A little more updating of information

We have been a little fixated over the recent CERA report on the myth of an imminent peak oil problem, and, in the process, have not given enough recognition to another report that has just been released. Wood MacKenzie is also a company that provides information on the energy industry and, is the often more conservative evaluator of reserves that Jean Laherrere has used in some of his studies. On November 1 Leanan noted their press release, which can be seen on video in which they noted that while the Arctic Regions do, in fact, contain significant amounts of oil
The US can no longer consider the Arctic as a long-term strategic energy supply source, according to a new joint study by Wood Mackenzie and Fugro Robertson, "Future of the Arctic." The study found the Arctic potential is significantly less than previous estimations had suggested, and the mix of resources have been found to contain much less oil and more gas.
"These findings are disappointing from a world oil resource base perspective," said lead study author, Andrew Latham, Vice President, Energy Consulting at Wood Mackenzie.
The study shows only approximately one quarter of the oil volumes previously assessed in key North American and Greenland basins.
In a more recent OG&J review (behind a pay wall) of the report it is noted that:
As a result, the study said the US "must look elsewhere to meet rising demand," including member nations of the Organization of Petroleum Exporting Countries "such as Venezuela," and to Russia-areas of "broader, geopolitical concerns relating to security of supply."

This study is the first overall assessment of the Arctic's total oil and gas potential by Wood Mackenzie or anyone else, Latham said. "Nobody has done it all, not even the US Geological Survey," he said.

It further goes on to comment on the estimated costs of production, noting that
The cost of Arctic operations is high, driven by extreme transportation costs, with wide variation between basins. "Average field development costs of around $6/boe are comparable with many other parts of the world. High costs elevate average development breakeven prices across the Arctic to above $30/boe," said the report.

It said there are attractive niche opportunities in many basins where the breakeven price of the largest fields are much less than average, below $20/bbl in some cases. Two basins-the North Slope in Alaska and Russia's Pechora Sea-achieve exploration full-cycle returns greater than 20%. "These are both oil-prone basins with good access to markets via pipelines and ice-free seas," Latham said.

The North Slope region has previously also been addressed by the USGS.

I thought it a worth putting the additional emphasis on this to remind us all that not all the rosy estimates relating to the development of future reserves will actually turn out to be there, or will be developed in the immediate future (note that the report anticipates the major gas not being produced until perhaps 2050 due to export and technological constraints).

And, to give further support to Westexas comments about drilling more and producing less, let me also stick in here the information from the API from their third quarter well completion report.

a 21-year high estimated 37,261 oil wells, natural gas wells and dry holes were completed in the first three quarters of 2006. In the third quarter alone, there were an estimated 12,687 completions. This figure is the highest single quarter estimate since the first quarter of 1986 and the twelfth consecutive quarter of increases in estimated U.S. drilling activity.
The wells broke down into 11,545 oilwells and 21,897 gas wells. In an additional comment from the OG&J (protected)
(quoting Frederick Lawrence of the Independent Petroleum Association) While EIA estimated in September that an average 264 rigs drilled for oil in the US during 2006's first 8 months-66% more than the average of 159 in the same 2004 period-US oil production fell more than 7% to an average 5.098 million b/d from 5.5 million b/d, he said.

"Although the well completion totals are very impressive, production isn't keeping up. Producers need access to more supplies and have to pay increasing costs for equipment and personnel. The cost per well is increasing, which diminishes some of the value of the increased commodity prices," Lawrence said.

However, opening the latest volume of the OG&J one finds their take on the recent IEA report, that Dave found more pessimistic than usual. I thought I would include one of the tables from their review.

As you may note from the line about the US, the current decline is production may only be temporary (though I am not holding my breath). On the other hand the OGJ review does anticipate a decline in the production of natural gas, failing "a much more aggressive leasing policy, both on and offshore, especially for unconventional natural gas resources."

Of note, the futures market is placing bets more in line with OG&J than CERA.   The futures have a significant contango.
Microhydro, what tells you the futures market is placing bets more in line with OG&J, rather than CERA? I'm just curious what data you might be watching.  It will be interesting to see when the market "wakes up" to peak oil.

If what you say is true, CERA may have noticed this trend too and that might help explain their recent PR assault on the Peak Oil camp.

At the moment, Jan 2007 is $60.36 and Dec 2012 is $66.37.  This is not a pricing structure that believes in a future superabundance of oil like a 130mbpd CERA world.  If the traders believed CERA, the 2012 contract would be something under $40.

Now you might ask why the 2012 contract is not $200 or more.  There is a simple answer for that.  When the contango (future price higher) is large, it becomes economic to store commodities for future use or sale.  And that is what is happening, both governments and private interests are increasing inventories.

While I agree with MicroHydro I would like to point out that  futures contracts going out as far as 2012 are typically thin and IMO have not had much predictive value in the past. Better to take them as a bet on direction of prices as opposed to absolute price levels.
Thanks microhydro.  There was a paper presented by Pedro Almeida at ASPO 2005 using essentially your method:

"Peak Oil and the NYMEX Futures Market: Do Investors believe in physical realities" (Abstract)

The authors look at the slope of the curve for Prices on long-dated futures contracts for December delivery, as well as open interest.  

Figure 1 shows the data from 2005 was essentially what you suggest if traders were Not anticipating Peak Oil: a negative slope with declining prices for late-dated contracts. They also note the low open interest as a sign or non-awareness.

IF the slope for the December contracts is now positive and open interest is increasing we might be witnessing the awakening of the Futures market.  

Assuming MH is right - I second this interpretation of CERA's report.

I wonder if someone can give a good explanation of how it is possible for a spot market to respond to long term trends? Is it not the oil in storage - ready for delivery that matters more than actual flow rates in such a market? Are the demands of margin trading, risk of a margin call and a need to keep trading volumes high (because each trade has a small profit) not contrary to adapting to long term trends/risks?
For more explanation see the link abstract for ASPO 2005 above.

All the points you make for the risk in long-term contracts are there but you might think of this as the Chinese Approach to oil. Lock up contracts for in-ground oil now using futures because most traders, unlike nations, cannot can make direct contracts with the producing countries.

Hello Heading Out,

Although I am delighted this new evidence helps to increase the credibility and validation of all the TopTODers worldwide, especially the tag-team of Westexas & Khebab, it sure makes me worry how smoothly the rest of humanity can prepare in a timely manner for the roller-coaster ride down the Hubbert backslope.  Yikes!!!

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

Newsdrop. AngryChimp. I've got much to say regarding your posts. But I have no need or desire to publish my thoughts here. I will. I just need to know you are listening. As I get older I learn not to waste time. You can email me direct and set up any arrangements you want, or I will post here. What I won't do is constantly monitor old threads. You never sourced the Thankgiving stuff and an early entry that appeared to be Orwell. I'm glad I alerted you to the Sept. 24 conference at Berkeley. That is a must see video. Do you believe in God? Do you believe that things can have no explanation?
Sorry, ThanksTaking. It resonated with me. I'll never forget that. I will also never forget 11.25.06. Only those closest to me will know why. I changed on the 19th. The 26th verified it. But like Jack and yourself, I'm very secretive. And I'm still considering a Presidential run.

Don't worry. We'll figure out the cabinet positions later. Kennedy created NSC/NSA. I'd need secret police.

What are you talking about here?  I must be missing something as your last couple of posts seem to be private reactions but you are posting to the public thread.  
Do you really care?
In my opinion, he does care since he made this remark toward you..
Great, now we're getting somewhere. Do you care? I can't answer whether he missed something or not. Did I miss something?
I personnaly think we all missed something, namely the bit of text that initiated your intervention.. That was the content of David JM message..
It was meant for AngryChimp. Apparently my intended target was the only one that missed it. I hope he's okay.

Heading Out,

Great information, thanks.

There were a few items that caught my eye, and lead me to more questions than answers, of course...

1. the sentence from the report: "The study found the Arctic potential is significantly less than previous estimations had suggested, and the mix of resources have been found to contain much less oil and more gas."
Question:  How much more gas?
Right now is not the time to be frowning on supplies of natural gas wherever they can be found.  The trillion dollar question right now is whether there is enough gas out there to do a bit of a "dash to gas" and convert more to transport use, and hope, assume, try, whetever, to reduce waste in heating and electrical production use (this somewhat mirrors T. Boone Pickens idea voiced several years ago, that we could do nuclear for power, gas for transportation.  I personannally like solar/wind/efficient design for electric production and heating, and perhaps gas for transportation.  Either way, how much gas?  The world needs to know!
2.Even if the volume of oil had been there in it's fully expected amount, what was the time window envisioned to get it to market?  In other words, would/will the oil or gas be available in real volume in the near future, or was this down the road, say post 2020?
3.  Anymore thoughts on those "niche" opportunities?  As those at TOD are prone to do, we are always kicking around radical transportation solutions for natural gas.  Is the pipeline cost the essential barrier?

Lastly, a bit off topic to what I have been discussing above, but:
Can we start "packaging" this information into some type of very involved presentation pushing HARD the conservation of electric power (i.e. efficient lighting, "EnergyStar type appliances, solar hot water heating, passive solar and earth bermed protection in newer housing as DIRECTLY related to our overall energy emergency (I think we are getting to the place we can start calling it that).  There are some that completely divorce the "transportation fuel" problem from the stationary power production and heating issues.  I think this is a mistake we will pay dearly for, as natural gas enters, directly or by the back door, the transportation fuel market (i.e. through tar sand oil, fertilizer in ethanol, and low sulfer Diesel fuel)

Roger Conner  known to you as ThatsItImout

Their exists a potential break through for stranded or semi stranded natural gas in the form of micro-channel reactors.

Google returns many links.


These can be potentially placed in the field to perform GTL practically at the well head.

I question that they would provide enough hydrocarbon liquids for our current society but I think they would be good for limited use in a mainly electrified society. Plus the same technology works for bio-gas.

Can we start "packaging" this information into some type of very involved presentation pushing HARD the conservation of electric power

Yeah. I mean "we" can. But not here. This is a community of hard-core doomers. They have no interest in anything that might avert the apocalypse. There's no love here.

Actually I don't thimk I'm a doomer in the traditional sense.

I think our current society is unsustainable and even if your not a doomer its pretty obvious we will dead end at some point in the near future.

The doomer talk is from recognizing that we need to collectively act intelligently. I just don't see that happening.

The longer we wait the less chance we have for making mistakes. In recent times many people quote America's WWII effort as a shining example of collective intelligence and will power the fact we never had our own factories bombed is and had vast natural resources is not given in my opinion its fair weight in the outcome of the war. If anything the Russians did a better job at collective action at a far higher cost both socially and physically.

So successful examples of collective action in the twentieth century include in many cases horrible conditions for the actors or normal people. China  is another example  the same collective strength with individual hardship approach.

So historically under real hardship it seems historically your dammed if you do and dammed if you don't.

Finally Americans today who are the worst rampant consumers are not the same people who fought in WWII we are in general a weak, fat and jaded population.

With all this and more the chance for enlightened collective action happening to create a new sustainable society is slim to none. I don't think its a doomer attitude just the facts.

Actually I don't think I'm a doomer in the traditional sense.

My cult takes no prisoners. Prove yourself or die. 2012 is the earliest possible date. I've promised my bride Pickens' liver on a plate. With Feta cheese and green peppers.

Forget traditional. This is a war. Only modern will win.

If you need some warmup, try the Sopranos, Season 5. Especially the last three episodes.

Do you care?

fava beans and a nice chiante' ?
Exactly. Hahaha. I forgot about that one. What the heck are fava beans, anyway?
i dunno either but they are supposedly similar to lima beans or butter beans
Traditionally given out from St. Joseph's Alters (a long standing New Orleans tradition on St. Joseph's Day (middle of Lent) of free food for everyone with a donation to a church or charity as the spirit moves you.  The fava beans are supposed to represent Lent).  I assume common in South Italy.

Best Hopes,


Fava beans are similar to limas only in that they are beans and green. In taste they are more like a mild and sweeter pinto bean but are much easier to prepare from the dry state. You doomers really should learn about the hundreds of types of dry beans as they may be a main staple in your diet in the future....
Everyone should also know that Fava beans are poisonous to a small percentage of people:  www.ansci.cornell.edu/plants/toxicagents/vicine.html
10-4 granny now get busy and cook us up some grits    


There is so much truth in what you say.

What I keep looking for is a way to create/find opportunities for folks, and hopefully not just kids but folks of all ages to help contribute.  Truthfully, energy must still be too cheap.  I can find all kinds of industries that pay hugely when compared to anything someone can do in the energy industry, I easily understand why people say "hey, it couldn't be that bad or they would be trying harder..."

Last night on "Nightline" they had a feature piece about store window decoration in New York city department stores (one assumes a similiar situation in other major retail markets like Chicago, L.A. Atlanta, etc.) in which the expense, creativity, and extravagance  of the decorations have grown wilder with each year in a bid to attract the customer's attention.  It was spectacular, with motorized displays, animated creatures, use of exotic materials, etc.  The costs could only be guessed, but they must be into the hundreds of thousands of dollars.  And are dismantled after the holiday!

I just wondered where we could set up a "display" contest for the most creative energy ideas, and be willing to lay down hundreds of thousands of dollars only to dismantle it later.  It seems that energy alternatives are held to a completely different standard than any other industry in history.  I can think of NO industry that has to justify it's existance right down to the last single tenth of a watt in the way that alt energy ideas are expected to.  Of course, in alt energy, if the alternative proposed is not PERFECT on the day it is proposed, it is considered garbage and tossed aside.  It may start to get annoying to me someday.....gee, by the looks of this post, it already has!

Sorry, just had to vent....:-)
Roger Conner  known to you as ThatsItImout

[BLOCKQUOTE]The longer we wait the less chance we have for making mistakes.[/BLOCKQUOTE]

Very true, this is the time element in risk management.  So, why wait?  Start with yourself, then family, then friends, then community, then region, then country, then the world.  If you get any success up to your community you got a chance.  We are working on the region now where we are.  

[BLOCKQUOTE]With all this and more the chance for enlightened collective action happening to create a new sustainable society is slim to none.[/BLOCKQUOTE]

Also true, but less and less true the more local you are talking about.  

Yeah. I mean "we" can. But not here. This is a community of hard-core doomers. They have no interest in anything that might avert the apocalypse. There's no love here.

Considering rantings about 'messing someone up' or how one will offer up human body parts as food, the issues arn't the generation of power on the downslope.

The issues will be the crazy reactions of people to a money system based on growth that will lack the discounted input of oil.

Note the line that some of it won't be developed until around 2050.  That is not an encouraging date.  However the most likely scenario they project is that the region will yield 8 million boe in 20 years with the split being 40:60 oil:gas.  However less of that will come from US basins than was anticipated. (I am assuming that means the North Slope).



yeah, if it takes till 2050, I won't be drivin' the CNG Honda on my Christmas wish list on any of that gas...:-(

RC known to you as ThatsItImout

What is the long term advantage of converting to natural gas?  I think that using gas for transportation purposes is one f the worst possible attempts at a solution.  I think even the wildest and most far fetched ethanol plans make more sense.  

Say we convert to use gas for transportation, we roll out a whole new fleet of NG burning vehicles, and then a few years down the road gas runs low and we're back to square one.  If we're going to go to the effort of developing all new vehicles then we should just go electric.  We can put the money into mass transit and secondarily into electric automobiles.  

There's nothing really that great about burning oil or gas in a car engine.  If we want to use those fuel sources then we can just burn them in a power plant and sequester the CO2 both to prevent global warming and to produce more oil.  

Just to note that for O&GJ the US is now passing the midpoint of depletion...
And Kazakhstan delays coming up.

http://www.marketwatch.com/news/story/kazakhstan-downgrades-long-term-outlook-oil/story.aspx?guid=%7 BF81F3D59-F133-4966-ADBE-1AE4746D7BC5%7D

snip of info.
Kazakhstan has downgraded its long-term oil output forecast because of delays at Caspian oil developments, senior Kazakh officials said Tuesday, according to media reports.
Kazakhstan's Energy and Mineral Resources Minister Baktykozha Izmukhambetov said Tuesday, according to Interfax news agency, that planned oil production will reach only 130 million metric tons, or 2.6 million barrels a day, by 2015.
Earlier in June, he had said that Kazakhstan had planned to reach the production of 3 million barrels a day, or 150 million tons, by that time.
Kazakh Prime Minister Daniyal Akhmetov said Tuesday that the downgrade of long-term production forecast was related to delays in starting production at offshore fields.
"We have to realize that we have a delay in the program of developing the Caspian," Akhmetov was quoted as saying by the Kazakh state news agency Kazinform. "All our plans to reach oil production of 120 tons by 2010-2012 and 150 million tons by 2015 are in doubt because of it."
Akhmetov said that the delay would also affect Kazakhstan's macroeconomic indicators, without elaborating.
Production at giant Kashagan oil field in the Caspian is unlikely to start before 2009-2010 because of technological difficulties related to the development. There have also been periodic tensions between the government and the developing consortium, led by Italy's Eni Spa (E), over issues such as Kazakhstan's acquisition of a stake in the project

Who's next?

Two points I frequently make about Texas:

(1)  We saw a 1,000% increase in oil prices in the Seventies, from trough to peak.  The Texas oil industry responded with the biggest drilling boom in history, increasing the number of producing wells by 14% from 1972 to 1982, as production fell by about 30% from 1972 to 1982.   Post Peak (past the 50% of Qt mark):  More oil wells = less production.

(2)  Texas oil production is now down about 75% from our 1972 peak.   Last year (33 years after we peaked), the Texas State Geologist, who was presenting the "Undulating Plateau" scenario at a industry meeting, in response to a question from me claimed that while Texas "may" not be able to equal its peak production, it could--through the use of vastly improved technology--dramatically increase its production.  Denial is a powerful force.

notice how small the number one producer's reserves are (relatively)  no propaganization going on there     no, none  there.....   move along......   no propaganda there
Under the most likely scenario, it is projected that production from the Arctic will contribute some 3 million barrels of oil equivalent per day (mboepd) liquids and 5 mboepd gas at peak, with the proportion of production from US basins lower than previously anticipated.

"This assessment basically calls into question the long-considered view that the Arctic represents one of the last great oil and gas frontiers and a strategic energy supply cache for the US," stated Latham.

Thanks for posting, HO. Makes me wonder how much of those "yet-to-find", undiscovered resources (graph above) for the countries (Russia, et.al.) adjacent to the Arctic are expected to come from this "final frontier".

This should be front page news but, of course, it is not.

The table showing "Estimated World Oil Resources, 1995-2025" has a "Total" column that is the sum of the 3 columns to the left, except for Central and South America.  For some reason in Central and South America 103.4 + 90.8 + 125.3 = 19.5

Methinks they dropped the 3 in front of "19.5".  See how easy it is to discover 300 billion barrels of oil?  Now let's see, if I can sell that at even $10 per barrel...

(Their "Total world" total includes the correct figure of 319.5)

(Their "Total world" total includes the correct figure of 319.5)

Well, actually you should have said "Their "Total world" includes the very incrorrect figure of 319.5." The very idea that "reserve growth" and "undiscovered" will triple oil reserves in Central and South America is absurd.

However the idea that reserve growth and undiscovered will multiply US reserves by more than 8 fold is even more absurd. In fact the whole damn chart is absurd. And they just so damn specific. Russian reserves will grow by 102.2 billion barrels. Point 2 no less! And they have yet to discover another 115.3 billion barrels. They know exactly how many billion barrels Russia has undiscovered, down to point 3 billion barrels. They know exactly how much everyone's reserves will grow and exactly how much they have yet to discover.

I tell you these folks are good, they are damn good.

The original chart can be found here:

Ron Patterson

You're so terrific!!  (and so right)

I hadn't notice these details but, after relection, it's purely incredible. They perform a precision of more than 0.3%!!! (1bl of 100bl barrels are 1%, so 100 mil. barrel of 100 bl is 0.1 %)

I think it is simple impossible to achieve such a precision in the proven reserves, let alone the undiscovered ones!

But you must remember that they are discussing FIBs - Fictional In-place Barrels.

Lots of FIBs out there yet.


I prefer the simple acronym Imaginary Recoverable Oil, the IRO.

Perhaps they will even find the WMD's while looking for the IRO.

Denial is perhaps one of the strongest uncategorized psychological traits of humankind. It seems to be stronger than love from my observations.

I know from my own experience that being aware
of PO is sometimes a chore-burden i wish i could be relieved of.

I'm pretty certain that many sheeple know in
their bones that the situation is fubar'ed, but they
will not allow the silent intuition bubble to
the top of conscioussness, allowing themselves to be lulled by the figures of authority. it's the easier path.

"What do you get for pretending the danger's not real.
Meek and obedient you follow the leader
Down well trodden corridors into the valley of steel.
What a surprise!
A look of terminal shock in your eyes.
Now things are really what they seem.
No, this is no bad dream. -P.F.

Re: I'm pretty certain that many sheeple know in their bones that the situation is fubar'ed

Are you a long-term reader? Sheeple? Fubar-ed? These are terms we used well over a year ago here at TOD.

-- best

I should explain -- FUBAR means Fucked Up Beyond All Repair.

I think that's mostly accurate as I survey the world around me.

and sheeple is sheep + people?
Did i get it right

IN all cases, thanks for explaining FUBAR for a non english speaking person.. Can u tell me by the way what FWIW means??

FWIW = For What it is Worth

Usually data of questionable relevance or reliability.

FWIW, CERA projects world oil production at 105 million b/day in 2020.

FWIW, US oil consumption post-Katrina dropped.  However, it is difficult to call this a long term trend.

Hope this helps,


It helps so much, thank you heartily. I tried to guess, i thought it may be "for what i witness" lol..

BUt i found alone, like a big boy, the meaning of "AFAIK" and IMO-IMHO...

Ah there's one more thing: what is TFTSH or something..??

see you

THAT one is hard to guess !

TSHTF is correct letter string.

The Shit Hits The Fan.

Think of mental image :-(

Usually a "When" is implied or added.

This means when violent, rapid and negative changes take place.  In Peak Oil this means post-Peak Oil changes that are so rapid that they are difficult to adjust to without economic and social disruption.

TSHTF in Germany after they lost WW I.  Reparations lead to hyyperinflation, high unemployment and the Great Depression.  And Hitler.

Hope this helps,


Thanks a lot , you're a bit like my english teacher!!
I always thought it was "Recognition" not "Repair"

Hmmm, which one is worse?

What do you get for pretending the danger's not real?
Down you happily trod into the valley of steel.
Meek and obedient you follow the bush brained leader.
Man I wish I had a better rhyming meter.

Oh my, What a surprise!
That look of terminal shock is in your eyes.
Now things are opposite to what they seemed.
No, this is for real and not as Americans dreamed.
We're really low and gasping for crude,
In other words we're done for, Dude.

That's what we got for pretending the danger's not real
That's what we got for happily trodding into the valley of steel
For being meek-minded and blindly following our bush brained leader.
And the least of our problems is not having a better rhyming meter.

Do you have a musical score to go with this?

"I tell you these folks are good, they are damn good."

In other words, they must think that meaningless precision is is a cheap & easy credibility enhancer. At least for an unsophisticated target audience.

They may be right.  Keep that tucked in your back pocket.

http://www.peakoil.com/modules.php?name=News&file=article&sid=21102&mode=&order=0&am p;thold=0

Re: Oilman: U.S. Must Find Alternative Fuel Sources (Score: 1)
by billp on Tuesday, November 28 @ 20:55:45 EST
(User Info | Send a Message) http://www.prosefights.org/  
natural gas look to be more of an immediate problem than peak oil

Peak oil and natural gas is not our expertise.

But this is sure fun to read!!!