Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on January 14, 2014
Fears of global oil crisis aired at Transatlantic Energy Security Dialogue
Jeremy Leggett column in Recharge magazine: “We are betting our entire national economic life on the hope — indeed the expectation — that the fracking boom will continue until well into the 2020s, and that, at a rate and cost we desire, significant amounts of ‘yet to be discovered’ oil will somehow be found to meet the demand.”
“If any of that proves incorrect, we have no plan, no alternative, and have given no thought to how we would respond in such a case.”The speaker is national-security expert Lieutenant Colonel Daniel Davis, a veteran of four tours of duty with the US Army in Iraq and Afghanistan. I am not a military man, but I worry just as much about the energy security of my own country as he does about his. In the UK, the government, the civil service and most of the big energy companies seem perfectly content to replicate the grand gamble under way in the US.
On 10 December, Lt Col Davis and I convened video-linked gatherings in Washington and London of people who share our concerns about the risk of a global oil crisis. We also invited key people who don’t, but who were interested in probing beyond the propaganda that energy-policy discourse seems to attract these days. [Two powerpoints, and Agenda / Participants / Transcript of first half are appended below.]
Those joining us included retired military officers, security experts, senior executives from a wide spectrum of industry and politicians of all the main parties, including two former UK ministers.
We began with a presentation by Mark Lewis, a former head of energy research at Deutsche Bank. With this background, you might expect Lewis to be a disciple of the conventional narrative of plenty in oil markets. Many of his peers are. But he suggested that three big warning signs in the oil industry point to a counter-narrative of impending problems for supply: high decline rates, soaring capital expenditure and falling exports.
The decline rates of all conventional crude-oil fields producing today are spectacular; the International Energy Agency projects output falling from 69 million barrels per day (bpd) today to just 28 million bpd in 2035. Current total global production of all types of oil is some 91 million bpd.
Consider the spending needed to try to fill that gap.
Capex for oilfield development and exploration has nearly trebled in real terms since 2000: from $250bn to $700bn in 2012. The industry is spending ever more to prop up production, and its profitability is reflecting this trend, notwithstanding an enduringly high oil price. Meanwhile, consumption is soaring in Opec nations. As a result, global crude-oil exports have been declining since 2005. It is difficult to conflate this data and not see an oil crunch ahead, Lewis concludes.
What of the recent addition of two million bpd of new oil production from American shale: the boom that has even been cast as a “game-changer” and a route to “Saudi America” by industry cheerleaders?
Geological Survey of Canada veteran David Hughes, who has conducted the most detailed analysis of North American shale of anyone outside the oil and gas companies, offered some sobering views on this. His data shows that spectacularly high early decline rates in existing shale gas and shale oil (more correctly known as tight oil) wells means high levels of drilling are needed just to maintain production. This problem is compounded because “sweet spots” become exhausted early in field development.
As a result, shale-gas production is already dropping in several key drilling regions, and production of tight oil in the top two regions is likely to peak as early as 2016 or 2017. These two regions, in Texas and North Dakota, comprise 74% of total US tight-oil production.
Like Lewis, Hughes believes that the oil and gas industry is leading the world by the nose towards an energy crisis.
In my book The Energy of Nations, I describe how military think-tanks have tended to side with those, like Lewis and Hughes, who distrust the cornucopian narrative of the oil incumbency. One 2008 study, by the German army, puts it thus: “Psychological barriers cause indisputable facts to be blanked out and lead to almost instinctively refusing to look into this difficult subject in detail. Peak oil, however, is unavoidable.”
This blanking-out extends to the mainstream media, which has enthusiastically echoed the mantras of the oil companies, to the extent that the very words “peak oil” have been positioned as a badge of baseless scaremongering.
We should never forget that in the run-up to the credit crunch, the financial incumbency deployed exactly the same PR tactics against those warning about the fragility of mortgage-backed securities.
Transatlantic Energy Security Dialogue: Agenda, Participants, Part One discussion edited transcript
The Three Witches: Decline rates, soaring capex, and falling exports. Presentation by Mark Lewis.
The “Shale Revolution”: Myths and Realities. Presentation by David Hughes.
12 Comments on "Fears of global oil crisis aired at Transatlantic Energy Security Dialogue"
Northwest Resident on Tue, 14th Jan 2014 10:31 pm
No surprise whatsoever that national-security expert Lieutenant Colonel Daniel Davis would be heralding the impending dangers of oil shortages and “lack of planning” for that eventuality. I’ve posted it here once or twice before, but now is a good time to do so again — a link to the 2010 Joint Operating Environment, a declassified version, put together by top military strategists who have the job of predicting future security threats to America. This document predicts an energy “shortfall” in 2015, and describes dire security-related consequences to America (social unrest, need for military/police responses on American soil, potential wars, etc..).
Despite the every worsening situation with fracking and oil extraction since 2010, there have been no further “official” military statements on the security threats of “energy shortfalls”. Which means to me — I interpret it this way — that the military has given due warning, and now they are and have been in full preparation. The fact that the military and police have been planning and are continuing to prepare for extreme social unrest should be obvious to objective person.
http://www.fas.org/man/eprint/joe2010.pdf
Thanks for the reminder, national-security expert Lieutenant Colonel Daniel Davis. We have been warned, again.
sparky on Tue, 14th Jan 2014 11:09 pm
.
And we will be , again and again !
it doesn’t matter , none is so deaf as those who plug their ears
GregT on Wed, 15th Jan 2014 12:17 am
Thank YOU Northwest Resident,
For pointing out what so many people absolutely refuse to acknowledge. There has been more than one study carried out by military think tanks around the world. Some of the biggest security threats to national sovereignties will be internal, in the forms of civil unrest, violence, and societal break downs.
Another report on Peak Oil that was approved for release by senior German military officers in November of 2010, put together by a team of analysts at the Bundeswehr Transformation Centre, a top level German military think tank.
http://www.energybulletin.net/sites/default/files/Peak%20Oil_Study%20EN.pdf
What is that noise that children make while plugging their ears? LA LA LA LA LA, I can’t HEAR you!
Kenz300 on Wed, 15th Jan 2014 12:40 am
Quote — “Capex for oilfield development and exploration has nearly trebled in real terms since 2000: from $250bn to $700bn in 2012. The industry is spending ever more to prop up production, and its profitability is reflecting this trend, notwithstanding an enduringly high oil price. Meanwhile, consumption is soaring in Opec nations. As a result, global crude-oil exports have been declining since 2005. It is difficult to conflate this data and not see an oil crunch ahead,”
————————–
The cost of oil keeps rising…………… and will continue to rise even more in the future……..
Oil has a virtual monopoly on transportation fuels…. that needs to end.
SilentRunning on Wed, 15th Jan 2014 12:50 am
Northwest Resident wrote:
>The fact that the military and police have been planning and are continuing to prepare for extreme social unrest should be obvious to objective person.
I’ve thought that myself as I’ve watched the militarization of the police forces – and otherwise inexplicable purchase of urban assault vehicles for local police forces.
Such vehicles would be useless against the stated objective of “preventing terrorism”. But they would serve admirably for crowd/riot control when the populace is no longer sedated by cheese doodles and reality TV
Makati1 on Wed, 15th Jan 2014 2:05 am
The US consumes about 70% of the prescription drugs manufactured in the world each year. The US consumes over $20 billion in liquor per year and $100 billion in beer. (Yes, those numbers are correct.) Then throw in the illegal ‘recreational’ drugs and you have a very stressed out populace kept docile by all of the above and the mindless drivel on TV, government handouts, etc..
What happens when those disappear? Oh yes, it will be very violent. Ditto in Europe and most Westernized cities around the world. And, the US has more guns than people. It will be interesting … and bloody.
Dave Thompson on Wed, 15th Jan 2014 2:52 am
The p,eople in charge know what we face as a whole. The system is set up with the idea of global potential crisis. In the U.S. The set up will be another war of some kind. May not be a conventional shooting war but more of the invisible enemy type that puts us in a state of fear. It will happen suddenly, come from seemingly nowhere, and cause the general population to regroup and morph into an economy of less is better, because things have changed now. If it works out the majority will live with next to nothing and the power, monied, elite will live protected under the guise of protecting all for your own good.
Northwest Resident on Wed, 15th Jan 2014 3:26 am
Makati1 — I’m hoping it won’t be too bad. I expect that we will be heavily policed with military units fresh from their experiences in Afghanistan and Iraq mixed in. All they have to do is cut gas/fuel deliveries to trouble areas. Then send in the spec ops. They’ve got communications locked down. Any open rebellions on American soil after collapse will have to be horse-mounted and deliver messages by pigeon. Meanwhile, American security forces will maintain adequate supplies of fuel, top notch communications and they will lock us down tight. That’s what I predict, and I’m an optimist!
Makati1 on Wed, 15th Jan 2014 10:54 am
Northwest … troops that are committing suicide at record rates? That cannot find jobs now? That cannot get Vet benefits/medical help? That have families that are also suffering under the same elites?
No, the few who might do as you say are too few to handle a country the size of the US that is armed. They cannot be in 300 cities at the same time.
They will not have to cut the electric as it will be down in the opening revolts. They will be at as much of a handicap as the rest of us. Are they going to man the oil refineries? Wells? Pipelines? The infrastructure that makes their lives possible too? They couldn’t do it in a 3rd world country the size of Texas that was not citizen armed. They retreated after 10+ years (Iraq) and are now retreating in Afghanistan after 12+years. They are outnumbered by at least 1,000 angry, armed citizens to 1 soldier who will be questioning their loyalty to their masters.
If you depend on them (the military) to keep you safe from your neighbors, think again. Your ‘flag waving patriotism’ is your weak point. When it comes to killing their fellow Americans, I see mass awals and deserting in all branches of the military.
Dragon Oil on Wed, 15th Jan 2014 3:36 pm
I am a geologist with 47 years experience in O&G. Figuring recoverable reserves from money hustlers and the media is insane. Neither has an attention span of more than a few hours. The O&G business is based on long term planning and performance. The bigger the planning entity, the longer term the planning — provided the planning is correct. Neither the money people or the media have ever been known as “long term planners” much less “good ones”. Thus endeth the lesson.
Newfie on Wed, 15th Jan 2014 5:07 pm
Dragon Oil, are recoverable reserves infinite ?
rockman on Wed, 15th Jan 2014 8:04 pm
Global oil production has increased from 71,954,000 bopd in 2005 to 74,644,000 bopd in 2012. But oil exports have declined 0.2% during the same time period. “It is difficult to…not see an oil crunch ahead,”. I suppose it depends upon how one defines a “crunch”. It seems me the crunch began when the world start paying 3X as much for oil as it was just 10 years ago. Add the trillions of $’s and thousands of lives spent on military adventures in oil producing regions in recent years I would say the crunch has already started…and with a passion.