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The Origins of Peak Oil Awareness

The scientific study of peak oil began in the 1950′s, when Shell geophysicist M. King Hubbert reported on the evolution of production rates in oil and gas fields. In a 1956 paper Hubbert suggested that oil production in a particular region would approximate a bell curve, increasing exponentially during the early stages of production before eventually slowing, reaching a peak when approximately half of a field had been extracted, and then going into terminal production decline.

Hubbert applied his methodology to oil production for the Lower 48 US states and offshore areas. He estimated that the ultimate potential reserve of the Lower 48 US states and offshore areas was 150 billion barrels of oil. Based on that reserve estimate, the 6.6 million barrels per day (bpd) extraction rate in 1955, and the 52.5 billion barrels of oil that had been previously produced in the US, Hubbert’s base case estimate was that oil production in the US would reach maximum production in 1965. He also estimated that global oil production would peak around the year 2000 at a maximum production rate of 34 million bpd.

Hubbert calculated a secondary case that if the US oil reserve increased to 200 billion barrels (about which he expressed doubts), peak production would occur in 1970, a delay of five years from his base case. Oil production in the US did in fact peak in 1970, so Hubbert is widely credited with precisely calling the US peak, but few know that he was actually skeptical that the peak would take place as late as 1970.

The US has now surpassed Hubbert’s most optimistic estimate for US oil production. Through 2014, cumulative US production stands at approx. 215 billion barrels, with a remaining estimated proved reserve of 48.5 billion barrels (but with the caveat that this reserves estimate is based on crude prices near $100/bbl).

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

Whatever Happened to Peak Oil?

September 16, 2015

Whatever Happened to Peak Oil?

Whatever happened to “peak oil” – the assertion that the rate at which oil is extracted from the Earth is nearing a maximum or peak level? With falling oil and gasoline prices and a boom of new oil development in the United States and elsewhere, concern about global oil supplies have faded from public view.

But have concerns about peak oil really disappeared? What key factors have changed in the oil industry, and what challenges remain? Are we entering a new era of “abundance” or are the risks of the world’s dependence on oil rising?

Guests:

Jeremy Gilbert – principal, Barrelmore Ltd; former chief petroleum engineer, BP
John Kingston – president, McGraw Hill Financial Global Institute; former director of news, Platts (energy information division of McGraw-Hill)
Steve Andrews – co-founder, Association for the Study of Peak Oil USA

Key Questions:

Cost: What are the trends regarding costs to maintain global oil production now and in the future? Are costs of developing new oil rising or are fracking and other technologies driving production costs down? Do falling prices mean that oil is getting cheaper?

Demand: What are the trends regarding global oil demand? Will oil consumption peak because of a peak in demand as much as supply? How are demand and supply interconnected?

Supply: What is the outlook for global supply? How will trends regarding costs and price volatility affect global supply? How much does price affect the outlook for supply? Do prices need to keep rising to maintain supply?

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

Syria peak oil weakened government’s finances ahead of Arab Spring in 2011

September 14, 2015

Syria peak oil weakened government’s finances ahead of Arab Spring in 2011

While the attention of the world is on the refugee crisis we need to look at the causes of this mass exodus.

Fig 1: Refugees walking on Hungarian motorway towards Austria in Sep 2015

In May 2013 the Guardian had an article “Peak oil, climate change and pipeline geopolitics driving Syrian conflict” http://www.theguardian.com/environment/earth-insight/2013/may/13/1

In March 2015, a group of researchers led by climatologist Colin Kelley (University of California) published a study in the Proceedings of the National Academy of Sciences with the title “Climate change in the Fertile Crescent and implications of the recent Syrian drought”

“Between 2006 and 2009, the people of Syria suffered during the most severe drought that country has experienced since the beginning of its instrumental record. As water became scarce, crops failed and cattle died on a huge scale. As many as 1.5 million Syrians, out of a population of just over 20 million, moved from the countryside to the outskirts of already overflowing cities”
http://www.historicalclimatology.com/blog/is-climate-change-behind-the-syrian-civil-war

Fig 2: Sand tornado in Syria in September 2014

http://news.nationalgeographic.com/news/2015/03/150302-syria-war-climate-change-drought/

In this article we analyse to which extent peak oil contributed to a fiscal deterioration so that the Syrian government was forced to introduce unpopular policies (tax increases, removal of fuel subsidies, increasing cost of cement etc) which contributed to the unrest.

Oil production, exports and consumption

Fig 3: Syria oil production, exports and consumption

We see several tipping points

1996: peak production
2001: Crude oil exports start to drop sharply, albeit cushioned by rising oil prices
2006: Petroleum imports begin to increase at higher rate
2008: Increasing petroleum consumption approaches level of declining oil production
2011 Arab spring reaches Syria in March
2011 International oil companies suspend operations
oil embargo http://www.sanctionswiki.org/Syria
2012: Oil production falls precipitously as government loses control over Eastern oil fields.
2014: Oil production has completely collapsed

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

Jeffrey Brown: To Understand The Oil Story, You Need To Understand Exports

September 14, 2015

Jeffrey Brown: To Understand The Oil Story, You Need To Understand Exports

Peak Oil is very much alive

Despite the attention-grabbing economic volatility that is grabbing headlines, it’s important to keep our eye on the energy story firmly in focus. This is especially true as the headlines we regularly read about Peak Oil being dead ” are “manifestly false” according to this week’s podcast guest, petroleum geologist Jeffrey Brown.

As concerning as the fact that global oil production has plateaued over the past decade, despite trillions invested in trying to goose it higher, are Brown’s forecasting model for oil exports. His Export Land Model shows how rising internal consumption can swing (and has swung) countries from major exporters to permanent importers within a dizzyingly short period of time:

The crucial issue to understand about what has happened after 2005 is that we’ve had a very large increase in global gas production and natural gas liquids, but a much slower increase in crude plus condensate. So, what I think has happened is the actual crude oil production has basically flatlined while the liquids associated with natural gas production, condensate and natural gas liquids, have continued to increase. So, we ask for the price of oil, we get the price of Brent or WTI; but when you ask for the volume of oil, you get some combination of crude, condensate, natural gas liquids, biofuels. So, the fact is that substitution has worked and is working in that they’re bringing on alternative substitutes, but they’re only partial substitutes. The actual, physical volume of crude oil production has probably been flat to down since 2005. Over the past ten years, it has taken us trillions of dollars, basically, to keep us on an undulating plateau in actual crude oil production. What happens going forward?

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

Peak Oil Ass-Backwards (part 2): Crashing OilPrices Aren’t Due to an Oil Glut But to DemandDestruction and Peaking Credit

September 14, 2015

Peak Oil Ass-Backwards (part 2): Crashing Oil Prices Aren’t Due to an Oil Glut But to Demand Destruction and Peaking Credit

As I began to mention at the end of the first part of this three-parter, I’ve only just recently come to the conclusion that oil prices aren’t going to have a tendency to rise due to the tightening of supply imposed by peak oil, but to depreciate. This of course flies in the face of the common logic of supply and demand, but when factoring in the method by which the majority of our money is created, a deflationary effect can be seen to come into play. This has taken me an absurdly long time to clue into, for although I’d steadfastly amassed a bunch of pieces (various information), I hadn’t realized they were actually all part of the same puzzle.

With peak oil and fractional-reserve banking being the first two pieces of this puzzle, the third piece that I needed to factor in (which oddly enough I’d already written about) is the fact that money is a proxy for energy. As I wrote in a previous post, Money: The People’s Proxy,

Simply put,… the core function of money is that it enables us to command energy – the energy used to move our bodies with, to power our machines, to feed to domesticated animals whose energy we then use to do work (which nowadays generally means entertaining us), etc. In other words, it might be tough and/or inconvenient, but one can get by without money. You can’t get by without energy.

In other words, at their core, our economies don’t run on money, they run on energy. Moreover, it doesn’t even really matter what you use as your form of currency – coins, pieces of paper, gold, zero and one digibits, conch shells, whatever – because if you don’t have the energy to perform the work and/or create the products your society expects, the money is virtually useless and worthless.

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

PEAK OBEDIENCE

September 4, 2015

PEAK OBEDIENCE

Warnings about Peak Oil have circulated widely in recent years, and if accurate, they are important. Peak oil, however, pales in comparison to something that’s happening right in front of us… and something that is a good deal more dangerous: Peak Obedience.

If that concept strikes you as odd, I can understand why: We’ve all been living inside of an obedience cult. (And I choose these words carefully.)

In our typical “scary cult” stories, we find people who have given up their own functions of choice and who then do crazy things because they are told to by some authority. While inside their cult, however, it all makes sense; it’s all self-reinforcing.

So, inside a cult of obedience, obedience would seem proper; it would seem righteous; and more than anything else, it would seem normal. And I think that very well describes the Western status quo.

Obedience, however, should not seem normal to us. Obedience holds our minds in a “child” state, and that is not fitting for any healthy person past their first few years of life. It also presupposes that the people we obey have complete and final knowledge; and in fact, they do not: politicians, central bankers, and the other lords of the age have been wrong – obviously and publicly wrong – over and over.

So, obedience is not a logical position to take. But we all know why we take it; and that reason is fear. The mass of humanity obeys because they are afraid to do otherwise. All the “philosophy of governance” explanations are merely attempts to distract us from the truth: people believe they’ll be hurt if they don’t obey.

We are taught not to think in such stark terms, of course. Those “philosophy of governance” explanations give us reasons to believe that obedience is the good and heroic thing to do. Still, we know the truth.

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

A Transition for Humanity Into the Post-Petroleum Age: 10 Commandments.

September 1, 2015

A Transition for Humanity Into the Post-Petroleum Age: 10 Commandments.

On her blog, “Our Finite World”, Gail Tverberg outlines the likely prognosis for humanity, and our best possible choices, as we run up against the Limits of Growthhttp://ourfiniteworld.com/2014/02/17/reaching-limits-to-growth-what-should-our-response-be/ The case she unveils is, to say the least of it, sobering, but I am reminded of an article that I wrote some while ago http://scitizen.com/future-energies/the-10-commandments-guidelines-to-surviving-in-a-post-peak-oil-world_a-14-3709.html, which, with a few amendments and reconsiderations, I now re-post here. The original set of 10 commandments provided a simple set of rules for members of a small community to live in reasonable harmony with one another, and that is essentially the requirement for an oil-dependent society that has necessarily fragmented into smaller communities, once its supply of oil has been severely curtailed. At first sight this does seem like a prognosis of “doom and gloom”, as indeed it will be if there is no sensible scale-down of oil-fuelled activities. Indeed, a “wall” of fuel dearth will suddenly appear, and we will drive straight into it; or really be abandoned by the wayside of the petrol-fuelled journey of globalisation. So, here are some suggestions (not rules or commandments, but logical consequences and prospects for the era that will follow down the oil-poor side of Hubbert’s peak). Overall, it will be necessary to curb our use of oil in the same amount as its rate of declining supply. The world’s major 800 oil fields are showing an average production decline rate of -5%/year http://aspousa.org/peak-oil-reference/peak-oil-data/oil-depletion/ which determines the size of the “hole” that must be filled by a matching production rate of unconventional oil, just to preserve the status quo, let alone to permit a growth in supply. Clearly the depletion-rate will not be precisely linear, but certain courses of action are indicated.

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

Peak Oil Ass-Backwards (part 1): PeakOil, Meet Fractional-Reserve Banking

September 1, 2015

Peak Oil Ass-Backwards (part 1): PeakOil, Meet Fractional-Reserve Banking

(image by Viktor Hertz)

If the ongoing crash of oil prices over the past year – and now the stock market crashes of last week – have continuously taught me one thing, that would be that I’ve got very little clue regarding the economic implications ofpeak oil. To explain this I’ll have to take a circuitous, roundabout route here, but if you’ve been as afflicted as I’ve been then you might find the following a bit illuminating.

For starters, even though I learned about peak oil in 2005, fractional-reserve banking in 2006, and pretty much instantly proceeded to put two and two together, I still ended up falling for what I might unfairly call the “peak oil orthodoxy.” I’m not sure where I first came across this “orthodoxy” I speak of, but an example as good as any – and maybe even better than any – would be that of author and a former Chief Economist at CIBC (one of Canada’s Big Five banks), Jeff Rubin.

As Rubin explained it in his first of two peak oil books, because peak oil implies a curtailment on the supply of oil, and since the demand end of a growing economy is by definition increasing, the notion of supply and demand imply that prices will head upwards if supply is limited. Because of this, upon oil’s peak its price will eventually rise to such ungodly high levels that it’ll become unaffordable by many. Following that, its demand will therefore peter out, and so thanks to the new glut in supply the price will crash to equally ungodly low levels. Once things settle down and the consumer can once again afford the now lower-priced oil, the process will repeat itself since the new (and increasing) demand will once again bump up against the limits imposed by peaking oil supplies. As a result, another crash will occur. On and on the process repeats itself, but with the higher price spikes followed by higher troughs.

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

US Oil Production Nears Previous Peak

August 31, 2015

US Oil Production Nears Previous Peak

The EIA’s Monthly Energy Review came out a couple of days ago. The data is in thousand barrels per day and the last data point is July 2015.

US consumption of total liquids, or as the EIA calls it, petroleum products supplied, reached 20,000,000 barrels per day for the first time since February of 2008.

Something I never noticed before, consumption started to drop in January 2008, seven months before the price, along with world production, started to drop in August 2008. This had to be a price driven decline. Could the current June and July increase in consumption be price driven also?

US Production was down 96,000 barrels per day in July to 9,503,000 bpd. That is 190,000 bpd below the March level of 9,693,000 bpd.

Here is what the last 50 years of US production looks like. The peak was in 1970 or 1971, depending on what you call the peak.

In March 2015 we were still 351,000 barrels per day below the peak month of 10,044,000 bpd in November of 1970. But right now we are headed in the wrong way to break that record. In July we were 541,000 bpd from that record. Right now the 2015 average, January through July, is 9,534,000 bpd. That is 103,000 barrels per day below the 1970 average. But the 2015 average is likely to get smaller as the year plays out.

I have another chapter from Peter Goodchild’s Tumbling Tide: Population, Petroleum, and Systemic Collapse. I really like this book. The author comes closest to matching my sentiments than anyone I have read to date.

Tumbling Tide Chapter 10

The Pollyanna Principle

The problem of explaining peak oil does not hinge on the issue of peak oil as such, but rather on that of “alternative energy.” Most people now have some idea of the concept of peak oil, but it tends to be brushed aside in conversation because of the common incantation: “It doesn’t matter if oil runs out, because by then everything will be converted to [whatever] power.” Humanity’s faith in what might be called the Pollyanna Principle—the belief that everything will work out right in the end—is eternal.

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

Nicole Foss Talks Energy Industry Issues and Oil Price Collapse

August 30, 2015

Nicole Foss Talks Energy Industry Issues and Oil Price Collapse

Part I- Energy Industry Issues

The Doomstead Diner site blurb:

Coal Industry Collapse-Carbon Sequestration
One of the biggest effects we see lately is a collapse in commodity prices, through all sectors. Most intriguing to me is the collapse in coal prices, since coal is used in so many places for the production of electricity. Several large coal mining companies have gone into bankruptcy. How will this affect electricity production as we move along here? Q2: Will the efforts for Carbon Sequestration, Carbon Credits and Taxation have any meaningful effect on this dynamic?

Oil Price Collapse
Many people thought the price collapse in Oil that came at the end of 2014 was unforseen and unknowable. In fact many people in the peak oil community believed for a long time the price of oil would spiral inexorably upward. Some of us here have argued otherwise, that credit constraints would drive the price downward. Steve did the best job of this, and actually pegged the price crash for oil to the month more than two years in advance with his infamous Triangle of Doom charts. Steve, can you tell us how you were able to pull off that stunt? Q: John Mauldin and other shills for the Oil industry assure us that better and cheaper drilling technology will bring up all the oil we need and keep the industry solvent. How realistic is this?

Relying on the Government Will Make Climate Change Worse

August 21, 2015

Relying on the Government Will Make Climate Change Worse

Twenty-five years ago, existentialism was a hot piece of intellectual property.

A literate public was buying up such books as William Barrett’s Irrational Man: A Study in Existential Philosophy and Viktor Frankl’s From Death Camp to Existentialism (later republished under the title Man’s Search for Meaning).

American psychologists were being introduced to the movement by a brilliant anthology entitled Existence: A New Dimension in Psychiatry and Psychology, edited by Rollo May and others. The 1958 International Congress of Psychotherapy chose existential psychology as its theme.

And the twentieth-century existentialists themselves were all still alive: Heidegger, Sartre, Camus, Martin Buber, Gabriel Marcel and Paul Tillich.

Today all six men are dead and, from all appearances, so is the movement for which they were known.

But that’s a shame. Especially if you care about climate change and peak oil.

Do it yourself

Here’s why we need existentialism so much today: It encourages people to listen to their own conscience and to take action themselves. It’s against cynicism and quietism.

A central proposition of existentialism is that the most important consideration for individuals is that they are individuals — independently acting and responsible, conscious beings — rather than an amalgamation of the labels, roles, stereotypes, definitions, or other preconceived categories into which they might fit.

The actual life of individuals is what constitutes their true essence. Thus, human beings, through their own consciousness, create their own values. People are defined by how they act and are, thus, responsible for their actions.

Freedom, from an existential perspective, cannot be separated from responsibility.

Existentialism teaches that we alone are responsible for our choices and the consequences of those choices.

– See more at: http://transitionvoice.com/2015/08/relying-on-the-government-will-make-climate-change-worse/#sthash.NQc1gwK8.dpuf

True Believers

August 18, 2015

True Believers

There is a special species of idiot at large in the financial media space who believe absolutely in the desperate and tragic public relations bullshit that this society churns out to convince itself that the techno-industrial high life can continue indefinitely, despite the mandates of reality — in particular, the fairy tales about oil: we’re cruising to energy independence… the shale oil “miracle” will keep us driving to WalMart forever… our wells doth overflow as if this were Saudi America… don’t worry, be happy…!

Such a true believer is John Mauldin, the investment hustler and writer of the newsletterThoughts From the Frontline, who called me out for obloquy in his latest edition. After dissing me, he said:

“I have written for years that Peak Oil is nonsense. Longtime readers know that I’m a believer in ever-accelerating technological transformation, but I have to admit I did not see the exponential transformation of the drilling business as it is currently unfolding. The changes are truly breathtaking and have gone largely unnoticed.”

Mauldin is going to be very disappointed when he discovers that the vaunted efficiencies in shale drilling and fracking he’s hyping will only accelerate the depletion of wells which, at best, produce a few hundred barrels of oil a day, and only for the first year, after which they deplete by at least half that rate, and after four years are little better than “stripper” wells. The PR shills at Cambridge Energy Research (Dan Yergin’s propaganda mill for the oil industry) must have pumped a five-gallon jug of Kool-Aid down poor John’s craw. He believes every whopper they spin out — e.g. that “Right now, some US shale operators can break even at $10/barrel.”

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

Europe oil consumption peaked 2005

August 11, 2015

Europe oil consumption peaked 2005

This is the 3rd article using data from the BP Statistical Review published in June 2015

Fig 1: Western Europe oil consumption, oil prices in $2014

Total oil consumption peaked 3 times at around 14 mb/d:

(1) In 1973, the 1^st oil crisis which was triggered by the Yom Kippur war. The following OPEC embargo was successful because US oil production had peaked 3 years earlier so the US could not increase production to offset OPEC’s reduction

(2) In 1979, the 2^nd oil crisis which was caused by Iranian oil production peaking in the mid seventies and the following Iranian revolution, resulting in a global recession in 1982

(3) In 2005, at the beginning of the 3^rd oil crisis when global crude oil production had a peak and declined until 2007

3 main oil consumers Germany, UK and France

The oil crises in the 70s brought down consumption by 2 mb/d (oil prices increased 10-fold) through both energy conservation and a recession.

Fig 2: Oil consumption Germany, UK and France

Consumption never went back to 1973 levels but peaked in 1998 and then declined by 0.6% pa until 2006 after which consumption declined by 1.7% pa, mainly due to drops in France and UK, while Germany reduced consumption irrespective of oil prices.

Fig 3: UK became net importer in 2006

Fig 4: UK debt and GDP

http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

UK debt started to increase more than GDP when oil production began to decline from its peak in 1999

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

Oil Shipments by Rail Declining

July 18, 2015

Oil Shipments by Rail Declining

Weekly oil shipments by rail can be found on the web at Weekly Carload Reports. And a summation of that data with charts can be found at Association of American Railroads Freight Rail Traffic Data.

Crude oil by rail basically started with the shale boom. Prior to that almost all oil was shipped by pipeline. Of course a lot of oil was trucked to the pipelines. The EIA says in the first seven months of 2014 8 percent of all us crude and refined products was shipped by rail. It looks like that percentage was increased somewhat in the second half of 2014.

Oil by rail, for the entire USA, peaked in August, September and October of 2014 and has declined since.

I have converted the weekly carloads to daily then converted carloads to barrels. There are about 700 barrels per carload. That gives us the average barrels per day by rail.

I have converted the weekly “daily average” to monthly “daily average” and plotted it against the North Dakota production. The EIA says: Between 60% and 70% of the more than 1 million barrels per day of oil produced in the state has been transported to refineries by rail each month in the first half of 2014, according to the North Dakota Pipeline Authority.

As we can see from this chart the volume of oil shipped by rail changes from month to month. The chart is barrels per day per month. The peak, for North Dakota, is December 2014. Oil by rail for the USA peaked about three months earlier.

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

EIA Confirms: Oil Production Peaked

July 13, 2015

EIA Confirms: Oil Production Peaked

U.S. oil production has peaked…at least for now.

That is the conclusion from a new government report that concludes that U.S. oil production is on the decline. After questions surrounding the resilience of U.S. shale and when low oil prices would finally cut into production, the EIA says the month of April was the turning point.

In its Short-Term Energy Outlook released on July 7, the EIA acknowledged that U.S. oil production peaked in April, hitting 9.7 million barrels per day (mb/d), thehighest level since 1971. In May, production fell by 50,000 barrels per day, and EIA says that it will continue to decline through the early part of next year. Still, the declines won’t be huge, according to the agency’s forecast – production will average 9.5 mb/d in 2015 and 9.3 mb/d in 2016.

The EIA figures move a little closer to what some critics have been saying for some time. Data from states like North Dakota and Texas had pointed to slowing production for months while EIA posted weekly gains in production figures for the nation as a whole. Along with several consecutive weeks of inventory drawdowns, EIA figures started to look a little suspect. The latest report is sort of an acknowledgement that those figures were a little optimistic.

Nevertheless, as the EIA affirms peak production in the second quarter of 2015, the fall in output over the next few quarters should bring supply and demand back into balance, or at least close to it. Supply exceeded demand by more than 2.5 mb/d in the second quarter of this year, but that gap will narrow to 1.6 mb/d in the third quarter and just 500,000 barrels per day in 2016.

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

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