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It’s been a while since we’ve heard about peak oi l—the point at which we use up half the world’s reserves and see production terminally decline—but it’s happening. And yet, we still have enough oil left to burn our way to climate catastrophe.

In a paper released at the end of July, Sir David King, the British Foreign Office’s Special Representative on Climate Change, and his co-author, Oliver Inderwildi of Oxford University’s Smith School of Enterprise and the Environment, refute what they call “a common misperception about peak oil”: that fossil fuels are growing scarce.

Rather, they argue, peak oil means it’s getting more difficult and costly to get oil out of the ground—and there’s less of the cheaper, easy oil available.

The age of easy oil is over

Plummeting oil prices in the wake of the US shale boom have led many to dismiss peak oil as little more than a doom-mongering myth.

In his study published in the peer-reviewed journal, Frontiers in Energy, King agrees with critics that the planet is swimming in oil. But he warns that peak oil proponents are still right to warn of oil’s growing economic and environmental costs:

Haliburton fracturing operation. Image: Joshua Doubek/Wikipedia

“We are not running out of oil, but we have reached a plateau in easy, inexpensive conventional oil production, which will be followed by a fall in production…Novel unconventional oil reserves are abundant, but are more costly to produce, provide less net energy and cause more GHG [greenhouse gas] emissions.”

Up until 2005, economic growth was enabled by exponentially rising production of cheap conventional oil. But since then, conventional production has stopped rising. To keep the economy chugging along we’ve started using more expensive forms of unconventional oil—which are worse for the environment, and require more energy just to get out the ground and become usable.

…click on the above link to read the rest of the article…

Peak oil by any other name is still peak oil

September 10, 2016

Peak oil by any other name is still peak oil

One of the most compelling charts I have ever seen is the “Growing Gap” chart that used to appear in every ASPO Newsletter. This is the one from the last ASPO Newsletter, written by Colin Campbell and published in April 2009.

Since then, more than seven years have passed, and peak oil has disappeared from the mainstream press headlines–almost. On August 29, Bloomberg published a story alerting to the fact that conventional oil discovery has reached a 70-year low. It published a very interesting chart, using data provided by Wood Mackenzie, the oil consulting firm, to show that fact. Unlike the ASPO chart, Bloomberg’s chart only goes back to 1947, the year before Ghawar was discovered.

I thought I would reproduce the “Growing Gap” chart using Wood Mackenzie’s data.

Neither Wood Mackenzie nor Bloomberg make public the data behind the chart, but I used a digitization program, WebPlotDigitizer, to extract data from the chart. The results are not perfect, of course, but give a good enough estimate. One must keep in mind that discovery data are not precise and may have a significant margin of error.

In order to obtain conventional oil production, I subtracted US tight oil production and Canadian tar sands productionfrom the EIA’s global crude plus condensate number. I know I must also subtract the extra-heavy production from the Orinoco Belt, but it is hard to find data for it. In any case, this is a very good estimate. According to data gathered byJean Laherrère, the Orinoco extra-heavy production is only around 1 Mb/d today.

The following chart shows the digitized Wood Mackenzie conventional discovery data and the production data described above. According to the data, since 1980, when the gap between production and discovery began to appear, humanity has extracted about 47 percent more conventional oil than it has discovered.

…click on the above link to read the rest of the article…

An Updated Version of the “Peak Oil” Story

August 16, 2016

An Updated Version of the “Peak Oil” Story

The Peak Oil story got some things right. Back in 1998, Colin Campbell and Jean Laherrère wrote an article published in Scientific American called, “The End of Cheap Oil.” In it they said:

Our analysis of the discovery and production of oil fields around the world suggests that within the next decade, the supply of conventional oil will be unable to keep up with demand.

There is no single definition for conventional oil. According to one view, conventional oil is oil that can be extracted by conventional methods. Another holds it to be oil that can be extracted inexpensively. Other authors list specific types of oil that require specialized techniques, such as very heavy oil and oil from shale formations, that are considered unconventional.

Figure 1 shows the growth in unconventional oil supply for three parts of the world:

Oil from shale formations in the US.
Oil from the Oil Sands in Canada.
Oil characterized as unconventional in China, in a recent academic paper of which I was a co-author. (Temporarily available for free here.)

Figure 1. Approximate unconventional oil production in the United States, Canada, and China. US amounts estimated from EIA data; Canadian amounts from CAPP. Oil prices are yearly average Brent oil prices in $2015, from BP 2016 Statistical Review of World Energy.

Oil prices in 1998, which is when the above quote was written, were very low, averaging $12.72 per barrel in money of the day–equivalent to $18.49 per barrel in 2015 dollars. From the view of the authors, even today’s oil prices in the low $40s per barrel would be quite high. Since the above chart shows only yearly average prices, it doesn’t really show how high prices rose in 2008, or how low they fell that same year. But even when oil prices fell very low in December 2008, they remained well above $18.49 per barrel.

…click on the above link to read the rest of the article…

M. King Hubbert and the future of peak oil

July 17, 2016

M. King Hubbert and the future of peak oil

Almost synonymous with the term “peak oil” is M. King Hubbert, perhaps the foremost geophysicist of the 20th century, who first theorized about the eventual decline of oil production in the 1930s. His life has now been chronicled by science writer Mason Inman in a new biography entitled The Oracle of Oil.

Depending upon whom you speak with, peak oil is either a catastrophe waiting to happen or a far-off concern that has already been solved or will be soon. Frequently, peak oil is referred to as a myth. What you rarely hear is that peak oil is an empirical fact having already occurred in dozens of countries.

The term “peak oil” simply means that crude oil production for any field, region or country eventually reaches a peak or plateau from which it inexorably declines. Because the amount of oil in the Earth’s crust is finite, it is logical to assume that one day peak oil production will occur worldwide. The concern is that we as a global society are so accustomed to rising oil production that we have built an entire world around that assumption. Will we be ready when oil production begins to decline?

To shed some light on that and other questions author Inman takes us from Hubbert’s early days at the University of Chicago to his famous speech in 1956 (in which he predicted a peak in U.S. crude oil production no later than 1970) to his days in Washington, D.C. working for the U.S. Geological Survey and his fights there concerning the timing of a U.S. oil production peak.

In the course of the story Inman puts to rest misconceptions about Hubbert and about peak oil. First and foremost, peak does NOT mean running out. As explained above it means the trend of rising oil production reverses into a decline.

…click on the above link to read the rest of the article…

Peak Oil; Climate Change; & System Justification Pt 1

July 17, 2016

Peak Oil; Climate Change; & System Justification Pt 1

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Research has powerfully illustrated that a lack of knowledge in domains such as energy and the environment can lead to bad decisions and erroneous beliefs that hinder a society’s ability to create change in domains that require it

KNOWLEDGE & UNDERSTANDING

Rather self-evident, isn’t it? Certainly that observation is not limited to energy and environment, but the more complex the challenge, coupled with the greater potential impact, the more critical it becomes to understand the issues—all of them—and the range of consequences should there be a failure to respond appropriately.

There are reasons and explanations as to why the general population—and those leaning Right in particular—choose to deny, avoid, or ignore matters of great import and impact. That the justifications, rationales, and innate strategies used might be understandable should not be the end of the discussion. Self-awareness and introspection carry their own set of benefits.

This new Friday series, extending well into the latter part of 2016, will examine the concept of System Justification * and the role in plays in generating continued opposition and denial of the facts and implications of both a peak in the rate of oil production, and climate change. Facts won’t go away, and denial is not a shield, but there are well-defined patterns and behaviors which provide a foundation for the tactics employed to sow doubt and preserve the comforts of the known and familiar.

While the benefits are clear and gratifying today, the ongoing failure to move beyond the emotional and psychological comforts afforded by system justifications is not without its costs and consequences. A greater appreciation for not just the facts of peak oil and climate change, but an understanding as well of how we respond to them, why, and what happens if we fail examine other approaches is arguably of more enduring benefit.

…click on the above link to read the rest of the article…

Peak Oil in Asia and oil import trends (part 2)

June 26, 2016

Peak Oil in Asia and oil import trends (part 2)

We pick up the question from part 1:

Asia_oil_production_consumption_2005-2015_fill_in-2035

Fig 11: Homework for governments

Let’s have a look where all the net imports into Asia have come from in the past:

Asia_net_imports_2001-2015

Fig 12: Asia net imports – overview

BP’s data on inter area oil movements start in 2001. Oil imports from the Middle East increased from 11.5 mb/d in 2001 to 15.5 mb/d in 2015 or 4 mb/d. This is an amazing “performance “ because Middle East exports to all countries increased only by 0.8 mb/d (crude) and 0.7 mb/d (products) in 15 years!

World_crude_oil_exports_2001-2015

Fig 13: World’s crude oil exports

Global crude oil exports in 2015 were not higher than in 2007. Canadian exports (dirty tar sands mainly to the US) increased by 1.9 mb/d since 2001.

Middle East exports to Asia

Fig 14: Middle East oil exports share to Asia

Asia’s share of Middle East exports has increased from 60% in 2001 to 75% in 2015. Let’s have a look to which countries/regions these Middle East exports go:

Middle_East_oil_exports_by_destination_2001-2015

Fig 15 Middle East oil exports by destination

In the above graph we stack Asian countries on top of other countries which shows that Asia took away Middle East exports from the US and Europe which are in decline.

So how would that continue into the future? Let’s do a very simplified trend analysis without regard to oil prices, the type of oil, oil reserves and geo-political events and assuming no declining oil production in Asia.

…click on the above link to read the rest of the article…

Peak Oil in Asia (part 1)

June 23, 2016

Peak Oil in Asia (part 1)

According to data recently published in BP’s 2016 Statistical Review Asian oil production remained at around 8.3 mb/d for 4 years now.

Asia_oil_production_1965-2015

Fig 1: Asian oil production

We see the dominance of China (52% of total). The peak for all other Asian countries together was already in 2000, 15 years ago, followed by decline of around 0.9% pa which has now accumulated to around 600 kb/d (equivalent to 60% of Australia’s consumption). Since 2000, China was able to offset this decline and grow the Asian system but this has stalled now as confirmed by the latest data from the National Bureau of Statistics in China.

China_crude_oil_production_Jun2013-May2016

Fig 2: China crude oil production

Data are from here: http://data.stats.gov.cn/english/easyquery.htm?cn=A01

No matter how this Asian production plateau evolves it is dwarfed by ever rising Asian consumption. Let’s have a look at net oil imports country by country, alphabetically:

Australia_oil_production_vs_consumption_1965-2015

Fig 3: Australia’s oil balance

…click on the above link to read the rest of the article…

Global Energy Advisory June 17th 2016

June 18, 2016

Peak Oil: Are We Not Better Than This? Pt 11

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Entrenched as each side is in what seems an endless and ever-disheartening conflict between conservatives and progressives, finding seams to broaden discussions is no easy task. Cocooned as each partisan is in the selective comfort of peer perspectives and beliefs, suspicion and ridicule are the easier guidelines to follow.

But at what cost to all of us, if not today, then soon enough? Has there been a collective, irrevocable determination by all that the political and ideological wars will continue until … well, when?

THE LEFT-RIGHT VIEW OF SCIENCE

Progressives consider the statements and rationales offered by most public leaders on the Right with a mixture of disdain, astonishment, and ridicule. Conservatives view every action and proposal from the Left with a blend of deep suspicion as to motivations and objectives. That few take the time to contemplate what’s actually being presented—and of greater importance: why—is doing nothing but perpetuating and deepening the distrust and animosity. Probably not the ideal outcome….

Few of us doubt the conclusions presented by professional engineers when they direct that construction of buildings or other structures must meet certain criteria. While second opinions are not uncommon, most of us accept the medical findings from doctors and dentists without doubting their competency or motivations. We trust airline pilots to fly planes more so than we would an investment banker, just as we would trust the latter to properly handle major financial endeavors more so than we would the owner of a chain of hair salons.

Yet the findings of climate scientists worldwide, or the concerns offered by those who examine the range of factors in the field of energy exploration and production are held to different standards. Unanimity and perfection are the requirements to be met before a sizeable portion of the populace will even consider the issues they raise. All or nothing seems to be the not-entirely-unspoken rule.

…click on the above link to read the rest of the article…

Demand destruction and peak oil

June 5, 2016

Demand destruction and peak oil

Roger Baker is a transportation and energy reform advocate based in Austin, Texas. Long time member of ASPO, we actually met at one of the first ASPO conferences, the one held in Pisa, in 2006. Here he discusses the current situation with crude oil and the global economy.

We are fully under the influence of petroleum demand destruction. The global oil market can’t function without real oil production price discovery, which doesn’t exist in the currently deflationary global economy, which forces indebted producers to sell far below cost.

Both supply and demand seem to cyclic in nature and we are not finished with the supply destruction phase, which can only be revived through a globally realistic oil trading price, which nobody knows. This is an unknown until demand destruction also runs its course. The global demand in the oil supply-demand balance that sets the global oil price cannot be known until we can understand where the global economy is headed. The global material economy seems to be contracting as the Baltic dry index, trucking, and railroad profitability seem to affirm, even ignoring oil prices and Chinese economy.

The reality is probably that a falling EROEI and the end to cheap oil after ~2005 made our finance capital investment growth less profitable. But this fundamental shift has been hidden through easy central bank credit and fiat currency generated on demand to pay interest on a growing mountain of unpayable debt, with a shift of debt from private hands to public, such as away from Wall Street toward Fed and US Treasury obligations. Now we see the world’s major central banks each independently creating their own fiat currencies to preserve a trading advantage, led by the dollar as the world’s standard reserve currency.

…click on the above link to read the rest of the article…

Peak Oil: The Next Steps Pt 1

May 29, 2016

Peak Oil: The Next Steps Pt 1

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I ended last week’s post by explaining the significance of getting all of the facts about our energy supply future as a first step.

Before deciding whether or not to accept the realities of a depleting finite resource and the impact this will have on our society—or ignoring it for whatever comforting alternative explanations suit one’s needs—understanding the implications and those realities is a more beneficial approach.

THE FIRST CHALLENGE IS NOT THE ONLY ONE

The corollary to an appreciation for what a less adequate, less affordable, and less available supply of our primary energy resource is the transition itself. That effort will not happen via magic. Not only will the research, development, and planning require more effort, time, and contributions than we’re likely considering now, putting everything into place is no easy assignment, either.

Just to keep things interesting, the transition from an oil-based industrial economy to Whatever-Plan-B-Will-Be will have to be achieved using that same declining measure of supply to design and construct and transport and put into place the infrastructure we’ll need to support and maintain this as yet unidentified and not-planned-for-yet Plan B, thus making less available to us for all of our ‘normal’ demands and needs, creating its own set of problems. We’re talking about using a lot of declining energy supplies that’s a lot more expensive, over the course of a lot of years to put into operation a lot of new industrial and economic and civic foundations to (we hope) enable us to maintain some semblance of growth and prosperity—all while using new energy resources that simply will not be as efficient or inexpensive or dependable as oil has been.

…click on the above link to read the rest of the article…

EIA’s Annual Energy Outlook and the Seneca Cliff

May 19, 2016

EIA’s Annual Energy Outlook and the Seneca Cliff

The scenario above shows an Oil Shock Model with a URR of 3600 Gb and EIA data from 1970 to 2015 and the Annual Energy Outlook (AEO) 2016 early release reference projection from 2016 to 2040. The oil shock model was originally developed by Webhubbletelescope and presented at his blog Mobjectivist and in a free book The Oil Conundrum.

The World extraction rate from producing reserves must rise to 15% in 2040 to accomplish this for this “high” URR scenario. This high scenario is 100 Gb lower than my earlier high scenario because I reduced my estimate of extra heavy oil URR (API gravity<10) to 500 Gb. The annual decline rate rises to 5% from 2043 to 2047 creating a “Seneca cliff”, the decline rate is reduced to 2% by 2060.

blogchart/

The scenario presented above uses BP’s Energy Outlook 2035, published in Feb 2016. This outlook does not extend to 2040, maximum output is 88 Mb/d in 2035 at the end of the scenario. This scenario is still optimistic, but is more reasonable than the EIA AEO 2016. Extraction rates rise to 10.6% and the annual decline rate rises to 2.5% in 2042 and is reduced to under 2% by 2053.

A problem with the BP Outlook is the expectation that US light tight oil (LTO) output will rise to 7.5 Mb/d from 2030 to 2035, the BP forecast for US LTO from 2013, 2014, 2015, and 2016 is shown below.

blogchart/

A more realistic forecast would be a peak of 6 Mb/d in 2022 with output declining to 3 Mb/d by 2035. The scenario below shows roughly what World output might be with this more realistic, but still optimistic scenario. There is a plateau in output at 85 Mb/d from 2025 to 2030 with annual decline rate peaking at 2.1% in 2044 and then falling under 2% per year from 2048 to 2070.

blogchart/

…click on the above link to read the rest of the article…

Peak Oil: Where To Begin?

May 18, 2016

Peak Oil: Where To Begin?

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The unpleasant truth now and soon is that the ready supply of oil and gas which we almost always take for granted [the occasional price spike notwithstanding] is on its way to becoming not-so-ready. A host of factors now in place are steadily converting possibility into likelihood. Thinking that we’ll just implement a few crash programs to straighten out that potential mess is a nice thought, but we simply do not have the means to make that happen—not the technological capabilities, not the personnel, not the industries, not the leadership … yet. Clearly, we do not have enough time to do it all with effortless ease and minimal disruptions.

The farther we continue to travel down that path which relies on fossil fuels to sustain us rather than on a new one marked “new future with new and necessary alternatives”, the longer and more difficult will our backtracking be. What supplied us on the front part of the journey will no longer be there for us on the ride back. We’re going to have to create entirely new systems and infrastructures and modes of production and transportation—or at the very least re-build extensively—in order to adapt to new sources of energy. So relying on current conditions and practices and customs and tinkering only along the edges simply won’t work because we are going to be dependent on entirely different energy resources.

A recent article highlighted the fact that many oil producers are continuing production efforts even though they are operating at a loss. Many factors obviously contribute to such an incongruous decision, chief among them the costs associated with resumption. How long should we expect those trends to continue?

…click on the above link to read the rest of the article…

Peak Oil: Are We Not Better Than This? Pt 7

May 14, 2016

Peak Oil: Are We Not Better Than This? Pt 7

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I began last week’s post with a variation of these questions:

How do optimistic projections from ExxonMobil’s “The Outlook for Energy: A View to 2040” report—which I highlighted in that post—square themselves in the face of the oil production challenges suggested by the news excerpts which were also included in that piece? How long do those opposed to climate change and peak oil implications dance away from the unpleasant truths?

What is the benefit beyond avoiding painful discussions today? At what point do those contrarian viewpoints give way to a recognition that there is more than enough evidence already in play to make those challenges both very real and quite formidable now?

How does postponing not just acknowledgment but any and all efforts to come to mutual understandings and a commitment to work cooperatively in addressing these matters make it any easier or better for anyone?

At what point does the single-minded pursuit of any and all efforts to oppose, deny, or obstruct the efforts of one’s political opponents give way to a recognition that repeatedly shooting oneself in the foot has limited benefits? A question I’ve raised numerous times in the past is just as relevant today: if you have to mislead, misinform, distract, omit, or even lie outright to support your opposing viewpoints or policy proposals, how valid are they to begin with?

What’s the point? What happens if you “succeed”?

Today’s reality about fossil fuels—oil in particular—and production thereof is no different than it was several months ago and no different than it will be in the days ahead: it is still a finite resource. Production of conventional crude oil, responsible for most of our technological marvels and economic progress over the course of a century-plus, peaked a decade ago.

…click on the above link to read the rest of the article…

Peak Oil: Are We Not Better Than This? Pt 6

May 7, 2016

Peak Oil: Are We Not Better Than This? Pt 6

I suggested at the outset of this series that I did not want it to turn into yet another exercise in mocking those who do not accept the implications of peak oil. A legitimate argument could be made that I’ve failed in that objective.

I view the tone adopted in a number of comments I’ve offered not as mocking so much as it is an attempt to point out that there is a communication problem emanating from the Right [not a news bulletin], and by doing so in the manner I’ve chosen—more wry, in my mind, than mockery—I’m trying to suggest that “the opposition” consider how their tactics and failure to substantiate their positions carries risks for them as well.

Actions and words create impressions and responses and outcomes. If the objective of one’s behavior—individually or in abiding by the expectations of one’s group—is to produce a satisfactory objective however defined or relevant to the issue, ignoring the impact on those who do not share the same considerations, values, or goals is a risk rarely considered to the degree necessary.

Reality will not be impressed by efforts to ignore it or deny its impact. Uttering statements as if their mere appearance online is sufficient to refute opposing viewpoints cannot sustain itself as a strategy for much longer. What Happens Then?

It may not be a message many wish to hear, but when it comes to peak oil and climate change—among other critical issues of at least national scope—we are all in this together.

…click on the above link to read the rest of the article…

Peak Oil: Time To Get Serious Pt 4

May 4, 2016

Peak Oil: Time To Get Serious Pt 4

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A fossil fuel-driven-and-made-possible life is all any of us have ever known. There are virtually no aspects of commerce, leisure, transportation, or consumption which do not depend in some part on inexpensive, readily-available and easily-produced fossil fuels. That is most certainly not going to change dramatically overnight, but the situation we’ll soon be facing simply isn’t going to get any better if all we’re counting on for many more years is even more inexpensive, readily-available and easily-produced fossil fuels.

So what to do? Do we want a voice in the solutions or not?

Who among us wants even more problems and worries to contend with now? Plates are still full and then some. For issues like peak oil—where it’s not at all clear that problems with fossil fuel supplies exist today or tomorrow or next month—that challenge very quickly slides down our list of priorities.

Aided by determined efforts to shade the truths about current and future production challenges makes it that much easier to pay no attention at all to what a declining base of our primary energy source might mean for all of us.

All duly noted and a perfectly reasonable determination to make … today. The underlying concerns voiced by proponents of peak oil and its impact remains unchanged notwithstanding. A future with diminishing fossil fuel resources—our future, more specifically—is going to be so different and in so many ways, and so much more constrained by that fact, it’s unlikely anyone can legitimately wrap their mind around that eventuality at this moment.

…click on the above link to read the rest of the article…

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