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 begins …
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Re: Re: Do The Math
Overtaken by events.
In other news: the Earth isn't flat.
Re: Do The Math
His assessment is behind the curve on several forms.
Others are not mentioned at all. He's got in artificial photosynthesis and D-D fusion, neither of which *exist* in any form and leaves out satellite solar power which IIRC is due to be tested in California by 2014.
@Andrew
What do you mean? What has been overtaken by events and which events?
Also, why the "in other news..."
@ Andrew
Looks like there is a difference in world view here. I'll state my position.
I believe that science is generally a step-wise attempt to refine how things work, with the occasional big breakthrough/upheaval. If there is a wonderful new breakthrough that can give us centuries more resource, then great! However, to actually bet the world's future energy resources/requirements on scientists developing some major breakthrough just when we need it seems a little irresponsible to me.
This may be a little bit "out there" in terms of thought, but maybe - just maybe! - the world should start looking at finding a way to live within the means of *known* resources for a change, without depending purely on human inventiveness to get out of the mess we could very easily find ourselves in. If we find a wonderful new resource we can exploit, then obviously the standards of living and what we can achieve can also be increased. If, though, we do not look at living within our means, the potential crash is frightening.
Yes, it would be nice to live in a world of pure optimism assuming that scientists and engineers will come through and continue providing breakthrough after breakthrough (because, let's face it, politicians and economists are a totally busted flush), eventually even defeating the presently known laws of physics. But then, I'm not that much of an optimist.
In other news: the Earth isn't infinte.
@ John Smith 19
The site's author is fairly approachable, and if satellite solar power is likely to be able to provide significant power at reasonable efficiency and cost with minimal risk I am certain he would be interested - just leave a comment and link to some solid figures at his site and he is likely to take a look into it. In fact, that is the reason that fusion appears in the list at all. So many people following his series of articles expressed hope that fusion would solve many of the power problems, that he took that into account in preparing the table in the (earlier) linked article. Regarding artificial photosynthesis, a quick google provided this (http://www.sciencedaily.com/releases/2011/12/111219112010.htm), which, while it is regarding release of hydrogen via artificial photosynthesis rather than generating hydrocarbs, shows that research is at a further along stage than simply not existing "in any form".
I look forward to your future positive contribution to the discussions and debate at his site.
Interesting Arguments
The interesting thing about the Peak Oil arguments are that they miss some of the basic economics of oil use. Firstly, Orlowski makes some interesting arguments about human ingenuity. Where that ingenuity kicks in is the interesting part though. In the long run, we won't be making synthetic oil for energy uses (with the possible exception of portable energy on aircraft for example). Synthetic oil will actually be all about materials made from oil, the petrochemicals industry. As oil supply reduces, prices increase. As prices go up, it become economically viable to explore other solutions to energy supply and generation of oil for petrochemicals as well. At some point bio-fuel is cheaper that oil for petrochemicals, and at some point solar arrays in the sahara are cheaper than burning fossil fuels (nuclear is already cheaper, but let's ignore that for the time being).
Now, another thing happens as well. As we start extracting oil from more and more difficult locations, the energy cost of extraction goes up. As soon as the energy cost tips over the energy produced by oil, we stop burning fossil fuels for the majority of things. Then what little oil is left ramps down production and just starts getting used for petrochemicals.
I remember being forced to rote learn in school in the 80s that oil would run out in 20 years. I'm sure there is a lesson there!
Re: Interesting Arguments
The simplistic economics argument as put forward os largely unphysical.
It assumes infinite supply (as if the cost can magically make oil appear).
It assumes infinite substitutability (e.g. synthetic oil for "real" oil).
It ignores the energy cost of mining a unit of energy.
Some economists are actually intelligent, yet they don't realise their ideas don't always apply properly. So one can forgive AO for not thinking too hard about it either - especially as to do so would hurt his cornucopian proclivities.
Since the stuff is finite, it will run out.
Peak Oil will be a supply problem first, irrespective the amount stil in the ground, known or unknown.
@Adam
Re: "Some economists are actually intelligent, yet they don't realise their ideas don't always apply properly."
I've recently read a book by Steve Keen ("Debunking Economics"). It does a very thorough hatchet-job on present mainstream economic theory. He goes back to first principles within the neoclassical economists' theories and clearly shows that the underlying principles are either flawed or outright wrong. As a side-note, he is actually one of the few economists to go into print warning of the "Great Recession" prior to it happening, and with reasons for it.
Briefly, one of the main flaws is that neo-classical economics is strongly wedded to the idea that the market is in equilibrium, or will quickly tend to equilibrium. Also is a very marked lack of time involved in the theories, usually being handwaved away by stating that either the view taken is a snapshot, so time doesn't really matter, or that it is the long view where things have tended to find their natural equilibrium - so time doesn't matter.
Cutting large parts out - basically economists are still trying to (pretty much) use algebra, whereas the real equations lie in the differential equation domains and chaos theory. So if you want to challenge any neoclassical economist, ask them where in their theories can they show that booms and busts can occur without handwaving "external events". Booms and busts occur with such frequency and periodicity that those "external events" sure do seem to come fairly often...
Definitions
The power of positive thinking never fails to amaze. Current US production is at about the same level as it was in the 1940's. It is not trending upwards, it is just not trending downwards as quickly as it was.
The number of productive wells has increased significantly in the last three to five years, but that was after thirty years of decline.
Re: Definitions
I noticed that also, the graph in the article shown prettily trending upwards is the NUMBER of oil wells, not the amount they pump. It's basically meaningless except as a pictorial effort at supporting the articles premise . It says nothing about the actual levels of extraction/production.
Peak oil is the wrong thing to watch for
People always seem to think peak oil is warning about us "running out". I've always thought a better way to express what peak oil is really warning about is: "the end of Easy oil". We will never totally run out of oil, but the days of burning it off because it's bubbling out of the ground are long gone. As we have to go to greater lengths just to get what's left (or free what's trapped), the cost keeps increasing. We are rapidly approaching a time when many people simply can't afford to burn oil casually.
That economic crunch when people have to adjust their lives because of the sky high cost of oil is what "peak oil" has always been warning about. And from where I'm sitting, that prediction has proven remarkably accurate.
I always despair when technical reviewers like the register take positions that are so obviously non-technical and totally out of touch with reality and the raw numbers.
There are have been dozens of reports now from government and military sources that have verified Peak OIl. The most recent one is out of Australia which was just leaked in the past few weeks by the Telegraph.
Basically, the oil sands and deep water have allowed the worlds oil to plateau rather than decline. But that will soon end.
http://www.dailytelegraph.com.au/news/opinion/all-evidence-of-this-treachery-went-down-the-memory-hole/story-e6frezz0-1226248729853
You can read the report here:
http://www.manicore.com/fichiers/Australian_Govt_Oil_supply_trends.pdf
THe money quotes from the report, which is 400 pages and goes into excruciating detail on all of the worlds oil production potential is this:
(Page 350/351)
"According to the aggregation of predictions of annual potential oil production, world production of conventional oil is currently just past its highest point. A predicted shallow decline in the short run should give way to a steeper decline after 2016. But of course, deep water and non-conventional oil production are growing strongly, turning a slight decline into a plateau (Figure 13.11 and Table 13.3).
Thus the prognosis is for a slightly upward sloping plateau in potential production from 2005 to 2016, before crude oil production declines begin in earnest. Figure 13.12 and Table 13.3 show that it is the projected expansion of deep water and non- conventional heavy oil production that turns what is predicted to be a 2006 peak in conventional oil into a more drawn out plateau over 10 years for total crude."
Shame that possibly the largest oil layer ever found has recently reared it's head in the Kurdistan area of Iraq. It's a British registered company at the forefront there as well (GKP) though there are plenty of rumours of the big US companies looking to buy them out.
There's enough
Seemingly there's enough oil and gas to last through my lifetime so I'll put away the goat-hair undershirt and the recycled-tire sandals.
As for the next generations? **** 'em. Let them fix their own problems.
Re: There's enough
I've got no kids either so I can see the merit in this approach.
However I just hope the next generation doesn't try to fix its own problem by bumping off the current one.
Re: There's enough
You mean let them fix our problems, in the sense of the ones we created for them.
Re: There's enough
Some of us weren't blessed with your admirable self-interest. We suffer from an unfortunate human weakness boffins call "empathy" and foolishly give some consideration to the potential suffering of our children and grandchildren.
Re: There's enough
"Seemingly there's enough oil and gas to last through my lifetime so I'll put away the goat-hair undershirt and the recycled-tire sandals.
As for the next generations? **** 'em. Let them fix their own problems."
Now that's a proper grumpy old man POV
Of course if the timing is a little bit off your retirement years are unlikely to be golden and you won't like it when you run through the last pack of adult incontinence nappies.
Three cheers for ideology and optimism
...even though it has precious little to do with facts. Most of those disputatious items have been cited above. The fact remains, though, that a finite resource can be used up. Even when we find a replacement, we've merely pushed back the troubles.
...and resources are a vector? OK, you can *represent* them with one. [If you call a tail a leg, how many legs does a cat have? Four — calling a tail a leg doesn't make it one.]
Personally, I like Amory Lovins' take. The cheapest fuel is the fuel we don't have to use, which he dubs 'negabarrels.' Use of carbon composite trucks has already saved Wal-Mart a ton on fuel. There are plenty of ways we can reform what we do and how we do it that sidesteps the issue. How about telecommuting instead of driving to work?
You can check our Lovins' work at http://www.rmi.org/
I don't understand
I've tried to summarise the article and it seems to come out as "Peak Oil is a myth because when oil production peaks and is no longer sufficient we will have come up with an alternative and so all the people that said that we should look for an alternative to oil are idiots."
Well, given the rate at which the Chinese are buying new cars . . .
We'll all soon be paying oil at prices where just about any production method will be economically viable.
Re: Well, given the rate at which the Chinese are buying new cars . . .
I keep hearing $40-$50/barrel is the magic price investors want to hear for all the new synthetics startups.
Re: Re: Well, given the rate at which the Chinese are buying new cars . . .
"I keep hearing $40-$50/barrel is the magic price investors want to hear for all the new synthetics startups."
Now is that production *cost* or sale *price*?
Re: Re: Re: Well, given the rate at which the Chinese are buying new cars . . .
Currently the marginal cost to produce one more barrel of oil is about $50 and if not for speculators, instability in certain countries and the various sabre rattling from other countries is about where the market would price a barrel. It is the magic number for synthetics because it makes synthetics viable in the long term and would do a lot to stabilize the price.
Addendum
Oh yeah the $50 / bbl price would also be unassailable by conventional oil producers who would likely try to squash the synthetic competition and maintain their pricing power. They might be willing to take a loss for a while but the smaller OPEC members probably wouldn't be able to hold out for too long.
Re: Re: Well, given the rate at which the Chinese are buying new cars . . .
Andrew, you just keep repeating "synthetics". I'd like to read about the viability of growing our fuel. Let's forget about the economics for a moment, just focus on the projected availability of land and the demand for food and fuel.
Re: Re: Re: Well, given the rate at which the Chinese are buying new cars . . .
Some startups are using algae+sugar, Venter is using algae+CO2.
You can do a lot to tweak the algae to improve things.
But all are using industrial facilities rather than converting farmland.
Unbelievably naive article... worst I've seen here
This article marks a new low for the Register.
The debate over Peak Oil has always been about, not whether or not it matters, but whether it has already happened or not. When it does, things will start going down hill rapidly unless we suddenly greatly increase our energy production using other methods. Synthetics either rely on using land (which is going to be needed for feeding people) or energy.
So we need to either get Nuclear Fusion viable, or somehow overcome the global inertia surrounding Fission reactors and start building them everywhere.
For the latter of course we'll then need to start considering when Peak Uranium will occur.
Re: Unbelievably naive article... worst I've seen here
"This article marks a new low for the Register."
Hi! You must be new to this whole "news" thing...
This is The Register. It's staffed by journalists. It may have escaped your attention, but journalists are not scientists. Few are even experts. This is a news website, not a peer-reviewed scientific journal. The Register's staff's job is to report on what is happening, but they are not required to understand it all in the minutest of detail.
Andrew Orlowski's article is a report on a report released by Citibank. He interprets it as best he can, but given that this is a field that deals heavily with statistics, physics, organic chemistry, and more, it is idiotic to expect someone who works in an entirely different field to nail it.
As with all the other writers working for The Register, Andrew's responsibility is to attempt to interpret the information as best he can in terms readers can understand.
Journalists are writers. They are also people. All people are inherently biased. There is no point screaming "BIAS!" at a journalist. It's like shouting "MAMMAL!" at a rabbit.
(As for the "IT angle": IT usually requires electricity. That electricity has to come from somewhere, and where it comes from will have a huge influence on how much it costs.)
Petrol is still cheap
Only about 65p a litre from the pump, including 20% VAT, delivery, retailer costs. Duty (and a bit of VAT on the duty) make up the rest.
Dry wells refilling on their own?
They didn't even mention the weird phenomenon that has the oil industry and geologist baffled, of old "dry wells" refilling on their own.
I first heard about it 12 years ago, while hanging out with some geologists that work for the oil industry. They quietly mentioned that there are old US wells that were believed to have been pumped dry, but when they were required inspect them by EPA (or some other govt agency), they found the wells to be full, and under pressure.
The industry and the govt kept it quiet for a long time. But recently there have some published reports about the phenomenon. Some of the ideas as to why are; Oil has seeped in from deeper sources. Oil is not from "dinosaurs" but a natural byproduct of plate tectonics. Oil is a waste product of some undiscovered micro organism that lives deep in planets crust. (Yea, some ideas are far fetched in my opinion).
But the point is, we haven't even gotten close to exhausting the planets oil supply.
As to why they haven't used the oil in the old wells? Conspiracy theory to inflate oil prices for profit? Environmental regulations? (I don't know).
Re: Dry wells refilling on their own?
I'm pretty sure no industry insiders or geologists are baffled by this given that it is 90% urban myth.
Re: Dry wells refilling on their own?
If you're going to come out with stuff like that: Cite sources.
Re: Dry wells refilling on their own?
Maybe time to brush off this one again ...
http://en.wikipedia.org/wiki/Abiogenic_petroleum_origin
And if we do manage to keep burning oil?
So if we do somehow manage to economically extract oil from these previously unviable reserves, then we can what? Alter the climate even more than the already frankly scary prognoses based on using the known, conventional, fossil fuel reserves? Nothing to worry about there then...
(Disclaimer: unless of course you believe that anthropogenic climate change is a myth cooked up by the green commies in the UN etc etc)
Citigroup is being misleading
Actually the whole thing with shale and other sources of oil fits quite neatly with Peak Oil. The prediction is that as conventional sources of oil go through their entirely predictable life cycle, the incremental cost of production goes up over time. Conventional oil field preduction can be temporarily boosted or extended with new technology - and the oil produced costs more per barrel than the original oil when the field was producing at peak.
Share and tar sand oil (and deep water drilling) wouldn't even be considered if the current cost of oil wasn't high. Eventually, any field will reach a point where the cost of extraction (direct and indirect) exceeds the value of the oil/gas extracted - and that field will be shuttered until the value of an incremental barrel rises due to scarcity to the point where extraction becomes economically justified again.
"Apocalypse Politics"?
Excuse me? Back in the 80s when everyone was predicting that oil would run out in 20 years, fracking wasn't an option. It's been figured out since then, and that's great - loads more cheap energy for us to use. But does that mean we should rely entirely on blind faith that something will be invented to save us?
Back in the 80s, folks also discovered a sodding great hole in the ozone layer, caused mainly by CFCs. Now we could have sat around and said "no worries, someone will invent something to squirt up there and sort it out"; or we could have done what actually happened, which was saying "unless we stop using CFCs, we're screwed". A lot of companies using CFCs heavily screamed blue murder about that, but they got told to belt up. Having been given no option, they went and invented their way to stuff to use instead of CFCs.
Back in the energy world, we can keep assuming that some McGuffin is going to magically solve the problem, or we can start preparing for the day when it doesn't happen. For example, California is already doing that by mandating an average fleet fuel consumption for a manufacturer's cars, forcing them to invent their way towards more energy-efficient transport. It's a win-win situation - if some magic McGuffin gets us more cheap energy then we can use it better, and if it doesn't then we're better prepared for tightening our belts.
Re: "Apocalypse Politics"?
"Back in the 80s, folks also discovered a sodding great hole in the ozone layer, caused mainly by CFCs. Now we could have sat around and said "no worries, someone will invent something to squirt up there and sort it out"; or we could have done what actually happened, which was saying "unless we stop using CFCs, we're screwed". A lot of companies using CFCs heavily screamed blue murder about that, but they got told to belt up. Having been given no option, they went and invented their way to stuff to use instead of CFCs."
CFC's and the ozone hole are also a nice existence proof that humans *can* change the planetary environment on a human *timescale* given we have an exact date for the start of CFC mfg.
Something to keep in mind when the humans-are-too-puny-a-species-to-make-any-dent-in-the-planet line gets touted about.
What really matters.
"we won't be running out any time soon" is a euphemism for "in my lifetime"...
Re: What really matters.
You forgot to add "I really hope so"
Well the unconventional gas figures don't stand much scrutiny so I don't think we should put too much faith in another bunch dealing with unconventional oil reserves.
The most common figure cited for American gas reserves is 2,170 trillion cubic feet (tcf) from the Potential Gas Committee. Which is often said to be a 95-year supply if 2010 consumption figures are maintained.
Of that, 273 tcf are "proved reserves," stuff we are fairly sure is there and can be produced economically. 536.6 tcf are "probable" from existing fields, it probably exists and might be economically recoverable. 687.7 tcf is "possible" from new fields - gas that might be in new fields if and when we find them and might be recoverable. Beyond that are 518.3 tcf of "speculative," gas - the meaning is in the title and 176 tcf for coalfield gas of which 90% has not been proven.
In short the US has 11 years of proven gas, 21 of proven and possible reserves and everything after that is an unknown. And that's not even taking into account the percentage of any gas that can be recovered from a field.
As for the rig counts - does it show there is a huge untapped supply of gas out there? No, it shows that shale needs a lot more rigs than conventional reserves and that shale gas wells are tapped out much more quickly than traditional gas wells.
Oh and some of the operators might have been overstating production and reserves:
http://www.theoildrum.com/node/8212
Gold; we won't be running out anytime soon
Strategic Planners believe Peak Oil signals resource wars in our time.
Games played by investment houses and their clientele will not overcome annual aggregate conventional oilfield depletion.
Mike Richards' rationale applies to conventional oil, on which the pricing of motor fuel ultimately rests. Railways are a significant part of the solution set. Dance around this as we may, the surest way to pass through the Oil Interregnum with the least disruption shall be by replication of former transport and distribution methodologies: leaning on railway expansion and extension as much as possible in the time at hand.
If a Citibank analyst says it must be true, it must be true. After all, we know from the dot com bust that the analysts of the "too big too fail" investment banks only provide truthful information not whatsoever crafted to defraud the idiot masses. Citibank only wants to help you!!
I will note that there are recent credible articles illustrating that shale reserves are not whatsoever panning out like Citibank suggests they are.
Regardless...
... of whether or not Peak Oil is "dead", I bet we won't be seeing fuel/energy prices fall at all.
I'll get me coat. All three of me coats in fact - I need them because I can't afford to run my heating...
Yet Another Hockey Stick
Another hockey stick shaped graph! The conspiracy theorist in me says that someone's reusing their FUD!
The proponents of both Global Warming and Peak Oil keep arguing that naysayers are in the pay of Big Oil. That makes no sense.
The idea of Peak Oil allows the punters to accept higher oil prices. Same with Global Warming. If anything, Big Oil would be paying to keep these ideas front and centre in the public stage.
How The Future Car Looks Like - Das Ersatz-Auto
http://www.holzgas.ch/573.html
Of course there won't be a sufficient supply of wood, so humanity will use smelly coal instead. That will probably last for another 500 years.
After that, nuclear-powered Haber-Bosch gasification (with the Carbon pulled from the air) will take over.
It would a crime to humanity to use trains&buses and let the purchase be shipped with a truck to the homes - freedom shirley means riding your own personal gaz-guzzler every single day.
Hello Big Oil, are you listening?
Hey,
I'd like to get my hands on, er, advocate for all of the big bad oil companies out there that are doling out mula. I can say all sorts of really nice things that even happen to be true.
Who can tell me where I can go or contact to be their shrill?
Lineup begins behind , thank you very much.....
Zurich bank account # 78-333-1824
{point is, if big oil was stuffing peoples mouths with bills and spending anywhere near what their detractors claim, they would be broke in no time... Ah, the ad hominem attack, last refuge of the incompetent.)
Anonymous since I don't want to fight all the Greenies at once or at all for that matter.
Apocalypse Politics...
Is still alive and well. Just listen to ten minutes of the AGL lobby's Chicken Little predictions and you'll be disabused of the idea that it's dead. All the Himalayan glaciers will melt in ten years, the ocean level will rise three feet before next Wednesday, and the unarmored three-spined stickleback is about to become extinct! The only thing that can save us is giving AGL scientists more money! Or the "carbon offset" of having 6 billion people living in unlit, unheated grass huts so that Al Gore can fly his private jet to climate summits in Hawaii and the Caribbean.
I'm pretty sure that apocalypse politics will be with us just as long as plain old politics.
@Dan Hall
So, on the one hand you have scientists who just want more money. On the other hand, you have Big Industry and Big Banking, who are totally objective on the matter.
Right.
Those money-grabbing scientists, always flouting their wealth with their flashy cars, hookers and blow. Glad I've got industry lobbyists and their "reports" looking out for my best interest.
It's not how much but where it lays that counts
The biggest issue is not how much there is but where it lies and who has control of it. Right now the biggest producers are those filthy rich bastards in the land of sand et al. The cartels controlling it put the price on it and control the supply and demand chain to get the best buck per barrel. What we need is a game changing plan to move that control away from vested interests back to the people who need it most. Much of the worlds wealth revolves around it. The small guy has to fight tooth and nail to get their hands on it at vastly inflated costs.
Of course there is also solar energy farms whcih could potentially generate the worlds energy needs. But guess who has most of the land where those solar farms would be most effective? Yup! The very same people who control most of the worls oil supplies.
Wind farms are not never going to cut it. Nor wave power. If countries can find local sources like shale then it would help somewhat towards removing this control. But it's only going to be a temporary solution for many.
The UK's gas and oil supplies rely so much on these vested interests we are often held to ransom by it by those abroad (and a lot of the energy companies in the UK are controlled by those same external interests).
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