Peak Oil - coming sooner than you think

Politics International Politics
1

President Bush has just pushed his Energy Bill through congress. That’s nice - but will it do much good? The bill does nothing to promote energy conservation - indeed, it’s a bunch of new tax breaks (over $8 billion worth) to encourage the fossil fuel industry to drill/dig for more. There’s supposed to be something in there for nuclear power, but not much - I’m having a hard time finding the details. Drilling in ANWR will be allowed - that will give us one whole year’s worth of oil (and then what?).

How critical is the approaching “oil shortage?” It’s not that we’re going to run out of oil tomorrow, it’s just that very soon (possibly by next year) the world will reach “peak oil” - the point at which oil reserves start to decline. And that spells big trouble.

First of two good articles I’ve got up my sleeve…

John Vidal in The Guardian wrote:

The end of oil is closer than you think: Oil production could peak next year, reports . Just kiss your lifestyle goodbye

The one thing that international bankers don’t want to hear is that the second Great Depression may be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired English petroleum geologist living in Ireland to tell them about the beginning of the end of the
oil age.

They called Colin Campbell, who helped to found the London-based Oil Depletion Analysis Centre because he is an industry man through and through, has no financial agenda and has spent most of a lifetime on the front line of oil exploration on three continents. He was chief geologist for Amoco, a vice-president of Fina, and has worked for BP, Texaco, Shell, ChevronTexaco and Exxon in a dozen different countries.

“Don’t worry about oil running out; it won’t for very many years,” the Oxford PhD told the bankers in a message that he will repeat to businessmen, academics and investment analysts at a conference in Edinburgh next week. “The issue is the long downward slope that opens on the other side of peak production. Oil and gas dominate our lives, and their
decline will change the world in radical and unpredictable ways,” he says.

Campbell reckons global peak production of conventional oil - the kind associated with gushing oil wells - is approaching fast, perhaps even next year. His calculations are based on historical and present production data, published reserves and discoveries of companies and governments, estimates of reserves lodged with the US Securities and Exchange
Commission, speeches by oil chiefs and a deep knowledge of how the industry works.

“About 944bn barrels of oil has so far been extracted, some 764bn remains extractable in known fields, or reserves, and a further 142bn of reserves are classed as ‘yet-to-find’, meaning what oil is expected to be discovered. If this is so, then the overall oil peak arrives next year,” he says.

guardian.co.uk/life/feature/ … 50,00.html

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There has always been articles written about the shortage of oil. If you would read some of the projections from 30 years ago they would have said we wouldnt have enough oil to make to this point. The fact is they are finding more oil all the time and better methods are made to get the oil. So you cant put much faith in a report that says how much is left, since no one really knows. But it is true that eventually we will run out. We will always need oil, not just for things like gas or diesel, but for alot of the products that are made from it. It would be better if they came out with some measures to to conserve oil by having higher milage required on vehicles. Promote more nuclear and renewable sources for energy consumption to try to stretch out how long the oil will last. It really upset me hearing the USA complain about Iran wanting to build a nuclear reactor. The USA said they have enough oil and gas that they shouldnt need to build one. Maybe they are just being smart about it, keep its oil reserves around longer to make more money, and maybe to be more environmentaly friendly.

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Oh, yes! I’m sure that is exactly what the Iranian Govt. has in mind! Clean power! Happy, healthy people! Better conservation of natural resources! Gosh…looks like they have been misjudged. :laughing:

4

I think high oil prices can be a good thing. They will usher in alternative fuel sources far more rapidly than we would have otherwise experienced when the price of oil was 9 dollars a barrel only 5 or 6 years ago. That can only be a good thing. The oil shock of the 70’s had the same effect. This time I hope it will be even more substantial, because technologies have advanced a lot more in the last 30 years.

Since the price of oil was at that price only a few years ago, I don’t think there is really an oil crunch in terms of supply in any really meaningful geological sense. The two biggest holders of supply are essentially under siege and that is what is having the impact on prices. The energy crisis is just a beat up by commercial interest groups.

I guess when the price of oil was so low the Saudis wouldn’t have been pumping it too rapidly and they wouldn’t have been expanding their capacity to pump it either. Now, that the price is high and there is a war on they’ll let us squirm a little and why not after all that was the price we have to pay for an invasion of the middle east. Plus they probably have genuine difficulty in expanding production when they are under threat from domestic terrorist with inflammed passions.

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Hmm. What do you think the big users of energy will be willing to do to corner a share of the market? Wars for more power are unthinkable, right? Developing alternative fuel sources MIGHT be an upshot, but the only thing that can really replace oil is probably nuclear (which can provide the energy needed for hydorgen). The original poster was right to imply that conservation (using less energy) would be the ideal. Since the seventies, conservation has been the biggest source of new energy.

Peak oil doesn’t say that we run out of oil, just that demand surpasses supply (supply continues to fall). The rising cost of oil will affect just about everything you do (not only driving, but also eating, for example). What has also changed is the other factor besides supply–demand. Most notably in China and India where demand is skyrocketing, in the west it’s just slowly rising. A “meaningful geological sense” may be meaningless when talking about a SOCIAL issue. We may have thousands of billions of gallons hundreds of miles below the surface, but if extracting and refining a gallon of it takes 1.1 gallons of oil, where does that leave you?

[/quote]

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One must also consider how reserves are defined - BP’s definition is a good one, “the estimated quantities of oil which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under current economic and operating conditions.” And then there is the three P’s of proven, probable, and possible.

The thing to keep in mind is that reserves are defined “under current economic and operating conditions” - this means that a high oil price leads to an increase in reserves presented on the books - proven reserves. A low oil price leads to lower reserves.

The days of $9 oil is over - look at what it costs to recover a barrel from non-Middle Eastern producers - especially Russia -, factor in demand from the US, China, and India and then you’ll see that the price is not going much below the mid-20’s max though I do not think it will be below $30 again.

As noted, peak oil is not about running out of oil just running out of cheap oil. The days of discovering large new fields are over and have been for thirty plus years. High prices may keep reserves high but it will also make a lot of current uses uneconomical.

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I was the original poster. I did mention that there was a second great article I wanted to post, though someone else beat me to it in another thread:

lifeaftertheoilcrash.net/

Maybe better, there is a whole forum devoted to the subject. I’m having a lot of fun posting there under the name “ozonehole” (the forum software wouldn’t accept my name “Dog’s_Breakfast”). Anyway, for those who enjoy this topic, check out:

peakoil.com/

cheers,
DB

8

Who knows what to believe anymore. Conservation and alternative energy sources must be developed and brought to market.

[quote]Iranian Oil Minister Sees Suplly Surpluses
Tuesday April 26, 8:20 pm ET

Iranian Oil Minister Says Global Petroleum Markets Are Oversupplied

PORT-OF-SPAIN, Trinidad (AP) – Global petroleum markets aren’t short of crude oil and may even be oversupplied, Iran’s oil minister said Tuesday.

“I think the market is oversupplied,” Bijan Namdar Zangeneh told reporters during a natural gas conference in Port-of-Spain, Trinidad. “We have not difficulties on the supply side.”

Iran is one of 11 member countries of the Organization of Petroleum Exporting Countries. Officials from two other OPEC members, Saudi Arabia and the United Arab Emirates, have said a global lack of refining capacity, not a shortate of crude oil, is to blame for an almost 50 percent surge in world prices over the last year.

“The markets should not expect OPEC to do everything,” Zangeneh said.

OPEC President Sheik Ahmed Fahd Al Ahmed Al Sabah, however, said last week that the organization would automatically increase its total output by 500,000 barrels a day in May in response to an expected increase in demand.
biz.yahoo.com/ap/050426/caribbean_opec.html?.v=1[/quote]

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I did find it funny that certain people in the States are looking to OPEC to solve the high prices at the moment (or shift the blame). Oil is traded on short term contracts and the price is determined by speculation - capitalism at its best. The high price is the result of the value that traders are fixing to the product. OPEC has increased output (it traditionally adjusts price by adjusting volume) and the price has not dropped which should indicate that there is something more to the present prices than OPEC’s supply - short to medium term factors that impact the traders decisions. The most notable being the lack of refining capacity in the US at the moment. Then one can add increased demand for oil and petroleum products from developing markets (India/China) and we have a situation where supply and demand combine to produce a high price.

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An other (ie. alternative) energy source that will become a lot more economical is also one of the worst in terms of air quality–coal, which remains abundant.

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Good point, s.b.

The damafan post before yours was good too.

So was TC’s, DB’s, Tommy Boy’s, Foxtrot’s and the Cadet’s earlier on.

My post will now mark the lowest point in terms of contribution to this thread, but I just wanted to say :bravo: to some great discussion.

Cheers,

12

Lots of folks around here are converting their diesel Mercedes Benzs, or whatever diesel engines like trucks and farm equipment, to use biodiesel which is a mix of vegetable oil and diesel. Much cleaner burning and FREE when you have food establishments happy to donate their drums of used oil, and you have the time to filter it, and a place to store it. And lots of folks around here DO have time and space.

Hell, i’d go horse and buggy in a flash, but the poor dears don’t like the nasty filthy roads with the noisy hummers and suvs spewing out noxious chemicals.
Even the Amish got tired of that …

And i agree Fox, the high cost of gas is a good thing, and it’s still cheap.
But who do you think is getting richer?

[quote] Big oil companies posted record profits last year and should grow even flusher this year. Oil companies will occupy three of the top 10 spots when Fortune magazine releases its ranking of the top 500 publicly traded companies Monday.

Exxon Mobil Corp. ranks second, behind only Wal-Mart. Exxon posted sales nearing $221 billion in 2004, a figure roughly equivalent to the economy of Greece. Fortune ranked it the most profitable company on its list, with $21.5 billion in profits, a staggering figure larger than the economies of Madagascar and Iceland combined.

ChevronTexaco Corp. and ConocoPhillips ranked 7th and 8th, respectively. ChevronTexaco saw its net income - or profit - jump to $13.3 billion in 2004, almost twice its 2003 take.

Oil-producing countries also get rich, by requiring the oil companies to cut them in on the deal. Norway, the world’s third largest oil exporter, is thought to have the world’s highest standard of living, thanks to oil income. Booming oil prices brought Norway a 19 percent increase in oil exports last year, to $38 billion. [/quote]

realcities.com/mld/krwashington/11337800.htm

No wonder Norway wants no part of EU. :s

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Well there is no doubt that Bush has delivered on his promise to Big Oil.

I was reading about an interesting technology the other day that some Australian firm was selling to Korea. It is a process of reverse refrigeration. Glasshouses in Korea need to be heated to 20 to 25 degrees during the winter so that they can grow vegies all year around. Normally, they use oil as the energy source for the heaters. However, this company had harnessed a chemical that could absorb ambient heat at freeezing temperatures and release it into the glass house. It is only a chemical process and hence very cheap and can heat the glasshouse to 20 odd degrees.

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In addition to Peak Oil, there is a coming crisis with Peak Natural Gas, and the USA is especially vulnerable:

Puncturing Natural Gas Myths – Part I
11.21.03 Andrew Weissman, Publisher, EnergyBusinessWatch.com

Article Viewed 13125 Times

[i]Does the U.S. still face a severe natural gas supply crisis during the remainder of this decade?

If there is any remaining doubt regarding this issue, it should be thoroughly dispelled by the National Petroleum Council’s recent Report to Secretary of Energy Spencer Abraham.

The Council’s Report, entitled “Balancing Natural Gas Policy – Fueling the Demands of a Growing Economy,” presents the results of the most comprehensive assessment of supply and demand of natural gas in the North American market undertaken in many years. To date, it has received surprisingly little attention – despite Alan Greenspan’s warning last May regarding the potential threat to the U.S. economy posed by tighter-than-expected natural gas supplies.

Anyone who reads the Council’s Report carefully, however – and I would urge everyone who reads this article to do just that – can’t help but come away from the experience shaken. [/i]

Read the rest of the article:
energypulse.net/centers/arti … m?a_id=556

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Why do people keep worrying about oil running out??? If it runs out we’ll be forced to use alternatives. (Environmentally friendly ones. hopefully) The world is not going to end if we run out of one fuel source. We have the technology and knowledge; however, environmentally friendly alternatives have been pushed into the back seat for years now…
Some say it’s because of production costs… some say OPEC… Others say government… Regardless of who it is, I think running out of oil would be the best thing for the people of this world. Maybe then people will start to appreciate and respect this planet of ours.

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Um, because of the sheer havoc it’d wreak on the economies of most developed nations, perhaps?

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Nicaragua hits the crunch first

The poorer nations are first to experience what we will all be swept over by: expensive energy

by Dan Crawford

[i]Recently, Fidel Castro, who attended the first PetroCaribe Energy Summit at Puerto La Cruz, Venezuela, made a statement that was ignored by international media. He informed the summit that no Caribbean country will be able to purchase oil once the price reaches $100 a barrel.

Castro was only pointing out the obvious

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Hmm. I have it on the word of a friend who’s a grad student in geology that oil prices won’t go permanently above $60 a barrel – he says that there exists a process to convert coal into oil, that can be used to generate gasoline at least (plastics and other useful petroleum products are made from different parts of the crude oil during the refining process, so we’d still be short of those.)

He says the reason this hasn’t been put into practice yet is that it isn’t cost efficient – nobody wants to pay $60/barrel for fake oil when you can have the real stuff for $40.

Apparently it’s really environmentally unfriendly (fancy that) even without considering that it’s probably going to lead to strip-mining, mountain topping and other nasty polluting activities in order to get at the coal.

o’course this is all “my friend said” word-of-mouth, so take it with as much salt as you wish.

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do a google search on “E85”. help is already here.

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E85 (85% ethanol, 15% gasoline mixture) wasn’t what Yisha’ou was referring to, but anyway, this might be a good time to raise the issue of EROEI.

EROEI = energy returned on energy invested

It’s a ratio. Exploiting any source of energy requires that you expend some energy on the extraction and refining process. Oil in the Middle East has an EROEI of about 30:1.

Currently, a lot of people (including our beloved Fred) are saying that the solution to our problem is the Athabasca tar sands in Alberta, Canada, where there is more oil than in Saudi Arabia. They are apparently unaware that the EROEI for the tar sands is a pitiful 1.5:1, which effectively means that 66% of the oil will be used up just in the extraction process. There is also the little matter than only 20% of the tar sands are considered recoverable.

Decent introduction to tar sands:
en.wikipedia.org/wiki/Tar_Sands

There is also shale oil. The USA has a LOT of it. However, it’s EROEI is also pathetically low (I believe around 2:1) and worse, the extraction process consumes huge quantities of water. That matters, since most of the shale oil is in western Colorado, where there is already a water shortage.

en.wikipedia.org/wiki/Oil_shale

From what I have heard, oil extracted from coal has a negative EROEI. Oil can also be made from natural gas - again, with a negative EROEI. But I haven’t done much research on it - nobody in the oil industry seems much interested in it either. Exxon is placing its bet on Athabasca right now and hoping that Saudi Arabia remains friendly.

Ethanol production also has a poor EROEI. It depends a lot on what crop you use to produce the ethanol. You get the best results with sugar cane, positive (but not good) results with canola (rape seed). Corn is a barely break even EROEI from what I’ve heard, though I don’t have a figure.

Then there is biodiesel. EROEI depends on what you use to make it, but can be somewhere around 5:1.

In short, artificial oil doesn’t come anywhere near the real stuff. But it exists. However, it will be expensive, and in most cases environmentally ruinous. Still, I don’t doubt that it will be used, but I do doubt that it can produce enough to save our current profligate lifestyle.

If we really want to maintain our prosperity, we’ve got to make some major changes. I’m not a total doomsayer. There are things that can be done, but unfortunately our “leaders” are asleep at the switch. The Energy Bill which was just passed by the US congress and awaits the president’s signature is a big joke - a bunch of tax breaks for oil companies to encourage them to do more drilling. As if they needed encouragement with oil at $60 a barrel (but they love the tax breaks).

The USA, of course, is not the only country on earth. Some other countries are showing at least a little interest in dealing with the problem, but nothing terribly impressive is happening. The Japanese and Indians are pursuing breeder reactors, which is the solution I favor above all others. Solar and wind (mostly wind) is happening in Europe. Iceland, thanks to favorable geography, is doing geothermal and hydroelectric for almost 100% of its power. Greenland is almost entirely hydroelectric, thanks to the (rapidly melting) icecap, which has swollen its rivers to record size. But overall, the world (and not just the USA) is living in a fool’s paradise. And we don’t have much time to solve this. It’s amazing how few people take it seriously.

For a whole lot more info and debate, join the discussion at our forum:

peakoil.com