section to include them.
I've found that a nontrivial number of people have heard of peak Oil, never heard of EROI, don't know the water issues, and hence think that tar sands and shale oil obviate peak oil's effects.
Sugestion 2: for a media guide, see if you can get Charlie Hall's latest version of Balloon Chart. If I had only two charts to show people:
- one would be a typical Peak Oil graph
- the other would be the balloon chart
Suggestion 3:
"It's not the size of the tank that matters, it's the size of the tap"
I'd rather it say:
"The size of the tap matters much more than the size of the tank."
Obviously, the size of the tank matters *some*, because it helps determine the shape and the duration of the downturn, and the total amount available for investing in building a sustainable energy system.
I think the overall discussion is very good, and helps get the press off reserves, but is a slight overstatement that leaves you open to critiques from anyone who want to minimize the problem.
Suggestion 4: this is an excellent resource. Individual TOD readers can work on their local press/reporters to try to help them. Although originally aimed at helping science reporting, much of the same positive advice applies as I posted here.
Excellent points...and yes, tar sand production should get a little more attention.
Thanks for this document. I am sure that it will be very helpful as a media briefing once improvements such as that suggested by Gail are made. To my mind it falls short though in not including a "what can we do about all this" section. There are some not very helpful views on that out there and the media need pointing in a better direction than to advise people to stock up on cans and bullets and head for the hills. By encouraging people to consider ways forward we may just tap into the wonderful creativity of the human race in a positive manner instead of allowing (by default)less admirable traits to take the lead.
Well, I really tried to restrict it to addressing what I saw as the key confusion points about peak oil. If I tried to get into all the solutions, it would go on for days...in fact it needs a book or several. My aim was to make this as short as possible. If it isn't, the busy media people I want to reach will never read it.
OK, how about why I think I finally, really, get, why Matt Simmons thinks oil is ridiculously cheap!
Dear Mr. and Mrs. typical American,
Let's start by taking an unnamed high end American SUV Standard package 2WD model and crunch some numbers on it.
Manufacturers specs:
GVWR 7,000 lbs. (2WD)*
*When properly equipped; includes weight of vehicle, passengers, cargo and equipment.
EPA estimated 12 mpg city, 19 mpg highway (2WD) Disclaimer, your mileage may vary due to driving conditions.
Average current price of Premium Gasoline about $4.60 per gallon.
Lets round the price of gas up to $5.00 and the mpg down to 10 and figure an average speed
of 50 mph for a total distance of 10 miles.
This means that at current gasoline prices we can move a combination of 5000 lbs of steel
plus 850 lbs of people, plus 1150 lbs of cargo in air conditioned comfort for a distance
of more than 10 miles in about 12 minutes flat, for less than a measely 10 bucks?! Wow!
How much does it cost to sit down in restaurant and have a nice dinner for two with a good
bottle of wine? Where I live that's an easy $100.00 tip included.
Ok, now try this excercise, (no pun intended), put a backpack on with about 20 lbs of
cargo in it and pedal 10 miles in the hot sun on your bicycle as fast as you can.
Question How long did it take you to pedal 10 miles? How much do you plus your backpack
and bicycle weigh?
So now how much do you think gasoline should really be worth? Hint about a $100.00 bucks a
gallon is still pretty darn cheap. Still don't believe me? Try pushing that empty SUV a mere 100 yards on a flat surface in the hot sun by yourself.
Maybe this is the reason why Matt Simmons has become more and more testy about the fact
that so few people in the MSM seem to get why he feels that oil is still so unbelievably cheap.
All this of course still doesn't address the questions as to what it costs in
externalities to produce and maintain a civilization that needs 5000 lb SUVs to do the
above mentioned excersise on a daily basis and cannot seem to grasp why this is
unsustainable in the long run.
Trick questions: how much water did the bicycle rider have to drink to stay adequately
hydrated, how many calories did he consume and how much net CO2 did he add to the
atmosphere?
Extra points questions: what did it cost, (full physical, social and environmental
accounting) to produce the bicycle and same accounting criteria for the sustenance of the
bicycle rider?
Same set of questions as above in relation to the production of the SUV and it's driver's
sustenance.
Isn't it time to acknowledge the truth and stop kicking this poor dying horse of a
civilization, it's fallen and it's not going to get back on its feet again. Pretty soon
it's going to start smelling bad.
Note to Chinese, Indians and others who are only now starting to go down this path, sorry
guys you missed the party, it was really nice but it's over and you'll just have to try
something else,like maybe taking a good long hard look at solar powered electric rickshaws
and taking care of your natural resources and environment before it's too late.
Hey maybe someday you can even export the surplus rickshaws on Chinese Junks to the rest
of the world, though it may be a while before we here in the west will be able to afford
them. You see we've maxed out our credit on buying all that stuff we only really needed to
keep the myth of economical growth alive and now we are flat broke and our environment is
pretty messed up too. I know, go figure.
Best of Luck for a sustainable future as you grow your economies at 10% a year, dam those
rivers, build those coal fired power plants and buy those cars and flat screen TVs.
May you live in interesting times! Trust me you will.
Cheers.
Ride a Bike or Take a Hike!
P.S.
I have a funny feeling I lost Mr. and Mrs. Typical American right after I gave the manufacturers specs for the SUV. So I didn't bother telling them about the likes of Dr. Albert Bartlett and a few other good people...
Better, but you are still using hard breaks at the end of your lines. Don't do that...let the text in the box wrap itself instead of hitting return--this isn't a typewriter! :) You're taking up a lot of extra space that is not needed.
My apologies again. I'm having a combination of technical issues on my end today so I'm not going to try and fix it a second time.
I agree that oil is still cheap.
RE Media Summary of Peak Oil
Some have suggested multiple ideas to add/improve on your summary. IMO you could CHANGE your summary but you should not lengthan it. Here in the US we have a sound bite culture that values a quick description of items of interest.
My suggestion is that you have a summary labelled "Peak Oil Theory Primer PART 1" or equivilent. Have Part two be "Detailed Analysis of Global Oil Supplies" or equivilent. Have Part three be "Links and historical info for ?"
With the three seperate sections the average joe is not overwhelmed if all he wants is the quick summary...but LOTS more info is readily available if you manage to pique Joe Public's curiosity.
Off Topic
Those pesky aliens!
cowabduction.com
Noone knows why aliens like cows...
And last is my two cents on inflation in US
People mention Shadowstats.com People complain that 'official' inflation reports are inaccurate. What I see very little of is discussion of why it is logical for the government to downplay inflation.
In my own case I am on Social Security. My income increases by 2.5% annually to 'keep up with core inflation' While credible explanations say REAL inflation is closer to 12% Right now the Social Security is in the black...it is when you get to the 2020s that the finances are dicey. If Social Security has a budgetary black hole comeing up useing 'core inflation' for their budget...how much faster will disaster arrive if it decided to increase Social Securiy payments by 12% per year?
Social Security is one example; I am sure there are other government expenses that are directly tied to official inflation figures. So IF the governments official inflation report was 12% per year, then everything tied to inflation would increase in cost at that rate. 12% - 2.5% = 9.5% difference in inflation...this is a very large number over a one year period. The difference is monsterous after a decade when you count compound interest. And there is my indirect explanation of the governments motivation for an artificially low "official inflation rate"
I was also thinking that the additional references at the end should be beefed up considerably. I didn't give it much thought.
Tell you what: I invite everyone to submit their top three favorites for sites and/or key papers that should be consulted for more in-depth information...your "desert island" picks. I'll tally up the winners and tack them onto the end. Post 'em here or just email them to me.
Try to pick up a 500 pound rock. You probably can't do it with just your hands. Then try to pick it up with a proper lever. Not much of a problem.
Your comparison between an SUV doing work and doing the work yourself fails precisely because the SUV, in large part, counts as a lever. It has mechanical advantages independent of how many calories of fuel it - or you - consume. Your bicycle example at least has a degree of mechanical advantage, but then you put the weight in a backpack instead of properly in panniers. Bicycling 10 miles with 20 pounds balanced over my rear tire - in city traffic I can get there as fast as the delivery vehicle of your choice, and arrive feeling energized, not exhausted.
I know you love these stories. But my bet is the general public will say "So what?"
I actually do bicycle in the real world and probably would not try to ride with 20 lbs on my back so you are right that it was a bad analogy. I also have a least a basic understanding of gear ratios so I agree that the SUV has mechanical advantages. My attempted comparison between the two was sloppy at best. However, and it seems I also failed at this, my intent was to parody a bit the explanations that I've heard Matt Simmons and many other experts give that I'm sure just goes right over the heads of the general public. Don't get me wrong, I accept the message and agree that it is paramount that the message get to out the general public but I don't think it is happening. Case in point, the look of incredulity on the faces of the announcers and pundits listening to what he is saying and these are people who have a bit more access to information and knowledge than the public.
I've actually heard him make the comparison of the fully loaded SUV with passengers going a certain distance then suggesting putting them all in a donkey cart and then offering the owner the same amount of money as it would take the SUV in gas money and suggesting that the response would be the donkey cart owner spitting in your face. He's probably right. Though the response to his story by the general public is exactly "So What" it is not something they parse as impacting their reality.
Then presenting graphs and technical information that depends on even basic mathematics and asking them to understand is like speaking Greek to them. This is not a language in which they are fluent. To then expect them to connect the dots and understand the enormity and the complexity of the problem with which we are faced is probably to ask too much.
So what I failed to do in my lousy attempt at humor was to poke a little fun at fact that a lot of this necessary information is not even close to getting through. The consequences of which are not funny at all. There seems to be a rather deep disconnect between what the experts are saying and what the average person thinks is the happening.
What was lousy about it? It certainly got a laugh out of me, and I'm not easily amused.
The assumption that owners of $50,000 SUVs are too dumb to understand peak oil or the relative value of a gallon of gas is wrong as well as condescending.
On an income commensurate with the type of vehicle you describe, $6000 a year is an expense low enough to accept. The biggest production volume SUVs on the road draw about 3x the gas that the biggest production volume economy cars.
The difference between $6000 a year on Land Rover fuel and $2000 a year on Corolla fuel is incidental to the person buying the Rover.
As to China and India missing the boat: 100-mile range, 45mph electric cars recharged on coal and nuclear will do what they need. They'll be using their roads, just like we will.
Echo chamber.
Name,
Funny, (pun intended)!
Umm unless I missed something Mr. and Mrs Typical American are not known to drive $50.000 SUVs. It seems that you understand neither the implications of the data presented on this site, nor are you able to recognize parody even though I explicitly apologized for for my lame attempt at humor a couple of responses down.
As to whether or not the people who do drive $50,000 SUVs them are smart enough to understand the concept of Peak Oil or not is a discussion for another time. Hint, in general I try to distinguish between giving people the benefit of the doubt with regards their intelligence, the average IQ happens to be 100 for a reason, and what they actually know and understand. Though some people are not quite smart enough to understand the difference. I hope that last sentence wasn't too subtle or nuanced.
Cheers!
The oil shale section is nonsense.
Colorado oil shale is richer per acre than the Alberta tar sands.
http://www.fossil.energy.gov/programs/reserves/npr/Oil_Shale_Resource_Fa...
Fushun has been continuously producing oil shale since the 1930, except for a period in the 1970s when very low world oil prices and domestic oil finds made shale oil production uneconomical.
The Chinese produced 210,000 tons(1.5 million barrels) of shale oil at Fushun, Manchuria in 2006. Expansion plans at that time called for increases to 700,000 tons. The reserves in the article below are 3.5 billion tons of shale oil at Fushun.
http://www.sdnp.jo/International_Oil_Conference/rtos-A106.pdf
It would be nice if there was an objective discussion of oil shale/unconventional oil at TOD.
OK here is some material I put together a couple of years ago, trying to be quantitative and objective. Please have at it. Murray
Following is some more information that I put together for Dan Kish, senior advisor to Representative Pombo. I'm intending to edit all of this for another EnergyPulse submission so please use with care for now. Murray
snip
Royal Dutch/Shell has quietly resumed oil shale research in
recent years, both in the lab and on land it owns 200 miles west of
Denver, Colorado, near the towns of Rangely, Rifle and Meeker. The company is working on an in-situ method of recovery which uses electricity to heat the shale slowly below the surface. Spokeswoman Jill Davis said the process brings only lighter hydrocarbons to the surface that can be converted into gasoline, naphtha and jet fuel
with only minimal upgrading.
Unlike earlier mining-based operations, the in-situ method does not
require the disposal of large quantities of waste materials at the surface. Italso consumes far smaller amounts of water.
Shell's research indicates that its process clears the crucial hurdle of producing more energy than it consumes. "It sounds very energy-intensive but initial results show that the output we get is about six times the input," Davistold Oil Daily.
The company has spent tens of millions of dollars on research to date and Davis said it hopes to move ahead with an integrated pilot project in the next few years, which would cost about $200 million. A decision on whether to proceed with commercial production could be taken around 2012.snip
. Let's assume Shell decides to go ahead, and builds a nuclear plant to provide the electricity needed in situ. Based on current projections they will be able to supply their energy needs for 5 cents/kWH, most of which is plant amortization. For one 1000MW plant that is $400M/yr, and that will be the bulk of their cost of goods sold. If they produce the 80,000 b/day subtended by their 6:1 ratio, and sell the product for $40./b, there gross income will be $1B/yr after 80% yield to get light crude equivalent. Even if we have to mark up the energy cost by 50% to get all of their other direct costs, when we use the ratios from their present Petroleum company income statement, they would yield 9% PBT vs 8% on their 2003 annual report. On this basis they would be likely to go ahead, regardless of the energetic yield. If they could build the electricity plant for $1B, amortized over 30 years their ROI would be at least 20%. I don't know what hurdle rate they have, and they would have to be confident of a 30 year supply of shale (which at this production rate is a certainty), but I expect this return would get a green light. Regardless, they would almost certainly seek some government subsidy to improve their situation. If the numbers don't prove out, they will walk.
First we need to put Estonia in perspective. They use the bulk of their oil shale for electricity generation, burning it like you would coal, at an energy yield from the primary energy contained by the shale in the ground to electricity delivered to the customer of 11%. For the small share they use to produce oil, the energetic yield from ground to tank is 9%. World oil shale yields from 0.14 b(barrels) shale oil/ton of shale for "lean shale" to 1.2 b/ton for "rich shale". Average world shale oil that is considered
recoverable is estimated to yield 0.3 b (barrels) /ton of shale. The small portion that Estonia uses for oil yields 0.9 b/ton, ie only their rich fraction. They also estimate that they are competitive with oil at $25.00/b for light crude. They generate 3000 MW of electricity from oil shale, much less than 1% of USA generation. Estonia is not a model for the USA need of replacing declining petroleum.
From World Energy Council 2001 (www.worldenergy.com), using USGS numbers, we have USA proven reserves of 3.34x10e12 tons of shale that could yield 242 Gt kerogen or 1936 Gb at an average of .58 b/ton. Of this 560 Gb of shale oil is considered "proven recoverable". Estimated unproven is another 500 Gb. Total is about equal to world conventional oil reserves. Sounds great.
However the top grade (0.5 to 1.2 b/ton) is about 30%, so at $40./b for light crude, maybe 200 Gb of the proven are economically useful to replace light crude and the rest is speculation. At our present consumption rate of >7 Gb/yr, the economically proven is 30 years. Not so great.
Note Suncor gave up on the Stuart development in Australia in 2001, and it was yielding 0.5b/ton, with light crude at about $25.00/b. We can suggest that technology will make things better, but from 1973 to 2002 several billion dollars were spent on shale oil, so I doubt that much technology has been overlooked.
Shell suggests an energetic recovery of 6:1, but all other references I can find say that 40% of the energy in the shale is used to generate the usable shale oil. I.e. for 10b of kerogen in the shale you must consume the equivalent of 4b to leave 6b useable. How do Shell get their 6:1? I will bet all the money in my pocket against all the money in yours that the 6:1 is the result of measurement in the lab of joules of heat in to a sample of
shale vs joules of primary energy contained in the kerogen produced. From that point you have to take the electricity to heat efficiency, which will be high in the lab, but not high in the rock being mined, and the efficiency from the primary energy in the fuel used to the generation of electricity. There will be a lot of heat dissipated in the rock mass that does not generate shale oil, but lets optimistically assume 70% efficiency. If we use coal to generate the electricity, we know the typical efficiency is about 35%, giving us a net of 25%, which reduces our 6:1 to 1.5:1, or about the
same as conventional processing.
Worse, in situ, Shell admits that the heavy fractions do not get recovered, only the light fractions, while in the lab recovery might be close to 100%. From other sources I find that the light fractions seem to be about 65% of the total kerogen which would reduce our 200 Gb/30 yr to 130 Gb/20 yr. Then we have to upgrade the shale oil to light oil equivalent (adding hydrogen that has to come from somewhere) and then convert to gasoline (unless we want to convert the entire car fleet to deisel) which requires more energy, potentially bringing the net energy yield to 1.2:1. In
calculating the whole system energy returned on energy invested (EROEI) we also have to include the portion of the energy embedded in all of the plant and equipment that should be assigned to the final gasoline as well. If we do that for everything from the coal mine through the refinery we probably have energetic recovery less than 1, even for the Shell process.
. If we use the Shell in situ method for recovery, water may
not be a problem in the Green River Basin. If we use conventional mining and pyrolitic processing, water will be the limiting factor on production rates, because it is an area of very low water resource. We could consider using the Eastern Black shales first, where water is not so much of a problem, and have the additional benefit that these shales are relatively high in Uranium, which could spread the economic cost. However due to an unfavorable H/C ratio the light oil yield is low, or a large fraction of hydrogen has to be added. Also the recoverable resource is much
less than the Green River.
Finally there is the issue of recovery rate. It doesn't matter how big the resource is, what matters is how fast it can be produced. Late 2004 production of light crude equivalent from Athabasca tar sands is just getting to 1 Mb/day and is projected to be no more than 3 Mb/day by 2020. It is unlikely to ever exceed 6 or 7 Mb/day, of which Canada will need 1/2 when their oil declines sufficiently. Availability for the USA is unlikely to ever exceed 3 Mb/day. Given the relative ease with which tar sand bitumen can be made to flow, how fast can we ever produce shale oil? Maybe 2 or 3
Mb/day some time in the distant future, at least 20 or 30 years from now?
Shell doesn't even intend to make a decision on going to production before 2012. Then if they do go ahead, they have to build a source of electricity, as well as the rest of the recovery plant and then ramp up. Let's assume they build a 1000 MW nuclear plant as their electricity source. That plant can produce 8 billion Kwh/yr of energy/yr, which is .033 quads. Even at the claimed 6:1 energy yield that would give 0.2 quads of kerogen or about 0.16 quads of light crude equivalent per year. We use 40 quads of oil per year, so that 1000 MW nuke plant would support production of 0.4% of our annual
oil consumption at the most optimistic energy assumption, equivalent to 80 thousand barrels/day. We would need 25 such nuke plants to support production of the 2 MB/day I have suggested above as a max output. If the Shell 6:1 ratio proves to be a still optimistic 3:1, we will need 50 nuke plants. How many can we build by 2020? 2030?
Let's assume petroleum production worldwide goes into decline in 2008 (which is highly probable), and declines at an average rate of 3%/yr during the first 20 years (starting at 1%/yr and growing to 5%/yr). UK North sea oil went into decline in 1999 and is already at 5%/yr. With demand rising in all other parts of the world the decline rate for USA availability is likely to be higher than the world average, but let's work with 3%/yr to be optimistic. BY 2020 our petroleum availability has dropped to 67% of the peak. If we assume a peak at 8 Gb/yr in 2008, (22 Mb/day), we will have lost
over 7 Mb/day by 2020, and tar sands plus shale oil will not have offset more than 3Mb/day of that. By 2030 petroleum will be down by 11 Mb/day, and the offset for tarsands plus shale oil might be up to 5 Mb/day. Our net supply is still down 30% from the peak, using very optimistic assumptions.
Shale oil might provide a very, very small offset for a portion of oil decline, but will never be a solution, or even a significant contributor to a solution. It makes sense to develop to have for strategic military reasons, but it cannot be something to pin a responsible National Energy Policy on.
This is a good engineering analysis. In showing how shale is not going to be the answer you walk right by what is obviously going to be the answer. As you have pointed out the price of a KWH of electricity is about 5 cents in the nuke plant you outlined above with most of it being capital cost. My understanding of the current state of the art and pricing is that it is about $1.4 per watt to build and about 2 cents a KWH to operate with about .5 cent of the operational cost in fuel.
Instead of using this power to melt shale which is then refined and piped etc, all that is needed is to take this same electrical power and put it directly into our transportation fleet. By my calculations we need about 100 GW of nuclear power to replace the energy required in a fleet of electric vehicles of similar engineering characteristics of the GM Volt which is coming out in about 18 months ( the first production model is going to be unveiled at the end of the summer).
The cost of operating these vehicles on pure electric will be under $1 per gallon of gas equivalent assuming a comparison to a 20MPG car and 10 cent KWH electricity.
The economics of this are compelling and as long as no one gets in the way politcally this is going to be answer to $145 oil. Simply, no one is going to buy a car than costs 4x more to operate and has a huge carbon footprint when they can get a better one with effectively a zero carbon footprint.
Nuclear plus EV is going to happen unless there is a break thru in solar which lowers its cost below nuclear which is highly unlikely.
I've posted this at this site over and over again and no one can refute the numbers because they are real and they are going to happen. These numbers also do not include a dime worth of technological improvement even though the pace of improvement is ongoing and substantial. Westinghouse, the makers of the best nukes around just recently anounced plans for a larger version of thier AP1000 modular plant and now believe that they will soon be offering a 1.7GW version of same. This would get the total number of plants down to about 60. They also claim that from first concrete pour to electricity generation is 3 years.
On another thread there was a conversation about doom and gloom being the predominant mode here while solutions are given short shrift. I tend to agree with that observation as the rehash of the 'problem' seems to be more emotionally satisfying than what are the likely answers.
I totally agree. Your point was not overlooked. It seems so obvious I didn't bother raisng it. It would be idiotic to build all those nukes to inefficiently produce shale oil to power inefficient ICEs when the energy could be used so much more directly, and the time frame to the EVs is probably quicker than for the shale oil.
Thank-you Dave and very well said.
I believe that Nuclear plus EV plus conservation (and less wasted energy) is the way to go. For example, my wife drives our large car to the exercise club to work out even when the weather is beautiful and the 1 mile trip by bicycle would take less than 10 minutes. I believe that the vast majority of Americans could realistically drop their oil consumption by 30-50% by just NOT wasting energy on luxuries (and telecommuting/carpooling/public transit, etc., etc.). Of course, the previous posts on the difficulty of people changing their habits is also completely true. On the other hand, the worries about "Global Warming" are unlikely to be fulfilled when there is are real and accelerating limits to the amount of carbon that we will be burning going forward. The reality of nuclear power (and the huge reserves of Uranium available) imply that there will be real reductions in the CO2 emissions in the future (love to see some modeling of THAT on TOD!!).
Keep up the good work!!
Ian
Hi Ian,
"Love to see some modeling of THAT on TOD!!)."
It seems to me that at TOD there is not much interest in solutions, other than the idea of subsistence farming and living. I don't know why that is but it sure appears to be the case. Its sort of sad because since they have at least a decent sized readership and could probably make some marginal positive difference if they chose.
I would still be worrying about global warming because there is no near term shortage of coal to be burning. Also because of the lag times involved my understanding of the process is that even if we ceased increasing our generation of greenhouse gases tomorrow the atmospheric concentrations would still rise to get to a new equilibrium. That equilibrium might be high enough to cause climate changes that we could do without.
cheers
david
You are not alone David. The barriers to nuclear charged electric vehicles are not market or technology determined. We have only to wait until the generation that was 20 years old when they listened to TMI on talk radio, and 26 years old when they watched Chernobyl on television passes from the top of the food chain and into retirement.
If its not nuclear it will be coal.
Great contribution, thanks Murray! Now...would anyone like to distill those facts into, say, four sentences or less? That's the challenge, with this piece. "Shale oil might provide a very, very small offset for a portion of oil decline, but will never be a solution, or even a significant contributor to a solution" kinda works for me.
Your starting out with Shell. That's fine. They have a nice clean technology. The problem is you need electricity which is a problem.
Wyoming has a windpower potential of 747 Twh--2.5 quads. If 6 units of shale oil energy is recovered for every 1 unit of electricity input, that's 15 quads of petroleum every year(out of 40=37.5%).
Shale oil is rich in distillate(diesel) and kerosene(jet fuel) though poor in light fraction(gasoline). Fortunately gasoline can be replaced with alcohol from biomass and coal(E85/M85).
You should say that 95% of Estonia's electricity is generated with oil shale as well as producing a small amount of shale oil.
It's still more energy per ton than tar sands.
http://www.fossil.energy.gov/programs/reserves/npr/Oil_Shale_Resource_Fa...
I agree that 7 Gb is a huge hurdle. Half of that is gasoline, but 20% goes for diesel and 9% for jet fuel: 7Gb/365 x .29=5.5 mbpd from shale oil. Right now we also domestically produce ~5 mbpd from conventional oil sources.
There is no doubt that the efficiency of personal transport must more than double in the future.
In the begining, tar sands, orimulsion, ethanol, biodiesel,etc. were very small offsets, but we need to produce far more offsets because oil products alone are more critical than oil as a fuel.
You want to use the optimistic 6:1 energy return. Here is a followup I sent to Dan Kish in Sept 2005:
> snip Dear Dan,
> >
> >See the following url for latest detail on shale oil history and implied practicality, as well as the attachment for a more detailed analysis of practicality. http://www.hubbertpeak.com/laherrere/OilShaleReview.pdf
> >
> >The Congressional testimony by Mut of Shell (about March 2005) proves my prior contention that the 6:1 energy yield in the Shell press release was false. Further it seems the committee did not know the right questions to ask. A colleague of mine had the opportunity to question Shell further and found that the 3.5:1 quoted by Mut as the yield from primary energy in the fuel to generate electricity to the energy in the light oil and gas produced was for a 60% efficient combined cycle gas plant, and did not include the energy needed for the screen wall freezing. For a typical coal plant, including the freezing, the energetic yield would be little more than 1:1, excluding all of the embedded energy, as I said in our earlier exchange. Further, NG won't be available for this purpose, period, so using the NG energy efficiency is totally invalid. snip
It doesn't matter what percent of Estonia's electricity is generated with shale oil, it is still extremely inefficient from primary energy in the shale to useable electricity. Estonia only uses it for lack of a better alternative. We have lots of better alternatives.
It doesn't matter if oil shale has more energy per ton than tar sands. What matters is how much energy it takes to extract useable light sweet crude equivalent. Here shale oil is much worse than tar sands.
I agree that we must develop all practical alternatives. However it is doubtful that shale oil is practical. Face it, you are grasping at straws to cling to a comforting but near 100% certainty unlikely idea. That is called "paradigm paralysis". try to take a more open minded look. Murray
Oh, another point - that Fushun production quoted is 4,000 b/d. Not very meaningful. Murray
the Colorado shale will not yield much, according to the U.S. Army Corp of Engineers, General Accounting Office, World Energy Council. Anyone who had seen "oil shale" and who has any sense of the real world can look at this marmal rock and see it will take more energy in than out.
Hello ChrisN,
If you give me proper attribution in the text of your upcoming book: feel free to use my voluminous TOD postings on I/O-NPK. Also, as linked before by me: BigGav's blog on the fertilizers' legal cartels would be fascinating to examine further from a postPeak investing standpoint:
http://peakenergy.blogspot.com/2008/05/smells-like-guano-to-me-living-wi...
------------------------
Smells Like Guano To Me - Living With the Fertiliser Cartels
...As a result, farmers and fertilizer-importing nations are furious and beginning to look at the structure of fertilizer markets. What they've found is jaw-dropping:
In several countries, obscure laws shield makers of potash and phosphate from certain antitrust rules. In the U.S., for example, phosphate makers are among a handful of industries empowered by the 1918 Webb-Pomerene Act to talk with competitors about pricing and other issues.
------------------------
IMO, the global topdogs fully understand that job specialization is only possible by generating food surpluses. Therefore, careful economic throttling of both I-NPK and O-NPK flowrates is crucial to controlling the societal style & pace of our postPeak Overshoot decline--cartels can easily form the basic metering framework to precipitate rapid transformation.
Thus, the postPeak downslope boils down entropically to a battle of bicycles & wheelbarrows to keep some portion of civilization going arrayed against machete' moshpits, which obviously prevents even subsistence farmers from being successful. Since there are No Substitutes to NPK to leverage photosynthesis above a Liebig Minimum--ag-control cartelization is an extremely powerful force.
This has been demonstrated before in history: recall my various posting series on the 'first US Patent', Guano Wars, the War of the Pacific [Atacama], the British Isles dead-heading 3.5 million 'immigrants' per year, and 1914 potash hitting $14,500/ton.
My guess, without any research, is that the 1918 Webb-Pomerene Act is a direct result of this earlier 1914 crisis.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
One contrarian point on this:
While I agree that the role of producing oil from areas currently off-limits would only be a modest and temporary one in relation to the long-term energy supply issue, the estimates that have been made by whoever it was, some government agency or whatever of miniscule impact of such production on gas prices appear to me to be, at best, dated.
If there is one thing we have learned about petroleum lately, it is that even a slight excess of demand over supply can cause prices skyrocketing.
One then has to acknowledge that, conversely, even a slight additional supply brought online in a tight oil market could have considerable effect in lowering prices.
It is reasonable for Peak Oilers to disagree about the desirability of drilling in areas currently off-limits. I'm sure we all agree that if it is done, it is in no way a "solution" or even a big part of a solution. The question is, would it serve as one modest and temporary PART of an overall solution, and would its contribution be sufficient to justify the environmental tradeoffs.
I don't think it is accurate to contend that the economic benefits would be NEGLIGIBLE, which is the conclusion one would reach if one believes those projections of miniscule impact on gas prices.
I believe the recent behavior of the oil market renders those projections, to say the least, suspect.
lance: I appreciate your reservations, but what would you say instead?
"If there is one thing we have learned .... lowering prices."
But "good surprises" and "bad surprises" are not symmetric.
Extra oil can usually be seen coming, since super-giant oilfields don't "sneak up" on us, whereas {wars, threats of wars, revolutions, etc, etc} are harder to predict, and even a serious threat of one boosts the price.
All of this is like what happens in a well-tuned computer as load increases: early on, performance is fine. As resource limits are approached, performance can become irregular, and sometimes, even a slight additional perturbation can cause performance to fall off a sudden cliff. Unfortunately, positive surprises rarely happen.
Good media guide! Simple and to the point.
Okay, here's a big problem with all this oil business.
People don't understand oil, period. I suspect most Americans have never seen a working oil well. The drilling, pumping, processing and transport is invisible and arcane. Americans know oil because they buy gas. Americans think 'somebody else' is cheating them ... the detail ... can't be bothered.
People understand money. Every American handles, takes, changes money. Americans understand debt. As far as geology goes, Americans are unsophisticated. Regarding money, most Americans, even those who have none, are quite sophisiticated. Not necessarily correct, but aware, rational and to a degree ruthless.
The Peak Oil phenomenon needs to be connected with money. Saying that, 'economies are going to crash' or that someone out there can, 'profit by Peak Oil' is too vague and uncertain. Americans are lied to constantly, we're used to it, we've gotten used to functioning - pretty well - in an 'all lies, all the time' environment.
When Americans learn how their financial lives are being affected by this, they make adjustments. In fact, adjustments are taking place already.
Just to note; we in America have a fiat money/debt based currency regime. Continuous growth is required in such a regime to service and retire the accumulated debt. The US had a hard (gold- backed) currency regime that encouraged savings ... In 1932 and earlier. It worked well but did not withstand the Depression. The current regime was installed prior and during WWII .. with the gold standard in place. The US finally 'disconnected' the dollar from gold in 1975 allowing the currency markets to determine the value of the dollar priced in other fiat currencies.
Part of the Peak Oil problem orbits around what some call the 'Peak Credit' problem. As our economy shrinks, the value of the dollar declines, which means what refiners buy gets more relatively more expensive. Also, the 'wealth basis' of America is declining, since much wealth is in 'investments' such as stocks, bonds and real estate rather than than the skill of its workforce. All of this effects the value of the dollar, now driving it lower. This driving - as much as the other kind - increases the price of crude; not just for us but for the producers as well.
Up until 2007, this wasn't a problem. We created a mountain of debt that was distributed around the world. Credit is a kind of 'resource', too. We could have used this credit to build an alternative energy regime, for instance. Instead we built more and more sprawl. Now, the credit disappears and the sprawl remains ... and the number of oil alternatives shrinks.
Very few people in our Idiocracy think, let alone "understand".
Mostly they graze where the rest of the herd grazes and they panic and run only when the rest of the herd is doing the same.
This may explain why there are "runs on the bank".
As long as the rest of the herd appears to trust in a bank, then the bank is good, irrespective of what the facts are. If it's good enough for them, it's good enough for me. It's simply Old Kinderhook.
As long as the rest of the herd appears to trust in the gasoline pump, in the SUV and home, sweet McMansion, then it's good enough for the mindless in the herd.
By framing Peak Oil in terms of "money" you are simply feeding the followers in the herd more of the same alfalfa that got their brains twisted in the first place. Not a good idea. Not even for media. Don't assume they understand. They simply repeat the noises they hear, perhaps adding some distortional noises of their own to the original noise.
So let's keep it simple:
Oil is a liquid chemical that we humans don't know how to make on our own.
We find pockets of it in the ground and suck it up. We attach a price number to that which we suck up. We believe it will just keep coming and coming.
When it stops coming, we panic. We increase the price number in hopes that the new number will keep the oily substance coming and coming. When that doesn't work we say to ourselves: See the speculators. See the speculators run. Run run speculators. Run run Dick. Run run Jane. Run run Forest Gump. We don't know what else to do. So we run. We run with the herd. We make noises about markets and gougers and evil terrorists. That keeps our herd mentality minds happy. For a while.
PEAK OIL PRIMER FOR MEDIA MOGULS
See Jane.
They smile.
They smile because the spot runs.
The black spot runs and runs.
First it ran in Titusville.
It ran and ran.
Then it ran out.
Dick and Jane did not stop smiling.
A new spot showed up in Texas.
It ran and ran and ran.
It ran faster than the Titusville spot.
It seemed like Texas Spot would never run out or stop running faster and faster.
One day a bad man named Hubbert said that Texas Spot would stop running fast. He said the Texas Spot would "peak".
Dick and Jane laughed.
Silly Mister Hubbert.
He is nothing but an old fashion coot with doomer mathematics.
One cold crude day in 1971, the Texas Spot stopped running faster and faster.
Mr. Hubbert had been right.
Dick and Jane did not cry.
Dick and Jane found a new Spot, even bigger, faster and better than Texas Spot.
This was Saudi Arabia Spot.
It ran and ran and ran and ran.
It ran faster than the Texas spot.
It seemed like Saudi Spot would never run out or stop running faster and faster and faster.
One day a bad man named Simmons said that Saudi Spot would stop running faster and faster. He said the Saudi Spot would "peak".
Dick and Jane laughed.
Silly Mister Matt Simmons.
He is nothing but an old fashion coot with doomer mathematics.
One cold crude day in 2008, the Saudi Spot prices ran up over 100.
Mr. Simmons had been right.
Dick and Jane did not cry.
Although they did whine some about pain in their pumping hands and holes in their wallets.
Dick and Jane found a new hero.
He said drill and drill.
We drilled in Texas.
That solved our Titusville problem.
We drilled in Saudi.
That solved our Texas problem.
Now we simply have to drill and drill some more.
Dick and Jane are happy again.
The drill and drill man
makes sense.
Dick and Jane are common people.
The drill and drill man
makes common sense.
They don't need to heed old fashion coots like Hubbert and Simmons with their doomer mathematics.
Happy Days will be here again.
Happy Days came after Titusville Spot pooped and declined.
Happy Days came after Texas Spot pooped and declined.
Happy Days will surely come after Saudi Spot poops and declines.
All we have to do is drill and drill.
Nice try, but one of the fundamental assumptions you make about ANWR and the future production of Alaskan oil and gas is inaccurate.
Your analysis begins with an assumption that no additional pipelines will ever be built to the North Slope of Alaska where ANWR is located because of the expense. However, not one but two projects to build new pipelines to the North Slope are currently under consideration in Alaska. The leading project, proposed by the Transcanada Corporation, would connect North Slope gas to the existing gas pipeline networks in central Canada and the mid-western USA. A decision on this project will be made shortly. Exploratory work has also begun on a second gas pipeline project, called "Denali" supported by the same consortium of oil companies that runs the current Trans-Alaska Pipeline System (TAPS).
Any individual with knowledge about Alaska, or any competent media person who actually investigated the situation in Alaska would immediately see this basic error in your media guide. I suggest you correct this problem.
Well, actually I was trying to restrict the entire piece to a discussion about oil, not natural gas. Maybe that wasn't clear enough.
If the expense and environmental concerns aren't stopping a new natural gas pipeline from being built to the North Slope, then your claim in the media guide that the expense and environmental concerns will prevent the construction of a new oil pipeline to the North Slope doesn't make sense. Once it begins in earnest, construction of the new natural gas pipeline from the North Slope to Alberta and connection to the midwest gas pipeline system is going to go on for years and be the largest ongoing construction project in north America. Everyone in the US will be aware of this giant construction project. IMHO, it will make the media guide look silly if it contains a claim that it is impossible to build a new oil pipeline to the North Slope when at the same time out there in the real world a huge construction project is underway to build a new gas pipeline to the North Slope.
If you aren't familiar with this new pipeline project to the North Slope, here's a link: http://www.denali-thealaskagaspipeline.com/
I'm not at all convinced that we can be confident that a new oil pipeline could/would be built just because a new gas pipeline is being built. As I understand it, gas and oil pipelines are very different things. Anybody out there with real-world experience on pipelines want to comment on that?
"As I understand it, gas and oil pipelines are very different things."
Yes, one of them has pumping stations and the other have compressor stations. In between there are big pipes. Nat Gas pipelines use carbon steel that is more corrosion resistant than the ones to transport oil. Other than that not much difference.
To not be confident that a new oil pipeline could be built when someone is currently building a new nat gas pipeline in the same place is simply to pick an argument for the sake of arguing. It like saying that we can not build any new apartment buildings while a giant office building is going up next door.
It seems to moi that you have some attachment to there being only insurmountable problems with no solutions even when they are repeatedly pointed out. I wonder why that is?
There are other reasons why I doubt that a new TAPS would be built. For one, it appears to have about 1.25 mbpd of unused capacity already. If the peak production rate for ANWR were truly less than 1 mbpd, there would be no reason to build it. Another question is whether anyone would be willing to shoulder the cost of building it. I don't disagree that a new oil pipeline could be built, I just don't think it's very likely.
The quote from the guide is:
"No other oil pipeline from Alaska’s north slope would ever be built, due to the cost and logistical issues."
If the reason that no new pipeline will be built is because it is not necessary because the existing infrastructure is sufficient to carry the new flow then why talk about it at all as if it were a negative. It is also unlikely that lots of petting zoos are going to be built around the wellheads but that too is not relevant.
The cost issue is purely one of economics. There are no technical reasons a pipeline can not be built so it is just a matter of return on capital. The calculations are not very difficult though I would posit that the future price of oil has so much embedded variance that some of the risk would have to be sold to the marketplace.
Prudhoe is depleting. So when ANWR starts production it will be able to utilise more of the pipeline capacity than is currently available. So let's say that ANWR will ramp up over ten years and Prudhoe will continue declining over ten years. ANWR will be able to produce up to 1.6 million barrels of oil per day. ANWR could produce more, perhaps, and then we would need to build a second pipeline right next to the first.
Also, we could build a synfuel plant at Prudhoe to convert natural gas to liquids and produce methanol to ship through a second or third pipeline. We would probably barge the synfuel plant up to the North Slope from Seattle shipyards rather than build it on site. We would need to build a railroad to the North Slope if we built it on site, and that would be expensive.
As a counter to the high USGS reserve estimates for the entire world and the really high estimates of official organizations.
You might include the dispersive discovery model, or oil discoveries since 1900 showing how they have peaked a long time ago, and say how production follows discoveries. You might also talk about the humongous margin or error in the USGS numbers. Also you may get a graph of OPEC oil reserves and their coincidentally stair-step doubling in reserves and illustrate how reserves are overstated, ie Kuwait lowering their reserves by 30 billion barrels ect.
You might show that peaking production is not just an oil phenomena and has been well documented with other resources.
http://europe.theoildrum.com/node/3086
also,
Good luck Chris
All important points, but again, in the interest of brevity, I left them out. Maybe this just highlights the need for more detailed works that this piece can refer to. I will definitely take a look at Gail's piece with a new eye on how it can serve that function, and I hope to gather some other good suggestions upthread on other important additional reading.
Thank you all for your excellent feedback--it is just what I hoped for! I may not be able to respond point by point to everything, but I will begin incorporating changes in the doc and hope to issue a revision within a week.
Hi Chris
If your goal is to educate people so that you can make a positive difference in the world then I would suggest that a big part of the Media Guide be centered around the solutions that are likely to come about and what we can do as a group to promote them. If the Guide ends as a guide to the apocalypse then it is no guide at all and one that will only serve to frighten some people into perhaps making unwise decisions based on fear.
There is nothing in the guide which shows what we actually do with the liquid petroleum products that are being produced and how we might substitute for them. It would be quite difficult for a new reader to get a handle on what might be a way forward without these facts.
As I have posted here many many times with virtually no reply nuclear plus EV is on the face the best solution to peak oil in that it is technologically sound (requires no new breakthroughs though battery improvement will certainly be welcomed) and financially quite do-able. As a wonderful side benefit to this conversion the whole greenhouse gas issue, which is a large one indeed will go by the wayside.
Here in the US we can push this solution by giving tax credits to EV producers / consumers which is very much like a carbon tax but politically it is always easier to give subsidies than to impose taxes so it is practically a better way to go. We can also push to resolve the whole nuclear waste storage solution at Yucca Mountain and help debunk the crazy ideas that we must make sure that the site is geologically sound for 10,000 years, as if once a sealed cask is placed in storage there is some reason it can never be touched for 10,000 years should something need be done to it like move it.
As long as the US remains a relatively free market place, the EV solution is going to happen, so I am not too worried about the future. The big difference we can make is on the transition. If we engage the oil producing countries constructively we can together get over the hump to better world. If we remain in a state of antagonism where they feel it is a good plan to put the screws to consumers over the short term then there is no telling where the hard feelings will lead.
If possible, please consider reporting Peak Oil in terms of World Oil Exports.
What is extracted is geology; what is exported is economics. Declining Exports is a drag on economic momentum that can be measured in foreclosures and gas prices.
The media's interested in geology seems reflected in the fact that we have had a clear geological picture of Peak Oil since 1956. Yet we let it sneak up on us.
The media is interested in jobs and foreclosures, the human consequences. Framing Peak Oil in human consequences may help educate people so we can mitigate the worst of those consequences.
The graph below is an attempt to illustrate foreclosure consequence. It is an update of an EIA graphic. In the bottom graph, the dark blue line is Disposable Income and the red line is oil prices. With the peak in World Crude Oil (I wish it were World Oil Export data, if you know a source please let me know), oil prices climbed. More and more people were forced to choose between their commute and house payments. Foreclosures then exposed banker misbehavior.
Here is a peak oil fact sheet provided by the State of Minnesota that might give you some ideas. I thought the graphics were very attractive.
http://www.nextstep.state.mn.us/download/peakoil.pdf
It was handed out at this Climate and Energy Change conference for community planners, officials, and staff.
http://www.nextstep.state.mn.us/conference.cfm
#1 and #7 are very important. Perhaps #7 should be moved to #2??
#8 is very poorly worded. The impression the reader gets is that point #8 is a general doom and gloom statement (the future is going to be hellish, run to the hills, bla bla bla). This tends to overwhelm the reader and cause them to move on to the next point. (Or close the browser window lol.)
But in fact #8 is a very important point.
People like Daniel Yergin are parroted all over the media as being experts, despite being more wrong than a broken clock. If this isnt the number one issue, it is surely the #2 issue of the day. Nothing will ever get solved until these people who are proven wrong are exposed and pushed back down into the sewer from whence they came, figuratively speaking. It is extremely frustrating dealing with these people and having to wade through the mess they leave behind in their wake.
All over the media, you can see all these people who were so wrong about everything ... you can see them quietly changing their tune. It is even more noticable if you're a Ron Paul supporter... if you witnessed all the attacks on Ron Paul you are surely noticing how his attackers are "stealing" his ideas. In addition to the moral bankruptcy of this type of behavior, it is also dangerous for another reason: it leads people to trust in those who only steal others' ideas without giving credit where credit is due. Dont get me wrong, I'm glad they are changing, but when they can't admit they were wrong and say who it was that convinced them they were wrong, it does a major disservice to the whole of humanity.
Furthermore, point #8 actually makes another distinctly separate point: cost overruns. These cost overruns are caused in part by the "fossil fuel feedback loop". I think this needs its own category, because it is so important. When the price of oil goes up, the costs of extracting oil, and coal, and everything else also goes up. From the cost of fueling the heavy machinery, to the cost of the tires, to the cost of the food for the driver, it is all part of a collosal positive feedback loop. It is a shame that millions of people understand the feedback loop that global warming may create (which might lead to runaway warming) yet so relatively few understand the fossil fuel feedback loop. Isnt that odd?
Compare these:
- The very limited evidence for the possibility of runaway climate change at some future date
- The overwhelming evidence of a fossil fuel feedback loop leading to runaway price spikes right now in front of our eyes.
For serious discussions of climate, go to Real Climate at start at "Start Here".
For anyone who has studied them *seriously* and has no economic or political predisposition to believe otherwise, it's clear that:
- the Peak Oil plateau is here, and we are in for a very rough economic century if we don't go all-out on efficiency and sustainable energy supplies (not easy, as per Charlie Hall's balloon graph), while carefully husbanding what's left of our one-time inheritance of high-EROI fuels.
- climate science is plenty good enough to say that we will have rough *centuries* or *millenia* from climate problems, if we keep on a BAU path with regard to GHG emissions. Although Earth cannot produce a Venus-like runaway Greenhouse, we can certainly create more ice-albedo feedback, and if we melt enough permafrost, the positive feedback effects melt (over 100s or 1000s of years): Greenland, Antarctic Peninsula, WAIS, and maybe even a chunk of East Antarctica. If it gets warm enough to release the methane clathrates, we could have a rerun of the PETM event, Not a Good Thing.
But, in the near future, i.e., within the planning horizons of local governments here in the SF Bay Area, we already know that the 2100 minimum likely sea-level rise of 1m is going to be very, very expensive .
The USA is rich in part because we have a lot of useful coastline, and a lot of infrastructure near sea level ... and it's going to have to be protected/replaced, not with the help of $30/bbl oil with which it was built, but with (whatever equivalent energy costs in 2100, 2200, etc).
Peak Oil&Gas economic effects are relatively near-term, whereas AGW's are much longer-term, but that doesn't make the evidence for the latter any less likely, and the physics is inexorable.
We'll certainly use all the oil & gas we can get, and world economics and climate are in synch: get efficient, stretch supplies, invest fuel into building sustainable replacements. The big climate/econ disconnect is coal & nonconventional oil.
Physics is inexorable indeed. Most of these so called scientists who are worried about sea level rises apparently don't care too much about physics. Before you can even begin to predict where sea levels are going to be 100 years from now, you have to go back in time and answer a very basic question: how did massive animals roam the earth and hunt prey in ways that are clearly not physically possible in today's gravity? Rather than try to answer that question, they choose to ignore it, and all other questions like it. For that reason, there will not be a true undertanding of climate science for a long time. We first need to be able to come to a concensus on the most basic geological concepts, such as (1) what was the earth's gravity 200 million years ago in relation to what it is now, and what are the implications of this?
And even more importantly, (2) why is every square mile of deep ocean floor so much younger than the land masses? And there is yet an even more perplexing question: if you take all the salt that is dissolved in all the oceans in the world, you would have enough salt to cover all the land on the earth with 400 feet of salt. (3) Where did all that salt come from? It sure as heck didn't come from erosion. To me, the answer to all these questions is obvious. The answer to all 3 questions is the same.
It is ironic that so many people who have no plausible explanation for those questions can be given any credibility when they claim to have the slightest clue what sea levels are going to be in 100 years. They don't have the slightest clue about the oceans. Until they can answer those questions, and dozens of other related questions that all have the same answer they don't want to hear, global warming will remain nothing more than a propaganda campaign. If you don't want to deal with those questions, then it is a waste of time to even think about global climate change because your fundamental assumptions on what the earth is and how it works are going to be hopelessly flawed. Flawed science always leads to flawed policy.
I suggest you read basic high school astronomy and geology textbooks for the answers to the above questions.
Oh, skip the parts of the geology textbook that relate to where salt deposits come from. They are wrong.
Would you care to enlighten us?
Tonyw: in case you get no reply, let me guess:
Google: expanding earth
It appears that iconclast421 subscribes to this theory.
Strangely enough, very few geoscientists agree.
Amidst the breathless entries the Wikipedia entry is useful.
Nuclear is absolutely unsustainable.
We have around a 50 year supply of uranium left for existing nuke reactors.
After that we need to develop breeder reactors to turn inert U-238 and Th-232 into weaponizable plutonium or U-233 and up to now after 50 years of trying that technology has been at least an economic failure(there is one operational breeder power reactor the ancient BN-650 in Russia, while state-of-the-art breeders in Japan(Monju) and France(Superphenix) have been CLOSED. One possible method is to burn MOX and thorium in hyper-expensive heavy water CANDU reactors.
All breeders will require huge amounts of reprocessing (of waste) which requires lots of energy(SWUs) as well.
Also there is the fact that the present nuke fleet is rapidly reaching its design life after which they should decommissioned.
Oh yeah, forgot about the millions of tons on nuke waste sitting in reactor swimming pools awaiting a final resolution.
I don't know how many times all this has been discussed here but the nuke-believers keep repeating the same garbage.
The nuclear religion is a kind of idee fixe in the brains of some here. I refer those deluded unfortunates to Dr. Michael Dittmar for deprogramming.
http://www.aspo-ireland.org/contentfiles/ASPO6/3-2_APSO6_MDittmar.pdf
So can you please put away all your nuclear powered toy transport and your 'green' electron economy daydreams until you have some realworld answers?