200 plus oil

[JonnyFive]

Not an energy market guy, but I read somewhere that it costs about $180.00 currently to produce a barrel of green crude, so I imagine it would be marketable if oil hits $200.00 a barrel.

Cool. If you could find a source for the figure too that would be nice, because I hadn't seen one yet and was very interested in knowing what kind of costs would be involved.

 

[PadainFain]

Long time watcher, first time poster.

Since this is a skeptics' forum perhaps the question one should ask is:

Who stands to gain from higher oil prices?

I've worked in the Oil industry and my fiancee's father still does. Neither he nor I have seen anyone on the inside panicking about the lack of reserves. To the best of my knowledge there is no such lack. But if demand outstrips supply then prices rise, share prices rise, profits rise. It's a win:win situation for the Oil companies.

There are large untapped resources in the ex-Soviet states which have already been apportioned by the big players but as yet are underused because there is no requirement to use them.

Oil reserves will last a lot longer than people seem to believe but I'm sure the prices will continue to rise well ahead of inflation.

None of this of course detracts from any environmental message about the use of fossil fuels.

 

[Francesca R]

Who stands to gain from higher oil prices?

Oil producers, net of the (increasing) cost of production and the (politically-influenced) "underinvestment" in exploration.

Neither he nor I have seen anyone on the inside panicking about the lack of reserves.

"Lack" or reserves for what? You can't lack oil unless you do not have it. Yes everyone who is able to buy some can get some.

To the best of my knowledge there is no such lack. But if demand outstrips supply then prices rise, share prices rise, profits rise. It's a win:win situation for the Oil companies.

In much of the world the companies are owned by sovereign states (who don't have share prices )

There are large untapped resources in the ex-Soviet states which have already been apportioned by the big players but as yet are underused because there is no requirement to use them.

The rights associated with many not-yet-extracted oil reserves have not been allocated according to market mechanisms, which disrupts the idea that oil supply will respond to market-determined parameters.

Oil reserves will last a lot longer than people seem to believe but I'm sure the prices will continue to rise well ahead of inflation.

They have not always done this. As others have argued, there is a self-correcting force that would act against the real oil price increasing persistently. At some point it becomes susceptible to substitution.


ETA--Welcome

 

[soylent]

Oil peaked recently at $146/barrel and has been falling since; now we're back down to $124 again. Demand is down quite a bit, especially in the US where gas has been so cheap for so long.

Who stands to gain from higher oil prices?

As long as the prices are moderate and there are no strong competitors, the people who have oil.

If oil prices get too high, the people who want to sell alternatives. One example would be electric vehicle companies, battery companies and the utillities who supply coal or nuclear sourced electricity for them(since you'll probably be charging at night that means baseload, not hydro or NG which are seldom used for anything but peaking). Another might coal mining companies like Sasol who turn coal into diesel-like fuel using CTL. Providers of public transportation and sellers of high efficiency vehicles are also likely to profit.

 

[Mister Agenda]

I didn't find a link for the $180.00 a barrel estimate for green crude, but these folks claim to be able to produce it for about $87.00 US a barrel if I've correctly converted from 35 Euro cents a litre. I'm skeptical about the claim, it seems like a big leap from the $20.00 US a gallon it was costing not so long ago, but maybe they have a breakthrough. If so, it would be worth marketing as quickly as they can get their production up.

http://ec.europa.eu/environment/etap/pdfs/sept06_algae_energy.pdf

 

[Blackadder]

I read we use 86,400,000 barrels/day in the world, but we produce only 85,000,000/day

So right now we a short 1,400,000 barrels a day. This is ok since we have a load in stock. But sooner or later will be gone and we need to find more or start using less.

Some say the OPEC can't increase production, because their major fields are at or almost at peak production, and will only get down. (This means they still can produce for many many many years, but will yield less and less every year. remember 5% less of a huge amount is still a huge amount. It only illustrates that they cannot increase production)

Other countries still can increase production. But why should they? For america? For china? They think: let's produce as little as possible, because everything we don't sell today for $130 we can sell in years to come for $200 or more? They will pay.

Sounds reasonable. I would do the same.

So we can find a few new sources... But most are very hard to come by, even if it would go over $250.

Instead of investing billions of $ trying to get that hard to get oil, we might be better of investing those billions in research of other energy sources.

 

[Mister Agenda]

Good point on holding out for higher prices. One of the ironies of investing in alternate fuel sources or new drilling or conserving is that it can lead to lower gas prices immediately if the oil producers believe their resource may be worth LESS in the future. Another one is that lower oil prices stifle the incentive to develop alternative energy sources or new oil fields. It can be of frustrating to observe the cycle persisting without being broken.

 

[RecoveringYuppy]

$400 or $500 is probably a bit unrealistic in the near future, given that at least one alternative exists to create a light sweet crude equivalent (so-called "green crude" - we've talked about it on here before) that probably costs less than that.

Have to keep in mind that most of the prices cited for so-called "green crude" are based on current prices of the various feedstocks they use. Ramping up production of "green crude" would (in some cases already is) driving up the cost of the feedstocks. It's even debatable if some of the feedstocks for the various processes can be made in significant quantity at all.

 

[JonnyFive]

Have to keep in mind that most of the prices cited for so-called "green crude" are based on current prices of the various feedstocks they use. Ramping up production of "green crude" would (in some cases already is) driving up the cost of the feedstocks. It's even debatable if some of the feedstocks for the various processes can be made in significant quantity at all.

I thought green crude was made using algae, not feedstock. Perhaps I am referring to the wrong thing? I meant the algae-based substitute for light sweet crude.

Fuel using feedstock seems to be a bad idea in general. Better to use a higher density crop (like sugar cane in Brazil) to make ethanol.

 

[RecoveringYuppy]

I thought green crude was made using algae, not feedstock. Perhaps I am referring to the wrong thing? I meant the algae-based substitute for light sweet crude.

By "feedstock" I meant whatever the bio-fuel is made from, which in the case of oil made from algae, would be algae.

Algae may be the most promising feedstock for energy harvesting but it's far from given that it can be produced in quantities sufficient to make a dent in petroleum usage. Human energy needs currently satisfied by petroleum would require the equivalent of harvesting 10% of all plant life on Earth. And that's assuming an optimistically high efficiency and doesn't factor in any growth.

 

[PadainFain]

Oil peaked recently at $146/barrel and has been falling since; now we're back down to $124 again. Demand is down quite a bit, especially in the US where gas has been so cheap for so long.



As long as the prices are moderate and there are no strong competitors, the people who have oil.

If oil prices get too high, the people who want to sell alternatives. One example would be electric vehicle companies, battery companies and the utillities who supply coal or nuclear sourced electricity for them(since you'll probably be charging at night that means baseload, not hydro or NG which are seldom used for anything but peaking). Another might coal mining companies like Sasol who turn coal into diesel-like fuel using CTL. Providers of public transportation and sellers of high efficiency vehicles are also likely to profit.

I'm happy to bow to superior knowledge, yourself and the previous poster who quoted me. However oil is not only used for fuel. Plastic? Lubricants? And yes there are alternatives to Petrol, Diesel and Kerosene but how many users of these fuels would actually go out and buy them? Some industries might but your average Joe? No. Will your airline suddenly refuel on something else? No.

Maybe I'm overly cynical but the kinds of changes that make alternative fuels take market share from oil products do not take place overnight. The Oil companies can milk the market as much as they want. They can rape and pillage! And once the competitors get enough market share to be a blip on the radar? They can drop the prices. They can pull the strings on their puppet politicians to reduce the subsidies on alternative fuels. They can buy these competitors out.

Personally I think that the price of oil and scaremongering about the environment will, somewhat ironically, result in a massive uptake in nuclear fission power and that nearly everything we power with oil products will be running on highly efficient, high storage batteries in our lifetimes. One day maybe we'll master fusion, or properly work out how to use geothermal energy (although I think that will impact on the environment in wonderfully insane ways), or put up a solar panel ring a la Larry Niven or something equally clever. There are water-based lubricants that can replace the oil ones and somehow we'll overcome our desire for plastics.

One can only hope but I believe that for the medium term oil prices will outstrip inflation by a fair mile.

 

[Blackadder]

By "feedstock" I meant whatever the bio-fuel is made from, which in the case of oil made from algae, would be algae.

Algae may be the most promising feedstock for energy harvesting but it's far from given that it can be produced in quantities sufficient to make a dent in petroleum usage. Human energy needs currently satisfied by petroleum would require the equivalent of harvesting 10% of all plant life on Earth. And that's assuming an optimistically high efficiency and doesn't factor in any growth.

Yesterday I happened to read about algae. Maybe you know we (dutchmen) made quite a lot of our land from the sea. Those pieces of new land are called Polders. We have a lot, most are small en centuries old, but in the 20th century we made a few final ones, very big ones, called Flevopolder and NorthEastPolder. A 3rd one was in the planning but never got finished because it was decided that we had enough land area and the area was better of being water for recreational purposes. But we finished the dykes around it. It's a big lake now. If that algae for fuel is going to work, they claculated we just need put the whole lake full of algae to grow enough for the total energy consumption of the Netherlands. I have not checked if this is true, but it sounds promising. The area needed is exactly 2% of our total land area. (but it's water now so we would not lose any actual land) Sounds like a good deal.

 

[RecoveringYuppy]

If that algae for fuel is going to work, they claculated we just need put the whole lake full of algae to grow enough for the total energy consumption of the Netherlands. I have not checked if this is true, but it sounds promising.

Well, the first question I have about that, is what technology can actually use a lake to grow the algae? The methods usually cited as "most promising" grow a very specific species of algae in "reactors" where the culture can be kept pure.


http://www.greencrudeproduction.com/solution.html

And completely harvesting the algae from a lake means nothing else is going to be growing there and what impact would that industry have on the recreational uses of the lake?

 

[Blackadder]

Well, the first question I have about that, is what technology can actually use a lake to grow the algae? The methods usually cited as "most promising" grow a very specific species of algae in "reactors" where the culture can be kept pure.


http://www.greencrudeproduction.com/solution.html

And completely harvesting the algae from a lake means nothing else is going to be growing there and what impact would that industry have on the recreational uses of the lake?

What I heard was that the lake would be totally lost for anything but the algae farming. But we have many bodies of water so that is a small sacrifice to make if it means we van make the energy for a nation. It had another major advantage, the algae would feed on the huge surplus of cow and pig manure we have.

But I guess there must be some major problems, because these things have been discussed by university professors and Shell since 1994 , and nothing has happened yet. So either it was not cost effective in the past or there are technical problems.

 

[RecoveringYuppy]

But I guess there must be some major problems, because these things have been discussed by university professors and Shell since 1994 , and nothing has happened yet. So either it was not cost effective in the past or there are technical problems.

I'll think I'll try to clarify my main point and point out that there is a problem more fundamental than cost or the current technical issues. The problem is simply the scale of energy flow on this planet.

Natural photosynthesis is not terribly efficient at capturing sunlight. The entire biomass of Earth captures .1% of the energy falling on the Earth. Human energy needs are moving in to that range, having just past .01%.

Those numbers have some scary implications if we try to use biomass for any significant portion of our energy needs:

The limits to what we can harvest via biomass are already in sight. We're rapidly moving in to scales of energy usage that compete with all of the rest of life on Earth.

We'd be talking a major change in the biosphere. If we do it by harvesting natural growth we're talking about harvesting noticable percentages of all life on Earth. For example: 10% of all photosynthetic energy to replace petroleum.

Alternatively, if we do it by harvesting selected species grown in a more artificial manner, those species we select to do that would become the most "biomassive" species on Earth, outmassing any other species.

The energy contained in the food the human race eats is .018 Zettajoules/year if I've calculated correctly. That's about 0.0005% of the energy falling on Earth. Harvesting energy via plants might (repeat might) be less intensive than our food crops but how much less intense would it have to be to make up for the fact that we'd talking scaling up the energy harvest by 10, 100 or even a thousand times?

To me, the prospect that we might pump all the oil out of the ground, is a lot less scary than finding out we've pumped all the algae out of the bottom of the food chain.

http://en.wikipedia.org/wiki/Solar_power This link has some of the numbers I've cited. There's plenty of solar power on Earth, but photosynthesis collects only a small portion of it.

 

[JonnyFive]

I'll think I'll try to clarify my main point and point out that there is a problem more fundamental than cost or the current technical issues. The problem is simply the scale of energy flow on this planet.

Natural photosynthesis is not terribly efficient at capturing sunlight. The entire biomass of Earth captures .1% of the energy falling on the Earth. Human energy needs are moving in to that range, having just past .01%.

(snip)

When you say the human energy needs, do you mean the energy needs from petroleum-based sources alone or from all sources?

 

[RecoveringYuppy]

The .01% is for all human energy needs. Except for the number about the amount of energy we consume as food, the numbers are derived from the wikipedia article I cited.

I'm not sure how literal Blackadder was being but he said the project he was talking about was meant to address all of the Netherlands energy needs.

But the argument doesn't change much if you focus solely on replacing petroleum with bio feedstocks. We're well in to levels of energy that surpass that captured by any single species and are moving in to the realm of comparing to the entire biosphere.

 

[RecoveringYuppy]

In an earlier post I claimed some numbers about how petroleum compares to biomass. The link below puts petroleum use at .18 ZJ per year. The wikipedia link on solar energy I posted puts photosynthesis at capturing 3 ZJ per year. That would mean diverting 6% of all photosynthesis to production of petroleum replacements. And that's with 100% efficiency and factors in no growth.

http://en.wikipedia.org/wiki/World_energy_resources_and_consumption#Oil

 

[Blackadder]

Ok I tried to find some more reliable information about this. Didn't find anything from scientific origin. Most people that wrote about it (in Dutch so I won't give links) were not so optimistic. They say that most algae farm advocates make miscalculation in the amount of tons / ha algae farming would produce. Or they don't factor in the amount of energy that is needed to produce it. In our case in Holland, we might not have enough sun to make this happen. It should be done in Africa for really good production.

But the conclusion seems to be it still might be promising, algae could produce more than other biofuel sources and they take in more CO2. Shell has started with local projects (Hawaii, and Flevoland , the Netherlands)

KLM is a partner in making algae fuel for their aircraft. See http://www.algaelink.com/
(Note I have no idea how accurate that commerical website is)

 

[RecoveringYuppy]

Or they don't factor in the amount of energy that is needed to produce it. In our case in Holland, we might not have enough sun to make this happen.

You might want to check these facts and calculations, but:

• The Netherlands are 41.5 thousand sqare km, which is 41.5 billion square meters.
• Solar insolation at that latitude is 2.67 KwH per sq meter per day on average
• You said the lake in question was 2% of the area of the Netherlands.
• The population of the Netherlands is 16.4 million people.

So there are 135 KwH falling on that lake for each person in the Netherlands. That might be livable if we could get 100% conversion. But 100% conversion is a pipe dream. In fact I cited earlier that one tenth of one percent is the average of natural photosynthesis. At one tenth of one percent that works out to approximately no KwH per day per person. Even if we could get 10% it would only be 13.5 Kwh per day per person. Not familiar with energy consumption in the Netherlands but I'd bet it's in the 100 KwH/day/person range, not 13.5.