So Much for Hubbert’s Peak Oil Theory: $20 Per Barrel Oil Soon?

All right, the headline might be a tad hasty. Nevertheless, geologist
M. King Hubbert famously (and so far) correctly predicted in 1956
that U.S. domestic oil production in the lower 48 states would peak
around 1970 and begin to decline. In 1969 Hubbert predicted that
world oil production would peak around 2000. Hubbert argued that
oil production grows until half the recoverable resources in a
field have been extracted, after which production falls off at
essentially the same rate at which it expanded. This theory
suggests a bell-shaped curve rising from first discovery to peak
and descending to depletion.

In fact, daily U.S. oil production did “peak” at an
average 9.6 million barrels in 1971. In January, U.S.
production averaged about 9.2 million barrels per day. If Hubbert
were right this should not be happening. The problem with Hubbert’s
analysis and that of his many peak oilist devotees is that they
overlook how market prices can change the definition of
“recoverable resources” by means of encouraging new technologies
and the search for new reserves. In the current case, fracking has
made once unrecoverable resources recoverable. As a consequence,
U.S. petroleum production has dramatically ramped up from its nadir
of 5 million barrels per day in 2008.

As a result of flood of new supplies, storage tanks in the U.S.
are filling up and the amount of stored crude is at an 80 year
high. Since last summer the price of oil has fallen from $107 per
barrel to $50 today.
Some analysts are suggesting that this glut could cause a second
price collapse to as
low as $20 per barrel later this year. That would be only
slightly above the average per barrel low (in real dollars) of

$17.23 in 1998. If prices fall that far, then drilling and
production will be cut back and prices will rise again.
Nevertheless, what is happening now to U.S. and global oil
production and prices was supposed to be impossible according to
peak oil theorists.

reason.com

10 Comments on "So Much for Hubbert’s Peak Oil Theory: $20 Per Barrel Oil Soon?"

coffeeguyzz on Wed, 4th Mar 2015 9:00 pm 



The latest generation of Coiled Tubing conveyed frac’ing hardware is in the early stages of rewriting the entire stimulation/production protocols in the shale fields.
Companies such as Baker Hughes, NCS Multistage, and Halliburton have been offering these tools in recent months and the results have shown both an increase in output(30%+), along with an extremely rapid time frame (couple of days) in which to precisely monitor and frac with customized, controlled volumes/pressure of fluid in 60+ stages. These stimulations, called ‘high intensity’ by several operators, are highly rubbilizing the formation near the wellbores while NOT inducing unwanted water intrusion by limiting ‘out of zone’ fracs.
This technique is one of the driving reasons that the largest producer in the Bakken – Whiting – has declared their intention to continue to drill/frac in the current low price environment.
As future output, refrac’ing, ‘marginal’ areas being subject to significant re-evaluation, shale hydrocarbon production is on the cusp of of a major step change upwards.

Plantagenet on Wed, 4th Mar 2015 9:24 pm 



Clearly M. King Hubbert never anticipated the large scale development of shale oil. His prediction that US oil production would peak in 1970 and fall ever lower— never to up again —– is falsified.

Nonetheless we may still hit peak oil. Its just going to be quite a bit later then the year 2000 as predicted by Hubbert, or the year 2005 or the year 2010.

GregT on Wed, 4th Mar 2015 10:45 pm 



Hubbert was correct in his prediction that the US would peak in the early seventies, and he was only off by a few years with his prediction for world conventional oil production peaking in or around 2000. The stuff that we have brought online since 2005, is not affordable to our economies. We may as well be producing sawdust.

We are past peak conventional oil production, the economic fallout is impossible to ignore, unless one is a die-hard denialist, or a complete fool.

forbin on Thu, 5th Mar 2015 3:44 am 



“… storage tanks in the U.S. are filling up and the amount of stored crude is at an 80 year
high. ”

quiet possible , after all most of LTO is condensate and rather volatile , so I can believe the refiners will take that first to make into gasoline and other products

However as usual the article conflates crude oil with crude and condensate , not that condensate doesn’t have its uses ( natural gasoline and drip gas can be refined into Automotive grade gasoline for example ) but strictly speaking its not crude as defined at 45API or lower .

Next we’ll have the disproof of peak oil by using the BoE of Nat gas ……

And you can re-define any hydrocarbon source on the planet as “oil” if you like , all you do is move the peak date back a bit , theres still only a finite planet and a finite amount of hydrocarbons to use .

I do find it kinda amusing that this is like a child on a trampoline who bounces high and shouts ” look , theory gravity disproved !! ”

heh 😉

Forbin

rockman on Thu, 5th Mar 2015 6:58 am 



“In 1969 Hubbert predicted that world oil production would peak around 2000.” It’s easy to say someone is wrong when you lie about their previous statements. Hubbert did not say US oil production would peak in 1971: he said US production from currently developing trends in the US would peak in 1971. He was correct. Hubbert did not say global oil production would peak around 2000: he said global production from currently developing trends would peak around 2000. He was correct. In his original paper he actually points out the potential of unevaluated offshore trends and other plays but because there was no historical data base to analyze they were not part of the POPULATION STATISTICS he used to build his model.

People tend to forget he wasn’t making some wild ass guess about future US and global production. He built a statistical model. And like all models its accuracy will hinge on the assumptions made. Hubbert specifically said his models did not include the unknowns. As far as his models are concerned they have been proved amazingly accurate. And not to take away anything from the man but they should be given that the trends he used to build his model were very mature and had already produced a very significant amount of their URR. Just as today folks struggle to predict how much oil will ultimately recovered from the Eagle Ford Shale and DW GOM. Obviously that model will be a lot more reliable if you build it after 50%+ of those wells have been drilled.

So wait another 20 or 30 years and you can be the next Hubbert. LOL. Then you too can use decades’ long production stats to predict the future just like he did.

Mark Ziegler on Thu, 5th Mar 2015 8:12 am 



Just another peak while conventional oil continues to decline.

viewcrafters

Lomax on Thu, 5th Mar 2015 8:32 am 



I’d agree 100% with rockman, conventional oil was studied and modelled producing the peak theory.

This modelling has no correlation to oil sands production, but fits fracking and other types of oil have been developed since. So we can add in the new oil sources and see more or less where each one shifts the total peak, how likely we are to reach these peaks with ever higher oil prices is hard to tell. My guess is that the world economy will be going into crises every few years from now on because all of these new sources of oil are progressively more expensive.

The fracking oil has horrifically short lifespans in comparison to conventional oil wells, even the IEA believes it will peak in a few years. After that we are left with a lot of oil to exploit, but all of it is expensive.

Peak oil happened, pointing at low prices today doesn’t change that, the prices we have today are a combination of bad investment (debts that will not be repaid) and demand destruction of oil that is too expensive.

Newfie on Thu, 5th Mar 2015 9:46 am 



So… The supremacy of “market forces” will ensure that oil production continues to rise forever ? Gosh. I guess I’ll go out and but a V-8 Hummer and maybe a 300 h.p. speed boat. The future looks bright thanks to “market forces”. 😉

shortonoil on Thu, 5th Mar 2015 9:58 am 



“So long as oil is used as a source of energy, when
the energy cost of recovering a barrel of oil becomes
greater than the energy content of the oil, production
will cease no matter what the monetary price may
be.” (M. King Hubbert)

Another author who quotes Hubbert, and doesn’t have the slightest idea what Hubbert was talking about! The author can’t distinguish between a barrel, and a BTU. Hubbert was well aware that to be of use petroleum has to act as an energy source. Obviously, from his statement, he was also aware that the day would arrive when it would become incapable of fulfilling that requirement. Hubbert was a good enough of an engineer to realize that you can’t cheat the Second Law.

Of the world’s endogenous supply of liquid hydrocarbons, only about 40% of it can fulfill the requirement of acting as an energy source. The rest is just stinky, sticky goo that at best will end its existence as a piece of plastic pipe. It will never participate in the process of powering the world.

We have now consumed 83% of that portion of petroleum that can run autos, fly planes, and power ships. After the last 17% is gone the remainder that is technologically extractable will stay buried in the earth. No one will be able to afford its removal. Falling petroleum prices are not a sign of unlimited supply; they are a sign of the diminishing supply that the world can afford. Hubbert’s simple words are now half a century old, and still most can not comprehend what he was saying!

http://www.thehillsgroup.org/

antaris on Thu, 5th Mar 2015 11:05 am 



Short, how many years would that equate to left, if we kept up consumption as is
and then fell off the cliff ?