[Gazzatrone]

I often quote this post I made, as I am particularly fond of it as it was one of my first posts where I didn’t feel like a retard. Even though what I was trying to convey was the simplicity of Peak Oil. Or at least I attempted to simplify it for people like myself at the time of writing.

A cautionary note to other even more established posters can be relayed here. It can be a cringe worthy experience, and “good for the soul” practice to go and re-read their own very early posts. But I digress.

Admittedly I felt pretty smug with myself after reading some of the positive replies. All except one, which is this one copied here. It also happens to be the first reply.

$this->bbcode_second_pass_quote('stryder3700', ' ')I think you've over simplified it a little too much and forgot about the issue of depletion on existing fields. We aren't just using it really fast. It's also getting harder and more expensive to get out of the ground.

Your analysis says we're screwed in the near future. Add in depletion and we're screwed even quicker.

But I'll definitely give you props for doing the math to figure it out on your own.

[TonyPrep]

True, EROEI makes the problem worse, more quickly. However, an EROEI of 1 does not necessarily mark the end of production of oil. It depends on the usefulness of the energy source used as input versus the energy source that is being produced. I doubt that oil would last very long at 1:1, but it could go down below 1 before it's usefulness is outweighed by the cost of the energy input.

Tony

[GreyGhost]

I would really like to see EROEI more widely accepted and talked about, because it is an important concept, but it needs to be refined to be more convincing. Go take a look at the wikipedia entry on EROEI (but make sure you come back here afterwards)
http://en.wikipedia.org/wiki/EROEI

Back? Good. In case you were too lazy, here are a couple of problems with EROEI:

1. What activities exactly do you include in the energy invested? The energy used to build the refinery in the first place? Taking to the extreme, do you include the fuel in the cars to drive the employees to the refinery? Most of you would say "Well, no..." but some doomers would probably say "hey, maybe we should! That makes it even worse!". The problem is you could keep going back forever, and end up with energy invested including the big bang.

2. You could change a refinery to be more self-sufficient, by powering itself completely from it's own oil, instead of drawing electricity from the grid. So the oil-refinery as a whole would have lower energy invested, maybe even zero. The EROEI for that system could go arbitrarily high, but the refinery is not really any better in the bigger scheme of things.

EROEI is an attempt at capturing the idea that things get worse due to the energy being more difficult to obtain. So it is a key argument that peak oil proponents push, and cornucoppians don't get. But in order to work, it needs to be more rigidly defined so we can actually quantify these things.

Can anyone who really likes the EROEI concept please give a more detailed definition of what energy should be included in the "energy invested" part, with examples and reasons why? And answer the wikipedia criticisms?

[TommyJefferson]

$this->bbcode_second_pass_quote('Gazzatrone', 'y')ou can’t sell what you will have to burn in order to get the next barrel out.

[gego]

Gazzatrone, This is an excellent post; move to the head of the class.

One thing I immediately noticed was that the EROEI numbers you presented were halving every 20 years (3.5% decline rate) until the last number which just fell off the chart. This raises a red flag, which has nothing to do with the thrust of your thinking, but which either means bad data or something really significant happening. Had the 20 year halving period held up, then it would not be until after 2050 that we reached 1:1. In the long run, this would be quibbling over pennies, as we are headed to 1:1, but the sudden drop is alarming, and needs some explanation.

I do have some question about what is included in the energy invested. If this is limited to exploration, then once 1:1 is reached, much exploration would cease; production activity would continue. If the energy invested also includes production cost, then when 1:1 is reached, much production would cease. Since these concepts look at averages, there would continue to be segments of exploration and production which would be better than average, so this activity might continue beyond the time that the overall average reaches 1:1.

There will be a reachback effect on the economy as we approach 1:1 for production. We do not need to reach 1:1 for the suffering to begin. We are in the early stages of this reachback effect now. As energy becomes more costly, more and more economic activity will become uneconomical and cease; for example, one does not mine metal if the cost is more than the selling price, and even today some mines with low grades and high costs are shutting down.

With all the fog obstructing a clear view of the future, your foghorn is helpful.

[Gazzatrone]

$this->bbcode_second_pass_quote('GreyGhost', '1'). What activities exactly do you include in the energy invested? The energy used to build the refinery in the first place? Taking to the extreme, do you include the fuel in the cars to drive the employees to the refinery? Most of you would say "Well, no..." but some doomers would probably say "hey, maybe we should! That makes it even worse!". The problem is you could keep going back forever, and end up with energy invested including the big bang.

[gego]

I did go read the Hall & Cleveland presentation. They are painting with a broad brush. One thing they say is that for the past three years exploration, in dollar terms, has been a net loss; more $energy has been used that $energy found. So according to them, we already are below 1:1 for exploration. This does not mean exploration is over, but it does mean that we are currently taping into existing production in the effort to find more oil, without success, on average. This places us in the same position of a man without an income living off of his savings account.

Does anyone know of a study with more precise data?

[Gazzatrone]

$this->bbcode_second_pass_quote('TommyJefferson', '')$this->bbcode_second_pass_quote('Gazzatrone', 'y')ou can’t sell what you will have to burn in order to get the next barrel out.

[Gazzatrone]

$this->bbcode_second_pass_quote('gego', 'I') did go read the Hall & Cleveland presentation. They are painting with a broad brush. One thing they say is that for the past three years exploration, in dollar terms, has been a net loss; more $energy has been used that $energy found. So according to them, we already are below 1:1 for exploration. This does not mean exploration is over, but it does mean that we are currently taping into existing production in the effort to find more oil, without success, on average. This places us in the same position of a man without an income living off of his savings account.

Does anyone know of a study with more precise data?

[gego]

Here is a discussion of EROEI that goes along with Gazzatrone's thinking:

http://www.theoildrum.com/story/2006/8/2/114144/2387

The crux is that peak oil relates to gross production irrespective of the cost of that production. As Gazzatrone has indicated, net production is what really matters. Hell, we could produce 10 times what we do today and it would not help us if the energy cost of production were 20 times what it is today.

I keep hearing the supposed soothing idea that oil is not running out, it is just cheap oil that is running out. I guess this is a way of saying that the net energy profit is declining.

If you took world oil production each year (which has been increasing since 1930) and multiplied by the EROEI numbers Gazzatrone presented (which have been decreasing since 1930) to yield the net production available to humanity, the picture is much different than just looking at total production, alarmingly so.

Take some simple assumptions. World oil production peaks in 2010; the EROEI is 6:1 at this peak time; the rate of decline in gross production is 3.5% per year giving a halving period of 20 years; the rate of decline in EROEI is also 3.5% apparently which it has been historically, also giving it a halving period of 20 years.

If you just looked at oil production declining at 3.5% per year after 2010, you would expect oil production to be 50% of the 2010 number by 2030. However with the EROEI rate also declining, the net oil available in 2030 would be only 25% of what it was in 2010. Think of this in personal terms as you would lose 75% of your salary between 2010 and 2030. Think of a business with sales falling and costs increasing; a double whammy.

And all of this does not consider that the population is still expanding, and that a 3.5% dropoff in post peak gross oil production may well be a low number.

Hell.

[SchroedingersCat]

Great post. EROEI is a very important point to remember. I think Heinberg listed current EROEI for oil at 6:1 in his book The Party's Over. That was a couple years ago.

On top of net production, don't forget net exports. Many oil producing countries are retaining more and more of their own production for domestic use. WestTexas over at The Oil Drum maintains that globally net exports are in decline.

Yikes.

[gego]

The fact that EROEI apparently has been falling at at 3.5% rate since 1930 also takes some of the steam out of the debate over the peak oil date. This falling return is a trend in motion, and is likely to remain so. Even if the peak oil date turns out to be later than 2010, or if we manage to plateau for a while, there still will be this constantly increasing energy cost factor eroding the net amount of oil available to humanity.

Considering the effect of both declining production and declining EROEI, I can well see Richard Duncan's "falling off a cliff" and "end of the electric age by 2030" as very realistic assessments.

If you really want to scare yourself, take the known rate of decrease in EROEI (3.5%) and add to it different possible rates of gross production decrease after peak. Some people have thrown around the possible rate of post peak gross production fall of as much as 8%. The combination of these two would result in a halving of net production just 6 years after peak; now that is one hell of a fall off of a cliff. The implications of that are ominous.

[TonyPrep]

$this->bbcode_second_pass_quote('ElijahJones', 'I')f gasoline at my local filling station ever falls below 1:1 someone in the supply chain is losing money in the most real terms available

[rogerhb]

$this->bbcode_second_pass_quote('Gazzatrone', 'T')he one that died in 1997 was 74 and the one in 2002 was 76

[gego]

I thought this thread would be more lively.

I guess the main point got lost in the distraction, the verbose quibbling over whether or not 1:1 EROEI would cause production to cease. This is missing the forest for the trees.

What matters to your life or death is not just peak oil, its timing and the subsequent rate of production decline, but equally importantly, the rate of decline in EROEI. Think of the profitability of a business being influenced by both its revenue and its expenses. Focusing on peak oil is a focus on revenue only because the Hubbert curve is a production curve. It does not take into account how much energy must be used to get that production, EROEI.

The EROEI ratios presented in Gazzatrone's initial post indicate that that it is consistently taking more and more energy to produce oil. The energy cost to get oil has been doubling every 20 years if these historic EROEI numbers are close to accurate. This is a 3.5% growth rate in cost of production. As Gazzatrone's beautiful analogy points out, this may well be what kills us while we focus only on gross production in the peak oil discussion. To know how much oil humanity will have available post peak we need to plug into the equation the peak oil production date and output, the rate of production decline, AND the rate of decline in EROEI.

If you are thinking that production will decline post peak at a 5% rate making production fall by half every 14 years, think again. You must add to the 5% rate of production drop, the rate of change in EROEI which at a minimum look to be 3.5% giving a combined rate of 8.5% or a halving period of 8.235 years. This is HUGE because it shows just how quickly the amount of oil we have available to use could fall by half. We are not talking 20 years, but may be talking as little as 5 years for net oil available to half if costs escalate suddenly and gross production falls at the higher range of expectations, post peak.

Production may not have peaked yet, but EROEI peaked a long time ago and the effect of EROEI has been disguised from public view by the strong surge in gross production in the past 75 years. The effect of EROEI will continue to be disguised because everyone will be focused on production declines post peak.

Looks to me that peak oil will be much more of a bitch slapping to humanity than most want to imagine.

[MonteQuest]

Good post Gaz. A good reminder of a Dec 2004 thread I wrote...

EROEI: Energy Returned on Energy Invested

It is located in Conservation and Energy Efficiency.

[Ibon]

Yes. A very good post. With my antannae always on the look out for those stresses and events that wll force cultural change, I look at the insiduous nature of EROEI as a trigger point in that when it falls low enough it will start to radically influence the demand side of consumption and quickly trim the fat of our wasteful habits. That is the only part of the cancer analogy that is weak. Malignant cancers speed up as they advance, in other words, they consume more of the bodies resources. In the case of EROEI our modern societies are going to slow down dramatically their consumption once EROEI exerts pressure. A silver lining in all of this is the incredible waste built into our energy consumption that we will be forced to wean ourselves from. This will buy us some time for a paradigm shift.

We are just too stupid to deal with this any other way. We have to take ourselves to the brink.

[TonyPrep]

$this->bbcode_second_pass_quote('Ibon', 'A') silver lining in all of this is the incredible waste built into our energy consumption that we will be forced to wean ourselves from. This will buy us some time for a paradigm shift.

We are just too stupid to deal with this any other way. We have to take ourselves to the brink.