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23 July 2015

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AEL

Pat:

Have you read any of Art Berman's work?
http://www.nakedcapitalism.com/2015/03/debunking-americas-energy-fantasy-shale-gas-tight-oil-peak-next-decade.html

Worth watching.

jld

"you cannot cite "math" if you have no numbers"
Plain wrong: A = B - C, C being not zero and positive, A is thus less than B.
Maths, no numbers...

Joe100

Col. Lang –

A good source for an answer to you question “where is peak oil” is the most recent (2013) International Energy Agency (IEA)
“Resources to Reserves” report:

Proven reserves of conventional oil are estimated to be around 1.3 trillion barrels, with remaining recoverable oil resources representing about 2.7 trillion barrels. Globally, proven reserves have increased modestly since 1990, despite the growth in consumption. The global reserves-to-production ratio, based on
current consumption levels, is in the range of 40 to 45 years. As resources are successfully converted into reserves, this period will be extended.

Proven reserves of unconventional oil are around 400 billion barrels (bb), with estimated recoverable resources of 3.2 trillion barrels.

So the current guess of global oil resouces is about 7.6 trillion barrels. This is arguably low as previously unknown forms of oil resources continue to be discovered, for example the large “fairways” of residual oil (water mixed, until recently quite challenging to extract) that are now believed to run between major oil fields in parts of Texas.

Resources are those volumes that have yet to be fully characterised, or that present technical difficulties or are costly to extract, for example where technologies that permit their extraction in an environmentally sound and costeffective manner are still to be developed. Reserves are those volumes that are expected to be produced economically using today’s technology; they are often associated with a project that is already well-defined or ongoing. As the more accessible, conventional supplies are exhausted, so more technically demanding resources will need to be exploited.

For context, current global oil consumption is about 34 billion barrels per year.


kao_hsien_chih

The talk of "peak oil (supply)" or "peak oil demand," at least as absolute concepts, is silly.

As a few folks with experience in oil industry already noted, there is no absolute "peak oil." It is literally impossible to know how much oil there is period. There are known reserves that are too costly to extract. There are potential oil reserves that are left unexplored b/c the probability of finding (enough) oil does not justify even the cost of exploration. Peak oil, as such, is a function of prices: there will be more oil (either produced or explored for potential production) if the prices are high enough and are expected to be stable enough. These, in turn, depend on the demand, which is itself a function of prices. If the prices get too high, people will find ways to economize and find alternate sources of energy. The "peak demand" simply gets higher when the prices are low, and if the prices stay high enough, we may already be long past the absolute peak demand (associated with cheap oil) anyways.

The bottom line: oil may be finite, but there will never be a time when it makes economic sense to extract the last drop (or a few billion barrels) of oil--unless people find the secret of immortality in crude oil or some other weirdness. A talk of oil as "finite" resource that "will" run out is silly propaganda.

Tidewater

Tidewater to Pete Deer,

Damn! You're blogging from the hospital. I'm impressed! Good luck with that procedure. I'm following the dialogue. I like your point of view! Best.

Colonel Lang: I think Gaia is a metaphor. But Arctic News says October is going to show some explosive new figures on the methane. 'Blue water event' seems to be coming, this year, next year. I used to think that had a nice kind of ring to it. A 'blue water sailor' is one who took a forty-footer around Cape Horn, that kind of thing. Blue not good in the Arctic Ocean.

Valissa

Fun fact... "peak wood" was approx. 1906 according to Jim Sterba, author of 'Nature Wars: The Incredible Story of How Wildlife Comebacks Turned Backyards into Battlegrounds.'

OT, but expect you will be interested in this war update...

Turkey Opens Key Air Base for US Strikes On ISIS http://www.defenseone.com/threats/2015/07/turkey-opens-key-air-base-us-strikes-isis/118443/
Turkey will open up Incirlik Air Force Base, about 250 miles from the Syrian city of Raqqa, to coalition operations against the Islamic State…

MRW

I’m with the Colonel on this one 100%. People are generally blowing it out their ass when they talk about Peak Oil and reserves. Climate activists are the worst, IMO, and so are the journalists who read their press releases and print their emotional crap without doing proper basic investigation.

The ABSOLUTE gold standard in global energy supplies, untapped reserves, and forecasted needs is “The BP Statistical Review of World Energy,” and has been for 64 years. The US DOE and the US military rely upon it, and so do all governments and military supply chiefs around the world. Ask any oil expert.

You can start here. Various parts of the 2015 Review are available under “Downloads” in the left panel. And they’ve added videos and charts so you don’t have to wade through tons of verbiage to get the facts.
http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html

In 2014, non-OPEC oil supply grew by 2 million barrels/day (bpd), the largest on record, double the average of the last 10 years.

In 2014, US shale revolution produced 11.5 million of oil bpd, higher than its previous US oil production peak in 1970. The US produced more oil than either Russia (previously #1) or Saudi Arabia, and became the number one producer in the world.

Now the story gets interesting with some anecdotal history. When the oil embargo hit in 1973, the US military was shocked to discover that its oil supplies left its troops and ships/subs/planes/supply lines/bases with less than a two-day supply of fuel at its locations worldwide. Complete panic. James Schlesinger was Secretary of Defense at the time. What I am about to tell you came from him.

Schlesinger said that oil at that moment became National Security #1. Nothing else mattered. Commercial and residential need was completely ignored. Further, we (the US federal government) didn’t have to worry about paying for it. Nixon took us off the gold standard on August 15, 1971, so foreign oil cost the federal government the flick of a finger on a keyboard, or if we were paying in actual cash: about $0.06 to print a $100 bill. But the strategy then became to use up everyone else’s oil before we tapped up our own considerable supply. (The CIA controls who gets to drill domestically. Jes’ reportin’.) The one exception was 1973/74 drilling at Prudhoe Bay on the northeast slope of Alaska. The Russians had just perfected slant drilling and since it’s about 127 miles from the western tip of Alaska to the eastern tip of Russia, the last thing the SecDef wanted was for Russia to tap into the huge fields offshore.

Let me interrupt myself here to point out that Obama's recent approval to drill in the Chukchi Sea, that sweet spot between Alaska and Russia about 45 miles from the Russian shore, is all part of this strategy. Russia is now building pipelines to and refineries on its far eastern border to supply China, Japan, and the Koreas. Maybe that’s what got Obama spooked after eight years of the US denying those drilling rights.

Vast, unfathomably large oil fields were discovered offshore NW of Prudhoe Bay but they were tapped; their structure is such that they exist like enlarged pores or blackheads, and can’t be tapped without Russia actually moving into US arctic waters.

Now for the issue of renewables. (All of this is underreported in the US press while US journalists do the bidding of the transnationals that want US federal support for their development—remember it’s just a matter of keystrokes to get the money if the issue is emotional enough—under the UNEP umbrella and out of US jurisdiction. The trade agreements TPP, TTIP, and TISA are the legal framework for the global governance they are seeking this December in Paris, unless people wake the FU.)

Last November this jaw-dropping report came out, but you didn’t hear about it in the NYT or WashPo. Google, you may remember, about five years ago threw its vast resources behind renewable energies to combat climate change. In November 2014, they admitted defeat.
"Renewable energy 'simply WON'T WORK': Top Google engineers
Windmills, solar, tidal - all a 'false hope', say Stanford PhDs"
Page 1
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
Page 2
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/?page=2

Also: The original article in the IEEE Spectrum by the two Google scientists who said renewables won’t work:

"What It Would Really Take to Reverse Climate Change — Today’s renewable energy technologies won’t save us. So what will?"
By Ross Koningstein & David Fork
http://spectrum.ieee.org/energy/renewables/what-it-would-really-take-to-reverse-climate-change

The first article has this sobering paragraph in it:

"Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear. All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms - and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.”

But, of course, that’s what the transnationals are promising they can do . . . and it will be on the US dime. The transnationals have discovered how the US monetary system really works—what I’ve been wailing about all year--and made plans in 1987 with ‘global warming' to take advantage of it. If they were really serious, there would be multi-million dollar contests—right now—for students to discover the next great source of energy. But there haven’t been any, and there aren’t any now, are there?

P.S. The reason Iran started its nuclear fuel biz in 1975 with Ford’s blessing was because they were told their oil fields would run out by 2016. Then their massive dry fields filled up in the early 00’s. Surprise. Oil is supplied from below from the tectonic movement of the plates under high heat and pressure. Another thing the the Russians discovered in 1950.
http://www.thenewstribe.com/2013/04/16/tectonic-summary-of-iran-pakistan-border-region-earthquake/

turcopolier

jld

IMO an algebraic equation with no values is worthless as an argument in a policy debate. pl

turcopolier

Pete Deer

Sorry to hear you are ill. pat

Norbert M. Salamon

Colonel:

With great respect Hubert's theory was with respect to conventional oil production. While fracking is over 30 years old technology, the recent actions {Bakken e.g.,] does not produce conventional oil, it mostly produces pentane - this being the reason that the railroad tankers have a tendency to explode [pentane is also known as natural gasoline].

With the expenditure of up to 400 billion dollars per annum the world's total production barely improved since 2005 [the peak of conventional oil world wide]. The world wide reduction in CAPEX in the last few years is already has effect.

That the USA statistical offices include Natural Gas Liquids in their oil production total is misleading for the energy content of NGL is at best 70% of regular conventional oil. Further at times they also include refinery gains, a rather dubious exercise, since it take s horrendous amount of natural gas/hydrogen and energy to crack the heavy part of the oil residues.

Your original question to many was when peak oil will arrive. If the price collapse keeps for a year or more, you might get your wish, Sir, for the collapse of oil related CAPEX [as reported widely]foretells the total collapse of new explorations in expensive fields [Shale, deep sea, tar sands -Canada, Venezuela and Estonia] deep sea oil [see the number of parked drill ships in the Caribbean Sea - some for dismantling]. The conventional fields of the world deplete at approx. 4-5% per annum and at present they supply most of the oil. [Consider that Saudi Arabia processes more than one barrel of seawater to flood oil fields per two barrels of oil produced].

The Iranian possible increase of oil production can only be used by certain refineries, many changed to other types of oil due to the US designed sanction measures.

Finally, Sir, the USA oil extraction is not based solely on private funds, but considerable financial efforts by the taxpayers through various TAX LAW LOOP HOLES.

turcopolier

NMS
Supply is supply. pl

JMH

"The Stone Age didn't end because we ran out of stone"

Fred

Valissa,

"...How Wildlife Comebacks Turned Backyards into Battlegrounds"
My hometown is currently repeating Long Island's battle over excess deer population. Hunting no, Bambi birth control too expensive, lots of hand wringing. I told my councilman at the last coffee meet up he held that we just need to rely on inattentive drivers. That was at least good for a couple of chuckles amongst the all dirty looks from the pro bambi side.

Babak Makkinejad

Fred Hoyle and I Bernard Cohen had also crunched the numbers and dismissed renewables - excepting breeding reactors.

Please see:

http://88.167.97.19/temp/Breeder_reactors_A_renewable_energy_source_pad11983cohen.pdf

http://www.amazon.com/Energy-extinction-case-nuclear-energy/dp/0435544306


Jack

Sir

In addition to crude many commodities are trading well off their highs. Copper is trading at a 6yr low. Iron ore is down. Caterpillar has seen declining YoY sales growth for 31 months. One of the implications is declining economic growth rates in China and Latin America. The other in particular for crude is improved efficiency in the west. We are using less crude per unit in the US.

What I find interesting is that during the last run up in prices the media hysteria was around price manipulation and excoriation of speculators. CONgress got in the mix with calls for more "regulation". Similarly when stock prices rise then every thing is a-ok. But when it declines blame the short-seller and even ban sales outright as we have seen in China couple weeks ago. And of course get the government and central bank to create money out of thin air to buy securities. The Swiss National Bank is a proud owner of Apple stock using francs they just conjured on a keyboard. What's not to like about all this free lunch government backstopped and manipulated global financial system.

One of the beauties of the "green" moral superiority propaganda crew is once again to get government to use the power of the state to fleece those deemed "bad" and enrich those deemed "good". Like government loans to Solyndra where the government was far down the capital stack even relative to equity holders. Subsidies for ethanol and solar and wind. Al Gore sure has made a fortune on the basis of using government power to feather his nest. While he scaremongers his own personal life is rather opulent in terms of energy consumption.

BabelFish

WRC, so nucs are present in the U.S., Russia, Britan, France and China. The percentage of subs that are nucs is very high, but the Russians and the Chinese have diesel and/or AIP boats as well. The Indians are working to commission a nuc sub.

The U.S., French and Russians have surface nucs but the number is relatively small. All our Nimitz class carriers, the French carrier deGaulle and I forget the Russian surface components right now.

So, the majority of the worlds surface units are petroleum powered.

BabelFish

Matthew,

Thanks! I remember a lot of shallow wells being drilled during a price surge and then being turned off when the price declined. We also tried to extend the life of old fields with water flooding but the rate of return was small.

A Pols

I'm unclear whether to infer that you think Petroleum supplies and useage can be expanded indefinitely or that supply exhaustion won't happen soon enough to matter in terms of our human horizons. We seem to be keeping the gas stations open and we can still pay for the stuff, but is there no limit at some future time, even if not in the proximate future?

William R. Cumming

I think the market is quite accurate right now. Of course the industry still wants the export restrictions on domestically produced oil and gas lifted.

MRW

"But Arctic News says October is going to show some explosive new figures on the methane."

Arctic News is an alarmist site run by one guy that by its own admission, "is often based on NEWS RELEASES of relevant scientific studies and data from sources such as NOAA and NASA. (My emphasis.)

The methane panic is old hat, it peaked three years ago. It was mainly coming from Peter Wadhams, Professor of Ocean Physics, and Head of the Polar Ocean Physics Group in the Department of Applied Mathematics and Theoretical Physics, University of Cambridge. Impressive title. Wadhams claimed all sort of hyperbolic things about methane, and that the arctic would be ice-free in 2015. American and Canadian polar ice scientists went after him with a vengeance in the NYT for the distortions, and lack of facts.

The journal "Nature," responded to the panic and inserted this paper under its Nature Education Knowledge Project. The paper says it will be 1000 years before there will be any effect.
http://www.nature.com/scitable/knowledge/library/methane-hydrates-and-contemporary-climate-change-24314790

----------------------------------
Conclusions

Catastrophic, widespread dissociation of methane gas hydrates will not be triggered by continued climate warming at contemporary rates (0.2ºC per decade; IPCC 2007) over timescales of a few hundred years. Most of Earth's gas hydrates occur at low saturations and in sediments at such great depths below the seafloor or onshore permafrost that they will barely be affected by warming over even 10*3 [1,000] yr.
----------------------------------

This is what the arctic sea ice looks like today. Hardly anything to worry about:
http://ocean.dmi.dk/arctic/icecover.uk.php

In fact, yesterday the CBC announced "CCGS Amundsen re-routed to Hudson Bay to help with heavy ice—Worst ice conditions in 20 years force change of plans to icebreaker research program.”

The ice is so heavy in the Arctic right now that the CCGS Amundsen, arctic research ship and icebreaker, had to abandon the 115-day scientific expedition planned for this summer to help ships stuck in the ice. Johnny Leclair, assistant commissioner for the Coast Guard, said Tuesday conditions in the area are the worst he's seen in 20 years.
http://www.cbc.ca/news/canada/north/ccgs-amundsen-re-routed-to-hudson-bay-to-help-with-heavy-ice-1.3162900

The Moar You Know

First off, before anything else, we've survived peak oil before.

It wasn't petroleum oil, it was whale oil. There's some very instructional history there, both from the lengths that the last whalers went to get their harvest, and of the price fluctuations that whale oil underwent in it's final years. At one point, whale oil was running about $1000/barrel. Unheard of money for the times, and not sustainable. But people needed to keep their lights on!

A new technology saved us all from having to learn to read by Braille: petroleum.

More on that in a minute.

An actuary would say that, tops, I've got about another 30 years to live. So for me, mention of "Peak Oil" is meaningless. I'll be dead by the time we get there anyway.

Is there such a thing? Of course, oil's a finite resource. How finite? Nobody knows. And really, it's a pretty silly question. There are three factors that I can think of off the top of my head that should have the Western World moving off oil as fast as possible, and none of them are "Peak Oil":

1. (the biggie) I don't care for my money going to dictators, murdering gangs, and psychos masquerading as religious authorities. The less we buy the less they get.
2. Pollution. It's still there. As I've got the asthma, I'm not a fan.
3. Plastics: we don't know how much oil is left, but it's a fair amount by even the most pessimistic estimates. Yeah, we need it to make the car go, but we need it even more for plastics. You don't have oil, you don't have plastics, you don't have modern medicine, period. I leave imagining a world without plastics as an exercise for the reader. Won't be pretty.

Back to the technology:

For those worried that the hippies are trying to take away your muscle cars (a reasonable fear, they are) all I can say is that I've driven most of the classic performance machines and the Tesla I drove last week could beat every one of them without the accelerator even touching the floor.

It runs exclusively on electricity.

There are a variety of ways to produce that electricity that have nothing to do with petroleum.

Peak Oil is not going to be a huge, society-busting problem for the same reason that Peak Whale wasn't: we have working alternatives now, and they're getting pretty cheap. Not quite cheaper than oil, not yet, but close.

Peak Oil is alarmist hippie bullshit, says me, the pragmatic hippie. Trying to scare people into a lifestyle that uses less energy wasn't going to work, it never could have. So let's get on it and figure out a way to deliver more power to the billions of people around this globe who want it.

turcopolier

The Moar You Know

"it's a pretty silly question" It's only a silly question if you want to discuss things at the level of a college bull session. pl

J. E. Maggs

Here are some numbers. If the entire surface of the earth were covered with oil 1 meter deep, then the amount of oil would be 3.2 10^15 (3.2 times ten to the fifteenth power)barrels. At the rate of world production of oil in 2012 (76 million barrels perday) this putative pool of oil would last for 115 thousand years. You can scale this answer as you desire. For example, if you think the oil pool is only a centimeter deep, then the oil reserve would last 115 years.

Maggs

ex-PFC Chuck

I think it's a little too early to count on fracking as the salvation of American oil production. From what I've read at Oilprice.com and other such sites most US fracked oil comes from the Eagle Ford formation in west Texas and the Bakken Formation, which is mostly in western North Dakota but extends into Montana. When this type of production started at these sites the predicted break-even wellhead price for the former was about $80/barrel and for the Bakken about $100 per. These estimates were based on the anticipated depletion rates. That is, the rate at which production of a given well declines over time. Now some of the first wells completed at these sites and its my understanding that the average rates of production decline in both fields are proving to be greater than the original projections. Thus the true breakeven wellhead price is proving to be even higher than the original. This would be somewhat of a problem even if the Saudis hadn't cranked their spigots wide open but they having done so greatly exacerbates it.
You might think that the rational response of the frackers would be to close their wellhead valves and sit out the price collapse until either the economy does a genuine turnaround into recovery (instead of the faux recoveries the pols have been flogging) or the Saudi's change their strategy. Your thinking, however, would be wrong. The reason is that most of the fracking is not being done by the majors who have balance sheets scores and hundreds of billions of dollars on their balance sheets; it is being done by small (relatively) wildcat companies that are up to their eyeballs in debt. Junk debt as a matter of fact, which means that the interest they're paying is well above the near zero levels of the prime rates that have been in effect since the Meltdown. At this point they don't care if they're making a profit. They just want enough cash flow to keep current on their payments in the feint hope that something will happen, be it the Second Coming or a Black Swan event, that will bounce the wellhead price before they collide with the bankruptcy wall, which more of their peers are hitting each month.

They have also stopped cold drilling new wells to cut down on capital expenditures. But the way the numbers work out, it does not make sense for them to suspend completion work on wells that were significantly along when they realized that last summer's drop in wellhead prices was more than a short term dip. A major reason for this is the above mentioned depletion rates of fracked wells. In order to keep the cash flow up they need to maintain, and hopefully increase revenues. They can only do that by finishing those partially completed wells. That is, assuming they can get the financing to do it, which is becoming more difficult to find and more costly if they succeed. This is why the production of fracked oil has continued to increase even as the producers are losing $30-50 or more for every barrel they produce.

If the Saudi spigots are still wide open a year from now, almost all wells that were started will have been completed and the drilling rigs will be in storage. Many and perhaps most of the smaller production companies will be ten toes up in bankruptcy and their in the process of being sold off to the majors for pennies on the dollar. Those few that manage to survive will be shadows of their former selves, having been forced write down the asset value of their leases reserves because of the persistence of wellhead prices in the $50 range. A lot of institutional knowledge will have been lost, not to mention guts of entrepreneurs and aggressive thinking on the part of lenders.

Norbert M. Salamon

you said:
Peak oil, as such, is a function of prices.

IMO this statement is not necessarily true, for when oil is at $50, there is very little production which is profitable [aside from Persian Sea areas.]

A truer stamen would be something like:

Peak is, as such is the function of net energy gain hen product energy is larger by at least a factor of 3 the total energy needed to produce it. when energy requirement is larger then that gained by production it is the end of the game.

Total required energy for production includes energy for exploration, drilling energy cost, steel manufacture to delivery to site, environmental clean-up, transport to refinery, refinery energy demand [incl. construction/maintenance thereof] and distribution energy cost.

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