Day 2 in Sacramento at the ASPO-USA meeting and The Hunt for Black Gold Open Thread

Ed's Note: The intent of this thread is to combine two different discussion items:

1. A one-hour special on the oil situation, The Hunt for Black Gold. It features a discussion of peak oil, an interview with Sarah Palin, Matt Simmons, Randy Udall, and a closer look at oil company profits, and a discussion of alternatives. It was shown on CNBC yesterday, and will be shown again today, Thursday, Sept. 25 at 1 a.m. ET and on Sunday, Sept. 28 at 10 p.m. ET.

2. Heading Out's discussion of Day 2 of the ASPO-USA conference, which can be found below the fold.

Note: Notes on Sunday's proceedings can be found here:

Monday, September 22, was the first day of the formal meeting, following the Breakout sessions on Sunday. The meeting had over 500 attendees, so that all the seats were full as the meeting started, and there were soon folk standing at the back of the hall. Kjell Aleklett, President of ASPO-International, began with a brief review of world conditions before Sally Odland moderated the first session which was an introduction, or reminder, of the basics of oil generation and exploration. This was provided by Ken Verosub, a professor of geology at UC Davis. Starting with the basics of oil formation, he pointed out the combination of different geological events, and the resulting layers of rock that have to be formed in place in order to create, capture and then trap the rock, and the need for geological movement to then concentrate the supply so that it can be recovered.

He pointed out that the oil has to be “cooked” just the right amount to convert it to oil, which requires a certain depth of burial, at one stage in its history. He illustrated the events through the creation of oil traps around a salt dome. To find the traps, the methodology has had to get more refined. Originally, two-dimensional models of the subsurface were achieved by using exploding sound sources and a small array of geophones to pick up reflected sound waves and thus map the layers of rock beneath the surface. The systems today can use computer analysis to generate three-dimensional images which can be projected into rooms that allow the geologists a degree of exploration not available in earlier years.

He went on to explain how a “Hubbert” curve of depletion is formed for a given oil field, from the accumulation of production rise and decline of the individual wells in a field. He mentioned that the results of the combination of geological rocks that have to come together to provide a viable field restrict potential discoveries to relatively known places. (These do not include many of the places where the “Drill here, Drill now” message is enunciated). Finding where there is enough oil to justify a well is neither easy nor cheap. He then used some simplified math to show that the amount of oil that is left is already diminished to the point that, in the best circumstance, oil production will peak in the 2010 to 2015 time frame. This assumes a world max production of around 100 mbd (we’re at about 86 now).

Sally Odland works at the Lamont-Doherty Laboratory where just recently they have acquired an ex-industrial sesmic survey ship. Because of the recent cost increases in ship repair, and the fact that the industry kept hiring away the team members, restoring the boat took much longer and more funds than anticipated. The costs of fuel now mandate that the ship be rented out to industry for 5 months of the year, so that the School can afford to use it for the other 7 months.

Sadly Gil Mull one of those who helped drive the first exploration well in the North Slope of Alaska could not make the conference, but Sally went through the slides of his presentation, and these will be available at the ASPO website within a couple of days, and are well worth seeing.

Jeremy Gilbert tried to sound a Wake-up call. He noted that in many reports of the remaining reserves and production the only reliable numbers are often the page numbers. He now sees that the projections of the arrival of peak oil have been optimistic, and that the risks have got worse, as the peak point approaches. He noted that as world gas prices continue to rise, the Kingdom of Saudi Arabia (KSA) has just cut oil and gas prices (which increases domestic demand). He spoke disparagingly of previous IEA projections, but noted that the agency has recently undergone a change in heart and now sees three problem areas:

(1) the geological constraints on finding large fields of oil;
(2) the lack of investment able to exploit these increasingly difficult and expensive sites; and
(3) the much greater production problems that working in these more difficult environments bring.

He bemoaned the renewable energy mantra that “solar, wind or something, UFO’s perhaps, will bring an answer to our crisis.”

The problem is that we are finding only smaller fields each year, and must thus find more of them to make up for depletion. Those who call for more drilling need to learn that this will take time (given that all the rigs available are already busy, and that permitting etc all takes time). And as for new technology, this is usually applied in harder-to-produce rock, where its implementation only brings overall recovery values up to what they were originally estimated to be. He noted that while we have doubled the number of drilling rigs (around 3,500) in recent years, overall production levels have remained the same. And since Russia likely peaked last year, we are now running on borrowed time.

In short, it is past time that we wake up to the crisis at our door. He recommended the Deutsche Bank Report “From shale to shining shale” which is a critical look at shale gas plays.

Morey Wolfson of ASPO (and the Colorado Governor’s office) then presented a truly impressive new addition to the ASPO web site, the new Google Earth Global Energy Infrastructure tour . The tour had been put onto a 20-min video that he ran. Having watched it, I really encourage you to check out the site. It shows all aspects of the energy issue, and finds and shows the places that are important to it. (You could count the tankers in the Malacca Straits).

The next speaker was Matt Simmons whom I have heard on numerous occasions, but who this time talked into a silence as intense as any I have heard. He scared the audience in a way I have not seen before, perhaps because we were all much more willing to believe this time, given his record from the past.

He noted at the beginning of his talk that there are 150 miles of unit trains leave Wyoming every day. (Ed note – a 1-mile unit train contains 110 rail cars of 100 tons of coal each.) He talked about the elements of risk that we have now forgotten how to apply. He noted that we have forgotten how savage a collapse can be, or how fast it can occur. (Enron unfolded in 7 days. The events of the last week showed how even faster collapse can come now). The delays in bringing oil production on line from the recent hurricanes will only underline this point.

As a result places are running out of gasoline (Ed note the two folk next to me at the table were from Atlanta and Tennessee and neither town had any gas stations left with fuel, as far as they knew). The South is going to have to cope with a growing shortage until more of the infrastructure comes back on line, and that may be weeks into the future. This will get worse if all motorists suddenly start topping up their tanks, since this will sensibly empty the floating reserve that is the volume moving through the system at the moment. This will, in turn, remove confidence in the system, which will make the situation worse. The heating oil situation for the North East is only going to get worse in this scenario. And there is no data on how close to a collapse we currently are. And the collapse could well be a disaster equivalent to that of Gustav/Ike squared.

He noted that contrary to the solutions for the financial world there is no insurance policy that can help with Peak Oil. The paradigm is changing and sadly the world is still Energy Illiterate.

He also commented, having talked with producers of the new gas wells being drilled in the various shale formations around the country, that this is close to, if not already at a point where the energy costs to sink the well are not returned by the gas recovered from it. Further in talking with Baker Hughes folk (the ones that track the wells that are drilled around the world), he found that those who thought depletion in old fields was less than 5% got no takers from his audience, 60% of the audience thought that depletion was between 6 and 8% and the remainder thought that it was in the range above 10%. (As noted earlier the assumed value is often taken as somewhere between 2 & 4% with TOD using around 4.5%). It was by far the most pessimistic that I have heard him give.

We then broke for lunch and I was confronted by the question as to whether the situation would be so bad that we would not be able to come to a meeting, if one is held next year. Then the annual M King Hubbert Awards were presented, and we will talk about them in a separate post.

Jim Buckee of Talisman gave the luncheon address, talking on the production company viewpoint. He differentiated between the volume available in a field, and the production rates that can be achieved at it. He said that Peak Oil is real, and illustrated this conclusion by discussing the decline in production rate from virtually all the major oilfields of the world. 90% of production comes from 10% of the fields and we know which they are. He then went through the list, which was dominated by the comment “in terminal exponential decline.” The depletion rate he quoted (after the 50% production point) was on average 10%.

In discussing the KSA fields he said that these also will follow these rules, as Abqaiq already is. Talk of increasing post peak production with Enhanced Oil Recovery Techniques does not spell out what these might be, and his opinion was that this was a likely myth. Recent Natural Gas Liquid (NGL) increases have hidden the likely peaking of crude oil, but this will only last a short interval more before it too will start to decline.

He did give a realistic reason why the major oil companies have not admitted to Peak Oil, pointing out that it will lead to reactions very similar to those that hit the financial community last week. Nevertheless with resource nationalism rising this makes further exploration tough; makes it difficult for industry to attract people; has doubled production costs over the last 3 years; and leads to a constant fight against field declines.

He pointed out that there is no opposite to a train wreck. Further nationalism just means that the state takes a larger slice of a pie of fixed size. The change in production from majors to IOCs to NOCs has led to increasingly smaller production levels at higher costs. He felt we would hold production at the current level of around 85 mbd for another decade, but only because we will soon see effective rationing of this supply.

I then took a short break and missed the first after-lunch talks so any input on those would be helpful. I came back as Hermann Franssen was taking about the role of the IEA, and its recognition that times have changed, and as a result that its predictions of the future supply are changing also. He tried to get the audience to understand the world from the KSA point of view. That they see a constant threat to the price of oil, and their income, and thus act very protectively to ensure that they can continue to make money selling their oil. But they are also conscious that they want to leave some oil for their offspring, and thus are very conservative in their production management. However Aramco is very compartmentalized, and thus only very few people really know the numbers and what is going on. And some of those that do are very pessimistic.

We must change things, and this requires successful “suits” going to Washington with a message. This message should include the need to fix the American transport system (against which are marshaled all those that have an interest in the highway system as it currently stands).

The world’s stock or cars will double in the next 17 years, but the Middle East is close to reaching an upper sustainable production level, and non-OPEC has peaked. Thus, the best we can hope for is in the 90 – 105 mbd range. He was nervous of the foreign policy of Gazprom. And while they are in the Middle East already, it must be remembered that America has zero credibility in this region.

Andy Weissman in the first of two talks, covered Electricity and Gas, noting that their crisis points are not yet here, though close. We could easily soon see natural gas (NG) prices that equate to $150/bbl of oil. The supplies of NG that have become so critical to powering the national power grid are going to decline in volume, and thus increase in price. LNG is the marginal production we will come to rely on, and this will impose an additional premium on price. He anticipates global shortages of LNG by 2012/2013, with devastating consequences. He sees 5 essential requirements to meeting our needs:

1. Greater sense of urgency needed
2. Replace the IEA
3. Deelop a national strategy to review energy use across the board
4. Maximize all cost effective domestic resources
5. Use the best expertise available to review the options.

Jim Puplava felt that the worst is yet to come. He relies on the Chicago Federal National Activity Index. When this falls below -0.7, then there will be recession (it’s close). He is recommending a Prius to help in the time when gas rationing arrives. We are at a point where we have maximized the rig count and yet production is not rising. He feels it is ludicrous not to expect a decline in non-OPEC production. We have an immediate crisis and need to take action. We are talking about the wrong set of solutions and need to change the mind set. The opinion of the experts has been shaken and the lack of good information does not help.

After the break John Theobald introduced the next session with the opening section of the film Soylent Green which, for those who have forgotten, is people. (See the movie).

He then introduced David Fridley who reviewed the recent growth and change in condition in China. It is an economy where coal dominates supply (at around 97% of the resource base) and with a reserve of around 238 billion tons, is likely to continue to do so into the future.

Biomass (rice hulls and similar debris) is used extensively in the hinterland as a fuel source for cooking and heating. Industry otherwise dominates consumption, while transport needs have been small. However, the coal consumption has out-stripped the capabilities of rail to carry it, and thus trucks are increasingly used. These increase the energy cost for delivery by a factor of 16, but China has few other options. China has been busy buying up resources all around the world; it must do so to meet its needs. It is looking at Coal to Liquid and Coal to Chemical plants with the first CTL going in to Shenhua in Inner Mongolia. But it will be a large consumer of water at around 10 tons for every ton of liquid produced, in an area that has little water to spare. Ethanol was not a success, so they now produce methanol and blend this into gasoline.

Diesel is dominant in transportation. There are very few private automobiles, compared to other countries.

Vince Matthews then talked about Peak everything else, and included China in this analysis which saw China seeking major volumes of many commodities and in the process driving up the price. There were many examples given in the slide show of these increases, over a range of minerals. Steel price for example has risen six-fold. Where prices have not yet risen dramatically it has been because of long-term contracts that control price until they expire.

We forget that much of our NG is imported from Canada, and as their needs rise and production falls their exports to us will decline. Thus even though the rig count has increased, we are still in trouble. 49 coal plants came off line last year, to be replaced by NG, but while the number of wells drilled increased from 9,000 to 30,180 over the past few years, production has not matched this increase. Production from the Rockies region is flattening out.

Many folk talk about our redemption coming through increased use of photovoltaics (PV) and solar energy, not recognizing that solar cells require rare earth elements that are largely falling under the control of China, and whose price continues to rocket upwards. China is searching diligently for mines and prospects to acquire (doesn’t really matter what the mineral) and is becoming much more successful than ourselves. (though he noted that Shell is buying up the water rights in Colorado around the oil shale area).

The days activity were summarized by Robert Hirsch, who again emphasized the magnitude of the problem – just matching 1% of global need requires 850,000 bd of oil equivalent. He looked at certain one-liner phrases that had cropped up over the day. “Willful human blindness” was one of the more memorable, as was “Peak roads”.

And then we adjourned to network. As I mentioned in the earlier post there were many of our readers at the meeting, it was a great pleasure for us to meet and chat with many of those, particularly the ones who don’t often comment. And to those as other attendees, I do ask that you expand on my brief review, fill in the blanks and add your impressions.


If anyone comes across an online source for the CNBC show, please post.

Efforting that.

Also, for those of you coming over from LATOC, scroll up to get to the Simmons summary (Matt put the wrong URL in...).

This comment covers both topics. At the ASPO meeting Matthew Simmons mentioned being interviewed by Maria Bartioromo. He was impressed with her understanding of the situation and her concern that the topic did not receive adequate attention. He expected The Hunt for Black Gold to be excellent, which it was. I was pleased to see Randy Udall featured at ASPO and Black Gold.

China will likely take over as leader in producing solar panels this year. But, the bulk of the market remains silicon and thus is not dependent on rare earth minerals. The thin film sector (which can use rare earths) is growing faster than the silcon sector and that growth is centered in the US. The relative growth rates may become more equal as silicon supply shifts into gear for solar being a larger market than computer chips. The rare earth issue is pretty much a canard for the overall industry.


Chris, when you say "The rare earth issue is pretty much a canard for the overall industry" do you mean that rare-earth based products will not be able to be scaled up due to their scarcity? I have read that China has already tied up over 90% of rare-earth minerals.

I mean that there are methods that do not rely on anything scarce that will come down in price to be well cheaper than coal. If, in the absence of scarcity, the thin film methods that do rely on the scarce elements would be even cheaper, it does not matter much. I would guess that China is using a lot of rare earths because they manufacture a lot of electronics. Indium in not technically a rare earth but it could prove to be a constrain on CIS and CIGS thin film solar cells:


Heading Out mentioned that he missed a bit of the program after lunch. Jeff Rubin, the economist from CIBC was scheduled to speak them. He was not able to be present in person, so sent a video. The topic was, "Triple Digit Oil Prices Will Reverse Globalization". In it, he showed a comparison of the cost of shipping a 40 foot container from China to the US. A few years ago, the cost would have been $3,000. It now costs $10,000. If oil rises to $150 a barrel, it will cost $15,000.

One place where this is already making a difference is with steel. Because of the high cost of shipping steel, it is now cheaper to make steel in the US than to ship it from China. There is relatively little labor involved in making steel, so their lower labor costs makes little difference compared to the higher shipping cost. He expects this type change to gradually impact goods with higher values relative to weight.

He expects that higher shipping costs will tend to make countries purchase goods from their closer neighbors, rather from long distances. In the case of the US, this means Mexico will sometimes have an edge over China in making goods to import.


I wonder if shipping inflation has finally caught up to the steel market. About 4 months ago I was told one reason for the sudden run up in oil field tubulars in the US was increased demand (along with the willingness to pay the extra cost) from overseas buyers. Oil field tubulars may still be the one exception to the shifting shipping paradigm. It might cost more to export pipe than it used to but the end product (oil/gas) might justify the expense. Perhaps one more reduction of oil/gas exploration EROEI.

Rubin was quite strong in this idea that high oil is the end of globalization. He noted that at $150, oil was the same as a quadrupling of the tariff rates of 2000.

He also noted that at $100, oil is 40% of shipping costs, at $200, it is 80%.

In a similar vein, the following day speaker Michael Boyd noted that the ave flight in 2008 sold for $191, while the cost of fuel for that flight was $138. He was surprisingly upbeat, it seemed to me, about the future of flight.

You do have to figure the stealth inflation of added fees. That $191 airfare is more like $212 when you add the $15 for one checked bag and $6 for a cold sandwich. Let's see how long they can keep up this charade of low published fares.

Hello HO & Gail,

First, Big Kudos to all ASPO & TOD speakers, plus the attendees of this conference.

Gail's Quote: "He expects that higher shipping costs will tend to make countries purchase goods from their closer neighbors, rather from long distances. In the case of the US, this means Mexico will sometimes have an edge over China in making goods to import."

This is a logical result when this is possible, but many Elements are geo-location flowrate-limited, thus, this geo-constraint means that long distant shipping will be inevitable, until declining FF net energy forces the shift to even smaller flowrates moved by wind-sailing ships. I have no idea on this timeframe progression.

From history, we know the Brits mined the easy 'low-hanging fruit' of Pacific guanos, then moved it back halfway around the world for UK topsoil application in the 1800s. They would have saved much energy, expense, and time if they had native resources, but Nature wasn't generous. Such is life.

Presently, the UN FAO Fertilizer Forecast projects North America[NA] to be heading into a phosphorus[P] deficit, and the latest from the USGS website echoes this trend with evidence of increasing phosphate imports from Morocco [the remaining high fruit], even with the admitted US Census Bureau data suppression.

The ASPO discussion of potentially higher crude depletion rates [10%->yikes!] plus WT's ELM thus indicates a growing strategic need to insure NA P-imports for food surplus generation, which is key to continued job specialization. IMO, this is 'right down the alley' of Asimov's Foundations of predictive collapse and directed decline using Element planning and control.

Obviously, the Pentagon is not going to reveal their future plans. Heck, I don't even know if they are looking this far ahead into the control concept of Asimovian Optimal Overshoot Decline, but I certainly hope they are reading TOD daily. Proper execution of Liebig's Law of the Minimum and Liebscher's Law of the Optimum offers many potential control scenarios going forward. Recall my earlier weblink news on the Israeli curtailment of the Element sulfur inside the Palestinian enclosures.

If a 'global black swan' occurs to severely curtail crude flowrates, we could see lots of bunker-fueled ships at anchor. The UK and Europe, due to their close proximity to Morocco, might be able to ship adequate raw phosphate rock quantities by pressing all their sailing yachts into repeated trips to and fro.

In contrast: the US and the rest of giant NA, geo-located across the 'pond' from the non-substitutable Element P, might be forced to use a few nuclear aircraft carriers for trans-Atlantic transport. Small sailing yachts would find the Atlantic's distance and notoriously foul weather impossible to safely traverse while heavily laden down with bags of phosphate rock...Logistics is all. Very expensive transport fuels would be required to move the P from NA's seaports to the far-inland arable acres for agro-application.

Pres. Clinton is now on record for promoting the closing of the US landfills to ramp O-NPK and the other Elements for recycling--I have pushed for this process, plus even more [see SpiderWebRiding in TOD archives], for some time, too. Of course, long time TOD readers of my postings already know of my advocacy for strategic reserves of I-NPK far above our present JIT levels, as greatly expanding O-NPK recycling networks cannot be done overnight, especially during a National Emergency.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

"The UK and Europe, due to their close proximity to Morocco, might be able to ship adequate raw phosphate rock quantities by pressing all their sailing yachts into repeated trips to and fro."

Spain and Morocco are working to finalise plans for two rail tunnels under the Strait of Gibraltar, to be presented to a joint EU-Moroccan commission in October and with a tentaive operational date of 2025. Note this has been talked about for several years but seems to be gaining traction:-) as does the pan-Mediterranean union. We will have to see how it pans out with the financial turmoil, it is of course a challenging technical project. Alan might know more about this?

totoneila,Bob please keep hugging. by the way does totoneila mean anything or is it just a nickname?

Hi totoneila,

Chemical Fertilizers are mostly a post WW2 thing.

Your last comment that Organic NPK cannot be ramped up overnight is of course correct. 3-5 years is the change over period depending upon how badly the soil has been abused by chemical fertilizers.

Organic can never equal chemical for low Time/physical-effort results but has other benefits.

The punch-line is that we already know Armageddon is coming to farming. we now know with about 10-20 years lead time.

As with our present financial crisis, when the farming crisis arrives all the farmers will be asking for a government Bailout claiming the crisis is imminent or the people will starve.

You and I will watch it happen

Yeasts are infinitely smarter than the masses.


As H.O. noted, Simmons commented ( I think in response to a question) that the ERoEI for natural gas from Barnett Shale may not be net-energy-positive. I suspect there isn't enough good data yet on these unconventional nat-gas plays to warrant a conclusion yet, and this is something I hope gets attention (Charlie Hall? Cutler Cleveland?) in the near future.

When I asked for a show of interest from attendees re. our project on dynamic-systems modeling of global energy flow (incorporating a variety of future scenarios), I was gratified that 26 people showed up for the brief mid-morning meeting. I will assemble a distribution list once I'm back in MA and will start the dialog. Going after some grant funding is a high priority.

Another outcome of the conference was a decision to begin some sort of peer-reviewed Peak Oil journal. I suspect this will be entirely online, not paper, but not clear if that's final or who is in charge.

Dick Lawrence

I want to thank Heading Out for his continued, valuable service of reporting back on the conferences. Dude, you rock.

...and to Gail, and the make me 'all-warm-inside.'

And another big thanks to Heading Out for posting notes from the conference. I would've like to go, but this wasn't a good week to get out of work.

HO: Terrific summaries, thank you for that!

I typed 33 pages (!) of notes from the conference, which I hope to clean up and upload to ASPO-USA and here as soon as possible.

I jotted off a short article of my general impressions yesterday morning: Reflections on the ASPO Peak Oil Conference

As for the new project to create an online library of peak oil related data and papers, I have been bugging Charlie Hall about the notion for several years now and it sort of bloomed into fruition on the last day of the conference. Because I opened my big mouth, I guess it's officially my project, at least for now. Charlie and I and a few others hashed out a few ideas for it over dinner that night.

Along with it, there was a "call for papers" issued. [The notion of calling it "proceedings" from the ASPO-USA 4th Annual Conference was misguided, because they won't be proceedings and they won't be related to the conference.]

Those who want to suggest a topic on which they would like to write a technical paper for the ASPO library are invited to send their topics (not the papers) to papers [at] aspo-usa [dot] com, or to me at chris [at] getreallist [dot] com. I take it that an ad-hoc committee will be formed to review them and select some papers to greenlight for publication, but I wasn't involved in the development of that concept. In any case, I hope the new library project will help get the word out and eventually become a useful resource.

As usual, it was a pleasure to connect with TODers in person for a change, and HO, I'm sorry I never got a chance to circle around to you!

Chris, thanks for taking notes and i am sure we all look forward to reading these soon. The online library of peak oil related data and papers sounds like a good idea.

Further in talking with Baker Hughes folk (the ones that track the wells that are drilled around the world), he found that those who thought depletion in old fields was less than 5% got no takers from his audience, 60% of the audience thought that depletion was between 6 and 8% and the remainder thought that it was in the range above 10%. (As noted earlier the assumed value is often taken as somewhere between 2 & 4% with TOD using around 4.5%). It was by far the most pessimistic that I have heard him give.

Why does TOD use a decline rate of 4.5%, which is the same rate assumed by CERA?

Schlumberger has estimated an 8% (and growing) world oil production decline rate. TOD and CERA's 4.5% rate seems too optimistic and not very realistic.

Robert Hirsch writes:

Schlumberger may have better data than anyone else on oil fields throughout the world, because they operate almost everywhere that oil is produced. This includes the OPEC countries, where most data are considered state secrets. For IHS or CERA to have better data, they would have to have a competent, far-reaching spy network, which IHS/CERA has not claimed and couldn’t claim without significant repercussions. Indeed there is no indication that IHS/CERA has better oil field data than anyone else. Schlumberger and Gould have been too responsible for too long to believe that they would off-handedly estimate an 8% decline rate without knowing the facts. An 8% world oil production decline rate means that the world is in for very serious oil shortages almost any time now.

[Note: The frightening thing is that the Hirsch report only assumed a two percent decline rate.]

8%? Well, that's pretty sobering. That means that absent any new additions, you are down by about 1/3 in just five years - YIKES! That also means you've got to come up with new additions of 8% per year, every year, just to tread water. It ain't gonna happen! Especially with financial markets in the tank the way they are -- who is going to come up with that sort of capital financing?

The main argument of Peter Neill's optimistic presentation was that Saudi Arabia's decline rate is much smaller because they are managing their fields conservatively, producing 2.5% of the recoverable oil each year, vs 5% in the west. For the non-opec world, Neill was probably using a relatively high decline rate, but I don't think he gave a specific figure.

While we, who accept both the concept and inevitability of Peak Oil, speak in terms of declines and what that will actually force, I rarely see anyone whom has chosen a point to aim for while we still have a chance to aim. By that, I don't mean using the same amount of energy as we do today or (to the horrors of some) an ever growing amount in the future.

As mentioned elsewhere, I attended a Biomass Conference on Monday and Tuesday. Only in a few small groups did you hear people acknowledge that the short-term goal (within 10 years) is something like cutting our consumption of oil in half. We can either do it because we put a program in place or we can allow the market forces (and the fast collapse that CAN occur) to control the outcome. In giving people my sense of what puts us within striking distance of a short-term mix of biofuels and conventional fossil fuels, I'm stating that the equivalent of approximately 50% of today's liquid fossil fuel use is probably about right (not easy, but about right in putting us within striking distance of some balance. Dropping to about 10 million BPD would give the remaining oil reserves and some combination of other technologies a chance of averting uncontrolled ping-ponging as the markets go into a ringing effect of postive feedbacks with built-in delays) and that puts us at a level of somewhere in the 1960's.

All one has to do is look at the damage caused by Hurricane Ike, to see how quickly everything can be flushed.

Hello Starship Trooper,

Your Quote: "..I rarely see anyone whom has chosen a point to aim for while we still have a chance to aim."

May I offer consideration of aiming at Asimov's Foundations for Optimal Overshoot Decline?

IMO, it threads the needle between Jay Hanson's Magnum Opus at [google Thermo/Gene Collision for a succinct fast-crash prediction scenario] and the ArchDruid Greer's slow and relentless grind to full Catabolic Collapse. I greatly admire the work of both of these gentlemen, but I have a mental bias towards the works of Jay. I consider my minor efforts as truly feeble compared to the massive groundworks they and others, such as Hubbert & Asimov have blazed for postPeak Humanity.

As an aside, I greatly applaud the ASPO Google-Earth energy modeling effort. Hopefully, this can be further expanded into the more discrete domain of Key Element Flows, but it probably requires a huge supercomputer clustering effort. Who knows?-->maybe the NSA has been working on this for some time already.

'Wild & Crazy' thoughts ahead:

It could be argued that life evolved with physiological nerve and brain connections towards Element-Sensing Optimality, not Energy-Sensing-Optimality.

Let me try to explain. Equal btu or caloric amounts of various foodstuffs cannot be mentally discerned; it takes the Scientific Method combined with careful lab techniques. Ask yourself: how many btus of bananas = a chicken = chocolate bars = beer = orange juice?

In contrast: our brains, tastebuds, and digestive tract evolved toward biochemical recognition, processing, and feedback for the Elements in the foodstuff listed above. Did you ever wonder why your brain and/or stomach made you choose a banana for the Potassium versus craving the more compact sugar energy of a Snicker Bar? Our menu selection in a restaurant is more driven by subconcious Elemental needs than energy calculation.

The energy calculation, if it occurs at all, will be secondary when the objects are equal. I remember my father's rule for sharing a candy bar: the person who cuts it in half lets the other person have first pick. My brother and I subsequently had careful pre-cut discussions on exactly where was the best place and perpendicularity angles of attack for the knife to finally cut the chocolate in two halves. LOL! :)

The same can be said at the higher societal level: we soil-test to Element optimize towards the ideal Liebscher's goal of nutrient balance, not into just seeking cheap and maximal energy input of pouring in concentrated nitrates, then having a Liebig Minimum in phosphorus.

A possible postPeak example? If a ship's doctor determines that a sailor, long at sea, is starting to get scurvy, he will tell the patient to either take vitamins or eat citrus [google Limey]. Well, when on a slow sailboat in slack winds, you cannot find tasty fruit in endless miles of seawater, so doctors will have to have available industrially processed vitamins even though the embedded energy per Vitamin C unit is much higher than fresh fruit prone to spoilage.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Brother and I also had the "one who cuts first picks last" rule. Thanks Bob for the post (and for all the others too).

Hello Seadragon,

Thxs for responding. I try to do what I can for paradigm shift, but time is precious and limiting my efforts to stay at what I consider the bleeding edge of Peak Change and Outreach.

I realistically consider myself below average in nearly every mental category and skillset necessary for the promotion of humanity's and the planet's future postPeak propects--which is why I have asked many times before for those TODers & TopTODers of much greater analytical acumen, skill, and resources to please advance, or extrapolate in new directions my brief, preliminary sketches of Optimal Overshoot Decline.

If I could touch-type as fast as my mind's speculative thoughts: I could go into much greater detail on potential cascading blowbacks, political control concepts, Foundation structure and hierarchy, viral growth in realpolitik mitigation & decimation strategies and supportive feedback loops, steady constants and oscillation frequencies of differing Element Liebig Minimum imposition regimes, Meme creation for autogenesis of multiple Foundation creation at the local to large watershed level for optimal biosolar habitat reorganization & Liebscher's Optima, possible timing sequences of migration forces causing the dispersive growth of Earthmarines, critical path methodologies and fishbone charting of key variables, keystone predation goals to force habitat optimization and specie protection, measurement & sensing criticalities for computational analysis....on and on.

Yet and sadly, some of my postings take hours of research, compilation, then an arduous hunt & peck, followed by ruthless editing on my part to be concise. Many times I fear that some thought or key concept I deleted to support text brevity was just what was required for a 'Eureka' breakthrough in one of my more intelligent readers' minds. As posted before: IMO, Peak books by Simmons, Deffeyes, Heinberg, etc, and websites such as TOD & EB, etc, constitute the largest charity effort on the planet for the generations ahead.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

You are a gentleman and a scholar.

I think you should assemble several dozen of your best postings, bind them in black and green covers of algae polymer covers, the colours representing freedom and ecological consciousness, entitle it 'Are Humans Smarter than...', and ask Gates, Soros, and Lucky Luciano to fund the distribution of several tens of millions of examplaires in the high temples of retail commerce where hominoid polywogs stream in search of the very knowledge and perspective you provide.

Hello Toilforoil,

Thxs for responding. I believe there are probably historical examples of Asimovian Optimal Decline--future research someday. Just off the top of my head, consider the escape from Antarctica:

He probably created the optimal strategies, tactics, conditions, structures, and resource flowrate networks that maximized total probabilities for survival in the face of extinction for all. This not only resulted in no loss of life, but also achieved their rescue. Recognition of potential Liebig Minimums + Liebscher's Optima par excellance'.

I guess I say do the first 20% in a year:


Thank you for all the information from all of us who can't be there. Jeff Rubin's video would be interesting to view. Does anyone have a link to it anywhere or know where to find one?


Maybe someone can talk ASPO-USA into posting a link to it. So far they don't have anything up on the presentation. I can send Greg Geyer an e-mail about it.

He recommended the Deutsche Bank Report “From shale to shining shale” which is a critical look at shale gas plays.

Does anyone know where a pdf or html of this exists? The link above is not the report. All I've found is the first 16 pages in a messed-up html.

Thanks to anyone that can find it.

That wasn't hard - it was in the first page of Google results. Original PDF is 404 but Google has an HTML cache of it.

Thanks to Chris for the link to the critical Deutsche Bank report on shale gas and its prospects. Matt Simmons commented negatively on the EROEI of shale gas. I read the report and unless I missed something, it did not appear to be very "critical." So I would invite Matt or any knowledgeable TOD ers to produce data on the EROEI or profitability of the different gas plays, tight gas, shale gas, coal bed methane etc. I would also ask the editors to consider adding a glossary of the different acronyms being thrown around by the increasingly technical discussions being aired on TOD. Really excellent summary of the presentations by so many bright people and interesting comments by all. I really wished I had attended the conference. Next year god willin' that the creek don't rise...


Yeah...that's the 16 pager I referred to, it's not the whole report.

Anyway, a Mr J.I. came through, thanks Dude:)

Page 12ff has the details of the decline rates in several locations:
1st yr decl: 62…80%
2nd yr decl: 20…35%
3rd yr decl: 15%
4th year + onwards: 10%

Thanks for the summary, HO!

There was a good discussion in your summary about production decline rates being possibly over 10%/yr. Brazil's production decline rate appears to be over 10%/yr, estimated to be about 12%/yr.

Page 29 of the IEA OMR Sep 10, 2008 shows the graphic below which forecasts Dec 2009 crude production to be about 2.06 mbd, up 0.32 mbd from 1.74 mbd on Jan 2007.

According to Wiki Oil Megaprojects, Brazil's addition crude production capacity for 2007 was 0.64 mbd
2008 estimate is 0.38 mbd
and 2009 estimate is 0.17 mbd.

That gives a total capacity addition of 1.19 mbd from 2007 to 2009. Assuming that 100% of this additional production capacity becomes realised production, then 0.87 mbd of this amount is needed just to offset production decline, with the remainder of 0.32 mbd increasing production to 2.06 mbd on Dec 2009. Brazil's implied production decline rate is 20%/yr!

If only 75% of additional capacity is assumed to become production, then the production decline rate drops to 12%/yr which means that Brazil must add about 0.25 mbd new annual production, or 0.33 mbd new "capacity", just to stay on a 2.1 mbd plateau.

Brazil's latest Tupi discovery is wonderful news but Tupi is unlikely to increase Brazil's production above 2.1 mbd. Instead it will probably extend Brazil's production plateau out to about 2015. Despite Petrobras' prediction that Brazil's production will exceed 2.4 mbd by 2012, it appears more likely that Brazil has just started its peak production plateau.

In Jan 2008, Colin Campbell updated his Brazil forecast which also indicates a peak production plateau.

The total liquids supply chart has been updated for the IEA OMR Sep 2008 report and indicates that total liquids remains on plateau until the end of 2009. OECD demand destruction has reduced total future demand and 2Q09 demand should be met by supply of about 86.5 mbd. Consequently, oil prices should remain volatile within a range, before resuming the long term price uptrend in late 2009.

Supply, Demand and Price to 2012 - click to enlarge

The largest part of total liquids is crude and condensate which is updated below. Production dropped for August and September due to pipeline problems in Georgia and hurricanes in the Gulf of Mexico. Production should increase in October to 74 mbd, before dropping to about 73 mbd in mid 2009.

Crude and Condensate to 2012 - click to enlarge

Hello Ace,

As usual, I consider your postings a Must Read for any TODer. Thxs!

Sobering projections through 2012. However, developments at Whitesands/Alberta in producing a insitu syncrude may change the slope of the curve going forward. outlines the work in progress. PETROBANK ANNOUNCES FIRST THAI™/CAPRI™ PRODUCTION, dated Mon Sep 22, 2008 provides the current status.

"Assisting were two British universities-Bath and Birmingham-supported by a generous grant from the British government´s Engineering and Physical Sciences Research Council (EPSRC)."

Glad to know that we Brits are helping out, shame we don't have any oil sands. If it works I guess this could help make it less environmentally damaging. The current oil sands stuff looks horrendous.

Another comment Matt Simmons made which worried him greatly was the effects of these shortages should it go national. He feared the situation where all the US drivers top off, believing it quite possible. He explained if everybody, which he imagined normally had about a quarter tank, were to fill up, it would take 78 million barrels, whereas our current finished inventory is only 87 million barrels. He feared it would take years (decade?) to provide for ongoing consumption and finally refill inventories.


It's actually more than a theory re:topping off. Back in the late 70's, during the embargo, that's exactly what happened. After all the rumors of gas hording and tankers sailing in circles out on the ocean died away and the MSM became bored with the story, the numbers were studied. Based on the same topping off assumptions they found all the suddenly missing inventory: in was in everyone's gas tanks.

So it's easy to imagine history repeating itself. I'm not certain about the concern over years to replace inventories though. It only took a few months back in the 70's as I vaguely recall. After everyone begins filling up when half empty gasoline consumption will be right back where it started. Refiners would likely start buying more crude to rebuild their minimum inventory levels but given they are all keeping those numbers relatively low. and then, when the panic buying ends, folks will start using up their rolling surplus which should reduce demand slowly. This should also allow the refiners to catch up on inventories.

Great review, Heading Out. Here's my Day 2 review - though it seems we may have covered many of the same bases, there might be a few nuggets in there for your readers to dig out.