Peak oil is here

[billvon 2,476]

=============================
It's Official -- The Era of Cheap Oil Is Over
Energy Department Changes Tune on Peak Oil
By Michael T. Klare

Every summer, the Energy Information Administration (EIA) of the U.S. Department of Energy issues its International Energy Outlook (IEO) -- a jam-packed compendium of data and analysis on the evolving world energy equation. For those with the background to interpret its key statistical findings, the release of the IEO can provide a unique opportunity to gauge important shifts in global energy trends, much as reports of routine Communist Party functions in the party journal Pravda once provided America's Kremlin watchers with insights into changes in the Soviet Union's top leadership circle.

As it happens, the recent release of the 2009 IEO has provided energy watchers with a feast of significant revelations. By far the most significant disclosure: the IEO predicts a sharp drop in projected future world oil output (compared to previous expectations) and a corresponding increase in reliance on what are called "unconventional fuels" -- oil sands, ultra-deep oil, shale oil, and biofuels.

So here's the headline for you: For the first time, the well-respected Energy Information Administration appears to be joining with those experts who have long argued that the era of cheap and plentiful oil is drawing to a close. Almost as notable, when it comes to news, the 2009 report highlights Asia's insatiable demand for energy and suggests that China is moving ever closer to the point at which it will overtake the United States as the world's number one energy consumer. Clearly, a new era of cutthroat energy competition is upon us.

Peak Oil Becomes the New Norm

As recently as 2007, the IEO projected that the global production of conventional oil (the stuff that comes gushing out of the ground in liquid form) would reach 107.2 million barrels per day in 2030, a substantial increase from the 81.5 million barrels produced in 2006. Now, in 2009, the latest edition of the report has grimly dropped that projected 2030 figure to just 93.1 million barrels per day -- in future-output terms, an eye-popping decline of 14.1 million expected barrels per day.

Even when you add in the 2009 report's projection of a larger increase than once expected in the output of unconventional fuels, you still end up with a net projected decline of 11.1 million barrels per day in the global supply of liquid fuels (when compared to the IEO's soaring 2007 projected figures). What does this decline signify -- other than growing pessimism by energy experts when it comes to the international supply of petroleum liquids?

Very simply, it indicates that the usually optimistic analysts at the Department of Energy now believe global fuel supplies will simply not be able to keep pace with rising world energy demands. For years now, assorted petroleum geologists and other energy types have been warning that world oil output is approaching a maximum sustainable daily level -- a peak -- and will subsequently go into decline, possibly producing global economic chaos. Whatever the timing of the arrival of peak oil's actual peak, there is growing agreement that we have, at last, made it into peak-oil territory, if not yet to the moment of irreversible decline.
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http://www.tomdispatch.com/post/175082

[vortexring 0]

Time for a change in energy policy, eh? Might save us from some more wars. . .

'for it's Tommy this, an' Tommy that, an' "chuck 'im out, the brute!" But it's "saviour of 'is country" when the guns begin to shoot.'

[futuredivot 0]

Nah, we'll just be fighting for different shit. Maybe we can invade some European country and take their carbon offsets

You are only as strong as the prey you devour

[makeithappen40 0]

I definitely did not expect such an intelligent response so soon here. Well done, my friend. Farewell.

[kelpdiver 2]

so...peak oil is 2030? It still projects a 12% increase. It just won't keep up with growing demand, all else staying the same.

[billvon 2,476]

>so...peak oil is 2030?

Peak oil is basically happening now; growth in conventional oil is predicted to stop very soon. Additional growth in liquid fuels will come about via "unconventional sources" - oil sands, shale oil, liquified coal, bitumen and biofuels.

[sundevil777 94]

Do you think the report argues in favor of new oil field development?

I cannot see how it does not. Perhaps you could say that new development should be timed so that it comes on line when things really hit the fan, but I don't see how it can be argued that it argues they should not be developed at all.

Charles Krauthammer had an interesting idea. Raise taxes up high on gasoline, stimulating research in alternatives and motivating people to use less, but at the same time, reduce payroll taxes an equal amount. Basically revenue neutral on governments and ordinary people, but stimulates innovation and conservation. What do you think? I'd be all for it, especially if we had a national policy to not import oil from unfriendly countries after some set number of years.

People are sick and tired of being told that ordinary and decent people are fed up in this country with being sick and tired. I’m certainly not, and I’m sick and tired of being told that I am

[billvon 2,476]

>Do you think the report argues in favor of new oil field development? I
>cannot see how it does not.

Indeed, the report assumes new oil field development; that's an integral part of figuring out the Hubbert Peak.

But the problem is bigger than that. The problem is not that we have no more oil _fields_ it's that we have no more _oil._

Let's say we go on a crash course of drilling ANWR; that gives us another 7.5 months of oil at our current rates of consumption. Let's say we drill every field that we are certain has oil here in the US, no matter what areas are ecologically sensitive. Now we have another 2.6 years of oil at current rates. Let's say we drill everywhere we even _think_ there's oil and we luck out half the time; now we're at 6.4 years of oil.

After that, it's not that there's no more oil fields in the US where drilling is legal. It's that there is no more commercially recoverable oil in the US, period.

That 6.4 years assumes that we use all our own oil and that we can get it all out quickly. Neither is true, of course. There will be shortages long before that and some will trickle out of nearly dead wells well after that. But it demonstrates that we don't have much time left, and "drill baby drill!" just doesn't work. Indeed, it makes the problem worse in the long term.

So the next step is to start what the report describes - the transition to alternatives.

> Perhaps you could say that new development should be timed so that
>it comes on line when things really hit the fan. . . .

Basically yes. However, my description of "when the shit hits the fan" is not when it's too expensive for americans to drive SUV's. It's when our military adversaries take advantage of our own military's 100% reliance on oil and move against us when we have no oil left. They'd be able to roll into LA without much opposition at all. (Heck, we'd probably _give_ them LA if they gave us some of their oil.)

> Raise taxes up high on gasoline, stimulating research in alternatives
>and motivating people to use less, but at the same time, reduce
>payroll taxes an equal amount.

I'd go for that.

>I'd be all for it, especially if we had a national policy to not import oil
>from unfriendly countries after some set number of years.

I would _not_ go for that. I want those unfriendly countries to run out before we do. A "conserve oil in unfriendly countries and drain our own instead" program makes little sense to me.

[TomAiello 25]

Quote

After that, it's not that there's no more oil fields in the US where drilling is legal. It's that there is no more commercially recoverable oil in the US, period.

You are assuming at least:

(a) that the cost of recovering oil remains constant (and does not decrease with new technology)

(b) that the total production of an "empty" field cannot be increased with new technologies

(c) that the price of oil on the world market remains constant


Honestly, I can't see how any of those assumptions could be correct.

The price of oil will rise. Some enterprising folks will sort out a way to extract more oil from "depleted" fields (in fact, this has already happened, and depleted fields are being bought up by investors who are waiting to make a killing when oil stays north of $100 per barrel). As they develop the technologies for extraction further, the price of production will fall. Since the price of production from the "depleted" fields will become lower than the price on the market, those fields will be re-opened to further extraction (at a higher, but still profit making, cost, given a higher price of oil on the world market).

-- Tom Aiello

[email protected]
SnakeRiverBASE.com

[billvon 2,476]

>(a) that the cost of recovering oil remains constant (and does
>not decrease with new technology)

Actually the cost of recovering oil will _increase_ since a) the cheap to recover oil is running out and b) people will be willing to spend a lot more to get the hard-to-recover oil at $100 a barrel. Indeed, the cost of oil is basically set by the cost to recover it, ignoring swings caused by speculation.

>(b) that the total production of an "empty" field cannot be increased with
>new technologies . . .

Oh, it can be. But again, you're reaching the point of diminishing returns. You can put a lot more effort into getting 70% of the oil out of a field instead of 60%. But you're not going to double the remaining oil.

>(c) that the price of oil on the world market remains constant

It will not and has not.

>Some enterprising folks will sort out a way to extract more oil from
>"depleted" fields (in fact, this has already happened, and depleted fields
>are being bought up by investors who are waiting to make a killing when
>oil stays north of $100 per barrel). As they develop the technologies for
>extraction further, the price of production will fall. Since the price of
>production from the "depleted" fields will become lower than the price on
>the market, those fields will be re-opened to further extraction (at a
>higher, but still profit making, cost, given a higher price of oil on the
>world market).

All of that assumes that there is an infinite amount of oil to recover, and that increasing the effort put into recovering it will increase the oil available.

That's just not true. If you have a soda, and you get to the bottom, and you start sucking up the dregs, it always seems like there's a bit more you can get out. But you're not going to get another 16 ounces out of that cup no matter how heroically you try.

As the price rises higher and higher. other technologies will begin to replace oil. Biofuels is one big one; shale oil, bitumin and tar sands are other alternatives. Once it's cheaper to make those, conventional oil will fall by the wayside. The trick is arranging things so that that happens rapidly enough that we can make the transition without an economic/military crash.

[TomAiello 25]

Quote

Actually the cost of recovering oil will _increase_ ...

The more you use and develop the technology for recovery, the cheaper that recovery will be. The technology for extraction from a "depleted" field was prohibitively expensive 10 years ago ($200/barrel) but is now looking downright reasonable ($70/barrel for the same extraction).

Of course as we further extract, each new barrel will be harder to get, and extraction from one field will this become more expensive over time, but I think there's quite a lot of $80/barrel oil still sitting around in "depleted" US fields.

-- Tom Aiello

[email protected]
SnakeRiverBASE.com

[billvon 2,476]

>The more you use and develop the technology for recovery, the cheaper
>that recovery will be.

Again, that's making the assumption that the resource is unlimited, or effectively so. If, for example, you came up with a technology to get gold from seawater, and it became commercially viable, you'd expect the cost to decrease with time because the supply is essentially unlimited and the technology will improve.

But if you did the same thing in a mid sized lake, and there was only 200 pounds of gold in the water to begin with, the costs would go UP the more gold you took out, because you'd be diluting the supply the more you worked it. (As a thought experiment, ask yourself how much it would cost to get 50, 100, 200 and 250 pounds of gold out of that lake.)

>The technology for extraction from a "depleted" field was prohibitively
>expensive 10 years ago ($200/barrel) but is now looking downright
>reasonable ($70/barrel for the same extraction).

Right. But the problem is that we are taking all the $50/barrel oil now, and soon there won't be any oil that is so easy to recover. So we'll have to go with a technology that costs $70/barrel, hoping it will fall to $50/barrel by the time that's all that's left. And by the time that's gone, maybe that $500/barrel technology will be almost ready . . .

Which is why extraction costs will rise with time. Not because the technology won't advance but because the easy oil will be gone, taken with the previous level of technology.

[kelpdiver 2]

Quote

>(a) that the cost of recovering oil remains constant (and does
>not decrease with new technology)

Actually the cost of recovering oil will _increase_ since a) the cheap to recover oil is running out and b) people will be willing to spend a lot more to get the hard-to-recover oil at $100 a barrel. Indeed, the cost of oil is basically set by the cost to recover it, ignoring swings caused by speculation.

I think it's more accurate to say that the price of oil is based on the cost of extraction of the marginal production (ie, the final 5%). When oil is at $40, there's little point for the extraction in Alberta, which I believe runs close to $60 to be viable. If oil is at $100, Alberta is making 40/barrel, others might be making 80/barrel. And some method of extraction that costs close to 100 would go online.

The net effect of this is that global demand sets the price. If we want X barrels per year, the price will run close to what the cost of the last 10% of production is. If we cut our demand in half, that will be much much less (at this point in time). Double it and the price will be much higher, as any increase in production now requires an exotic (expensive method).

In the future, as you describe, all extraction will be more expensive, so we might want to move quickly now on the consumption side.

But the imperialist in me wonders if we're actually at a pretty good price point now. Oil is still relatively cheap for Americans, but rather dear for those in China and the third world where demand would grow fast at the old 20-30$ prices. Keeping it higher stunts their growth and puts off the end date for readily available oil.

[stitch 0]

Quote

>so...peak oil is 2030?

Peak oil is basically happening now; growth in conventional oil is predicted to stop very soon. Additional growth in liquid fuels will come about via "unconventional sources" - oil sands, shale oil, liquified coal, bitumen and biofuels.

That is already hapening. Halliburton has drilled more holes in Wyoming than a Studio City porn director.

"No cookies for you"- GFD
"I don't think I like the sound of that" ~ MB65
Don't be a "Racer Hater"

[yourmomma 0]

Don't be re-god-damn-diculous. We all know that human kind is incapable of having a net effect on the planet. Oil production, like the effect of its consumption is cyclic. Being that oil consumption has only been monitord for a hundred years or so means only liberal blow hards trying to trample free markets will fall prey to this propaganda. We will simply increase supply to meet demand. Never having to suffer the consequences of our actions. All of this information can be found on a suppressed EPA document penned by the lead software developer. He helps audit linux kernel so you know its true.


Edited to remove the name of hercules' inbreed half brother.

[stitch 0]

Quote

Don't be ridicules.

Wasn't that Hercules' inbreed brother ?

"No cookies for you"- GFD
"I don't think I like the sound of that" ~ MB65
Don't be a "Racer Hater"

[yourmomma 0]

Actually he was inbred. And it was a half brother.

[rhys 0]

Hmmm, a substance that takes thousands if not millions of years to form, in a finite manner, is drilled at millions of barrels a day for decades....



No shit sherlock!

I'm sure I have had conversations about this before here in the past;

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=1544591;search_string=oilcrash.com;#1544591

"When the power of love overcomes the love of power, then the world will see peace." - 'Jimi' Hendrix

[rhys 0]

Quote

Time for a change in energy policy, eh? Might save us from some more wars. . .

there's a thought!

"When the power of love overcomes the love of power, then the world will see peace." - 'Jimi' Hendrix

[TomAiello 25]

Both things will happen. It's impossible to say which effect will govern--technological advances making extraction (or manufacturing of oil) cheaper, or depletion of naturally occurring petroleum.

It's kind of like the atmospheric carbon business you were talking about earlier--one process drives it up, one drives it down, and we simply don't know yet which will govern in the long run.

-- Tom Aiello

[email protected]
SnakeRiverBASE.com