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Page added on June 19, 2014
Michael Lynch: What Is Peak Oil?
Forbes contributor Don Blackmon initiated not a firestorm but a tempest in a teapot by suggesting that peak oil had been debunked by the work of M. A. Adelman, my mentor. Amazingly, there are many people who believe in peak oil, but are not particularly aware of the history of the theory and its evolution. (Among there many other shortcomings.)
Here’s the situation: there have long been warnings of scarcity, going back to the 19th century, primarily reflecting pessimism about petroleum resources which was rather unusual, given the relatively poor understanding of the geology at that type. A combination of hubris and Malthusian bias would seem to explain it.
M. King Hubbert wrote a paper in 1956 in which he noted that no particular pattern could be observed in energy production, but that for US oil, a bell curve seemed reasonably accurate, so he applied it to predict US production would peak between 1965 and 1970. When Nixon ended oil import quotas in 1970, US oil prices and drilling dropped, and production peaked in 1971, which convinced Hubbert (and his many disciples) that the bell curve was ‘scientific’ and valid. His other predictions fared much less well, but have tended to be overlooked.
Growing gap between discovery and production (Photo credit: Wikipedia)
In 1989, Colin Campbell revived the method, arguing that conventional oil production had peaked that year. Subsequently, he joined with Jean Laherrere to produce a series of consulting reports and then articles, making various claims for their ability to accurately estimate recoverable resources and production patterns. These proved to be incorrect, and they abandoned most of their early arguments, after initially deriding critics, like me, as not being ‘scientific’.
Their work became eclipsed by others, particularly in the US, who basically argued that production had (or soon would) peak because of difficulties in raising production. Given high prices, some argued that their argument were validated, even to the point of arguing that the loss of supply due to the 2003 Iraq war or the 2011 Libyan uprising were not very relevant.
Various other technical arguments have been advanced, including that decline rates were too high to allow production to increase, or that the energy needed to produce oil had become too great, but all have faced the problem of increasing discoveries and production. Future posts will address some of these issues, but the fact remains that there is no significant work suggesting that world oil production must peak any time in the foreseeable future, unless demand-side pressures are the cause.
30 Comments on "Michael Lynch: What Is Peak Oil?"
westexas on Thu, 19th Jun 2014 8:13 pm
Michael C. Lynch (August, 2009): ‘Peak Oil’ Is a Waste of Energy
http://www.nytimes.com/2009/08/25/opinion/25lynch.html?pagewanted=2&_r=3&emc=eta1
“Oil remains abundant, and the price will likely come down closer to the historical level of $30 a barrel as new supplies come forward in the deep waters off West Africa and Latin America, in East Africa, and perhaps in the Bakken oil shale fields of Montana and North Dakota. But that may not keep the Chicken Littles from convincing policymakers in Washington and elsewhere that oil, being finite, must increase in price.”
westexas on Thu, 19th Jun 2014 8:19 pm
The EIA shows that global dry gas production increased at 2.8%/year from 2005 to 2012, a 22% increase in seven years. What we don’t know is by what percentage that global condensate production increased from 2005 to 2012.
What we do know is that global Crude + Condensate (C+C) production increased at only 0.4%/year from 2005 to 2012. In my opinion, the only reasonable conclusion is that rising condensate production accounted for virtually all of the increase in global C+C production from 2005 to 2012, which implies that actual global crude oil production* was flat to down from 2005 to 2012, as annual Brent crude oil prices doubled from $55 in 2005 to $112 in 2012.
Basically, it appears likely that actual global crude oil production peaked in 2005, but global natural gas production–and associated liquids, condensates & NGL’s–have so far continued to increase.
Note that when we ask for the price of oil, we get the price of 45 or lower API gravity crude oil, but when we ask for the volume of oil, we get some combination of Crude + Condensate + NGL’s + Biofuels + Refinery Gains.
It’s analogous to asking a butcher for the price of beef, and he gives you the price of steak, but if you ask about how many pounds of beef he has on hand, he gives you total pounds of steak + roast + ground beef.
Normalized global gas, NGL and C+C production from 2002 to 2012 (2005 values = 100%):
http://i1095.photobucket.com/albums/i475/westexas/Slide1_zps45f11d98.jpg
Estimated normalized global condensate and crude oil production from 2002 to 2012 (2005 values = 100%):
http://i1095.photobucket.com/albums/i475/westexas/Slide2_zpse294f080.jpg
*45 or lower API gravity crude oil
MSN Fanboy on Thu, 19th Jun 2014 8:37 pm
If Micheal Lynch is indeed correct why did the IEAs prediction of increased production untill 2030 never happen?
Why is oil above 100 dollars a barrel? and the above question being validated now.
Why are we drilling for shale?
Why are we considering Kerogen and Tar sands? (Deep water)
Why did the IEA change its graph to “All liquids”?
Why is Economic growth failing for the 99%?
Why are the central banks printing + copy + pasting money.
Why havent i had a pay rise in 5 years yet the price of a loaf of bread has doubled?
Why are high decline rates now prefered over slow ones ( i mean wtf? )
Why are asset bubbles the only thing left standing in BAU?
Why did the Plateau start in 2005?
Why do we need 48 trillion+ investment in energy to 2030? (fossil fuel based)
Why as an add on are we spending more to get less? Especially if, as your mentor taught oil is as abundant and easy to get as ever… especially with “advanced technology”
Why bother arguing against the peak oil crowd if you already know your correct, and why not use factual data over snide assertions?
Yes im done.
rockman on Thu, 19th Jun 2014 8:47 pm
“…there is no significant work suggesting that world oil production must peak any time in the foreseeable future…”. First, a totally meaningless statement IMHO: Foreseeable future”…2 years?…8 years? 25 years? 50 years? So exactly how far can he see into the future? And you? And the next person you meet?
More importantly I’ve lost all patience with fools who consider the truly important issue is the date of Texas PO, US PO, global PO, Uranus PO, the great Spider Nebula PO, etc, etc.
I’m pretty sure most here understand the critical issue is the price/supply dynamic. I’m more than willing to let the dateaholics continue to play with themselves without me. LOL.
Davey on Thu, 19th Jun 2014 8:53 pm
Great take on world production, west tex, Short harps on the same issue from a slightly different angle with production costs and energy delivery. I like how you expose the built in exaggerations of the oil markets with the disconnect between price and all production components.
Dave Thompson on Thu, 19th Jun 2014 8:58 pm
This article is meant for all the folks that want to say “see peak oil is a hoax”, and by my straw poll of friends I know in general that is about 2/3.
Harquebus on Thu, 19th Jun 2014 9:36 pm
How long the Fed can keep printing is how long peak oil can be denied. The economy is a surplus energy equation. There is no surplus energy, only mountains of debt.
Perk Earl on Thu, 19th Jun 2014 10:31 pm
Thought you nailed it pretty good with that list, Fanboy.
Beery on Fri, 20th Jun 2014 2:42 am
Just a reminder that here, we’re pretty much preaching to the converted. Since Forbes allows people to comment on articles, I urge folks here to add their comments to the original article. Perhaps one or two Forbes readers might get a clue that this guy is at best deluded, or at worst a charlatan.
forbin on Fri, 20th Jun 2014 3:28 am
interesting article – in that he gives little in the way of support for his premise of the title
when I read Forbes I am reminded that its an investment magazine and there to promote , quite frankly, the next fashionable scam in investment circles.
I agree with Rockman on the ” foreseeable future ” bit , used by politicians all over the world and meaningless unless given a data point, ie meaning 1 month 1 year 1 decade.
I’d rather take my ques from Westexas who gives the data that he reaches his conclusions from rather than this pretty empty “speech” .
take care
Fobin
Makati1 on Fri, 20th Jun 2014 3:31 am
Michael Lynch:”I spent nearly 30 years at MIT as a student and then researcher at the Energy Laboratory and Center for International Studies. I then spent several years at what is now IHS Global Insight and was chief energy economist. Currently, I am president of Strategic Energy and Economic Research, Inc., and I lecture MBA students at Vienna University. I’ve been president of the US Association for Energy Economics, I serve on the editorial boards of three publications, and I’ve had my writing translated into six languages.”
In other words he never worked a day in his life and has no idea of what the real world outside of academia is like. He is one of those millions of potential suicides, when the SHTF, as he will not be able to handle the real world or be of any value to anyone except as fertilizer for the fields or food for the rats.
Jimmy on Fri, 20th Jun 2014 3:58 am
Peak Oil is NOT a theory!
It’s an observation. Obviously this writer never took a physics class.
shortonoil on Fri, 20th Jun 2014 8:51 am
“In 1989, Colin Campbell revived the method, arguing that conventional oil production had peaked that year. Subsequently, he joined with Jean Laherrere to produce a series of consulting reports and then articles, making various claims for their ability to accurately estimate recoverable resources and production patterns.”
It is quite unsettling when some moron like this tries to ridicule great minds like Hubbert, Campbell, and Laherrere. They were correct, and this imbecile is out to lunch. In our report, “Depletion: A determination for the world’s petroleum reserve” we go into great detail as to why Hubbert’s, Campbell’s, and Laheree’s predictions were a little early. It was not their methodology, or basic hypothesis. It was the result of a mathematical peculiarity in the function that they were using. A peculiarity that could not have been identified until after Peak was reached.
Of course this author has an agenda, and neither science, or mathematics will dissuade them from pursuing it. Trying to bring a little reality to such a mind would probably be tantamount to explaining Quantum Mechanics to a fruit fly. The end of the age of oil is not far away, and no amount of mindless propaganda spun out by Forbes, or anyone else is going to change that!
http://www.thehillsgroup.org/
Davy, Hermann, MO on Fri, 20th Jun 2014 9:01 am
Short, should that be 1999?
Danlxyz on Fri, 20th Jun 2014 10:34 am
I wonder why he is using a graph that appears to be about 10 years out of date.
And since I am complaining, what is Gb/a? I could guess but why not just tell me.
Meld on Fri, 20th Jun 2014 11:38 am
Well this 6 paragraph article certainly changed my mind.
@Danlxyz Gb/a means Gigabollocks per arsehole
Ezrydermike on Fri, 20th Jun 2014 12:32 pm
well to be fair, Gigabollocks is a lot of bollocks. At least a 100 yrs worth.
Read on Fri, 20th Jun 2014 1:29 pm
“Explaining quantum mechanics to fruit fly”
ROFL
rockman on Fri, 20th Jun 2014 2:09 pm
E – I hate to criticize. But…”Gigabollocks is a lot of bollocks. At least a 100 yrs worth.”. First, you’re forgetting the potential of geopolitical factors acting to cut the exportation of bollocks. Second, you assume the demand for bollocks remain the same in the future: you’re forgetting the great Bollocks Recession that drove down both the demand and price of bollocks. And lastly you’re forgetting the potential of the SBR to at supply us with enough bollocks to hold out thru a temporary supply disruption. A critical error given the great volume we have stored in our Strategic Bollocks Reserve thanks to our highly productive politicians.
Northwest Resident on Fri, 20th Jun 2014 2:19 pm
Yep, our politicians are busily pumping that Strategic Bollocks Reserve fuller and fuller every day. In fact, I don’t know which is most likely to happen first. Will the global economy collapse due to oil shortages and/or the gigantic financial balloon popping? Or will the Strategic Bollocks Reserve explode due to being pumped to over-capacity by our talented politicians, resulting in gigatons of bollocks raining down onto planet earth, choking all living things to death with the suffocating stench?
shortonoil on Fri, 20th Jun 2014 3:38 pm
“Short, should that be 1999”
Hubbert predicted world Peak in 1997. Campbell, and Laherrere predicted 2000 in the WEO 2000 publication put out by the EIA. In actuality it was 2005 using end of year reporting. Our study defines everything at the beginning of the year, so our results are 2006 (same thing). The problem is that Hubbert, Campbell, and Laherrere were using a pure logistic function in their evaluations. It turns out that there is a slight skewness to that function. A skewed logistic function has no explicit mathematical equation to define it. Analysis must be done numerically using Quantile Statistics, and Quantile Statistics was not invented until 1973; long after Hubbert. The mathematics needed to model the Peak did not even exist when Hubbert published his work. Further, it did not become common knowledge until the mid 2000s. It is amazing that these men accomplished what they did, with what they had to work with. If you go to our site, then “Study Graphs”; graph# 29 there is an example of that curve. Graph# 29 shows the normal, and the skewed logistic curves. You can see how that little twist to the curve puts the Peak out further by about 5 years.
The Peak really did occur, and the EIA is now filling in the void with paint thinner, and road tar. The age of oil was powered by high quality light sweet crude. The lower quality oil taking its place does not supply enough energy to provide for growth. All we can do now is tread water, and gradually sink until the Giants (the 1% of fields that supply 60% of the world’s oil) go into decline. Expect that this decade!
http://www.thehillsgroup.org/
robert wilson on Fri, 20th Jun 2014 4:38 pm
From a USENET post sic.geo.petroleum 1999 ” We have huge amounts of petroleum resources left and there is no
> constraint on the ability to deliver oil products (gasoline, etc.,
> which is what counts) for an extremely long time, easily more than
> 100 years. So, I guess you could say I partly believe that it’s a
> matter of when, because I think the date is so long in the future
as
> to be meaningless for any decision-maker. ”
>
> Michael Lynch, Center for International Studies, M.I.T.”
robert wilson on Fri, 20th Jun 2014 4:44 pm
From Yahoo group energy resources #67533 2004 — In energyresources@yahoogroups.com, ”
Ron Patterson wrote:
>
>
> Good Lord, Michael Lynch actually wrote that! Yes he did, I did a
> search and there it was, in black and white…
Ezrydermike on Fri, 20th Jun 2014 4:53 pm
Rockman,
Good points, but don’t discount that as we approach peak FUBAR and the price of bollocks rises, new technology will be put into play for enhanced bollocks recovery and as NW points out we will awash in new bollocks. We will probably need to lift the export ban.
J-Gav on Fri, 20th Jun 2014 5:25 pm
Short – Exactly! With the giants going down this decade and geopolitical turmoil threatening anything remotely close to replacing it, the cornucopians are in for a shock. But try telling that to the general public… a message they won’t want to even contemplate.
And oh, by the way, so-called ‘strategic reserves’ are going to look pretty silly once reality sinks in. Well, maybe I’m going too far – they might actually be enough for one or two military campaigns aimed at grabbing more ‘strategic reserves.’
synapsid on Fri, 20th Jun 2014 6:45 pm
J-Gav,
Good point there–if I remember correctly about half of the Strategic Petroleum Reserve is reserved for the Department of Defense.
rockman can correct.
shortonoil on Fri, 20th Jun 2014 6:55 pm
Strategic Petroleum Reserve; is that like all the gold in Fort Knox. There is a 50-50 chance that Goldman Sachs has already sold it to the Chinese.
Newfie on Fri, 20th Jun 2014 7:06 pm
Oil is obviously finite. But it is never going to peak. Really ?
rockman on Fri, 20th Jun 2014 7:45 pm
E – Sorry but I definitely don’t believe in Peak FUBAR. Not that it can’t be reached but that we will all be dead before we get there.
ralfy on Fri, 27th Jun 2014 12:11 pm
Hubbert predicted global crude oil peaking in 1995 + 10 years, as seen in the 1976 TV interview.