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Peak Oil? Drivers—and Voters—Could Delay It for Years

Peak Oil? Drivers—and Voters—Could Delay It for Years

Investors and politicians have made their views clear about oil’s uncertain future. Consumers, not so much.

Drivers traverse the 405 freeway at night in California. The fate of the oil industry depends as much, or more, on consumers as it does on politicians and policymakers.

PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS

You might be filling up your tank a lot longer than BP thinks.

Ambitious green policies—from politicians and even the newly climate-conscious oil companies—suggest the world is moving at warp speed away from fossil fuels. But the transition might not be easy on consumers’ wallets, which is precisely why it could take a while.

The idea of “peak oil,” historically a reference to a fear that oil supply was running out, now means something entirely different. British energy giant BP suggested that oil demand might have already reached its apex in 2019 if one were to imagine a world that doubles down on policies that restrict carbon emissions.

Others are more conservative. Under its “stated policies scenario,” the International Energy Agency estimates that oil demand will peak around 2030 and plateau. That scenario takes into account announced policy measures and its own judgment of how attainable they seem. As the IEA acknowledges, though, some of the declared policies are far-reaching targets. Chris Midgley, head of analytics at S&P Global Platts, says his group projects the world is unlikely to reach peak demand until the late 2030s, noting that demand for petrochemicals in particular seems resilient.

Transportation plays a key role in the timing of that peak; it accounts for the largest share of petroleum consumption globally. For electricity to crowd out oil as a transportation fuel, governments must either provide taxpayer subsidies that make electric vehicles more affordable or place a cost on not switching over, such as even higher taxes at the pump.

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

 

The Very Real Possibility Of Peak Oil Supply

The Very Real Possibility Of Peak Oil Supply

Three months ago, British oil giant BP Plc. (NYSE:BP) sent shockwaves through the oil and gas sector after it declared that Peak Oil demand was already behind us. In the company’s 2020 Energy Outlook, chief executive Bernard Looney pledged that BP would increase its renewables spending twentyfold to $5 billion a year by 2030 and ‘‘… not enter any new countries for oil and gas exploration.’’ That announcement came as a bit of a shocker given how aggressive BP has been in exploring new oil and gas frontiers.

The investing universe appears to concur with BP’s sentiments, with the oil and gas sector consistently emerging as the worst performer over the past decade. The sector suffered yet another blow after the largest investor-owned oil company in the world, ExxonMobil (NYSE:XOM), was kicked out of the Dow Jones Industrial Average in August, leaving Chevron (NYSE:CVX) as the sector’s sole representative in the index.

Meanwhile, oil prices appear stuck in the mid-40s with little prospects of climbing to the mid-50s that most shale producers need to drill profitably.

Delving deeper into the global oil and gas outlook suggests that it’s peak oil supply, not peak oil demand, that’s likely to start dominating headlines as the quarters roll on.

Source: Bloomberg

Peak Oil Demand

When many analysts talk about Peak Oil, they are usually referring to that point in time when global oil demand will enter a phase of terminal and irreversible decline.

According to BP, this point has already come and gone, with oil demand slated to fall by at least 10% in the current decade and by as much as 50% over the next two. BP notes that historically, energy demand has risen steadily in tandem with global economic growth with few interruptions; however, the COVID-19 crisis and increased climate action might have permanently altered that playbook.

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

Peak Oil in South & Central America

Peak Oil in South & Central America

(1) Pre-Covid

..Fig 1: Oil production and peak years

Production peaked 2015 due to Venezuela’s production collapse. Brazil’s production has not yet peaked but is unlikely to offset Venezuela’s decline. All other countries together are on a bumpy production plateau for the last 20 years.

Fig 2: Oil consumption peaked 2014

Production vs. consumption

Sorted by net exports (difference between production and consumption)

Fig 3: Venezuela last peak was in 2006, since then net exports are down to 560 kb/d

The US imposed sanctions on Venezuela since 2006 but the oil sector was most hit by E.O. 13808  (Aug 2017) and 13850  (Jan 2019) in which PdVSA properties  under US jurisdiction were blocked and transactions prohibited. https://fas.org/sgp/crs/row/IF10715.pdf

Fig 4: Venezuela’s oil passing through the Indian Ocean?

7 months after leaving the JOSE terminal in Venezuela, crude oil tanker SAINT MARCELLA appeared at anchorage outside PORT LOUIS Mauritius, for servicing/rebunkering by TRESTA STAR. The destination shown by Vesselfinder was S.LINGGI in Malaysia (Straits of Malacca)

This Reuters article reports:
27 Nov 2020

Exclusive: Venezuela resumes direct oil shipments to China despite U.S. sanctions

Venezuela has resumed direct shipments of oil to China after U.S. sanctions sent the trade underground for more than a year, according to Refinitiv Eikon vessel-tracking data and internal documents from state company Petroleos de Venezuela (PDVSA).

Chinese state companies China National Petroleum Corp (CNPC) and its listed subsidiary PetroChina – long among PDVSA’s top customers – stopped loading crude and fuel at Venezuelan ports in August 2019 after Washington extended its sanctions on PDVSA to include any companies trading with the Venezuelan state firm.

The imposition of the sanctions was part of a push by the Trump administration to oust Venezuelan President Nicolas Maduro, but they failed to completely halt the South American nation’s oil exports or to loosen Maduro’s grip on power.

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

2020: The Year Things Started Going Badly Wrong

2020: The Year Things Started Going Badly Wrong

How today’s energy problem is different from peak oil

Many people believe that the economy will start going badly wrong when we “run out of oil.” The problem we have today is indeed an energy problem, but it is a different energy problem. Let me explain it with an escalator analogy.

Figure 1. Holborn Tube Station Escalator. Photo by renaissancechambara, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons.

The economy is like a down escalator that citizens of the world are trying to walk upward on. At first the downward motion of the escalator is almost imperceptible, but gradually it gets to be greater and greater. Eventually the downward motion becomes almost unbearable. Many citizens long to sit down and take a rest.

In fact, a break, like the pandemic, almost comes as a relief. There is suddenly a chance to take it easy; not drive to work; not visit relatives; not keep up appearances before friends. Government officials may not be unhappy either. There may have been demonstrations by groups asking for higher wages. Telling people to stay at home provides a convenient way to end these demonstrations and restore order.

But then, restarting doesn’t work. There are too many broken pieces of the economy. Too many bankrupt companies; too many unemployed people; too much debt that cannot be repaid. And, a virus that really doesn’t quite go away, leaving people worried and unwilling to attempt to resume normal activities.

Some might describe the energy story as a “diminishing returns” story, but it’s really broader than this. It’s a story of services that we expect to continue, but which cannot continue without much more energy investment. It is also a story of the loss of “economies of scale” that at one time helped propel the economy forward.

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

Why The World Can’t Quit Fossil Fuels

Why The World Can’t Quit Fossil Fuels

Have the recent pronouncements of the death of oil and reigning renewables been more rhetoric than reality? Yes and no. It’s true that peak oil is now closer than ever, and globally we’re seeing a more earnest effort to decarbonize than ever before, in large part thanks to green stimulus packages for post-COVID economic recovery. But for all of the advances that green energy is making around the world, it’s just not enough to achieve the kind of greenhouse gas emissions reductions necessary to curb the impact of climate change. In fact, it’s not even close. This week Axios reported on the “chasm between CO2 goals and energy production,” saying that “projected and planned levels of global oil, natural gas and coal production are way out of step with the kind of emissions cuts needed to hold global warming significantly in check.” This reporting is based on a brand new study. The second annual “Production Gap Report” is the continuation of a project developed in collaboration with the United Nations Environment Programme (UNEP). The 2020 report was put together by the UN, the Stockholm Environment Institute, the International Institute for Sustainable Development, the Overseas Development Institute and the climate think tank E3G.

The purpose of the report, which is modelled after and alongside UNEP’s Emissions Gap Reports is to synthesize and communicate “the large discrepancy between countries’ planned fossil fuel production and the global production levels necessary to limit warming to 1.5°C and 2°C.” And, as it turns out, that discrepancy is still quite large, even after the COVID-19 pandemic took a huge bite out of fossil fuel demand and the oil and gas industry as a whole.

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

Peak Oil is Suddenly Upon Us

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Planes stopped flying. Office workers stayed home. “Zooming with the grandkids” replaced driving to see family. A year of global hunkering yielded the sharpest drop in oil consumption since Henry Ford cobbled together the first Model T. At its worst, global demand dropped by a staggering 29 million barrels a day.

As a once-in-a-century pandemic played out, British oil giant BP Plc in September made an extraordinary call: Humanity’s thirst for oil may never again return to prior levels. That would make 2019 the high-water mark in oil history.

BP wasn’t the only one sounding an alarm. While none of the prominent forecasters were quite as bearish, predictions for peak oil started popping up everywhere. Even OPEC, the unflappably bullish cartel of major oil exporters, suddenly acknowledged an end in sight—albeit still two decades away. Taken together these forecasts mark an emerging view that this year’s drop in oil demand isn’t just another crash-and-grow event as seen throughout history. Covid-19 has accelerated long-term trends that are transforming where our energy comes from. Some of those changes will be permanent.

It’s often difficult to recognize civilization-sized shifts in behavior until after they’ve occurred. Until the pandemic none of the major oil forecasters had seen an imminent demand peak. The debate won’t end now, especially with signs that the pandemic will ease in 2021. But if we look back from here and see the oil peak clearly in the past, what follows will be the evidence of how the energy future snuck up on us.

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

Climate Change dominates news coverage at expense of other equally important existential issues

Climate Change dominates news coverage at expense of other equally important existential issues

Preface. I’ve noticed that in the half dozen science magazines and several newspapers I get practically the only environmental stories are about climate change. Yet there are 8 other ecological boundaries (Rockström 2009) we must not cross (shown in bold with an asterisk below) and dozens of other existential threats as well.

Global peak oil production may have already happened in October of 2018 (Will covid-19 delay peak oil? Table 1). It is likely the decline rate will be 6%, increasing exponentially by +0.015% a year (see post “Giant oil field decline rates and peak oil”). So, after 16 years remaining oil production will be just 10% of what it was at the peak.

If peak oil happened in 2018, then CO2 ppm levels may be under 400 by 2100 as existing and much lower emissions of CO2 are absorbed by oceans and land. The IPCC never even modeled peak oil in their dozens of scenarios because they assumed we’d be exponentially increasing our use of fossils until 2400. They never asked geologists what the oil, coal, and natural gas reserves were, assumed we’d use methane hydrates, and many other wrong assumptions.

Meanwhile, all the ignored ecological disasters will become far more obvious. They’re papered over with fossils today. Out of fresh water? Just drill another 1,000 feet down. Eutrophied water? Build a $500 million dollar water treatment plant. Fisheries collapsed? Go to the ends of the earth to capture the remaining schools of fish.

The real threat is declining fossil production, yet climate change gets nearly all the coverage. And I’ve left out quite a few other threats, such as “nuclear war” with 17,900 results since 2016 in scholar.google.com.

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

The decline of oil has already begun

In 1961, when I was 14, working on a science fair project, my father – a geologist and petroleum engineer – explained oil depletion to me. To grow production, oil companies were drilling deeper and deeper wells, developing technologies to extract more oil from spent fields, and would one day tap into shale rock and the Canadian tar sands to extract the dregs.

Oil Spill and Burnt Forest Action in Brazil. © Adriano Machado / Greenpeace
Greenpeace activists protest oil in front of the Palácio do Planalto, in Brasília. © Adriano Machado / Greenpeace

Oil, he explained, was a finite store of condensed organic matter from the bottoms of ancient seas. The industry had been extracting the highest quality and least expensive oil, but over time, the quality of oil would decline, the cost of finding it would increase, and decades in the future, perhaps in my lifetime, oil would no longer be economic to produce.

Although we would not technically see the end of all oil on Earth, the cost/benefit ratio would begin to favour other forms of energy. He told me then, in 1961, that oil companies should be developing other energy sources, that they should consider themselves in the “energy business,” not just the oil business.

Since my father knew all this 60 years ago, I suspect that virtually every engineer and manager in the oil industry knew the same facts. They knew oil was a finite resource, and would eventually run out. They also knew that burning oil created carbon emissions, which would heat the planet. In 1965, the American Petroleum Institute warned that CO2 pollution could “cause marked changes in climate” with “catastrophic consequence.”

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

Peak Oil Never Went Away

Peak Oil Never Went Away

Do you remember peak oil? It was all the rage a decade ago. Now, almost no one is talking about it. The funny thing is, the problem never went away. If anything, it’s gotten worse.

In this post, I take a deep dive into peak oil. I show you that the peak in the production of conventional crude oil isn’t some distant prospect. It’s already happened. What’s more, the model that correctly predicted this peak suggests that conventional oil production is about to collapse.

Yes, talk of peak oil went away. But the problem didn’t.

Peak oil — A brief history

If you use an exhaustible resource, you will eventually run out. This fact is so obvious that everyone understands it … at least in principle. But in practice, humans are shockingly bad at predicting resource exhaustion. Why? The reason, I believe, is that we don’t understand things that are big.

Here’s an example. Imagine you’re stuck on a desert island with a one-year supply of food. What would you do? You’d probably ration the food so it lasted as long as possible. Now imagine that you had 100-year’s worth of food? Now what would you do? To hell with rationing … you’d probably gorge yourself without worry. This change in behavior is important. Like the 1-year stock, the 100-year stock of food is still exhaustible. But it’s so large that it seems infinite. And so you behave like the resource is actually infinite.

When this behavior plays out in the real world, the results are always the same. We exhaust a seemingly inexhaustible resource — and we do so sooner than we expect. Here are a few examples. The bison of North American were once so plentiful that they seemed infinite. Yet by the end of the 19th century, only a few hundred were left.

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

 

Australia’s BP Kwinana refinery closure: peak oil context

Australia’s BP Kwinana refinery closure: peak oil context

Fig 1: BP is in peak oil mode

BP shuts down Kwinana refinery with 600 jobs expected to go, Commonwealth says no impact on fuel security

Fig 2: Kwinana refinery in Perth

Refining activities will wind down over the next six months, with the new [product import] terminal expected to open in 2022.

The Federal Government has expressed disappointment over the refinery closure.

Energy Minister Angus Taylor said …… the Government expected BP to deliver on its commitment to supporting workers during a challenging period, but that closure of the refinery would not impact Australian fuel supplies.

“We will ensure Australia maintains a sovereign refining capability to support local industry, meet our nation’s needs during an emergency, and protect motorists from future higher prices,” he said.

https://www.abc.net.au/news/2020-10-30/bp-shuts-down-kwinana-refinery-hundreds-of-job-losses-expected/12832372

The Minister’s statement seems to be wishful thinking.  3 refineries already closed in the last 8 years

2013 Shell Clyde refinery, 85 kb/d in Sydney

2014 Caltex Kurnell refinery, 125 kb/d in Sydney

2015 BP Bulwer refinery, 102 kb/d in Brisbane

The following graph shows the impact of these previous closures on crude and product imports:

Fig 3: Crude imports dropped and replaced by product imports
https://www.energy.gov.au/publications/australian-energy-update-2020

The growth in diesel consumption explains why the government was forced to invest $200 million in a competitive grants program to build an additional 780 ML of onshore diesel storage
Media release 14 Sep 2020
https://www.minister.industry.gov.au/ministers/taylor/media-releases/boosting-australias-fuel-security

Fig 4: After the Kwinana closure there will be only 3 refineries
https://www.festanks.com.au/crude-oil-refining-in-australia-infographic/

As BP made its announcement a crude oil tanker from UAE was in port.

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

Today’s Contemplation: The Coming Collapse VIII

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Chitchen Itza, Mexico (1986) Photo by author

Once again, a comment I posted in response to an article on The Tyee.

Where to begin? I realise this article is primarily about a federal political party and its future but there are two underlying issues that are discussed that need far more exploration and understanding if we are going to be projecting where a particular party or even government will be down the road (let alone the entire world).

If we are going to be discussing energy and Peak Oil then there is SO much more to bring into the conversation. Yes, politics plays a role (as it always does) but the topic is vastly wider than sociopolitics. It encompasses virtually everything in our complex, globalised industrial world. Everything. From the way we create potable water, to how we feed ourselves, to how we build and heat our homes (I’ve purposely focused on the three items we NEED to live…everything else is icing but just as dependent on energy, especially fossil fuels).

First things first. There is NO substitute for fossil fuels. At least not one that can sustain our current world the way it is configured. No, alternatives to fossil fuels cannot do it. They are not ‘clean’ as the mining, refinement, and manufacturing processes for them are environmentally damaging. They have a low energy-return-on-energy-invested (EROEI) and provide little ‘bang for the buck’. They cannot fuel many important industrial processes such as steel and concrete production. They depend very much on continued exploitation of fossil fuel, both upstream and downstream. They are NOT a panacea.

We are stuck with fossil fuels, until and unless we are ready and willing to give up probably 90% or more of what we consider ‘modernity’.

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

Forget Peak Oil Demand, Supply Crisis Could be Hitting First

Forget Peak Oil Demand, Supply Crisis Could be Hitting First

In today’s IEA’s annual World Energy Outlook 2020 report, the OECD energy watchdog states that it doesn’t see a peak oil demand before 2040, only a possible oil demand flattening. The energy agency repeats that oil demand is effected by COVID, but all scenarios show that oil demand has not peaked yet. The energy agency contradicts here the views currently being proponed by BP and others that oil demand has peaked already. The report bluntly states that after recovering from the “exceptional ferocity” of the COVID-19 crisis, world oil demand will rise from 97.9 million bpd in 2019 to 104.1 million bpd in 2040.

Even that the agency acknowledges that demand has been hit and is lagging behind 2019 levels, overall demand will increase, only the increase will be slightly slower than expected. The Paris-based agency, financed by the OECD governments, and lately known as a main proponent of energy transition and renewables, expects that a slower increase of oil demand the coming years will be caused by clean transport policies and surging renewable energy. At the same time the IEA also reiterates that demand for petrochemicals and global growth of long-distance transport will be leading to a net increase of oil demand until 2040.

It needs to be reiterated that several major factors are very unsure that could have a major impact on global oil demand growth. The current assessments are all taking into account a wide range of proposed and/or signed energy transition and net-zero emission government policies.

These will have an impact if fully implemented by all. Looking at the current situation, especially due to COVID-related economic issues, renewable and emission reduction policies could however become sidelined, delayed or put on ice. The need for a revamp of the global economies is clear, but choices will be made by respective constituencies without full focus on climate change and renewables.

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

U.S. Oil Production Has Already Passed Its Peak, Occidental Says

“It’s just going to be too difficult to replace the 2 million barrels a day of production that we’ve lost, and then to further grow beyond that,” Chief Executive Officer Vicki Hollub said Wednesday at the Energy Intelligence Forum. “Over the next three to four years there’s going to be moderate restoration of production, but not at high growth.”

Occidental is one of the biggest producers in the U.S. shale industry, which added wells at such a rate prior to the spread of Covid-19 that the country became the world’s top crude producer, overtaking Saudi Arabia and Russia, ushering in an era that President Donald Trump called “American energy dominance.”

U.S. oil production is stuck below it's pre-pandemic high

Shale’s debt-fueled expansion came to a juddering halt due to lower gasoline demand and oil prices, but also because of Wall Street’s increasing reluctance to fund growth at any cost. Shale operators are increasingly prioritizing cash flow and returns to investors over production growth.

Occidental, which vies with Chevron Corp. to be the biggest producer in the Permian Basin, has been forced to throttle back capital spending, lower growth targets and cut its dividend in a bid to save cash during the downturn. Its finances were already severely challenged by the debt taken on through its $37 billion purchase of rival Anadarko Petroleum Corp. last year.

Hollub said global consumption stands at about 94 billion barrels a day, and it will take a Covid-19 vaccine before it returns to 100 million barrels. Due to cutbacks around the world, supply and demand for oil will likely balance again by the end of 2021, she said.

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

Has oil peaked?

Last month, the world’s 4th largest oil company—BP—predicted that the world will never again consume as much petroleum as it did last year. So, have we finally hit peak oil? And if so, what does that mean for our economy and our world?

There was fierce controversy in the first decade of this century over claims by petroleum geologists and energy commentators that peak oil was imminent (I was a figure in that debate, writing several books on the topic). Most of those early claims were based on analysis of oil depletion and consequent supply constraints. BP, however, is talking about a peak in oil demand—which, according to its forecast, could fall by more than 10 percent this decade and as much as 50 percent over the next 20 years if the world takes strong action to limit climate change.

Source: PeakOilBarrel.com; production in thousands of barrels per day.

Numbers from the US Energy Information Administration’s Monthly Review tell us that world oil production (not counting biofuels and natural gas liquids) actually hit its zenith, so far at least, in November 2018, nearly reaching 84.5 million barrels per day. After that, production rates stalled, then plummeted in response to collapsing demand during the coronavirus pandemic. The current production level stands at about 76 mb/d.

Many early peak oil analysts predicted that the maximum rate of oil production would be achieved in the 2005-to-2010 timeframe, after which supplies would decline minimally at first, then more rapidly, causing prices to skyrocket and the economy to crash.

Those forecasters were partly right and partly wrong. Conventional oil production did plateau starting in 2005, and oil prices soared in 2007, helping trigger the Great Recession.

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

Welcome To Easter Island

Remember Easter Island? That place in the pages of National Geographic with the gigantic carved heads peeking up from grassy slopes?

Whether you recall it or not, you live there — in a manner of speaking.

Easter Island was colonized by the Rapanui, a particularly adept seafaring culture.  When they arrived, around the year 800 A.D., the island was a lush forested tropical paradise.

But eventually, according to researcher Jared Diamond in his bestseller Collapse: How Societies Choose to Fail or Succeed, they committed ecocide.

They cut down every single tree on their island. Eventually the people had no wood to burn in their cookfires. They had to resort to burning grass, a particularly inferior fuel source.

But before arriving at that sad state, the Rapanui cut numerous huge stone effigies called “moai” out of solid rock – some weighing 14 tons – sculpted them, and moved them great distances.

For whatever reason, the Rapanui tribe felt it was very important to make these giant stone heads, often at the cost of using trees as the means for transporting and erecting them.

Somewhere along the way I’m sure there were alert members of their society quietly wondering if maybe they should instead start protecting their dwindling groves and forests?

It’s tough to be “that person” who concludes that your culture is up to something completely non-sensical.  It’s tough to open up and call that stuff out — because most people don’t see the problem themselves, and can feel attacked if you bring it up.

In this story of Easter Island, the production of the gigantic stone moai were deemed more important than every tree on the island.    Hey, maybe that was the right call – I don’t know, I wasn’t there. But whether it made sense or not, it wasn’t a sustainable practice.

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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