Tech Talk - New Energy Report from Harvard Makes Unsupportable Assumptions

The Tech Talks of the last few months have followed a path of looking in a relatively realistic manner at crude oil production with emphasis on that coming from the United States and Russia, as well as Saudi Arabia, the current focus of my weekly pieces. An earlier piece looked at a Citigroup report of considerable optimism, and the post explained why, in reality, it is impractical to anticipate much increase in US production this decade. Since then, after reviewing the production from Russia, several posts have shown why the current lead in Russian daily crude oil production is likely to be soon over and then decline, as the oil companies are not bringing new fields on line as fast as the old ones are running out. Saudi Arabia, as the current posts are in the process of explaining, is unlikely to increase production much beyond 10 mbd, since Ghawar, the major field on which its current production level is built, is reaching the end of its major contribution, though it will continue to produce at a lower rate into the future. The bottom line, at least to date, is that there is no evidence from the top three producers that their production will be even close, in total, to current levels by the end of the decade.

So, (h/t Leanan) there now comes an Energy Study from Harvard which boldly states that this is rubbish - that by 2020, global production will be at 110.6 mbd and these concerns that most of us have at The Oil Drum (inter alia) are chimeras of the imagination.

Figure 1. Anticipated Growth in global oil production by the end of the decade (Maugeri, Leonardo. “Oil: The Next Revolution” Discussion Paper 2012-10, Belfer Center for Science and International Affairs, Harvard Kennedy School, June 2012.)

It is therefore pertinent to begin with examining where the study (which was prepared with BP assistance) anticipates that the growth in supply will come from.

That too is shown as a plot:

Figure 2. Anticipated sources of the growth in global production by 2020 (showing only the top 23 producers). ((Maugeri, Leonardo. “Oil: The Next Revolution” Discussion Paper 2012-10, Belfer Center for Science and International Affairs, Harvard Kennedy School, June 2012.)

It is instructive, in reading this plot, to first recognize that it is a plot of anticipated production capacity rather than projected actual production. The reason for this can perhaps be illustrated by an example. Within the current production capacity that Saudi Arabia claims adds up to 12 mbds, is the 900 kbd that will come from Manifa as it is further developed and comes on line within the next few years. However, at that time. the increase in production will, to some degree, offset the declines in existing wells and producing fields that will become more severe as more existing horizontal wells water out. Manifa is not currently in significant production, and is unlikely to be at such a level for at least another 18 months, with production being tied to the construction of the two new refineries being built to handle the oil. It is not, therefore, a currently instantaneously available source of oil. At a relatively normal 5% per year decline in production from existing fields, Saudi Arabia will have to bring on line (and sustain) at least 500 kbd per year of new production. While it is likely that it can do this for a year or two more, betting that it will be able to do this plus raise production 2 mbd or more in 2020 is on the far side of optimistic. Just because a reserve exists does not mean that it can be brought on line without the physical facilities in place to produce it.

It is interesting, however, to note the report’s view on field declines in production:

Throughout recent history, there is empirical evidence of depletion overestimation. From 2000 on, for example, crude oil depletion rates gauged by most forecasters have ranged between 6 and 10 percent: yet even the lower end of this range would involve the almost complete loss of the world’s “old” production in 10 years (2000 crude production capacity = about 70 mbd). By converse, crude oil production capacity in 2010 was more than 80 mbd. To make up for that figure, a new production of 80 mbd or so would have come on-stream over that decade. This is clearly untrue: in 2010, 70 percent of crude oil production came from oilfields that have been producing oil for decades. As shown in Section 4, my analysis indicates that only four of the current big oil suppliers (big oil supplier = more than 1 mbd of production capacity) will face a net reduction of their production capacity by 2020: they are Norway, the United Kingdom, Mexico, and Iran. Apart from these countries, I did not find evidence of a global depletion rate of crude production higher than 2-3 percent when correctly adjusted for reserve growth.

Sigh! I explained last time that with the change in well orientation from vertical to horizontal, that there was a change in the apparent decline rates. When the wells run horizontally at the top of the reservoir, they are no longer reduced in productive length each year as vertical wells are, because the driving water flood slowly fills the reservoir below the oil as it is displaced. This does not mean that because the apparent decline rate from the well has fallen that it will ultimately produce more oil.

The amount of oil in the region tapped by the well is finite, and when it is gone it is gone, whether from a vertical well that shows gradual decline with time, or from the horizontal well that holds the production level until the water hits the well and it stops. I am not sure that the author of the report understands this.

The point concerning support logistics is critical in a number of instances. The political difficulties in increasing production from the oil sands in Alberta, through constraints on pipeline construction either South or West, are at least as likely to restrict future growth of that deposit as any technical challenge.

The four countries that the report sees contributing most to future oil supplies are (in the ranked order) Iraq. the United States, Canada, and Brazil. For Iraq, he sees production possibly coming from the following fields within the next eight years.

Figure 3. Anticipated production gains in Iraq in the next eight years. (Maugeri, Leonardo. “Oil: The Next Revolution” Discussion Paper 2012-10, Belfer Center for Science and International Affairs, Harvard Kennedy School, June 2012.)

I understand that one ought to show some optimism at some point over Iraq, but it has yet to reach the levels of production that it achieved before the Iran/Iraq War, and that was over some time ago. The EIA has shown that it is possible to get a total of over 13 mbd of production, but it requires investment and time, and some degree of political stability in the country. That is still somewhat lacking. Prior to that war, Iraq was producing at 3.5 mbd, the production curve since then has not been encouraging:

Figure 4. History of Iraqi Production since the start of the Iran:Iraq War. (Source: EIA)

Recognizing that the country has problems, the report still expects that there will be a growth in production of some 5.125 mbd by the end of the decade. This appears to be a guess as to being some 50% of the 10.425 mbd that the country could potentially achieve.

As for US production, this is tied to increasing production from all the oil shales in the country, which will see spurts in growth similar to that seen in the Bakken and Eagle Ford.

I estimate that additional unrestricted production from shale/tight oil might reach 6.6 mbd by 2020, or an additional adjusted production of 4.1 mbd after considering risk factors (by comparison, U.S. shale/tight oil production was about 800,000 bd in December 2011). To these figures, I added an unrestricted additional production of 1 mbd from sources other than shale oil that I reduced by 40 percent considering risks, thus obtaining a 0.6 mbd in terms of additional adjusted production by 2020. In particular, I am more confident than others on the prospects of a faster-than-expected recovery of offshore drilling in the Gulf of Mexico after the Deepwater Horizon disaster in 2010.

As I noted in my review of the Citicorp report this optimism flies in the face of the views of the DMR in North Dakota – who ought to know, since they have the data. The report further seems a little confused on how horizontal wells work in these reservoirs. As Aramco has noted, one cannot keep drilling longer and longer holes and expect the well production to double with that increase in length. Because of the need to maintain differential pressures between the reservoir and the well, there are optimal lengths for any given formation. And as I have also noted, the report flies in the face of the data on field production from the deeper wells of the Gulf of Mexico.

It seems pertinent to close with the report’s list of assumptions on which the gain in oil production from the Bakken is based:

*A price of oil (WTI) equal to or greater than $ 70 per barrel through 2020

*A constant 200 drilling rigs per week;

*An estimated ultimate recovery rate of 10 percent per individual producing well (which in most cases has already been exceeded) and for the overall formation;

*An OOP calculated on the basis of less than half the mean figure of Price’s 1999 assessment (413 billion barrels of OOP, 100 billion of proven reserves, including Three Forks).

Consequently, I expect 300 billion barrels of OOP and 45 billion of proven oil reserves, including Three Forks;

*A combined average depletion rate for each producing well of 15 percent over the first five years, followed by a 7 percent depletion rate;

*A level of porosity and permeability of the Bakken/Three Forks formation derived from those experienced so far by oil companies engaged in the area.

Based on these assumptions, my simulation yields an additional unrestricted oil production from the Bakken and Three Forks plays of around 2.5 mbd by 2020, leading to a total unrestricted production of more than 3 mbd by 2020.

Enough, already! There are too many unrealistic assumptions to make this worth spending more time on. To illustrate but one of the critical points - this is the graph that I have shown in earlier posts of the decline rate of a typical well in the Bakken. You can clearly see that the decline rate is much steeper than 15% in the first five years.

Figure 5. Typical Bakken well production (ND DMR)

Oh, on a related note, the Alaskan pipeline was running at an average of 571,462 bd in May.

Say they are right - what is the upside for Harvard?

Say they are wrong - what is the downside for Harvard?

And what is the upside in the NOW for making such a report public?

"Think Tanks" understand the lack of accountability on the downside, the benefits in the now, and the bragging rights if they happen to get one right once in a while.

Total Energy = number of people X the use of energy per person.
A = B X C

This "scholarly work" attempts to increase A. Far simpler, but less politically correct to modify B. And right now, with C being rationing via price - it is the C part of the equation that is being adjusted.

Little downside to telling markets and people what they want to hear, especially when looking ahead more than a year or two; short memories and all that. Psychics and fortune tellers have always known this.

Far simpler, but less politically correct to modify B.

It seems to me that this post is advocating genocide. If so, the author is a disgrace to his pseudonym (being the original name of the author who became famous as George Orwell). If I am reading it incorrectly, I would appreciate a clarification.

He might reply that he's simply advocating women's rights, access to birth control, and higher standards of living for the under-developed countries, all of which reduce the birth rate. However, he's still wrong. His equation assumes each new person born consumes the same amount of energy as every other person, which is clearly false. Also, the equation is absurdly, overly simplistic. Energy expenditures are a function much more of a society's infrastructure and economic system than they are numbers of people. Transportation consumes at least an order of magnitude more energy per year than food production, for example. Yet the masses of people in under-developed countries aren't the ones doing the traveling.

He might reply that he's simply advocating women's rights, access to birth control, and higher standards of living for the under-developed countries, all of which reduce the birth rate.

This is something I considered, but rejected because he said that his option was "politically incorrect". We are therefore left to speculate on "politically incorrect" methods of population reduction.

Apart from that, I agree with Emanuel.

It is politically incorrect to tell people how many children they can have. It is seen as a human right and of course keeps "growth" going.

Wholesale murder is a little beyond "politically incorrect". So, no, he's not advocating genocide.

I agree.

In fact, the way Ablokeimet has chosen to interpret this discussion immediately into some assumption of fascistic brutality is a stark reminder of how these discussions remain so off-limits, or at least they remain incapable of moving forward rationally without hyperbolic cries of 'Murder!' and 'Nanny State!'

Of course, framing family planning as coercion is misleading, and suggests a worldview that is uninformed about the real-world dynamics of fertility, and prone to seeing the world in terms of coercion, instead of more humane methods.

Which is, of course, Business As Usual at it's worst.

this post is advocating genocide

VS the actions of the leadership class?
VS what various 'holy books' say is acceptable?

I'm just pointing out the obvious. Again.

My previous post was inviting "Eric Blair" to say that he wasn't advocating genocide. Now, instead of accepting the invitation, he posts something ambiguous, but which seems to indicate that political and/or religious figures are also advocating it. I am now more disturbed than I was before. I would like a straight answer from him - is he advocating genocide? I would be very glad indeed to be assured that my reading was incorrect.

Advocates of genocide to "solve" environmental problems are not hard to find. Big Gav and I had a run-in with one on this very site a year or two ago. Though few in number, they can be very determined debaters on the web. I am a big supporter of freedom of speech, as it is an aid to character assessment. I like to know what sort of person I am conversing with. If "Eric Blair" is not an advocate of genocide, I think he should have no difficulty saying so.

For the record, I happen to believe that the world is overpopulated, in the sense that its current population is not sustainable under the current or any rational organisation of society. On the other hand, I believe that:

(a) The Total Fertility Rate for the world has been falling for decades and will, in a few years, go below 2.0. This will cause the world's population to top out at about 9 billion people in about 2050 and begin declining gently. This can be assisted and possibly accelerated by improving access to contraception and improving the education of girls. Neither of these measures are "politically incorrect".

(b) Once we have a rational organisation of society (i.e. not capitalism and not Stalinism) and stop the most dangerous and wasteful activities, we will have a few centuries to reach a sustainable population before non-renewable resources are, for practical purposes, exhausted.

Written by Ablokeimet:
The Total Fertility Rate for the world has been falling for decades and will, in a few years, go below 2.0. This will cause the world's population to top out at about 9 billion people in about 2050 and begin declining gently.

The rising edge of population collapse as the peak is approached looks identical. You are assuming the decreasing birth rate means that humans are getting the population under control rather than resource constraints are forcing a change.

Writen by Ablokeimet:
This can be assisted and possibly accelerated by improving access to contraception and improving the education of girls. Neither of these measures are "politically incorrect".

It depends on your location. U.S. conservatives object to all manner of birth control except abstinence. The people who blow up girls schools in Afghanistan object to educating females because they are property of men.

Your (b) is vaguely optimistic. What does a "rational organization of society" mean to you? I think you are trying to steal my stuff with high minded ideals that fail upon practical application. Climate change and peaks in various energy sources will not allow us several centuries to decrease human population. It is already causing drought and crop failures.

Bob Shaw's question from Phoenix, Arizona: Are humans smarter than yeast?

The rising edge of population collapse as the peak is approached looks identical. You are assuming the decreasing birth rate means that humans are getting the population under control rather than resource constraints are forcing a change.

The Total Fertility Rates (TFR) and the birthrates have been going down the most rapidly in the most prosperous countries. This decline has been steady through both good economic times and recessions. I don't see any reason to link these declines to resource shortages. Do you have any direct evidence that resource shortages in countries like France, Italy and Japan have affected TFR and birthrates?

Maybe not resource shortages but declining standards of living that make the DINK lifestyle more attractive than starting a family.

If people in OECD countries multiplied like rabbits, vastly more resources would be consumed beyond what their paychecks could afford. A prosperous life causes many of the people to recognize that children are an expense that lowers the standard of living. The paychecks, which are loosely related to resource exploitation, have not risen enough to allow an increasing standard of living with a large number of children. In general people in OECD countries have chosen stuff over children. Poor rural folk see children differently as slave labor on the farm or a potential retirement plan. In this case, the more children, the better. Then there is religion which advocates large families and blinds the congregation to the consequences.

Massive consumption of stuff can not be sustained along with having many children. The more children urban parents make, the more they have to spend on necessities like food, clothing, shelter and medical, which leaves less money for buying stuff. For a place to have high growth in consuming stuff and large families requires large, increasing income for the average worker. Saudi Arabia might fit this description temporarily made possible by massive profits from exploiting crude oil.

When the economy declines in these urbanized, developed countries, such as Japan and Russia, the urbanites still view children as an expense which they can not afford. Therefore, as the economy declines, they have fewer children because they can not afford children. To reverse the trend the average lifestyle will have to revert to rural (or something) where more children mean more profit.

Low birth rats in OECD countries are not caused by people getting wiser about overpopulation. It is because the system can not provide for more and more and more. Mother Nature is imposing limits.

Human population is in overshoot as evidenced by the souring environment and depleting resources. Mother Nature corrects population overshoot using population collapse.

U.S. conservatives object to all manner of birth control except abstinence.

There is a strange intersection of interests WRT birth control.

The 'inflammatory' version is here.

A less inflammatory but selected quotes version is here.

In her own words:

The philosophy of Birth Control points out that as long as civilized communities encourage unrestrained fecundity in the "normal" members of the population—always of course under the cloak of decency and morality—and penalize every attempt to introduce the principle of discrimination and responsibility in parenthood, they will be faced with the ever-increasing problem of feeble-mindedness, that fertile parent of degeneracy, crime, and pauperism. Small as the percentage of the imbecile and half-witted may seem in comparison with the normal members of the community, it should always be remembered that feeble-mindedness is not an unrelated expression of modern civilization. Its roots strike deep into the social fabric. Modern studies indicate that insanity, epilepsy, criminality, prostitution, pauperism, and mental defect, are all organically bound up together and that the least intelligent and the thoroughly degenerate classes in every community are the most prolific. Feeble-mindedness in one generation becomes pauperism or insanity in the next. There is every indication that feeble-mindedness in its protean forms is on the increase, that it has leaped the barriers, and that there is truly, as some of the scientific eugenists have pointed out, a feeble-minded peril to future generations—unless the feeble-minded are prevented from reproducing their kind. To meet this emergency is the immediate and peremptory duty of every State and of all communities.

Hrmmmm. Feebleminded-ness and a concern about "rational organization of society"

Technocracy is defined as a political system in which the determining influence belongs to technicians of the administration and of the economy. A technocrat is a person who exercises authority by virtue of his/her technical competence. The technocratic mind view emphasizes the logical, practical, problem-solving, instrumental, orderly, and disciplined approach to objectives, its reliance on a calculus, on precision and measurement, and a concept of a system ..... The conception of a rational organization of society has thus become confounded. Rationality as a means - as a set of techniques for efficient allocation of resources - has been twisted beyond recognition; rationality as an end is confronted with the cantankerousness of politics. The politics of the future will not be quarrels between functional economic interest groups for distributive shares of the national product, but the concerns of a communal society, particularly the inclusion of disadvantaged groups.

Now can birth control, eugenics and a Technocracy ("rational organization of society") get tied together?

Though not all progressives or socialists were eugenicists, many individuals of influence in the United States and other countries who affiliated themselves with those schools of thought were indeed supporters of eugenics. Some of the more famous supporters were President Teddy Roosevelt, John Maynard Keynes, President Woodrow Wilson, Bertrand Russell, Alexander Graham Bell, George Bernard Shaw, Harry Laughlin, H.G. Wells, Margaret Sanger, foundations connected to the Rockefellers, Harrimans, and Carnegies, Supreme Court Justice Oliver Wendell Holmes, and others.

And who was one of the founders of Technocracy - Dr. Marion King Hubbert met Howard Scot around 1930 and became one of the founding members of Technocracy Inc., where he contributed to the more scientific presentation of their technocratic ideas and was on the staff of the Continental Head Quarter (CHQ) of Technocracy Inc. many are having a nice, "comfortable" conversation? Or has the above made you the reader now more disturbed than you were before?

Bringing up ancient eugenics stuff from many decades ago when discussing modern reproductive rights policy is a massively deceitful argument. Is anyone arguing for that today when trying to keep birth control freely available? No. End of story.

It is like the people that argue against evolution because Darwin said some ugly racist stuff. It is not relevant to the modern discussion.

"U.S. conservatives object to all manner of birth control except abstinence." is also a massive over-reach. Certainly there is a good part of the hardcore Christian base that do believe this and some higher-ups like Santorum. But I wouldn't say banning birth control is a majority position of conservatives. (Although just the fact that there is a significant number of people who agree with that is really scary.)

Bringing up ancient eugenics stuff from many decades ago when discussing modern reproductive rights policy is a massively deceitful argument.

And yet - my memory of the Diane Dew site is that is the exact framing there.

Is anyone arguing for that today when trying to keep birth control freely available?

Yes. Because that is how I became aware of the history.

No. End of story.

And yet, how I became aware of the history noted above because a party was using that history in a birth control argument.

'Tis a more interesting framing in light of the 'lets have a rational society' and 'there are taboo subjects' - those who with to argue the Technocratic and birth control positions should be aware of the history so that they have answers to such questions about the history. Beyond "that's not fair" at least.

Look at the list of foundations - foundations connected to the Rockefellers, Harrimans, and Carnegies - then the reasons - To meet the problems of degeneracy, crime, and pauperism it is the immediate and peremptory duty of every State and of all communities to therefore embrace the philosophy of Birth Control one has reason to pause and ask: How close is Humanity to a place where the people at the top, the people who claim that spot because they are "The Leaders", to deciding it is far simpler to wipe out whole swaths of Humanity so that they may continue their present energy consumption patterns VS embracing a change that might upset the system so that they cease being "The Leaders"? Another variation - how bad is the bottom such that the people at the top don't want to join the bottom? What could be done to improve the bottom so that the top won't have a Monty Pyton moment - 'you can tell he's the king cuz he's not covered in shite'?

Perhaps a more modern study of 'leading thinking' would be more to one's liking: The Money-Empathy Gap
New research suggests that more money makes people act less human. Or at least less humane.

I don't know who this Diane Dew is.

"Yes. Because that is how I became aware of the history."
Please provide a link. It fun to mock the extremists.

"And yet, how I became aware of the history noted above because a party was using that history in a birth control argument."

Someone else using a bad argument is not a good reason to repeat it. It is just perpetuating a bad argument.

Is there a point to all this cryptic woo-woo?

Someone else using a bad argument is not a good reason to repeat it.

M. Sanger's own words are not worth bringing up?

Either PP was founded with the attributes pointed out on the various web links or it was not.

And either the issue raised by M. Sanger - best not spend limited resources on 'dead ends' - is a valid argument or it is not. (the dead end argument is one seen on TOD BTW)

Is there a point to all this cryptic woo-woo?

Going to the founding documents is 'cryptic'?
Or is 'cryptic woo-woo' short hand for 'I am not doing well in the argument, best attach labels'?

Oh, if I found support for Gold and not a fiat currency in those founding documents - would that make it less cryptic for you?

M. Sanger's own words are not worth bringing up?

Probably not.

Volkswagen was founded by Hitler for ideological reasons - should I consider that when I look at a TDI?

The US was founded by slave owners - does that matter?

I'm sure we can find many more...


If you want to debate a dead woman from a century ago then bring up Sanger's words. But if you want to debate people today, it is strawman argument.

Neither of these measures are "politically incorrect". - It depends on your location.

Well, let's clarify our definitions. "politically incorrect" is code, created by the right wing, for things they like and which progressives dislike. It's part of a disinformation campaign, which was intended to suggest that progressives were exerting oppressive control of the US "marketplace of ideas" (hence, progressive ideas were "politically correct").

So, contraception and education are not "politically incorrect".

inviting "Eric Blair" to say that he wasn't advocating genocide

You have a strange way of inviting.

You have been here as nearly as long as I have been. With my volume of posts, when have I advocated genocide before?

"Genocide"... ? Wow, that's a leap! Let's try free condoms and cash-for-the-snip programs first. :)


"Genocide!" or repossess houses, raise the retirement age, default on pensions, default on other retirement plans and reduce interest rates to near zero to undermine the means of support for the elderly. That plan is enjoying great success in OECD countries.

"It seems to me that this post is advocating genocide"

It's still so taboo, as it's always been, to analyse human populations in ecological terms as the animals we are, right alongside yeast, deer, lynx and hares. But we are animals subject to the same constraints as all.

I don't find find pointing out the obvious so offensive since if humanity is using too much energy then the most obvious way of dealing with that, since we refuse to use less on an individual level, is to reduce population. Of course I'm not in any way advocating that, in fact I'm devoting my life to preventing that from happening by pushing hard for renewables and ecological education. But to blindly ignore the obvious is to set the stage for allowing TPTB to reduce population using their own methods, via war and mass murder, when SHTF and we run out of energy and we have no choice but to reduce population.

But to blindly ignore the obvious is to set the stage for allowing TPTB to reduce population using their own methods, via war and mass murder, when SHTF and we run out of energy

We humans repeat patterns that have worked in the past. What has worked in the past for the TPTB is methods of war and mass murder.

How do "we humans" get to learn new, better patterns?

I worked your formula backwards a week ago making Excel charts, dividing populations (globally and for several countries using US Census bureau projections) by every fuel type (Oil,Coal,Hydro, etc.)to model the effect of a continuous annual decline in oil consumption of 3%. The charts are interesting, in my biased opinion, but I rarely post and have no idea how to display them in a reply.
Globally, my assumptions had Gas and Coal largely displacing the lost oil through to 2030. There was so little net effect that population measures wouldn't reasonably take place. Bad global warming scenario.
For Canada the picture was economically worse, but manageable, due to a low natural population increase and abundant hydro supply. Since the country doesn't have the infrastructure for a large increase in coal, the future for renewables looked good.
The US model was picture of disaster due to heavy oil reliance and a relatively high natural rate of increase. I tried modelling a zero immigration policy, starting in 1920, but it wouldn't observably affect the outcome.

Since just about all the population growth of the US and Europe for the last 40 years has been due to immigration, it seems a little difficult to believe that a zero immigration policy would not have had an observable outcome. A population in the US closer to 200MM rather than over 300MM would definitely be a lot easier to transition to a more sustainable path.

I should clarify my reasoning.
For starters, please bear in mind that I only modeled forward to the year 2030. Most sources (BP, IEA, EIA, etc.) do not forecast probable data beyond that point. More importantly, most scenarios have any significant decline in oil supplies happening in that timeframe.
You are correct in believing that a zero immigration policy would eventually have a substantial effect. I don't think it would make much difference within the 18 year time period, at least for the United States.
A democrat administration would be unlikely to bring in such a policy. It might cost them too many minority votes in the tight elections that have become the norm.
I believe that a Republican government will eventually look at such a policy seriously, but not until their constituents are forced by reality to accept that resources really do have limits and that rising sea levels are not in fact a left wing plot.
These things take time. Assuming serious collapse in supply, I can't see such a policy on the table before 2020. Current American population growth is at 0.8 percent per year, three quarters of which is due to natural increase and the remainder from immigration.
In the remaining 10 years, for which I felt I could reasonably guess at results, the overall population would not yet be significantly altered by immigration control.
Over a much longer time frame, if society values followed the current trend, such a policy would stabilize the population because much of the current natural growth comes from first and second generation immigrant families.
As for a 200 million sustainable population, there are no civil ways of getting there quickly. There are over 300 million people in the nation currently. With zero immigration and a one child policy, you might get there in a century. It could happen, but not until a lot of pain brought the need home.

I agree with your outlook and time frames, politics often move very slowly. My comment was in reference to the 1920 date with the thought that without immigration there is a good chance that the US population would have stabilized in the 1970s or 1980s.

That was completely an error on my part. I had meant to enter 2020, not 1920. Shows the problems of posting after midnight.
Immigration control is a very hard sell in a nation born with the concept of Manifest Destiny. Flooding an area with people simply worked too well in dealings with French, the Spanish, the Mexicans, Natives, and British loyalists. How do you reverse a growth policy that worked so well as long as there were unexploited resources?
When the winning side has to share the spoils a little too finely and new factions emerge, things change. We are just reaching that point.
I think the only time American policy could have been turned away, from promoting immigration, is after the Carter administration fell following the Iran hostage situation and the 1979 Oil Crisis.
Reagan might have been able to push for population control in the name of better resource management, but went with deregulating fiscal policy instead. Immigration control at that point could have largely stabilized the population by now.

Deregulating fiscal policy and installing Alan Greenspan and an expansionist Fed who were more than happy to provide/enable the huge run up in debt that financed the population growth. Unfortunately, once the debt bubble bursts your left with the larger population that has to be provided for and a more depleted environment to do it with.

"Democratic", not "democrat", please.

Do you really think a zero immigration policy is going to fly? We have businesses (agriculture) that apparently depend on cheap manual labor, and we've had poor luck thus far making our borders be properly impenetrable. It's already plenty annoying that we have to do the whole I-9 song and dance every time we hire someone at work (interns, in particular; they come and go every year). I can imagine an economic restructuring where most people earn enough money that they're not hacked off at the high cost of food produced by well-paid labor, but then you've just lost the Republican support.

The one thing that might work and would be humane -- improving the condition of people in countries sending us immigrants -- would also boost world-wide resource consumption.

I doubt your average Walmart or Costco shopper would notice the difference if farmers started paying a living wage. Fruits and vegetables require the most hand labor, most other farm operations are largely mechanized.

I agree that the ultimate solution, at least in the US, is to help Latin America improve their standard of living. We could easily start with things like crop supports that undermine grain prices in Mexico and make it difficult for small farmers in Mexico to make a decent living. Of course that would be noticed at Walmart.

And we don't want a zero immigration policy. I do patent work in Silicon Valley and I can tell you that it would be a disaster if stopped immigration. What we should be doing is stapling a green card onto every graduate degree handed out in science & engineering. If we want to stay on top in science & engineering, we should be trying to keep everyone of those foreigners that comes here and receives a world class education.

Democratic, as you say, sorry.
I think it's less a question of whether a zero immigration policy would fly as whether it might be applied.
Twenty five years ago, Reagan was demanding that a wall, designed to keep people in, be torn down. It was, but the son of his own vicepresident built another to try to keep people out less than 15 years later. Who saw that coming in 1989?
Public attitudes and expectations can change a lot in 15 or 20 years. A long period of economic hardship caused by a diminishing resource supply would likely lead to a strong demand for firm and not necessarily humane action. That's a large part of why the Great Depression was followed by World War II. Shutting the door on potential immigrants may be more likely to occur than helping them increase their resource use.
Would it fly? It might. I don't believe in luck. A serious administration acting with public support could make a country a very undesirable destination for prospective immigrants to the point where they would look elsewhere or stay home. History has numerous examples of targeted populations being driven entirely out of lands, stopping entry is all too possible.
I'm not advocating such a policy, but a finite resource base will ultimately lead to some form of population control. At the Global level, every nation faces the same problem. We are likely to see more of nearly every known cause of population decline: international warfare (Iraq), civil war (Sudan), societal collapse (Somalia), mandated population control (China), genocide (Rwanda), epidemic disease (1918 Flu), famine (Ethiopia), environmental catastrophe (Maldive's future?), mass emigration (Ireland), forced expulsion (Russian Jews), and voluntary declining fertility rate (much of Europe).
I might have missed some, but I think only the last option would be palatable for the American public. That's only possible if immigration falls, but by what means? Raising the standard of living for residents of nations with a higher natural rate of increase would mean supporting most of the people of the world from the developed nations. That is unlikely during a prolonged resource decline, as is finding them the resources for development.
I think doors to many wealthier countries will eventually close, partially if not entirely, with sufficient firepower held to protect the resources behind the doors.

The kind of policies and thinking necessary to turn a country into a fortress damage both the resource base and a country's ability to adapt. Countries of this kind tend to become homogenized, inflexible, over-stretched, and risk extremism. The fortresses and islands can't last indefinitely and, in a pretty short time, the barriers erode and become too expensive to maintain. Conceptually, think of a Maginot Line for climate change, resource depletion, and overpopulation. A static defense is a poor bastion against a dynamic assault.

I agree. A static defense with no offense can only fail.
However, effective countermeasures to those three global problems require a clear plan of action including goals with target dates, processes to achieve those goals, consequences for failure, and unceasing vigilance and analysis.
That sounds kind of like Kyoto. The Kyoto Accord failed. There was no process for how the goals would be reached, no reasoned evaluation of success, and no ongoing planning for how the course of action would need to be revised. You can't exclude major segments of the world population on the grounds that they hadn't gotten a fair chance to burn through the resources of the planet on a per capity basis. All Kyoto accomplished was the meteoric rise in China's economic status and a vast increase in CO2 pollution via coal as other nations proclaimed success in turning green by cuting their manufacturing sector and importing from China. Nations theatened by China's success either never participated or will opt out.
So we need something new, perhaps using Germany or Costa Rica as a guide, that requires full global participation. In a democracy, a popular government form, you also need an informed and involved voting public with clear benefits to maintain public support.
Do you see movement in that direction in most of the world? I don't.
What about America specifically? Half the legislators in the country want to dismantle the EPA. Mentioning overpopulation is political suicide. Winning elestions requires a marketing campaign so expensive that representatives are effectively owned by those who finance the publicity. Thus, greed now rules the nation.
It's a nation where having an abnormally large number of children might get you a reality TV program complete with around the world vacations. A place where a state can pass laws that demand that years of study regarding sea level rise must be entirely disregarded so that developers with a link to campaign financing won't have their future swampland fail to obtain a development permit.
The place is already inflexible, over-stretched and extreme. I'll bet you 20 Duggars and one polyamist family group that the United States is currently in no position to attempt anything regarding population control but closing the door.
An ineffective Maginot line for climate change and resource depletion to be sure.
Real change would require an election based strictly on the candidate's competance as evidenced by qualifications and record, with marketing rigorously controlled by a transparent election office. Got any ideas for how that might come to pass? Maybe a county somewhere could volunteer to run mock elections in an effort to find an experimental selection process that wouldn't install a corporate lackey.
Now wasn't that an impressively digressing rant? I need to go buy beer.

I think it's highly skewed to simply frame it as 'Kyoto Failed'. That's like saying 'The UN is ineffectual' .. NEITHER of those associations have any power without the positive and active support of the Key Economic powers on the globe. The USA demurs, these processes are dead in the water, and it's far more OUR failure than that of the folks who actually tried to move the stone.

Credit the right culprits. It needs to say 'Kyoto was sabotaged.. it was pushed.'

The ag and water impacts of global warming on the US look pretty terrible in your timeframe. It saddens and concerns me that we aren't talking more about this current and growing problem. Just one point to note. Climate models, though useful, have tended to underestimate the degree of response to a forcing. We really need to begin ff consumption cuts now if we're going to deal with the problem.

In a related note, it seems Rex Tillerson is having an Enron moment on climate change:

Few governments or corporations seem interested in even discussing cuts. Suggesting belt tightening doesn't win elections and weakens the grip of totalitarian regimes. There is little profit in encouraging customers to abandon the growth concept in favour of sustainability.
Real cuts would need to happen at the level of the individual. People will eventually need to learn how to budget the resources they personally use, including the local environment. Whether we do it as planned sustainability or as disaster management remains to be seen.

The charts are interesting, in my biased opinion, but I rarely post and have no idea how to display them in a reply.

If you wish, you could always ask The mgt.* if the material is worthy of a key post.

Then all of us can read it and point out improvements/errors.

*(not implying any relationship to Markoff but was amused at 'the management' being shortened and wanted a chance to post the link to get to the quote "It was the chains of communication, not the means of production, that determined a social process".)

Yo! My friend, Null Hypothesis,

You say:

I don't find find pointing out the obvious so offensive since if humanity is using too much energy then the most obvious way of dealing with that, since we refuse to use less on an individual level, is to reduce population.

Well, neither do I! However we live in a world where the following recently happened:

Lawmakers banned from speaking on House floor after using the words 'vagina' and 'vasectomy' during abortion bill debate

Rep. Lisa Brown and Rep. Barb Byrum banned from speaking after their 'unprofessional conduct'
Some have branded their behaviour 'offensive' and 'disgraceful'

By Daily Mail Reporter

Need I say more?

we are animals subject to the same constraints as all.

Animals don't have contraception.

Human fertility dynamics look very little like those of wild animal populations. Italians are very well fed, have unrestrained sex, have very low death rates, and yet their fertility is well below replacement.

Where do we see that in wild populations?

Human fertility dynamics only look different today because we have contraception, women's rights, education, and social order. Before contraception our fertility rates were no different than other animals.

Historically we see a drop in fertility rates as people emerge from poverty and get educated, aka "development". This pretty well correlates with using more energy. The problem is that as we all know, we are running out of energy. In fact, without fossil fuels the planet would be well beyond a Malthusian die-off by now. If we do not replace them in very short order, as in the next few decades, with other options like wind, solar and nuclear, then we'll get a Malthusian Collapse. Then I fear we may fall off a cliff socially and those factors that tended to reduce fertility may reverse as people are thrown back into poverty, social order breaks down, wars ravage the world, educational systems disappear, and as is being noted here, today we are seeing the rise of religious fundamentalism as things start to fall apart, of burying heads in the sand from the unpleasant things happening around us, denying it away by legislating a ban on free speech on sensitive issues.

As an interesting exercise, I wonder if anyone has looked at how fertility rates changed in countries that recently went though wars or hyperinflations, like Argentina, Yugoslavia, Sudan.

Fertility dropped dramatically during the Great Depression.

Human fertility dynamics only look different today because we have contraception, women's rights, education, and social order. Before contraception our fertility rates were no different than other animals.

I don't believe this is true. There are historical data of populations dropping or stabilizing for various reasons, both cultural reasons (e.g. Pacific islands) and shortage of resource reasons (e.g. post Roman Empire depopulation. In any case, humans have had both the knowledge of how to control their populations and in some cases the will to do it. For that matter, even non-human animals 'control' their populations under some circumstances. This paper by Hopfenberg & Pimentel notes that although population tends to follow food availability, it does not necessarily take starvation conditions to reduce birthrates. (my emphasis)

...Iwamoto (1978) has shown that monkey troop size increases rapidly after artificial provisioning, but the level of consumption efficiency of the troop is always maintained lower than the critical point in both the artificial and natural habitat. Starvation within the troop simply does not occur if the rate of food availability is held relatively constant. Under natural conditions, as the feeder population increases, the food population decreases. This leads to a decrease in the feeder population which is then followed by an increase in the food population. This increase in food availability again produces an increase in the feeder population. In quaternary consumer species, the so-called ‘top of the food chain’, this occurs primarily through fluctuations in birth rates.

I understand that fertility drops in relation to scarce resources for biological reasons (that's why girls these days in the developed world start their periods so young -- due to good nutrition), but based on fertility rates in starving African countries I don't think that would be anywhere near as low as replacement levels...

I think infant mortality rates have a lot to do with the ability of animal populations to inherently control their growth rates without reverting to mass starvation or famine. In a few weeks I'm going to head off into the wilderness of the central BC coast with my kayak and hang out with the wolves and bears. The salmon will be running and the wolves feast on them. Even with this abundance of food, infant mortality is still high, as wolves have quite a few young. But once they reach adulthood the death rates level off.

I wonder how humans managed to voluntarily control their populations before modern contraception became available?

A partial list: control of sex (late marriage, religious restrictions, etc); condoms have existed for centuries; abortion through abortifacient herbs and other means; infanticide.

First, are we agreed that "to analyse human populations in ecological terms as the animals we are, right alongside yeast, deer, lynx and hares. But we are animals subject to the same constraints as all." is misleading, given that humans have the ability to regulate their fertility?

2nd, "we see a drop in fertility rates as people emerge from poverty and get educated, aka "development" is too simple. Actually, economic development leads to a reduction in child mortality, which leads to a temporary population boom. Then, education leads to a reduction in fertility.

we are running out of energy

Well, we're having a temporary scarcity of oil. For better or worse, we have more than enough fossil fuels to cook the planet, which is by far a bigger problem than PO.

We have, of course, an enormous abundance of energy in the form of sun, wind, waves, fission, etc.

It's worth pointing out that the world has done a pretty good job lately of ramping up production of solar panels, wind turbines and EVs. At the moment, the problem is getting people to buy them, given the artificially low cost of FFs.

"humans have the ability to regulate their fertility?"
What happens when all the condom factories get bombed?

"Well, we're having a temporary scarcity of oil."
When oil disappears it won't be temporary.

"We have, of course, an enormous abundance of energy in the form of sun, wind, waves, fission, etc."
I mostly agree with you on the potential of these sources, though only really sun and wind, and possibly though unlikely, nuclear. I'm as big an alternatives promoter as anyone because we have no choice -- we either go solar or we die, quite literally. The problem is the time frame available, and that we may not be able to pull that transition off in time.

Interestingly, even though we're at Peak Oil now, and likely a decade away from Peak Coal and Gas, we may be beyond burning half of the fossil fuels we ever will despite the Hubbert Curve, due to future social decay. These non-conventional fossil fuel sources that would be constituting the decline half of the Hubbert Curve are mostly by definition difficult and require quite a degree of technical sophistication to extract, process, and deliver. In a world of social decay this degree of sophistication may not be plausible. Similarly, if everything gets blown up in a war we won't be building many solar panels.

As one commenter posted here a few months ago regarding EOR in Saudi Arabia, "I can't help but notice that one shoulder rocket launcher would take it all down in a few minutes."

But I still argue for renewables as much as you do, because maybe we'll be able to pull it off but it won't be a future of abundance, it will be more like, will we be able to prevent half the world from dying or not.

When oil disappears it won't be temporary.

Oil won't disappear for centuries, and it's the mismatch between supply and demand that's temporary.

We don't "need" oil - the sooner we move to substitutes, the better.

The problem is the time frame available, and that we may not be able to pull that transition off in time.

No, the problem is the desperate opposition by people in legacy industries. We could move to wind, solar and EVs pretty quickly - far faster than depletion of FF in general and oil in particular.

People who are pessimistic about dealing with Peak Oil wonder: which processes happen to use oil today, because of historical accident, and which truly have to do so? What part of manufacturing, transportation etc, is specifically reliant only on oil?

So many things run on oil - can we possible replace oil in all of these applications?

The answer is yes, primarily through electrification of surface transportation and building heating. Aviation and long-haul trucking can be replaced with electric rail and water shipping, and aviation will transition to substitutes.

This will proceed through several phases. The first is greater efficiency. The second phase is hybrid liquid fuel-electric operation, where the Internal Combustion Engine (ICE) is dominant - examples include the Prius and, at a lower price point about $20K, the Honda Insight. The 3rd phase is hybrid liquid fuel-electric operation, where electric operation is dominant. Good examples here are diesel locomotives, hybrid locomotives, and the Chevy Volt. The Volt will reduce fuel consumption by close to 90% over the average ICE light vehicle. This phase will last a very long time, with batteries and all-electric range getting larger, and fuel consumption falling.
The last phase is, of course, all electric vehicles, which are are slowly expanding, and being implemented widely (Here's the Tesla, here's the Nissan Leaf). Electric bicycles have been around for a long time, but they're getting better. China is pursuing plug-ins and EV's aggressively. Here's an OEM Ford Ranger EV Pickup, and a EREV light truck (F-150).

Here are electric UPS trucks. Here is a hybrid bus. Here is an electric bus. An electric dump truck. Electric trucks have much less maintenance.

Kenworth Truck Company, a division of PACCAR, already offers a T270 Class 6 hybrid-electric truck. Kenworth has introduced a new Kenworth T370 Class 7 diesel-electric hybrid tractor for local haul applications, including beverage, general freight, and grocery distribution. Daimler Trucks and Walmart developed a Class 8 tractor-trailer which reduces fuel consumption about 6%.

Volvo is moving toward hybrid heavy vehicles, including garbage trucks and buses. Here is the heaviest-duty EV so far. Here's a recent order for hybrid trucks, and here's expanding production of an eight ton electric delivery truck, with many customers. Here are electric local delivery vehicles, and short range heavy trucks. Here are electric UPS trucks, and EREV UPS trucks. Here's a good general article and discussion of heavy-duty electric vehicles.

Diesel will be around for decades for essential uses, and in a transitional period commercial consumption will out-bid personal transportation consumers for fuel.

Mining is a common concern. Much mining, especially underground, has been electric for some time - here's a source of electrical mining equipment. Caterpillar manufactures 200-ton and above mining trucks with both drives. Caterpillar will produce mining trucks for every application—uphill, downhill, flat or extreme conditions — with electric as well as mechanical drive. Here's an electric earth moving truck. Here's an electric mobile strip mining machine, the largest tracked vehicle in the world at 13,500 tons.

Water shipping and aviation can also eliminate oil: see my separate post on that topic.

More at

"No, the problem is the desperate opposition by people in legacy industries. We could move to wind, solar and EVs pretty quickly - far faster than depletion of FF in general and oil in particular."

In my view, this is a choice that must be made. The more foot-dragging on the issue, the more trouble long-term.

China's investing 90 billion per year on this transition. If we won't keep up, then we cede dominance in a critical new industry. Or worse, we become the advocate for the dirty, old industries, as China becomes the champion for the new industries of the future. Very bad position to be in.

I agree!

Animals do have contraception.

Only one species though.

The genocide would be to not advocate population restraint. There are ways to reduce population that both raise living standards and do no harm to those already living.

Looking up thread, I've seen some pretty scarey things listed. In short, you can restrain population without the terrible choices. Open access to birth control, educating and liberating women, increasing the age of marriage, increasing the age of first child birth (generally through education and more specialized jobs), supporting a middle class lifestyle, income compression (less of a gap between rich and poor), and access to reproductive services all restrain population growth without causing harm.

We should try to bend the trend back to 6 billion not push on to 8. Right now we are looking at 80 million persons per year in population growth.

It's all about keeping up "investor confidence."

US election year knows no boundaries.. but energy/geology does.

Googled Maugeri. He's executive chairman of ENI's petrochemicals arm and has taken the sabbatical to enjoy the Harvard ambience and deliver another cornucupian assessment matching his previous articles (listed on the advertisement wikipedia entry.

Leonardo ain't no da Vinci, that's for sure.

Even DiCaprio seems to be more on the ball on these matters.

I think the problem here is a mis-match between economic cost price and intended purpose - if the intended purpose of oil is as a raw material to say manufacture plastics or fertiliser than the standard classic model probably works, with the usual political / investment / geological problems you get with any commodity. If the price is right, people will extract accordingly..
However if the intended purpose is purely for energy, than you get into more complex issues that the price of say oil at say $180 a barrel might make digging a hypothetical 10 miles deep well economic, but if it requires more joules to extract a barrel of oil than you get from that barrel, it energy-wise wouldn't make sense to do so, despite what classical economists and accountants might say... all they see is a commodity with a price on the international markets and the costs of extracting the commodity, not on the energy balance issues - if that is it's intended purpose.

What the peak oil community I think fails to understand is that the oil investment side doesn't really care about energy economics (other than price of course) - so long as oil can be extracted at a price below that it can be sold at, no problem, the overall net energy issues are for some 'other mug' / politicians to deal with, well after they have banked their money.

The bigger question therefore, is what use will oil be in the future - mostly energy for transportation as it is now, or as a raw material for increased manufacturing in the US, when as I expect more manufacturing moves back to the OECD to compensate for trade / shipping costs from Asia ?

I'm starting to think that when we look back 20 years from now we'll be able to see some sort of correlation between the price of oil (namely, its percentage of global GDP) and the EROEI of said oil.

Exactly! Also linked to expanding debt. Societies that don't tax the rich will have it worse.

A question or two about Iraq's oil production. Your link to the 2002 [?] report of the peak pre the Iraq/Iran war quoting 3.5Mbpd seems to check out OK with, except that this peak was in one exceptional year only. Similarly your number on the graph for recent production below 2.5Mbpd seems about right and compares with your estimate of 'capacity' at 2.8Mbpd. Mazamascience says 'no data' for consumption.

But your graph for production peak before Iran/Iraq war (the one year of peak at 3.5 compares with <3.0 for years either side) seems to represent a smoothed curve, placing the 'old peak' at only slightly more than 2.5Mbpd compared with recent highs of slightly less than 2.5Mbpd. I am confused about future production rates. Can we expect a 'report-guess' of a doubling to >5Mbpd (?) or some other fraction of an EIA guess of 13Mbpd? Are there long-lasting new or old supergiants like SA's Ghawar that will go on for the next 10 - 50 years? Has anybody any good guesses as to to the future decline rates, particularly from newly tested geological structures?

Enough, already! There are too many unrealistic assumptions to make this worth spending more time on.

Ya think?

The Belfer Center's leadership begins with the recognition of science and technology as driving forces constantly transforming both the challenges we face and the opportunities for problem solving. Building on the vision of founder Paul Doty, the Center addresses serious global concerns by integrating insights and research of social scientists, natural scientists, technologists, and practitioners in government, diplomacy, the military, and business.

Sigh! One would like to expect a bit better from such an interdisciplinary and august body of individuals, however it seems they suffer from a combination of wishful thinking, a belief in cornucopian techno fixes or possibly outright denial of reality. Then again, it might just be something as simple as their salaries depending on their not understanding the dilemmas our global industrial civilization is currently facing.

On they bright side, they at least claim, to recognize science... Makes me feel all warm and fuzzy!

FM - Maybe more than paychecks guides them. I think we're all subject, to some degree, to the same dynamic: no task is that difficult as long s we're thinking about someone else doing it. Why should the think tank gurus not be subject to the same prejudice? And now add the financial side to the quation: always easier to justify a porject if someone else is paying the bill. How many times have all of us thought Mr. X should just do Y regardless of HIS cost because it's the right thing to do?

It woud be interesting to see a think tank devoted to studying those inherant problems in think tank analysis.

Think about that for a moment. LOL

It woud be interesting to see a think tank devoted to studying those inherant problems in think tank analysis.

Actually Daniel Kahneman has a few interesting things to say about that.

Edge Master Class 07
Auberge du Soleil, Rutherford, CA, July 20-22, 2007

I'm deeply ashamed of the rest of the story, but there was something really instructive happening here, because there are two ways of looking at a problem; the inside view and the outside view. The inside view is looking at your problem and trying to estimate what will happen in your problem. The outside view involves making that an instance of something else—of a class. When you then look at the statistics of the class, it is a very different way of thinking about problems. And what's interesting is that it is a very unnatural way to think about problems, because you have to forget things that you know—and you know everything about what you're trying to do, your plan and so on—and to look at yourself as a point in the distribution is a very un-natural exercise; people actually hate doing this and resist it.

There are also many difficulties in determining the reference class. In this case, the reference class is pretty straightforward; it's other people developing curricula. But what's psychologically interesting about the incident is all of that information was in the head of the Dean of the School of Education, and still he said two years. There was no contact between something he knew and something he said. What psychologically to me was the truly insightful thing, was that he had all the information necessary to conclude that the prediction he was writing down was ridiculous.

COMMENT: Perhaps he was being tactful.

KAHNEMAN: No, he wasn't being tactful; he really didn't know. This is really something that I think happens a lot—the outside view comes up in something that I call ‘narrow framing,' which is, you focus on the problem at hand and don't see the class to which it belongs.

Emphasis mine.

I'm a huge DK fan. Glad to run across someone else who reads his work as well.

So I wonder, with all this enhanced extraction, which big well will be the next to callapse? That should give the think tanks something to chew on for a bit, don't you think?

The author of the Harvard paper, Leonardo Maugeri, has every major oil producer in the world except Iran, Mexico and The North Sea increasing in production by 2020. He even has Indonesia, in decline since 1996, holding steady. He holds two degrees (Political Science and Economics) and a Ph.D. in international economics. He holds a doctorate in economics so this paper should surprise no one.

Concerning infill drilling of horizontal wells to stop the decline rate, Russian analysts Alex Burgansky wrote in 2009.

Russia is a very mature producer. If you exclude all the drilling activity taking place every year, then Russian organic decline in production is close to 19%. To compensate for that organic decline, Russia drills somewhere between 5,000 and 6,000 wells every year.

And this massive infield drilling with horizontal wells is going on all over the world. Without them the world would surely have gone into a steep decline around 2006. Could we not expect water to start hitting the wells in these old fields pretty soon? And when it does would not the drop in production be very steep indeed?

Ron P.

There's an economic question here too.
Russia needs a $110 dollar oil price(Brent) to avoid busting their budget.
Drilling many more wells costs a LOT of money. And that investment needs higher and higher prices to pay off, because as the oil is scarcer and harder to get at, CapEx(Capital Expendatures) costs increase at a very high rate.

The same pattern is occuring worldwide.

This is a key reason why even nations untouched by the so-called 'Arab spring' like Russia need $100+ prices or higher to get even. Not all producers are in this position, like Canada which still has increasing production, but those like Russia who are struggling do. And there are many nations like Russia, or those who have already been there, like Indonesia, as you mentioned, who have been in a decline since '96 and will continue to decline. The economics just simply don't add up after a while.

Now, Russia is lucky since it's individual peaking is occuring right at the worldwide peak, so it gets cover by high global prices and thus can prolong the peak for itself. That's a luxury that those who peaked in the 90s(like Indonesia) or early 2000s (like the UK) didn't have as the global oil prices were too low when they peaked to offset ever-higher CapEx costs which made it impossible to hinder their individual peaking by more and more investments(wells, rigs etc).

Obviously, higher oil prices do cover more and more rigs, wells and various other CapEx investments. But only up to a point. And that chart above shows crude oil only(85 % of all oil and not likely to drop much more in the coming decade) up until 2010 and it shows that we're investing record sums and getting precious little for it.

Now the cornucopians say; but unconventional plays! Shale gas! Shale oil! Well, what about those?

You see the same phenomenom in the U.S. shale gas plays where increasing (or even just maintaining the same) volume requires more and more billions in CapEx. Arthur Berman did a good talk about it(too lazy to post too many charts right now but his talk contains all the info and it's all about facts and no hype) at the last ASPO conferenc.
The same dynamic, of course, also applies to shale oil although it's not quite there yet.

However, depletion rates for unconventional, deep water etc is higher than for conventional landlocked oil plays, so this phenomenom may in fact get there faster for unconventional plays. And even so, if you discount NGLs, biofuels etc and look for pure unconventional oil only, not 'liquids' which can contain all kinds of things(some of which aren't even useable by transportation or heating for homes etc) then you see that the unconventional oil production worldwide is very modest, low single digits and not expected to rise by most, even including slightly optimistic, estimates.

It's actually not that hard to completely bust open cornucopians and their fantasy land projections. You just need a brain capable of doing third grade math. That's why it's surprising and slightly frightening to realize that this guy was chairman of one of the largest energy companies in the world.

In my studies of reserve growth, countries such as Russia don't seem to show as much growth as the USA. This has a lot to do with their estimates being more on the mark from the start, whereas the USA prospectors were almost always required to underestimate potential, thus providing more room for reserve growth.

"It's actually not that hard to completely bust open cornucopians and their fantasy land projections. You just need a brain capable of doing third grade math. That's why it's surprising and slightly frightening to realize that this guy was chairman of one of the largest energy companies in the world."

That's been my point as well. The only sophisticated skill is to have some facility with how to apply probabilities. That is how scientists and reasonable analysts attack these problems, and what the cornucopian mind has trouble dealing with.

The other day I found this old quote by James Clerk Maxwell (the grandfather of broadband):

"They say that Understanding ought to work by the rules of right reason. These rules are, or ought to be, contained in Logic; but the actual science of logic is conversant at present only with things either certain, impossible, or entirely doubtful, none of which (fortunately) we have to reason on. Therefore the true logic for this world is the calculus of Probabilities, which takes account of the magnitude of the probability which is, or ought to be, in a reasonable man’s mind."

American companies estimated their oil reserves at the 1P level (Probably only) which means a 90% probability of their existence, which was very conservative. This was due to US Securities & Exchange regulations. If you estimate at the 1P level, there is a 90% probability of the reserves increasing as you drill out the field.

The Russian geologists estimated their reserves at the 2P level (Proven plus Probable) which means a 50% probability, which is a more estimate of how much is there, but not nearly as conservative. If you estimate at this level, there is a 50% probability the reserves will increase, and a 50% probability they will decrease as you develop the field. If the estimates are honest, the revisions will average out and they will neither increase nor decrease for the country as a whole.

American oil companies will calculate these 2P estimates and use them internally, but will not publish them for fear of being sued if they don't pan out.

Estimates of risk are intrinsic to the oil industry and are used extensively, but they are very much a mystery to the average person, who doesn't really understand the concept of "risk".

This really backfired on the USA. They not only got bad data but were also fooled by reserve growth that was not real, only a result of overly conservative bookkeeping.

I have this all described in The Oil Conundrum.

Oh, the 'logic' of making a profit and 'damn all consequences' has often required deceiving anyone with 3rd grade math talents.

The trouble with modern production technology is that companies can maintain very high production rates until the very end. With horizontal wells, and gas or water injection, the production rates can stay constant until the oil column is very, very thin, and then *BANG* the gas and/or water hits the perforations on all the wells simultaneously and the field is done.

This is why Mexico's Cantarell field went down so fast - they just cranked up the nitrogen injection rates until they were injecting half the nitrogen produced in the world into Cantarell. However, while it did maintain rates, it did nothing to compensate for the fact the oil column was getting thinner and thinner. PEMEX tried to deny it was going to happen, but when the distance between the rising water column and the descending gas cap neared zero, that was it, production went into freefall and there was nothing they could do about it.

This is more or less what happened in the UK, too. Certainly they managed to get very high recovery rates out of the fields, but there are limits to how much you can recover. Once you reach those limits, it's all downhill from there. The UK government should have seen this coming since they had all the data, but apparently it came as a complete surprise to them.

In the old days of vertical wells and non-smart production technology it was much more gradual. Wells watered out one by one, and sections of the field stopped producing one by one, and everyone knew the glory days were coming to an end. On the flip side, there was lots of oil left in unexpected corners of the field, so the small oil companies would come in and drill for that. Not any more, with horizontal wells and sophisticated injection projects, when it's gone when its all gone.

This is what Maugeri, being an economist rather than a petroleum geologist, is overlooking in this paper. Also, he is taking the blue-sky speculations of the promoters too seriously when adding up world, and particularly US, future production. You always check to make sure you still have your watch and all your rings after you shake hands with those guys. Probably, being an academic and not having as deep pockets as most oilmen, he's never been taken to the cleaners by an oil promoter.

Makes the cliff look pretty steep, doesn't it? These big well collapses are going to catch everyone by surprise. The data's pretty darn muddy. But, if I had to bet money, it would be on those countries requiring high priced oil: Saudi and Russia most prominently. We'll see. But I wouldn't be surprised if one or both fails to maintain current production by 2020.

The Harvard study may as well be an industry study. Any word on who funded it?

Edit: Author is a former ENI executive. So, the usual suspects. Almost like a climate change snuff piece, but this one aimed at peak oil. Nice. But the real target is likely to be investors. So I wonder what they're looking for capital for? Thousands of wells and rigs for fracking?

The thing about Russia is that it is a "very mature" oil producing area, as oil geologists are fond of saying, which is to say it doesn't have a lot of potential for new discoveries.

However, back during the days of the Soviet Union, they used to drill the wells so far apart that you couldn't even see from one oil well to another across the flat Siberian tundra. Naturally, there's lots of opportunity for drilling lots and lots of infill wells, and putting in lots of injection systems to improve flow rates, and that's what they are enthusiastically doing now in this modern age of capitalist profits.

However, as Russian geologists know, but apparently Maugeri doesn't, this is a process with diminishing returns and there is a point at which it will cost more to drill a new well or do more injection than the well will produce in oil. This is the point that capitalists usually stop drilling because there are no more profits to be made.

So the Russian geologists are hoping that if oil prices stay high, the good times will roll for a while longer, but they don't expect it to go on indefinitely.

Recall that MIT wrote a paper in 2007 that predicted a revolution in geothermal energy. Link. IFAIK it never happened and never will. You'd think some kind of short peer review process would stop one faculty at a university undermining the credibility of other faculties.

Academics are always predicting technological revolutions that never happen. They usually only look at the good factors and fail to consider most of the obvious drawbacks.

True technological revolutions are totally unexpected. Steve Jobs was particularly good at creating these - inventing something that no one knew they needed until he produced it. Nobody knew they needed an iPhone until they saw one.

The trouble with this is that it takes a genius to make it happen, and geniuses are in much shorter supply than academics.

I'm not totally convinced that anyone needs an I-Phone. Jobs was certainly a genius, though. He knew how to design products that were so seductive, sometimes people thought they couldn't live without them.

Nevertheless, your central point is still valid. Every true pioneer is by definition an amateur. It's the difference between foresight and hindsight, after all.

I think many academics try to be 'leaders out in front' while staying inside the walls of the castle. The real pioneers are the ones face down in the sand with arrows in their backs.

It must be a sign of our times where the iPhone is considered a "technological revolution"...

Jonathan Huebner, a physicist at Pentagon, has done research into the innovation tempo of societies. Huebner isn't concerned about innovations in general, but rather what he calls significant inventions. He has found a peak year for technological innovation, and it is surprisingly 1873. That it coincides with people starting to use large amount of fossil fuels is probably not too surprising.

The foremost part of industrial society's breakthroughs was in the fifty year period before WWI, like the radio, camera, telephone, airplane, combustion engine, automobile, light bulb and the electrification of society. These cornerstones of innovation have of course been further developed, but this development has mostly been about improving details; the basic function is more or less the same.

I'll add that picturing "pioneers" is probably a quite misleading way of looking at technological process.

It feels very little happened since the seventies. The only real difference is that computers are a lot better but Unix and C is still here. My house, my workplace, the high voltage power grid nearby, the closest highway and this cities airport where all built during the seventies.

The TV is flat nowadays, it is great sometimes but does it make a real difference?

In the industry robotics and CNC machines are a great invetion but they make no big difference in products possible to produce. Most cheap products are assembled by cheap labour in China. Injection molding and die-casting was invented more than one hundred years ago.

The technologies enabled concentration of profits, not actual physical and societal advance. Although, we have had some decent medical progress. Lots of stagnation coming from over-emphasis on privatization and the profit motive. Just euphemisms for government money going to corps and the wealthy while money is sucked out of both actual development and decent paying jobs for most people.

What was built and invented during the seventies is now available to everyone but progress have stagnated. I expect a lot of the products used during the seventies where quite old and some of it built long before the seventies in best case during the sixties but mostly older.

Totally agree. I believe the underlying apathy about many issues including liquid fuels (and why articles like this one from harvard are so comforting) is that most people are end users of everything and expect that someone else will fix the problem with new technology when mostly what we get is version 2.0 of what we already have. Sorry, interstellar travel is not in the pipeline. :-(

Oh I don't know about that, every new version of Microsoft Office gives me SO much more word processing and number crunching power! Every iteration brings in a new feature I use maybe like once a year! It more than justifies the hours, days, weeks, months I spend trying to figure the new format out, cursing at Microsoft the whole while, often out loud, about why the H they had to screw up a perfectly fine interface from 2003 that used simple tabs, so as to take away another inch of screen space with that big honking banner at the top. And then by the time I figure the new version out, another one's here! But it's all worth it I guess, because we all know that what's good for us doesn't taste good, so Microsoft deserves another few billion in revenues in 2012, 9 years after we reached Peak Office Software in 2003. Right on Microsoft! Keep up with that wealth creation, lord knows we all need wealth! Only you can do it, since obviously no other software company is good enough to compete with you in the fair and balanced office software market.

I'm glad I'm not the only one. I finally upgraded from 2003 just because I felt I was supposed to and to use newer format documents. But I hate 2010. I have to spend so much time trying to figure out where they have hidden features.

And let's not even start on Windows 7's Control Panel and user profiles vs. XP/2000. Why is hiding and/or aimlessly scattering essential stuff that used to be easy to find such a great thing? Of course, it does help those who sell training courses and DVDs.

Imagine if car makers changed the location, configuration and handling characteristics of basic controls on a car every 3-4 years? Gas/brake pedals being reversed or just replaced with dashboard buttons. Your steering wheel replaced with a hard to operate toe-joystick. The simple act of locking or unlocking your car doors involving a complex multi-step procedure and entering passwords each time. Sound like fun?

Hmmm, I don't get these issues with Linux.



unity and gnome on ubuntu :-)


Don't seem to have that problem with my Mac either, although Pages has some problems opening .doc files when Microsoft changes their file format. It takes Apple a few months to update Pages for the changes.

That may be true about 1873,everything was wide open in just about every field. BUT, the iphone is a symbol of progress and represents a lot of technological achievement.

The 20th century saw the greatest scientific discoveries (relativity, quantum mechanics, and DNA to name a few) and there is still a lot of progress happening now. Dark Energy and the acceleration of the expansion of the universe was just discovered recently. The standard model of physics has been fairly constant only since the 1970's or so. High temperature superconductors were discovered in the 1980's.

Living though incremental changes it's easy to take progress for granted.

I guess the thing I find interesting about smartphones in general is that they are designed to put a reasonable amount of processing power in your hands that consumes extremely small amounts of electricity to actually use (manufacturing is another matter entirely).

Figure 2, first column. It has 2011 Saudi production capacity 12.2 mbd and the next column has the US at a production capacity of 8 mbd. This was oil production capacity not all liquids. If this was really true then why was the actual production only ~5.6 IIRC for US and 9.7 for Saudi?

I believe there was a release of the strategic reserve in 2011, which does not make sense if there really was spare capacity.

Occam's razor, the simplest reason is usually the best. That being there was no spare capacity in 2011 and this was reflected by the release of the strategic reserve and the high prices.

If these known figures are incorrect in the report, then the future guesses are just bunk. (absurd, ridiculous, nonsense).

The spare capacity cited is only theoretical capacity - if you try to bring it on production, you find it doesn't exist.

The US had this problem during the oil crises of the 1970's. Companies had overestimated their capacity for a variety of reasons (higher government allowables, looks good to the investors, the managers needed to meet their quotas, etc.) However, when the government called on the higher production to meet import shortfalls, it wasn't there.

Also, you can't run equipment at 100% of its theoretical capacity for long periods of time - it will suffer premature breakdown. All you can do in the long term is 90-95% at best, and even then "long term" may mean only a few months. You always have to take theoretical capacity with a grain of salt.

Hide - I noticed that also. Obviously ever US oil producers has been selling every bbl possible as a result of recent high prices. If they overestimate production capacity by more than 40% today maybe we should use that as a minimum correction factor for their predicted future capacities. As far as the SPR release you make an excellent point. Perhaps he uses the SPR as a portion of his “capacity” and doesn’t bother to point it out. Needless to say using storage volumes as a production capacity is totally bogus: to the entire world production comes from a wellhead and not a storage tank.

....release of the strategic reserve in 2011....

Because Saudi Arabia could not ramp up production fast enough to offset Libyan production losses

The graph is here:

Refer to Matt Simmons' Twilight in the Desert book

The huge stretch to 93 mbpd current (even with reserve capacity) raised my eyebrows early on. 8 mbpd US and 12.2 Saudi just isn't real (as you pointed out). And the fact that this guy is from ENI just makes it seem like someone trying to puff up investor overconfidence.

The world may eek out production gains for a little while. But there are severe headwinds. Fracking and the other unconventionals require high prices to keep going and there's an economic wall you run into when prices get too high. These economic factors also constrain production. Fracking is what's keeping crude+condensate (world) flat or slightly growing. This really isn't grounds for making claims of 2 mbpd production growth each year through 2020.

Just for reference, EIA has current world oil production at 89 mbpd, EIA has 91 mbpd. Growth in all liquids since 2008 has been about 500,000 bpd each year under an environment of very high average prices. Russia and Saudi demand $100 oil to keep producing and investing. This really isn't a reason for wild optimism.

This was oil production capacity not all liquids.

They're including NGL in "oil production capacity". That's roughly 2.2 - 2.4 mbd. Add that to 5.6 mbd of c&c, and you get right about at the 8 mbd mark.

We gotta read carefully before we go off wasting ink/electrons on analysis...

NGL + oil makes the 93 mbpd number even more outlandish. So they're implying a 5-6 mbpd + spare capacity?

This is precisely the sort of thing I'd say if I wanted to keep the stock price of my company from going down. Earnings growth for oil companies is directly tied to increasing extraction of oil; oil is their capital, and they make their money by depleting their capital to realize a profit. It might be useful to find out what positions, if any, in energy stocks are held by the authors of this report, and if they hold significant short interest positions as well.

Citigroup's report is not optimistic for the experiment of civilization. If it's right, we might as well stop talking about climate change because it will be baked in the cake unless one believes we can emit unlimited amounts of carbon dioxide into the atmosphere without any consequences.

James Mason has a detailed description of what it would take for North Dakota to achieve 2 million barrels per day.

I summarized it.

Based on an average well production profile for wells with a 500 Mbbl EUR, the number of wells to sustain 1.0, 1.5, and 2.0 million barrels per day of oil production rates for thirty years is 27,000 wells, 41,000 wells, and 55,000 wells respectively.

James Mason does use the actual decline rate patterns of the wells that have been drilled.

It would take 3000 well completions per year.

Russia has a lot of oil that they could use horizontal drilling on.

Russia is also starting deep water drilling.

Texas could head to 4 million bpd

Adnano - Mason's curve doesn't say anything about "sustained". It just gives the peak production in 2020. OOps my bad! forget it

See: Mason is optimistic on production/well vs the numbers I could find by about a factor of 2.

I think he is optimistic by a factor of 4. Over the span of 30 years, they would need 200,000 wells. And that is assuming that the quality stays high and the best ones haven't been cherry-picked early.

I did some background work here:

The numbers I could find suggest that each well will generate 100,000 barrels over its lifetime.

Mason wants 2 million barrels per day sustained over a 30 year period.

That is a cumulative 2million/day*365days/year*30years = N*100,000

Solve for N=219,000 wells

If he says that it will only take 55,000 wells, then each well will need to generate 4000,000 barrels over its lifetime. This is a factor of 4 high.

And that is only to supply 2 million barrels per day, which is 10% of the USA's current usage (not corrected for demand growth).

If we wanted to get 100% of our oil needs from these wells over 30 years, then you realize that we will need over 2 million Bakken-style wells.

Pretty much every operator in the Bakken disagrees with you. Also, there are more than just 2 pay zones in the Williston Basin (a couple years ago I read a paper by Julie LeFevre estimating something like 9 or more pay zones). Some of these are looking better than the currently active Middle Bakken and Three Forks. So basically, you're going to be wrong.

I also remind everyone that The Oil Drum has consistently underestimated the Bakken (more), and by extension, they're also underestimating similar oil formations. It's pretty nervy of someone on this website to minimize the importance of the Bakken (again!) when all of their past efforts at doing so have been met with abject failure. If I told everyone here 3 years ago that North Dakota oil production would be pushing 600,000 bpd as soon as 2012, I would have been laughed at and my pronunciation would have been dismissed as a Cornucopian fantasy!

OK, then please lay out a complete analysis with pointers to every file and data record that is used to make the estimates.

I will be waiting for this and until you provide it, we will consider that you are just blowing smoke.

Clock starts now.

advancednano already provided a link with an analysis doing exactly that. No reason why I should repeat the effort.

Daily production data from every well please. I am sure you can get it for us. Thanks.

You did not do an analysis of daily production from every well in your own analysis. In fact, in your link you said:

This is my plea: What we need from the Dept. of Mineral Resources of is a complete set of data from every well, not the rolled up info.

So, now you're asking me for information which you yourself have noted is not readily available. If you cannot access the data, why should I be expected to?

I, for one, don't require well-by well analysis. But I am curious what you believe is the overall potential of US oil production from fractured basins, like the Bakken?

And, for my part, I think the new, unconventional supplies represent extreme climate risk. But that's another issue.

As for TOD estimates, I did see a few in the 500k range back as early as 2007. So some weren't so far off current extraction. But I suppose that begs the question of how much more can come from this source and what will be peak, plateau production for it?

As for the notion of abundance, well I think we'd be talking about that if oil were below 20 dollars again?

But the question is how much of today's production could be profitably lifted at $20?
Not enough to keep the torches lit, methinks.

Couldn't agree more.

Lowest figures I've seen for fracked well profitability is $45 and that's for a cherry-picked well. So I guess a better question would be this: at what rate can the Bakken and these other fracked fields produce profitably? And I would think that's highly dependent on the price of oil.

The fact that we are producing these wells, that the industry has been forced to, is a sign of depletion.

The thing I'm trying to wrap my brain around is that a significant percentage of the value of a modern currency is from oil itself. We're buying new oil with slightly older oil alloyed with time, ideas, and raw materials -- unless you are buying on credit, in which case you're buying new oil with future oil.

My head hurts when I think about this, if anyone could set me straight, i'd be much obliged.

Think of currency as representing a unit of potential labor/resources. The given amount you can exchange the currency for fluctuates constantly given current conditions. Energy is both a resource and a means to employ labor (machine labor). As the energy value of a resource decreases (and this can be mitigated somewhat by efficiency) the more labor/resources must be employed just to extract it. The result is an increase in the total amount of economic activity required to simply bring the energy source to market. In dollar terms, you could measure this as %GDP. In energy terms you can measure this as EROEI. The lower the EROEI and the higher the % GDP, the less efficient monetary systems (dependent on machine labor) become. The result is multiplication of debts in society and/or decreasing economic activity. The inverse is also true.

Debt, to a certain degree, is a promise of future economic activity. So debt can create an illusion of economic growth in societies undergoing economic contraction, delaying contraction and potentially sparking growth as long as real resources/labor can be purchased and exchanged for debt. Debt holders are making the bet that this growth will occur and enable debt payments. This is implied in the promise that they will eventually be paid off + interest.

In a situation of low EROEI and high % GDP, the likelihood of debt being paid off drops. The result is that banks and financial systems that haven't de-leveraged are much more likely to fail. In extreme cases, very low EROEI and very high % GDP would result in the wiping out of most debt by making lending practically useless to the lender.

In the case of oil, or any other energy source, there is a limit to the % of GDP it can demand through the function of price without causing economic downturn. Given the current mix of other energy sources and oil's current strangle-hold on transportation resources, it is likely that this level is somewhere in the range of 5-10 percent GDP. The basket of fuels called oil is currently being produced at a rate of about 90 million barrels per day (split between EIA and IEA). The current price is 85 dollars per barrel. So each day it costs 7.65 billion to run the vast majority of the world's transportation systems on oil. In a year this adds up to about 2.8 trillion dollars which represents about 4.7 percent of world GDP, just below our estimated 'danger zone.' The fact that we've reached such an impasse is a clear indication of how much oil has come to dominate the world's necessary transportation systems and is a legacy of the 'sunk costs' of trillions in oil/liquid fuels burning infrastructure.

For much of 2011-2012, the world was at the lower end of this 'danger zone.' World economic growth has, since, been constrained with slowdowns and recessions coming from parts of Europe and China. The exposed weaknesses include China's reliance on exports and structural failures in the EU (central bank, but no representative federal system to distribute aid to less efficient economies).

An interesting study would take all of the world's energy resources (their rate of production x market price) and add them together to see what % GDP you'd come up with. My bet would be that will give you the aggregate real EROEI of your input energy sources taking into account efficiency gains. The fact that oil alone represents nearly 1/20 doesn't bode too well for real future economic growth. But, the activities of productive society would probably be well served to pursue long-term low cost, low impact, energy sources. Such sources would create more real growth long-term. A solar array able to last a hundred years, for example, could produce an EROEI of more than 30 to 1, with very little in the way of water consumption and external damage due to pollution or climate impacts.

Achieving a positive level of equality (where hard work is rewarded, the wealthy are incentivized, and the poor and middle class have opportunity, good living arrangements, and avoid oppressive systems), and sustainability in a changing world climate system are separate, but related, issues

This is my best basic overview at this hour. Hopefully it will help.

Robert, you bring up some interesting points about debt that we don't discuss too often on TOD. We tend to focus on GDP and growth but what we don't often discuss is how much of the current demand is a result of pulling future demand forward. The US as well as other developed countries and some of the developing countries have been consuming more energy than their economies could actually afford. This isn't going to go on forever as the debts actually represent claims on future income and will result in a loss of purchasing power by consumers. An example of this is an under funded pension plan that allowed workers to consume more in the present as their wages were higher and via pension promises they did not feel a need to save on their own. When the 50% haircut comes along, the ability to consume is drastically reduced.

So far, in the US, just the loss of the ability to create more debt has resulted in a decline of 2MMBd. Once the debts are actually dealt with through default and inflation, I would expect even more demand destruction. This process will occur around the world as China and other developing countries see a decline in their exports. On the commodity producer side, those countries that run large trade surpluses will see some of their wealth destroyed. How long they will want to continue to produce beyond their import needs is a question. The arab spring has the potential to shift the production side of the equation not only in the middle east but also in developed countries like Australia and Canada if the citizens decide the spoils aren't being distributed equitably.

debt can create an illusion of economic growth in societies undergoing economic contraction

No, they can't. Economic production is a real, tangible thing, and can be measured. It's either there or it's not. If car companies are producing x number of cars, that production is real, and isn't borrowed from anybody. If production rises, it's using real resources which exist right now - you can't borrow energy from the future.

Economic growth includes consumption which can be financed with debt. Production is just one part of GDP. In the US, we have had years of growth while manufacturing has stagnated.

To run with your car company analogy, how is it that the economy, as measured by GDP, has grown while vehicle sales are down about 5M a year? Could it be that debt allowed a lot of vehicle sales to be moved forward in time? Yes, those cars were produced but they weren't payed for with savings from other economic activity.

Economic growth includes consumption which can be financed with debt.

It doesn't matter how things are financed - we could have a command and control economy, with no debt at all.

For a biophysical analysis, all that matters is: do we have the resources needed: food, buildings, energy, metal, etc?

Production is just one part of GDP

"Gross Domestic Product" is all production. Production includes both goods and services.

how is it that the economy, as measured by GDP, has grown while vehicle sales are down about 5M a year?

Mostly, services grew. Other manufacturing also rebounded a decent amount from the bottom of the recession.

Could it be that debt allowed a lot of vehicle sales to be moved forward in time?

Not really. As you note, car sales are down. If they're down, they're down.

GDP = private consumption + gross investment + government spending + (exports − imports)

If consumption/spending is spurred by debt, then that's included in GDP. If GDP measures 'growth' year on year and a percentage of that 'growth' comes from debt, then debt is included in that figure. But if debt is spent on activities that don't result in future growth (growth able to pay down debt). Then the growth isn't real, it's an illusion.

GDP = private consumption + gross investment + government spending + (exports − imports)

private consumption + government spending = total consumption.
consumption + investment + net exports = production.

If consumption/spending is spurred by debt, then that's included in GDP.

Consumption/spending can be spurred by a lot of things.

If GDP measures 'growth' year on year and a percentage of that 'growth' comes from debt, then debt is included in that figure.

No, it's not. Debt is just an intangible that society uses for bookkeeping. It's not part of "production".

Personally, I think we should raise taxes and government spending, rather than trying to fool consumers by borrowing their money.

I agree - government borrowing fools people into thinking that consumption is investment.

If Debt were an intangible that meant nothing, the financial meltdown and loss of liquidity wouldn't have resulted in the great recession. The entire world financial system is built to generate and distribute debt (which is why the lending rates of central banks are so important). As designed, the current system can't function without it. Without debt, GDP would pretty rapidly move toward zero.

Debt demands future economic growth to sustain it. Which is why what the debt is spent on is so important.

GDP is the means of book-keeping. That it includes debt is intrinsic to its equation.

And I do agree with you on taxes and gov't spending. We just need to invest (both debt and capital) in the right things.

If Debt were an intangible that meant nothing

I didn't say debt meant nothing, I said it was not important to a biophysical analysis, and that's it's not part of "production"/GDP.

Debt demands future economic growth to sustain it.

I've seen this said, and never been able to find it's intellectual roots. Where does this idea come from? Why can't interest rates just be very, very low, and borrowers simply pay those rates to carry debt perpetually?

We just need to invest (both debt and capital) in the right things.

Yes, indeed...

So it's a context issue -- econ vs biophysics? Well then, fair enough.

In a high debt society you need aggregate growth to pay down aggregate debt. Where growth equals lower unemployment and higher wages year on year and debt equals money owed plus interest. If there is negative or no growth fewer of these debts will be paid off. There will be more defaults. These will ripple through the system causing more unemployment and lower wages, further reducing growth.

If you have interest approaching zero, then you have less need for growth to pay down debt. And I think this is more desirable in a situation of resource scarcity. Unfortunately, this isn't really what we have now. We have low interest to banks, high interest rates to consumers. So the consumer is getting crushed while the banks and Wall Street do OK.

Now, on the unrelated issue of Bakken production... I seem to have been singled out along with Piccolo on an opinion we stated in discussion here four years ago. First, I am not an oil geologist. My area is emerging threat analysis. So I'm a generalist, not a specialist. Piccolo was a geologist and, at the time, made a very compelling argument (to me), that Bakken production probably wouldn't hit more than 250K in five years. I tended to agree since, at that time, it looked like oil prices and the economy were in terminal decline. I didn't think it likely that prices would recover so quickly to $100+ per barrel, which created the environment for the Bakken/fracking boom. Nor did I imagine the degree of speculative rabidity that the Bakken and tight oil would inspire.

There has been, what seems to me, a number of flippant remarks on this issue. But I think the companies involved and society as a whole take a serious financial risk when it comes to fracked oil. There's a lot of capital that goes into it. And the well depletion rates are very high. This creates a situation where the capital flows seriously risk creating an asset bubble that is unsustainable if/when prices fall. I don't necessarily believe it is fair to blame either me or Piccolo for not foreseeing pre-mortgage crisis style speculation in the oil shale patch come 2011-2012 and coupled with the longest period of high oil prices in world history. The emergence of such a situation makes me much more concerned, not less so.

In general, I think that oil has become a very dangerous resource (along with the rest of the fossil fuels). Its net energy keeps going down as it depletes. It creates serious climate externalities. And countries that rely on oil for their primary revenue source are geopolitically unstable.

I can see that you also advocate for alternative energy sources. And this is refreshing to me. Because I think that's where the best potential for a positive energy future rests. And I'd sure hate to see the Germans and the Chinese beat us to it. That's not to say that alt energy is the only solution. I think we'll need real population restraint, less meat consumption, and, as you've alluded to, less debt sloshing around in our economic systems (lower interest and less leveraging).

One last word and I'll finish. Though I'm not entirely a doomer, I think it's important to listen to what they have to say. We've reached a number of limits and will have to do serious work not to get into a collapse situation. In this respect, they are completely correct, IMHO. The peak oil analysts have focused on one limit. But the oil drum is full of people who are concerned about and do serious research on many approaching limits. A single report from an oil executive who framed his data in such a way as to create an illusion of abundance and to sideline very serious depletion issues should not be taken as excuse to invalidate the forum or the research conducted here. In the details, we will make errors and, as the research continues, those errors will be refined and corrected. This is how quality research is conducted. The fact that Piccolo and I made a bad weather forecast for the Bakken, as an example, doesn't make the hurricane in the gulf any less real. ;)

Best regards and good luck.

In a high debt society you need aggregate growth to pay down aggregate debt.

It's certainly desirable. Is it essential? Probably not. The UK and Japan are good examples here: they'be both had very high debt levels for quite a long time.

If there is negative or no growth...There will be more defaults. These will ripple through the system causing more unemployment and lower wages, further reducing growth.

In a dynamic economy, the defaulters are replaced by others. Zero growth would be an average: some would fail, some would grow.

We have low interest to banks, high interest rates to consumers. So the consumer is getting crushed while the banks and Wall Street do OK.

In the long run, in a stagnant, zero growth economy the finance sector would shrink.

I seem to have been singled out along with Piccolo

I was only thinking about Piccolo.

at that time, it looked like oil prices and the economy were in terminal decline

That, I think, suggests that your general outlook was too pessimistic. In 2008 I was predicting that prices would stabilize between $100 and $125. I thought I had screwed up when prices crashed, but that proved to be temporary.

This creates a situation where the capital flows seriously risk creating an asset bubble that is unsustainable if/when prices fall.

No question. This is the age-old dynamic of the oil patch: Boom and Bust.

OTOH, I don't anticipate oil prices falling much more. If nothing else, KSA has the ability to prevent that, if they can get the timing right.

oil has become a very dangerous resource (along with the rest of the fossil fuels). Its net energy keeps going down as it depletes. It creates serious climate externalities. And countries that rely on oil for their primary revenue source are geopolitically unstable.

I couldn't agree more.

We've reached a number of limits and will have to do serious work not to get into a collapse situation. In this respect, they are completely correct, IMHO.

I think that's too pessimistic. I really think we're only looking at one really serious threat, and that's climate change. That's serious because of the very large delays in the feedback loop, which makes it very, very hard for human society to plan properly and cope in time.

The rest may be painful, but in the larger context can be coped with in a variety of ways.

There is a difference between internal debts and external debts. If a country's debt is mostly internal than the defaults will wipe out a bunch of wealth and living standards will fall but life will go on. If a country has large external debts from running trade deficits than a default can also mean the loss of the ability to import goods.

There is a difference between internal debts and external debts.

Very true.

If a country's debt is mostly internal than the defaults will wipe out a bunch of wealth and living standards will fall but life will go on.

The only necessary loss here is paper wealth. If bankruptcy procedures are deftly handled real living standards won't be affected.

If a country has large external debts from running trade deficits than a default can also mean the loss of the ability to import goods.

You would think. Surprisingly, Greece has defaulted on it's sovereign debts every 25 years for the last 200 years....investors forget very quckly.....

Could you explain the deftly handled part of bankruptcy? Lets say a retirement fund has invested in a REIT which instead of returning 6% a year, goes bankrupt and hands the retirement fund a 50% loss after liquidation. Normally this would result in a reduction of payments made to the retirees. How can this be handled to avoid the loss?

Let's take a different example: GM. It could have been liquidated. Instead, it was reorganized, and today is much more profitable due to the bankruptcy, and the reduction in liabilities.

An REIT raises larger issues of the handling of mortgage foreclosures. Lenders can restructure loans and recognize their losses without throwing people out of their homes and depressing the resale market, or....

Now, a retirement fund can be a defined benefit program, in which they simply have to find money elsewhere to make up the losses, or the retirees can take the hit. It's possible that the pension fund's promises were always unrealistic: how can they get 8.5% on investments (a standard pension benchmark) when the economy is growing at 3%?? Debt and financial capital is a way of keeping track of who gets what: who will get more or less: retirees? current employees?

A lot depends on the underlying reality: was productive capital wasted on unneeded home building? If so, then recognizing those losses means recognizing a real, physical loss. Also, re-purposing the tradesman who were building homes will mean a lot of unemployment and pain. Of course, both of these real losses can be minimized with proper management: the unneeded homes can be quickly demolished or lived in by partly subsidized renters; the tradesmen can be repurposed to, say, building wind turbines and solar installations and installing insulation...

Robert – That’s why I try to avoid the debates such as how much oil will the Bakken produce by some future date. Been a while since I made the point that any such prediction isn’t worth discussing if it doesn’t at least include a parallel price of oil prediction. For instance in the late 90’s the oil patch new about the oil in the Bakken and knew how to drill/frac hz wells. So why no big drilling boom back then? Maybe $20 oil, ya think. LOL. Anyone predicting the current production rate of the Bakken today would have been rightfully labeled an idiot…if they used a future price $20/bbl. But if they had used a sustained price of $150/bbl then the limit would have been capex and rig availability but a high rate prediction would have had some validity.

Ignoring the pricing metric in such predictions pushes those rate and URR predictions into the “technically recoverable” category IMHO. Heck, we could have been producing 3 mmbopd from the Bakken by now if economics and infrastructure weren’t a problem. And that’s fact, buddy. Just like the fact that frogs wouldn’t bump their butts if they had wings…another undeniable fact. LOL. IMHO if someone doesn’t at least include a future oil price platform then it’s pointless to discuss their prediction. Even with a price forecast other factors still come into play. But, as you imply, nothing overrides pricing.

Yes sir. It's these facts, and the increasingly narrow tight-rope separating demand and demand destruction that has become of keen interest to me.

It's interesting to speculate on end production and to hear or make goal post predictions. But it's really nothing more than an exercise in throwing out markers based on your best notions and information RE market conditions, etc. And I don't take these estimates too seriously. Nor do I think they reflect on the intellectual capacity of the individual making the predictions. Anyone who dares to use the crystal ball and attempt to make an exact estimate of any future is bound to come up wrong. Yet, IMHO, it's still helpful to make forecasts. Any forecast is more accurate than none at all. And the discussion is at least as useful and informative as the forecast itself.

Perhaps there is a way to formalize the process more, to create model predictions. But I think we'd need better info, and a non-special interest attached group to create the models. USGS and the EIA could do it, if they had the right mix of experts, info access, and funding. But the economists will need to start listening to at least some of what the peak oilers are saying.

One last point, and this is entirely unrelated to your OP. But it's just something that's been bothering me lately. I think there's a view that Peak Oil theory and the issue of climate change are exclusive. By this, I'm observing people saying things like 'peak oil will come on so rapidly as to make climate change moot' or 'peak oil isn't real, climate change will fry us because the oil production will go on and on.'

I think these views are too simplistic. I view the crises as related. Yes, more oil means a more dire climate situation. And, true, a nearer peak MIGHT result in less carbon emissions. But that's not necessarily the case. Peak oil could result in a boom in coal and ocean-based methane hydrates, causing a climate nightmare just as readily as booming tar sands, oil shale, or tight oil production. If a peak in the conventional supply of one resource causes flight to an equally harmful or more harmful resource, then the situation has grown worse, not better.

I think it is better to look at Peak Oil as Depletion. Depletion means the resources become more expensive, more difficult to extract, and generally less viable economically. Depletion has a ratcheting effect, just like climate change. It means conditions gradually grow worse. Eventually, a ratcheting will hit a tipping point where things tend to break down, and that's when you have a catastrophic crisis. The fact that we are dealing with two crises, depletion, and climate change -- both linked to fossil fuels -- should be a unifying notion. The two problems are linked. They feed on one another. And they both spring from the same resource base. We should look at them as manifestations of the same problem -- fossil fuel dependency. And there is no way to deal with either problem unless we look at the root cause.

"Perhaps there is a way to formalize the process more, to create model predictions. But I think we'd need better info, and a non-special interest attached group to create the models. USGS and the EIA could do it, if they had the right mix of experts, info access, and funding. "

Good point.

Joseph/Robert - Let me butt in just to keep the concepts straight. "But the question is how much of today's production could be profitably lifted at $20?"

I'm going to take your terminology (lifted) for exactly what it means: the production cost to produce an existing well. I can only offer a generalization but the vast majority of production today can be lifted for less than $20/bbl IMHO. I can make an even stronger statement if I focus only on my area of ops...the Gulf Coast. I can point out thousands of oil wells that are being profitably produced at several bopd with 98%+ of the production stream being salt water. I'm about to offer one company a potential partnership to try my horizontal well bore concept to recover some of the 20 million bbls of residual oil reserves in their field. They are doing a total of 80 bopd and 7,000 bbls of salt water/day from 16 wells. So why don't I just buy their meager little production instead? Because it would likely cost me more than $5 million...maybe a good bit more. This field kept producing profitably when oil fell below $20/bbl back in the late 90's so imagine how profitable it was when that oil was selling for $110/bbl.

Just my WAG but I would say they are spending less than $5/bbl lifting costs. Remember they might be producing 2,400 bo/month but they are also pumping out over 200,000 bbls of salt, separating the oil from the water and then pumping the water back into the earth. Takes a good bit of energy but at the end of the day still very profitable at both $20 and $110 per bbl.

I recently pointed out that we have to be careful with our terminology. When some folks say it costs $X to produce oil from some play they often mean the cost to lease the acreage and drill/frac a well and put it on production. We call that "finding cost": the toal capex spent to dril the wells /the net URR. In the oil patch the cost to produce a well is the operating expense. That's the total amount spent every month to produce a well. It has nothing to do with what it cost to drill the well initially. From there the lifting cost is simple: LOE/net bbls of oil produced. Notice I said "net bbls of oil produced". My well might produce 100 bo but I have to give 25 bbl to the mineral owner as the royalty payment. And in Texas another 5 bbls is given to the state and county as a production tax (in La. it would be closer to 14 bbls). So my net production in Texas would be 100 bbls but closer to 70 bbls. Thus LOE has to be justified by significantly less revenue than the gross production volumes would indicate. and remember I still have to pay income tax on that net income.

Of course the LOE varies widely between fields, trends and counties. Consider Deep Water GOM: no operator would produce wells out there at such low rates as found in most onshore fields. The very high LOE offshore just won't justify it. More difficult to speculate on lifting costs overseas so I won't try. But I gather the subject was more focused on the US and the shale plays in particular. In general producing from a fractured shale reservoir with little or no water production would have a lower LOE than the example of the field I gave above. I don't have any actual costs for pumping a pressure depleting shale well but I can offer an even more extreme case: a reservoir no pressure where the heavy oil dripped into the well bore at less than 1 bbl/day. And yet this small operator was making a huge profit when oil prices peaked. But more importantly, they were profitable (but barely) when oil was selling for $7/bbl. A low price because it was nasty sulfur rich. Of course a company like Chesapeake couldn't profitable operator such wells even with high prices: their overhead and manpower demands wouldn't allow it. The small US independents make their profit with sweat equity.

Now to put some more flesh on the bones of "profitability". Two wells in different reservoirs each cost $X million to drill and complete. And both the A and B wells have the same LOE. And both will produce the same URR of Y bbls of oil. And both receive the same price for the oil. Yet one is very profitable with a great rate of return and the other is mediocre. In fact I can show you real examples of Well B producing twice as much URR as Well A but still has a much lower ROR.

The difference is the decline curve. Well A is more like a fracture shale well: high initial rate followed by a high decline rate. Well B has an initial rate that only 10% of Well A but has a very gradual decline rate. Well A produces commercially for only 7 years while Well B does so for over 50 years. BTW the high water cut fields producing only a few bopd from existing wells are examples of Well B: most of these wells have been producing for over 60 years and although their flow is way down they are still producing profitably.

Net Present value (NPV) is the metric used to calculate the rate of return on all oil patch investments. It adjusts the value of a field's recover in a time domain. Simple put getting $100 of revenue from a $20 investment might sound great but not if it took 60 years to recover that $100. At least not as good as getting it back in 7 years. And this is the driving metric behind the shale plays. The high initial flow rate allows a very quick recovery of the initial investment. But that great revenue stream can drop 80% or more in just 12 months. Thus a shale well will calculate a much higher ROR than a conventional well which may recover 3X as much oil but over a much longer period.

Which isn't a bad thing: make a nice ROR in just a few years, plug the well and head on down the road to your next investment. The complication arises when you consider who is doing most of the shale drilling: public companies. And their prime motivation isn't the's increasing their y-o-y proven reserve base. The primary goal of the management of a public company is to increase share price. And the key metric that Wall Street uses to value a public oil is that y-o-y increase in reserve base.

So there's the trap: drill shale wells and get a big boost in cash flow and proven reserves. The bad news: due to the high decline rate those metrics decrease quickly and thus have to be replaced by more drilling. And those new wells create the same demand: quick replacement. And thus the problem some shale players seem to be facing at the moment: insufficient capex to keep this treadmill running. Chesapeake may be the poster child for this situation. The company itself admits it's more than $15 billion short of its capex needs and this is even after selling more than $12 billion in assets including some interests in its "highly prized" shale plays. And now with some decline in oil prices the revenue stream of all the players will drop some. Only time will tell what the net effect of all these factors has on the shale plays.

Robert / Rockman,

Thank you for your detailed and well-thought-out replies. It never ceases to amaze me how the people on TOD are so generous with their time.
Rockman, I was perhaps being a bit flippant when I used the term lifted but I'm thrilled you ran with it. Your response illuminated an aspect of the industry I'd not understood after nearly 7 years on TOD.

Joseph – Sorry…didn’t catch the “flippant” attitude. LOL. I was actually impressed with you use of lifting cost. That’s actually a very specific metric we use in the oil patch. If I credited you with being more knowledgeable the you really are I sincerely apologize. LOL. An oil well will either flow on its own are we have to use “artificial lift” to get it out of the ground. AL is a whole world of engineering/science unto itself. A variety of pumping or lifting systems are available. So when we say our lifting cost for Well A is $5/bbl it means something specific. But even then not always clearly. Are we spending $5/bbl for electricity/fuel? Are we including an amortazation of the capex spent for the AL system? Are we including future repairs/replacement/maintenance in that number? The answers vary from company to company.

I was perhaps being a bit flippant when I used the term lifted but I'm thrilled you ran with it.

Joseph, you accidentally asked a question that oilmen spend a lot of time thinking about and use thousands of hours of computer time trying to figure out the answer to. I thought it was pretty deep at the time. Rockman's explanation was pretty darn good.

Rockman / Rocky

I'm kind of blown away by the scale of the lifting cost. I'd assumed it was going to be a decent chunk (Like ~50%) of the price shown on the right side of the page in the options quotes, but it sounds like the range is significantly lower than that, at least in some areas.

I'll take this as good news, in that should prices collapse due to outside factors, there is still some portion of production that will not be financially underwater.

I suppose I was thinking of the chart I'd seen of production costs for over half the world was at least $50 to produce. I now realize that chart was really representing the daily cost of ongoing business, not production 'lifting' cost as I'd imagined.

The nexus for my thinking was that this spring Newt Gingrich was promising something like $2 gas, - a price that could only be sustained by the lowest cost half of the world's production. If the lifting part of the costs are that low, then $2 might be not be unthinkable, at least for a time but it would be a financial disaster for the industry.

I like to think 100 years out. That's not all that long - my grandpa made his late '90s. He was a boy when the Wright brothers flew, and watched 12 men walk on the moon. You don't need to be Hari Seldon to figure out that Fossil Fuels will not be a significant source of energy in 2112 - It's going to be renewables, since that's what we'll have left. Like Hari Seldon, I'm not too worried about that happens then, it's how we'll get there that keeps me up at night.

Anyway, thanks again for the education. The more I learn, the more there is to learn.

Joseph - "I now realize that chart was really representing the daily cost of ongoing business". And that can be difficult to interpret. I've notice that many use "production cost" to mean development cost = how much the completed well cost/URR. But that can still be misleading. I may have spent $X millions to develop my proven reserves of Y millions of bo. But what about the $Z millions I spent drilling dry holes? Shouldn't I add that to the $X millions to give a clearer picture of the economic dynamics? But many companies, especially pubcos, won't do that. All about the spin when you're trying to talk folks into bidding the price of your stock up.

Not only is it relatively cheap to keep most of the EXISITING oil wells producing but I've seen operators accept negative cash flow for a while. Yep: spend $20,000 this month to sell $18,000 worth of oil. Several reasons for doing so. First, if I decide to plug the well it could cost me tens of thousands of $'s to do so. And if that well is the only one producing on that lease my rights to that lease will typically expire within 30 days of when I stop producing. That operator may wait hoping for better prices soon. Or maybe there's other potential he wants to drill on that lease but needs time to raise the money. Or maybe he's hoping another operator will sublease his land (we call that a farm out) and drill a new well.

So even if an operator is netting only $5/month to produce 200 bo every month he'll keep producing that 2,400 bo per year ($200,000+ of oil) even though he'll only make $60 for the year. At the very least better to make $60 than spend $15,000 to P&A the well. And who knows what might happen in a few years: maybe someone might want to farm in his lease to drill that crappy Eagle Ford Shale. Yes: thanks to the EFS boom there have been many $millions made by operators who held onto crappy little wells.

Thanks for the in the trenches assessment, and for keeping us on track, Rock.

Suppose we shouldn't be too surprised, then, by all these papers puffing new oil potential from fracking? If it's an industry that requires such constant infusions of capital then it begs the question of long-term viability. Perhaps that's why they keep having to proove themselves to investors? This ENI Paper looks like just one more in a long list.

Given the capital requirements and the high depletion rate, how much more difficult would the booms and busts be to manage? And if wells are capped much sooner than a conventional well, wouldn't that make the larger resource vulnerable to much more rapid peaking? I suppose we'll know more when Bakken and Eagle Ford top out and we get a better assessment of how many active rigs are needed to maintain production over time.

In general, though, wasn't talking about 'lifting costs,' just overall system costs and impacts. Was trying to avoid that level of granularity. Your area, not mine. But I am really glad to see you jumped in to help Joseph and I. As ever, always an enlightening experience to read your posts. And, yeah, Rock is extremely generous with both his time and information.

As for TOD estimates, I did see a few in the 500k range back as early as 2007.

I think that's incorrect.

There was one analysis, several years ago, which forecast a peak of about 200k mbd. The author has since agreed that his forecast was wrong, and ruminated on the difficulty of forecasting...

Good bye. This will be my last post on the TOD. (Except replies to comments).

I have been reading TOD for many years and have enjoyed and learned a huge amount from the many well-written, well-researched, well-reasoned (and sometimes almost brilliant :-)) posts from the likes of Euan, Nate, Gail, Stuart and many others. I was inspired by their posts and went on to take a masters degree in energy.

However, there have been many wild predictons made on the TOD (such as of an imminent collaps in oil production. When the price of oil went above USD 100/bbl there were many contributors predicting that "oil can never fall below USD 100/bbl again". Nearly all predictions made have been proved wrong. (Russian oil production was predicted to collaps in 2008. Ghawar has been empty so many times I've forgotten.)

But the final reason I am leaving TOD is the total domination of the forums by bullies who simply attack viciously any post opposing their views with the argument: "If you can't come up with a very complicated numerical model then shut the f*** up". Well. As any scientist or engineer knows, a model is only as good as the data you put into it. And unless you can predict the future... If this mode of attack doesn't work they simply call the poster a "Cornucopian" (the worst insult on TOD) and ARGUMENT OVER!

The world certainly faces enormous challenges with regard to providing energy for a growing population and for the people in the developing world to achieve improved living standards. But TOD is no longer the place for a fruitful discussion on possibilities. (Instead increasingly dominated by grumpy old men predicting the end of the world as we know it.)

Don't be suprised if game changers, be it shale-oil, shale-gas, cheap solar power or other come along. Don't be suprised if oil production keeps rising for many years to come. Don't be suprised if there is more energy available per capita population in the future. Hell. The future may even be rosy. :-) (Whoops Cornucopian again).

I am sure I am not the only reader leaving TOD for the same reasons.

ps. I know abundanceconcept can stand up for himself.

Over-reacting a little? This is a roosting place for peak oilers. So what else would you expect? I wouldn't be too suprised if many here disagreed with optimistic estimates. Although, I agree that it's generally not good form to use name calling. I also tend to think that looking for solutions is a positive. Something that should be generally encouraged. (although I would advocate for a set far different from the notion of more drilling)


Leaving because of the 'boy who cried wolf syndrome'. Many cornucopians have threatened such, but forget one important part of the story....

The wolf came and got the sheep.

Gotta remember - that's a fictional allegory, not historical fact.

This is a roosting place for peak oilers. So what else would you expect?

Well, that is exactly his point. When there are so many people that are in total agreement then you get a counter-productive 'groupthink' effect as shown by some of the over-pessimistic examples. If there is an over-pessimistic groupthink that is resulting in bad forecasts, it is probably a wise thing to avoid the forum if you want a more objective view of the truth. I kinda have a same feeling that he does but instead of just abandon the forum, I tend to ignore the more over-the-top doomerism and focus on the hard data made available.

Yeah, you gotta get what's useful, and ignore the rest.

Except occasionally, when you can't stand it...

It looks as if Nordic_Mist and de_la_tierra bailed on us after belly-aching that they can't take it.

The point is that we have every right to be suspicious and because of the short lifespan of these posts, one has to make their opinions known quickly.

In this case and based on that Bakken article by Mason that the "cornucopians" seemed to be defending, I ended up finding an egregious or sloppy error in the oil production figure here:

I tried fitting this to a diffusional model and it just wasn't working very good (see the comment above with the embedded chart). The values at early times seem to diverge from my model. I am usually never wrong (ha ha) so I thought I would look through the other data from Mason's paper. So the data in the following figure is the source for the likely correct numbers.

One can see that the first year's production has more detail, and it is different from the figure above. In particular, he has production greater than 250 after the first year, whereas in the detailed plot it is less than 200 at the end of the first year. Mason essentially screwed up in his plot. There is only so much one can do with the info you find and some trust is in order that it doesn't stink.

I am still working on a post detailing the diffusional model of a typical oil well and this will go into more detail on how Mason got sloppy.

"The Oil Drum" is not a single entity; it is a discussion site. Views expressed here are not some sort of official TOD position. It's true that some posters here underestimated the rate of the Bakken ramp-up, but that doesn't mean that "The Oil Drum" was wrong.

Written by abundance.concept:
The Oil Drum has consistently underestimated the Bakken

I just quickly read that article, The Bakken Shale - Has it Moved the Oil Needle?/u>, Nov. 2, 2009; and do not see where Piccolo underestimated the Bakken because he did not estimate future production. He mentioned the USGS estimate in 2008.

In the 2008 article, one of Piccolo's conclusions at the bottom was:

3. Because of the highly variable nature of shale reservoirs, the characteristics of the historical Bakken production, and the fact that per-well rates seem to have peaked, it seems unlikely that total Bakken production will exceed 2x to 3x current rate of 75,000 BOPD.

Which would be 225,000 bpd. Note that ND production is now over 600,000 bpd (see link at bottom of post).

Elsewhere he said:

It would be great if the Bakken could make it to 250,000 BOPD. However,at the rate of increase shown during the last year it would take at least 5 years to get to 250,000 BOPD. In the mean time the average rate per well seems to be dropping. That needs to be reversed if much higher total Bakken rates are to be achieved.

In the quoted figure of 100,000 BOPD, it's difficult to tell if that happens to be more recent data than Oct. 2007, or maybe it includes Canadian production. I do not now how high Canadian Bakken production is. I would say, though, that in my sampling of web sites that have commented on the Bakken, many do not seem to have a lot of technical depth. Either that, or they are believers in the "New Physics" thing.

Keep in mind that Piccolo is a petroleum engineer ... which goes to show how very wrong "experts" can be sometimes.

Right below him, Robert Marston said

For my part I agree that Bakken ever reaching 250,000 bbl/day is very optimistic. I am unaware of any 'new physics' changing reality in today's universe. But I'm still a bit curious about the entire Bakken Basin and how it will all play out.

... which is now looking like a pretty humorous statement.

By the time he wrote the 2009 article, Piccolo had realized his estimate of the year before was obviously too conservative. And yet, one can tell from the tone of his and others' comments that they still did not expect much from it. For example, this from Piccolo:

Admittedly, I was a bit hasty in my prediction of peak rate. However, I will go out on another limb and say that 1 million barrels per day is going to be really tough, especially if the decline rates mentioned by a poster above are wide spread. Let's hope you're right and I'm wrong. If it did reach 1 million barrels per day, it would absolutely be "moving the needle" on national production.

Three years later, North Dakota production (as of April) is at 609,371 barrels/day, and takeaway capacity next year will reach the 1 million barrel/day level, which at this point is looking fairly easy to accomplish, and when that happens, I'm hoping Piccolo comes back and admits that the needle has been moved, and it will be fun watching WHT scurry to re-jigger his calculations.

BTW, even I was a bit conservative on Bakken production as recently as two years ago:

August 18, 2010

It [the Bakken] will easily reach 400K bpd, possibly 500K bpd, and likely more.

Not only did we "possibly" reach 500K bpd, we blew right past it!

"I'm hoping Piccolo comes back and admits that the needle has been moved, and it will be fun watching WHT scurry to re-jigger his calculations."

I am still waiting for the data that you base all your judgements on.

What is very striking is the production profiles of these wells, very unlike anything we have seen. They have a huge initial spike and then rapid decline followed by a flattening out tail.

This is indicative of a highly diffusive flow, and I will demonstrate this behavior in a post shortly.

Beyond this point, abundance.concept doesn't realize that global peak oil is behind us and there is nothing left to prove but to refine the models. This will allow us to follow the declining curve going forward.

Ah, so Piccolo did make a low estimate for the Bakken in April 2008.

I see that a commenter, jackafuss on April 26, 2008, 9:13am, in Piccolo's thread was over-optimistic about production from Thunder Horse:

Billions have been spent on Thunder Horse, in the Gulf of Mexico, without a drop of production but it will start late this year at 250,000 bpd and grow to 1.1 million in a few years.

People can be wrong in either direction.

A word of caution about the Bakken. If the oil companies stop drilling at a hectic rate, the output from the Bakken will stagnate and decline rather quickly due to the quick peak and fast decline of individual wells. Peak production from the Bakken may occur after more than 50% of the URR is extracted.

Infrastructure could limit Bakken Drilling, Denver Post, April 12, 2012:

There are close to 220 drilling rigs in the Williston Basin. "We could easily double the number of rigs, purely based on resources," Williams said.

However, he guessed growth could be capped at 300 rigs in the next few years until infrastructure can catch up.

Having more production data, the USGS's estimate for the Bakken due out in 2013 ought to be more accurate than their prior one.

In 2008, there were very few people, even in industry, looking at Bakken hitting more than 600k. I had cited one article that predicted 1-2 mbpd, though (in the post you linked). Also, in 2008, there weren't too many outside TOD predicting sustained oil prices over 100 dollars per barrel for a year and a half running. To be fair, even the industry hedged on Bakken.

So the optimistic prediction is still 1-2 million barrels per day? 1mbpd by end of this year does seem a bit fast. EIA is predicting 800k from Bakken by 2015, not this year. Looking at increases, you have 535k in December and a current rate of 600k, which shows a decent increase, but not fast enough, at current rates to hit 1 million by end of year.

In all honesty, I don't think there is, even now, a very deep understanding of what's possible and what are the limits of these new areas. The reserves estimates are all over the place. They haven't been nailed down to any satisfaction. Lots of mud and smoke in the data. What is becoming increasingly clear, however, is that the US is sitting on a large reserve of unconventional fuel. The result is that the resource depletion issue looks a bit better even as the climate issue grows dramatically worse.

In addition, the new resource requires, in most cases 70 dollar + oil prices to push profitability for the companies involved and for increases in extraction. These economics don't really look so hot. Am I missing something?

"We underestimated what the region could produce. We also underestimated the market's willingness to sustain higher prices." <--- I don't think this ultimately says much about oil production tech. It just says we are willing to pay more to maintain BAU than we expected.

This is the flip side of efficiency gains. The more efficiently you use fuel, the more it is worth to you -- the more you will pay for it before switching to something else.

Real efficiency means GDP grows to absorb the additional cost. This isn't really happening yet. We'd need a much larger fleet of PHEVs and high efficiency vehicles, ships, and aircraft, that sort of thing. Again, something we'll have to look at in 8 years.

I believe the prediction of 1-2 million bpd was made by me. I was involved in the discussions back then and said 1-2 million bpd back then and this site and my own. So will various oildrum defenders come back to this post I'm 6 years and say that oildrum got it right because I put in the 2 million bpd paper by Mason and had web hubble and the main article say it was wrong ? I note that you ate saying 1-2 million bpd above now.

Ok. Your blog post, about 4 years ago, predicted 1-2 mbpd in 4-6 years. For my part, I was curious about the prediction and wanted to see if others here believed it was possible. In general, I agreed with the assessment that 250k was probably more likely. But, given the murky nature of the data, I wasn't entirely satisfied with that assessment either.

So, today, here we are sitting, right now, at about 4 years and 600,000 barrels per day. This isn't 250k and it's not one million either. So for the 4-5 year time-frame, piccolo and I were low and it looks like you were a bit high. Now, all that said, given a current 20k per day monthly increase, it looks like you might hit 1 million bpd by 2014 if these trends hold. And that would validate the low end of your prediction range.

I, for one, would not be so crass as to say 'you were wrong' in such an event. I would say you barely hit the low end of your projection. In this case, Piccolo and I erred a little much on the pessimistic side, which is obvious since production is 600k now. But, if production figures don't hit 1 million by that time, your prediction will have come up a little long. Nothing to get bent out of shape about. Until the data comes in, it's all theory anyway. And data beats theory every time.

I'm not entirely confident, however, hanging a prediction on 1-2 million. If there's one thing I've learned in all these years on TOD, is that things can change on a dime. If Bakken boomed last year, it might struggle the next. I will, however, say that if extraction efforts keep ramping up, it does look possible that the 1 million mark could be reached. I think there are challenges to hitting this level, but it's possible. The 2 million number is, in my view, extremely optimistic. For 2015, I would tend to lean toward the EIA numbers, noting that EIA numbers tend to lag behind any trend.

The key issue is that these wells have a huge spurt initially and they peter out very quickly.

Notice how Mason can't even bring himself to plot the data at time near zero. He doesn't plot it because it is off the scale high and it doesn't bring a lot of confidence to the person reading the graphs.

So what is happening is that we see this substantial production increase simply as a result of gold-rush dynamics and the acceleration of the number of new wells.

Wait until these new starts stop accelerating. All the declines will start to take into effect. That's what I reported previously -- what I will write up next is a model of this spurt/peter-out dynamics.

That's a good point. But I think it's also a question of how many rigs/wells they're willing and able to drill. If they manage to accumulate massive capital, they can punch a million holes in the thing and push production pretty high. It depends on oil in place, extraction rates, infrastructure and price.

The reason it's hard to predict is you have the USGS saying there's 3 bbl of extractable oil, but you have companies claiming anything from 12 to 45 bbl or more. Of course, what can be extracted depends on price as well, because they'll apply whatever tech they can to get the oil at higher prices. And, added to that, over time you get some added tricks of the trade that make things less costly fighting with the fact that the low hanging fruit gets picked first.

This is the reason I'm looking at what prices the economy can bear. Consistent $110-150 dollar oil might blow this thing wide open. And we had the low range of that for large chunks of last year. So it's no wonder to me that Bakken production leaped so much at that time.

In essence, it's closer to a mining operation. And though the individual wells deplete really fast, they can invest in infrastructure to push the production (given capital) as hard as they want. The harder the push, the higher the rates and the faster the depletion. But if you're talking about high estimates, it's a huge resource. Even at 3 bbl, you're talking 800 kbpd for 4-6 years of feverish extraction. At 30 bbl, you could imagine a scenario with thousands and thousands of wells and hundreds and hundreds of rigs. At that point, the question becomes how much investment do you want to sink into a system that buys you another 15 years of BAU and dumps a boatload of greenhouse gases into the air?

My concern is that this may be possible if prices stay high and political will for curbing ghg emissions remains slack. Of course, this is the bet the IOCs are making right now.

This is not to say that I disagree with you RE depletion rates. Mason could very well be overly optimistic. But, from what I've seen, these guys are bound and determined to get whatever investment it takes to punch as many holes in the ground as possible. Even now, there are more rigs operating in the US than in the entire rest of the world put together. It's drill, baby, drill on crack or frack or whatever you want to call it. Even worse, and as ugly as it may sound, if the world economy can limp along for an extended period at $100 + oil, you then start to get into the oil shales (and if you want to talk about a water crisis...). And given the rig Armageddon we're looking at now, I'm not too optimistic there will be much restraint with those resources either.

These unconventionals + biofuels + remaining conventionals + enhanced extraction might be enough to continue to eek out small to moderate gains in production flows for a while. But the massive volumes of oil required to push the peak back even 5 years means an epic struggle and, potentially, the formation of the biggest capital bubble ever seen in modern history. Eventually, the high costs, the malinvestment, the externalities, and the capital sinks take hold, and the longer it gets pushed out without renewable replacements, the worse the situation at end.

If oil prices go down for a prolonged period, that's when you'll probably see the new starts wind down. And then you'll get a look at that depletion rate.

Very volatile situation. Like balancing on the head of a pin.

I think we have a chance to do some very rigorous modeling, especially with regards to Bakken.

The statistics from these wells I believe are good enough, if we can get the entire database, to be able to extrapolate predictions from.

You think you can get the data? Man, that would be one hell of a coup. Would love to see those models.

OK. Looking back at Piccolo and my earlier conversation, we were doing our best to nail down how rapidly Bakken could ramp up. In 2008, the estimate was 250,000 barrels per day in 5 years, which was low but not so low as those who were poo-pooing the new resource.

In the source statement, I had also cited an estimate for 1-2 million barrels per day within 4-6 years. So 4 years later we stand with Bakken at 600K -- not 250K, but not 1-2 million. In fact, we've pretty much split the difference which is somewhat standard with optimist/pessimist predictions.

In all honesty, I doubt this particular instance invalidates all of TOD discussion. Piccolo and I are just two members of a much larger group that contains a number of very pessimistic (doomer) analysts and others, like you, who tend to take a much more optimistic view.

In the source statement, I had also cited an estimate for 1-2 million barrels per day within 4-6 years. So 4 years later we stand with Bakken at 600K -- not 250K, but not 1-2 million. In fact, we've pretty much split the difference which is somewhat standard with optimist/pessimist predictions.

You seem to be assuming the current 600K bpd is at or near the maximum rate. It isn't. And there's 2 years left in the 4-6 year window.

Do you have the production data for us yet?

Still waiting.

Do you have the production data for us yet?

Still waiting


Yes, politely ask the state of North Dakota to release all their data so we can look at it.

They apparently had it available at one time but no longer.

The ball is in your court.

Yes, politely ask the state of North Dakota to release all their data so we can look at it.

You were the one who first asked for the data, originally complaining about it on your own website. Since it is you who want the data, it is you who should ask the state of North Dakota for it.

Well you are the one that is asserting unlimited abundance, so it is your responsibility to provide the numbers.

We have been through this before with the cornucopians, as they make claims without being able to back them up.

My prediction for global crude oil production has been spot on, and I like to make predictions based on calibrating from early data. Without data, you can't really predict anything can you?

This is what I have done so far in correcting Mason's mess of a figure:

The first panel shows in blue his yearly production and his cumulative. I also plotted a pure diffusion model in red with two parameters, an effective diffusion coefficient and an equivalent scaled swept oil volume. Note that the model is shifted to the left, indicating that the fit may be bad. But not so fast, as Mason did not transcribe his early numbers correctly. The panel on the right is the production data for the first 12 months and I moved those over as black markers on the first panel, which improved the fit. A boo boo by Mason.

The cumulative is the verification as the diffusive model fits very well over the entire range.

What does it all mean? It indicates that the oil collected is all via spatial diffusion, which is well characterized as the solution to the master equation for flow along a gradient.

Diffusion shows some well-known characteristics, chief among them a strong spike initially and then fat-tails as the flow shows the classic random walk diminishing returns.

So now we can understand how these Bakken wells are producing oil. After the initial fracturing, oil close by the collection point will quickly diffuse through the new paths. This does not last long, however, as this oil is then replenished by oil from further away and since it takes longer to diffuse, the flow becomes correspondingly reduced. Eventually, the oil flow is based entirely on diffusing oil from the furthest points in the effective volume influenced by the original fractured zone. This shows the classic law of diminishing returns, characteristic of Fickian diffusion.

If these numbers that Mason has produced are high quality, and that is a big if (considering how he screwed up the most important chart) this may become a de facto physical model describing oil production for fractured wells. I can guarantee that you won't find a better fit than this considering it is only two parameters, essentially describing a rate and a volume. This is likely the actual physical mechanism as diffusional laws are as universal as entropy and the second law.

If you'd been diligent enough to look down-thread, you'd have seen that I lean closer to the EIA predictions at the moment. So 800 kbpd by 2015 would be more realistic, in my view. However, I don't think 1 mbpd is impossible given the fact that Bakken is currently soaking up 8% of all the world's rig capacity. You might have to push 10% (or 300 operative rigs) to make that number, though.

I pointed out in 2009 the article 18 months before in 2007 where Picolo said the Bakken would not they past 150,000 to 225,000 bpd. Then in reply to the linked comment he says it will not get to 1 million bpd. So after missing badly he put what he thinks is high target that in reach next year.

The article from 2009 has the last point that at the time it was too early to know is US could develop other Bakken like oil. Now Eagle Ford has Bakken levels of production. Texas has other oil shale.

Isn't the issue more about the ultimate recovery rather than the rate? In this type of widespread play rate is just a function of the number of drilling rigs. It seems to me the more important issue is how long the wells produce and what the ultimate recovery turns out to be.


You will really be a genius if oil price plummets AND Bakken production rises.

Improving processes and technology (superfracking) seem likely to drive down the costs for Bakken wells. Various improvements to speed up the spudding of wells and using one pad for more pipes. It is not just the Bakken but what happens in Texas. Texas should have more impact. Also, if Occidental Petroleum sells land to more aggressive companies like Continental resources, then California's massive oil shale will get a lot more production. The technology has to be adapted and perfected for the different geology in California.

So I take it you are of the persuasion that carbon dioxide emissions, no matter how huge, are unimportant. Am I incorrect?

No, I think carbon dioxide does matter but not as much as other pollutants.

Btw - I write nextbigfuture. 11,000 articles with my opinion on most everything.
116 articles on air pollution, including a bunch of death per twh articles.

CO2 measures will take 30 years to start having an effect on temperature.
Addressing soot and methane has an impact in 5-10 years and a big one by 15-20 years.
Soot makes ice darker and increases the absorption of heat.

Ah, genius or self-promotional sock puppetry? I wonder...

The guy asked me about the topic, I answered with links to what is a more complete answer based on what I have already written and believe.

Almost no one is reading the comments on this old thread now. I think maybe a few dozen people. I have over a million page views per month including RSS readers. over 12000 subscribers.

Theoildrum has 24000 subscribers.

On straight up web pageviews (not RSS), I am at 80% of theOildrum.
Last month 632,000
Last month 524,000

The only useful promotion for me here would be to write weekly or monthly regular columns here. I am just engaging to help improve the quality of discussion on the internet in general.

Thanks to nano for the Mason link.
Data is data and it is valuable either way. Thie Bakken data set helped understand production flows, and we could debug the incorrect chart while we are at it.

Fair enough, then. Thanks for the references. It just looked a little odd having two 'nanos' talking to each other. Odd coincide.

1. China Broad Group making “Can be built” factory mass produced high rises and skyscrapers. Deployment of 5 times improved energy efficiency by 2020 with many partners (30% of new construction) would save 400 million tons of CO2 per year

They plan to make the world's tallest building by Jan 2013. It will be assembled in about 90 days on site from factory mass produced sections. They have 7 partners for factories in China. The first factory makes 100 million square feet of building. 80 factories will match the 30% of annual world construction in 2020. They have franchisees in India too.

2. Black Carbon free cookers for 700 million households would save 18% of black carbon soot. Equal to about 10% (3 billion tons) of today’s CO2 in warming effect. Current target is 100 million households by 2020 for the equivalent of about 400 million tons of CO2 per year in warming reduction.

They use 5 times less cement as are rated against a 9.0 earthquake and reduce construction dust which is 40% of particulates in China.

3. Diesel particulate filters for cars and trucks and other diesel engines can reduce the 14% of black carbon from transportation. Majority of vehicles are existing older cars and trucks already on the road and would need retrofits

4. Massive amounts of electrification of vehicles could reduce carbon dioxide and other emissions. There are 150 million electric bikes and scooters (mostly in China). This could increase to 500 million electric bikes and scooters by 2020. This will reduce the usage of 2 billion regular cars and vehicles. There will at best by 20 million electric or hybrid cars without massive change.

5. A variety of DOE and other approaches to retrofitting existing buildings for efficiency could increase energy efficiency by about 20%. Perhaps 1 billion tons of CO2 per year worldwide by 2020.

6. Reducing carbon dioxide emissions from concrete. 5% of world total. There is green cement which can absorb carbon dioxide. Green cement is unlikely to be deployed on a wide scale by 2020 because of the need for long term studies to prove develop and prove the safety of the new materials. Also, the new material have to be scaled up.

7. Scaling up of regular nuclear power and hydro power. The world will add about 1000 TWh of hydropower and about 1200 TWh of nuclear power.

Maximizing uprates of existing reactors can be rolled out during refueling of reactors. Extended uprates can boost power by 20%.

8. Nuclear fission technology advances -
* Annular fuel (MIT invented, being commercialized in South Korea (can boost existing and future reactors by 20-50%) impact in the 2019-2025 timeframe.
* factory mass produced pebble bed reactors (China under 210 MWe being built, first I 2013-2014)
* factory mass produced breeder reactors Russia, first in 2018-2020
* Hyperion Power Generation 25 MWe reactors, first in 2014-2018. Could be used to convert container ships to nuclear power. China COSCO shipping company was interested in nuclear shipping. Nuclear shipping would reduce pollution from the worst grade of oil – bunker fuel. 5000 ships would be like electrifying 100 million cars.
Should be big impact from 2018-2030

9. Johannes Lehmann of Cornell University estimates that by switching to slash-and-char from slash-and-burn agriculture, which turns biomass into ash using open fires that release black carbon and GHGs, 12% of anthropogenic carbon emissions caused by land use change could be reduced annually, which is approximately 660 million tons of CO2-eq. per year, or 2% of all annual global CO2-eq emissions.

10. Biochar.

I'm puzzled by Figure 1 because it is one of the most flagrant examples that I've seen in a while of what Edward Tufte long ago dubbed chartjunk. The numbers on the middle and last of the expanding series of giant oil drops are 93 and 110.6, projecting a 19% increase. Maybe that could happen, maybe not, but that's so much the least of it that it scarcely matters. What we really see in that one little chart are no less than five (count 'em) chartjunk scams:

· Scam #1: the height ratio in pixels represents roughly a 30% increase, not 19%.

· Scam #2: this appearance of increase is reinforced slightly by placing the bottom of each drop above the baseline instead of on it. On a bar chart, the bars normally start on the baseline.

· Scam #3: the drops get wider as well as taller, introducing an additional apparent 30% increase since the eye tends to see the area.

· Scam #4: the drops are shaded and cartooned to look three-dimensional and visually suggest yet another 30% increase.

· Scam #5: the visual increase is additionally reinforced into a fourth dimension by making the leftmost drop notably lighter.

Counting only scams 1, 3, and 4, which are easiest to assign numeric values to, the graphic suggests a 120% (1.3**3 - 1)*100 increase from 2011 to 2020. Thus the graphical Lie Factor seen by anyone who skims the chart quickly, for the size of the increase, is at the very minimum 120/19 or 6.3. This is really quite remarkable.

Now, it is simply not credible that an institution such as Harvard, or people of the eminence such institutions typically engage in their flagship "centers", could be blissfully ignorant of these considerations, inasamuch as Tufte raised them almost 30 years ago and by now they are well and widely known. It seems to follow that Harvard or their Belfer Center have decided that not only is there a fight, but that they have a dog in it: else there would be no conceivable reason to issue such a risibly blatant propaganda graphic. But - and leaving aside the usual internet conspiracy theories that tell us a great deal about the ideology of the would-be "explainer" and nothing whatever about the phenomenon being "explained" - just what species of dog could it possibly be?

Thanks for pointing out the deception.

Hi Dave,

Did you miss the last two years of Iraqi production in your graph? The EIA has Iraq at 2.6Mb/d in 2011, the highest since the 1st Gulf War.


given that I already had the plot shown, and that Iraqi production has not yet reached pre-war volumes, I went with that plot as being reflective of the overall situation. There is a more up to date plot in the New York Times on June 2nd, and they are still below 3 mbd, and I am not sure I am as optimistic as they are over production "soaring", it looks like a much slower progressive increase to me.

Here is that New York Times plot. And you are correct, it doesn't look like anything is soaring.

Iraqu Oil Production

Here is my plot with data from OPEC's Oil Market Report in kb/d. Last data point is May 2012.

Iraqu Oil Production

The June data will be out in 9 days on the 11th. It looks like Iraqi production will be flat to down in June. Exports in June were 72.9 million barrels or an average of 2.43 mnb/d verses 75.95 million barrels in May or 2.45 mb/d average.

Iraqi oil exports decrease in June

And from the Wall Street Journal OPEC June oil production down as Iran falters

"With the shut down of Kurdistan regional exports and the planned shut down of the Majnoon field for maintenance, we do not see Iraqi production increasing any time soon," said consultancy JBC Energy in a research note.

Ron P.

Written by Leonardo Maugeri in "Oil: The Next Revolution", page 20:
From 2000 on, for example, crude oil depletion rates gauged by most forecasters have ranged between 6 and 10 percent: yet even the lower end of this range would involve the almost complete loss of the world’s “old” production in 10 years (2000 crude production capacity = about 70 mbd)

A 6% decline rate over 10 years would amount to (1 - .06)10 = 54% of the original amount, not "the almost complete loss...." Mistake or propaganda?

Who is Leonardo Maugeri? The Belfer Center describes him as a research fellow of the Geopolitics of Energy Project at the Harvard Kennedy School's Belfer Center for Science and International Affairs.

One of the world's foremost experts on oil, gas, and energy, Maugeri has been one of the most distinguished top managers of Eni, the largest Italian company, which is also ranked number 6 among the largest international oil companies. At Eni, he held the position of Senior Executive Vice President of Strategies and Development (2000–2010) and eventually became Executive Chairman of Polimeri Europa, Eni's petrochemical branch (March 2010–June 2011). In 2008, Maugeri promoted the strategic alliance between Eni and the Massachusetts Institute of Technology (MIT), which—among other outcomes—led to the establishment of the Eni-MIT Solar Frontiers Center in 2010.

Maugeri is recognized worldwide for his books and seminal articles about energy, as well as for his part-time activity as a lecturer in some of the most prestigious universities and think-tanks. Since the early 2000s, he was among the few who affirmed that the world's oil was neither running out nor approaching its "peak-production." He was also among the few who predicted the revolution of shale-gas and tight oil.

He has published four books on energy, among them, The Age of Oil: the Mythology, History, and Future of the World’s Most Controversial Resource (Praeger, 2006), which earned the Choice Price in the United States in 2007 and was translated into eleven languages. His latest book—Beyond the Age of Oil: The Myths and Realities of Fossil Fuels and Their Alternatives—was published in the United States in March 2010.

Mr. Maugeri has also written several articles that appeared in Foreign Affairs, Science, Newsweek, The Wall Street Journal, Forbes, Scientific American, Oil & Gas Journal, and The Review of Environmental Economics and Policy.

Mr. Maugeri has been a Visiting Scholar at MIT (2009–2010) and a member of MIT's External Energy Advisory Board. He also serves as an International Counselor of the Center for Strategic and International Studies (Washington, D.C.) and as a member of the Global Energy Advisory Board of Accenture, and he is a senior fellow of the Foreign Policy Association (New York).

That is a long winded description for a former Italian oil industry executive without academic credentials.

Edit: The Wiki article about him claims he has academic credentials but the reference, a link to Forbes, is dead.

A 6% decline rate over 10 years would amount to (1 - .06)10 = 54% of the original amount, not "the almost complete loss...." Mistake or propaganda?

I found this argument quite strange as well. As you noticed, the real loss over 10 years would be 46% of the original value. However, an additional assumption the author makes is that all current fields are in decline!

If we assume 50% of fields are in decline at the highest rate of 10%, with the other 50% increasing at a very modest 1% per year, the final production after 10 years would be 72.6% of the initial production, a total loss of only 27.4%.

The loss due to the 10% decline for 10 years would be a mere 22.8 mbd. My take on your rhetorical question would be that the halo effect of his goal, to demonstrate the future increase and refute the decrease in production, has left him blind to his own errors of reasoning...

*An OOP calculated on the basis of less than half the mean figure of Price’s 1999 assessment (413 billion barrels of OOP, 100 billion of proven reserves, including Three Forks).

The USGS estimated 3 to 4.3 billion barrels of undiscovered, technically recoverable oil from the Bakken in 2008. 100 billion barrels of proven reserves is not useful when it can not be extracted, refined and brought to market.

In my comment above,

I said that each Bakken well will produce about 100,000 barrels. Top end of 4.3 billion barrels puts it at 43,000 wells to extract all this oil (assuming no diminishing returns).

The analyst Mason required 55,000 wells to sustain 2 million barrels/day over a 30 year span. He uses an average 400,000 barrels per well. This puts his estimate at 22 billion barrels, a factor of 5X above that of the USGS estimate, and this only over a 30 year time span. If we want it to continue, that 22 billion barrel number will have to increase accordingly.

The USGS estimate is already WAY out of date (they've recently started another new study, which will be out in a year-and-a-half).

Continental Resources' (the largest Bakken driller) own estimate is at 27 - 45 billion barrels.

Assuming the lower number, and assuming 55,000 wells, that's almost 410,000 barrels EUR per well, consistent with Mason's estimate.

I wonder if the abundant cornucopian believes in those hyperbolic decline profiles.

Where did I say I didn't?

Read Mason's paper. He takes those hyperbolic decline rates ... and still tells us we can get 1-2 million bpd from ND, depending on assumptions.

Provide the mechanism for those decline profiles. Give me the effectiive diffusivity of the source and generate an analysis. Determine when the concentration profile reaches some sort of steady state.Show that this will truncate the long tails of the hyperbolic. What is the resultant volume?

Not done right and the hyperbolic decline turns into a cornucopians dream. Almost infinite amounts of oil from the fat tails.

We are waiting for your data.

Not done right and the hyperbolic decline turns into a cornucopians dream. Almost infinite amounts of oil from the fat tails.

Not even Mason's analysis above assumed infinite amounts of oil from fat tails. Perhaps you missed that little detail. Last time I looked, 500 Mbbl EUR is not "infinite." Nor are any of the other operators in the Bakken assuming "infinite" EUR's. Your accusation, then, is a straw man.

Mason may not be have assumed infinite amounts of oil from fat tails but given the decline rate in the first five years, assuming that more than 50% of the total recovery will occur between 5 -30 years is a pretty fat tail assumption. Seeing that it is just a guess at this point, it seems like it would represent a more optimistic assessment.

Right. Mason has tails that are suspiciously fat, especially considering how fast the production initially declines. What's up with that?

I am still waiting for the abundant data BTW. Since the oil from Bakken is so abundant I guess the data must be as well.

See reply above.


The "fat tail" is the hyperbolic decline. There has been lots of lively debate over the last several years surrounding the use of the hyperbolic decline model in forecasting unconventional wells.

Mason's decline exponent of 1.4 is high but within the acceptable (defined by the SEC and reserves auditors) range.

Theoretically, an exponent greater than one is impossible to infinity, since that would imply infinite reserves. This is usually handled by applying an exponential (b=0) segment at the end of the hyperbolic curve, or by simply limiting the forecast to 30 years, or both. A cash flow model will usually cut the well life even shorter when opex becomes greater than revenue. So the well's economic life is what gets used in the end.

We know the hyperbolic model by itself is not valid for these wells from the perspective of reservoir physics and fluid flow, but within a limited window, the modified curve discussed above is a reasonable approximation, and preferable due to its simplicity.

The reality is that with linear transient flow, the curve should be modeled as a series of exponential segments with decreasing instantaneous decline rates, but implementation makes that model impractical for everyday use.

I looked at how you arrived at your eur of 100,000 bbl, but it looks like you're only including historical production. To prevent going on a long-winded tangent to discuss the merits of your rationale, I will simply say this:

Shooting holes in optimistic forecasts is a worthy and necessary goal. Watchdogs keep us firmly cemented in reality. But going too far the other direction to prove your point does nothing but undermine your own efforts.

dlt - I agree with you fully. I'm only making a WAG since I don't have access to that trend data but 100k bbls did sound a bit light to me also. OTOH I've often see folks cherry pick data to make their "average" look good. Is that higher number including the wells that never recovered their initial investment? I've seen that game before: don't include the dry hole and non-commercial wells. Thus when they say the average well has/will produce X bbls of oil they mean the average successful well. I've seen more than a few operators exclude their failures when they calculate the economics of their drilling programs. They'll often say their "successful efforts" made an X% rate of return. Which always looks much better then when they don't include the money losers. The SEC started to scold some of the public companies in the various shale plays because they kept offering the value of their drilling efforts without including the many hundreds of $millions they spent on leases. A well costing $6 million to drill and complete calculates a better rate of return if you don't include the $1.5 million paid for its lease.

Just two weeks ago a fellow pitched a deal in a new area where they are trying to expand the Eagle Ford Shale play. Told me about a recent great well that came in 600 bopd and had produced 122,000 bo so far. Unfortunately for him I do have access to the data base in this area. Of the 12 wells drilled in the field so far there was that one good well, two so-so wells and 9 wells that began producing at 50 bopd or less. And these are $5 - 6 million wells. So thus far this extension is a big time money loser. And remember these are folks who have already gone through the learning curve on how to drill and frac EFS wells. One little word game the promoters often use is that the "good wells' are averaging yada yada yada. What they typically mean by good wells are those not counting the non-commercial efforts which might be a significant number if not the majority.

You show me a complete data base of all wells producing from a fractured shale and it's not difficult to form a fairly accurate profile of the entire play if its been developed for a number of years. I've yet to see that data documented for any play. I did this for the Eagle Ford a few months ago. In another month or so I'll do it again. I have access to the monthly production of every EFS well ever drilled. Now that the current spat of horizontal drill has been going on for a few years it's getting easier to characterize the entire effort. Another 3 to 4 years of production history and all the debates will be over. As a wise man once said data beats theory every time.

The amount of new Eagle Ford data in the last few months is pretty amazing. It's over 3000 wells now. There are a good number of condensate wells (oil not so much) that have been producing for 20+ months- if you can isolate those, you'll be able to create a nice little type curve.

The full-play analyses have been done, but the most rigorous studies are proprietary for obvious reasons- they take a lot of time to do by people who aren't cheap. But I know plenty of folks just like yourself who've done their own analyses, and they're usually pretty good considering the disparity in resources.

As a wise man once said data beats theory every time.

Yes, but often we have to wait for ages for the data. A good theory allows us to predict it.

Ab - I agree but I think you missed the point. There have been many theories presented of TOD that were readiy shot down by existing data. That's the meaning behind the statement. And the validity of any prediction, good or bad, can't be proven until the data comes in.

Yes, the Hubbert Linearization theories have been particularly bad.

But then you have models such as ELM which are provably correct.

To the extent that ELM is provably correct, it is pointing out a useful, but not very new concept: some oil exporters are controlling prices and subsidizing consumption, so their consumption isn't controlled by market dynamics, at least for the moment.

Beyond that, it doesn't tell us that much.

OK, then you have all my stuff, which includes the Bakken analysis I did today, as examples of top-shelf models. Of course not provably correct (science never is) but all based on fundamental physics and stochastics.

And the finished blog post on the Bakken data analysis is here:

Nick - ELM would seem to be telling us that some of the largest suppliers of oil to the world will either have reduce their export volumes to the other global consumers or reduce the lifestyles of their citizens and risk political instability. As a member of one of the largest oil consumers on the planet that imports a large % of that fuel I really don't care as much about PO as I do PE...Peak Export. After all the US reached PO almost 40 years ago and despite some bumps in the road we've been doing OK. Nice for the world to be producing 100 mmbopd some time in the future but that doesn't do me much good if the US can't import the oil it needs and if it's paying a huge price for what it does import.

Opinions may vary but I think ELM might be telling us something critical. As far as ELM not being a "very new concept" what is? PO was explained to me by my first mentor at Mobil Oil 37 years ago. And obviously he was aware of the PO concept years before that. As they say: "What was old is new again". At least those who were previously ignorant of the facts.


ELM tells us that consumption of a portion of world oil supply, perhaps 25%, is protected from price pressures.

It's easy to exxagerate the importance of this: some exporters don't control domestic prices, such as Mexico and Iran (technically Iran does, but they use other measures to suppress domestic demand).

KSA, on the other hand, already consumes more oil per capita than the US, and they're acutely aware of the stupidity of burning oil to generate electricity - that's not going to persist for 20 years, or grow to the point of eclipsing exports.

The idea of trying to extend "net exports" to "available net exports" by excluding Chinese and Indian consumption is over reaching: Chinese consumers are mostly not protected from price pressures, and Indian diesel price controls are unsustainable because they're so expensive - gasoline price controls have already been ended.

Finally, I'm not worried about US imports: they're falling much faster than net exports. Europe is a bit more vulnerable...

Hey Rockman, what does it cost you to get the complete data for the EF basin? Think you would be willing to fire me over some hard data on these wells? If so I have a couple excels that I have scaled to Accumap data that can grind these wells pretty quickly, would be willing to share.

Moric - It will cost me about 10 minutes of my precious time. You willing to pony up and pay for it? LOL. I pay a flat monthly rate with unlimited data recover. And I dump into Excel. There’s about a 2-3 month lag for the TRRC data but that’s not a problem for long term stats. I am planning to post a summary again in another few months. I’m about to head out to a well site so won’t get to it today. Should be able tomorrow or the weekend at the latest. It’s a very big data set with more than a dozen parameters but it’s rather easy to follow. I’ll toss in a few pointers on how to order the data which is very useful when working in the time domain. Very useful to separate new wells from ones with enough production history to be useful.

Haha well I guess when you look at it like that! What's the best way to contact you? My email's I would very much appreciate any pointers in how to order the data!

Moric I'll send you the data ASAP from my account. FYI: long ago someone warned me about posting my addy in proper format. The robots hunt for them. So better to use "at that g mail thingy" or something like that.

de la tierra,

What Mason drew is much worse than a hyperbolic fat-tail. The fact is that Mason's curve has an exponent less than 1. You should really be paying attention to reality.

The easiest way to show that Mason is selling a pack of lies is by looking at the cumulative. Tne red line is a dispersive diffusive growth of exponent 0.5 and the green line is an exponent of 0.75.

Then we look at the derivative of the cumulative:

Isn't that interesting how the derivative of the cumulative doesn't match with the decline? It's because the guy Mason is extremely sloppy or is trying to be deceptive. Deception is very important for commodities trading. I didn't fall off the turnip truck yesterday.

I looked at how you arrived at your eur of 100,000 bbl, but it looks like you're only including historical production. To prevent going on a long-winded tangent to discuss the merits of your rationale, I will simply say this:

Shooting holes in optimistic forecasts is a worthy and necessary goal. Watchdogs keep us firmly cemented in reality. But going too far the other direction to prove your point does nothing but undermine your own efforts.

Are you really that afraid of going toe-to-toe on the math? Do you even know how to do any of the analysis?

Your 100,000 barrel recovery number comes from a total average cumulative production from all Bakken wells, unless I'm missing something. From your link, the table summarizing the top 4 counties:

So what you're saying is the average ultimate recovery of a Bakken well is 100,000 barrels, correct? You've stated that twice on this thread. The numbers on your own blog say the average Bakken well is 17 months old, has produced 102,876 barrels, and is still producing at 141.5 barrels per day, correct? So how again did you get to your 100,000 barrel ultimate recovery?

Otherwise, what on earth are you talking about? The b exponent is 1.4. From Mason's own report,

Figure 4. North Dakota Bakken average first year well production. Fitted IP = 14,225 bbl; optimized decline exponent b = 1.4; optimized nominal decline rate Di = 0.197.

And did you seriously try to fit a hyperbolic curve on top of the images of the the graphs in Mason's report?

Deception is very important for commodities trading. I didn't fall off the turnip truck yesterday.

Are you really that afraid of going toe-to-toe on the math? Do you even know how to do any of the analysis?

Seriously, what on earth are you talking about? You didn't do any math. You mis-interpreted data in a table, drew a curve on an image of a plot, and you think that's analysis? And why did you call the hyperbolic exponent the "dispersive diffusive exponent?"

This is feeling strangely like conversations I've had with paranoid religious zealots. Is this guy real, or is someone pulling my chain? Either way, I'm done.

I don't think you know what you are talking about. Do you know how diffusional flow works?

This class of problems is very straightforward to model. The premise is that a volume of trapped oil diffuses outward along the fractures. The bookkeeping is that the diffusing oil has to travel various distances to reach the collection point. One integrates all of these paths and gets the production profile. I call it dispersive because the diffusion coefficient is actually smeared around a value.

The real issue is that everyone uses a heuristic that someone else passed along to them. I always try to approach these problems from first principles.

"This is feeling strangely like conversations I've had with paranoid religious zealots. Is this guy real, or is someone pulling my chain? Either way, I'm done."

Your exit is probably for the good. I will put together a blog post showing the math behind the diffusional approximation and then demonstrate how it applies to a composite average Bakken well. It's an eye-opener.

I picked up how to work diffusion problems while involved in semiconductor research. The reason that the computer you are typing on works is that someone actually calculated how far dopants diffused into the planar silicon circuitry. If you want to consider this kind of math as "paranoid religious" that is your choice.

So once I get this model in place, we can understand exactly what is happening with the typical production flow.

EOG Resources Inc's (EOG) lease holdings are among the largest in two of the most prolific oil shale fields in the U.S. -- the Bakken (600,000 net acres) and the Eagle Ford (535,000 net acres) oil shale plays. Plus its Bakken lease holdings are in the sweet spot of the oil play (prolific in the prolific play). EOG’s Bakken wells generally have the highest EUR’s (estimated ultimate recovery) in the Bakken. While others get EUR’s of 400,000 - 600,000 BOE (barrel of oil equivalent) per well, EOG often gets 700,000+ barrel EUR’s; or if it does a second lateral, it can get EUR’s of 1,100,000 to 1,150,000 barrels. It is the biggest oil producer in both the Bakken and the Eagle Ford, where its lease holdings are also in the premier oil window. In fact EOG has large positions in many of the new unconventional oil play fields

In the Bakken system, Continental holds nearly 1 million net acres in North Dakota and Montana and produced 48,024 barrels of oil equivalent in the first quarter, an 88 percent increase year over year.

Continental expects production across its entire portfolio to grow between 47 and 50 percent this year and to triple between 2009 and 2014, propelled largely by the Bakken.

With oil at $90 per barrel, Continental estimates a 32 percent rate of return for single wells and 39 percent rate of return for pad drilling. Those rates increase to 52 percent and 62 percent respectively when oil hits $110 per barrel. The figures assume an average completed well cost of $8 million for single wells and $7.2 million for pad drilled wells with an EUR rate of 603,000 barrels of oil equivalent for both.

Those returns could improve as Continental becomes more efficient. The company plans to increase its pad drilling in the coming year and claims to have reduced its spud-to-spud cycle time by 30 percent over the past six months. Continental is still railing around half of its Bakken production to market, though, a significant cost increase over pipelines.

Kodiak reports a 44 percent IRR for its average well in the Bakken based on a $10.5 million well cost, but the rate rises and falls with prices and production.

The figure is roughly the midpoint of that range. For wells with an EUR rate of 650,000 barrels of oil, Kodiak estimates a 25 percent IRR when oil prices are $75 per barrel. For wells with an EUR rate of 850,000 barrels of oil, Kodiak estimates a 69 percent IRR when oil prices are $95 per barrel.

The high end is becoming a realistic assumption for Kodiak. In Dunn County, N.D., Kodiak is reporting EURs between 800,000 and 900,000 barrels from long lateral wells.

The Denver-based Kodiak currently holds around 157,000 net acres in the Bakken.

Upside in the Eagle Ford
GeoResources also projects a broad range of potential returns.

The Houston-based independent expects to drill between 74 and 97 gross well across its 55,000 net acre leasehold in western North Dakota and eastern Montana in the Bakken.

The 25 percent rate of return Magnum Hunter cited refers to $8 million wells with an EUR rate of 300,000 barrels when oil prices are $90 per barrel.

That rate can fall to as low as 6.8 percent when oil prices are at $70 per barrel, but can increase to as high as 61.9 percent when oil prices are around $100 per barrel, average well costs fall to around $7 million and EUR rates increase to 450,000 barrels of oil.

By comparison, GeoResources reports a 25 percent return for its Eagle Ford wells, assuming $8 million well costs, $90 per barrel oil and an EUR rate of 325,000 barrels.

That range extends to greater peaks than the Bakken, though.

The rate can fall to as low as 8.4 percent when oil is at $70 per barrel and drilling costs average $9 million per well, but can increase to 127.1 percent when oil hits $100 per barrel, drilling costs fall to $8 million and average EUR rates increase to 500,000 barrels

advan - Interesting note about EOG being in a sweeter Bakken sweet spot. I stumbled across across a report about a new state spacing rule EOG will try: 6 wells on a 2,560 acre unit or one well per 427 acs. Previous spacing was at 640 to 1280 acs per well. The tighter spacing would indicate they expect much higher recover than they've seen in other areas of the trend.

*A combined average depletion rate for each producing well of 15 percent over the first five years, followed by a 7 percent depletion rate;

Admittedly the guy writing this analysis should have explained it a little better than he did, but when I read that passage I'm not so sure he was talking about *individual* well average decline rates, due to the presence of the word "combined." Also, he said "depletion" rate not "decline" rate. I highly doubt this guy is so ignorant he's not aware of Bakken well decline rates; I suspect that English being his second language, he probably didn't word it as well as he should or could have.

If I assume his rates are annual and relative to the remaining oil in the well:

for the first 5 years, the average well depletes at a rate of 15%/year,
after the first 5 years, the average well depletes at a rate of 7%/year;

then it turns out more like the production curve in Heading Out's figure 4 because:

56% of URR is extracted after the first 5 years,
69% of URR is extracted after 10 years,
85% of URR is extracted after 20 years,
95% of URR is extracted after 35 years.

An approximate integration of Heading Out's figure 4 assuming URR = 1310 kb yields:

After 5 years: 676 kb = 52%
After 10 years: 876 + 183 kb = 1059 kb = 81%
After 20 years: 876 + 183 + 183 kb = 1242 kb = 95%
After 35 years: 876 + 183 + 183 + 55 kb = 1297 kb = 99%

You should know that this is not a purely academic "Harvard's" study, but the author "Belfer Center researcher Leonardo Maugeri" is (or was?) head of Strategy and Development at Italian oil and natural gas company Eni. In fact as far as I know he is one of the most active "peak sceptics" and this is just one more of similar publications of this kind he had made before, e.g.

So it is rather a shame that the name of "Harvard" is being degradated by "studies" like this.

I've been wondering if this report has any funding connected with it.Was money passed between hands to have it created? Also, the timing is interesting, elections coming up etc, nice fuel for sticking to an opponent.


Thanks for this, Drillo. Makes a lot more sense now. Just more source hiding and legitimacy-seeking from a guy with a stake in drumming up investor support.

Meanwhile, there is the pesky net export problem. . .

I don't think that China & India will actually be consuming 100% of Global Net Exports of oil (GNE*) in 2030, but on the other hand, it sure is one heck of a trend line, and it looks like China's oil production may be peaking. US net oil imports increased at 11%/year from 1949 to 1970, when we peaked. US net oil imports then increased at 14%/year from 1970 to 1977 (doubling in about five years).

Note that at the 2005 to 2008 rate of decline in the GNE/CNI ratio, the Chindia region would be at a 1.0 ratio (consuming 100% of GNE) in 2033. At the 2005 to 2011 rate of decline in the GNE/CNI ratio, the Chindia region would be at a 1.0 ratio (consuming 100% of GNE) in 2030:

In any case, the projected post-2005 Cumulative Available Net Exports** (CANE) number is particularly jaw dropping. We take ANE at peak in 2005 (14.6 GB/year) X 25 years X 0.5 (area under a triangle) less ANE at peak (14.6) to get a post-2005 CANE estimate of 168 Gb, with about 80 Gb already having been shipped, through 2011.

So, the 2005 to 2011 rate of decline in the GNE/CNI ratio suggests that the "fuel tank" that represents the estimated post-2005 cumulative supply of globally net exported oil that will be available to importers other than China & India was about 48% empty at the end of 2011, a depletion rate of about 11%/year.

*Top 33 net oil exporters in 2005, BP + Minor EIA data, total petroleum liquids

**GNE less Chindia's Net Imports (CNI)

Monbiot seems to have accepted Maugeri's info at face value:

I accept George's point that there is surely enough oil to fry our planet, but I'm certainly not convinced that "we were wrong on peak oil" and that we are therefore free to dismiss the rather likely economic & social turmoil that may be created by the end of cheap/affordable oil.

Sharon Astyk posted good observations re. Monbiot and Maugeri:

Does anyone know if this article was published in the "Satire" section of the Guardian? Otherwise I suppose that he wrote this story with a gun being pointed at his head - so he had no choice.
Anyway, this wasn't the first time Monbiot changed his mind. According to Wikipedia "Monbiot once expressed deep antipathy to the nuclear industry.[37] He finally rejected his later neutral position regarding nuclear power in March 2011. Although he "still loathe[s] the liars who run the nuclear industry",[38] Monbiot now advocates its use, having been convinced of its relative safety..."

No, Monbiot is not joking.
Nor do I believe that he was pressured.

Leggett has also responded:

Rob Hopkins has written a thoughtful response:’s-announcement-“we-were-wrong-peak-oil


I just sent Moric a spread sheet with the production details of over 2,500 Eagle Ford. He has promised to do some impressive graphing.

In the meantime here's a very short summary of the most recent EFS wells with a full 12 month (April 2011 - April 2012) production history. Of those 49 wells that went on production in April 2011: Average initial flow rate: 346 bopd. Current flow rate: 176 bopd. That would imply a decline rate of about a 50% decline rate for the first year. But that's not correct. Unfortunately Texas does require oil production reporting by the well but by the lease. So a well drilled 12 months ago may only being doing 100 bopd today but if other wells have been drilled on that same lease during the last 12 months the lease production could be showing much more than 100 bopd. We do know the number of producing wells on the lease but we can't differentiate wells on the lease drilled 12 months ago from ones drilled 1 month ago...wells that haven't started the deep declines yet.

But I can look at only those leases with only one well drilled on them. That yields 35 wells with an initial rate average of 275 bopd that are averaging 127 bopd after 12 months. That yields a decline rate of 46%. Which is better than the 60% -80% DR some have postulated. OTOH the best initial rate of those 35 wells was the EOG #1 Dulling Unit that came on at 790 bopd. But after 12 months later it was doing 232 bopd which would represent a 70% decline. So a better decline for the smaller wells but they are coming on at less than 300 bopd...a good bit less than the 1,000 bopd wells the pubcos love to send out press releases on. BTW 6 of those 35 wells had initial test rates of less than 200 bopd. And if you're waiting to see the press releases on the two multimillion $ wells that came on at less than 50 bopd you shouldn't be holding your breath IMHO. LOL

Very sobering info. Doesn't bode well for maintaining production rates over any length of time. So, even as US reserves get ratcheted up with increases in these various shale oil plays, the actual ability to increase and, more importantly, maintain production that the increased reserves would imply will decrease.


I assume those numbers are just for the oil wells? If so, my numbers agree with yours. You may find it interesting to do the same quick analysis on the gas wells over the same time period. As usual in the liquids plays, the wet gas wells produce more oil than the oil wells. Counterintuitive at first until you factor in the lower viscosity of wet gas compared to oil at reservoir conditions.

An added benefit is that the Texas rrc lists gas wells individually instead of by lease, so filtering won't be necessary.

Looking forward to your/moric's analysis.

dlt - Correct. I did include all wells whether classified as "oil" or "NG" to Moric. Depending on what state you're in the oil/NG ratio used to make the determination varies. A NG well with a very high condensate yield can just as easily be considered an oil well. It gets a tad more complicated when you consider that some of the Eagle Ford wells are also producing a good bit of NGL's. Are those volumes added to the oil production? It's not oil but still a liquid under the right conditions and is measure in liquid units. I'm still researching that question. Condensate production from a NG well in Texas is easier: to the TTRC its oil and counted as such. NGL's are more difficult: I can separate the NGL's from the production stream at the well head and can measure that volume. But I may also sell the NG flow intact and somewhere down the line a gas plant will extract the NGL's and split the sales with me. I can't tell you exactly how/if the TRCC makes that distinction.

I went through this a couple months ago so I might as well share what I learned. NGL's are not counted as oil production by the rrc. If it's gas at the wellhead, it's reported as gas. And very few are separating NGL's at the wellhead, at least according to the API gravities. They're being separated downstream. A very rough rule of thumb is:
- very rich gas/volatile oil/retrograde condensate will yield an additional 120 bbl/mmcf of NGLs at the gathering facility. Gas volumes will shrink about 30% and NGLs will sell for about 35% of west Texas intermediate.
- less rich gas, let's say below 100 bbl/mmcf, the gas will yield an additional 60 bbl/mmcf and gas volumes will shrink by 15%

And yes, there are plenty of gas wells that should be re-classified as oil wells and vice versa based on producing oil/gas ratios.

So where is all this data and why isn't it just available off some server?

The climate science and AGW skeptics will scream for months on end if some college professor doesn't make his data and climate models available for other people to verify. Why should this be any different? Sure, the oil companies are private, but everyone gets subsidized in the end.

Mason's chart on daily production is screwed up. Why isn't all that data available for us to check against? I look at his data, find stuff wrong with it and then deLaTierra accuses me of "religious zealotry". People in the oil industry are different, that's for sure. It must be from living too long in a fishbowl.

I will probably write up an outsider's view of the inner workings of oil industry analysis. It will consist of these key observations:

1. Data is always held close to the vest.
2. Heuristics rule in analyzing the data.
3. Academic textbooks are hesitant about applying first-order physics models, follows from #2
4. Long-winded anecdotal observations substitute for deep analysis.
5. FUD is important to play along with the commodities traders, i.e. why give someone else an advantage when it comes to making money?

Rockman may have been played for a rube sending that data out to the fellow that asked for it. I doubt we will see anything come back. He is probably applying the data privately to improve his portfolio.

This may seem like sour grapes to me, but I also do research on climate science topics, and the hypocrisy is astounding. Relatively speaking, the oil industry essentially gets a free ride in obscuring the facts any way they want to. Oil production = opaque. Climate science = transparent.

Now I suppose I will be accused of being on a "religious crusade". Spare me.

Web - Spot me an addy and I'll send it all to you also. It's not's taken from the TRRC records which aren't terribly user friendly. The state requires all operators to submit production stats if for no other reason than collecting severance tax. Though companies do screw up their reporting from time to time. But not ultimately reporting all one's production, from which severance is calculated, is considered tax evasion and treated rather harshly if proven to be intentional. The software the company includes in my license is proprietary so I can only send you an Excel dump of the raw data but I'm sure you would prefer that over edited data.

There are some peculiarities in how the data is formatted but I can explain that as we go.

The address is on my TOD user handle. I will turn this around quick-like and post graphics and a best shot at a model. Thanks.

Web - Check your mail. If not there let me know.

Got it, thanks.

There were only a pair of useful parameters per well
1. Production at start.
2. Cumulative production at end.

This is all I could do with the data, I took the ratio of cumulative to start, plotted against duration:

This is really conventional oil production showing some Hubbert-like acceleration with time, not the immediate slowdown that the Bakken fields show. It is likely a mix of smaller more recent wells with the older larger cumulatives (dating back to the 1940's) swamping the recent data.

So the bulk of Eagle Ford is conventional oil, right? Why is this interesting from a fracking perspective? It will never show huge production values again, will it? Must be the NG that is important?

BTW, I found one outlier which had a very small initial production and a large cumulative that I had to throw out.

The other page has a subset but it really isn't much different.

Still looking for production data per month to detail the dynamics.

Web – Take that “initial production” with a grain of salt. That IP number is what the companies supply the TRRC. Unfortunately there’s no standard methodology. What’s reported is the initial test which, firstly, isn’t what they’ll l start producing the well. Secondly I may test my well at 500 bopd on one choke size and then produce it on a larger or smaller choke thus increasing or decreasing that rate. And I might test it on a very large choke to priduce a very high ratefor the sake of a press release even though I had no intention of ever trying to produce at that rate.

There’s another difficulty working n the time domain: you still don’t have the details. Remember in Texas they only report lease production…not well production. The initial well might have begun producing on a lease in 2009 but maybe 3 wells went on line this year. Those would greatly exaggerate the current production rate because it would include new wells that haven’t started their steep decline. OTOH the cum production is also misleading since a number of wells just came on recently.
I was going to send you some more pointers but spent late last night on a well. After a nap I’ll send you some more tips. You can see why I restricted my stats to leases with just one well and that had just the full first 12 month production history. It might not be as comprehensive but avoids some of those data busts.
Sorry…nap time now.

You have access to the same data I do. Everyone does. The only difference is that I pay for a subscription to a service that makes the public data more user-friendly, and you can do that too. The most popular services are IHS and Drilling Info. I don't have some magical access to all this data by simply being involved in the industry.

You keep complaining about not having data, as if there's some grand conspiracy. It's right in front of you. All you have to do is search around the public websites for a little bit. Since you keep accusing "people in the oil industry" of keeping this data from you (among other things), I can only assume you're either lazy, incompetent, or being intentionally obtuse.

Start here, since you apparently couldn't figure it out when you last went to the RRC website (or did you at all?):
For the Eagle Ford, it makes the most sense to search both "Eagle Ford" and "EagleFord." There is no standard field name. You can find monthly production data, depths, dates, completion intervals, lateral lengths, well tests, fluid data, and more. You have API numbers from Rockman's spreadsheet that he was nice enough to provide to you after insulting him. Make use of them.

For the Bakken, I guess you didn't see that great big "Bakken and Three Forks Information!" on the North Dakota Dept of Mineral Resources website?
I'd never been to the site before, and it took me about 30 seconds to find individual well data.

The diffusion model you're so proud of has been around in some shape or form since flow through porous media was first understood. Darcy's law is an explicit manifestation of a diffusion model. Congratulations on re-inventing the wheel. You went on a bizarre tangent on diffusion and dispersion when we were discussing hyperbolic decline exponents, which have no physical implications in unconventional wells.

There are dozens of dimensionless models that enable quick analysis of volume and pressure data from unconventional wells, some of which have implied drawdowns (as yours does) so that only rates and volumes are of concern. Each operates under a different set of assumptions, some of which are only applicable under specific scenarios. I have several. Search for "diffusion shale" or "unconventional analytical model" or whatever you want here for lots and lots of academic papers, all available for download:

To answer your observations,
1. Data is always held close to the vest.
Lots of data is easily available if you have basic searching skills
2. Heuristics rule in analyzing the data.
3. Academic textbooks are hesitant about applying first-order physics models, follows from #2
Which of these textbooks have you looked at? My textbooks (Petroleum Engineering Handbook, Dake, etc) contain nothing but first-order physics models. I can only assume you're trying to get under people's skin with this statement, as it's completely unfounded.
4. Long-winded anecdotal observations substitute for deep analysis.
Again, your issue is with your inability (or lack of inclination) to do a basic search.
5. FUD is important to play along with the commodities traders, i.e. why give someone else an advantage when it comes to making money?
Since you now have all the necessary resources now, I look forward to your own analysis.

This all started because I wanted to know how you came up with your 100,000 barrel Bakken well ultimate recovery. Instead of an explanation, I've received only obfuscation, deflection, and unfounded accusations.

To answer your questions, the Eagle Ford is absolutely an unconventional reservoir. There is nothing conventional about it. It has much lower permeability than the Bakken, and it absolutely must be fracture stimulated to produce commercial volumes. Once again, all this information is available with a simple google search. By the way, that well (API 42-283-32845) is NOT an outlier. It is an Eagle Ford well in the heart of EF country in La Salle county. A small initial rate just means its first production date was at the end of a month, look at the following month to get a better indicator of peak rate. Type the API number here to get all the data on that well (I can't link to the well directly):

Unless you have a strange data set, there is no swamping of data from old wells. There are only a few dozen Eagle Ford wells that produced before 2005, most of them co-mingled with other reservoirs and all of them with low rates. Look those up specifically if you don't believe me, now that you know where and how to look.

dlt - Mucho thanks. I thought it was so but wanted to make sure before I spread more damn oil patch lies. You do know we're a bunch of lying bastards, don't you? LOL. Almost all of our NGL's are seperated at some gas plant but I've seen reports that more than a few of the EFS operators are putting in their own JT plants to knock the NGL's out themselves. If you have enough NG/NGL's it makes economic sense to spend the money for the JT units. From the NG I'm sending to a plant in Matagorda County I only get 30% of the NGL yield...the rest goes to the plant owners.