PEAK OIL: Going Mainstream

[Tolls]

We know where all the large and easily-accessible fields are.

But not the less accessible ones. So, as I said, price and technological improvements (driven by price) have the potential to unlock other reserves.

The head of the IEA has said this year that the peak was in 2006.

If anyone doubts then listen: http://www.youtube.com/watch?v=k22q5KZibtI

You'll have to give me the speech details. I can't find a speech on the IEA site saying that, and the other reports contradict that. Unless we are using different definitions of peak.

Hubbert's theory is based on the simple truth that for any given area you will always end up finding the biggest fields first. It has to happen this way, because oil prospecting is a bit like a game of "Battleships" - if you just keep sticking wells in the ground then it is much easier to find large fields than small ones.

Good luck.

No. You are more likely to find the biggest, easily accesible fields first. Not the same thing as the biggest.

 

[Tolls]

My understanding of what I've read is that
oil price spikes lead to recession
which leads to demand reduction
which leads to a fall in the price of oil
which makes investment less attractive.

As the economy recovers from recession
prices rise again
until production limits are reached
which triggers another price spike
and so on , to our doom and gloom,
the end-of-civilization,
hair shirts
etc

Price instability (which undermines long-term investment) rather than simply ever-sky-rocketing prices is how Peak Oil destroys growth-based economies.

However that cycle ignores the already deployed investment during the higher prices. Those don't suddenly disappear as prices fall.

In addition, as prices rise (through increased production costs), the low price also gets higher. That is, the rock-bottom price for oil steadily moves up, thus maintaining the value of certain extraction techniques.

 

[UndercoverElephant]

But not the less accessible ones. So, as I said, price and technological improvements (driven by price) have the potential to unlock other reserves.

Yes, but you must take into account the economic impact of this higher price. The global economy can't just adjust to ever-rising oil prices and keep on consuming at the same rate. The average person's spending power is going down, not up. Oil at $200 a barrel might well enable the exploitation of otherwise too-difficult reserves, but who will be able to continue buying it? Think of it from the POV of an oil producing nation. Would you be willing to rely on the price staying this high or would you be fearful that after having made a massive up-front investment the global economy will be in such a fragile state that the price of oil comes back down to $130?

You'll have to give me the speech details. I can't find a speech on the IEA site saying that, and the other reports contradict that. Unless we are using different definitions of peak.

Follow the link. It wasn't a speech. It was a ten-minute interview with an Australian radio station, but it was very revealing about what the head of the IEA actually thinks (now.)

 

[Tolls]

Yes, but you must take into account the economic impact of this higher price. The global economy can't just adjust to ever-rising oil prices and keep on consuming at the same rate. The average person's spending power is going down, not up. Oil at $200 a barrel might well enable the exploitation of otherwise too-difficult reserves, but who will be able to continue buying it? Think of it from the POV of an oil producing nation. Would you be willing to rely on the price staying this high or would you be fearful that after having made a massive up-front investment the global economy will be in such a fragile state that the price of oil comes back down to $130?

The thing is we are seeing such investment. Oil shale (unpleasant though it is) is a case in point. Once oil hit a sufficient price then investment in oil shale extraction become worthwhile, to the point that once invested oil does not need to maintain that price for those facilties to remain profitable. I believe shale will still be profitable should oil drop to $30, and some say $20.

So once the initial investment is done in the techniques, and the first rigs (or whatever) using these techniques are built, later ones become cheaper.

And this is taken into account when these decisions are made. At the moment there are sufficient profits to invest in improved extraction techniques such that should the price drop they will still be valuable.

Follow the link. It wasn't a speech. It was a ten-minute interview with an Australian radio station, but it was very revealing about what the head of the IEA actually thinks (now.)

Don't do you tube. I'm at work, so if it isn't a transcript it doesn't get a look in. Outside of work I have better things to do...

 

[UndercoverElephant]

Don't do you tube. I'm at work, so if it isn't a transcript it doesn't get a look in. Outside of work I have better things to do...

In that case, so do I.

 

[Tolls]

In that case, so do I.

You knock off early on the coast...

 

[Dymanic]

So, as I said, price and technological improvements (driven by price) have the potential to unlock other reserves.

For that matter, technological improvements have the potential to render the whole peak oil issue moot. With tiny fusion engines under the hoods of our cars, we'd be thumbing our noses at OPEC. If you think basing energy policy on hallucinated resources is the way to go, maybe you should have a look at another discussion currently ongoing in the Social Issues forum, Science is the new Cargo Cult.

The thing is we are seeing such investment. Oil shale (unpleasant though it is) is a case in point. Once oil hit a sufficient price then investment in oil shale extraction become worthwhile, to the point that once invested oil does not need to maintain that price for those facilties to remain profitable. I believe shale will still be profitable should oil drop to $30, and some say $20.

The thing is, it's not a question of whether production from unconventional sources will be profitable; it's a matter of whether production from those sources will be sufficient to offset the decline in production from conventional fields.

Don't do you tube. I'm at work, so if it isn't a transcript it doesn't get a look in. Outside of work I have better things to do...

Here ya go.

And for your further convenience, here are the take-home quotes from the Chief Economist of the International Energy Agency, Dr. Faith Birol:

"When we look at the oil markets the news is not very bright. We think that the crude oil production has already peaked in 2006".

"The existing fields are declining sharply in North sea, in United States, in Gulf of Mexico. Just to stay where we are today we have to find four new Saudi Arabia's, this is a tall order."

The former head of Saudi Arabian exploration & production, Sadad Al-Husseini, said the same thing in another interview you probably don't have time to watch, available here:
http://www.davidstrahan.com/blog/?p=67

He also made this statement in a presentation at that same conference:

"[World] reserves are confused and in fact inflated. Many of the so called reserves are in fact resources. They’re not delineated, they’re not accessible, they’re not available for production".

These statements are not coming from wild-eyed internet doom-and-gloom junkies, Tolls.

 

[Tolls]

"When we look at the oil markets the news is not very bright. We think that the crude oil production has already peaked in 2006".

Except the figures we have for oil production show that isn't the case.
Again, unless he's using a different definition of crude oil production.

 

[UndercoverElephant]

Except the figures we have for oil production show that isn't the case.

Well, there's nothing like a point blank refusal to take it from the horse's mouth, is there?

Do you know who the IEA are and why they exist?

http://en.wikipedia.org/wiki/International_Energy_Agency

The International Energy Agency (IEA; French: Agence internationale de l'énergie) is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development (OECD) in 1974 in the wake of the 1973 oil crisis. The IEA was initially dedicated to responding to physical disruptions in the supply of oil, as well as serving as an information source on statistics about the international oil market and other energy sectors.

Do you know who Fatih Birol is?

http://en.wikipedia.org/wiki/Fatih_Birol

Dr Fatih Birol (1958 Ankara, Turkey) is the Chief Economist of the International Energy Agency and Director, Office of The Chief Economist, with overall responsibility for the organisation's economic analysis of energy and climate change policy.[1] He oversees the annual World Energy Outlook series which is the flagship publication of the IEA and is recognized as an authoritative source for energy analysis and projections.

OK? So what who/what we have here is the Chief Economist of the independent, inter-governmental organisation which only exists in order to provide policymakers with accurate, independent information about oil supplies and their relationship to the global economy.

And what does he say?

"When we look at the oil markets the news is not very bright. We think that the crude oil production has already peaked in 2006".

"The existing fields are declining sharply in North sea, in United States, in Gulf of Mexico. Just to stay where we are today we have to find four new Saudi Arabia's, this is a tall order."

And your response to this is to claim that "the figures we have for oil production show that isn't the case."

So you are seriously telling me that Fatih Birol (REMEMBER WHO HE IS!!!) is quite unambiguously telling you that crude oil production peaked in 2006 and that we need to find four new Saudi Arabias to avoid a disaster when in fact "the figures we have for oil production show that isn't the case."

In other words, you are seriously telling me that Fatih Birol and the IEA are incompetent, and that you know how to do their job better than they do!

I think I know who I'd rather believe, and it's not you.

 

[Dymanic]

Except the figures we have for oil production show that isn't the case.
Again, unless he's using a different definition of crude oil production.

I wonder if there's any possibility that the source of your confusion could be the observation made by President Obama in his address on May 14 that US domestic production last year was at its highest point since 2003?

 

[Tolls]

I wonder if there's any possibility that the source of your confusion could be the observation made by President Obama in his address on May 14 that US domestic production last year was at its highest point since 2003?

Nope.
The source of my confusion has nothing to do with the US.
It has to do with reports from the IEA itself.

And yes, UndercoverElephant, I do know who they are, which is why I posted links to press releases from their own website. Including one just last week:

Growth in oil supply capacity through 2016 averages 1.1 mb/d annually...

from the link I gave earlier.

Or maybe even this from testimony given by the deputy director for the IEA to Congress in February this year:

The world’s total endowment of oil is large enough to support the projected growth in output, but it will require substantial levels of investment and development of more technically challenging and unconventional resources.

again, from the IEA website.

Which is why I say that Fatih Birol seems to be talking at odds with the output of the organisation he works for. The organisation of which he is not the head.

 

[UndercoverElephant]

again, from the IEA website.

Which is why I say that Fatih Birol seems to be talking at odds with the output of the organisation he works for. The organisation of which he is not the head.

Have you actually read this document? Because if you have, then there appears to be something wrong with your English comprehension skills. It says we need to find six new Saudi Arabia's and that the global energy system is "increasingly untenable."

??

 

[Tolls]

Have you actually read this document? Because if you have, then there appears to be something wrong with your English comprehension skills. It says we need to find six new Saudi Arabia's and that the global energy system is "increasingly untenable."

??

In a timescale that doesn't fit with the Peak Oil predictions...which tend to be "this year", "next year", "last year".

It predicts that there is sufficient available to meet demand to 2035. In the sentence I quoted, which is the one after they propose the amount required to meet that demand.

To meet new demand growth and offset decline in currently producing fields, gross capacity more than six times the current capacity of Saudi Arabia will have to be installed by 2035. The world’s total endowment of oil is large enough to support the projected growth in output, but it will require substantial levels of investment and development of more technically challenging and unconventional resources.

So no, not 6 new Saudi Arabias. An extra output equivalent to the amount currently produced by Saudi Arabia. Subtle difference. And one the IEA (who you were putting forward as saying we peaked in 2006) thinks is achievable.

So the IEA does not think oil production has peaked, or will peak in the near future.

ETA: That should say "An extra output equivalent to six times the amount currently produced by Saudi Arabia."

 

[UndercoverElephant]

So no, not 6 new Saudi Arabias. An extra output equivalent to the amount currently produced by Saudi Arabia. Subtle difference. And one the IEA (who you were putting forward as saying we peaked in 2006) thinks is achievable.

Not according to that document it doesn't. Unless "untenable" means something different to what I think it means...

 

[Tolls]

Not according to that document it doesn't. Unless "untenable" means something different to what I think it means...

Which covers energy as a whole, including the effects of fossil fuels on the environment and energy security.

Or do you think they didn't notice a contradiction between the last paragraph and the one I quoted above?

 

[Dymanic]

The source of my confusion has nothing to do with the US.
It has to do with reports from the IEA itself.

Press releases, you mean (not that the reports themselves cannot also be confusing). Perhaps one of the reasons that the IEA findings often appear to be at odds with one another is that the projections are based on various policy and demand scenarios. To avoid errors like the one you made above in stating that "Hubbert got his numbers wrong", you need to be more alert to qualifying phrases like "if current trends continue".

The most recent IEA executive summary, released last November, includes the following statement:

"Crude oil output reaches an undulating plateau of around 68-69 mb/d by 2020, but never regains its all-time peak of 70 mb/d reached in 2006, while production of natural gas liquids (NGLs) and unconventional oil grows strongly".
http://www.worldenergyoutlook.org/docs/weo2010/WEO2010_ES_English.pdf

Take a look at the graph World oil production by type in the New Policies Scenario and see what happens to the curve if you exclude natural gas liquids. Does it not look to you like that puts the peak somewhere around 2006?

Which is why I say that Fatih Birol seems to be talking at odds with the output of the organisation he works for.

Maybe it's simply that the organization's Deputy Executive Director may have reasons for choosing his words more carefully when addressing a Congressional Comittee than does the organization's Chief Economist when speaking to a reporter.

So no, not 6 new Saudi Arabias. An extra output equivalent to [six times] the amount currently produced by Saudi Arabia. Subtle difference.

If you see it as a subltle but important difference, can you explain why?

In a timescale that doesn't fit with the Peak Oil predictions...which tend to be "this year", "next year", "last year".

It's hard to find a timescale that doesn't fit with somebody's peak oil prediction. It's worth remembering that in 1970, US oilmen were mocking Hubbert's prediction that domestic production would peak around that time, gleefully pointing out that the US was producing more oil that year than it ever had before.

 

[JihadJane]

'2015: End of the Oil Age
Consensus Grows for Looming Peak'


"For years, global governments have built up a wall of deceit to shelter the public from the reality of the end of oil.

And for years, scientists and institutions not beholden to shareholders or constituents have tried to sound the alarm with muted results.

But several events in the past few months have proven the most powerful governments in the world have known about Peak Oil for years. They've been intentionally downplaying it. And they have no idea what to do about it...

It's not alarmist to say or think the world is running out of oil.

It's actually one of the most prudent things I can think of."

 

[Eddie Dane]

'2015: End of the Oil Age
Consensus Grows for Looming Peak'


"For years, global governments have built up a wall of deceit to shelter the public from the reality of the end of oil.

And for years, scientists and institutions not beholden to shareholders or constituents have tried to sound the alarm with muted results.

But several events in the past few months have proven the most powerful governments in the world have known about Peak Oil for years. They've been intentionally downplaying it. And they have no idea what to do about it...

It's not alarmist to say or think the world is running out of oil.

It's actually one of the most prudent things I can think of."

Cool.

The faster, the better I say.

Germany is about to embark on their plan to run their industry on a couple of windmills and a hamster in a treadmill.

The faster reality gets jackhammered into the minds of the Green voters, the better it is for everybody and the environment.

 

[PGH]

'2015: End of the Oil Age
Consensus Grows for Looming Peak'


"For years, global governments have built up a wall of deceit to shelter the public from the reality of the end of oil.

And for years, scientists and institutions not beholden to shareholders or constituents have tried to sound the alarm with muted results.

But several events in the past few months have proven the most powerful governments in the world have known about Peak Oil for years. They've been intentionally downplaying it. And they have no idea what to do about it...

It's not alarmist to say or think the world is running out of oil.

It's actually one of the most prudent things I can think of."

Clicked on the link and I found out that all the world's governments have been lying, the end is coming and they know it. There's predictions of chaos and a smidge of Christian symbolism for some reason.

Just when you think all is lost there's a hopeful link at the very end. That link clicks you to a site where you can invest in a..shhhhh.. secret oil field! And not for $30,000 or $20,000 but for the low low price of $995!!

Whew! I was so worried society was about to collapse! But now I'll be able to keep myself and my family safe in the castle I build with my profits from sales of oil that the government doesn't want you to know about!

Next I'll just grab some seeds from that nice Mr. Beck fellow...

 

[Eddie Dane]

Clicked on the link and I found out that all the world's governments have been lying, the end is coming and they know it. There's predictions of chaos and a smidge of Christian symbolism for some reason.

Just when you think all is lost there's a hopeful link at the very end. That link clicks you to a site where you can invest in a..shhhhh.. secret oil field! And not for $30,000 or $20,000 but for the low low price of $995!!

Whew! I was so worried society was about to collapse! But now I'll be able to keep myself and my family safe in the castle I build with my profits from sales of oil that the government doesn't want you to know about!

Next I'll just grab some seeds from that nice Mr. Beck fellow...

I didn't click on the link, but that is marvellous news!

I'll sell my weapons cache and invest in this oil field and I'll be rich, RICH.
Hahhahahahaha. So long suckers!

I'll set up my own little warlord fiefdom with the money I'll make!