I dunno. I kind of like the Shrek line of videos. I suspect that these Kerogen production facilities will be located in Shrek's swamp, where other fantasy creatures hang out, and where Michael Lynch lives.

I know this is kind of crazy, but would nukes be able to convert some of the shale to oil at a reasonable ERORI?

DIY -- I suspect he's more likely buying options on EncapSol. Not realy a bad play IMO if we see oil spike up this winter. Not my type of game to play but to each his own.

I continue to think that burning the stuff in situ and capturing the heat to drive a generator is going to be the best strategy. One might actually get a good positive EROI with that approach, and the capital investment and environmental impacts would probably be more manageable as well. Whether the EROI and ROI would be better than renewables like wind or solar would determine whether or not such a scheme would actually fly.

Crazy.
Why would oil production fall like negative compounding interest?
Does oil production follow the laws of radioactive decay;
N=No*exp(-t/T)?
Please explain your reasoning without falling back on definitions.

Web, it appears to me if the production rate is constant and the reserves (reserves means recoverable reserves I hope) don't magically grow the depletion rate accelerates. Seems clear enough from the definition. Say you started with 100 units and produced 10 units a year steadily for ten years. The first year the depletion rate was 10% or 10/100 the second year the delpletion rate is 11.111111% or 10/90 third year the depletion rate was 12.5% or 10/80 and so on up to the tenth year when the depletion rate is 100% or 10/10. If the depletion rate remains constant and the reserves don't magically grow the oil will never be fully depleted but less will be produced each year. Do I have it right?

I know field's don't produce at constant rates from full to zero (like draining a fuel tank by running an engine at a constant work load and a constant rpm) and that reserves can grow as a field's full extent becomes revealed over time or by new tech allowing a greater % of the oil in place to be recovered (again I hope reserves here means recoverable) but I broke my example down as simply as I could to try and make myself clear.

That's a big assumption that Canada will continue to produce the oil sands. IMO, contrary to popular opinion, there are a lot of Canadian's that don't agree with the development of the oil sands and particularly the environmental effects. Many of us are ashamed of the mess that is being created and at least imo; we can't keep ignoring that mess for another 20 years. Probably it is worth discounting the oil sands for many reasons.

From your paper.

In comparison to the non-OPEC group, the OPEC group generally displays lower decline
rates (Table 3). One quite intriguing detail is that OPEC fields tend to exit the plateau phase at a
lower percentage of their URR volumes. This is an explanation for the lower decline rate. Instead
of a prolonged plateau, a longer decline phase with less annual decrease has generally been
favoured as a production strategy compared to non-OPEC.

I assert that OPEC is simply lying its ass off and there is no difference between non-OPEC and OPEC production.

The primary difference is many of the OPEC fields are on land large and well suited for aggresive extraction measures that maintain production at the expense of and eventual steep decline. The poster child is of course the early use of peripheral water injection with Ghawar and in general aggressive adoption of water injection to maintain pressure in the OPEC fields.

Certainly running slightly below maximum production may or may not delay the eventual decline it all depends.
Your reported production profile is of course flatter as you can bring online offline production as needed to cover and offset declines but that tends to simply flatten the profile.

Also of course for the ME they do seem to have a bit of room between stable production an field damaging extraction rates I'd argue most of the excess production capacity is of the latter form one reason why its classified as only being available as surge capacity as its unmaintainable. Non-OPEC probably could do the same but is less willing to push fields into the danger zone. Thus paradoxically more conservative.

The truth ?

Well maybe next time prices get high or the time after that or later OPEC will unleash its vaunted spare capacity and develop its reserves to produce at a rate consistent with non-OPEC one can always hope of course.

In any case literally all you have to do is assume OPEC is not special outside of of their willingness to produce their fields at damaging rates on occasion.

Next of course this paper is not looking at and end of replacement for small rapidly depleting fields that provide the rest of the worlds oil. In short this is our baseline decline rate or best rate and the OPEC values are wrong.

Next even with this the real rate that decline is acellerating is probably underestimated as can be seen from the decline of Cantarell. Even after you correct for OPEC's fraudlent claims and consider that they produce similar to the rest of the world you have to correct for the fact that known declines where underestimated using this sort of methodology. The upper bound on the rate of decline is fuzzy. And of course the strong price signal from the last decade probably accelerated the depletion rate even more.

They are very much underestimating the implications of the plataue in production as its the primary reason why I assert that global production became self similar and maximized depletion rate.

Basically the moment we hit plateau with rising prices you know for a fact that the OPEC numbers are bogus.
You can safely discount the claims.

Regardless despite the fact that I feel this paper is unduly conservative an avoids the obvious discounting of OPEC reserves as it stands it presents a much more worrying picture of future oil production.
Even with the potential of understating future acceleration of decline rates by as much as 50% !

The problem is of course intrinsic in the approach its practically impossible to use accelerating decline rates to predict future decline rates. A linear fit can easily prove to be highly optimistic but you really don't have a mathematical basis to make the leap and assume non-linear acceleration of the decline rates.

Nothing in the past data provides the clue needed to predict future decline rates unless you place a huge amount of importance to the plateau period. Its purely subjective decision and if correct can only really be known after the fact. It does not mean you can't make the prediction it simply means nothing in the historical data allows you to differentiate the two cases.

Regardless simply assuming that the truth is close to the data presented buy your most reliable data sources and going with that results in a far less rosy picture. And as you dig its not clear in the least that the reliable sources are actually all that reliable as the collapse of Mexican production shows. So you have additional reasonable corrections that can be made before you end up with the "worst case" scenario.

Instead of this approach of steadily developing less and less optimistic scenarios why not simply develop the worst case scenario and determine if you can find reason to believe its too pessimistic ?

If you can't and I've so far not found compelling evidence that the pessimistic scenario is false then you probably have the right answer.

Not that this is not a good paper however I wish they had taken the obvious next step and thrown out the OPEC data renormalized it to match non-OPEC production and considered the case that non-linear increases in the rate of decline in production are possible and cannot be predicted from the initial changes in decline rate.
Every curve has a tangent.

Fantastic to see the paper but also realize they where a bit timid in their analysis.
Significant cojones deficit IMHO.

That projection would leave way too much of oil in the ground.
Between 1950 and 1975 oil production rose from 4 Gb/a to 25 Gb/a
reached a 33 year plateau at 25 Gb and will fall from 25 Gb/a to 8 Gb/a in 2030. Total oil = 1645 Gb which is a lot less than +2000 Gb.
OPEC produces ~15 Gb/a with +600 Gb of reserves so it is unlikely that they would produce much less. For non-Opec unconventional and heavy oil will have to produce a 'crash mat' of at least 10Gb/a.

New technology and heavy oil can produce another 1000 Gb/a but require major investments and for the last 30 years the national oil companies have underinvested(oil producers divert oil dollars into their militaries or domestic programs or buying ODEC assets).

I agree that 2006 was a peak but 8 Gb/a in 2030 looks silly.
After all, the US is still producing 2.6 Gb/a after all these years of producing.

JMHO

Yes, please listen to Rockman. I would also affirm that you need to know nothing about geology but the barest principles. You can look to me as an example. It's not that I actually don't know anything, it's just that you can use logic and the probability and statistics of counting to reason about oil depletion. The idea of Bayesian inferencing is a good place start.

Exactly right. But what you are pointing out is also an example of how dark/light things look when using different lenses. From perspective of those who can grow from cash flow (without debt) and have access to low-cost natural resource reserves, this is great environment because $50 oil is still profitable to them but is money loser to those at margin. But from perspective of SOCIETY, it is a tough environment because even though EROI is now increasing (because marginal EROI projects have been scrapped so average EROI goes up), total energy gain (EROI X Scale) will decline, implying less BTU for non-energy sector. When introducing risk into the equation, it becomes clear that old school principles will rule the day. (less debt, lower cost as opposed to unproven prospects financed by others.)

What % of E/P would be profitable at $50 in US (and $4 gas)? I would think less than 50%, but don't know. It will be 'interesting' to watch total BTU production and total debt creation in coming years.

The credit market really has several impacts:

1. The direct availability of credit to oil and gas developers which you mention. I agree with your analysis of this piece.

2. (Indirect) The ability of consumers to buy houses, cars, and a whole host of other things that use oil and gas in their production. Without credit (or with sky-high interest rates), consumers cut back, and oil and gas prices likely fall.

3. (Indirect) Without credit, there are likely to be cut-backs in industrial production (not just oil and gas), because consumers cannot buy, and because industrial organizations cannot get loans. These cutbacks can be expected to lead to layoffs. The layoffs further reduce demand, tending to push prices down.

I see the indirect impacts being as important as the direct impacts. In the long run, I would expect credit contraction would push oil and gas prices down (at least from what they would otherwise be), and further contribute to the contraction in future investment.

Canadian oil sands costs are down substantially from that graph. The days are gone when welders got $1000/day for just showing up, regardless of whether they did any work or not.

That's the good news. The bad news includes the fact that Mexican costs are out of control (PEMEX is losing a fortune at current prices) and all the deep water stuff is still expensive.

And things are happening in Saudi Arabia. They are starting offshore drilling in the Red Sea and talking about doing a CO₂ flood on Ghawar. None of that is cheap and they can't be the lowest cost producer any more if that's what they are going to do. Makes you wonder if we are about to see another Mexican-style cannonball dive off the high board.

Great! Thanks, also to Gail. Almost what I was looking for. For ag-commodities there's the FAOSTAT which give production prices and volumes, which is very useful.

Rembrandt's forecast hasn't changed dramatically in the past four years: http://www.theoildrum.com/story/2005/9/9/02536/09753

I will wait with anticipation. Thanks

Peter.

blue Peter, the answer is, at least partly, allready in the post from Rembrandt above.

There are around 600 fields in my database versus around 250 in Chris Skrebowski's, because he did not include smaller fields, hence the term megaprojects.

Wikipedia don't look at the very small fields. Still, there are uncertainties. It appears that many new recent projects don't give the flow rates as promised (as also observed by Simmons) and many show delays. If the plateau could last until about 2014 depends also on the production from giant fields (best case, middle (high, low) case, and worse case scenario). In theory, if all the future projects deliver what they promise and with best case giant field production (and all the 'new' giant Irak fields coming on stream within 5-7 years), the plateau production could go on a few years beyond 2014. IMO for this to happen there are too many if's.

Hi Mac,

I've wondered about this for years as I visited Arizonia, California, etc on business trips: what would life be like in those places if thier water supply was diminished?

I live on the shore of Lake Michigan next to a couple of nice rivers and plenty of ground water. Sure, we have cold winters with lots of ice and snow. But, I bet I could survive a cold winter with fuel shortages easier than a southwest desert person could survive a summer with little water.

Dunno see my response to your longer post. If I'm right then the reported numbers are fraudulent.

My best guess however is fin number 1 but a bit flatter at the top overlapping fin 2 on the way down.

No doubt at all about the potential for a long tail in production same as most peak oil graphs show.

Hmm hey maybe like this :)

Of course your being a bit disingenuous since I've stated many many times I've got nothing to add over
what Ivanhoe explained.

More sharkfin curves here.

http://hubbert.mines.edu/news/Ivanhoe_00-1.pdf

Look here the link I've know you read his papers.

http://www.hubbertpeak.com/Ivanhoe/

I've got nothing to really add over what Ivanhoe did. The fit is easy enough.
And I've told you this several times this is not the first time you rejected Ivanhoes work
and for the same reasons he hand drew his curve.

My adjustments have a lot more to do with money then with the curve itself.

My question is why and how we did it and this leads to some overall fairly small adjustments for "fraud".

These are inflated reserves and over and understatements of production sufficient in magnitude to cause problems esp with the data but nothing that materially changes Ivanhoe's work.

How we did it was a combination of technological enhancements and financial engineering rigged markets and outright fraud. Surprisingly similar to the .com bubble where all the same games where played.

Why we did it ?
A few people became filthy rich and powerful again surprisingly similar to the .com bubble or computer bubble in general.

Both industries have the same mix of real technical breakthroughs and ugly money games. Perhaps even the same players at the highest levels who knows. Certainly the information about the .com bubbles and other games in the computer industry are better documented and you can read about all the things that happen when you mix large sums of money and technology. My conclusion is simply that the oil patch is the big daddy of these sorts of games. With defense, airplanes and computers as envious stepchildren of the big boy.

Now back to the curve this means of course that the dip in production in the 1980's was no where near as deep as the public production numbers indicate a and of course Americans did not suddenly get super energy efficient like we think we did. We can quit patting ourselves on the bank on all the oil we saved in tht 1980's we didn't do near what we thought we did. And of course demand was far more resilient to the price shock then most people realize.

And we probably did not get the uptick that Ivanhoe drew in by hand either. And last but not least of course its not a sharp point but a curve when production falls off but thats completely dependent on the exact timing of local factors.
Economic state from the price increases during the flattening period detailed time the last new fields are brought on line etc etc right now my best guess is we curved over the top over a period of about two years starting somewhere in 2007 and over by late 2008 to perhaps early 2009 dropping about 4mbd of production or so over that period maybe as high as 6mbd.
Now as best I can tell if the concept is right we are losing 500kbd - 1mbd every month with my best guess actually 500kbd but dunno for sure enough for things to get ugly over the next several months.

But these are small corrections really there only importance is they are closely related to the creation of the financial system that supported this production model. The diversions of fairly small amounts of oil revenue to the top have large financial implications as it creates power money. This power money can then bootstrap the financial model needed for it to feed and grow.

Certainly plenty of error in the data to hide the flows esp if they are as I said fraudulent anyway you only need to redirect the revenue of about 5% of oil production over a period of decades to create a concentration of wealth and power that cannot be destroyed. Obviously this means our financial system and oil production are for all practical purposes siamese twins its completely interrelated.

Of course if this is true then obviously if oil production is crashing our financial system not only won't survive the crash it literally can't.

And last but not least it also says you will never ever figure out oil production using oil production numbers alone.
Its hopeless. The financial feedback with oil has same large direct connections. One of my other posts I said it was the financial curve pulling oil well maybe a better way is to say its both curves interacting with each other.

The hot oil flows that I argue used to exist are not only a direct connection but also the way the system bootstrapped itself.

Eventually in the end Americans became nothing but consumers and our consumption of oil and plastic junk from wall mart and cars and paper houses was used as a tool to create wealth at the top.

We are just a bunch of addicts adroitly managed to extract as much wealth out of as possible with the oil addiction forming the basic flow. The reasons are all on the money side but the money is directly from the oil addiction.

Pretty impressive since effectively they convinced a bunch of heroin junkies to do useful work for free.
Of course they had to keep extending their credit lines along the way but thats what happens when your dealing with junkies. Of course the even cooler thing is when the game eventually fell apart like it had too is they stuffed all the debt into the junkies collective call the government and did not even lose on that side.

Impressive but hopefully nothing else like oil exists that can allow this to happen again.

Regardless you have to put the oil and money together until you do you can never generate a shark fin production profile the corrupt oil data is simply not enough.

Now to my knowledge Ivanhoe never really discussed economics or financial issues however its my understanding he was fairly wealthy and given his positions he was a industry insider. So I have to assume they he also have a financial model he was using even though he never explicitly detailed it. If anyone finds something he wrote on finance I'd love to here about it or even anecdotal views from someone that knew him. Obviously my own model is fairly damming so if he was following the same thoughts I could readily see where he would choose to not write them down.

The nature of the model itself demands that there is and external influence at work geologic constrains simply cannot create this sort of curve i.e if it was pure geology then it would be some sort of fairly symmetric curve. You absolutely have to have the financial engineering to push the system. And of course thats why you never can solve it looking only at oil production flows so I know he left something out and from my own conclusions like I said you can see why he might. Whats interesting is Hubbert himself also has alternative financial model he supported.

http://www.financialsense.com/fsu/editorials/quigley/2007/0612.html

The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essential for its continuance. The second (monetary culture), an inheritance from the pre-scientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is super-imposed.

One has to imagine Ivanhoe also looked at the issue and about the "coupling".

I don't see that I've done anything different from what both Hubbert and Ivanhoe accomplished.
Outside of trying to understand the why and how of this coupled oil/money system plus technology.
I'd argue neither tried to create a more explicit understanding of this.

Cars are not just for the rich in China any more. They're becoming an upper middle class commodity. That is why automobile sales in China will exceed those in the U.S. this year (11 million versus 10 million).

Fuel economy standards are much higher in China, but still there is going to be an enormous demand for fuel, and the Chinese middle class will be competing against the American middle class for feedstock.

Fortunately, the Chinese government is proceeding with a project to electrify 20,000 km of Chinese railroads, which will mitigate fuel demand somewhat. Unfortunately, the U.S. government is proceeding with nothing better than wishful thinking.

Thanks dare. I knew some of my points were Ok but not as if they were god-like.

(Just a friendly tease)

And I do very much like your "underpopulation of smart people" view. I think I'll officially steal that line.

Your point on solar use potential is of course in the back of the minds of all who have some hope of our civilization emerging on the other side of the apparent bottleneck we seem to be upon.

From here
The total solar energy absorbed by Earth's atmosphere, oceans and land masses is approximately 3,850,000 exajoules (EJ) per year.In 2002, this was more energy in one hour than the world used in one year.Photosynthesis captures approximately 3,000 EJ per year in biomass. The amount of solar energy reaching the surface of the planet is so vast that in one year it is about twice as much as will ever be obtained from all of the Earth's non-renewable resources of coal, oil, natural gas, and mined uranium combined

This certainly allows for a tad of growth in our energy use over time. But bottlenecks (I am including the waist in an hourglass as a type of bottleneck) can have an infinite number of sizes and shapes and of course there is the possibility of a stopper getting stuck at the top end (the sun's life cycle certainly looks to be a stopper for life's 'progress' on earth).

If someone with a better handle on math than me would take the 122 petawatts our planet's system is absorbing every second and monetize it using LAs 2008 average kilowatt hour price and show that number next to the total $ value of all currency at work in the world it would give some idea of how small a part of our system we really are. But some small parts can really bugger things up in complex systems.

'Smart people' is a loaded term, Voltaire handled that subject rather wittily in 'Candide' :-) and in that spirit I will go out and shovel the driveway, looks like winter has finally arrived in interior AK. In a couple more weeks the ice on the Beaufort will be completely shorefast, only a month or three later than the thirty year average.

The smarter the people are, the lesser children they have...

Not true. The actual correlation is: the more highly educated people are* and the more economic opportunities there are for women** the fewer children they have. (This generally tends to assume easily available contraceptive devices, as well.)

(* I.e. the more people delay "adulthood" by extending the time they spend preparing for being independent economic agents, the longer they tend to wait to have dependents of their own. This is also typically associated with higher costs of living, and therefore also higher costs of raising children.)

(** This means that the women are less reliant on their spouses for survival, and thus they have more autonomy and more power in the relationship to decline sex with men who don't want to wear condoms or who demand their women bear them many children.)

Dare
I was pretty sure you had some real meat with which to replace 'smart people'
:-)

I still hope someone has easy enough access to the numbers to monetize the solar input our planet absorbs every second and set it next to the best guess of the total dollar value of all the money at work in the world at a given second (money sitting or being saved needs to be considered working, I just used 'at work' for lack of my knowing better term). I expect the latter would be a tiny number in comparison to the former but I could well be wrong.

Your only reference was a link to an explanation of IQ. Try as I might, I could find nothing in there relating IQ to family size. Please provide further references.

the higer educated the woman are and the higher the opportunities.. are, the later they get children, but also the lesser childs they get...

I believe that was in the first sentence I wrote, although considering the explanation I added to that point, I suppose I can see why you might have been confused. However, this merely reinforces my argument that education, rather than intelligence, is the relevant variable.

[T]he heritability of cognitive skills is relalatively high ... And because of that the education level is also... a consequnce of... cognitive skills...

Really? So smart people in the developing world achieve a higher educational level on average than stupid people in developed countries? That's the first I've heard of it... And here I thought it was dependent on government commitment to providing low-cost public education and financial assistance for post-secondary studies... smart people in poverty having difficulty affording it, otherwise. You assume - rather than prove - that there is meritocracy in the educational level people achieve, but this is usually so only in countries committed to it - predominantly industrialized democracies that can both afford and demand it.

Furthermore, as a university graduate and someone who has spent plenty of time socializing with post-grads, I can honestly tell you that the people who get degrees aren't always the people with the highest IQs. Rather, they are usually the people most motivated and dedicated to their work - not surprisingly - which means that a highly driven person with a modest IQ is more likely to stick with it and get the PhD than the very smart person who doesn't really give a shit.

The alternative is the political correct myth, that everybody is an empty sheet when born.

I believe the term you're looking for is "blank slate," which refers to John Watson & B.F. Skinner's work on behaviourism.

Watson is noted as saying:

Give me a dozen healthy infants, well-formed, and my own specialized world to bring them up in and I'll guarantee you to take any one of them at random and train him to become any type of specialist I might select - doctor, lawyer, artist, merchant-chief and yes, even beggar-man and thief, regardless of his talents, penchants, tendencies, abilities, vocations, and race of his ancestors (as quoted in Psychology: Frontiers and Applications, by Passer & Smith, p. 21).

I don't know anyone who actually believes this anymore. (You see, my bachelor's degree is in cognitive science, so I spent a great deal of time learning about various theories of cognition and how nature and nurture interact.) Behaviouralism was basically killed by a combination of Chomsky's arguments for the innateness of verbal language acquisition in children, and also experiments that came out of a paper by two of Skinner's students, Keller & Marian Breland, titled "The Misbehavior of Organisms."

Drawing on their experience in using operant conditioning to train animals for circuses, TV, and film stunts, the Brelands described a number of situations in which their attempts to condition an animal's behavior ran head-on into the animal's built-in instincts. For example... when the Brelands attempted to train a raccoon to drop two coins in a piggy bank by rewarding this response with food, the raccoon did not cooperate. After the raccoon was rewarded with food for dropping two coins into the bank, it took the next two coins and began rubbing them together, just as they do to remove the shells of newly caught crayfish. Eventually, the coin-rubbing response over-powered the coin dropping response and the Brelands had to abandon their attempts to condition the raccoon (Cognitive Psychology, by E. Bruce Goldstein, p. 11).

Arguing that greater education and female empowerment have by far the largest effects on birth rates does not make me an advocate of "nurture-only" theories in which humans are blank slates. Nor does it mean I am a slave to the "politically correct" position. Rather, it means I have accepted the empirically determined correlations that appear to be relevant to this topic and the arguments attempting to explain them. Another way to look at it is to consider that beliefs are influenced by experience, and therefore beliefs about the benefits of large family size are influenced by changing material conditions. Furthermore, the actual family sizes are influenced by the beliefs people hold about them, as well as the relative power - to manifest their preferred outcome - of the various people involved in making the decision. IQ does not appear to be very relevant to the discussion, except perhaps as one of the many factors that contribute to education.

Finally, as for environment having little to do with IQ, I refer you to your own reference:

A study of French children adopted between the ages of 4 and 6 shows the continuing interplay of nature and nurture. The children came from poor backgrounds with IQs that initially averaged 77, putting them near retardation. Nine years later after adoption, they retook the IQ tests, and all of them did better. The amount they improved was directly related to the adopting family’s status. "Children adopted by farmers and laborers had average IQ scores of 85.5; those placed with middle-class families had average scores of 92. The average IQ scores of youngsters placed in well-to-do homes climbed more than 20 points, to 98."[9]

Clearly, environment does play an important role in IQ - along with genetics - not that this really has anything to do with what I was trying to say earlier. If you absolutely insist on discussing genetic influences, you would do well to complement it with a look into epigenetic influences on the expression of genes. A worthwhile popular introduction to the topic is Discover Magazine's DNA is Not Destiny, by Watters, Ethan; November 2006, Vol. 27 Issue 11, p. 32-75. Basically, gene expression can be turned on or off by epigenetic protein markers present on the DNA; these can be influenced by, notably, diet, among other things. In other words, environmental conditions affected by, say, social status can potentially influence the expression of one's DNA.