RIP: Peak Oil - we won't be running out any time soon The idea that seized the imaginations of the bien pensant chattering classes in the Noughties – "Peak Oil" – is no longer relevant. So says the commodities team at Citigroup, and policy-makers would be wise to examine the trends they've identified. "Peak Oil" is the point at which the production of conventional crude oil …
"They simply wanted Doomsday a little too badly."
"Greens want people to be able to live at the highest sustainable economic level possible, emphasis on the sustainable part. "
I'd suggest both are pretty sweeping *generalizations*.
I'd say (in *both* POVs) it's a case of "some do, some don't."
Although speaking personally my closest approach to a "Green movement" was when I had some rather badly infected cheese.
The idea being that we're all supposed to be contributing to that eventual state of affairs by continuing to live within, and maintaining, the status quo? Easy! (I'd take a second of those for later, but I think the one I have is more than enough.)
It doesn't matter how much oil there is left, the question is how much does it cost to get it out of the ground? If it costs a barrel of oil in terms of energy to get a barrel of oil out of the ground, we're screwed. The newer techniques of obtaining crude are costing more and more to recover the oil.
Remember that oil has many important uses other than fuel - plastics and lubricants would be high up the list of stuff we really don't want to go without...
The cost of a barrel of oil has little to do with known reserves, it is market forces and governments that control the price. In general you may see a gradual trend in increased cost of a barrel over time but the short term variances caused by market uncertainties (e.g. banks spieling about Peal Oil) will largely swamp the figures.
The main problem with the ever-more optimistic figures for oil reserves is that the Arabs have a strong incentive to lie about how much they've got left, in order to prop up their currencies, maintain lavish spending and prevent bloody revolutions. I don't believe them at all.
If you do the maths, the amount of oil energy in GWh consumed by the world every day is so vast that it would take an unthinkable number of nuclear power plants or (let's be optimistic) algae swamps to replace it. More than there is probably space for on the planet, in fact. Think how long the dino oil took to make. The Victorians may have obsessed about whale blubber supplies, but they weren't driving cars and they didn't have plastics.
On the bright side, it probably makes no difference to the climate whether we burn the whole lot in the next 20 years or the next 200 years. It's probably worth buying a bicycle though, on balance.
'Some people' clearly includes you.
Do you know *anything* about the horrible side effects of fracking? Or the immense energy cost?
No. You don't. Because you're too ideologically blinkered to deal with reality honestly on this topic.
Here's just one study:
http://www.pnas.org/content/early/2011/05/02/1100682108
Here's another. (It's by lawyers, not scientist, so you don't need to worry about difficult words in this one.)
http://www.yourlawyer.com/topics/overview/hydraulic_fracturing_fracking
There are others.
Come back and write an informed feature when you've bothered to do some basic research.
Maybe you'll be mistaken for a proper journalist then, and not someone with an ideological axe to grind and a (rather small and insignificant, all things considered) bully pulpit to grind it on.
Quite. It was never resource shortage, but rather EROEI that was going to be the problem. The return on some of the newer techniques for extracting difficult hydrocarbons is frighteningly low. Add this to increasing world population, and rapidly increasing energy demands in the developing world, which mean a likely increase in demand of the order of 5 to 10 times current demand over the next 50 years and we have a problem. Biofuel will come nowhere near to filling this, and synthetics will require enormous investment in desert solar thermal, DT fusion, or fast breeder (and that only if we can figure out Uranium from sea water extraction). Nothing else comes close to closing the energy gap.
Exactly. EROEI is the key.
Please look it up: http://en.wikipedia.org/wiki/Energy_returned_on_energy_invested
Ask yourself why don't our cars run on (renewable!) whale blubber diesel? There are still whales about, you know, just ask the Japanese who "research" them.
The answer is because petroleum-based fuel was cheaper during the 20th century and still is at the moment.
Rudolf Diesel would have understood EROEI.
The two examples you mention, hydraulic fracking and synthetic fuel, have drawbacks which is the reason why they are not used currently: both are bad for the environment and the EROEI is really quite a lot lower than other current fuel production methods (e.g. South Africa Sasol's Fischer-Tropsch synfuel: google it).
You mentioned that there are hundreds of new wells in the USA to extract their huge amount of shale oil with hydraulic fracking. To me this doesn't sound like a brave new world of cheap fuel, but as an act of desperation to keep continuing with the profitable status quo for a little bit longer.
You cannot in the 21st century decouple the inventivity needed to get resources from the *energy investment* needed to get those resources otherwise you will fail.
Also, in economic terms the discussion often focuses on our "need" for fuel and energy. But unfortunately, physical rather than economical reality doesn't give a hoot about our "needs".
To put it differently, thermodynamics trumps economics. We're finding that out now.
I'll end my long and no doubt tedious rant by stating that I, a "tree-hugging hippy" as you'd probably call it, *love* human ingenuity and innovation and I sincerely believe that in 100 years we will still have wind and sunlight to our disposal to provide energy and food (lookup energy costs of Haber-Bosch process: http://en.wikipedia.org/wiki/Haber_process ) for whatever size world population that can fit within those energy constraints post-Peak Oil.
You might like to keep in mind that El Reg is the UK version of this website.
US Fracking companies are *exempt* from the provisions of the US Clean Water Act courtesy of "W"s 2005 energy policy act*.
Hence the ability in the *USA* to pump complex (and apparently lethally toxic and carcinogenic) chemical cocktails into the ground with *zero* comeback.
In Europe environmental legislation is a little firmer on the matter.
*Just one of shrub's little gifts to Big Oil and the American people. Getting it cancelled (or a new law to override it) would be quite a good idea.
"If you do the maths, the amount of oil energy in GWh consumed by the world every day is so vast that it would take an unthinkable number of nuclear power plants or (let's be optimistic) algae swamps to replace it. More than there is probably space for on the planet, in fact"
Nonsense. tClearly you are incapable of doing the maths.
|In Britain, 16 years ago more than 25% of our electric power was generated from fission reactors: there were 16 reactors in total: 1 PWR and 7 AGR delivering decent output, and 7 obsolescent (4 whose build started in the 1950s, one each from 1960, 1961 and 1962) low-capacity Magnox reactors which between them delivered about as much power as one and a half AGRs, and 1 newer (1964) medium capacity Magnox which delivered about 75% of a typical AGR output. Using modern technology we could have 25 times that capacity in a space small enough that it doesn't matter even in a densely populated area like Britain, and and with that we could power all out oil-burning devices as well as all existing coal-burning gear and still have some left over to export.
Just across the channel we have France something around 80% of electric power generation is nuclear. I've spent quite a lot of time in France over the years, and I haven't noticed that the scenery has been taken over by nuclear power stations.
In 29 years reactor output went from 200MWe (Calder Hall, first commercial output 1959) to 1250MWe (Torness, first commercial output 1988): ta factor of 6.25. If we hadn't stopped building plants we might expect a new reactor strating build about now to be in commercial operation generating about 8000MWe in 2020. That doesn't suggest vast areas of land taken over by generation at the sort of capacities that we would need.
In fact it's absolutely clear that not only are the distribution and storage problems of wind generated power worse than those of nuclear (a result of intermittency of generation), but so is the space required for generating plant.
...as abundant, provided you find abundant resources elsewhere to help you produce synthetic hydrocarbons. There's already research being conducted into making synthetic fuel (and it's serious research being done by such organizations as the US Department of Defense, who sees homegrown fuel as a step towards logistic security--A Good Thing for their type; more specifically, the Navy already uses reactors on most of their carriers, why not give them an extra job to do that can also help reduce the need to take on jet fuel every so often).
All you really need is a better way of producing thermal or electrical energy. We already have a good bridge to it in modern nuclear reactors (if we can just get past the scare of nuclear excursions--Gen IV reactors take those potentials into consideration, and some designs are designed to prevent runaway reactions), and if we can just wrap our heads around finding a commercially-viable fusion reactor...
Global conventional oil production peaked permanently in 2006, SIX years ago.
All growth of supply has since come from tar sands, coal to liquids, and biofuels.
The price of oil is $124/barrel today an all time record when converted to Sterling or Euros.
(Brent front month futures contract). When the UK North Sea supply peaked in 2001 it was below
$20.
Tar sands and similar reserves have a future production potential of 5-10 millions barrels per day, in 10 -2 0 years time. The world burns 85 million barrels per day.
Biofuel consumption has a global potential of 3-5 million barrels per day, but all it really does is turn natural gas into ethanol or prime rain forest into palm oil plantations. The US has just cancelled its bioethanol subsidy. Last year, Brazil IMPORTED both oil and ethanol from the US!
In the last 4 years US. Europe and Japan have cut oil consumption by 3 million barrels per day. The rest of the wold has increased consumption by 4 million barrels per day.
Last year another superspike in the price of oil was only avoided by releasing 60 million barrels from the US and EU strategic reserves. There is already talk of another release in the next few months.
The global supply of oil has peaked, and economically inefficient users of oil (Europe and the US) are being systematically priced out of the global market. At the rate that China and India are expanding imports, and the global supply of available exports is shrinking, then there will be NO oil available for import to any other country by 2025.
The US has not been self-sufficient in oil since 1964. We have been net importer since 2009.
I generally support your position, but one misstatement could make some (I'm looking at you A.O.) toss the whole thing. In point of fact, towards the end of last year/beginning of this one, the US (however briefly) became a net exporter of oil.
http://moneymorning.com/2012/01/04/oil-companies-big-winners-as-u-s-becomes-net-exporter-of-fuel/
Hi Identity,
A report on the internet does not make a fact. The US has been a net importer of oil EVERY DAY since 1964. Very briefly they exported more refined products (petrol and diesel) than they imported.
That was because domestic consumption has collapsed in the recession, and land-locked supplies of Canadian Tar sand oil were so (relatively) cheap that it was cost effective to use spare refining capacity and export the products. Since then those refineries have been shut down as uneconomic.
The lies the US media put out about oil are hard to credit sometimes.
"Global conventional oil production peaked permanently in 2006, SIX years ago.
All growth of supply has since come from tar sands, coal to liquids, and biofuels."
But its still oil being produced and burned in cars etc - yes?
If oil production is growing then by definition we haven't hit peak oil, let alone in 2006.
This article highlights that there is even more oil to be unlocked using the technology so successfully used for shale gas.
So again, no peak.
If synthetic oils start being produced as the paper suggests that means further growth in production.
So again, no peak.
Bioethanol from maize or sugar cane looks and behaves nothing like oil, being a low energy density substitute for petrol, but is counted in global oil production, as is bio diesel.
Natural Gas Liquids are short carbon chain hydrocarbons, a by-product of natural gas production. The carbon content is too low for transport fuels, but it is used as a petrochemical feedstock. They are counted in global oil production.
Tar sands are so thick that they are dug out of the ground with a mechanical shovel. They need chemical treatment to break down the long carbon chains to a point where a conventional oil refinery can use them as a feedstock, but it is probably reasonable to call them 'unconventional oil'.
There is as yet no peak in total fossil fuel production, but oil is the largest single source of primary energy on this planet, at about 30%. There is no way on earth it can be replaced by ramping up any other energy supply, fossil, nuclear or renewable.
Price comparison of one day in time with another. Fantastic. Must be true. You do realise that commodities (especially oil) are increasingly speculated in and invested in as an asset class by funds don't you? What do you think that investment does to pricing? A small-ish fund I work for has $1bn invested in commodities, mainly oil, and that is just the tip of the iceberg (there's a nice momentum trade in oil). Don't even attempt to dispel this, as some do, by looking at the futures exchange's separation of contracts outstanding into hedgers (generally producers and consumers) and investors/speculators. Goldman Sachs is allowed to be counted on the hedgers side and is also a very large player in the commodities market as a fund counterparty. I don't imagine they're the only ones. Thus the figures aren't that useful.
The price today is an all time high when converted to Sterling or Euro due to the lack of desire for those currencies vs the dollar. Better to compare in USD taking into account the relative strength of the dollar via it's trade weighted basket through time to account for variations by currency movement.
Basically those guys think because USA has a ESTIMATE increase of "ALTERNATIVE" oil production of about 300k barrel/day this year, and there is some shabby production increase on not so impressive overall wells production (North Dakota i'm looking at you), the PARABOLIC INCREASE on global oil demand can be fed and and prices therefore sustained.
The paper, issued by a financial conglomerate, is designed to attack investor, not as scientific paper. It is full of "hard" data (real information) mix with "soft" data ( estimations) floating on a sea of wish-thinking speculation and hype. As a scientific paper lacks of structured, rigour and a clear separation between FACTS, ANALYSIS and CONCLUSIONS.
They maybe right, but there is nothing in the paper to corroborate that.
Exactly, the price of oil will still have to rise a significant amount before extraction of shale oil is economically viable. Those reserve remain useable for the future which is a good thing but dismissing the economic pain your much derided "middle classes" will experience when we're down to tapping shale oil is irresponsible.
As the price of a commodity rises, alternatives that were previously uneconomic to produce become viable. Or in other words, if it's worth their while, somebody'll do it.
Now who first pointed that out? Ah, that'll be Adam Smith in 1776. Clever bloke, debunking Peak Oil some 200 years before some arsehat thought of it....
Smith was writing almost a century before the first law of thermodynamics was properly understood and when trade was largely agricultural and based almost entirely on renewable supplies.
If you think he addressed the concept of peak oil then you have clearly never read the Wealth of Nations.
If you've understood (not just read) the Wealth of Nations you'd understand that the basic principle the OP pointed out explains why peak oil wont be the end of civilisation, or even necessarily a crisis when peak production is eventually reached, as other technologies will replace it.
So no, the words 'peak oil' do not appear in the Wealth of Nations *slaps forehead*, but Smith still gave us the logical tools to understand it would never be the problem the Peak Oil mob said it would be.
I'm sure you'd be happy to point out the part of the Wealth of Nations that is applicable to finite energy resources. Smith gets bandied around with seeming impunity in this sort of debate but nobody ever manages to actually quote him.
No ... wait ... perhaps you could instead address some bizarre straw man about the "end of civilisation". That'll convince me.
Smith was not a scientist and it is easy to speak of alternatives when you are not a scientist. This time it's not entirely about money. If it costs 3 energy unit to produce one energy unit, physics are very clear here. Oil is so valuable because you spend very little energy compared to how much you extract. this is why ethanol didn't work and this is why extracting fuel from plankton, algae or whatever leafs you want is not working, irrespective of economical value. Remember, basic fundamental laws of science always beat economic laws.
"Or in other words, if it's worth their while, somebody'll do it."
You are confusing actual markets with the theoretical construct. This would be true in a free market, but in reality its more like this:
Oil becomes expensive, company wants to boil it out of oily sands.
Company gets permit and research money from government
Company starts producing, finds that cost is far higher than conventional drilling
Company works on getting its cost subsidised for example by using subsidised power
*a few years later*
The necessary shift to new infrastructures which would work with alternatives to oil has been postponed, "normal" oil is far to expensive, the government needs to go on and continue subsidising the company, otherwise everything will break.
So what we should do now is to make sure we can use a multitude of power sources and that we can switch quickly.
It may be that someone invents an alternative way to produce a scarce and costly resource, but it doesn't necessarily follow that it returns to former levels of abundance and cheapness. It may just mean that we can indefinitely maintain an expensive trickle of the resource.
Andrew posits a straw man that you either believe in full tilt exploitation of oil or Amish austerity. The fact is, we need not only to invest in alternative methods of producing hydro-carbons, but in alternative energy sources, eg nuclear.
".....Care to elaborate on that?...." Well, to put it simply, we have limited resources financially due to other commitments. For example, we could solve all our electricity generation problems for the next thirty years if we diverted a whole year of the UK budget to nothing but paying the Yanks or the Fwench to build us nuke power stations at a faster rate. Problem is, that diversion of cash would leave us with horrific shortfalls in other areas such as healthcare, policing or even road repairs. For voters in the UK, for example, giving up the NHS for one year is too much of a sacrifice, so we are left with limited financial resources.
And, ultimately, one of the costs is energy input*, without which no amount of creativity, ingenuity, or inventiveness will help. That would be the end-game, of course, but there's always a fervent prayer being repeated that the miracle of an 'out' will continue to roll in in a timely way, in perpetuity, so humanity can avoid reaching that particular pass.
*Abstracting entirely from the complexities, and costs, of converting infrastructure to use what energy is available --including the energy required to do the conversion. There's won't always be a functionally infinite and available quantity of energy available, but I get the sense that that supply is assumed a priori in the prevailing theosophy.
"the "sustainability" sector, which is almost completely dependent on state funding and which shares similar erroneous assumptions."
So the sustainability movement is not sustainable without socialism-like patronage, which history has shown us isn't itself sustainable. (Greece, East Germany, Brazil in the 90s, Vietnam, France in the late 1840s, ...)
And I apologize to all watermelons (green on the outside, red in the middle) for using empirical evidence to show you're wrong.Wait, no, I don't apologize.
Shale oil is a light oil that is extracted from the same hole in the ground as shale gas. Recent widespread deployment of horizontal well drilling combined with multistage fracking (facturing of the source rock by pumping in liquids under high pressure) has lead to an increase of both oil and gas production in the US in recent years, US oil production has increased from 5.1Mbpd to 5.6Mbpd, but US production peaked permanently at over 10Mbpd in 1971. The US consumes about 15 mbpd of oil products, and imports about 8 -9 Mbpd at the moment (and falling rapidly). (The numbers don't add up because of 'refinery gain').
Oil Shale is a oily shale resource rock found in huge quantities in parts of the US. Nobody has ever worked out a way of extracting oil economically from it, because it uses almost as much energy to extract as is contains. It is also hugely polluting. Oil shale will NEVER be produced.
In terms of EROI, you are saying EROI = 1 = EIOI ?
We're not quite at 1:1 yet. It would become uneconomic to use oil as an energy source before we got to 1:1. Unconventional oil is reckoned to give you a 5:1. Conventional oil is a bit less than 20:1 these days.
AO is a cornucopianist. His reasoning is often clear. But he doesn't really understand, or chooses to ignore, all the salient data. As a journalist he is not very objective.
human inventiveness will save us? some things you just cant invent ter way out of no matter how much money you chuck at it.
"Oil production is far more contingent on upstream investment "?
-no money wont save you.
this is all anti peak propaganda
Even if it isnt a load of "Big business shitting its pants" type of "carry on all is normal" speech
Shale oil and fracking have a EROEI about 20x that of conventional oil which will make a huge impact and still only delay the inevitable
Even then regardless of available oil , our present lifestyles cant carry on because its based on an ever expnading model - for it to work the economy , and more to the point the population must increase exponentially.
When I was a kid there were 4billion on the planet - now theres 7 or 8 , so in 40 years - 16 billion.
How long can that carry on for?
I'll be intrested to read the rest of the comments on this because usually any peak oil story is much derided by reg readers , so will this story provoke much congrats and agreement?
or will the readers find new reasons to diagree?
Wow - no one has mentioned this site in the article yet - Do the Math "Using physics and estimation to assess energy, growth, options—by Tom Murphy"
http://physics.ucsd.edu/do-the-math/
Written by a physicist using "back of fag packet" calculations to test the reasonableness of various fuel sources. If you have the time, a very fascinating read.
If you don't fancy reading up a few dozen articles by now, try one of the recent articles published giving a matrix comparing various fuel sources for abundancy, intermittency, difficulty etc, and is at http://physics.ucsd.edu/do-the-math/2012/02/the-alternative-energy-matrix/
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