DrumBeat: May 16, 2009
Posted by Leanan on May 16, 2009 - 9:35am
Interior Sec Salazar: Commercial Use of Oil Shale 10 Years Off
The commercial use of oil from US oil shale deposits is likely at least 10 years away and will require technological advances to get past hurdles standing in the way of its commercial use, Interior Secretary Ken Salazar said Wednesday."Oil shale needs to be on the table," Salazar said. "But it needs to be on the table in a realistic way."
Gas shortage forces Kuwait to shut Shuaiba fertiliser plants
Kuwait’s Petroleum Industries Company (PIC) will shut its urea and ammonia plants at Shuaiba for a month starting in late May because it does not have enough gas.The company will stop production at the plants from about 23 May, according to a source close to the company.
Chavez Eyes More Oil-Industry Takeovers Next Week
President Hugo Chavez acknowledged Friday that his government will continue to seize oil-company assets next week as part of its plan to expand the state's control over a key industry."You ask me if we have our eye on other [oil] companies, yes, yes," Chavez said in a televised press conference during a visit to Buenos Aires. "Next Wednesday...we will continue to seize companies in eastern Venezuela...I don't know how many, let's say all of them," he added.
Pakistan: Frequent power outages
Shortage of electricity is affecting businesses, making it difficult for industrialists to meet export targets within the stipulated period. On the other side, home industries are closing down due to frequent power outages.The energy crisis, which is affecting the country’s economy, is also hurting various industrial sectors of the second important city of Sindh, Hyderabad. It is surprising that consumers of Hyderabad Electric Supply Company (HESCO) are being forced to pay higher rates of electricity compared to other distribution companies.
India: Thermal power plants battling coal shortages
BL reported that the coal shortage situation affecting major thermal power stations across the country shows no sign of abating. According to latest available estimates, 23 thermal stations were facing critical coal stocks, with fuel in these plants expected to last less than 7 days.Of these, the coal stocks position in 13 large stations have been designated as super critical, with stocks expected to last less than four days, latest data of coal stock position compiled by the Central Electricity Authority show.
Even more worrying could be the fact that stations facing super critical coal stock situation include a number of super thermal stations, several of which form the backbone of the Central and Eastern Grids, including NTPC’s 1,840 MW Kahalgaon station in Bihar and the 1,000 MW Sipat station in Chhattisgarh.
US Geological Survey Spies 'Promising' Hydrate Reserve in GOM
A research team led by the U.S. Geological Survey in search of producible hydrate to add to the nation's energy portfolio has identified "the most promising" gas hydrate deposits yet in the Gulf of Mexico, according to a report by Reuters.Researched for years as a potential new energy source, gas hydrate is a combination of nearly pure methane and water frozen by low temperatures and high pressures in permafrost or beneath the sea, the report noted.
France offers Pakistan nuclear energy help
PARIS (AFP) — France and Pakistan have agreed to cooperate in the nuclear field, officials said Friday, with Islamabad claiming an important breakthrough in its bid to be seen as a responsible nuclear power.
Chevron to Proceed with Investment Plan in South Asia
U.S.-based oil giant Chevron Corp. (CVX) plans to move ahead with investments in South Asia amid an expected strong economic recovery in the overall region."Asia will have the quickest recovery to feed future demand growth. We have strategic locations in Asia to support growth in the long term," Joe Geagea, managing director for Chevron Asia South Ltd., said at a press conference in Bangkok.
In the good old days of high-octane leaded fuel, it was easy to overlook fuel hoses, float needle valves, carburetor rubber parts, fuel pump diaphragms, and carburetor gaskets. These items deteriorated slowly, requiring only periodic maintenance. Neglect them today and it can bite you with fuel leakage and the potential for a fire. Fuel-related fires have become a problem with older fuel systems because owners are not staying on top of important maintenance issues.The jury remains out on the adverse effects of pumping E10 into our Mustangs. E10 is 90-percent gasoline and 10-percent ethanol. And that's what you can expect at most gas pumps today. E85, which is 85-percent ethanol and 15-percent gasoline, should never be used in a classic Mustang.
Is "enhanced geothermal" too good to be true?
At recent talk by Thomas Homer-Dixon at the Houses of Parliament I heard for the first time about a thrilling new technological fix for our twin doom of climate change and energy shortages: enhanced geo-thermal.
The current challenges around the fossil-fuel based energy system affect the core of modern societies and cut across questions of security, national sovereignty, environmental sustainability, technological innovation and economic prosperity. While the energy crisis is multi-faceted, two broader notions exist with regard to where we might find the solution: in political reform or in technological innovation.
Plateau theory drives Total to oil sands: The French energy giant thinks conventional oil production will top out in a decade at 95 million barrels. The long-term plan is to diversify into nukes and other sources. But for now, its eye is squarely on oil sands
PARIS -- For Total SA, it's all about 95. The French oil giant builds its business with 95 in mind, as if the figure were tattooed on its executives' foreheads. The figure refers to Total's belief, not shared by the majority of Big Oil players, that global production will top out at 95 million barrels a day after 2020. That's only about 10 million more than current production.Many oil gurus refer to the top-output theory as "peak" oil. Total prefers to call it "plateau" oil, a subtle variation on the theme that suggests production, having reached 95 million barrels a day, will remain at that level for some time in spite of every effort to squeeze more from Earth's desiccated bowels (the peakists think production will fall relentlessly after reaching a peak, which may come well before 95 million).
An energy vision that may be too ambitious
It seems as though investors aren't buying into the peak oil theory - or "plateau" oil, as Total calls it. No wonder: If you believe that production will either decline or stagnate in a decade or so, then investing in an producer doesn't sound like the best investment.That's because if peak oil proves true, the world is bound to come up with a new source of energy that will reduce its dependence on oil, driving prices down. And if peak oil is just a fantasy, then expensive forays into alternative fuels could be for naught.
A maverick's message on oil: Jeff Rubin says prices are going nowhere but up, and life as we know it will change forever
In chapter 7, Rubin lays out in detail how high oil prices, which peaked near $150 in July 2008, led to inflation and rising interest rates that triggered the U.S. mortgage crisis and sent the economic dominoes, including global trade, falling."You can liberalize trade all you like, but it won't make a difference if no one can afford to ship the things you want to sell," he writes.
His prediction: Manufacturing jobs are going to return to North America over time. There will be a revival in regional agriculture. Urban farmers' markets will become more plentiful. Travel will be local and certainly not by plane. Dining out will be replaced by cooking in.
Undersea oil could help thaw U.S.-Cuba trade: Untapped reserves provide powerful incentive for change in relations
WASHINGTON - Deep in the Gulf of Mexico, an end to the 1962 U.S. trade embargo against Cuba may be lying untapped, buried under layers of rock, seawater and bitter relations.Oil, up to 20 billion barrels of it, sits off Cuba's northwest coast in territorial waters, according to the Cuban government -- enough to turn the island into the Qatar of the Caribbean. At a minimum, estimates by the U.S. Geological Survey place Cuba's potential deep-water reserves at 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas, stores that would rank the island among the region's top producers.
Wisdom from a commodity guru (review of Game Over, How You Can Prosper in a Shattered Economy, by Stephen Leeb)
In his chapter on oil, Leeb writes: “Alarmingly, the evidence suggests that no matter how you define peak oil, the world today is fast reaching – and may already have reached – it. If we allow ourselves to reach this sorry stage, we will truly be at Game Over”.Oil is not the only critical commodity that is becoming scarcer and more expensive, Leeb writes. Minerals, water, metals, these are all on the list.
He makes it crystal clear – time is running out ... and energy alternatives like solar and wind power are not going to magically make the problems disappear.
Oil transformed the Texas economy, turning what was an agricultural state into a financial powerhouse early in the 20th century. Texans concerned themselves with discovering new oil fields and building cities like Houston to refine and distribute the crude. Oil dollars lubed growth and the biggest state in the Union (at the time) prospered.So it's no surprise that folk in Texas don't think oil will be replaced as the basic power source for the American economy in the near future. "Not in my lifetime" is a statement commonly heard.
The Price of Oil: How did it get here, and where is it going?
Normally, news of burgeoning foreclosures, plummeting home sales, spiking personal and business bankruptcies, rising unemployment, and other economic indicators would tend to exert a bearish influence. After all, consumers generate 70% of U.S. economic activity, and if they stop or cut back on driving to work or the shopping mall, telephone relatives or business partners instead of flying out to see them, reduce purchases of items containing plastics, turn down the thermostat, and other weather-the-storm measures, oil consumption should decline.It took months for all these drivers to realign – but as we all know, they did, and then some. The chicken-and-egg debate, whether oil's sky shot triggered or portended the economic debacle in the closing months of 2008, will require more distance and data to resolve. But it's true that the dollar had started its comeback by mid-summer, supply had caught up, geopolitics had settled a bit, China backed off on its buying, no major hurricanes hit – but economic realities did.
Nigerian army frees hostages and destroys militant camp
PORT HARCOURT, Nigeria (Reuters) - Nigerian security forces said Saturday they rescued 10 hostages kidnapped this week, including six foreigners, and destroyed a key militant camp in the heart of Africa's biggest oil industry region.Nigeria's main militant group has declared an "all-out war" and warned oil companies to evacuate their staff in the Niger Delta following three days of heavy clashes with the military.
Nigeria: Government Plans to Stop Export of Crude Oil
The Federal Government through the Minister of Petroleum Dr. Rilwanu Lukman has said that export of crude oil from the country will soon come to an end as the Federal Government contemplates a policy of refining all crude produced in the country.
Turkey in team effort for Iraq push
Turkey has formed three consortia with an eye to bid for oil exploration rights for nearly all big oilfields Iraq is putting on the block next month, TPAO boss Mehmet Uysal said today.
Venezuela Wants OPEC to Enforce December Output Cuts
(Bloomberg) -- Venezuela wants the Organization of Petroleum Exporting Countries to enforce a December output cut when it meets later this month, Oil and Energy Minister Rafael Ramirez said.The South American country, which is “worried” about world oil inventory levels, wants OPEC to “reinforce” previous cuts, Ramirez told reporters today in Buenos Aires. The group meets again on May 28.
Russian gas monopoly bid proves devastating
MOSCOW — As energy markets shrink, the same tactics that the Kremlin used to build Gazprom, the giant energy company, into a fearsome economic and political power that could restore Russian influence in the world are now backfiring, slashing both its profits and its influence.
Russia seeks to speed gas pipeline with new deals
Russia will on Friday sign deals with Italy, Bulgaria, Greece and Serbia to build a major gas link to Europe, South Stream, as it seeks to speed up work to outpace the key rival project, Nabucco.
Brazil's president to sign 'voluminous loan' deal with China
Brazil's President Luiz Inacio Lula da Silva is to sign a financing agreement for state-run Petroleo Brazileiro SA (Petrobras) on a visit to China next week, a senior official said.Brazil's Energy Minister Edison Lobao told his country's state media that Lula, whose visit to China starts on May 18, will sign a "voluminous loan" deal on behalf of Petrobras.
CARACAS, Venezuela | The government on Friday temporarily seized a pasta factory owned by U.S. food giant Cargill Inc. in a pricing spat, the latest move by President Hugo Chavez's government against foreign companies.
Why local gas is high stumps probers
The federal investigation into unusually high gas prices in Western New York last fall failed to find illegal activity or identify reasons for the price difference.The Federal Trade Commission’s report — which included information gathered from the New York State attorney general’s office investigation—said it could not explain why gas prices in the Buffalo Niagara region were as much as 54 cents above the national average and consistently the highest in upstate New York.
Minister: Iraq committed to selling oil to Jordan
(MENAFN - Jordan Times) The Iraqi government is willing to discuss with Jordan the reactivation of oil exports to the Kingdom through the pipeline extending inside Jordan.
StatoilHydro oil sands role at stake
A Norwegian opposition group said yesterday it would ask for a parliamentary vote next week over whether majority-owned oil producer StatoilHydro ASA should withdraw from its $2-billion Canadian oil sands venture.The move marks an escalation in a row between oil interests and the environment just four months before Norway -- the world's No. 4 oil exporter -- holds an election.
Is Oklahoma City a city in transition?
ransition is not a spiritual movement. It is a grass-roots, community-led response to peak oil, climate change and the economic crisis. It is interested in unleashing our collective genius in whatever ways that emerge within the community.
In Man vs. Virus, The Win Goes to the Swift
When we look at the data on the hog trade to Mexico, it's increased pretty dramatically in last few years. I don't know why, but it feels like this is (due to) stocking of big pig-farm production facilities. There's nothing wrong with that. As a carnivore, it's great to have cheap, good-quality food.But the problem is that part of the risk of doing these trades and these globalized food production networks are disease outbreaks. When we do globalized food production and trade, we've got to insure ourselves just like you would insure yourself personally if you were doing a high-risk activity — you'd make sure you have life insurance.
Global Warming Inadvertently Curbed In Past By Lead Pollution, Scientists Find
ScienceDaily — Lead pollution in the air stimulates the formation of ice particles in clouds. A team of scientists from the USA, Germany and Switzerland has found that particles containing lead are excellent seeds for the formation of ice crystals in clouds. This not only has a bearing on the formation of rain and other forms of precipitation but may also have an influence on the global climate. This is because the heat given off from the earth's surface is more efficiently radiated into space by ice clouds (cirrus) with lead-containing particles than has been hitherto realized.
Well project tests storage of carbon dioxide: Effort could hold key to continued coal use
PATESVILLE, Ky. -- Drillers have bored nearly 4,000 feet below the green pastures of a Hancock County farm as part of a project that could hold a key to the future of coal in Kentucky.They're about halfway to their goal of 8,300 feet, aiming for rock that's 550 million years old. Next, researchers will inject small amounts of carbon dioxide to test the ability of underground layers to hold the greenhouse gas that many scientists say has become a serious global threat.
Judge blocks Wal-Mart's supercenter proposal for Yucca Valley
The retailer's analysis of greenhouse gas emissions is inadequate and its economic conclusions flawed, he says. The ruling signals a trend of factoring global warming into development plans.
Dems' climate bill shortchanges Obama tax credit
WASHINGTON (AP) — The House Democrats' bill to limit gases blamed for global warming would generate a fraction of the money President Barack Obama wanted to get from it to pay for a middle-class tax credit.Leaders of the House Energy Committee officially introduced the 932-page legislation on Friday, revealing critical details in advance of the panel taking a vote on the measure by the end of next week. The bill — the American Clean Energy and Security Act — would for the first time mandate reductions in the heat-trapping gases linked to global warming, and also shift the country toward cleaner energy sources.
The threat of a cap-and-trade swindle
The closer the United States gets to adopting a cap-and-trade system to control greenhouse gas emissions, the more frightening it gets.Not because the plan now under debate in the U. S. Congress would complicate the lives of energy producers, or impose new costs on consumers. Those drawbacks might be bearable if the system was truly designed to reduce emissions, and if the expense was reasonable. The alarm results from increasing evidence that emissions have become a secondary concern of a plan whose main purpose is to serve the partisan interests of the Democratic Party.
Draft U.N. climate texts mark step towards treaty
OSLO (Reuters) – The United Nations took a step toward a new climate treaty on Friday by publishing the first draft negotiating texts to help bridge a "great gulf" between options for rich nations to cut greenhouse gas emissions.Two documents totaling 68 pages also laid out choices on controversial issues such as nuclear power, emissions trading, forests, shipping or aviation in a new U.N. global warming pact due to be agreed in Copenhagen in December.
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Re: Global Warming Inadvertently Curbed In Past By Lead Pollution, Scientists Find
This finding is really startling. The suggestion is that the lead which industrial mankind added to the air by driving cars fueled with gasoline laced with tetraeythel lead may have contributed to the cooling conditions recorded after WW II until the mid 1970's. This finding puts a serious dent in the denialist claims that the cooling was natural and thus might return.
E. Swanson
Nature has a podcast on this paper if one is really interested.
(It possibly could of been on The Naked Scientists, also a Nature podcast)
Lead pollution may explain not only global cooling, it might also explain the difficulty many have understanding global warming. :)
+1 :-)
Alan
When they drilled ice cores in Greenland they located strata dating from the period of the Roman Empire that were contaminated with lead. Rome was a pre-industrial society whose smelting practices were having an impact of the biosphere.
This raises a series of speculative questions: How sensitive is the environment to lead? How much atmospheric lead is needed to cause cooling? Could this amount of atmospheric lead have caused a cooling that impaired Roman era agricultural production? Could this have been a factor in the downfall of Rome?
Obvious solution: Put lead back in the gas.
Geeze E. Swanson, you try to make things so complicated.
Obvious problem in the event that you are serious. With lead in gasoline, catalytic converters quit working. Do you really want to go back to the air quality of LA in the 1960's, considering that there are many more cities now built around the long commute, as LA was in the 1960's?
E. Swanson
Nah, I wasn't serious.
Ah c'mon Lynford. Pass the tetraethyl. :-)
Hey Folks,
As long as we keep flogging this dead horse of petroleum cars, not even lead sprays will save us.
Starting to hear a lot of talk about new graduates wrapping up their celebrations, looking around at the new economic landscape, and saying "What the heck am I supposed to do now?"
This commencement address by Paul Hawken has some good advice. Also fits the discussions we have here...
http://docs.google.com/Doc?id=dd8s33dc_15hfm6j9fc
Here's a favorite part:
The newly minted - and likely mostly unemployable - will not show up in U3, but will they show up anywhere?
From http://en.wikipedia.org/wiki/Unemployment
These stats seem "biased" towards one having had to be fully employed at one time or another.
Perhaps we need a new U category - I propose Ulose.
Pete
What's really important is the number of people working either full time or part-time and the participation rate. Both are only slightly off all time peaks, when everyone is saying we are going to have a depression, mums or near-retirees go back to work or stay at work, or go back onto the unemployed roles.
The link up top: Plateau theory drives Total to oil sands is quite interesting. Total has coined a new term: Plateau Oil. They believe that world oil, all liquids, will plateau by 2020 at around 95 mb/d and stay there for a few decades. That is about 10 billion barrels above the current level. Just to get there, world oil production would have to increase by about 1 mb/d every year between now and then. How likely is that.
Not so. UK production, since its peak in 1999, has fallen at an average annual rate of 6.88 percent if the EIA production data is to be believed. The North Sea, as a whole, has declined an average of 7.34 percent in the last five years.
They are probably very close on Mexico. I don't have data on Cantarell alone but Mexico's decline rate, as a whole, has been increasing since their peak in 2004.
Mexico's decline rate:
2005 1.46%
2006 2.34%
2007 5.33%
2008 9.43%
And 2009 is on pace for an even greater rate of decline than 2008. The point here is individual offshore fields have a very steep decline rate. Individual north sea fields are declining at least 10% per year, probably greater. New fields being brought on line has kept their overall decline rate a little lower.
Total is the only major to even come close to admitting peak oil, however they still have a long way to go before they come close to reality.
Ron P.
To grow profitable oil consumption economics says its price (and hence costs of production) would have to fall in real terms from those current(ie: it must become more affordable).
So, if the oil workers/suppliers in the major oil exporting countries would just take a large real pay cut year after year and at the same time invest huge amounts in new infrastructure and become much more efficient so that costs steadily fall it might happen?
How likely is that? IMO possible, but not probable since at present there are no new adequate breakthrough technologies available.
Nobody knows what the future will be, but some things are more likely than others.
Xeroid, yearly oil production is probably 75% geology and only about 25% economics. But in the long run it is all about geology. That is, you cannot produce more oil than is in the ground regardless of the cost of production.
As WT is fond of pointing out, the US and North Sea have had all the best technology and the economics of US and North Sea production have always favored more drilling. Still they peaked!
In my opinion, after a careful examination of the data, all but five non-OPEC nations have peaked, Azerbaijan, Kazakhstan, Canada, Brazil and Sudan. Non-OPEC clearly peaked in 2004 and is down over half a million barrels per day since then. Therefore any increase in production, over and above non-OPEC decline, must come from OPEC.
Several OPEC nations are clearly in decline and there are serious doubts about most of the rest of them. Only Saudi Arabia has any real chance of increasing production by any great amount. And since they are straining to bring only old mothballed fields back on line, I think there is no way they are going to make up for all the depletion in the rest of the world plus cause world production to increase by one million barrels per year. Out of the question!
There are some things that are known about the future. We are sure to die one day and oil, being a finite resource is surely to peak. And the overwhelming weight of evidence indicates it has either already peaked or will peak within a very few years. There will definitely not be a decades long plateau, even at current production. A decades long plateau, beginning around 2020 at 95 mb/d is simply not possible.
Ron P.
Ron, I agree with almost all of what you say except that actually the peaking problem is 100% economic.
Peaking is caused by consumers no longer being able to afford the price of profitably extracted oil. When you fill up at a gas station all you are concerned with is how much you can afford to buy, not geology. As long as it is profitable, producers will supply as much as consumers can afford - listen to what BP says, I am sure they are telling the truth, they are not stupid people.
Geology and our problems with it just explains why oil will get ever more expensive as time goes on, the easy low cost stuff is used first.
If the price of any commodity (oil, houses, sea fish etc) rises faster than wages (commonly known as a bubble)it becomes less and less affordable, eventually resulting in a peak demand 'flow rate'. The world peak has nothing to do with URR it has to do with making a profit and affording the price.
World URR tells you when you will eventually run out of the stuff at today's prices, it tells you nothing about profitable flow rates so discussions about it are meaningless from a peaking point of view.
Places like the North Sea are not depleted more quickly than they are because, although feasable, it would not be profitable to do so at today's prices.
From 2005-2008 production was on a plateau.
Because of this, the peaking problem will soon be a geological problem.
No. Because you said "the easy stuff is used first" you should understand that it is about flow rates. Time will come that all the small fields together cannot compensate anymore for the production loss in the (super)giants. Oilcompanies must be optimistic, imagine what happens if they wouldn't.
The geological world peak has little to do with URR, it has to do with flow rates. Plateauproduction ended last year because of economics.
This is perhaps peakers' strongest argument for an imminent or already passed peak. However, this argument isn't enough. It takes some time to get new capacity online, and in many cases, such as Iraq, other factors hindered capacity and output growth.
Perhaps, but at what time would that be? We need to realize that oil prices historically has been below $40. When countries has peaked historically, they have done so at a more or less constant price. We don't know what happens with long term supply or substitutes at a sustained $100. But we do know enormous resources will be put into prospecting and extraction. If oil sands can be extracted at $60, for example, then the investments let loose by $100 price would, with time, be able to smash any bottlenecks (if governments allows them to be smashed, that is).
Yes, that takes time. However a lot of megaprojects brought onstream the last 10 years are from very small fields. So, in the 2006-2008 period many of the fields that were started up in the 1998-2003 period began already to decline. And every year new production first has to fill the about 3 mbd loss from existing production. Read also Ron's post about geological peaking. When Irak can produce 6 mbd that is only the compensation of 1 year world decline.
Yes, sure. But conventional oil will still peak around the time when new conventional production is more expensive than new production of alternative sources of liquid energy. Thus the question is more at what cost this happens, rather than when it will happen. If it is below $150, recent history has shown that we are quite ok. And as far as I can see, alternative costs are far below $150.
That means that you are convinced that small fields, new discovery and EOR can keep on compensating for the increasing decline (let's say until 2030 as CERA does)as long as economics allow this. With conventional oil you have to look at peak of discovery and its derived peak of production (about 40 years later). Unconventional oil cannot fill the gap. Boone Pickens now believes gas will.
I don't understand how you came to that conclusion. What I'm saying is that when new production can't keep up, then prices will hit the alternatives-cost-ceiling. Above that, prices won't rise b/c alternatives will take up the slack. (Long term, that is. Short term, price volatility due to bubbles or lagging scaling can always make prices overshoot for a while.)
I think it can. Just scale it.
In Canada they expect to scale it to 4 mbd in 2020. Apart from environmental problems, there is a limit in gas and water supply. The energy problem could be solved with nuclear reactors.
Well, yes, but there is no real sense of urgency yet, is there? If the Canadian government pulls out all the stops and oil is stable above $100, what will happen? Swift scaling. Sure, there will be bottle-necks and some lead time, but the pace will pick up and there is no real limit.
As I understand it, water requirements for steam assisted gravity drainage is not that high, and natural gas is not really needed. As you mention yourself, nuclear power could be used for energy, or the bitumen itself could be utilized.
The urgency is there past peak. Maybe that is already now. The only thing that bitumen could do is soften the decline. In a past peak world oil-exports possibly could decline fast. That is why mitigation should start at least 10 years before this happens.
Only if the government is inhuman they won't care about increasing pollution of rivers and dying fishes because of tumors. Maybe the THAI method is cleaner, I don't know.
No limit ? Let's presume 10 mbd in 2030. Of a low grade oil.
Precisely, at least if the peak isn't obscured by something else. So any assessment of scaling done before this urgency come into play is bound to be very low.
So where is the bottleneck? If wind can expand by 30% year on year, why can't bitumen extraction?
Shouldn't "inhuman" have to do with humans?
Perhaps. And 10 mbd CTL, 10 mbd LNG, 10 mbd nuclear synthesized fuel, 10 mbd sugar cane ethanol. Or something like that. We'll see.
The point is that scaling takes a lot of time and is much more difficult past peak. In a world with decreasing oil production and even more decreasing oil-exports it is very hard to decide where the remaining oil must be used for. Certainly to develop alternatives, but this means even less oil for the 'normal' economy to keep on running as it does (contracting). 'Receding horizons' or 'the paradox of production' is a real danger in the past PO world.
Yes, and the pollution will cause also a lot of human deaths because of various types of tumors. Like what is happening now in China.
Drumbeat from today has news from the tarsand front.
I don't think so. A big CTL plant produces 80 kbd. China has serious doubts now to scale up much CTL, because of (if I remember well) tremendous water (and water shortage is a problem or is looming) use and high costs. Also, peak coal problably will come into play in the 2025-2050 period.
High energy prices will spur investments in energy and curb energy waste, I guess.
I don't think the choice between a few tumors and the end of human civilisation will be that difficult. But perhaps the Canadians see it differently, what do I know?
Perhaps, but if we need to, we'll simply use coal-water slurries. It won't be very clean combustion, but it would do while we invest in electrified transport and so on, if all else fails.
First, I don't think so. Second, we can use nuclear power to free up coal and NG for use in transportation.
Sure, but high energy prices also hit the economy hard. If you think that's only a guess, read the book 'from mass economy to information economy' from economist Paul Hawken written in the '80's. Curb energy waste is a good thing, but it will go together with diminishing globalisation and a lot of companies going bankrupt. Problably high unemployment and social unrest will follow.
If enough Canadians protest. After all they don't use (most of) the bitumen for themselves and if in this case the profit will also go above health is the question.
Some recent studies show a serious doubt about the coalreserves that were stated in old(er) studies. Even if coal lasts 150 more years, peak coal will be there much sooner. And like with oil, the best quality with the highest energy content is used first. The NG reserves maybe are overstated also. Mining uranium and coal needs a lot of energy, so with oilproduction going down I'm afraid of the law of receding horizons. But maybe you are right and will curbing energy waste (in the form of globalisation going down) be the solution. However it will come together with economic suffering for about 2 decades and the downturn of mass economy.
I think leisure use will go first. Excessive driving with monster cars, some long distance tourism and so on. Some goods transports will suffer, but of the most low-worth stuff. In all cases, stuff that is of the least economical worth will go first. Actually, US and Canadian private sector waste is a great cushion.
High unemployment - why? If anything, I think the opposite is true, at least for industrialised countries. When it is less profitable to ship from far away, more low-skilled work will be done domestically. Also, the economy as a whole will be a bit less efficient as global trade diminishes, and that also means we can employ a bit more people.
Do they? I figure energy payback is more or less immediate.
As I've stated before, I don't think oil prices will be above $100 long term, and I think we have no problem handling that.
Agree, luxury goods go first. Cushion from road trafic cannot be that much. Cars and trucks use 'only' about 25% of the oil (at least in Holland).
This needs a restructuring of manufactory. Now parts come from all over the world or travel long distances within a country (like food). A lot of 'just in time deliveries'. In theory it all looks simple, but in practice it will be a hell of a job to make the necessary changes in a short timeframe.
A bit more people. Let's say that if a lot of luxury goods sell a lot less or disappear then employ a bit more people is not enough. Of course when they replace machinery with people it could work but then the producion units/time will go down much.
Yes, but my point is that the oil you use in one thing you can't use in something else. No problem if oil supply keeps growing, difficult if oil supply is on plateau and very hard when oil supply drops every year. Then there will be the cushion that you mentioned but that works only if gasoline and kerosene prices are high. Otherwise people keep on driving and there must follow rationing. Maybe it could be done if governments prohibit SUV's and force to make EV's with a price that most people can afford.
Oilprices can only stay low of course if demand destruction is higher than supply destruction. When oilexports go down from 40 mbd to 25 mbd in 2020 I expect oilprices to stay above $150/barrel. There are too many countries, above all China and India, with growing oil demand. High oilprices means factories have to spend much more on energy and people much more on transport and food. For companies this means less profit and for most people this means less to spend on luxury goods and vacation. That is why I think that bankrupcy and unemployment is going to be high. You should read that book from Hawken. It was an eye-opener for me. An explaination why the changes in the 80's were caused by increased oilprices. I don't doubt the logic although most economists don't mention it or don't want to admit it.
Are you serious? How can you possibly believe that? To say it is 100% economic is to say that reservoir depletion (geology) has absolutely nothing to do with it. Mexico peaked in 2004, was that 100% economic? NO! Mexico would have peaked in 2004 if oil had been $20 a barrel or if it had been $100 a barrel. It was $20 or less for much of the life of their reservoirs, and reached $100 during their decline.
The North Sea peaked in 1999, at a time when the price of oil was between ten and fifteen dollars a barrel. Later a ten fold increase in the price of oil did not change the fact that the North Sea had peaked. During that great run up in prices the North Sea kept right on declining. Higher prices could simply not coax more oil out of the ground. The North Sea peaked because of geology, because of reservoir depletion.
The US peaked in 1970 because of reservoir depletion. I could go on and on and on but what's the point? The timing of the peak may be brought forward a few months, or pushed back a few months because of drilling cost and such. But as long as it is profitable at all, the oil will be produced. Peak oil happened in 2008, IMHO, because the world could simply could not produce more oil.
The economic collapsed happened after peak oil and at least partly because of peak oil. But that is secondary. Peak oil was a geological factor. Oil became very expensive because of geology! That is, had oil not peaked, or plateaued in 2005, the price would not have risen so high. Geology was the cause, economics was the effect.
Ron P
Well put, Ron.
If I can take the ridiculous economic argument further, I would say all our problems are caused solely by our very own existence. See, if we didn't exist then we would not see depletion. Therefore the peaking problem can't be because of geology! (sigh)
This meme is a very mild form of taking the kool-aid, but it certainly is endemic and quite annoying.
Ron,
Excellent post. Couldn't agree more with everything you wrote; PO is a geological phenomenon, way WAY more than it is an economic one.
xeroid,
I suggest you check out a website called "The Oil Drum". It can be found at http://www.theoildrum.com
This site will explain the geological factors involved in peaking of oil production. Happy surfing.
I understand how oil is produced - I deliberately retired at 55 because of peak oil and it's dire consequences - I am a true believer in peak oil about NOW, I predicted it long before TOD started (and obvious peaking actually happened) and planned accordingly - however most of the world's population don't get it at all, partly because they don't understand, even in general terms, how the so called 'free' world works.
I think it should be the aim of TOD to simplify the peaking explanation.
Some facts:
* for the essential BAU growth paradigm to continue we MUST consume about 1.6% more oil each year.
* even though regions like Texas or the North Sea have gone into production decline at current prices there is still plenty of oil in those basins but it will be very expensive to extract it - and despite those declines, up until very recently, the WORLD production did increase at the required rate for BAU growth.
* the peaking phenomenon (in free markets) applies to any traded good or service, oil is NOT a special case.
* if the decline POST PEAK is caused by a lack of SUPPLY then we would expect rising prices to destroy demand, no spare productive capacity, declining stocks in storage.
* if the decline POST PEAK is caused by a lack of DEMAND then we would expect falling prices, spare productive capacity, increasing above ground stocks in storage.
* there is plenty of oil in the world - nobody knows how much, but we probably haven't consumed even half of the oil in place.
* all oil is not equal, some sources of it are much cheaper to extract and refine than others.
* the low cost oil has been extracted first.
Some questions:
* Do we still have BAU growth? IMO, NO.
* Is the world consuming 1.6% more oil each year? IMO, NO.
* Are we post peak oil now? IMO, YES, possibly the 'all time' peak.
* So, is the price of oil (or house construction, or car manufacturing) rising or falling? If they are falling it is a demand problem, not supply.
* Or, is there excess potential production capacity for oil (or house construction, or car manufacture)? If there is spare capacity, workers being laid off etc it is a demand problem, not supply.
* Is storage of oil (or newly built houses or new cars) more or less than it was? - if the answer is more, then it is a lack of demand problem.
* Will the cost of future supply be more or less than now - will those costs be more or less affordable?
I contend that with POST PEAK DECLINES we have an over-supply of oil (and houses and cars) - an over-supply is NOT caused by geology!
'Occams razor' says the simplest explanation is probably correct. IMO declining peak supply of examples like new cars, or new houses was not caused by geology - IMO the common cause is a lack of demand in every case.
What you are missing is the extra 1 -1.5 trillion in energy costs - and that's only for barrels of oil exclusive of any follow-on costs for goods made with or from those barrels - to Americans from '04-'08.
And that's why your analysis is wrong. Peak Oil is, indeed, part of the current mix of troubles.
Cheers
IIRC, we've had this argument before, so I don't think we're going to get anywhere.
From a cash- flow standpoint in real 1982 dollars, the peak happened in 1998. We have been on an (economic) plateau - if you want to call it that - ever since.
It's a paradox; MORE money invested in production causes prices to rise so producers can recover costs and gain a return on investment. Historically, less oil is recovered year- over- year for each dollar invested, partly for dollar reasons and partly for geologic reasons. As a consequence, Oil becomes relatively unaffordable to more and more customers. Eventually the producers fail because they cannot recover their costs.
At the same time, LESS money invested in production causes the price to rise because the reduced investment cannot replace depletion. Deferred maintainence tends to slow production and scarcity becomes factored into the overall price. Matt Simmons constantly discusses the underinvestment in petroleum infrastructure.
It's another paradox: LOW energy prices encourage squandrous consumption but the return on investment is too low to finance anything but the easiest to produce oil. At the same time, the USA- style economy requires massive cnsumption ... and the Mexican/Chinese/Canadian/Eurozone - economies also requires massive USA consumption. No consumption, no economies!
The other side of the paradox is that HIGH energy prices stifle demand which reduces the cash flow available to invest in further energy production. High prices don't stimulate production, they smash demand.
The only way for money investment to increase production @ decreasing prices is for producers to discover giant fields from which it is easy to recover vast quantities of very inexpensive oil for delivery at a very low price. Fields like this have not been found for decades.
Investing large amounts of money in difficult to extract formations such as in very deep formations in very deep water or in the artic or antarctic is self- defeating. The oil may be technically available at some price but the availability risk - the probability of not finding profitably exploitable oil - becomes very high. What is found instead is 'paper oil' which is theoretically available but does not exist under real conditions.
There are investment limits. For instance, companies can invest in ships and crews and send them out to obtain whale oil. There is a limit to how much whale oil can be produced, regardless of how much is invested. Once the limit of whale oil production is reached, increasing investment in the whaling fleet by a hundred times or a thousand won't increase the amount of whale oil produced.
Because production cannot be 'commanded' by investment, any increase in price serves to divert funds to finance and trading/speculation. Investment chases paper oil and does so in paper markets such as the commodities exchanges. Eventually, the price increases destroy demand which causes the trading price to collapse ... along with the real economy.
Right now the Fed and other central banks are shoveling cash at finance: stocks, bonds and many commodities are rallying in price. As long as the Fed prints, prices will go higher. By the end of the year a barrel of oil might cost $100; the main- street economy will be buckling under the strain of higher prices. Production will remain flat or decline. The energy companies will speculate in the commodity markets - it's free money after all - and will buy back stock.
The energy problem cannot be solved by simply throwing money at it. Even a lot of money.
No, that is simply not true. We'll manage very well without giving Americans lots of manufactured goods in exchange for green paper.
Excuse me? World demand were largely unaffected by oil going from $40 to $140, so cash flow available for investments obviously more than tripled.
Sure, for whale oil, but in the case of liquid energy, the practical limits may so high as to be irrelevant. Oil sands, CTL, nuclear hydrogen/ammonia/methanol production and so on provides more or less limitless reserves. A higher, but not unmanageably high, oil price will make all these alternatives viable, so we have no problem.
Yes it can.
No you will not and it is very true that other world economies depend heavily on US consumption. If we stopped importing goods from China then millions of Chinese would be laid off. Ditto for whatever country you are from.
Well excuse me but it was affected very much. Energy prices have a lag time but eventually very high will and did drag everything down. We are still suffering from the effects of very high energy prices.
Snicker, snicker, what a cornucopian dream world you are living in.
Nope, Steve hit the nail right squarely on the head. People who believe that "we will find substitutes" are dreaming. There are substitutes but not nearly enough at much higher prices. Palm oil, for instance, can be produced by destroying the environment in Malaysia. But even by destroying the rain Malaysian rain forest, we cannot produce very much palm oil. Not enough to power even a tiny fraction of the world's automobiles. 85 million barrels a day is almost an unimaginable amount of oil. People who believe we will find substitutes have no sense of scale.
Ron P.
You are simply not making sense. Are you arguing that others need to be your slaves, otherwise they wouldn't have anything productive to do during their days?
No, the reason for international trade is that different countries does different stuff at different costs, so we exchange some of the stuff to improve our collective efficiency. So, if the US disappeared, other countries would rather need to work a bit more to make up for the loss of efficiency. Any loss of employment would be temporary - growth and employment would soon pick up.
That is not mainstream economics - just a theory you picked up because it fits well with your peak oilism.
Well, then, why would oil sands, CTL, nuclear synthezised fuels and so on not be viable or scaleable at $100 oil?
Why not? The reserves of unconventional oil is enormous, the amount of coal as well, and the amount of nuclear breeder fuel is more or less unlimited.
Why palm oil? I mentioned a few viable alternatives, and you counter this with an unviable alternative. What's the sense in that?
Well, it's about one litre per capita. For the US, it's more like eight litres. But that's your problem.
Exactly. If you buy into mainstream economics, then you have met the enemy and it is you.
Cheers
I can live with that. (It never sieze to amaze me that regular dudes, often without any relevant education whatsoever, think they can second guess the experts, or arbitrate among them.)
We'd be better off if more people listened to mainstream science. For example, when it comes to global warming, fishing or economics in general.
(It never sieze [ceases] to amaze me that regular dudes, often without any relevant education whatsoever, think they can second[-]guess the experts, or arbitrate among them.)
Now, there's some irony for you. (BTW, are you sure arbitrate's the word you're looking for?)
FYI, there are many quite well-educated people who think economics is voodoo science. I am hardly the first to realize the field is a joke. Ask Taleb, then read this: The Economist Has No Clothes.
Barring all that, you can just re-read your own posts here. You're making some blindingly simple errors all because you choose to let others tell you how to think and reason.
Cheers
I fail to see it, actually. Does my bad English have anything to do with the contents of my text? (I've visited English-speaking countries for a total of about two weeks in my entire life.)
Not really, no. I thought "arbitrate" means something like "choose the winner/who's right", but I may have gotten it wrong.
I talked about relevant education, not just any education. There are lots of "well-educated" people who think global warming science is voodoo, and other still that think biology (especially evolution) is voodoo. But why anyone would believe those people rather than the latest and greatest researchers in the respective field is beyond me.
When guys like you condemn economics, AGW or biology, that's not intellectual reasoning at work, it's purely culture and values. You simply don't want economics to be science, just like some christians would like evolution to be false. Then you build some pseudo-scientific constructs to justify your positions.
Actually, I make no such errors. Also, I don't let others tell me how to think and reason. But I do lean on authority from time to time, b/c that is often the rational thing to do. For instance, global warming models are not really simple and we cannot expect even 1% of the people to take the time to understand them.
No. Exactly the point. You are not an expert at English (presumably have no degree in the subject), yet use it. Any body of knowledge is a tool, nothing more. Telling people they can't use it (in your case, economics) unless they have professional standing is nonsense on the face of it, Jeppen. Might we choose to defer to experts when they have shown they can be trusted to use tools better than we? Certainly. But deference is not capitulation. We never give up our right to blow them off when obviously wrong.
Economics is a field of study that is divorced from reality and based on inappropriate foundations. A good example of how that is manifested is seen in this video on the failure of economics to deal with fraud.
http://larahanna.blog.is/blog/larahanna/video/7955/
Your stance that economics is a science is an opinion as that is by no means a universal belief.
That is correct. I don't understand the use here, but it's of no consequence.
Not relevant on a message board. It's relevant applying for a job, perhaps, but not here. It's insulting and plainly incorrect to tell people they have no business challenging economic thinking if they are not economists. The entire premise of this site is lay people can have a voice on a professional topic, and be more correct.
Jumping to conclusions, are we? Guys like me? There are demonstrable reasons to dismiss much of economics, but how does that possibly apply to AGW or biology? Particularly where I am concerned?
Perfect, are we?
Others have used the term troll. I can see why they think it fits. Personally, I think you are simply argumentative and arrogant and biased, at least thus far. That is, I think you actually believe the stuff you say, unfortunately.
Cheers
Well, you know, in my view, you're the arrogant and biased troll. But what constitutes trolling is certainly forum dependent, so in a way, I guess you're right, as you're probably closer to mainstream here. OTOH, in a forum devoted to serious discussions on economy, the roles would be reversed and you would be considered the troll - and probably more so than I am here. The question is which troll definition is more relevant when we are discussing the validity of economic science in general. What do you think?
Sure, but I have done no such thing, quite the opposite. I think you SHOULD use it, and I have said that you let your ideology block your judgement when you claim that the tool doesn't work.
I could go on commenting the rest of your reply, but I think I'll give it a rest here. You seem to know very little of economy, yet you self-assuredly dismiss economic science as "obviously wrong" - so I doubt reason can get through your prejudice and ideological filters.
I think the better place to leave it is: I've cited sources. You haven't.
BTW, I'm a liberal, if anything, and I know of no significant liberal "leaders" who say economics is crap. If they do, I don't know who they are. Hopefully you are taking from this point the following: my problem with economics has nothing to do with ideology; it has everything to do with the failings of the field.
As with most things, you can find something to take away from it, no? Some concepts are particularly useful, such as opportunity cost, diminishing returns, etc. But there's a lot of crap, too.
I posted for you several examples for you to respond to. You just kept yapping without responding to any of the substantive content I suggested... and it came from economists.
I really enjoyed William Black's take on fraud. It is his opinion that the invisible hand doesn't work where fraud enters the picture. The upshot is that free markets is an illusion; human nature rules. According to Black, economics largely ignores fraud in its theory.
Brill, don't you think?
Basically he is saying enough people are selfish enough to muck it up for the rest unless there is sufficient structure around them to prevent them acting on their base instincts. Since the above is pretty obvious to most grade schoolers, I'd say (speaking as a grade schooler might) economics sucks rocks.
To make this post at least .005% relevant to this forum, I noticed elsewhere you were saying higher prices will equal more investment, thus more supply - again ignoring geology. (I didn't read closely. If I am misquoting, I apologize.)
But set aside geology for the moment. Another nice economic term I like is receding horizons. Have you any thoughts on that?
Cheers
Just as Intelligent Design people, no?
You cite some crap denying established science and demand that I prove your sources wrong. When I do respond with substantial critique, you refuse to acknowledge that and keep on pretending I didn't. Then you alternate between labling me as a troll and demand that I put in time to refute other sources.
Could that "brill" and truly remarkable, ground-breaking observation possibly be the reason why such measures as "property rights" (which includes the overall functioning of the legal system) and "freedom from corruption" is included in, for instance, Heritage's index of "economic freedom"? You seem to think that economic science is limited to a few simple models of perfect markets and "economic men", and that everything else in the field is derived from those. You too seem to be stuck in the state of art of the early twentieth century. Economics has come a long way since then.
Apology accepted.
In the context of PO? Sure. When conventional oil peaks, there is obviously an element of receding horizons, as investments will be somewhat more expensive post-peak. But the horizon will stop receding at a point of alternatives' cost, and we will have more than enough "waste cushion", time and resources to do the necessary investments to get there. BAU, as you seem to call it.
Idiotic.
Where? You have name-dropped, nothing more.
Bull. I provided the link to the source. You chose not to watch it. Why?
Childish. I'll take your non-response as affirmation that you were saying exactly what I thought you were.
Magically? Just because?
When you are done lying and throwing ad hominems about, you are welcome to contribute some honest stuff. For example, you could follow up on the externalities I mentioned.
Btw, about the "Economist has no clothes" article. The authors' central thesis seems to be this:
However, the theory of externalities and the means to internalize them was first explored by the Cambridge neoclassical economist Arthur Pigou before 1920. Pigovian taxes are named after him. (Sadly, even today, the US seems to prefer the inferior cap-and-trade system to the simple Pigovian tax.)
The authors of the article do mention several earlier economists, ending with Pareto which published his main stuff about 1900-1910. This narrowly pinpoints the limit of the authors' economic knowledge to the state of the field around the first world war. So, if they read up on about one hundred years worth of economic theory, they may be in a better position to critize its current state.
Jeppen: Your English is great, far, far better than my ability to speak your native language. Welcome to TOD. I hope we don't put you off by the spirited nature of our "debate." We all have lots of positions and opinions, and none of us agree with anyone!!
Thank you, BOP.
No problem with the "spirited debate" - I fully expect to get some heat. (So when I'm participating less, it's because of time constraints, not because I've been put off by criticism. This is both interesting and fun.)
Everything you said is bollocks. Every point an assumption (the writer only knows of economics to the turn of the century... criminy) or just irrelevant.
Why did you not actually address the criticisms? All you did was name drop without any reference to the issues raised.
See my post above as to yet another weakness in economic theory.
Cheers
I addressed the core of the criticisms with my reference to the well-known theory of externalities.
Ya have to concede the kid one point, it's not so much a matter of flow rates but a matter of how much the damned stuff costs. Oil has become less and less affordable for over ten years and this is with a long- term increase in income to the various producers including the Majors and OPEC and with a robust and liquid demand side of the market.
Despite volatility the price year over year are steadily increasing and should continue to do so ... unless there is some 'breakthrough' that allows oil to be made from orange juice or seawater or something else equally common.
Even if oil is affordable to produce --- IT MAY BECOME TOO EXPENSIVE TO USE --- and that will be the end of the game right there.
There are a lot of variations on this pricing theme: too cheap to finance alternatives, too expensive to use. Too expensive to sell at the spot market, too cheap to stimulate conservation,
Etc. Just use your imagination. All the combinations are quite destructive.
Cantarell production, extrapolated from Pemex's Statistical Yearbook 2008:
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1236.7 1348.6 1265.6 1471.1 1731 1902.3 2122.8 2136.4 2035.3 1800.9 1496.5
Or in graph form:
They also provide field data for these:
Ku-Maloob-Zaap
Southwestern Marine Region
Abkatún-Pol-Chuc
Litoral Tabasco
Southern Region
Cinco Presidentes
Bellota-Jujo
Macuspana
Muspac
Samaria-Luna
Northern Region
Poza Rica-Altamira
Veracruz
The data has to be derived from pdfs. Rembrandt spoke of having to do this in some cases, I notice I get a formatting error when pasting into Open Office Calc - spaces between the thousands and hundreds in numerical data - that isn't there when pasting into Writer. Just a tip if you're keen on messing about with this, and hope that was all of interest. A dataset available to the public that supplemented what's available from the EIA/IEA/etc would be welcome.
All important field production data for México can be found here:
http://sie.energia.gob.mx/sie/bdiController
They regularly update on the 21st of the month so that, for example, data for April will appearnext thursday afternoon.
Cantarell production for march 2009= 642,917 bd; march 2008= 1,068,240 bd
Overall conventional oil prod march 2009= 2,669,680 bd; march 2008= 2,847,432 bd
These last 12 months total production decline has been softened by the ramping up of production of KuMaloobZaap.
The interesting question is if KMZ has already peaked. or is it about to do so.
A feature of the KMZ fields is that the oils have different viscosities. Ku has an API of 22°, while the Maloob and Zaap fields have an API of 12°. The Yuum K'ak' Naab therefore has a segregated storage facilities with one tank able to store one million barrels of blended crude similar in chemistry to Cantarell's 21°API, known as Maya blend.
Is this normal?
Does anyone have clue as to at what production rate Cantarell will be come uneconomical? I imagine it is not to far away?
Plateau Oil is at best a bastard son of Peak Oil. Peak Oil is and has always been about conventional oil. The whole theory rests on the uniform behavior of conventional oil wells extrapolated to world production.
Total is including non conventional oil from sources such as tar sands. Clearly tarsand oil and such non conventional oil sources can not be included in the Peak Oil thesis since their depletion does not follow that of conventional oil wells.
Total doesn't understand the basics of Peak Oil theory. Peak Oil is about the flow output of conventional oil wells. Adding unrelated kinds of production such as tar sands or ethanol has nothing do with it.
This is another case of comparing things that are different by lumping them all together. For some reason energy analysis is particular vulnerable to this nonsense. Perhaps it is because energy is hard to visualize. No farmer would even consider mixing grains like corn and beans together for example. Nor would a metal miner mix his gold and silver output. But when it comes to energy, it is done with abandon. The result is muddled thinking and obfuscation.
Is it me, or are appeals to ignorance becoming more common here?
So we should just have faith that unconventional sources of energy will supplant conventional ones and go back to sleep? How would that work? For the Alberta tar sands you need cheap NG and sustained acre-feet from the Athabasca; should I just ignore this chart showing the decline in Canadian Rockies glacier extent/snowpack over the decades, since it isn't a form of energy in of itself and thus has no direct bearing on what happens when I press the accelerator down?
Yes. Have faith.
Yeah,
Massive Oxidation. (See, Neil Young)
I saw that I had to laugh I thought, "Rubber bands."
I disagree strongly with that opinion. Anything that can be refined into motor fuels, be it tar sands or condensate, should be included in peak oil, decline rates notwithstanding. Onshore fields do not decline at the same rate as offshore fields, giant fields do not decline at the same rate as large fields and large fields do not decline at the same rate as smaller fields. Still all are part of the crude oil supply, just like the tar sands and the Orinoco bitumen deposits.
Tar sands produce crude oil and is definitely a related production; it is a petroleum fossil fuel. Ethanol on the other hand is totally unrelated to any kind fossil fuel. Your lumping ethanol with tar sands is a thousand times worse than lumping crude oil with tar sands.
I agree that lumping (almost) unrelated things together makes no sense. I do not think NGLs should be included in the peak oil picture. They are all gasses at room temperatures and should be part of the "peak gas" picture. But tar sands and bitumen are nothing but crude oil with the lights evaporated out, or consumed by bacteria. But we can still crack them into gasoline, airline fuel and diesel. We can still make plastics and asphalt from them. And that is what really concerns us.
Ron P.
Suncor is a major tar sands producer. When world prices were up around $140 a bbl Suncor was netting $46 a bbl for tar sands production. At present world prices they are netting $3 a bbl. World prices do not have to decline by much to put Suncor on life support.
If I lived in a desert I would be working my spreadsheets to calculate the level of production required to push the price down by enough to put Suncor on the ropes. They are the oldest, most efficient tar sands producer, and if they are uneconomic than all the others will also be in difficulty. Pumping capital into future tar sands production would suddenly look much less attractive. Why dump money into a tar pit when some dude in a desert can destroy project economics and hand you your economic head in a bag? So, as a smart desert dude, I can protect my present earnings and do a lot to ensure my future earnings are not placed in jeopardy.
I do not know the threshold costs for all the alternatives (wind, PV, whatever) but once the common perception arises that I have pricing power in the market a lot of those alternatives will begin to look very doubtful. In short, we have 1986 all over again and for those with short memories those were very, very painful days in the patch (unless you lived in a desert).
The kicker to all this is if we start to think in terms of BTUs. If we start to think in a more generalized way about energy supply we see that there is a tsunami of LNG about to come ashore. This takes us right back to the good old days when west texas came in (the field, not the dude). Folks had this stuff that cost them a lot to find but nothing to pump, and some cash flow was better than no cash flow. So everyone pumped and market prices went so low that free market Texans accepted creation of a government cartel to impose price order on the industry to force production down and prices up. And you have to know Texas to understand just how out of character such a cartel was.
Today, the shipping capacity is available, or on order, the production trains are complete, the reliquification facilities are built and waiting. Faced with a choice of expensive BTUs from oil, or cheap BTUs from LNG, what choice would you make? The outcome will be a market catfight which will result in the price per BTU taking a dive. How this plays out I do not know. I do know that every time a society has been offered cheap energy it has accepted the offer even at the cost of destroying its own industry.
One last piece of circumstantial evidence to support this thesis. Where is XOM? Just the biggest company in the industry with an enormous cash horde, a company known for making good long term decisions (Qynx taught them a lesson). Total and a bunch of other second stringers are invested in the tar sands but Exxon? A few nibbles (and those are on hold) but XOM is pretty much a no show. Where are they active? LNG.
Regarding LNG, I about went nuts trying to find this article from 4 1/2 years back: Limited Availability for 'Cheap' LNG to the U.S. | Energy Bulletin Finally showed up with a bread-and-butter Google search for 'heat content lng.' No luck using EB's search function.
Some surprising info in there regarding heat content, regasification, and the dominance of long-term contracts. From TOD: The Oil Drum | Empire On the Edge--Betting On LNG **, which refs the EB piece. I posted the EB article elsewhere and remember Nate Hagens saying much of it was news to him, FWIW.
Thanks Dude.
Interesting set of articles. Still digesting the various impacts.
1) York was writing in 2004 and speaking of a transition he saw taking place 5 to ten years out. So we are halfway through that transition to LNG markets coming to resemble current oil markets.
2) Was struck by the LNG emphasis on long term contracts vs spot cargo loadings which are more typical of oil markets. But this results in a series of negative implications for North America which appear to reinforce the basic thrust of my speculation:
2a) Tar sands production is dependent on availability of cheap NG. If domestic NG is in short supply and prices rise then the threshold price for tar sands production will also need to rise.
2b) If I read York correctly there is low possibility of access to foreign LNG as this supply is already subject to contract and there is little or none available to the spot market.
2c) North America then becomes a kind of "energy island." Europe and Asia have access to LNG under long term contract; NA does not. Europe and Asia have potential for price competition between LNG and oil; NA does not.
2d) Under scenario painted in 2c I would expect Europe and Asia to substitute LNG for some portion of their oil demand. This should result in lower prices and increased availability of oil.
2e) This lower cost oil will likely be redirected to the NA market precisely because as York illustrates there are a number of constraints on NA access to global LNG.
2f) Given this constraint the question is:
- What happens with tar sands production in the face of constrained NG, little substitute LNG, and relatively cheap imported oil? I cannot see tar sands production growing under this scenario. My sense is that tar sands production would contract. I find it difficult to see it growing even in the face of Mexican declines. Need to spend more time on this but my hunch is that once again de Margerie is late to the table.
I think that presumes pre-peak logic/psychology. If I believe we are post peak, then I don't think the ability of the desert dudes to depress the price for any length of time still exists. I can still invest in the alternatives, and simply hope to wait them out.
Another approach is Enbridge's proposed Northern Gateway Pipeline, which would bring condensate to Edmonton to be used as a dilutent - dunno if that would free up some of the NG for other uses, or if condensate can do double duty for processing the bitumen itself; the CAPP 2008 Crude Oil Forecast, Markets & Pipeline Expansions makes no mention of proposed Canadian LNG.
Doozy of a CAPP presentation from 2007: Oil and Gas - Benefits to Alberta and Canada, today and tomorrow, through a fair, stable and competitive fiscal regime. Graphs of the drilling treadmill and suchlike.
Looking for info on the Canadian rig count I stumbled across a forum discussion - Rig Count - First Enercast Financial. Looks like it's only a few months old, but they do have a thread on Peak Oil. Have tried to find other venues for energy yack in the past and all that came up was the odd post at odd sites like Freerepublic.com.
No new bank actions (takeovers)? Does not look like it. 4, then 2 then 1 then ZERO last week.
This one was "scheduled", but got a temporary reprieve.
BankUnited bidders get extension
Almost finished with Jeff Rubin's new book (link to review/article above). Pretty good primer on the peak oil issue as a whole, up-to-date as of this Feb. Was surprised how much attention he pays to depletion, including the ELM, never mentioned as such, nor do Brown/Foucher get a nod, not that it is an arcane concept exactly, but some props are warranted I think, given this digital era we live in - was Rubin writing about this all through the decade?
Recommended perhaps for newbs who would get nightmares from Heinberg's work, as doom in its many forms is pretty well absent and the tone is generally upbeat - we will deglobalize, a good thing; he touts lack of economic growth as, no surprise, "something we really don't want to see happen." I'm not seeing much in there I wasn't aware of already, but it would be enlightening for those who don't realize how far their food travels to market, or don't know the difference between cap-and-trade and carbon taxation.
I don't know about all through the decade, but he's been writing about it for the past five years at least (I didn't pay much attention before then).
Sounds like another book of punditry. No one seems to have written a book that describes the fundamental building blocks of understanding. We need that kind of book to reference, as it doesn't need to do any predictions, just lay out the groundwork. That is the way most of the useful models of the physical world work out the best. Eventually, other people adapt the models to understand what is going on. Rubin takes some educated guesses without directly referencing the ELM, which is understandable since a chief economist's job is to make sure he is an indispensable asset to his clients. He really has no need to acknowledge anyone else, whether he is right or wrong on his predictions, he takes a calculated risk that he will be right more often than not. Thomas Friedman is the best example of someone like this.
Now, as tho whether it is good enough to have fundamental models such as ELM only on the web, as TOD posts, etc, I kind of doubt it. If you look at Hook's recently published thesis on oil depletion, he doesn't actually reference any internet links as well. That is expected for an entirely different reason, as scholarly tracts are expected to reference only traditionally published journals.
So it is hard to get much respect from either the academic world or the professional trade world until some really fundamental books on the topic get published the traditional way. Deffeyes' two books are the closest to definitive that we have but remain too empirically driven for my tastes.
WHT:
Take a look at this source:
http://www.withouthotair.com/
Written by a Cambridge scientist it gives the grounding that I think you are speaking of.
Yes, I had seen that. Very impressive, but that is written from the point of view of alternative energy strategies. He doesn't actually address the premise of depletion and understanding this aspect, but he takes that as a precondition or assumption. Nothing wrong with that approach but it is not a formal treatise on depletion itself.
I introduced MacKay to peak oil about three years ago in person. He didn't seem to think that it was as urgent a problem as climate change. He already had the book in draft form, and he wasn't going to rewrite it because of some half-baked theory of faster than expected oil depletion.
I notice that Rubin makes reference to the need for energy investment to break even, without using the term EROEI or any reference to published papers. Bloggers? He does reference someone named "Howard Kunstler." Think I've read his blog, ClusterNation. You know the guy, HubbleTelescope?
Höök's a student of Aleklett, who has a blog: Aleklett’s Energy Mix. Guess it's acceptable as a side-venture to serious work. As is plagiarizing "amateurs": Export Land Model (ELM) goes mainstream | Energy Bulletin
A song comes to mind:
Johnny come lately, the new kid in town
Everybody loves you, so don't let them down
Ugh. As my cinematic namesake put it, "I hate the ****in' Eagles!"
Will bookmark this for when RR's review appears.
I do now remember seeing that video when it came out. ELM is straightforward and very intuitive IMO, so I suppose anyone could have come up with the idea. Not much that anyone can do about references and such, just interesting how this plays out. Eventually all this will become tacit knowledge and we will all fight over the truth via FutureWiki (TM) entries.
I have to confess that I have been so engrossed in purely technical arguments that I don't even pay attention to Kunstler anymore. He is a good writer, but isn't in my field of view.
Almost finished with Jeff Rubin's new book
Ditto, and I will post a review here. Most of it is basic stuff for the audience here, but I found the carbon tariff stuff quite interesting. That was the high point of the book for me.
Have you read Stephen Leeb's new 'un, Game Over? I listened to the latest Financial Sense interview, which left me with a different impression than the text description given there (which is simply the Amazon editor's summary). In the interview his primary focus was on the massive cost of transition, which is something I always want more data on, irrespective of our ultimate outcome. Luckily the lead Amazon review says that this latest is largely a non-technical rehash of his earlier books, one of which is down at my local library.
Very much enjoyed the interview, too. He came across more as a Club of Rome panelist than a guy hawking investments.
Chavez seizes Cargill factory
Some comments from me this morning on the latest Chavez moves:
Venezuela's Slide Continues
Excerpt:
It may not be overtly obvious, but I am not a fan.
I just finished reading Confessions of an Economic Hit Man, I found it very interesting. It sheds quite a bit of light on our relations with countries like Venezuela, and how they are represented by the US media. As far as I am concerned, if Chavez is a pain to corporate America it is probably in the best interest of his country (but perhaps not helping his own health).
Now try 'Shock Doctrine' to see it ramped up a gear. You may not agree with every conclusion Naomi Klein reaches, but the evidence she gives is horrifying. I think it should be on high school textbook lists worldwide.
I've read several articles by Klein and found her to be very sharp, with a good big picture view. The Shock Doctrine has been on my to do list for a while.
The guy is stretching it a bit to describe Venezeula as a potential Zimbabwe-China is putting in a few bucks to move along their energy control plan http://www.venezuelanalysis.com/news/4362
Good for Yucca Valley. Looks like my old neighbors aren't quite the inbreds we thought they were!
Cheers
PS: Go Wildcats! 2008 Battle of the Bell Champs!
Hello Leanan,
Your DB toplink: "Gas shortage forces Kuwait to shut Shuaiba fertiliser plants".
Interesting that now both KSA and Kuwait are having gas shortages--do they have any LNG regasification facilites so they can import from Qatar, Iran, or someplace else?
Also, I would think the profit from I-NPK export sales would be a better national Kuwaiti strategy than running A/C full blast in the desert. IMO, the electric utility needs to jack up price/kwh to the locals so that sufficient electrojuice [EDIT: and/or natgas] can power the I-NPK plants.
Kuwait is a food importer, therefore IMO, they can get the best bang for their energy buck by trading I-NPK for foodstuffs. IF I was Kuwaiti topdog, I would be honest with the people, then tell them that if they wish to continue eating then the I-NPK chem-plants need First Priority for the juice.
My guess is that people will grumble, for only a short while, if they have to turn up the house's thermostat a notch, but then they will quickly get used to the higher temperature setting. Now compare this behavioral response to their response of going to the food market and seeing empty shelves bereft of food and desalinized seawater. Now that is when things get ugly.
I think even the citizens of KSA & Kuwait need to learn how to hug a bag of NPK each day.
IMO, it is only a matter of time until their water gets so expensive that they will be very glad to crap in a bucket so that it is eventually exported for food.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob,
First- I always look for your comments on NPK and very much appreciate you keeping this topic at the forefront of TOD.
I think you'll be saddened to hear of the untimely death of Dr. Peter Graham, rhizobia researcher extraordinare. Peter was one of the worlds leading applied researchers in biological nitrogen fixation. He worked with legumes in food crops, forages, and native prairie legumes. He was advancing the most important organic N source the world has- the rhizobia and legume symbiosis.
Unfortunately, it doesn't appear that the land grant University (where he managed perhaps the finest rhizobia collection in the world) will replace him. Gene jockey's bring in so much more money than applied research these days.
With Dr. Graham's death last week the world lost a huge body of knowledge and resources that could have carried us forward to a better, more nitrogen rich future.
Sigh...
Thanks for your updates on NPK. As I posted recently, even the US has experienced something like a 25% drop in farm fertilizer sales (by volume) this year. I doubt that this has been factored into the Department of Agriculture's crop forecast released earlier this week.
Does anyone care to take a wild guess at what this will do to farm yields?
We are actually further down the 'post-peak' road in the farm sector than in the general economy, where gasoline usage is down only 1%. I hope I am wrong, but I see widespread world food shortages in two years - or less - even some starting in the US.
Hopefully I am just having a bad dream and Kuwait will go back to normal by the end of summer - or so this dated Bloomberg article implies.
http://www.bloomberg.com/apps/news?pid=20601207&sid=a1c9fRk1rJMI
January 12, 2009
Gas Shipments
Kuwait may begin receiving gas shipments at offshore facilities from Qatar this summer, Hussain said, adding that terms of the purchase agreement are still under negotiation.
“From the facilities side we are prepared for it,” he said. “The network will be ready by May” and completing the gas purchase contract is a “commercial question.”
Kuwait will be able to receive liquefied natural gas, or LNG, cargoes from Qatar at ship-based regasification terminals the country has already contracted, Hussain said. LNG is gas cooled to liquid for transport by ships.
Using ship-based regasification terminals will allow Kuwait to avoid building land-based terminals and limit costs since the country only needs the extra fuel supplies during summer months, Hussain said.
http://www.forbes.com/2009/05/15/fertilizer-corn-usda-markets-equities-c...
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Now not even dirt is safe from the financial crisis.
..On Tuesday, the USDA revised down its estimates of corn stocks by 100 million bushels to 1.6 billion bushels, putting year-over-year supplies lower even as demand is expected to increase by 3.5% from a year ago. (See "Supply Squeeze Seen On U.S. Crops.") Corn production estimates could be even lower if stringent fertilizer applications lower yields even more than expected. Weather could also further weaken yields.
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http://www.usatoday.com/travel/destinations/ski/2009-05-16-skiresort_N.htm
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Strapped resort wants skiers to invest
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We will probably see a lot of these go belly up like golf courses as we go further postPeak. Notice the owners are not selling any water rights [if they even have them to sell]. IMO, that is where the money action will be.
How would you like to receive a gift that ultimately costs you $10 million? Yikes!
http://www.battlecreekenquirer.com/article/20090428/NEWS01/904280316
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Brook Lodge to close
MSU resort, golf course struggling in poor economy
The award-winning wedding venue and corporate retreat center has been operated by Michigan State University since 2000 when it received the center as a gift.
Since then the center has lost nearly $10 million...
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EDIT: the taxpayers would have been money ahead several years ago by just paying Tiger Woods $1 million to come in and bulldoze & plow this area back into farmland. Of course, I would do it much cheaper for just food & beer. :)