Because Matt Deserves His Own Open Thread....eh?
Posted by Prof. Goose on November 2, 2006 - 7:28pm
"Data always beats theories. 'Look at data three times and then come
to a conclusion,' versus 'coming to a conclusion and searching for
some data.'" [The former will win every time.]
--Matthew Simmons, ASPO-USA conference, Boston, MA, October 26, 2006
“Any coward can fight a battle when he's sure of winning, but give me the man who has pluck to fight when he's sure of losing. That's my way, sir; and there are many victories worse than a defeat.”
—George Eliot
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Some time soon I will add a post about some of his conclusions at the end, relative to a different Conference I was obliged to go to for my day job.
HO
I think Simmons, Deffeyes, SS, Khebab & Westexas, and Darwinian do a better job of incorporating the 'intangibles of unknown unknowns' than the other leading theorists. I think they have a better hunch of Peak Everything feedbacks forcing the decline.
From declining grain supplies, water shortages, soil degradation, global warming weather effects, world debt levels, rising violence, infrastructure corrosion, pollution and waste, decline of technical expertise due to FF worker retirement, rig shortages, continuing overpopulation..... on and on, it all feeds back into the overall effectiveness of detritus energy extraction.
An aging cheetah just can't hunt as effectively as a young cheetah in it's prime.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I'd followed peakoil form a distance for many years and the commodities Bull Run, your book, and the May correction this year, followed by chance email correpsondence with Westexas led me here.
In Boston I only asked one question, and that was to Richard Heinberg - who said, amongst other things, that he read TOD every day - so I was wondering what your view is of The OIl Drum?
I'll be back later on with some data.
Cry Wolf TOD UK Contributor
I'm off to Drumbeat to Beat the CEO.
CW
I think Simmons may underestimate the Saudi Arabian reserves located in a few hundred fields which I often refer to as "all the rest". He makes the point well that most of Saudi production has come from 6 giant and super giant fields and from a petroleum geology perspective we just know that there will be hundreds of smaller fields around that have yet to be devloped and discovered. I don't think this will make any differnce to KSA peak but may have a profound effect on the down curve - if the Saudis are able to discover and develop these remaining resources.
I also think he is a bit harsh on the Saudi history of reservoir management. For sure, they didn't know much of what was going in Ghawar for much of its early life - but at that time I don't think anyone else would have done much better. The Saudis, after all have withheld and restrained their production for decades - which is in fact good husbandry of reserves - much better than for example UK, Norway and USA who just pumped as fast as they could - as it turns out at very low price, which has contributed to the near destruction of planet Earth.
I also think he should pay a bit more attention to the growing producers - Kazakhstan, Azerbaijan, Angola and Brazil - these countries have large and new reservoirs with full reservoir potential. However, it may turn out to be the case that unexpectedly high depletion rates in the North Sea and Brazil wipe out any gains from these new areas.
Simmons has done a great job publicising the peak oil threat - it is just a question of getting the balance right - and not just focussing on all the negatives, all the time.
I said I'd be back with some data - so here is the HL for the UK, all oil fields incluidng the Atlantic margin. So what if KSA production has a similar dog leg pattern?
So Matt - I know you're out there - what do you make of the UK HL? The fact that the UK has had a punctuated production and discovery history may infact have strong parallels with the unfolding KSA production and exploration history.
Saudi Arabia is not all of the Arabian Gulf basin. It sounds like some may want to pick and choose data to prove a technique to prove a point?
The fact remains that the North Sea and the Lower 48 peaked at the same point. Today, the world was where the North Sea and the Lower 48 were at when they started declining, and the world is showing declining crude + condensate (C+C) production (EIA).
Matt - still hopeful you may call by with comments.
These were all factors in Texas production, which is why I think that Texas peaked later (as a percentage of Qt) than did the overall Lower 48. And as I have noted, KSA is now at the same point that Texas started declining, as a percentage of Qt, and KSA--like Texas--is showing lower production even as drilling activity picked up.
Also, Texas, as one would expect, had a sharper post-peak decline rate than did the overall Lower 48. I expect to see a similar pattern regarding KSA and the world, probably compounded by the fact that KSA is so dependent on their largest oil field.
Hothgor,
I have frequently cited the example of Texas, where, after oil prices went up by 1,000% from trough to peak in the Seventies, the industry responded with the biggest drilling boom in history, which increased the number of producing wells by 14%, which resulted in a 30% drop in production.
Historically, past the 50% of Qt mark in a given region, increased drilling, while it may be profitable, has not led to increasing production.
Again, the basic premise is that we find the big fields first, whether it is Texas, the Lower 48, Total US, Russia, North Sea, or KSA. The smaller fields that we find past the 50% of Qt mark have historically not been able to make up for the declines of the old, larger fields. That is why the current world C+C decline, at the same mathematical point at which the Lower 48 and the North Sea started declining, combined with the near certain decline/crash of the four current super giant oil fields is such a compelling argument for the "Yes, we have peaked" position.
Westexas, how ya' been?
Even more down to the "pocketbook" issues, for those who use the low price now as an indicator that "peak cannot be close at hand, take a look at the histroy of U.S. oil prices.
http://en.wikipedia.org/wiki/Image:Oil_Prices_1861_2006.jpg
Note that in real dollars, on the EVE OF U.S. PEAK, our oil prices dropped to an inflation adjusted level not seen since the dark heart of the Great Depression, and not seen before that since the birth of industry! It's astounding to think about, the ABSOLUTE LOWEST PRICES were within monthes of what we now know to have been the ABSOLUTE PEAK of American production. The roads were full of big block power rockets, the lakes were full of sexy fast boats, the air was full of the jet set, oil was as CHEAP as it had been in a lifetime, and peak was within monthes.
We were then, as we are now, RUNNING BLIND. For the public at large, there was, and will be NO WARNING, at least none we will listen to.
Roger Conner known to you as ThatsItImout
Then there's the junk mail. Today there were three (3) different full-color, heavy cardstock flyers featuring images of oil derricks and jack pumps. All from the Democratic candidate for U.S. Representive, trashing the incumbent Republican for taking money from evil oil companies and giving them tax breaks. "Putting Big Oil ahead of our families!"
Wonder if it was planned before gas prices went down?
I told my boss today that this would reinforce everyone's conspiracy theories.
I posted this a few days ago, but no replies.
Recall that Aug is traditionally the start of the peak hurricane activity, so any fanning of fears would help jack up oil prices.
Johnny Carson & the national toilet paper shortage:
http://home.nycap.rr.com/useless/toilet_paper/
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It actually all started as a joke. Johnny Carson was doing his typical NBC Tonight Show monologue on December 19, 1973.
Heeeere's Johnnnnnny....
Of course, Johnny, like most talk show hosts, had a staff that helped write his monologue. His writers had heard earlier in the day about a Wisconsin congressman named Harold Froehlich. Froelich claimed that the federal government was falling behind in getting bids to supply toilet paper and that "The United States may face a serious shortage of toilet tissue within a few months".
His writers decided to include a joke based on this quote in Carson's monologue. He said "You know what's disappearing from the supermarket shelves? Toilet paper. There's an acute shortage of toilet paper in the United States."
Too bad they couldn't see the consequence of this statement. You may not be aware if you are young, but the early 1970's was a time of shortages - oil in particular. The next morning, many of the 20 million television viewers ran to the supermarket and bought all the toilet paper they could find. By noon, most of the stores were out of stock! Stores tried to ration the stuff, but they couldn't keep up with demand.
Johnny Carson went on the air several nights later and explained that there was no shortage and apologized for scaring the public. Unfortunately, people saw all the empty shelves in the stores, so the stampede continued.
Scott Paper showed video of their plants in full production to the public and asked them to stay calm - there was no shortage. The video was of little help. The panic fed itself and continued.
They finally got the shelves restocked three weeks later and the shortage was over. It is the only time in American history that the consumer actually created a major shortage (I don't think that the "shortage" of Barbie or Power Ranger dolls at Christmas time could be classified as a real shortage!).
And to think that it all started as a joke.
Useless? Useful? I'll leave that for you to decide.
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http://www.cnn.com/2005/SHOWBIZ/TV/01/23/your.memories/index.html
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I come from a family of night owls. In my early teens, I remember sitting up one night watching Johnny. One of the jokes in his monologue had to do with an alleged toilet paper shortage. It was just supposed to be a joke, but it seems that most of America (including my mother) took him seriously, which caused an actual nationwide toilet paper shortage for a day or two. Being a Mormon family, mom decided that along with our year's supply of food storage, we should also start keeping a year's supply of toilet paper. Johnny Carson was one of the last clean, classy, and truly talented entertainers on TV. He will be greatly missed. V. Robison, Waco, Texas
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I was working at a grocery store when this happened--I distinctly remember people freaking out over the thought of being caught without toilet paper. We had a very difficult time restocking the shelves. When the shelves had no toilet paper, people bought large amounts of Kleenex and dinner napkins as emergency backup.
Couldn't someone have profited immensely by doing the same thing by fanning fears of oil futures, then when Goldman Sachs revised their index, make another killing as the crude price declined? As mentioned before--No Proof, just speculation.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Oh, sure. Have you ever spent any time on any of the Yahoo stock message boards? Shorts are always trying to cause a panic, and longs are always talking of big news that's about to come out. But, to really affect the market, the person fanning the fears has to have credibility with the market. The leader of Iran has the power to influence the market (although less than he once did). The leader of Togo, not so much. :-)
Thxs for responding. Heinberg and his inside source [whoever that was?] was not credible to the Peakoil crowd and the market makers? Recall how many posts on TOD, and how many other blogs and websites picked up on Heinberg's comments in early AUG. Recall the accuracy of TODer SAT later warning that prices had gotten way too high and needed a correction. As mentioned before-- No Proof-- just speculation on the madness of crowds.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Middle East at a crossroads
by Richard Heinberg
Published on 4 Aug 2006 by MuseLetter / Energy Bulletin. Archived on 4 Aug 2006.
...
A New Oil Regime in the Middle East?
There is considerable danger that the smoke and fire from these three geographic flashpoints--Iraq, Iran, and Lebanon--could converge in a larger regional conflagration. In light of all this potential for apocalyptic mayhem, a discussion of the oil business may seem almost frivolous. But it is important to remember that, historically, the drawing of borders in the Middle East; the establishment of British, French, and later US-backed puppet governments in these faux nations; and the rise of a radical Islamic fundamentalist movement to challenge the Western-backed regimes, have all been fueled by the wealth produced by oil, and by the need for oil on the part of importing countries.
For decades there was a petroleum status quo of sorts in the Middle East: the capacity for production exceeded demand, and OPEC worked to restrain exports in order to keep prices from collapsing; meanwhile big producers like Saudi Arabia served as the world's petroleum bankers, maintaining the solvency of the system. On only one occasion--the embargo of 1973-74--did the swing producers withhold needed oil flows for political reasons, or cause prices to reach levels unacceptable to consumers (the other major post-1970 oil shocks, due to wars or revolutions, were beyond OPEC's control).
Now the status quo is crumbling--not so much for political reasons (though those are certainly imaginable, given the situations outlined above), but for reasons of geology.
Questions about the real size of Kuwait's oil reserves have emerged in the Kuwaiti National Assembly, leading the opposition party to call for production cuts. Remarkably, Kuwait appears to be groping toward implementation of the Oil Depletion Protocol, without ever having heard of it. However, from the standpoint of nations that want to keep the oil flowing so the global industrial party can continue, this is bad news.
Even worse news, potentially, comes from Saudi Arabia, where oil flows have shrunk by some 400,000 barrels per day over the past few months, despite astronomic prices. No one knows for sure what is going on. The Saudis themselves say the production cuts are due to lack of demand, but this hardly seems plausible, unless the kingdom is only able to deliver unwanted heavy, sour crude to market--but even in that case, one would expect flows to increase, with a price discount factored in for resource quality.
At the same time, the Saudis are hiring just about every spare drilling rig in the world, resulting in a dramatically falling rig count in the Gulf of Mexico--a place that would otherwise be seeing an increasing count, given the fact that Mexico's giant Cantarell field is in now in steep decline, with dire implications for the nation's economy.
Matthew Simmons (Twilight in the Desert) has been insisting for the past few years that Saudi production is close to peak and that Ghawar, the world's biggest field, may be in decline. Now many others are speculating that this is the real reason for the falling production figures.
What happens next? It depends on the real condition of Ghawar. Perhaps a heroic drilling campaign could result in a temporary bloom in production, lasting perhaps three years, followed by a swift, terminal collapse. On the other hand, it is possible that the field has been so thoroughly exploited already that we are seeing the irreversible, rapid decline. At the ASPO conference a well-connected industry insider who wishes not to be directly quoted told me that his own sources inside Saudi Arabia insist that production from Ghawar is now down to less than three million barrels per day, and that the Saudis are maintaining total production at only slowly dwindling levels by producing other fields at maximum rates. This, if true, would be a bombshell: most estimates give production from Ghawar at 5.5 Mb/d.
Disturbing Trajectory
While these events in Kuwait and Saudi Arabia are not front-page news, they are in their way every bit as significant as the ongoing violence in Iraq and Lebanon, and the ritualistic war dance of the American and Iranian leaders. The Israel and Lebanon situation seems to be about religion, terrorism, and land; the US-Iran situation seems to be about nuclear proliferation. But if one looks beneath the surface, nearly everything of significance that happens in the Middle East is at least partly about oil.
It may be pure coincidence that, just as the world's biggest oil producers are reaching a historic turning point signaling the end of the energy regime that has held since the end of US production dominance in 1970, a war has erupted between Israel and a militant organization supported by a nation the US plans to attack anyway in order to maintain dominance of world oil supplies going forward. History is full of such coincidences. But coincidence or not, it will be difficult to keep these unfolding realities from rebounding off one another, undermining attempts at a peaceful resolution.
Some commentators speculate that we are seeing the slow-motion commencement of World War III (or IV or V, depending on who's counting). I have no interest in fueling apocalyptic speculations. My strong wish is for a quick and peaceful resolution of the Israeli-Hezbollah-Lebanese conflict, a US stand-down from confrontation with Iran, and a speedy, voluntary US exit from Iraq.
In his talk at the ASPO conference, Terence Ward repeatedly said that America's bombing of Iran would make the work of petroleum depletion analysts easier--presumably because skyrocketing oil prices would force everyone to acknowledge that Peak Oil is a reality. On this point I disagree. If the scenario Ward outlined comes to pass, the public's attention will be fixated on military developments and casualties, with horrific news footage dominating nearly every moment of every television news broadcast. Oil prices will indeed soar and everyone will feel the economic pain from a crashing global economy--but few will look to geology as an explanation. Instead, they will point to the obvious proximate causes--attacks and counterattacks disrupting oil shipments, with speculators pushing prices even higher than they would otherwise go.
We have many reasons to hope that events are not spinning out of control.
http://www.energybulletin.net/18904.html
awesome post.
Thxs, but it was never disclosed precisely who divulged this info to Heinberg; no other corroboration from another party--that should be the first clue to get the alarms ringing. IMO, Heinberg, if he realized how explosive this info could have been, should have sought confirmation from another source before going public. If not, he should have never mentioned it.
I think Heinberg was just the messenger; the unwitting conduit-- but I think it would be fascinating to know who talked to him.
I am on R-squared's side: IF this person was just an influential market-trader looking to make a financial killing on the sly, or an agent hoping to effect prices & timing for the election, and NOT an IOC oil executive. It has all the makings of a PR disaster for the IOCs if prices start rising after the election. I would think even the IOC oil execs would want to know.
If this was an internal IOC action, similar to BP's clowns manipulating the propane market, then the public's attitude could get real ugly in the future. IF this key person was a KSA ARAMCO executive--I am unsure if any US laws apply, but if those so-called "production rumors" prove false--his name is mud, and Heinberg should point him out as never to be trusted again. Just my two cents.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Just to remined everyone, depending on what the Saudis were actually producing of late, their fourth quarter production will be down by between 600,000 bpd and up to 1,000,000 bpd from their production level when Matt's book was published. Also, note that the Saudis were unable to ramp up their production in the fourth quarter of last year to make up for the hurrican damage. In fact, that is when production started falling.
I would further remined everyone that Ghawar is now at about the same stage of depletion at which an analogoue field, Yibal, started crashing--much to the surprise of the Shell Oil Company, which was in the process of upgrading their surface facilities to handle an expected flood of new oil. Instead, Shell got a flood of new water.
Let me summarize.
There was clearly at least a perceived need for more oil following the hurricanes. The Saudis promised more oil. Were they able to deliver? No. Instead, it required a large coordinated release of emergency inventories.
KSA is now where the prior swing producer, Texas, started declining. Is KSA showing falling production? Yes.
Ghawar is now where an analogoue field started crashing. Is Ghawar declining or crashing? Who knows? We do have what Heinberg reports as a credible source that Ghawar is crashing. And there have been other reports circulating that the water cut is up to 50%.
But fundamentally, the problem is this. KSA--and the world--are highly dependent on one rapidly aging oil field, where the remaining oil is in a rapidly thinning oil column between a rising water leg and an expanding gas cap. From thir point forward, Ghawar--like Cantarell--can have high short term production rates, or higher remaining recoveries, but not both.
The near certain decline of these two super giants (plus the certain decline of the other two super giants), combined with the HL model, is why I am in the "Yes we have peaked crowd."
http://www.stickergiant.com/Merchant2/merchant.mvc?Screen=PROD&Product_Code=wipes&Category_C ode=bp
Crisis, real and imagined
"It is the only time in American history that the consumer actually created a major shortage (I don't think that the "shortage" of Barbie or Power Ranger dolls at Christmas time could be classified as a real shortage!)."
Great post, but as to the sentence above, I am not sure that's correct. The energy crisis of 1978-79 comes to mind.
While there was a supply disruption due to the Iranian revolution, no one could make the numbers add up. The small amount of disruption of Iranian oil, which had already been down due to political instability in Iran preceding the actual revolution there, it was certainly not enough to create a crisis. However press coverage every night greatly exaggerated the scale of the Iranian disruption, and was predicting the possible closing of the Strait of Hormuz, therefore cutting off ALL Persian Gulf oil. People panicked, and raced out to fill the tank, of not only cars, but also farmers topped up farm tanks, tractors, construction firms topped up construction equipment, and truckers topped up Diesels, and some real doomers even were storing gasoline in 1 gallon milk jugs and 5 gallon cans in garages, closets and bedrooms. This became such a fire hazard that some cities made it a crime, because there were some fatal fires in apartments and houses related to it.
Some called the "fill up" of America the "rolling reserves", and pointed out that the difference between half full tanks and almost every tank in America being completely full was a very large amount of refined oil product. Needless to say, the same thing was actually happening in Europe, Canada, Japan and other Asian developed countries. Few people now realize the absolutely dire shape Europe and Japan was in during the 1970's energy crisis, Europe having not yet developed the liberating North Sea (this should give us a hint of what Europe soon faces as British/Norwegian North Sea decline accelerates).
The long and short of it is, that word of a real crisis can create a real crisis, even though in fact the crisis does not yet exist. This leaves us with a question:
Why didn't this happen after the hurricane year of Katrina?
The fact is, with the "doom side" projections running at over $100 per barrel, it SHOULD have happened. Adding to this, the Israel-Palastinian conflict, the Prudhoe Bay pipeline "crisis", and the Iranian/Venezuelan crisis, oil SHOULD have went easily past $100 dollars somewhere in the last 2 years or so. It didn't? Why? The answer is discomforting:
Frankly, the American people have become burned out on "crisis". Beginning in the aforementioned 1970's, one after another crisis has been hurled at them. I can recall off the top of my head *the cold war, *Watergate and *the collapse of America after Vietnam, The *1973 energy crisis, the *1978 energy crisis, the *"national debt" crisis, the *S and L crisis, *AIDS, *the family crisis, the *"war" of "values", the *militia and "domestic terrorism, the *coming ice age, but then, *global warming, *the Y2K crisis,*9/11/01 (already a half decade ago? !!) the *"terror crisis, and now, the *bird flu, the coming *housing crisis, and of course the *peak oil. the Iraqi war now seems like small beans to most folks, when only a few years ago, a full blown war of years duration in the Persian Gulf would have been viewed as a nightmare scenario. We have become desensitized to crisis.
The demographic shift of America makes it even worse. One of the traits of getting old is the view that "hey, I've seen it all before. If no one has noticed, America is now a gray country, almost a giant indoor outdoor old folks home.
These folks are jaded and cynical to the extreme, having had the press blast crisis after crisis at them, but they actually have lived VERY well compared to the prior generation. Their main crisis is now the biggie...father time. They know that mortal crisis can only affect them for a short time longer, and that aging, declining health and lack of relevance are the now the real enemies for them.
This is why, for those who keep asking, Peak oil has not "caught on". The young, in the meantime, are optimistic, "transformers" who view themselves as power rich, personally and culturally. To them, doom sayers are losers who need to get out of the way. There is no problem that cannot be "fixed" with enough money and effort. They view the use of technology as always "good", and nothing to be frightened of. They have no intention of going back to a natural "hippy" youth of flowers, softness, "peace, love and understanding". They play the power game, and if the old folks cannot accept, they need to get out of the way, and cough up their wealth to the ones who actually are "doing things".
Almost everything can be commoditized in America, packaged as a product, a cause, a marketable organization on a nationwide scale. Every concern can be turned into a marketable commodity, from loneliness and lust, to status and the need for meaning, heritage, and adventure.
Except "crisis". Crisis does not sell. "Crisis" is old hat, "been there, done that".
I recall a discussion of an Austrian newspaper columnist, a muckraker type, who it was said, "had something to say about everything, religion, politics, food and restaurants, women, clothes, art, every movement, every style, EVERYTHING. When Hitler came along, and annexed Austria, he was asked his opinion of Hitler. He dismissed it with a wave of the hand..."of him, I have no opinion." A man who had an opinion about every "little crisis" had nothing to say about Europe's greatest crisis!
Such are the Americans, who may have burned themselves out on the little crisis, and now be too old, too cynical, too jaded, too tired, for the real one, the greatest possible crisis in modern history.
The lack of oil and gas is scary. The lack of interest and will even more so.
Roger Conner known to you as ThatsItImout
Very thoughtful post, I enjoyed it immensely. But see my post further below in this thread on the growing Mex-US problems. Is rampant Nationalism, ethnic & racial division, scapegoating, and other sad social practices our future? I am greatly worried as Phx is a tinderbox already with the Minutemen, Sheriff Joe Arpaio's incarceration practices, ethnic drug gangs, coyote smugglers, Asphalt Wonderland road rage or IEDs, communication breakdowns due to language differences,... on and on.
We could resemble Paris burning from rioters very soon, but I don't think we will see Phx arising from the postPeak ashes. If things start going nuts here-- we could see a quick jumpstart of a huge 'wealthy, white flight' migration to Cascadia. The wealthy suburb of Scottsdale will change their town's name to 'Skedaddle'.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Don't forget Prozac. It fits into your theory, which I believe. The anxiety necessary to lead people to action has been blunted.
on google news, this quote can only be found at:
http://www.rawstory.com/news/2006/Bush_tells_Rush_hes_deeply_concerned_1101.html
and
http://www.washingtonpost.com/wp-dyn/content/blog/2006/11/02/BL2006110200794_5.html&cid=11107886 45
in other words, Bush says the Iraq invasion was to prevent oil blackmail.
in other words, there is no spare capacity of any substance outside the Persian Gulf, and there is never likely to be any.
http://www.whitehouse.gov/news/releases/2006/10/20061025.html
(Search that page for "vast oil".)
I commented on this stunning admission just today on my site:
http://www.grinzo.com/energy/blog_entry_archive/2006/11/2006x11x02_2.html
this comment to Rush seems even more explicit than the one you highlight in your blog. once again, with such a significant remark from Bush regarding oil and Iraq, what I really can't fathom is the total lack of coverage in the mainstream press. is the USA press the same as the North Korean press? Chinese? UK c.1956? last throes of empire, maybe?
Given that a Bush crisis will likely be ignored during an election season as grandstanding, as well as the apathy mentioned by Roger in his post, it would take an asteroid to actually hit the earth before the TV was turned off from watching American Idol (or if the TV's stopped ....GASP...Working?...) before anyone would take notice. USA does not have a majority population who votes and with the turnoff in voting in general, the Bush comments just seem to me to become another show. I wonder about the public mindset if government is seperated so much that there's barely a pulse left?
Al Gore's An Inconvenient Truth should have also been noteworthy but I never got the feeling it took off in movie theatres.
This also plays into media conspiracies where either they're too shy of crisis being improperly trained or are being shut up / pressured by their mandarins and their big friends to can it. I once got an answer from a newpaper journalist who mentioned that he can't write about peak because the editor wouldn't accept it. I was at least happy that he knew about peak oil, but saddened to hear of the little benefit from a myopic newspaper. It did take 10 years or more for Global Warming to "make it" to the news so a fringe crisis isn't news yet. But I think the media just reflects the public.
Just when the USA needs a public ready to the cry, they don't want to play anymore. What an odd state of affairs indeed.
Peak Credibility?
Peak Apathy?
Just call it Peak-X
Back in June on TOD, there was a story about Matt's research with respect to natural gas in Quatar. If people have not read it, I would suggest that they do so.
Matt talked about the declines in Russia's three largest natural gas fields at the Boston conference - in the question period after his presentation, so no slides.
I think someone told me that Matt is now working on a book on the natural gas situation. Is this true? If so, when is it due out?
In the infamous Natural Gas meeting put on by the EIA in 1999 which put out the erroneous Jan. 2000 forecast, (The forecast was that natural gas supplies in North America would grow to 30 trillion cubic feet per year by 2015, and the price would stay below $3.00 a therm.) Simmons and Riva were the only non- signers out of a group of 250 Gas experts from the entire US corporate gas industry. One month after putting out that drival, prices soared past $10 with spot prices over $40. Conventional Gas production has been falling ever since. I have not seen an accurate forecast out of the EIA since then.
But Matt brought to the discussion an army of number crunchers who put serious data into the equation. His write up on gas supply faltering in the Texas fields was a masterpiece and extremely accurate. His book on KSA an even better work and , while this subject is too complex for any high level of accuracy I would trust Matt's forecasts more than anyone else and have in fact made significant investments in the future of my company as a result of that. I am not in the slightest bit uneasy about those decisions. We are lucky to have his work and insight.
treeman,
You give me one more opportunity here to recommend the great report by the NPC that was commissioned after the completely erroneous report in 1999 by the NPC, to find out basically what went wrong. On the second and much more comprehensive report in 2003,
Balancing Natural Gas Policy -
Fueling the Demands of a Growing Economy (2003), it is fascinating that both Matt Simmons and Daniel Yergin were members of that advisory panel, and by then, Simmons views held sway given that Yergin's CERA group had earlier said natural gas production would rebound, as drilling rebounded, and wound up with egg on their face when they had to admit in 2003 that natural gas production "has almost certainly peaked" in North America. Yergin, never to give up an optimistic take on things, then tried to put lipstick on a pig by giving glowing speeches on "The new age of globalized natural gas." People saw right through that one, as nothing more than a new second stream of dependency on imported petroleum, now being a massive bleeding of American wealth to buy both crude oil and natural gas abroad. Plus, no one wanted the damm terminals in their state! So bad had it gotten by 2005 that CERA representatives were going to poor southern states making speeches saying basically, "you have no choice, it's LNG or poverty." There has been no discussion about who is paying CERA to fly it's reps around to try to push the LNG gospal, but the "Globalization of Gas" now sounds more like a veiled threat than a golden opportunity.
Either way, some other posts mentioned "being worried" about Simmons connections to the Bush regime and the Council on Foreign Relations, and being involved in the now infamous Chaney energy meetings. Well, he seemed to have gotten one message across to the powers that be: Natural gas is a catastrophe in the making. Everyone seemed to be arriving at this conclusion by then. Even the Fed Chairman, Alan Greenspan, testified before Congress that the natural gas price crisis could wreck the economy, Bush was racing about soon after pushing the almost emergency speedup of LNG terminals and tankers, and now we have the National Chemical Association stressing that the demand for natural gas in the chemical industry perhaps cannot be fulfilled at a rational price, and could lead to U.S. economic problems on a massive scale. So, if Simmons warnings on crude go as of yet unheeded, everybody seems to have gotten fear of God when it comes to natural gas.
In the meantime, the NPC Report gives the rundown, from the decline in U.S. production, to the decline in Canadian production, to the disappointment that has been Mexico, once predicted as a rich source of nat gas but for years, a net importer. Even using LNG, and opening all current moratoria areas for drilling, it wil be a close squeeze on natural gas, and almost no one has yet found a way to get enough to provide for demand, barring either/or massive conservation efforts and outsourcing of natural gas consumptive industries to other countries. The question of course is what other countries? China is in worse shape than the U.S. on natural gas, and Japan and Korea import almost every foot of the stuff they use. The LNG market seems like a snake trying to swallow it's own tail, and the other shoe is still to fall, as British natural gas declines push Europe back onto the LNG market, and or into the arms of the Russians. America meanwhile is still banking on OCS (Outer Continental Shelf) rescue, Trinidad and Tobago (our current largest source of LNG) and our staunch Persian Gulf allies in Qatar. It will be an expensive race against time.
Beside my copy of "Twilight In the Desert" I have my downloaded copy of the NPC Report. These two, combined with "The Hirsch Report" tell you about everything you need to know about the potentially dire energy situation the U.S. now finds itself in. All the rest are pretty much just reprinted political and philosophical/aesthetic conjecture, good for helping the energy situation by acting as fire starter in the woodstove. "Twilight" cost me a bit. The NPC Report and the Hirsch Report on mitigation were free to be downloaded.
Check out http://npc.org
go to the natural gas tab and download Volume one, the summery of Findings and Recommendations. If at the end of reading it, you do not know more about natural gas in North America than you thought it was possible to know, go for the other volumes.
The NPC is preparing to do a similiar massive report on the world oil situation. Former Exxon chairman Lee Raymond will chair the committee.
This report, The Global Oil and Gas Study, is to be a comprehensive examination of world oil and gas supplies. Some have felt it will be a joke, given Mr Raymonds steerage.
I predict the opposite. The NPC has a long valued history of independence. Even when they are wrong, as in the 1999 natural gas report, they admit it, and try to fix it, fast. I am predicting that the NPC Global Oil and Gas Study may set off alarm bells around the world, and push forward an almost emergency effort on new technology, efficiency, and conservation. American industry, when confronted with the reality of possible extinction, and possibly SOON if they do not act, will act. They just need to hear it from what they consider to be an acceptable source.
It is going to be an interesting next couple of years!\
Roger Conner known to you as ThatsItImout
I hope you're right. I assumed that Raymond's appointment was intended to be just one more whitewash, given Bush's, Exxon and Raymond's past histories.
Looking at just the US, this is why: personal fuel expense as a percentage of disposable income is still quite low. It is now abt. 3.6% vs. 5.1% back in the bad old days of 1981 and a tiny 2% in 1998-99 when oil was going for $10-15/bbl.
It's not how much you pay, but how much of what you have to spend. Therefore the "price signal" worked very slowly.
However, if you really want to be scared about something, think of this: Between 1970 and now energy consumption/GDP has gone down 50%, but total debt/GDP has gone up 100%.
PS...Pls. help...how do I add graphs to my comments?
The comments below the review are FULL of rabid PO-deniers. If this is the reaction of Guardian readers, we really are fcuked folks!
http://blogs.guardian.co.uk/news/archives/2006/11/02/film_turns_black_gold_to_black_death.html
P.S. I've made this post in order that you can make some glimpses about the social and political impact of peak oil in some countries like Romania (I can hardly imagine countries from Africa); and what it scares me a bit is the lack of cohesion that increases with the growing gap between poor and rich.
BTW I'm a 25 years programmer (I don't program anymore I try sustainable living) and I've first learned about oil impact on industrialized society 3 years ago from a relatively old book : The World Challenge, by Jean-Jacques Servan-Schreiber (In Romania published in 1981)and when I've heard about peak oil accepted relatively fast the peak oil facts.
Eduard Florinescu
(same nickname like the TOD nickname)@gmail.com
TOD can also mean Truth or Dare ;)
hope i catch some more insights from you over the coming months.
p.s. truth or dare, that's cool. in fact, it's almost poetic given the topic of PO.
Same here. ;-)
Thank you for your post. It's very interesting. Please post more often!
Just as I predicted months ago, the Mexican standoff has huge postPeak implications for Mexico and the US. From Bloomberg:
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Revolt in Oaxaca May Force Calderon to Wage an Income-Gap Fight
Nov. 3 (Bloomberg) -- Mexico's next president, Felipe Calderon, will inherit an old battle over wealth and poverty that may force him to spend more on the country's southern poor than he had anticipated.
``The challenge for Calderon is not just in Oaxaca but in all of Mexico's southern states, where there is very little distribution of wealth and inequality is much greater than in the North,'' Chabat said. ``The federal government is going to have to intervene if they don't want to see movements like the one in Oaxaca in several states.''
The government is incapable of handling today's revolt, said John Womack, a Latin America history and economics professor at Harvard University in Cambridge, Massachusetts.
``They've all got a big mess on their hands and they don't even know how to describe it, let alone fix it,'' Womack said.
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With Cantarell crashing, and huge funds needed to prop PEMEX's production up: Pres. Calderon is going to be sorely pressed to siphon enough funds from Pemex to help the poor. IF the US is headed into a recession, the Mexican remittances to their families down South will decrease fast only adding to the pressures.
Furthermore, according to Stratfor:
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Mexican company Pemex received notification from the U.S. Securities and Exchange Commission (SEC) that it is failing to meet standards of financial transparency required for the company to participate in the U.S. stock market, El Universal reported Oct. 31. If the company fails to implement necessary changes, the SEC will bar it from listing on the stock exchange in 2007.
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This will only make it harder to privatize PEMEX and raise funds, but most political analysts say Mexican would revolt everywhere if Calderon even tried to do this selloff of PEMEX.
Now to the US: Mexican immigrants, anarchists, freedom & civil rights groups, etc are starting to protest at various Mexican Consulates across the US. Some are being arrested, photographed, or refused entry to their own country's property!
Here are some links to Phoenix, San Francisco, San Diego, Harvard University, and Minnesota protests.
Phoenix, two groups: see photos & video too.
San Francisco, 200 people:
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After two hours of protesting, the demonstrators demanded the Consul General come down and address the crowd. When staff members of the consulate communicated to the organizers that the Consul General refused to speak to the crowd, the chanting got more militant and one protester taped an APPO poster to the consulate's window.
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Harvard University:
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... where 30 protesters--carrying black crosses and Spanish-language placards--rallied outside the show...At the Peabody, protesters were barred from entering the reception where the consul general appeared. Kelly L. Lee '07 and other protesters said that their IDs were confiscated by police.
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San Diego:
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Deadly violence in Mexico's Oaxaca Province drew 45 protesters to the sidewalk in front of the Mexican Consulate in San Diego on Tuesday night.
The protesters in front of the consulate included residents of North County, which has a population of immigrants from Oaxaca that has been estimated to be at least 25,000.
Speaking through a translator, Anacena said the unrest was going to increase the flow of people traveling back and forth between Mexico and the United States.
"Borders won't stop anyone," he said. "People from there will always come here, people from here will always go there."
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Minnesota:
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Five Arrested at Oaxaca Solidarity Demonstration in Minnesota
Five people were arrested at the Oaxaca Solidarity demonstration this morning at the Mexican Consulate. We do not currently know what they are being charged with or where they are being held. The demonstration was peaceful and nobody enterd the consulate. One person was arrested for leading chants, and another for taking pictures. Two of the people were arrested while trying to follow the cops' order to disperse. The fifth was arrested apparently for having a knife (that wasn't out) in his possession, though this is unclear.
The demonstration itself was about 35 people. When we tried to enter the consulate they locked the doors and told us that though it was a public place they could refuse entry for any reason. People using the consulate for its "intended purposes" were allowed in. There were about 7 squad cars present and an arrest van.
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St. Paul, Minnesota:
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Mexican Consulate Windows Smashed in St. Paul, Minnesota
Tuesday, October 31 2006 @ 11:38 AM PST
Contributed by: Anonymous
Views: 221
Sometime on Monday, the windows of the Mexican Consulate in St. Paul, Minnesota, were smashed. This was a small act of solidarity with the people of Oaxaca, those living the struggle, and those who have given their lives for it. For an end to the repression. For the resignation of Ruiz. Autonomy for Oaxaca, autonomy for all.
Sometime on Monday, the windows of the Mexican Consulate in St. Paul, Minnesota, were smashed. This was a small act of solidarity with the people of Oaxaca, those living the struggle, and those who have given their lives for it. For an end to the repression. For the resignation of Ruiz. Autonomy for Oaxaca, autonomy for all.
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There are other cities if you google away.
How soon before people start being shipped off to the KBR workcamps? How soon before Mex-Americans start arming themselves to fight their way through the Mexican Army to protect their families way down south? Will the US stop Mex-refugees coming North at the Border? How soon will TODer Westexas's prediction of college grads having to help harvest the fields come true?Is America ready to shift 60-75% of it's workforce to permaculture labor?Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Eh.. Pemex privatization requires changing the Constitution, right?
If anyone would try that today in Mexico's tinderbox: nor smart.
Question, Bob: do you have any clue of the number of people flowing into Mexico from Central America?
I live here on the AZ/Sonora border, and was invited to participate in a live chat with Congressional candidate Randy Graf (he doesn't stand much of a chance). I didn't get a chance to ask a question -- about his idea of mounting .50 machine guns on border patrol helicopters, which terrifies me since I live next door to the "la Migra" station and their helicpters fly over us all the time. If they were mounted with .50s, I would fight, then move.
Anyway, nearly all the questions and discussions were about illegal trafficing.
Your post woke me up to the possibility of another Mexican civil war/revolution. I've been ambivilent about the double layer border fence they're proposing to build (I'll believe it when I see it), but I'm increasingly thinking if they don't build it, we're going to be overrun.
I thought it was a national oil company. Does this apply to their bonds? I can't see why the SEC would be making this request. Thanks
"We basically live in a world of uncertainty." Matt Simmons
"The lack of transparency keeps us all in a fog." Matt Simmons
"Relying on media reports and outdated reports is a very dangerous thing to do." Matt Simmons
(all quotes from Matt Simmons speech at ASPO-USA conference, Boston MA, October 26 2006
EXACTLY. RUNNING BLIND. That is the great fear. Peak oil can be dealt with if you KNOW it will occur, when it will occur, and what pace decline will be once peak is reached. That is something that can be dealt with. It will be hard, expensive, and TOUGH. But planning is possible. But absolute uncertainty, bad data, BLINDNESS. That is what WE MUST WAKE THE AMERICAN PEOPLE UP TO. That we know almost nothing about the world energy situation, about the most important commodity that a modern technical society HAS TO HAVE to survive.
As Matt once said, we are running at high speed in the dark, with no lights, no gas gauge.
Even if we drive off the cliff or the engine dies, we won't be able to see what has happened. Given that, we cannot even fix it after the fact. We must make the GOOD FIGHT FOR REAL INFORMATION, REAL STATISTICAL FACTS. Matthew Simmons, in one of his presentations, even suggests using military electronics, space satellites, and spies. He is right. We must get the blindfold off first.
Simmons closing statements shold send shudders up the spine
"the peaking of natural gas is even more real and more dangerous than the peaking of oil. Natural gas record are far worse than oil. The risk of peak gas is even worse than peak oil."
At ASPO-USA Simmons only spoke one sentence that I find ABSOLUTELY lacking in validity:
"How will we know when Peak Oil is here?...EIA, end of report, world crude oil record..
"Table 11B, in Dec. 2005, we hit a new record 74.375...six monthes later, we were off almost a million barrels a day. If we have six to ten monthes of that kind of decline lasting, we can safely say, guess what, we reached sustainable peak in Dec. 2005. It that number turns around, that will be wrong."
That pretty much means that a decline in world production of only 16 monthes is considered as "proof" by Simmons. I simply cannot understand where he would come up with that logic. The early 1980's proved that oil production worldwide can drop for a half a decade and not "prove" peak.
It is the single weakest point in his whole argument, and the weakest link in peak oilers theory: Declining production alone DOES NOT in and of itself prove peak oil in any real geological sense. Political forces, economic forces,logistical factors, lack of investment, even environmental regulation and attitudes and other more acceptable alternatives to crude oil can slow and drop production.
Otherwise, a STELLER SPEECH, and Simmons warnings about the blindness and scarcity of information in the energy industry, and in particular, his jarring warning about natural gas were worth the price of waiting for the download at dial up speed for me! Given Matt's work on the NPC (National Petroleum Council) document on the coming natural gas crunch, I take his natural gas warning as absolutely one more sounding of the alarm on which we must take action, NOW.
Roger Conner known to you as ThatsItImout
My question for you How many situation like 1980's do you think the world economy can sustain?
and
Is not the socio-political and economical landscape different now, and doesn't 80's consumption differ a lot from today's ?
You're inference may be but please what are the facts that ca prove that we should have 10 years of decline to know that the peak was in December 2005 it seems improbable that we can decline 10 year's and after that we can recover and exceed 74.375 ...
Maybe the decline is different now I might miss something but the argument that the wells are old still stands to me (in 80's they weren't so old).
Please show me were I'm wrong ...
Roger,
As you know, we have been over this several times. One of the things that people are missing is how strong the HL case is. For the sake of argument, let's assume that world conventional C+C production peaked in 2005. If Hubbert had given his speech about the world, he would have given it fourteen years ago, in 1991.
Deffeyes has vastly better data than Hubbert had when he made his Lower 48 prediction in 1956 (that production would peak between 1966 and 1971). Hubbert didn't have nearly enough data to make any realistic estimate for the world, but he said that it would probably peak within 50 years, i.e., by 2006.
As I pointed out, world C+C production is falling at the same point at which Lower 48 and North Sea production started declining. These are the appropriate, mathematially based, analogues. IMO, to expect to see rising production when all four of the existing super giant fields are almost certainly all declining or crashing defies common sense.
As I said yesterday, KSA and the Lower 48--based on HL--have about the same Qt, but Ghawar has already made 10 times as much oil as the largest field in the Lower 48.
This gives you and idea of how hugely exposed KSA--and the world--are to a near certain decline/crash at Ghawar.
Look at the whole string of warning signs:
*KSA couldn't ramp up production after the hurricanes
*The KSA stock market crash in the spring (don't know what has happened since)
*KSA's announcement that they could not find buyers for all of their oil--even their light, sweet oil, as prices headed over $70 per barrel in the US
*KSA's annnouncment that they were importing fuel oil products in August
*The announcement of curtailment of petrochemials projects because of a shortage of natural gas in KSA (natural gas production would fall as oil production fell)
*And finally, the announcement that production is down by another 380,000 bpd
I knew that Daiqing had supposedly peaked awhile ago, but I'd have to look up the details. Burgan and Cantarell are most likely just slightly past their peak.
After I asked the question I went to my Simmons material. You are, in fact, correct, at least according to him and the data we have. Ghawar was discovered in 1948 and peaked in 1980 @5.8mbpd. 32 years from discovery to peak. 26 years from peak to present. I'm not sure what the current estimate on Ghawar production is, but we know it is not zero.
Next - global C+C production in 1980 was 59.5 mbpd in 1980(it even dropped, for several reasons that year to roughly 56mbpd in 1981). In 2005, this figure was 73.5 mbpd.
Measuring from 1980 we get an increase of 14 mbpd or 31%. For an average annual increase of 1.3%.
This increase occurred during 25 years of Ghawar's decline - the largest field ever. While we are not taking into account the status of the other 3 fields at the time, I still think it is at least reasonable to entertain the idea of production increasing in the future. I'm not saying what will happen, I'm just saying we need to try to look at the whole picture.
Incidentally, where I found the answer about Ghawar's peak was in a Simmons slide that showed the other 6 largest fields in Saudi. They had all peaked between 1978 and 2004, I believe.
I think that Ghawar, at least until recently, was supposed to be producing about 5 mbpd or so. Again, there is quite a bit of fog surrounding issue. However, the key point to keep in mind is that Ghawar, like Yibal, was redeveloped with horizontal wells, which allowed them to keep production up longer than normal, at least until the water hits the horizontal wells. And again, Ghawar is at about the same stage of depletion at which Yibal crashed.
According to the WSJ article earlier this year, the remaining 800' oil column at Cantarell is thinning at the rate of about 300' per year. The math is pretty simple on this one.
I haven't seen any hard numbers on Burgan, but the Kuwaitis have admitted that it is terminal decline.
A news report earlier this year indicated that the water cut at Daqinig is 90%. Again, the math here is pretty simple.
In the aggregate, the four existing super giant oil fields are all old and are almost certainly all declining or crashing with rising water cuts.
Political and economic forces, etc. etc., have been and always will be present. So how far does production have to decline in order to show that PO has come and gone?
And if you think this, then why shouldnt' the conventional wisdom incorporate this?
This reinforces my feeling that PO will have to be seen far behind us in the rear view window before historians will finally pronounce PO a reality.
Meanwhile, rational discussion of PO will be overshadowed by a host of conspiracy theories.
I'm afraid meaningful shifting to sustainability (if such a thing is possible) will be done on an individual level, and probably not be top down. (which may be for the best, when all is said and done).
KSA Stock Market Chart:
http://www.ameinfo.com/financial_markets/Saudi_Arabia/
This week the market has fallen 12%. This has been attributed to the elimination of evening trading which has caused a retail investor sell off.
http://tinyurl.com/create.php
It's interesting that many of the gulf state markets are down 30% or more yet Kuwait's market is slightly up YTD.
http://tinyurl.com/yjdqe7
I don't think anyone else spends close to as much time as he does discussing all the other factors you are mentioning - whether the rich/poor gap, political issues, history of economic factors (he was a major oil banker during the oil crash crisis after all), infrastructure, aging of workers, etc. If he doesn't have command of the subtleties, I don't know who does.
Peakearl says,
"If you are stating that he is basing his conclusions about peaking on declining prduction alone you have either not read or heard anything he's been saying or you are deliberately and totally misrepresenting him."
No, I am most CERTAINLY NOT saying that in any way. I sit with a copy of "Twilight In The Desert" right beside me on the table now, several of the presentations from Matt's own website and a copy of the NPC (National Petroleum Council) Report "Balanced Options" natural gas report downloaded to my hard drive. I am very familiar with what Matthew Simmons has written and said, and consider his work monumental and steller in this field. His warnings of uncertainty of data are extremely valuable, his work in "Twilight" should be sitting off alarm bells all over the world (in a way, they are, it's just that nobody is listening to the alarms) and his warnings on natural gas are of EXTREME importance.
I am saying that the sentence I quoted was the one I am dealing with, the weakest sentence in the speech, and as a proof of peak oil, not to me sustainable.
One of the other replies to my remarks seems to think that I feel Matt is "wrong" about Peak Oil because of remarks concerning this one point (simply stated "declining production alone is not proof of peak"), and seems to imply that I think we should wait for "proof" before we act. Again, my many posts here on TOD have stated exactly the opposite, and my own two energy groups are geared to exactly the opposite: Even if we determined that "peak" per se is 20 years away (and we haven't, I am just giving an example) then we should be essentially in energy emergency mode RIGHT NOW, given the lead times and the uncertainty involved. I accept the Hirsch Report view that 10 to 20 years lead time in mitigation will still be barely enough.
Note the rest of my post that begain this little string of discussion: I reassert, given the utter uncertainty and blindness we run in, the EMERGENCY IS NOW, declining production or not.
Let me turn the argument around: If oil production, due to the addition of some new fields and Saudi and world offshore drilling suddenly pushed production up considerably, would we consider this "proof" that Peak did not exist or was not a threat only a few years, say 5 to 7, down the road?
I WOULD NOT accept rising production as a useful indicator that the emergency was over. The rise could be very temporary, but many of the optimistic CERA types will use it as "proof" that peak oil is nonsense, and use the peakers own argument about declining production against them, I assure you. That is the danger of marrying the peak oil argument to short term production declines. My view is declining short term production is the weakest leg of the peak oil arguments chair.
Thank you.
Roger Conner known to you as ThatsItImout
Ok, I do agree with this and really we are not far apart in what we think should be happening. However, ultimately it is the ongoing decline in production of a field, nation or world that does define the peak, when it happens despite increased drilling, technology and other efforts to increase the production. So really the question is how long do you have to see the decline before you believe it. In the case of US and North Sea, it took awhile for EIA, etc to become believers. In fact, there are those (very few) who still claim production in those regions can still recover! If Simmons is dating from Dec 2005, he's suggesting 1 1/2 - 2 years of decline should be enough to call the peak, given the current efforts to build production and investments in Saudi Arabia and elsewhere, and the numerous regions already in terminal decline.
I'm not sure, but I think he may be right.
The most compelling argument supporting your view is still Texas and the lower 48 states. It was Westexas, bless 'im, that opened my eyes to REAL geological peak with that example. There you had a perfect case study: Complete transparency of data, long consistant history of drilling, no wars, political upheavals or interference and or revolutions to slow production, and ready access to cash investment and the best technology, research and field know how that the world had to offer.
Despite all this, once the real geological decline began, all the kings horses, men and money couldn't put the Humpty Dumpty of rising production back to gether again. The North Sea is now showing very similiar conditions, with what looks like the same result.
So, what would be needed in Saudi Arabia/OPEC, and thus the world to match the above conditions? KAS and OPEC already have the cash, and has or can buy all the know how and technology in the world. KAS and most of OPEC Persian Gulf nations, exception being Iraq/Iran has stable political conditions. Most have a long history of production and drilling (with the biggest having among the longest, KAS and Kuwait). What's missing to paint a perfect picture of provable peak or at least knowable decline due to purely geological "peaking" of the fields? In my examination, only two things:
- Lack of political interference, i.e., ratcheting production up and or down for purely political/power reasons, and not for any real technical or geological reason.
- Lack of reliable data history and transparency of data.
The first, political interference and ratcheting for economic and power play reasons will always occur. We would have used Texas production more in this way, except almost all of the oil produced there was for our home market. Unless you were going to try to do a "power play" against Vermont or Maine, it made no sense. But for exporting nations, the cranking up/cranking down of production buys influence. The givaway of possible peak is of course when OPEC can no longer crank up production, even when it would be in it's own best interest to do so. If Saudi Arabia faced a massive need for cash, oil prices were soaring to the point that major demand destruction was setting in and alternatives to oil were moving into the energy market, and even other oil competitors were beginning to steal KAS/OPEC market and influence, it would be compelling evidence that KAS had peaked, and could not raise production even when needed to save it's own skin. These conditions have almost been met on a few occasions in the last few years, but not clearly and beyond a doubt. We will have to wait a bit, but perhaps not much longer, as Saudi need for cash continues to grow, and if the oil price begins to rise again, the last shoe to fall will be demand destruction and loss of Saudi influence. If Saudi production does not then begin to climb, we can make a pretty safe bet (not assured, but pretty safe) that Saudi production CANNOT GROW, no matter what they do.On the second point, "Lack of reliable data history and transparency of data", this goes back to my RUNNING BLIND posts, and to my quotes by Matthew Simmons showing that this is a major concern of his. Matt has suggested even using military satelite spying and operatives engaged in espionage on the ground to find out what is really happening around the world in oil production. I think he is right. Who can argue that the data and knowledge of the world energy situation is not as important to our survival now as the number of missiles and planes an enemy holds has always been?
Matthew Simmons is right to keep the pressure up on this, and we should support him, with continuing urges, taunts, bribes, whatever, for the worlds oil producers to agree to third party and outside auditing and examination of their data. In the modern world, a "reliable partner" in any business MUST be willing to be examined/audited. It is proof that they are confident in the numbers they put out, that they are unafraid to be checked from the outside.
It is shocking that the ONLY major industry that does not comply to any modern standard of business civility and ethic in this area of conduct is the most important business for modern technical survival, the energy business at the most important end, the production end. ASTOUNDING that this has been allowed for so many years!
SO, if we get declining production, in a situation in which the producers would benefit from rising production, or their survival would be assured if production rose, and it still declined, and if we had reliable outside auditing to prove the water cut and the declining production, and if there were no wars or upheavals to explain the decline, and continuing investment in the most modern exploration and drilling methods could not turn the decline around, THEN we could say, yes, this is it, the real geological peak, just as in Texas, no amount of additional money or effort can turn it around now.
To repeat what Simmons said, and Hirsch said, and we all know, if we wait until that clear twilight eve to act, it will be far, far too late.
When U.S. peak occured in 1971, it was not admitted to until 1979, even by the U.S. Department of Energy, and then they fudged and azz covered, saying that yes, it appears the U.S. "may have" peaked on oil production!! This almost nine years after it had happened! Of course, it was too late to do much except sell our destiny abroad at that late point in the game, and our freedom and destiny has been being bled away, one black drop at a time ever since.
Make no mistake: We could have reached and passed world production peak several years ago, and not know it yet. Or, we could still be a third of a century prior to Peak, and most of us dead and in our graves by the time it comes. The data REALLY IS THAT BAD.
We REALLY DON'T KNOW. It, meaning peak oil and or North American gas production could be anywhere between a half decade behind us or three decades in front of us. IT COULD BE ANY DAY IN BETWEEN.
Until and unless we act WITH FIRM DECISION AND DEDICATED HARD EXPENSIVE EFFORT, we live with that "Sword of Damocles" hanging by a thin thread above our cultural and personal heads EVERY DAY. Every day.
"As goes Ghawar, so goes Saudi Arabia. As goes Saudia Arabia, so goes the world." Matthew Simmons once said, I quote as closely as I can recall the remark. That is the thin thread on which we now hang our whole intricate, delicate cultural survival. Given that, does it really matter whether monthly, or even yearly, production rises or falls? Such is the precarious situation we have come to accept as normal. Running blind, at the edge of a cliff.
Roger Conner known to you as ThatsItImout
We are generally arguing interpretations of numbers that are inherently ambiguous. I always believe that the less certainty, the more the theories, and ironically the more powerfully these theories are adhered to.
I hope for clarity sooner rather than later but am not optimistic. I think we will in fact learn the hard way when peak has passed.
Have we reached Peak Women and Children now?!?!?!?!?!?
Photos from the BBC
BEIT HANOUN, Gaza Reuters - Two Palestinian women acting as human shields between Israeli soldiers and Palestinian gunmen were killed on Friday during a stand-off at a Gaza mosque, before the 60 gunmen managed to escape.
The dramatic events came on the third day of an Israeli assault on the Gaza town of Beit Hanoun, the largest operation it has conducted in the Gaza Strip in months, designed to put a stop to militants firing homemade rockets into Israel.
The gunmen holed themselves up in the al-Nasir mosque on Thursday evening. On Friday, around 50 veiled Palestinian women, answering an appeal on local radio, marched toward the mosque, attempting to act as a shield against the Israeli troops.
Israeli forces opened fire toward the mosque and two of the women were killed. At least six others were wounded.
The Israeli army said it had fired at armed Palestinians. It said it was investigating whether it had also shot the women. A spokeswoman said the army had television footage showing armed men mingling among the women as they headed toward the mosque.
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Can someone explain to me how this will advance Palestinian and Israeli society? Yikes!!!!
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
http://www.simmonsco-intl.com/files/American%20Petroleum%20Institute.pdf
Quote:
The guy certainly is intelligent, this presentation just shows the same difficulties building up in the middle east that he mentioned a year ago, the message I read is its not game over, but its certainly getting harder which is going to make overall production growth very hard if not impossible in the near future.
And that is basically the problem here....Simmons cheery picking from these papers creates a "state of fear" if you will, with respect to Saudi's ability to keep providing oil production. As I menitoned before the factors Simmons makes such a big thing of are common in almost all oil fields in one manner or another and are dealt with as needed. There is no such thing as oil that is "easy" to get out of the ground, at least not in any reasonable sense of recovery. What separates the Saudis from the rest of the world is that they are on the leading edge of oil field technology.
I've taken a bit of free time to go back to some of the SPE papers Simmons uses in this presentation. I'll discuss them in point form here. No room for a full discussion but I might do an addendum later:
Slide 30
Simmons give two quotes from SPE 97314
Quote:
Drilling problems encountered in the area typically include shale instability through pressure tansmission effects, swelling clay-stone, bit balling, drill-string accretion, differential sticking over tight gas permeable sands and down-hole losses.
Quote:
As fields mature and the search fro new oil and gas reserves continues, operators on the whole are increasingly moving towards drilling more challenging well profiles. Typical well profiles ever more frequently present challenges such as extremes of drilled depth, temperature, pressure, horizontal step out and extreme water depth to name but a few.
But in fact this paper was written to describe how in a Saudi field (unnamed) and in Awali from Bahrain how their High-Performance Water-Based-Mud Technology mitigated all of these problems that had previously been experienced in water based systems. Note that the Saudis had moved from oil based drilling systems which are non-problematic from a drilling standpoint to water based for environmental reasons.
A quote from the same paper:
Quote:
After a considerable research and development program, the resultan HPWBM has been field proven world-wide, including extensive applications in the gulf of Mexico as well as applications in Brazil, Austalia, Libya and Saudi Arabia. Furthermore a single component of the system has been used as an innovative solution to a low pressured reservoir application in Bahrain.
Simmons quote "days of easy drilling have passed their twilight " is misleading. In fact drilling in some areas is actually becoming easier because of the technology.
Slide 33
Quote from Simmons:
Quote:
Technology miracles are now creating new challenges
".......However, horizontal wells are more sensitive to formation damage induced by drilling fluids"
"Unlike in vertical wells, damage encountered in horizontal wells, usually completed as open hole, cannot be bypassed by perforation."
He neglected, however, to quote the very next line in the paper:
Quote:
" Therefore searching for an optimum drilling fluid and selecting the proper clean-up fluid to remove mud-induced damage may considered as one of the main tasks in any field development"
Which pretty much says it all....yes there are more problems with mud-induced formation damage but this is fixable. Indeed later in the paper the authors note that
Quote:
"New Celean-up sytem showed very promising results with 82% of return permeability for the low permeability core."
In actual fact mud damage is not something new and unusual....in vertical wells that remain open for long lengths of time prior to testing and/or completion damage can be extensive and this is faced pretty much everywhere.
Slide 34 - APE 93260
Simmons quotes
Quote:
" The number of horizontal wells is increasing dramatically in Ghawar Field, the largest onshore oil field in the world. The complexity of completions is also increasing."
Then makes the statement that the horizontal wells are challenges for conventional technology such as coiled tubing.
But the whole point of this paper is to describe some very effective technology for improving the way long reach horizontal and multilateral wells are logged.
From the same paper:
Quote:
" The paper will discuss the successful application of this technology and its comparative advantages, including reduced cost and enhanced operational safety."
"The tractor is an effective too for logging horizontal wells and achieving good log quality......the tractor reach in horizontal wells exceeds that of coiled tubing.....a significant cost benefit results from tractor logging in horizontal or high angle wells....a safer logging operation results since the extensive CT deployment and undeployment operation is eliminated"
so in actual fact the technology applied is better and more cost effective than traditional methods such as coiled tubing conveyed tools. This is a good thing, not a bad thing as implied.
Slide 35 spe 92883
Here he merely shows a slide from the presentation that shows decreasing oil production with increasing water cut. To some extent this sort of slide can be quite misleading, they really should have plotted oil and water both in terms of bbl/day but that isn't Simmons fault. What is though is neglecting to mention that the whole point of this paper was discussing the success of rigless water shutoff using through-tubing bridge plugs.
With reference to Ghawar the authors said
Quote:
"One of the easiest and most cost-effective techniques that has been used in the field to reduce water production is the application of rig-less Through-tubing Brige Plugs."
"The application of TTBP in this onshore oil field has been economical with an average payback period of 3.5 days. By successful application of TTBP technique in 93 out of 136 wells, an immediate oil gain of 112 MBOD was achieved."
The wells which failed were due to the super K streaks....in other papers in SPE Saudis talk about how integration of 3D high resolution seismic and MRC wells helps to avoid the super K streaks.
Slide 36 spe 93439
Shows some plots trying to emphasize problems happening at Ain Dur due to high water production.
In actual fact the point of the paper is to point out how effectively they have been able to manage water production:
from the same paper:
Quote:
"Horizontal drilling and rigless water shut-off proved to be effective techniques to control water production and enhance recovery in this gravity dominated system. Since 1999, production optimization has also played a significant role in controlling the water production and maintaining a constant water cut."
Quote:
"The main focus of this paper is the last six years. Since 1999, the oil and water production, water injection, and reservoir pressure were kept effectively constant as shown in Fig 2. This sound behavior is a result of active strategies taken during the subject period. Those strategies are in alignment with the rigorous logic of reservoir management tenets practiced by Saudi Aramco."
Indeed from the information presented in this paper it illustrates a very well behaved water flood that is being managed quite effectively. The fact that Aramcos models are now suggesting in excess of 70% recovery factor says this is a well managed field, somewhere nearly double what most fields ever achieve.
Slide 38
This is really over the top I think. Here Simmons quotes from SPE 92886 directly from the Introduction
Quote:
"The challeng consists of a relatively thin gas cap at the top of the oil-producting Arab-D zone. Necessity dictates casing off this cap to avoid gas production and to avoid taking a kick or causing lost circulation while drilling the horizontal hole below it"
the implication I assume is that there are huge problems that are difficult to solve. In actual fact this paper is about the first "marriage" of solid expandable tubular technology with the use of bi-centric bits. The idea here is that Aramco can avoid one of the casing runs they would do traditionally and also avoid several reaming runs. In actual fact the traditional methodology worked well at sealing off the gas, the new technology is used to save costs. Speaking to the well where they applied the technology Ain Dar 497
Quote:
" The actual installation was a simple, by-the-book operation that encountered no substantial obstacles. The integration of these two technologies into the initial well plan save Saudi Aramco 23% of their drilling costs, reduce the overall environmental impact of the rig, and decreased the total rig time by 9 days."
And
Quote:
"If the experience of this one installation is extrapolated to all the fields of Saudi Arbia, the potential cost savings that these two technologies can bring to the bottom line is considerable."
Slide 41
This one really ticks me off and shows why petroleum engineering should be left to petroleum engineers. In this slide Simmons references SPE 93473, shows a figure from the paper and makes the comment
Quote:
"Advanced logging seems to indicate the well knicked the gas cap in various places"
and
Quote:
" paper details puzzles raised by horizontal wells drilled in Shaybah in 1998".
First off the paper decribes application of advanced techniques in production logging which were used to identify various permeability zones within the horizontal well bore. What they discovered was that the roof carbonate had several different facies along the length of the bore hole, which is not surprising if you know anything about the Shuiaba in this area. The fact that certain zones are more permeable than others results in downward gas coning as pressure is drawdown in the borehole, further complicated by the fact there is little in the way of acquifer pressure support. In fact they state
Quote:
"Gas entries from higher permeability facies indicated that gas is cusping down from these intervals as schematically shown in Figure 7".
Figure 7 is the one Simmons shows. How in earth he interpreted the paper as meaning they were nicking into a gas cap in several intervals is beyond me. The results of the study show how by using new production logging techniques, plugging the information into a simulator they were able to test several remediation methods and come up with the best solution which was a sidetrack resulting in increased oil production and no free gas. Problem identified, analyzed and solved.
I'll stop here as the post will get too long. Suffice it to say that by just pointing to problems and not mentioning the fact that they are first solveable and second have been mostly solved already Simmons does the average person not familiar with oil field methods a huge disservice.
I am a firm believer that we are headed for a Peak of some kind within the next ten years, my best guess is it will be a relatively long undulating plateau. People do need to wean themselves off cheap oil, develop alternatives, conserve etc. Simmons contribution is bringing the notion of Peak Oil to the average person, but continuing on this "Saudi could fall apart any minute" bent is not of benefit to anyone as far as I can tell. Fair and impartial reporting would be a better tactic IMO.
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Thxs very much for your input! I hope you will post more--we need all the expertise we can get here on TOD.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
This is to counter the notion, which we hear everywhere, that Saudi Arabia is swimming in oil, and that their costs are less than $1 a barrel.
After reading his book, I was impressed that KSA oil is very mature, that Saudi technicians are formidable, and that we are unlikely to see anything but decline.
RockDoc's summary seems to prove out that, although he thinks Simmons's overstates his case, that he thinks PO is on the cusp.
For a contrary view point, here is a post from a drilling engineer screenname Energydigger regarding his experience in Saudi Arabia and why he believe SA is at peak production. He runs his own website called Energydigger.com. In this post, he was responding to Rockdoc, but not regarding Simmons.
no offense taken RockDoc, this is one of the reasons why I created the EnergyDigger.com website, to keep up with all this news... I had presumed from your screen name that you were a reservior engineer or a geologist.... your dealing with SPE papers and statistical data, much like the US government and some hedge funds out there - what I offer you is not hard data i nthe form you ask for and obviously prefer - but rather on the ground experience - I have drilled the new replacement wells as well as the workovers and I have seen first hand the declines and they are absolutely positivly real - even if I cannot support you with some SPE paper to that effect - the real issue here is graft - let me explain a particular situation and it will make more sense for you - try to put SPE papers and raw statistical data out of the picture for a moment and imagine that government and SPE figures are as about as accurate as the inflation figures and housing starts - - this is one of many variations of the same scenario in all phases of operations in Saudi - exploration/drilling, production, refining, etc..etc... - - - the royal family is now near 6,000 strong if not more... the king owns everything in that country - and i mean everything. By extension, the royal family has it's hands in everything that has anything to do with money - some flunky way down the list happens to control a mud (barite) supplier. The barite company sellign the barite to Aramco (via this low-level Saudi family member) decides to give the flunky a big cash award for accepting a lesser volume of barite but mark it as the full weight/volume as per the sale. The flunky makes off with a lot of cash and the barite supplier delivers the 60% of barite needed to drill the hole with. The drilling supervisor in charge of the operation is no idiot (my spelling is not great but I do know how to drill a well in my sleep) and confronts the Aramco manager with the issue decidely laying out the consequences of this action. The manager tells the supervisor to drill the well the best he can (because there is more than one cash award floating around, obviously) - - your hard working engineer drills the well with underbalanced drilling fluids which for the uninitiated causes blowouts among other greta things - I have seen three 30 million dollar Santa Fe rigs burned to the ground in as little as 4 months. BUT, let's say there is no fire, we get through this thing with our skin on and complete the well - Whew! OK.... well, theres another really big problem that will nag us for the remainder of the entire life of the well. When we drilled the well underbalanced (meaning the formation pressures are higher than the wellbore artificially induced drilling mud weight - the rheology of the drilling fluid systems did not build up what is termed a "skin" on the wall of the hole to seal the formation in from the chemicals and other formation fluids up and down the wellbore - as a reservior engineer, I can imagine you will greatly appreciate this particular example - if you take a core, it will be contaminated to unusable - and thus extreme formation damage has occurred - ultimately reducing the output and longevity of the well. SIGNIFICANTLY ! I have drilled wells over there in a field where I had everything i needed and brought in 600 bbl a day but most of the time, the wells can be ruined (in terms of Saudi rates) to less than 50 bbl/day... and that is day one, they can decline after that for the first year or two... the fields over there are all very homogenios - the wells can be batch drilled in a straight line across the desert and the results can be nearly identical with exceptions - the data I have is not printed but it is so firmly established that is is undisputible - at least for me.
That was only one example of graft hurting the Saudi oil production system - there are many many of these examples and that is just Saudi - Nigeria is even worse. Try North Africa or Eqypt, they are bad too - the European oilfields are much better run but less prolific. I drilled Japaneese Geothermals in Kyushu Island areas last year and they are extremely efficient but no real reserves except for the Northern Sapporro areas... Phillippines are the same - spent a month there last year. I spent January - June last year in Australia and they are declining at about 4% per year - falling behind very fast - a national emergency actually in their eyes. I lived in Venezuela and Columbia for 2 years in the mid 90's and graft is bad there as well but in a different way - the government runs the oilfields and need I say more about that??
Listen, I know you are trying to get the straight skinny here and I like hard fast numbers as much as the next guy, seriously, I am an engineer and that is a well know fact about the breed but I am telling you from first hand accounts at the most upstream end there is - I have been kidnapped 3 times in my career, twice in West Africa and once in South America - I have had morters land within 50 yards of me in Cabinda, Angola - - I flew into Kikwit, Zaire when ebola virus broke out and my company evacuated the country, I have worked hazard duty in the worst environments on earth and these experiences give one a keen eye for many things in life - including life itself - I have spent my entire adult career chasing oil - it has been my passion and my life for 30 years. I wish I had a better picture to paint but it is not as you say - the problem is real and I suggest only look at the real price of energy fuels today to justify my conclusions even if you cannot accept them at face value in this forum. It is actually a pretty simple equation but so many, including educated people find it hard to believe we are running so close to the edge on supply/demand.
That is my story and I am sticking to it...
Here's his post:
Thanks for the kind words. The oil field is a particularly dis-franchised industry - we have always taken a backseat in many formats. When we were starving at $12 oil and had 85% of the people in our industry losing their homes to the bank in a single year - there were no cries of foul and let's give some money back the the oil companies to help their people. This is not whining, people in the oil business don't do that - we get up and go find work - there is a point here... During the down-turns in the oil industry, the talented people have esentially been forced out of this business - I cannot even begin to convey the magnitude of the losses - they are staggering. These people NEVER come back to the oil industry as they are smart and have found other career paths and moved on in other industries - understandable. These down-cycles have come in regular waves - usually less than 10 years apart - this is a major problem as I will further discuss below.
The essential point here is this - there is nobody who can perform the work needed to replenish the resources we are talking about - sure, we are drilling and doing work but it is so inefficient that is is a pethetic thing my friend - it's really terrible. As someone with 30 years of high-end experience, I am contacted almost daily with job offers - not a bad thing for me, but a terrible statement of the industry as a whole. I am published in 170 countries and have worked in more than 40 countries in the last 30 years - I dare say that there are no more than a few thousand people in the world that can say that - there should be 50,000 people with that kind of experience but there is not.
Peak oil is here - I agree with Simmons - he has an educated viewpoint that few really understand - even in our own business, few understand it because they have such little experience in this business (reference previous sentences)... The education of an advanced oil engineer that is worth his salt and actually contributes to new ideas and is highly productive is about 10 years (minimum - remember the time-frame I established above for industry down-turn cycles?) - there are few people in this industry now with 2-3 years and many people with weeks and months only - our rigs are staffed with drug-ridden flunkies - I would say about 80% of rig personell are extremely incompetant - these figures are rough of course but I believe I am being very conservative... the big picture is this - we would not be at or so near to peak oil if we had a robust and vibrant industry - to be perfectly honest, the petroleum industry is in a shambles and I think it will be 10 years before we start to make a decent recovery - and also, this is really too late, we are about 10-20 years too late in fact... we could be 3 decades behind the curve in the whole scenario - - to add fuel to fire, the other countries we are competing with have smarter and more motivated people than Americans... I know thta isn't what you want to hear - I don't like it either but it is a raw hard fact - other countries have a much more educated work-force than the United States. We are competing in a large sence with other countries for resources now and they not only have a better educated industry than the US - they are also closer to the resources in most cases and have better relationships, lower cost-structures, etc... yes, we are in Peak oil and it is getting worse, not better - we may catch up a little someday but I probably will not see it in my career.
I realize that Ghawar is not Yibal, but it's the same formation, same area, and both fields were redeveloped with horizontal wells.
Shell was gearing up their surface facilities to handle an expected flood of new oil at Yibal, when they got a flood of new water.
And I understand that Ghawar, as a percentage of OOIP, is about where Yibal was at when it started crashing.
In any event, the "best case"--that Ghawar is making one barrel of water for every two barrels of oil--is hardly a stable situation in a field that has already been redeveloped with horizontal wells.
I have read these rockdoc posts before; has he written more? He reminds me of "J" who posted here when TOD first started, which is one of the reasons I got stuck here.
Whatever happened to "J"? Is he rockdoc? The kidnapping in Nigeria and mortar attacks sound very familiar...