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Oil In The Ground, Fantasy vs. Reality

General discussions of the systemic, societal and civilisational effects of depletion.
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Re: World Oil reserves: declining - but how fast?

Unread postby John_A » Tue 02 Jul 2013, 11:52:07

$this->bbcode_second_pass_quote('ROCKMAN', ' ')I just spudded a well in an oil trend in Texas that has produced 4.5 billion bbls or oil. It doesn't matter if oil goes to $300+/bbl no additional volume of any significance will ever be produced from this trend.


Then why did you just drill in a place where there is no significant volume? You didn't drill there to produce insignificant volumes did you? That would be irrational!

Let me guess...your insignificant volume is enough to make your IRR? That is the only explanation I can think of. So...how many insignificants does it take to add up to a significant?

Did I say that right?

$this->bbcode_second_pass_quote('Rockman', '
')My new well is an horizontal effort at EOR. If it's very successful and applied across the entire maybe we can add 3% or 4%...over many decades. This field has produced 28 million bbls of oil. There is zero possibility of a field of this size ever being discovered in the trend even if oil went to $1,000/bbl. There is not enough undrilled areas for such an accumulation to physically exist. Last year I drilled 3 exploratory wells for reservoirs in the same trend. My targets averaged about 50k bbls of oil each. Those were the largest undrilled areas we could find. And all 3 failed to find even one bbl of oil. Higher prices for oil can’t create oil where it doesn’t exist. But they do allow you to drill in riskier and more expensive areas. But that leverage doesn’t guarantee you’ll find a lot.


You do realize that you just implied that you are doing to change the recovery factor of this older, mature field? And if you do that...well..not only are you going to contribute to the increase in reserves the year after you do it, but I must ask, is there any reason as prices increase other experienced oil field folks won't be doing the same thing the world over? Or is this more of just a US thing?
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Re: World Oil reserves: declining - but how fast?

Unread postby Keith_McClary » Tue 02 Jul 2013, 12:58:10

$this->bbcode_second_pass_quote('John_A', 'Y')ou do realize that you just implied that you are doing to change the recovery factor of this older, mature field?
That's how I read it. The recent ~300% price increase makes it economic to squeeze out an additional "3% or 4%...over many decades" "If it's very successful" "maybe".
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Re: World Oil reserves: declining - but how fast?

Unread postby ralfy » Tue 02 Jul 2013, 23:07:12

$this->bbcode_second_pass_quote('John_A', '
')Economics doesn't work that way. Print money all you'd like, create it however you wish, and it doesn't cause anything to be cheap. This is how much money bread suddenly costs. Just imagine how much oil would be.

Image


And yet oil consumption for the rest of the world doubled even as oil prices tripled.

$this->bbcode_second_pass_quote('', '
')
Seen this one bandied about, wonderful graph. 9 trillion barrels total is the ballpark. We've used a little over 1. Where is the Heinberg equivalent?

Image



"Resources" <> production rate.

You still don't get it.

$this->bbcode_second_pass_quote('', '
')You keep saying it but obviously haven't calculated the economic growth between 1979 and 1994 and the oil consumption difference. Here is the growth. You should know already what the difference in oil consumption was between 1979 and 1994. Do you happen to notice any hitches in growth because of non-growth in oil consumption? Me neither.

Image



Of course! As I told you, much of economics involves credit.

Also, per capita oil production might help:

http://earlywarn.blogspot.com/2011/09/p ... apita.html

$this->bbcode_second_pass_quote('', '
')Explain how the consumer cares about what kind of refinery their gasoline comes from? Why YOU do? As long as the product comes in regular, midgrade and premium, refineries are as irrelevant as their feedstock.


As I explained to you earlier, consumers will not "care" because credit can be created easily. That's why oil consumption for the rest of the world doubled even as oil prices tripled. And yet the same credit creation also leads to financial risks and fallout. Hence, economic crisis in the U.S., EU, and Japan, and a dip in oil consumption:

http://ourfiniteworld.com/2013/04/11/pe ... e-problem/

The bad news, then, is far from your "basic supply and demand," oil consumption went up even as oil prices went up, with the increase for the rest of the world negating the dip for the U.S., EU, and Japan. Meanwhile, banks are back to their old tricks and engaging in more financial speculation, similar to what led to the 2008 crash.

Meanwhile, how are we meeting increasing demand? With non-conventional production, which consumers will need even as higher costs:

http://www.economist.com/blogs/dailycha ... onsumption

But it's the same non-conventional production driven by physical limitations:

http://www.slate.com/articles/health_an ... dance.html

http://www.theoildrum.com/node/9506

That is why I don't see estimates of world oil reserves declining in any way, as that's the only "good news" that can be given on this matter. Unfortunately, reserves <> production rate. Hence,

http://www.youtube.com/watch?v=YK730U0Q4NU

$this->bbcode_second_pass_quote('', '
')
The article has been contradicted both in terms of price (references already provided), inventory available (the point of this thread and references already provided), and certainly it is easy enough to show that peak "what consumers are demanding" has increased with an overall gain in price. Sorry but all three of these facts mean that your article is valueless. See that high in 2008? That was when TOD declared peak oil. Better luck next time?



But I didn't create this thread, so how can it be "my" article?

What I said is that reserves will keep going because it's obvious that there's a lot of oil underneath the ground. The problem is production rate.

You tried to counter that point by arguing that consumers don't care. But that doesn't my point in any way, as physical limitations will still affect production rate even if more credit is created to maintain production.

$this->bbcode_second_pass_quote('', '
')
Image



Try the second graph in this article:

http://www.resilience.org/stories/2012- ... end-growth

$this->bbcode_second_pass_quote('', '
')
It is, and we have now demonstrated that we can manufacture more liquid fuels with it, as demonstrated in the graphic above. And manufacturing fuels leads directly to the IEA graph above as to how much more liquid fuels we can manufacture at a price only slightly higher than $100/bbl.



Actually, production goes up and down, but the average is steady, and there's no significant increase even with a tripling of oil prices.

What should be noted is that we're now relying on non-conventional production:

http://www.economist.com/blogs/dailycha ... onsumption

which the IEA argues should lead to a 9-pct increase in energy produced from all oil and gas sources for the next two decades, but only as long as conventional production doesn't drop:

http://www.youtube.com/watch?v=YK730U0Q4NU

Meanwhile, because customers don't "care" and because the economy is ultimately driven by energy and material resources, then oil consumption has to keep rising to maintain economic growth:

http://ourfiniteworld.com/2012/07/18/ho ... dp-growth/

Given such, the production increase from non-conventional sources, which will have to meet both increasing demand and a drop in conventional production, will obviously not be enough.

$this->bbcode_second_pass_quote('', '
')
Do you have any response whatsoever for this rather obvious combination of facts which now allows for the development of the next 7 trillion barrels of liquid fuels, with a complete and total disregard for whatever anyone calls "conventional" oil? The world changed at $100/bbl. The IEA says it changed by 7 trillion more barrels of fuels. Do you have a reference which is applicable to that point?



Yep. It's called "money." Given that, will "the next 7 trillion barrels of liquid fuels" lead to unprecedented increases in oil production? Likely not, given the fact that oil prices already tripled and we don't see that production increase. Meanwhile, your "basic supply and demand" falters as oil consumption for the rest of the world doubles even with higher prices.

$this->bbcode_second_pass_quote('', '
')
Yes..many ironies. But none of them have so far discounted either the resources available, or the ever growing ability to manufacture liquid fuels from them.



As I explained earlier, the first is a given, and the second not true.

$this->bbcode_second_pass_quote('', '
')
Yes, things aren't as cheap as they once were and might not go back to that cheap. Yes, conventional is mattering less and less, and the less it matters, the more that IEA graphic does.



This makes no sense at all, as we are not moving away from conventional production simply because we choose to do so.

$this->bbcode_second_pass_quote('', '
')
At the end of the day that is really all that matters, how much do you have (IEA graphic), is it technologically possible to develop it (world liquid fuels graph) and what price will you sell it to consumers for (IEA graphic).



Exactly! What is "technologically possible" will be driven by physical limitations and not reserves:

http://www.resilience.org/stories/2013- ... te-of-flow

and the zoomed-out version of the world liquid fuels graph proves that.

The second point is meaningless because it implies that producers can choose to lower prices and yet maintain production. That won't happen for the same reasons, i.e., physical limitations.

$this->bbcode_second_pass_quote('', '
')
It is no more complicated than that. I understand why you need to make it about ponzi this, credit that, distinctions without differences, one kind of oil matters more than those others even though both are turned into the same products, complex arguments of banking and refineries and whatnot, but what it boils down to has been provided in 2 graphs.



Actually, it's the other way round, as I've shown above.

On the other hand, only a consumer who doesn't care will assume that there will always be lots of money available to extract resources at any cost and thus maintain production and economic growth. The last thing he needs is "complex arguments of banking and refineries and whatnot," as one type of oil is the same as another. That's why for him, the idea of peak oil and forums like this are irrelevant.

So much for ironies. :roll:

$this->bbcode_second_pass_quote('', '
')
Can you refute the basics of the case in anyway whatsoever?



Done multiple times in my messages.

$this->bbcode_second_pass_quote('', '
')
Oh, and I'm glad we can agree that reserves are increasing. This is progress! :-D

We never disagreed on that. All I did was explain why those reserves are increasing, but added that it won't matter.
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Re: World Oil reserves: declining - but how fast?

Unread postby ralfy » Tue 02 Jul 2013, 23:09:11

$this->bbcode_second_pass_quote('John_A', '
')
You are quite right. The upper bound to the amount you can change flowrate in a given year would be the dedication of every man, woman and child, factory and country to doing what needs done to make oil.

An exogenous constraint to the how. Economics can sure be great when you flex it to the limits, am I right about that or WHAT?! :lol:

Maybe that is why economists put those non-linear lines in the supply/demand curves? They do basically say that there is no price at which you can supply a given demand. Goodness! Maybe they know some of that fancy pants math stuff! No wonder their stuff works so well sometimes! It would really be nice if there was a peak oil equivalent to the IEA supply/cost curve, if only to start a conversation on the how.


Image


C'mon, "flexibility" is the heart of economics. With credit like this:

http://www.washingtonsblog.com/2012/05/ ... arket.html

how can we lose? :roll:
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Re: World Oil reserves: declining - but how fast?

Unread postby John_A » Wed 03 Jul 2013, 00:26:56

$this->bbcode_second_pass_quote('ralfy', '
')$this->bbcode_second_pass_quote('', '
')
Yes..many ironies. But none of them have so far discounted either the resources available, or the ever growing ability to manufacture liquid fuels from them.



As I explained earlier, the first is a given, and the second not true.


Well, if you think that crude oil goes straight from the ground to your gas tank in the car, boat motor, lawnmower or weedwacker, then I think we are done here. A conversation requires at the very least the facts of the matter to not be in dispute, and anyone who doesn't think that a refinery manufacturing the products they need doesn't exist is living in a world other than mine.

Its been fun ralfy, let us know how that conventional crude works out for you the next time you put into your car, kay?
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Re: World Oil reserves: declining - but how fast?

Unread postby ralfy » Wed 03 Jul 2013, 12:28:48

$this->bbcode_second_pass_quote('John_A', '
')
Well, if you think that crude oil goes straight from the ground to your gas tank in the car, boat motor, lawnmower or weedwacker, then I think we are done here. A conversation requires at the very least the facts of the matter to not be in dispute, and anyone who doesn't think that a refinery manufacturing the products they need doesn't exist is living in a world other than mine.

Its been fun ralfy, let us know how that conventional crude works out for you the next time you put into your car, kay?


It's the other way round: you were the one who kept thinking "that crude oil goes straight from the ground to...." That's why you kept referring to reserves, argued that money can deal with the problem of production cost, that consumers don't care where their oil comes from, and that it's all just "basic supply and demand."

In short, your last sentence refers to you.
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Re: World Oil reserves: declining - but how fast?

Unread postby John_A » Thu 04 Jul 2013, 11:08:54

$this->bbcode_second_pass_quote('ralfy', '')$this->bbcode_second_pass_quote('John_A', '
')
Well, if you think that crude oil goes straight from the ground to your gas tank in the car, boat motor, lawnmower or weedwacker, then I think we are done here. A conversation requires at the very least the facts of the matter to not be in dispute, and anyone who doesn't think that a refinery manufacturing the products they need doesn't exist is living in a world other than mine.

Its been fun ralfy, let us know how that conventional crude works out for you the next time you put into your car, kay?


It's the other way round: you were the one who kept thinking "that crude oil goes straight from the ground to...."


Sorry ralfy, but black isn't white.

You are the one making fake distinctions in order to then whip out, and then characterize, various blogs and whatnot as somehow supporting your position that those distinctions matter. They do not.
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Re: World Oil reserves: declining - but how fast?

Unread postby ralfy » Sat 06 Jul 2013, 23:10:26

$this->bbcode_second_pass_quote('John_A', '
')Sorry ralfy, but black isn't white.

You are the one making fake distinctions in order to then whip out, and then characterize, various blogs and whatnot as somehow supporting your position that those distinctions matter. They do not.


Actually, those points apply to you. You were the one who was looking at this as simply as matter of "basic supply and demand," ironically contradicted by the claim that consumers don't care where their gasoline comes from, which in no way negates physical limitations of extracting more oil, but which you think is "solved" by the fact that we have an abundance of oil.
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6 Key Oil & Gas Discoveries of 2013

Unread postby Graeme » Tue 30 Jul 2013, 17:22:10

6 Key Oil & Gas Discoveries of 2013 – Who's Worth Owning

$this->bbcode_second_pass_quote('', 'T')he pace of oil and gas exploration is frightening, and discoveries are weekly, if not daily, with volumes investors would only have dreamt of a decade ago. With each new discovery, it becomes difficult to keep track of the playing field, and even more difficult to rank the potential. There are also a lot of juniors popping up on the scene now, exploring, finding and developing with the intent to lure the bigger players to buy them out. So we'll make it easy for you here, with our list of 6 key oil and gas discoveries so far this year, followed by a short list of the companies we think have the best potential—and they're not necessarily the ones who have made the biggest discoveries.

Last year, it was all about East and West Africa, with game-changing finds in Kenya, Mozambique, Angola, Ghana and Ivory Coast that have sent explorers on a feeding frenzy looking for analog plays in the region and finding plenty. This year, so far, we like the discovery revival in the Gulf of Mexico and handful of new sub-salt and pre-salt plays.

6 Key Discoveries of 2013

Shenandoah-2/Gulf of Mexico


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