[clifman]

Novus, you are spot on to highlight this. I've been trying to raise discussion of this issue here and over at TOD. If I knew how, I'd insert my latest spreadsheet so folks could play around with the assumptions and perhaps someone adept could generate a graphic. It wouldn't look pretty. One can assume decline from Fields in Production of, say 1%-12%. New production will make up for some portion of that, yielding net decline. My best guess is net decline of 2.5-4%. Then, factor in declining EROEI and increasing population to get the big picture. Today, we have 85 MBD at 15:1, leaving 79 MBD net for 6.6 billion people, or 4.4 barrels/person/year. Ten years hence, using my 2.5-4% decline, and EROEI in the 10:1-7:1 range, and population of 7.5 billion, we'll have only about2.5 barrels/person/year. So we'll each have to get by with about 60% less oil. Of course the falloff won't be distributed evenly. Some people (perhaps in China?) will be using more oil than they do today, some will have none available. But any way you cut it, energy intense culture will be feeling a major squeeze, to say the least. If the move to deep water, polar, heavy and tar/shale oil takes overall EROEI below that 7:1 level, it's much worse, as that's about the level where EROEI really begins to bite:

EROEI % Net
15:1 93%
10:1 90%
9:1 89%
8:1 88%
7:1 86%
6:1 83%
5:1 80%
4:1 75%
3:1 67%
2:1 50%
1.5:1 33%
1.33:1 25%
1.25:1 20%

[venky]

Maybe I dont understand you correctly, but it seems to me there might be a flaw in your logic. Your interpretation of EROEI seems to be that it takes oil to produce oil, hence the concept of 'net oil'.

However, in the case of the tar sands for instance, the input energy is mostly natural gas, which I have read can be replaced by electricity. So if we produce 5 mbd from the tar sands all 5 mbd will be available to us, the input energy being in the form of natural gas. Ofcourse natural gas production is constrained and there are other issues.

So while declining EROEI is a concern, it doesn't seem to me to be the catastrophe that you make out.

[coyote]

$this->bbcode_second_pass_quote('MonteQuest', 'P')eak oil is the end of cheap energy in any form.

[arocoun]

Well, it may not be as big of a catastrophe as described, but it still seems like a catastrophe of some sort. Instead of getting less oil per unit of oil, we get less oil per unit of energy. Basically, it's about as bad, especially considering that most of our current sources of energy are non-renewables with production peaks and deminishing returns of their own.

EDIT: It seems I was a little slow to the response, so to clarify, this post is in response to Venky's.

[seahorse]

Whether we call it "net oil" or EROI it doesn't matter to me. Its a fact of life that the world is starting to realize. This is what French oil company Total was saying just a couple of days ago when it said the world will never produce 120 mbpd, bc it costs too damn much to do it.

This board has hit this topic many times from many different angles, whether it be EROI, or the topic Peak oil = Peak Refinery Capacity, or now net oil, its all the same. For this reason, KD is right and the world has already passed peak. IF the world was serious about overcoming the net energy issue, it would be building many new refineries to process the heavy oils that are left, or building nuclear reactors in Canada to heat the tar sands instead of using natural gas which is estimated to be depleted in 8 years. We're not doing those things, so, we are at the end of cheap energy, the Russian gas is quickly depleting, they are shutting it off to the Ukraine, Georgia, there is fighting in Iraq and Afghanistan, the US is openly developing a bigger nuclear arsenal, prices keep rising although Lynch thinks otherwise. Assuming money could resolve the problem, Klare was right, the world has opted to settle depleting energy through resource wars. No cites, bc I'm too tired of having to prove anything to anyone, just look at the gas prices at your local station and ask why.

[MonteQuest]

$this->bbcode_second_pass_quote('venky', 'M')aybe I dont understand you correctly, but it seems to me there might be a flaw in your logic. Your interpretation of EROEI seems to be that it takes oil to produce oil, hence the concept of 'net oil'.

However, in the case of the tar sands for instance, the input energy is mostly natural gas, which I have read can be replaced by electricity. So if we produce 5 mbd from the tar sands all 5 mbd will be available to us, the input energy being in the form of natural gas. Ofcourse natural gas production is constrained and there are other issues.

So while declining EROEI is a concern, it doesn't seem to me to be the catastrophe that you make out.

[pup55]

A couple of minor points: Here is a slightly revised graph. The data above represents the mideast "internal consumption" divided by the total production. Per the BP review, the middle east only exports about 20% of its refinery production outside the region. For this graph I have added to this figure the natural gas usage, converted to BOE. The mideast actually consumes 90% of the natural gas it is currently producing.

Since about 1985 the ratio of production to consumption has gone up by only about 5%. At this rate of increase, they will still be able to pump oil for a long time. However, this rate of increase will almost certainly not be linear. As they approach the maximum production rate, there will be a discontinuity, no doubt.

The growth rate of natural gas consumption in the middle east is about 7.5%. This is a doubling every 10 years. 90% of the natural gas produced in the middle east is used internally in the middle east. At this rate of increase, the currently stated reserves of natural gas in the middle east will run out in about 2048. I suppose they will hit "peak gas" and go into decline before then. So, presumably, if they are indeed using most of their natural gas to generate power to provide the energy for oil production, this will at some point be a big problem This will probably be the source of the discontinuity.

Thirdly, I am not ready to say that this consumption of energy is necessarily directly related to the pumping of that oil, but I don't think it is necessarily important for this to be the case. The amount of energy those guys are consuming is the amount it is taking to run their society in some orderly way, and take care of the population to a sufficient extent so they can produce oil. Think of it as the "overhead" involved in oil production. You can make the argument that it is going to take an increasing amount of energy to keep the people happy enough to keep the stuff running, and that is equally important if not more so than whatever amount they use to run the actual pumps and drilling rigs. This is especially true in light of the population increase in some of these areas.

Fourthly, I agree with whoever said that these guys will run their equipment even though EROEI is negative, as long as they pump oil, for critical petrochemicals and non-energy usage. At that point, you will have to compute it based on "money returned on money invested".

But. to return to the original point: It is clear that at some point, the internal usage in these places will be sufficiently large so as to not allow them to continue to export. This will be especially true if they start to go into decline. The data at hand at the moment do not allow us to figure out exactly what that point will be. Seahorse is probably right, though, we will be able to tell by reading the numbers on the gas pump.

[Antimatter]

$this->bbcode_second_pass_quote('Novus', '')$this->bbcode_second_pass_quote('Antimatter', '')$this->bbcode_second_pass_quote('', 'A')verage EROEI has been falling for years and right now is around 15.

[crapattack]

Novus, thanks for your post. Your idea of Net Oil packages the idea of diminishing returns nicely.

[jupiters_release]

$this->bbcode_second_pass_quote('pup55', '
')Fourthly, I agree with whoever said that these guys will run their equipment even though EROEI is negative, as long as they pump oil, for critical petrochemicals and non-energy usage. At that point, you will have to compute it based on "money returned on money invested".

[Battle_Scarred_Galactico]

The concept is very clear and has been put down in very easy to understand terms. I liked the antalope/grass analogy, although that could fall on deaf ears as anyone who doesn't get it probably doesn't realize why they need to eat at all.

[Doly]

If we were to make the analogy with food, I think a more accurate description would be this:

Imagine a village that lives next to a lake full of fish. At the beginning, they didn't know how to fish. One day, they learned fishing. During the first hundred years, they fished as much as they needed to feed their population, and the population grew accordingly. But one day, they reached the point where they started fishing more than was getting replaced by new fish being born (oil in fact is a finite resource, so it's a bit different). They tried new methods of fishing to compensate for the decline, but that only depleted the fish stock faster. At a certain point, no matter what they did, they couldn't keep up the production of fish. Fishermen spent longer and longer hours on the lake for smaller and smaller returns of fish. Logically, fish became more and more expensive, and people turned to other foods. Things reach a point that the amount of effort it takes to catch a fish uses a significant part of the caloric intake of the fishermen. Theoretically, at some point the calories you spend trying to catch a fish are equal to the calories you get from eating the fish and fishing is a worthless exercise, but in practice, people would stop fishing before that.

What happens at the end depends mostly on whether the village can ramp up production of other foods at the required speed, and the caloric content of the other foods compared with the effort it takes to obtain them. If fish was particularly energy-rich and easy to catch originally, even if they can ramp up production of other foods to keep everybody fed, it also means that everybody will have to work longer hours to get the same amount of nutrition. (In oil terms, this means that even if we make the transition to renewables, if the EROEI of the alternative energies is lower, we will have to devote a bigger fraction of our resources simply to keep everything running).

Let's suppose the village won't have enough foodstuffs to keep everybody fed at the current levels (in oil terms, there isn't enough energy to keep things running at current levels). If the villagers were initially overfed, the average weight will drop and they will work longer hours, and they might become healthier than ever before. This is the happy ecological scenario, where waste is reduced, resources start getting used responsibly, and everybody may be happier all around. If you think this is unrealistic, you haven't looked at your bin lately. We are so incredibly wasteful that I wouldn't be surprised if reducing our energy usage by half does our society more good than harm.

But if things go horribly wrong, there will be hunger in the village. In a moderate case, nobody dies straight away from starvation, but they are weaker and malnourished and get sick more easily from any infection. (In oil terms, there are real shortages of essential stuff, not enough to cause a dieoff, but a significant reduction in quality of life and possibly an increase in mortality, mostly because expensive treatment of diseases becomes something for the rich. A WWII type of life.)

Finally, in the "all the hell breaks loose" scenario, many people die of starvation. (In oil terms, collapse of civilization and likely dieoff).

Pick your favorite scenario. Mine is the third.

[AirlinePilot]

This is an excellent thread. I think anyone who has been here (PO) for any length of time can see this is just another way to connect the dots about this gargantuan problem. I think personally I had this concept floating around for a while but didnt think it any different from the concept of a geologic peak. For me this all follows that. It makes a lot of sense and it's very intuitive that as we pass the peak (geologically) we are going to accelerate the amountof oil used to get it out of the ground due to the much larger difficulties (and expense) extracting what is left.

This is the foundation of my doomer attitude. I don't see how this can possibly be managed, even If your a true cornucopian. It reminds me of one of the last scenes in the Movie Return of the King. In the battle for Minas Tirith, the Rohirrim has swept the field of Orcs, faced the giant Elephant army and now comes the Nazgul winging its way towards Theoden as he stands frustrated, amazed, and terrified at the threat. His expression in that scene is a perfect allegory for how I feel about what is coming.

The shock, horror, and despair humanity will endure could be immense. I truly hope for something miraculous, but the reality is that we will likely fade away into another dark age. I fear for the future of my children and thiers. It certainly is not a bright one.

[Novus]

I would like to add a corollary to the Net Oil Theory.

Net Oil 2.0: In a closed sytem the marginal decline rate is equal to one half its EROEI. [b]Net Decline = 1 - EROEI/2[b]

This means that any oil well that has less then 2 EROEI is unsustainable. The production of low EROEI oil is predicated on cheap energy else where in the world. So if an oil Co. owns a well the has 2 EROEI it is only worth it to produce from that well if it can get nearly free energy to power the well. If the well has to use its own self produced oil energy to power it then its production will decline.

Proof:

Given-
Well 'A' has EROEI of 1.9
Initial input 100 units of energy.

Cost and revenue for 4 iterations recycling energy:

1st iteration: 100 -> 'A' -> 190 units of energy
2nd iteration: 100 -> 'A' -> 190 -> 'A' -> 361
3rd iteration: 100 -> 'A' -> 190 -> 'A' -> 361 -> 'A' -> 686
4th iteration: 100 -> 'A' -> 190 -> 'A' -> 361 -> 'A' -> 686 -> 'A' -> 1303

Net energy return for each iteration:

1st iteration Net = Revenue(190) - Cost(100) = 90
2nd iteration Net = Revenue(361) - Cost(100 + 190) = 71
3rd iteration Net = Revenue(686) - Cost(100 + 190 + 361) = 35
4th iteration Net = Revenue(1303) - Cost(100 + 190 + 361 + 686) = -34

With each iteration the field gets less marginal return and turns negative after the forth iteration. The costs will in time overun the revenue on any energy source that has less than 2 EROEI. Even if you discounted the initial input as free energy the costs would still over run the revenue on the very next iteration. This is very bad news for the tar sands and America's older oil wells. These marginal sources of energy are only productive because their inputs have very high EROEI and they do not have to recycle their own low yeild energy back into themselves. The result of declining EROEI will be a progressive collapse of oil supplies that feeds on its own vicious cycle of ever greater declines.

[turmoil]

Do correct me if I'm wrong, but at 1.9 using your self-produced energy you gain 90 units each time.

1: 100 -> 'A' -> 190 = +90

2: 100 -> 'A' -> 190 = +180

3: 100 -> 'A' -> 190 = +270

4: 100 -> 'A' -> 190 = +360

I'm pretty sure the formula to see it over time would be (e = EROEI, x = iteration/time)

y = x(e - 1)

You take 1 from your output each time and the net sum grows. At 1.9 you add .9 to each iteration and because you have more than you started with, the cumulative net increases.

I think you were including your cumulative net in your input each time, which would give you negative results over time. Cumulative net energy is always increasing if EROEI > 1 but does decrease when EROEI <= 1.

But with such low EROEI it is hard to see how it is profitable unless your energy input costs and your labor costs are less than the value of your returned energy. In other words:

(100 energy + ~50 labor) -> 'A' -> 190 = ~+40

But add a few zeros and it doesn't look so bad, I guess.

(sorry for all the edits, just trying to make it coherent...usually I do drafts but I get lazy online.)

[Novus]

$this->bbcode_second_pass_quote('turmoil', 'D')o correct me if I'm wrong, but at 1.9 using your self-produced energy you gain 90 units each time.

1: 100 -> 'A' -> 190 = +90

2: 100 -> 'A' -> 190 = +180

3: 100 -> 'A' -> 190 = +270

4: 100 -> 'A' -> 190 = +360

[arocoun]

Good job on collecting and presenting info on the so-named Net Oil phenomenon, Novus. It's definitely bad for a society that depends on oil, especially when accompanied by peak oil. You've shown quite effectively that oil will soon become an energy drain, and an energy carrier, rather than an energy source.

And, you've also shown that ANY energy source that has an EROEI of 2 or less will always require outside investments of energy to continue production; however, outside investments will still be profitable and somewhat desireable, unlike with energy sources with an EROEI of around 1 or less. Something tells me that an EROEI of 2 isn't too bad in a society where we're constantly told to invest in this or that. Still, an EROEI of 2 is still kinda bad.

[seahorse2]

It seems this report has something to do with Net Oil.

Realtime News

Basically, as the price of oil goes up, the cost of extracting that oil is also going up making future development by OPEC uncertain.

[bdmarti]

$this->bbcode_second_pass_quote('Novus', '
')I shall correct you. You simply repeated the first iteration four times and did not recycle your net from the first into the second. If you do not recycle the net you are using free energy from else where to pump your well. Here is what the energy recycling formula looks like Net Decline = 1 EROEI/2 using a logorithimic model such as the one you used.