More on OPEC Rig Counts

Average daily oil + condensate production for all 11 OPEC countries, by month, from EIA, together with Baker-Hughes oil rig count. January 2000-Mar 2006. Rig counts exclude Libya and Iraq for missing data, and the last three points hold Iranian rig counts at the December 2005 value, as the data are missing. Click to enlarge. Source: EIA International Petroleum Monthly Table 1.1a and Baker-Hughes.

Let me complete the story on OPEC rig counts that I began yesterday. First let's talk about Indonesia.

Average Indonesian daily oil + condensate production, by month, from EIA and JODI, together with Baker-Hughes oil rig count. January 2000-April 2006. Inset graph shows annual oil consumption and exports according to BP (including NGL). Click to enlarge. Source: EIA International Petroleum Monthly Table 1.1a, Baker-Hughes, and BP.

Production in Indonesia has been in decline for some time as the graph shows very clearly. The rig count was increasing in recent years, but that has gone into sharp reverse in 2006 - I don't know why. Perhaps the most important story is told in the inset graph however: Indonesia is no longer an oil exporter and probably never will be again. It's striking that consumption was almost completely unaffected by the declining production (Indonesia subsidizes fuel internally).

Next is Algeria:

Average Algerian daily oil + condensate production, by month, from EIA and JODI, together with Baker-Hughes oil rig count. January 2000-April 2006. Inset graph shows annual oil consumption and exports according to BP (including NGL). Click to enlarge. Source: EIA International Petroleum Monthly Table 1.1a, Baker-Hughes, and BP.

Algerian rig count jumped sharply at the beginning of 2002, and this led to production increases. The rig count has been mostly fairly flat since, but production is increasing well, confirming that Algeria has fresh new reserves to exploit.

Here's the graph for Libya.

Average Libyan daily oil + condensate production, by month, from EIA and JODI, together with Baker-Hughes oil rig count. January 2000-April 2006, except Baker Hughes data begins in Feb 2002 and JODI data is quite incomplete. Click to enlarge. Source: EIA International Petroleum Monthly Table 1.1a, Baker-Hughes.

The situation is similar to Algeria: a flat rig count is leading to rising production, suggesting fresh high quality reserves to exploit.

Nigeria is the same story, until the political troubles started to set in this year:

Average Nigerian daily oil + condensate production, by month, from EIA and JODI, together with Baker-Hughes oil rig count. January 2000-April 2006. Click to enlarge. Source: EIA International Petroleum Monthly Table 1.1a, Baker-Hughes.

Here's Qatar: a very small rig count that is not rising, and production has leveled off. Could try harder.

Average Qatari daily oil + condensate production, by month, from EIA and JODI, together with Baker-Hughes oil rig count. January 2000-April 2006. Inset graph shows annual oil consumption and exports according to BP (including NGL). Click to enlarge. Source: EIA International Petroleum Monthly Table 1.1a, Baker-Hughes, and BP.

United Arab Emirates is similar, though both the production level and the rig count are higher.

Average daily oil + condensate production for the United Arab Emirates, by month, from EIA and JODI, together with Baker-Hughes oil rig count. January 2000-April 2006. Inset graph shows annual oil consumption and exports according to BP (including NGL). Click to enlarge. Source: EIA International Petroleum Monthly Table 1.1a, Baker-Hughes, and BP.

Finally, if we put together all the OPEC countries (excluding Iraqi and Libyan rig counts where there's not enough data, and extrapolate the last few months of Iran), we get this graph:

Average daily oil + condensate production for all 11 OPEC countries, by month, from EIA, together with Baker-Hughes oil rig count. January 2000-Mar 2006. Rig counts exclude Libya and Iraq for missing data, and the last three points hold Iranian rig counts at the December 2005 value, as the data are missing. Click to enlarge. Source: EIA International Petroleum Monthly Table 1.1a and Baker-Hughes.

On the whole, although some of the smaller countries are not increasing their rig count, this looks like OPEC is generally behaving in a fairly reasonable manner. After the global slowdown that started in 2000, they cut production, and then cut rig count. As the economy started to recover in 2002, they increased production from their spare capacity and then began increasing rig count. Rig count has continued to grow rapidly and steadily, but production has been declining for the last seven or eight months. On the whole, it doesn't seem to me this is very compatible with the "There's plenty of oil but OPEC isn't making an effort" that some anti-peakoilers have been arguing (though you could just about still argue that the Saudis and Iranians are deliberately cutting production to maintain very high prices in the short term while increasing rig count to maintain more capacity in future).

For further context, here's OPEC (in red) contrasted with the US, Canada, and the rest of the world (ex Former Soviet Union which Baker Hughes doesn't seem to track).

Baker-Hughes oil rig counts for OPEC (ex Iraq and Libya), United States, Canada, and the rest of the world (ex-FSU). January 2000-Mar 2006. Source: Baker-Hughes.

OPEC has a relatively small rig count for the large amount of oil they produce (probably because a number of the big Middle Eastern fields have historically had wells with very high flow-rates). However, the growth of OPEC rig counts in response to market events of the last six years seems well within the range of how other players are responding.

Hello Stuart,

Thxs again for your hard work.  I was rereading Duncan's Olduvai Gorge Theory Update again [PDF]:

By tallying the amount of primary energy used to
generate electric power we find that electricity wins
hands down as our most important end-use energy. To
wit: I estimate that 7% of the world*s oil is consumed
by the electric power sector, 20% of the world*s
natural gas, 88% of the coal, and 100% each for
nuclear and hydroelectric power. The result is that
electric power accounts for 43% of the world*s enduse
energy compared to oil*s 35%.

The critical role that electricity plays in the
United States is likewise telling. Out of the total enduse
energy consumed in each of the social sectors in
1) 0.2% was electricity in the Transportation

  1. 33.3% in the Industrial sector,
  2. 65.9% in the Residential sector, and
  3. 76.2% in the Commercial sector (EIA, 2004).
[page 4, 2nd paragraph]

It struck me how these latest graphs seem to dovetail nicely into his theory.  Duncan predicted a BRINK plateau 2004-2008 [note 5, page 7], your graphs seem to confirm.  He talks about diminishing returns-- the rig counts vs FF outputs graphs again.

I googled electrical blackouts: from Hawaii to Africa to Israel and elsewhere, the power companies are having increasing difficulty keeping the juice flowing as it is politically difficult to raise prices fast enough to gain the maintenance cash and/or growth funding to make a more robust distribution network.

Is a Hubbert Linearization Model possible for all energy sources?  Is there a way to graph power plant #s and uptime versus megawatts produced [like rigcounts and oil output]?

Duncan predicts circa 2008 is when the energy cliff starts, and then only seven more years [2015] to when the population starts declining fast from 6.9 billion [fig 4, page 8].  I hate to say it, but that seems to be where we are headed.

In short, can you or Khebab, or some other stat. modeler take a look at electricity? I feel Peakoil and PeakWatt are the same thing. Big Thxs.

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

Can you provide a link to what you found on Google related to increasing blackouts? My impression is that electricity reliability in most of the world has improved greatly.
Hello Jack,

Thxs for responding.  I just went to google news section, then typed in the words: electrical blackouts.  Then I quickly skimmed a lot of articles on where power was out.   I admit that this technique is not very scientific, but lots of places are having problems from thievery, insufficient maintenance, hard to get replacement parts, cash flow problems, and so on.  Just running out of fuel is not the only thing that can cause electrical problems.

What struck me as key was Duncan's assertion that "7% of the world*s oil is consumed by the electric power sector, and 20% of the world's natural gas."  When we go postPeak in these fuels: what percent of depletion will jeopardize a grid?

Phx has hydro, nuke, and coal power, but if we locally lose say 5% of our NG or oil by 2010, will our extra generators that run on these fuels bring the entire grid down?  Or do we just start losing peak load ability?  Or do we raise prices until we cutoff 5% of Phx residents and businesses.  I think rolling blackouts and brownouts ARE NOT the solution, but quickly raising prices to assure reliability is the better path.

Then what happens as each year Phx will have less energy?  I feel that the last thing people will want to give up is their refrigerators.  But can a utility company make money distributing such a small power load to lots of people over a vast spiderweb?

What about a city that is entirely dependent upon oil or gas generated juice?  Or a hydro dam with no water behind it due to global warming? How quickly will their lights go out for good?

I got lots of questions, but very few ideas on how to keep the juice on after Windmills, PV, and other alternatives are maxed out.  I am not sure if we have enough time or money.

BTW, Jack, what are your links that reliable juice is less and less of a problem?

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

But can a utility company make money distributing such a small power load to lots of people over a vast spiderweb ?

I was told, some years ago, that providing service (excluding billing) cost the utility about $9/month/customer in an urban environment.  Adjust for inflation, and this might be $12/month for the first kWh.

OTOH, cooling in a super efficient refrigerator* can be done daily and a small PV (perhaps w/o batteries) can do the trick to keep one's beer cold and milk fresh.

*Take a chest freezer, with top opening and very good insulation and set the thermostat at +2 C/35.6 F.  About 100 kWh/year.  Saw an Australian example on-line.

I agree that we need to pay a lot more attention to our electrical distribution infrastructure; there was a wave of interest after the 2003 blackout, but it has since subsided.

There are, apparently, a lot of existing technologies that can be used to distribute and condition power much more effectively and reliably than our current systems do ( However, these require an up-front investment and continuous reinvestment, which our deregulated energy companies are disinclined to do; they are busier watching quarterly profit-and-loss statements than figuring out how to deliver "nine-nines" (99.9999999) reliability.

As Amory Lovins points out, the end use is what matters, and focusing on end-use efficiency is a much better post-peak strategy than trying to push more energy into a system with huge transmission losses and inefficiencies. I just bought some more compact fluorescent bulbs to replace the last incandescent bulbs (I wonder why they are still being sold!); if they (as advertised) consume a quarter the electricity of the equivalent incandescent, then I can decrease my electrical consumption for lighting by 75% with no loss of amenity. And since there are are such huge losses in electrical generation and transmission, increasing efficiency at the point of use translates into huge "upstream" savings.

I was reminded of this by Tainter's comments at the "Peak Oil and the Environment" conference; I transcribed a section that caught my attention:

...[A high-gain system] yields high return on effort, and is typically so large as to seem inexhaustible. There is little incentive to conserve, and it would be counter-productive to do so. The resource is used profligately. And so the pesticide sellers treat the farmers the way we treat pools of petroleum; their strategy is to use and discard. In contrast, the resources in low-gain systems are scarce, and must be used conservatively. There is pressure for efficiency. Low-gain systems are often paradoxically impressive for their complexity of organization. The reason is that each unit of production in a low-gain system generates only a small surplus. To accomplish work, these small surpluses have to be aggregated.  This requires many channels to transmit the surplus energy, and correspondingly complex organization.

When I read Tainter's work, I wonder whether he distinguishes between "complex" and "complicated" systems. A number of system theorists do:

A complex system is a system with a large number of elements, building blocks or agents, capable of interacting with each other and with their environment. The interaction between elements may occur only with immediate neighbors or with distant ones; the agents can be all identical or different; they may move in space or occupy fixed positions, and can be in one state or multiple states. The common characteristic of all complex systems is that they display organization without any external organizing principle being applied. In the most elaborate examples the agents can learn from past history and modify their states accordingly. Adaptability and robustness is often the byproduct. Part of the system may be altered and the system may still be able to function.


What is complex and how does it differ from the merely complicated?

The most elaborate mechanical watches are called très compliqué. They are, as their French name implies, complicated. A Star Caliber Patek Phillipe has 103 pieces. A Boeing 747-400 has, excluding fasteners, 3x106 parts. In complicated systems parts have to work in unison to accomplish a function. One key defect (in one of the many critical parts) brings the entire system to a halt. This is why redundancy is built into designs when system failure is not an option (e.g. a nuclear submarine).

The stock market, a termite colony, cities, or the human brain, are complex. The number of parts, e.g. the number of termites in a colony, is not the critical issue. The key characteristic is adaptability. The systems respond to external conditions. A food source is obstructed and an ant colony finds a way to go around the object; a few species become extinct and ecosystems manage to adapt.

(Northwestern Institute of Complex Systems)

It seems that there are circumstances in which being more complicated -- i.e. the global system of oilfields, pipelines, terminals, tankers, refineries, etc. -- brings diminishing returns, but where greater complexity could create greater adaptability and robustness, i.e. dispersed generation by a great number of simple and solid-state renewable energy sources, networked through a super-reliable and efficient electrical grid.

I recommend Kevin Kelley's Out of Control: The New Biology of Machines, Social Systems, and the Economic Work as a good introduction to how complex systems work. On the darker side, the Global Guerillas site explores how complicated systems are vulnerable to deliberate infrastructure distruption.

Hello Rose Selavy,

Well done! Thxs.  Yes, electricity is currently 'complicated'--the key question seems to be whether people will cooperate for 'complexity' changes to benefit all, or if the wealthy will prefer to self-interest 'simplify' the system grid model by going off-grid [helping to promote systemic collapse].

Richard Rainwater, Bush & Cheney, and who knows who else are voting for protective self-interest by building eco-tech PV housing instead of investing these funds into utility companies to help the peasants [Just as Jay Hanson predicted--thus he encourages everybody to prepare to go off-grid ASAP--"BE A NOAH, build an ARK"].

My google readings seem to indicate the wealthy in Africa prefer to buy gensets instead of grid investing too.

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

It probably makes sense for some folks, and even some towns, to go off the grid; if one is pretty isolated geographically, the transmission losses and the costs and risks of an attenuated infrastructure, measured against the decreasing costs of self-contained power and water systems and cellular technology, make it cost-effective to do so.

I too am concerned about the richest folks bunkering down while letting the electrical networks decline. As Kunstler recently pointed out on his blog, most of the Americans who are thinking about peak oil at all are focused mostly on how to keep their cars running, with little thought to the electrical grid. I live in a compact city with good electrified transport; if oil is short, people can walk, bicycle, and ride the train; if the electricity goes out, things would start unraveling pretty fast.

Starting in the 1990's, a lot of towns have municipalized their utility networks. It would be interesting to know whether Municipal utilities are making smarter and longer-term decisions about infrastructure; I remember that during California's electricity crisis of 2000-2001, the municipal systems experienced less price volatility and fewer brown-outs and rolling blackouts than the big private utilities (PG&E and Southern California Edison). Many tech companies in the Bay Area, because their business is so dependent on electricity, sought to install backup diesel generators, and most companies I know of have made an investment in uninterruptable power supplies and computer backups. The better, and ultimately more cost-effective, investment would probably be to increase the reliability of the supply on a citywide or regional scale.

Your observation that maintaining widely distributed electrical networks as resources become scarce will become less tenable is an important one. Low-density suburbia and exurbia could find itself in an unpleasant infrastructure squeeze, as road, water, gas, sewer, and electrical infrastructure age and need to be repaired or replaced. Dense or clustered developments that minimize infrastructure, with good access to nearby farmland and energy-efficient rail and water transport, could be better places to live in a powered-down future.

Regarding compact fluorescents vs incadescent:  About two years ago I replaced almost all of my incadescent bulbs with the CFs.  Within a year I had replaced EVERY ONE of the new bulbs.  While they had advertised long life times, not one lasted a full year.  Something not everyone knows is that they all contain mercury.  So which is worse?  Long lived tungsten filaments that use lots of energy or short lived, low energy use bulbs that put mercury in the environment when disposed of?

Like so many issues in modern technology, when you start to think about sustainability you just can't get there from here.

Ther is indeed a lot of variability with CF bulbs.

I found as you did with the ones I bought from IKEA for example (various sizes and shapes all bad)

"Globe" are also fairly grim IMO

For what it's worth if you can find NOMA brand I think you should give them a try. Their 60 watt spiral is now the std. bulb around the house here. The one outside the front door is on all night every night and has been in service for 2 1/2 years.

But I'm still looking for a dim-able CFL that works, and at $10 Canadian a piece I don't want to gamble on any more junk. Anyone found one of these that does what it claims?

To ensure you get 6000 hours when advertised as such, it's best to stick to Energy Star CFLs. I had the same bad luck (imported CFLs from China) at first, but the Energy Star ones (which had a $3 rebate on a $3 bulb here), have lasted for 4 years so far.

Yes, CFLs contain Hg, but the largest source (40%) of Hg in the environment is from coal-burning power plants. This is the nasty stuff that is in the air, water, and soil. The savings on electricity from using CFLs has a much greater impact on Hg emissions from power plants than the Hg potentially leaching into the soil in a land fill from a CFL (though most places have CFL recycling centers so you shouldn't toss them in the trash anyway).

As for dimmables, there are 34 listed at the website. I've used on (Greenlite) and it works as claimed (and full ignition in less than 1 second and full run up in 60).

I've tried to think of the "global power grid" as a 1 block process to convert (raw) energy into electricity.

Input to this block clearly is raw energy (oil, coal, hydro, etc).

Output of the process could be defined as the number of end-user connections X kW's served. One complication mentioned above works here: when will fixed connection cost and variable usage cost run out of balance? Or, when will the first kilowatt be so expensive, you cannot even get to bying the second kilowatt, whatever it's price is? This will lead to a spiral of fixed costs being covered for by less end-user connections overtime, sending more people off-grid, etc.

Then I've looked at the enablers of the process. Covered too in Duncan's paper, this includes the software, operators, relays and what have you in this terribly complex powergrid system. Installing equipment whith better EROIs would be a way to get more juice from the same raw energy. Well, in short, the nine 9's story and it's costs involved happen here [Since Seven of Nine is well underway, maybe she can come up with the last 2 ;)]

Next the process needs controls. Forcing prices so people can only decide to disconnect is a way to control the process by policy. The reason I think this is not a solution is because of the fixed costs issue above. OTOH, it then also seems a good way to force grid disconnections in a 'managed' way.

The last arrow working on the process is often referred to as noise/pollution or system external influences. Here you find the impact of stolen copperwires, hurricanes, lightningstrikes, dams without water, etc. This out-of-control part is what really gets me scared...

Applying such system thinking to the power grid part of OT helps me see where some of the comments fit in, but it hardly helps me in getting deeper understanding. Though, it does give me a better appreciation again for the complexity of what we discuss here.

Last remark about my former employer: "It took the Philips Incandescent Light Works (NV Philips' Gloeilampenfabrieken), officially founded in 1891, four decades to reach the top of the lighting industry. In the first two decades the company became Europe's third largest producer of light bulbs, with a turnover of some € 33 million in 1911 (3.7 million Dutch guilders, converted to Euros of 2003).".

1891 is 40 years before the industrial civilization started as defined by Duncan.....


I don't have any links, which is why I said it was my impression. I did try a bunch of sources but could get good data.

I do know that across Asia, the region that I live in, things are getting better.

I don't think that says anything about peak oil one way or the other. Natural gas shortages should limit generation at some point, but I have seen no indication of that happening. Peak oil (or even expensive energy) reducing government's ability to maintain infrastructure also does not appear to be a factor.

"Duncan predicts circa 2008 is when the energy cliff starts, and then only seven more years [2015] to when the population starts declining fast from 6.9 billion [fig 4, page 8].  I hate to say it, but that seems to be where we are headed."

No, the population decline will be artificially jump started long before 2015.  I just hope that Tamiflu is an effective antidote for the agent of choice.

Hello MicroHydro,

Jay Hanson called this the Pandemic Powerdown method years ago. Yikes!

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

Is a Hubbert Linearization Model possible for all energy sources?  Is there a way to graph power plant #s and uptime versus megawatts produced [like rigcounts and oil output]?

I'm working on a post about the Hubbert analysis applied to coal which is the mainly used for electricity production.
Geothermal development might follow an HL curve (maybe not) on the way up, but there is no downslope :-))

I suspect that US hydrolectric development might follow an HL plot for new power coming on-line/year (I atill think we can get another 20%), but again the decline is only in new plants coming on-line.

Likewise we might one day see a saturation of wind turbines; but I doubt that I will live to see a y-o-y decline in wind production.

I am VERY unsure that exploitable renewable resource base follows the same distribution as oil & gas fields; and even less sure that the forces for exploitation follow the same curves.  Solar PV may show a step function if a much better cell is invented, for example.

I am VERY unsure that exploitable renewable resource base follows the same distribution as oil & gas fields; and even less sure that the forces for exploitation follow the same curves.  Solar PV may show a step function if a much better cell is invented, for example.

I agree, I don't think that the logistic curve should be applied on renewable ressources as Jean Laherrère did recently on biofuels.
Geothermal also depletes, AFAIK. The rock cools locally and becomes less and less efficient to heat the water. The reservoirs behind dams get smaller because of the silt. Wind indeed has diminishing returns, depending on the quality of the wind patterns, and who knows what climate change will do with those?

Not that they are useless, but no panacea for electricity... except maybe solar with decent technology.

Geothermal power plants are designed to rotate between wells and let some "rest" and renew.  Abiotic steam is a reality !

Hydroelectric storage may shrink but the head rarely does. Run-of-river hydroplants are economic and relie on no storage (or a few minutes worth).

Wind deplete ?  If wind patterns change, move the replacement WTs to a now better location in 20 to 30 years.  Total wind resource should not decline significantly with GW.

Solar ?  What if cloud cover and haze increase (quite likely BTW) and there are more frequent and severe dust storms in US solar's best location, the US SW ?

I'm working on a post about the Hubbert analysis applied to coal which is the mainly used for electricity production.

I'm looking forward to your analysis, particularly in looking at how you handle the fact that much of the production has been done in an environment where there were superior (or at least prefered) substitutes available: nuclear, petroleum and natural gas. Certainly generating plant construction and coal production would have been very different if there had not been nuclear in the 60s and 70s and natural gas in the 90s.

World electricity consumption in 2003 was 15,843 billion kilowatthours (3,883 for US), the 7% from oil is 1,109 billion kWh (US: 271).  (Source: EIA Annual Energy Review 2004.)

Utility-scale wind power produces 2.628 kWh/year for each $1 spent on wind farms.  (Assumes $1/W of installed capacity (reasonable number, very likely to go down with the continued development of larger, more efficient turbines), and a 30% capacity factor, the standard figure used in such calculations.)

Cost to completely replace the world's oil-based electricity generation: $422B, for the US: $103B.

Given the dire circumstances Duncan is talking about, and the fact that the astoundingly misguided boondoggle known as the Iraq War will cost far more in cash flow than even the $422B, let alone the $103B, this is a relatively cheap fix for a huge problem.

Clearly, no one would suggest that we try to replace that 7% of our electricity with just one other form of generation, and we won't.  We'll see a major ramp-up of thin-film solar, concentrating solar thermal, etc. in the coming years, as well as continued aggressive roll-out of wind power.  This calculation is meant to show that it's not nearly the intractable problem it might seem to be at first blush.

Hello LouGrinzo,

Thxs for responding.  Your input is much appreciated, but electricity availability will require much more than that $$$ amount as all FFs deplete and grid maintenance and security skyrockets.  

[Duncan,pgs 4-5,sect. 3: "Permanent blackouts are coming"]:
The third catch, according to the Olduvai Theory,
is that sooner or later the power grids will go down and
never come back up.4 The reasons are many.
The International Energy Agency (lEA, 2004)
estimates that the cumulative worldwide energy
investment funds required from 2003 to 2030 would be
about $15.32 trillion (T, US 2000 $) allocated as

  1. Coal: $0.29T (1.9% of the total),
  2. Oil: $2.69T (17.6%),
  3. Gas: $2.69T (17.6%),
  4. Electricity: $9.66T (63.1%).
Thus the lEA projects that the worldwide
investment funds essential for electricity will be 3.7
times the amount needed for oil alone, and much
greater than all of that required for oil, gas, and coal
The OT says that the already debt-ridden nations,
cities, and corporations will not be able to raise the
$15.32 trillion in investment funds required by 2030
for world energy. (Not to mention the vastly greater
investment funds required for agriculture, roads,
streets, schools, railroads, water resources, sewer
systems, and so forth.)
Furthermore, because of the rapidly rising cost of electricity, the increasingly impoverished customers
won*t be able to pay their electric bills. Worse yet, the
really desperate ones will illegally wire directly to the
low-voltage power lines, so without a wattmeter to
record their usage they won*t even have any bills to pay.

Basically, he states that diminishing returns from all resources + increasing population is what will start to send local and regional grids spiraling downward over time.

Those companies/homeowners that can afford their own gensets/PVs will move off the grid instead of trying to financially support a system of increasing unreliability.  This self-interest effort will only add to the cascading financial feedback problems of the utility grid.  My google reading seems to support this trend.

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

Hello TODers,

Brief example:  If I owned an ice-cube company in a hurricane prone area, or in Phx, I would be begging my banker to loan me the money for gensets and big water storage tanks.  Otherwise, when the local grid is disrupted, instead of making ice and maximizing profits, but most importantly saving lives, the owner is helpless as he just watches his limited JIT inventory melt away or sold off in a panic, with no prospect of making more.  Deaths soon follow.

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

Bob Shaw impresses me as a genuinely concerned, humane & worried man.  On the other hand, his approach to the consequences of Peak Oil is unnecessarily catastrophist.  An example is his alarm at the fact that 7% of the world's electric power is produced from oil.

It would certainly produce some significant problems if 7% of generating capacity disappeared overnight.  Even then, however, grid management authorities would have contingency plans to put into effect.  Peak Oil, however, wouldn't mean eliminating that 7% of generating capacity overnight.  Instead, it would get slowly priced out of the market.  The effects of this would depend on whether it was replaced by other sources (e.g. coal, renewables) or whether it wasn't.  In either event, the results would be relatively marginal.

For the overall results of Peak Oil, the effects would be considerably more severe.  They would still, however, be much more manageable than the doomers think.  Certainly, "business as usual" would be impossible.  That much is certain.  The doomers, however, can't seem to conceive of any alternative besides catastrophe.  In reality, there are many other possible outcomes & most of them are a good deal more probable.

First of all, the effects of Peak Oil are going to come on fairly gradually.  I'll grant that there are reasons to be apprehensive about some of the major oil fields that have been pushed really hard with horizontal wells & water injection.  Even if these field collapse in the near future, however, there are the many hundreds of other large fields (not to mention the thousands of smaller ones) which will be depleting at a more moderate rate.  Any steep decline in the next ten years would, therefore, be followed by more gradual decline after that.  This is very important in assessing the speed at which the world will have to adapt.

Second, there are many ways in which oil use can be made more efficient.  This would not run into Jevons' Paradox, because the increased efficiency would be driven by rising prices and, while it would make the higher prices more affordable than they would otherwise be, would be highly unlikely to make it more affordable than before the price rose.

Third, Peak Oil will abolish the wastrel culture (a.k.a. consumerism), though possibly not at first.  It is quite possible that some people will, for example, continue to drive SUVs out of bravado or as a status symbol ("I'm rich.  Watch me drive my big SUV around.  I light cigars with $20 notes, as well.")  Most people, however, will recognise that spending half your pay packet on petrol is, as we say in Australia, "a mug's game" and adapt their behaviour to the new reality.  SUV sales are already a long way below where they were a year or two ago.  As the price climbs, the shift away from them will accelerate.  In a fairly short period, the accumulated behavioural changes by the majority will lead to a much more censorious attitude to those people who continue to waste the oil that everyone knows will be needed tomorrow.  There will certainly be a lot of pain in the transition, but while extreme examples like Phoenix may very well be abandoned, most other cities will adapt.

Fourth, the political credibility of the established elite in the US will be destroyed totally by Peak Oil.  The space will be cleared for new forces to emerge.  Some will be both crazed & depraved (imagine your favourite radio shock jock as a doomer), but most would embody the humanitarianism that still animates most of the North American people despite the inhumane society in which they live.

Fifth, Peak Oil doesn't equate to Peak Energy.  That will be later.  Peak Oil will result in a lot less geographical mobility, but not a great deal of other sacrifice once the transition is made.  Food production, the favourite topic of the doomers, can be done a lot on a lot less energy intensive basis than currently in the US - & it is, in every other country in the world.  Further, the response to Peak Oil will be the learning experience which will enable humanity to cope with Peak Energy.  We will cope with Peak Energy by developing a society based on sustainable energy sources and keeping our manufacturing activities down to those that satisfy actual needs, rather than thoughtless desires.

Sixth & last, population is not the bogeyman that so many doomers think.  Global population, even at current trends, is scheduled to max out at 9 billion in about 2050.  Birth rates are falling in almost every country and some countries are already in total population decline.  Russia, for example, is in free fall.  So is much of Eastern Europe.  Japan has reached peak population this year and will fall from now on.  The rich industrialised countries, the ones with the greatest per capita oil consumption, will collectively have little or no population increase from here on.  India & China, which are both industrialising at a rate of knots, won't have the same oil consumption because they won't have an oil intensive legacy suburban & industrial structure.

So yes, Bob, we are smarter than yeast.  You're an example.  And, once Peak Oil breaks the spell of consumerism, so will most other people be.

Good post Ablokeimet. I partly agree with you but your analysis seems based on some assumptions that are far from certain.

  1. Practical peak oil may not happen gradually, it may actually happen almost overnight, for example, if a major production area was effectively taken off supply for a few years.

  2. A relatively rational human response, on both individual and collective levels, is unlikely.

  3. Peak oil will mean the level of real wealth will reduce. This will require significantly greater proportionate reductions in wealth by the most wealthy individuals, communities, countries, since if a proportionate reduction occured a large number at the poor end would die. I think this will cause significant conflict, however it pans out.

  4. US policy is to secure access to the oil and energy supplies it needs by military means if necessary. That means war.

  5. There is a good chance that peak oil will fundamentally undermine our economic, financial and monetary systems. I think they will break - with significant and difficult to predict results.

  6. The steady reduction in oil and gas supplies and their increase in price will hamper our ability to take mitigating action. Mitigation will be much more effective and doable if started well prior to peak, we haven't.

  7. Global population of 6.5 billion is already probably unsustainable long term by the fact that it is degrading the productive capacity of the land and environment. 9 billion ain't gonna happen, we are already using more grain than we can grow and that can't go on long.

(The russian population is in 'freefall' because life expectancy has declined massively since 1991 due to poverty, disease, infrastructure failure etc.)

So, if and only if,
the problem of peak oil is gradual,
is managed rationally, fairly, and with the overall benefit of the whole community on every level from local to global in mind,
doesn't largely destroy our economic and financial systems,
doesn't degenerate into widespread conflict,
only then is your rosy scenario likely.

I think that nothing less than a fundamental change in human thinking, attitudes and behavior are pre-requisite. I wouldn't hold my breath.

"0.2% was electricity in the Transportation

33.3% in the Industrial sector,
65.9% in the Residential sector, and
76.2% in the Commercial sector (EIA, 2004)."

First three figures add up to just under 100%, but with last one added it's ~176%.  ?error or something I'm missing in terms of overlap between the figures.

As for the conclusion - GULP!  Two years to build a "lifeboat".

Hello DoctorBob,

Thxs for responding.  No Duncan error--merely change your perspective [take each group individually, don't add]:

First consider all forms of transportation: primarily liquid fuels move them combustively, but a small portion [0.2%] are juice powered.  These are electrified trains, subways,  rechargeable golfcarts, etc.  That is the main reason AlanfromBigEasy wants to help solve the coming liquid fuel crisis with more mass-transit.

At the opposite end, commercial businesses live and die on juice.  GOOGLE, YAHOO, & MICROSOFT, need megawatts to power their equipment.  A restaurant needs juice for lights, A/C, run the cash register, etc,  but the ovens, grills, and hot water for the dishwasher comes from natural gas or propane.
Hope this helps other readers too.

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

The figure that I have seen is 0.19% of US electricity is used for transportation.  

That includes the 8,000 subway cars in NYC, Amtrak's Northeast Corridor (Boston-Washington), The Long Island Railroad (massive commuter + freight traffic), SF BART, DC Metro, Philly, Chicago, Boston, Miami Metro, Atlanta MARTA, LA Red, Blue, Green & Gold lines, Light Rail in San Diego, Portland, Sacremento, San Jose, Salt Lake City, Dallas, Houston, St. Louis, Minneapolis and the streetcars of New Orleans :-)

Sure I missed some.

Why so much transportation with less than 1/500th of our electricity ?

Because of the inherent efficiency of electrified rail !  High efficiency motors (>90%) that generate electricity while braking combined with low rolling resistance steel on steel.

You forgot the Metro-North Railroad, New Jersey Transit rail and light rail operations, and PATH (the Port Authority Trans-Hudson service).
And Cleveland & Buffalo.  Plus the 78 mile long Black Mesa & Lake Powell coal train (all electric).

PATH was a major oversight !

South Shore Line. Chicago-South Bend.
San Francisco, Seattle, and possibly Philadelphia have some electric trolley bus lines, which are powered from overhead electric lines. The electric motors are better on steep hills than diesel motors.

San Francisco's Municipal Railway has five light-rail lines as well.

Dayton Ohio and Boston also have ETBs.  

And SF Muni gets good ridership !

We can hammer together deck chairs and pool tables and wall paneling as she takes on water.

Turn the pool table upside down, nail (using nails left over from paneling) paneling against the legs on all four sides, install deck chairs for the paddlers and there we go !

Obviously we have more than two years before we "sink" !

Plenty of time ! >:-P

There is a serious purpose in compiling all known transit studies for Urban Rail in US cities.  Proper planning is one of the hardest things to time compress.  Starting with a 14 year old plan is MUCH better than starting from scratch.

It is also useful to demonstrate what CAN be done.

O.K., Stuart, your going to have to help me out here....this type of involved chart reading is not my strongest suit, so I am approaching it as a layman and asking myself what would stand out if I were brand new to this whole subject.

On the last chart in the series, I am reading correctly I think that the green line is the chart at the top is the line indicating "Rest of World (ex FSU)?

This would be the line with the sudden drop off at about11th or 12th month, 05?

Does that strike anyone as interesting?  With crude oil at some of the highest prices in history, why a rig count drop for the "Rest of World" right then?
One would think that the so called "new areas of development" away from OPEC (per CERA and others) would have inspired at least some extra rig count (?)

I would blame the hurrricanes, but that would be in blue line indicationg U.S., correct?

Just eyeballing, this means that rig count "rest of world" is now back to around the level of Feb. 04 (!!) quite a surprise given the price of oil.  We should also note that even though prices are high, even with what is (again, eyeballing) about a 10% drop in rig count "rest of world", we still have seen no shortages.

Now if I am not completely misreading the chart (always a possibility with my chart interpretation skills!), I mentally combed through some quick possibilities:
#North Sea drop in count, and no real promising prospects there to sink new wells (?)
#Mexico, same story, no new prospects, but drop in wells on marginal or declining prospects (?)
#Price inflation on steel, and workforce shortages causing delays (?)

And of course, I can't leave out what you know will be a popular one among those who feel any oil "shortage" talk is a scam.....
#The oil companies simply sitting on their cash and letting the price run up until they find the topside limit on price before demand destruction sits in (demand having remained surprisingly strong in the face of high prices), in other words, the whole thing is about price and money, not supply and geology (?)

Either way, IF I were coming at this as a newbie, and really looked at the charts, that last one in particular, right now, I would be inclined not to see signs of a looming crisis, but for the moment at least, just more business as usual.  Having been around this subject longer, I think it is more than that, especially in the longer view, but it could be hard to convince an outsider.

O.K., have at it.....tell me what I've missed!  :-)

Roger Conner  known to you as ThatsItImout

I checked, and the drop in the "rest of world" line in 06 is an artifact of the data being incomplete in recent months - it's not a real effect. I'll try to put up a corrected chart in the morning.
Could be right. SA and other opec are poaching rigs from our gulf to work in theirs - and, they have the bucks to outbid us. Can't be in two places at once.

How about a chart showing world total rigs (perhaps split out by land and off-shore). At some point the rig count has to stop going up when all moth balled rigs are in use and rate of break down exceeds rate of manufacture of new rigs.

Libya and Algeria enjoyed successful exploration programs in the 1990s - both as a result of inviting foreign E&P companies back - and this has provided some of the fresh oil comming on stream today.

At some point US and European E&P companies will get to explore Saudi - whether they are invited or not.

Does anyone know when Switzerland will get to join OPEC?

So how do you see that uninvited guest thing playing out??
First you get invited to a party, behave badly, the hosts then lose their heads and ask you to leave.  You decide you want to stay, squat for a while, then decide you like the look of the house and want to move in permanantly. You get involved in a brawl with the hosts new representatives and most likely everyone loses.

If there were fuel shortages in the US I imagine that this will stiffen resolve back home.

In the UK oil production peaked in 1999 at 2.9 million bpd.  Last year our production was 1.8 million bpd - almost the same as consumption.  The only preparation I can see that our government has made is to set up military bases in and around the Middle East.  Unpopular at the moment but when folks can no longer afford to fly to Spain on holiday, let alone start to go hungry, they will become more tolerant.

Here's a link to an interesting article in the name of Michael Meacher, a member of the UK parliament. heet=/money/2006/06/26/ixcoms.html

I'd guess most folks outside UK don't know much about Michael Meacher, you should, he is to the UK as Roscoe Bartlett is to the US. What's more, he was UK environment minister in the early years of the current Labour government (till 2003).

Here's his website:

Please do check out his articles, you will probably be surprised at the strength of some of the things he says, some very negative about the US.

Just before the last UK general election in May 2005 I did a pretty thorough search to see which UK MPs had ever mentioned the words 'peak oil', he was the only one I found, so I emailed him suggesting that peak oil might be within 5 years rather than the 30+ years the official agencies say. I received a brief acknowledgement and left it at that. I do note he's been mentioning PO more forcefully lately.

Rumour has it that Michael Meacher may stand against Gordon Brown for the leadership of the Labour Party, and hence Prime Minister, when Tony Blair stands down. I really hope he does and that he makes the core of his campaign the need for profound change to try to avert the probable catastrophic impact of PO and climate change.

I've seen Roscoe's great speach as recorded on peakoil.

In the UK most interesting prospect is a Scottish PM (Uncle Gordon) running a Westminster Labour UK government against an English Conservative majority - propped up by Scottish Labour MPs from Glasgow - a hangover from 1745.

Appologies to all US TODers who may not understand any of this - in the UK called the Westlothian Question - completely irrelevant to you now - but in 3 years time the relevance of this may become clearer when the UK dissintegrates.

All the oil, gas, whisky and fresh spring water is of course Scotland's.  We also have great scenery and welcome foreign vistors with open arms - fly now while you still have the chance.

PS Germany 0 - Italy 2 was the final score

Here is not the place but I think the Westlothian Question is mostly a trivial political football, the arguments on both sides are near balanced. Its recent resurgence is because the Tories think they can make a bit of political capital out of it.

Hopefully one benefit of climate change will be scope for a wider range of crops in Scotland, if only most of the natives would eat more sensibly, lol.

I guess I should be glad I didn't bet on Germany to win it.

Michael Meacher was a speaker at ASPO 2005 depletion workshop in Lisbon which I attended.  One of his more interesting papers was featured in FT in January 2004 and is reproduced here: Plan now for a world without oil.  This article clearly states that oil production would peak globally around 2015 (note that article was written 1-1/2 years ago).
Ah, before I emailed him ;)

I probably don't agree with everything he says but he is about the only UK parliamentary voice who is saying anything real on this subject.

Error in my 1st post - Jan 2004 is 2-1/2 years ago.
If I can work up the energy - which is in short supply - I hope to raise the peak oil question with our local and Hollyrood politicians with regard to road building, airports and train station planning policies. Turning green fields into roads and train stations into out of town retail parks in the town centre doesn't make much sense to me. Problem is how do you begin to explain peak oil to those with cummulative IQ marginally higher than a pack of yeast.
Just show them a graph of the price of oil over the last 5 years. Then tell them that food production would be between 25% and 50% of current if we didn't have fossil hydrocarbon input.
When viewed collectively, it is true that OPEC response in terms of rig counts does not appear out of the ordinary.

However, taking Saudi Arabia alone, as you plotted the other day, the view is not so comforting.

The Saudi rig response is very large, particular in the context of the broader OPEC response.

Is it possible they are industriously building spare capacity? How could we tell? On face value, the Saudi case looks scary to me.

I wasn't really trying to be comforting, per se, just pointing out that the "OPEC isn't investing" theory doesn't seem to be that strong in the aggregate (although it seems to be a fair description of some of the smaller countries). I agree the Saudi response really stands out. Either Ghawar is giving them a lot of trouble, or they are really redoubling their effort to become the swing producer again, but choosing not to lower their prices at present.
Hello TODers,

In the last graph by Stuart, the purple line for Canada's rig count is jumping all over the place, but overall is not increasing or decreasing much.  Is this due to the damn cold winter weather or some other factor?  You would think that with the tremendous demand of natural gas for the growing projects in the Athabascan oil sands, not to mention NAFTA exports to the US, that the rig count would be steadily increasing.  I am confused.

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

I wondered if rigs were switching back and forth between NG and oil seasonally.
I work for an oil services firm in Edmonton, Alberta, Canada. Every spring, our business almost shuts down due to 'spring breakup' when the ground thaws out and road bans are put in place. And during the summer months much of northern Alberta, BC, and Saskatchewan is inaccessible by heavy truck (google 'muskeg'). So many rigs go idle or move south (even south of the border) for the spring & summer months.
Hello El Zorro,

Big Thxs for clearing this issue up for us fellow TODers!  Do you have anyway to tell if global warming is lengthening your 'thaw shutdown season'?

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

I've heard they have lost almost 100 days per year because of early thaw in Alaska

this says its down from 204 to 124. Canada is probably similar.

Hello Memmel,

Yikes! Great link, thxs.  Nature's thaw is trying to tell humans to backoff, give it a rest, but we refuse to listen with our grey-matter!  Our genes are not our friends!

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

Increased thaw of permafrost will result in the release of vast amounts of methane, a much more serious greenhouse gas than CO2. This will, of course, result in a positive feedback loop. More methane, warmer climate, more methane, etc.

Scientists in Siberia have noted that an area the size of Germany and France combined has thawed for the first time in god knows how long. I fear that the rollercoaster train known as global warming has just crested the cogwheel hill and is about to head into a spectacular freefall.

The last thing we need is the development of more fossil fuel for carcult growth or for economic growth in the form of increased electricity use via coal burning.

I fear the Bob Shaw may be right in citing the Oldavai Theory and its result -- dieoff. Hope not. Give me three more years so I can get the first of my royalty checks.

Thanks much for the explanation.
Is it possible to get a count of pre-existing oil pumps/rigs that were moth-balled years ago because they were no longer profitable (at the time) and are now being brought back on line?  In the US? In other countries?
Entirely hypothetical...

Yesterday, I wrote that OPEC may be up to something and the straightforward interpretation through the "lens of peak oil" of a higher rig count & flat production may not be correct. Here's what is really behind my thinking....

Preparing for War

So, you're Saudi Arabia and issuing statements like this

Saudi Arabia on Monday denounced Israel's military offensive in the Gaza Strip, saying it had turned the Palestinian territory into a "mass detention camp".

Israel last week arrested one third of the Palestinian cabinet and began a military offensive into the Gaza Strip to free a soldier abducted during a military operation by Palestinian militants.

"Israeli policy avoids negotiating with the Palestinian side and intends to transform the areas the Israeli army withdraws from unilaterally into mass detention camps where Palestinians are blockaded and starved," a cabinet statement said.

And from somebody in the Israeli press ...
In Moscow, Israeli foreign minister Tzipi Livni talked to Russian president Vladimir Putin, then warned that the Gilead Shalit hostage affair could lead to a regional war escalation. Egyptian president Hosni Mubarak, after his mediation bid collapsed, hurried over to Saudi Arabia for an appeal to King Abdullah to use his influence with Assad - not Hamas - to defuse the situation before it hurtles out of control....

Middle East and military sources calculate that none of the recipients of these appeals is much scared about the prospect of a general Middle East flare-up. Russia, indeed, has a vested interest in a regional war. Putin is making good use of the US president George W. Bush's preoccupations in Iraq, Korea and other parts of the world, to build Syria up as a jumping-off base for Russian penetration of the Middle East. Our sources report that hundreds of Russian military engineers are busy establishing two big naval bases in Syria's Mediterranean ports of Tartus and Latakia. While listening to Tzipi LIvni's appeal, the thoughts running through the Russian president's head were most likely about the ways in which an Israel-Syrian military conflagration could be exploited to promote his plans....

OK, now let's throw in the Iranian (Shia') nuclear stand-off, planned gasoline rationing there, the virtual civil war in Iraq with their large Shia' majority, Kurdish independence movements, Turkish troops on the Iraq border, the Taliban comeback in Afghanistan ... and finally the United States -- which has been effectively shown to be a "paper tiger". Let's face it: Hugo has been giving America the finger for a couple years now and our crippled government can't do a damn thing about it other to send Condy out to make a few veiled threats that no one takes seriously. Finally, let's throw in the China/Russia opposition in the Security Council to strong actions or sanctions imposed on Iran.

So, if you think the Middle East "Rapture Index" is getting pretty high, do you start investing lots of money and pumping oil like there's no tomorrow ... OR do you accumulate rigs, flatten out your production and batten down the hatches? If the general Middle Eastern conflagration occurs and you think that is probable, oil will cost $$$ later. A straightforward calculation tells you that lost revenue now given the interest rate will still turn into positive gains on "the other side".

I'm just throwing out a hypothetical scenario. I'll leave it up to our able readership to decide for themselves.

Dave, I don't normally need any excuse to open a bottle of red - but here you provide many reasons to get drunk and stay drunk for the rest of the century.

We need to think about what the extra rigs might be doing:

  1.  Some will be used for exploration - no early impact on production
  2.  Some may be used for work overs - marginal impact on production
  3.  Some may be used to drill water injectors - marginal impact on production
  4.  Some may be used to drill multi-lateral horizontal producers - which probably take quite a time to drill and complete.

If the latter produces only oily water - then the impact on production might also be marginal.

In the North Sea, the rig count is way ap and production is still falling!

Maybe in Saudi 1+1=2

Just watching the graphs develop, I find it interesting that rig count and production are in lock step. Indicates to me that there are no easy oil fields out there anymore, the type you poke a straw in and then just stand back and collect royalties.

An additional observation, might the Saudis be hoarding drilling rigs to keep them off the market? Less drilling anywhere else means they can develop the SA fields, and the competition can't drill.

or they might see that they might have toruble later getting accsess to rigs so they want to get as many as they can now.
They've got 60 and we've got 1200, or 20x. Actually, we're hoarding the rigs. SInce we produce maybe 20b/d/well and they produce 2000/d/well, we should send them all of ours.

Since rig count has been going up since 2005 at least I don't think that current geopolitical factors are important.

In fact tying short term political factors to long term projects like drilling oil wells makes no sense.

The western press loves to blame geopolitics always for prices the  truth is its more complex but the layman has not been taught about world oil production.

Re: "blame geopolitics ... the layman has not been taught about world oil production..."

Maybe not the layman but that doesn't describe me, does it? As I said, the scenario is completely hypothetical. What is happening is consistent with that thesis but it is also subject to other equally consistent interpretations. As far as blaming geopolitics goes, never underestimate the power of a severe oil shock. Tensions in the Middle East are escalating. Planning on "business as usual" does not appear to be an option. I am sure Saudi Arabia is "gaming" the hell out of this situation. So is Iran, Qatar, Kuwait and the UAE. Interestingly, the North African nations (Algeria, Libya) are better positioned since they are not geographically in the region. These nations are thus in better shape to handle possible future geopolitical disruptions.

As far as rig counts starting to rise in 2005, that isn't unsurprising. I didn't say this scenario just came on the scene recently. It has been laying out there for at least a year now. The seeds of all this lay in the invasion of Iraq in March of 2003. As was predictable at that time, de-stabilization of the region has progressed apace.

best, Dave

I'm not saying people are not playing games. But I really think that there may soon be more serious problems with the worlds supply of light sweet crude and it looks like the root of the problem is Ghawar.

What really pisses me off is I think the US government and the Saudi's know whats going on there are way way to many foreigners in Saudi in sensitive positions or with access to sensitive data for me to think that the US does not know exactly what the state of Oil supply is in SA.

So the move into Iraq really the only gem left in the middle east. One important factor is it would provide bases to support the Sauds if there productions start to collapse.

Everyone keeps looking at Iran and that may actually be the wrong direction entirely.

Not that having direct access to Syria and Iran is not important but that in the next few years we could very well be moving into SA to contain insurgents there.

I guess I've increasingly become a Ghawar watcher :)

Dave, the US a "paper tiger"?  I don't think so yet.  Don't forget we still have a serious military capability, a willingness to use it, a disdain for international norms and agreements, and apparently no other plan.

I would argue that the US military capability is a "use it or lose it" proposition.  It's expensive to maintain that level of capability, even if you don't use it.  As our economy declines (which I believe it's about to), and the opposition to us grows stronger, the opportunity may well pass.  It's in this time period that we will be our most dangerous.  

We didn't spend that money building such a military machine just to watch it wither away, we made to be used.  And I believe we will, to everyone's great misfortune.

The military has alot of destructive power. What can we destroy that would actually return benefits to the people?

Only countries that can't fight back with natural resources might qualify. Iraq really stands out as the only good prospect. I'm fairly certain that cutting the DOD budget in half would benefit us more than starting any more wars.

GWB todo list.

1.) Invade Iraq take there oil
     a.) Don't forget to kill Saddam
2.) Invade Iran take there oil.

  Don't forget to invade North Korea so people don't think were invading countries to take there oil.

The "great shift" as I would term it is the transfer of geopolitical power from the US & Europe to Asia (China, Russia, maybe even Iran). The US no longer holds a stranglehood on power expressed by use or threat of use of military force even in "our own" hemisphere. We can use a "shock and awe" approach with any nation anywhere but can not follow through. See Iraq. A still militarily powerful nation is dangerous when wounded just like any large vertebrate predatory mammal.

The Middle East is the key. I think it's obvious to everyone now that we no longer have the upper hand there. We are in a quagmire that might be better described as a "failed police action" to secure the region for the free flow of fossil fuels. I am particularly concerned with the recent Israeli/Hamas escalation that has taken place since the Palestinian elections. Why is Hosni Mubarak running around the Middle East making desperate attempts at mediation? What has been the response of the Bush & Company? Silence, complacency, confusion, ineffectiveness.

Questions, questions. No real answers yet.

Happy Independence Day guys.

Most important news is that its still Germany 0 - Italy 0 (World Cup Semi Final).

What you raise are serious questions about democracy - Algeria, Iran, Palestine and US elections all with very unpalatable  results in recent years.  Democracy works well in some places - other countries are simply not ready.

My main worry at present is Iran - cos I believe most of Iran's oil goes East - make sure your military planners are aware of that before getting adventurous - a strike on Iran may be seen as a strike on China.

Also we are building a broader energy security based on floating bombs that pass through Hormuz - not just oil but also gas now, that in the UK will be used to make electricity.

Totally crazy - but there again our finance man Gordon Brown is taxing oil producers instead of oil consumers - DUH!

Excellent points, Twilight. While I hesitate to accept this, it is becoming increasingly clear that this is the case. Your "use it or lose it" theory works in my estimation.
I'd rather be wrong!  

Also, I don't think a military approach will be effective, just that it can still have a major impact on the world energy situation - one way or another.

Its always been that way, goes back to warnings issued by Eisenhower, his farewell speech even mentioned it. You dont generate a military industrial complex of any size and still expect to let it sit idle. Nor can you expect others to understand it NOT being used if you have it already. War does a couple important things, one, it lets you use that military, and two, the economic effects are quite tangible. Lets face it, one of the biggest exports of the US has always historically been armaments and war or "police actions" or interventions. There have been about 80 such interventions since WW II depending on how they are classified.

That being said, yes the US military is impressive in its size and amount of destruction it can do. However, occupations historically have one of two outcomes:the occupier moves in and either kills everyone of displaces them, or it tries to occupy and live with the locals. The latter almost never works out, for obvious reasons, one of which is guerilla warfare or asymmetrical warfare against a large and slow moving force is easy pickings and quite demoralizing. This has been played out countless times thru out history, why anyone is suprised I dont know. I have a theory that the neocons knew this and went in with an understrength force and zero counter insurgency plans just to draw out the war and stay in the "war business". They cannot achieve their agenda without perpetual war. Their goal was to control the oil bearing nations in the mideast and establish permanent bases there, they have done so, the oil hasnt started flowing yet (oops ! ), but the bases are there !! The secondary benefits of those in the war business have been enormous, billions of $$ unaccounted for, weapons makers running full tilt boogie for going on 3 years now, they have problems just keeping the 7.62mm ammo in supply !! Its a bonanza for them. Ya, the military of the US is broad, but it also lacks depth, that too is showing its ugly head. Thats one aspect im not sure they planned for, we will see.

For now I would assign a low probability (<10%) to your hypothetical, Dave.

The comments from Saudi Arabia are perfectly normal, concordant with their perception of the situation, and not utterly unreasonable IMO.

Syria and Egypt are the two major arab nations in the Mediterranean area of the Mid East, Syria is by far the more amenable to Russian involvement. One could say it is perfectly understandable that Russia is taking such actions, the US does it all the time (Israel, Saudi, Kuwait, bases in other Persian Gulf states, Iraq). One could also interpret it as Russian 'positioning' but what would you call US behavior?

I take issue with the implication that the US should 'do something' about Chavez and Venezuela. The US has no damn right to do anything about Chavez, Venezuela can sell their oil to whomsoever they choose. If they sell it for 1 cent a barrel to Cuba or China that is their choice.

Iraq is and will remain a mess. Best hope is a loose federation, a slow reduction in violence and the exit of most US troops as soon as conditions permit. The odds are against that.

The jump in Saudi rigs is probably best explained by one of two alternatives:

  • to compensate for falling production
  • to increase production so Saudi remains the swing producer
Time will tell.

If you want a "So it's war then" scenario try the 'Premptive Energy Security...' paragraph on this page at EnergyBulletin:
I read the original, interesting and pretty sick in its conclusions except for a few final comments.

Re: "I take issue with the implication that the US should 'do something' about Chavez and Venezuela. The US has no damn right to do anything about Chavez, Venezuela can sell their oil to whomsoever they choose. If they sell it for 1 cent a barrel to Cuba or China that is their choice."

In no way do I think the US has the right to "do something" about Hugo Chavez. I only used this as an example of American impotence. The US history of intervention in Central & South America demonstrates clearly enough what our foreign policy has been in the past, a foreign policy which I regard as immoral. My point was to say that the American government can no longer engage in such reckless, cynical and pernicious acts even if they want to (which no doubt they do).

I'm sorry you misunderstood my point. Perhaps I wasn't sufficiently clear in stating it.

Re: "If you want a "So it's war then" scenario try ..."

uhmm... I didn't say I wanted a war scenario. I said there appears to be one out there and proposed that some Middle Eastern oil & natural gas producers may be considering it... I am a bit annoyed.

How you read your interpretation of what I said into my actual remarks would be seem to an issue between you and yourself. But I see this all the time on TOD.

Ending on an upbeat note, thanks for the link.

I guess your Preparing for war heading distorted my perception of what you were saying. Life is too short for us to get into a quibble, I think we are probably coming from close to the same place.
A Hubbert linearization of Middle East production

Q = 288 Gbb
URR 828 Gbb
now at 35% of URR

Includes estimated 20 Gbb produced before 1965, added to match 1997 cumulative production given in table here:

So when is the peak?
According to this, the peak will occur at 400 GB.  (Since the "ultimate" extractable volume is found to be 800 GB by linear extrapolation, and "peak" = 0.5 * "ultimate".)  So peak oil in the middle east (taken as an aggregate) is still years away.
Didn't Matthew Simmons just forecast a 50% decline, in a mere 12 years, in aggregate oil production from the middle east?  If he is correct, surely this is a catastophic deline.

A 50% decline in 12 years equates to a 5.5% annual, cumulative decline, starting now.  Is Simmons wrong?

If anyone missed it, Simmons' presentation is here: The Energy Crisis Has Arrived.  The image above was swiped off page 44.

Hello Photcurio,

Thxs for posting this. Simmons has much better sources than any of us, so he might be quite correct in his assessment, but I wonder if he overlooked possible future Iraqi production.  Maybe Iraqi production might be 4-5 million barrels/day in a few years, and going up even more than that in the future:

I really have no idea on what the true state of Iraqi oil potential is.  Perhaps the TOD principals will take better look soon.

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

At current production rate the middle east would hit 50% URR ~2020. IIRC thats about when Colin Cambell was predicting OPEC would go into decline.
That's what I thought. But I don't get it. All this detailed chat about Saudi rig count, Saudi production maybe falling.  Syria and Iran maybe over the hump.  Iraq a wild card leaving growing production from Kuwait (with Burgan in decline) and UAE to plug the gap.  How is the Middle East going to keep going to 2020?

Stuart - HELP!

PS Still Germany 0 - Italy 0

The conventional wisdom is that KSA, Kuwait, Qatar, UAE, and Iraq have not peaked.  As we know, the KSA peak date has been subject of debate.  To a lesser extent, so has that of Kuwait.  So the explanation for "middle east"  peast dates passed 2010 is Iraq--the supposedly under-explored and under-developed prize.


Settle down. Stuart's not going to help you. You've been here for exactly one day. You don't need any help. Let me give you a website.

Come back when you've read that whole thing.

It's an interesting linearization that I haven't seen before. My general view is it's extremely hard to know with any reliability what's going on with the OPEC countries because the reserve history is so bad, and the linearizations of individual countries are pretty uncertain because there's been a lot of deliberate shut in on a large scale at times. However, at some point I'd like to investigate this ME linearization and get back to you.

What does seem to be the case is that only Saudi Arabia is showing the massive spike in rig count. No-one else is expressing any urgency in this particular way.

Thanks Stuart.  Further up the page we have the recent predictions from Simmons showing ME production cratering by 6 million bpd by 2012 and here we have a Hubbert linearisation forecasting peak ME production around 2020.  Two very different outcomes for the world near term - which is more right?

I think you are right in considering long periods of shut in production.  The UK might provide an analogy with significant involuntary production shut in following Piper Alpha - giving rise to Twin Peaks.

In addition to this I think the assymetric field development program may also play a role.  In Saudi, only the 6 biggest fields or so have been fully developed.  What would the UK production - reserves profiles look like if only Forties, Brent, Piper, Beryl and Ninian had been produced for the first 20 years, followed by development of everything else?

I think the overall field developemnt strategy also plays a role, in latter years dominated by multi-lateral horizontal producers according to Matt Simmons.  And it is the anticipated watering out of these producers that leads Simmons to fear production might collapse.

My best guess would be Simmons on the right track near term, followed by a period of massive re-investment, developing fields that produce 100,000+ bopd that results in a second smaller ME peak -some time post - world peak.

This is a great site and I will continue to contribute if thats OK.

Simmons has been pretty accurate since he started writing about energy infrastructure problems back in the early 90's. He and Joseph Riva were the only people to see the oncoming train of natural gas depletion in the U.S. back when the gas study by EIA was published , if memory serves me, in Jan.2000. Based on the likelihood that the spurious reserve additions in all of OPEC are being slowly exposed, Kuwait last year,Oman before that, I would tend to believe Simmons now rather than bank on the EIA or BP published reserve numbers for SA, and extrapolate out from that.  Also, this is a mind game as well. Remember how important face is in the Arab countries. SA has been touting itself as the world's most reliable supply. Even a slight faltering would bring on a rush of drilling. Lastly it has been proven, over and over again, that evn people in the business don't see the end coming. Hubbert faced it the worst. The operators did not see peak in the north sea as late as 1999. They, like most people who are faced with the prospect of Peak, will not mentally accept it. It ain't a pleasant thought. We humans tend to defend against unpleasant thoughts even if it is not logical.
By the way, OIL CEO, do I have to tread lightly as a FNG in order to not get chastized?
New people are very welcome to contribute.  We require contributions to be free of personal attacks, at least loosely on-topic to energy issues, and tend to have an ethos of being more interested in the evidence and the truth than any particular ideology.  However, enforcement of those mores amongst comments is uneven (depending on time and energy - the editors cannot always read all comment threads).  Oil CEO is welcome to his opinion, but only the blog editors can delete comments :-)  (something that has been very rare).
Stuart, a while back there were quite a few posts indicating that there is an ongoing shortage of rigs. If this is true, do you think it would have a noticeable effect on rig count?

back to lurking,

I see no sign of rig count growth leveling off. Presumably rigbuilders are working very hard indeed (and making massive $$ I hope and trust).
oil rig rates have been rising faster than oil, so if you think oil is in short supply, rigs are even shorter.
Oil CEO is one of TOD's entertainers.  ;-)

I, for one, welcome his lightheartedness and (sometimes surreal) humour (the post above about reading the whole EIA site is a good example of this).

He also has a huge amount of level-headedness that he brings to discussions here.  Something I also appreciate.

Just another colour in the TOD spectrum.

Thanks Oil CEO - that DOE site was a great read, so many numbers - but its all very confusing. One criticism, that DOE site was devoid of humour.
Odd. The opinion here at TOD seems to be that the whole agency is a joke.
Devoid of humour? You must have missed their future projections.

To elaborate on Jack's comment, the EIA has a horrible reputation amongst TODers mainly for their tendency to do what we call "drawing straight lines." They take past historical trends, and with a ruler it seems, simply extend them into the future. In other words if oil usage has been increasing over the last 10 years by 1.5% per year, they project future usage in 2020, let's say, as the result of 1.5% per year increases. Pretty simple. They then assume that production will be the same as that usage in 2020 years. At least nobody has figured out how else they come up with these numbers which appear to be utter insanity to most   observers. And apparently their record on future projections going back a few years is sufficiently bad to highlight this folly.

On the flip-side, we all tend to use their historical data as the standard for computing whatever we compute. But this is probably because there is practically nothing else to use. The IEA's data is the only data that is comparable. BP's data only comes out once a year. The EIA's data is fairly complete and comes out every month for the month two months previous. How accurate this data is is the subject of considerable debate here.

Raw nerves.  You guys certainly take your peak oil stuff very seriously - and rightly so.

The main point I would make is that on 12 May 2006 world markets began a serious wobble. The reason that emerged was concern over higher interest rates stemming from high energy prices.  Higher energy prices that may just keep going up and up.

What is going to happen next?  My feeling is that instead of a rational acceptance of fact, our politicians (including your DOE and our Lord Browne) are driving the train full speed to the buffers.  Two options, it runs out of gas before it gets there or it crashes head on.

Debate moved on to Khebab's post on Norway.

P.S. What is FNG?
Some kind of 'New Guy'..
If Oil CEO barks, bite back. His bark is far worse than his bite and while he has had his shots, he can't be at all sure that you have had yours. ;)
Exactly. Now you guys are learning.
Iraqi Reserves A good indication of Iraq reserves is found on
This report by MK Horn and associates shows the 53 oil fields in Iraq at Figure 3. Further down below Figure 17 under Table Caption if you click on Table 1 it shows the 28 major oil fields for Iraq with proved reserves of only 41 billion barrels and this was reported in 2003. I wouldn't count on too much more being found there.
What is FNG?  Unfortunately I'm afraid it reflects my advancing years. It was a term used affectionately during the Vietnam era to depict a new person in country. I was using it a little tongue in cheek. I have not contributed until recently but read the site for some time, and have followed the peak oil situation since 1997.  As Billy Crystal would say, the Oil Drum is marvelous.  Stuart, your contribution to the understanding of these complex issues is invaluable. I suspect many people will personally benefit from the insight your analysis provides. Well done.