[Graeme]

Peak Oil: Are We In The Eye Of The Storm?

$this->bbcode_second_pass_quote('', 'T')en years ago peak oil was assumed to be a rather straightforward, transparent process. What was then thought of as “oil” production was going to stop growing around the middle of the last decade. Shortages were going to occur; prices were going to rise; demand was going to drop; economies would falter; and eventually a major economic depression was going to occur. Fortunately or not, depending on your point of view, the last ten years have turned out to a lot more complicated than expected. Production of what is now known as “conventional” oil did indeed peak back around 2005, and many of the phenomena that were expected to result did occur and continue to this day.

Oil prices have climbed several-fold from where they were in the early years of the last decade – surging upwards from $20 a barrel to circa $100. This rapid jump in energy costs did slow many nations’ economies, cut oil consumption, and with some other factors set off a “great” recession. Real economic hardships have not yet occurred.


What is so interesting about all this is that a temporary surge in what was heretofore a little-known source of oil in the U.S. is masking the larger story of what is taking place in the global oil situation. The simple answer is that except for the U.S. shale oil surge, almost no increase in oil production is taking place around the world. No other country as yet has gotten significant amounts of shale oil or gas into production. Russia’s conventional oil production seems to be peaking at present, and its Arctic oil production is still many years, or perhaps even decades, away. Brazilian production is going nowhere at the minute, deepwater production in the Gulf of Mexico is stagnating, and the Middle East is busy killing itself. On top of all this, global demand for oil continues to increase by some million b/d each year – most of which is going to Asia.

If we step back and acknowledge that the shale oil phenomenon will be over in a couple of years and that oil production is dropping in the rest of the world, then we have to expect that the remainder of the peak oil story will play out shortly. The impact of shrinking global oil production, which has been on hold for nearly a decade, will appear. Prices will go much higher; this time with lowered expectations that more oil will be produced as prices go higher. The great recession, which has never really gone away for most, will return with renewed vigor and all that it implies.

[ROCKMAN]

"Are We In The Eye Of The Storm?" Not a bad analogy IMHO. Has anyone else stood in the eye of a hurricane? I actually did in my youth. Surreal to say the least: went outside when wind noise went away. Looked up at a small patch of blue sky. Still had some rain blowing in almost horizontally. Much like our current energy situation there was a sense of calm but no illusion that the threat was over. A real life case of waiting for the other shoe to drop. Just like many feel about the current energy dynamic. Not sure if it happened before or after the eye wall passed over the area but one of my school mate's aunt was killed in this storm.

$this->bbcode_second_pass_quote('', 'B')y Post Carbon

[Graeme]

I'd like to repost an the article that Keith McClary posted in the Fracking thread.

$this->bbcode_second_pass_quote('', 'O')thers, oil guys deeply involved with the bidness, seem to be sidling toward the exits, nostrils twitching. Royal Dutch Shell, one of the biggest players in the fields of fracking — it amassed at least $13 billion in leases in five years, starting in 2008 — appears to be leaving the building. While laying down a fog of statements about “restructuring… refocusing… renewed commitment” and the like, the company seems to have all but abandoned the North American shale business (in which, interestingly, it never made any money).

British Petroleum seems to be executing a similar tiptoe toward the EXIT sign. It has rolled all its American shale holdings into a company that doesn’t even bear its name (how low do you have to go before you’re too disreputable to be known as BP?) which is often a precursor move to a sell-off. BP’s CEO now dismisses the fracking revolution as a “lower margin, lean business” more suited to “independent operators,” otherwise known among con artists as “greater fools.” And he talks excitedly about how well the company is going to do with new deepwater wells in the Gulf of Mexico. Yeah, that ought to go well. Hard to see what could go wrong with that.

[GHung]

Yeah copious, luv the chart,, from EconomicMagic. Nothing like a little magical thinking, or magically substituting things for crude oil that aren't really crude oil. The Magic Land of Allakazam... where professional liars get paid copious sums to feed the shrooms.

[Tanada]

Eye of the storm is just another way of saying global peak plateau, IMO. The difference is when the plateau ends the decline will be very real, like the other side of the storm cell, but what we have had already was more of a thunderstorm than a hurricane.

[Newfie]

"Plateau" made me think of "butte" ... It's flat right here, but no way out but down. Sorta similar to the " eye of the storm." Hadn't thought of it quite that way before.

[Armageddon]

$this->bbcode_second_pass_quote('copious.abundance', '')$this->bbcode_second_pass_quote('', 'B')y Post Carbon

[Keith_McClary]

$this->bbcode_second_pass_quote('copious.abundance', 'O')ops. It's, like, 2 million bpd above that. So much for that prediction!

[copious.abundance]

$this->bbcode_second_pass_quote('GHung', 'Y')eah copious, luv the chart,, from EconomicMagic. Nothing like a little magical thinking, or magically substituting things for crude oil that aren't really crude oil. The Magic Land of Allakazam... where professional liars get paid copious sums to feed the shrooms.

[dolanbaker]

I'm surprised that no one else has already posted this...
According to the author, peak oil at 2014 is still on track!
This is despite increased production from the US via fracking.

http://peakoilbarrel.com/david-archibald-lto-plus-net-imports/#more-4629

$this->bbcode_second_pass_quote('', 'L')ooking at his second chart it looks like he is predicting the peak of world oil production to be this year, 2014. That falls within my prediction of a peak in 2015, give or take one year.

[copious.abundance]

I think I'm getting a nice case of deja vu from looking at that graph.


Remember this?

[Dybbuk]

$this->bbcode_second_pass_quote('copious.abundance', 'A')nd so on, and so forth, ad nauseum from the same doom and gloom crowd. I never cease to be amazed at the inability of some people to learn from their own mistakes. If your prediction of doom turned out to be dead wrong 3 years ago - never mind! Just forget about it and keep predicting doom and gloom anyway!

[Keith_McClary]

$this->bbcode_second_pass_quote('Dybbuk', 'I') keep hearing this "argument" from anti-PO types. The basic template is this: "since you predicted doom in the past, and it didn't happen, that proves that it won't happen in the future".

[dolanbaker]

If you exclude the increase brought about by the jump in price that made fracking viable, then that prediction was fairly close!
$this->bbcode_second_pass_quote('copious.abundance', 'I') think I'm getting a nice case of deja vu from looking at that graph.


Remember this?

[ROCKMAN]

Donlan – And this is a trap brought on partly by some of the PO crowd being so obsessed with dates and volumes. As you point out had someone predicted a 300%+ increase in oil prices some would have made higher projections of future drilling/production. But I doubt many of those folks are on this site. Only folks like the Rockman, westexas, etc. would have understood that potential. As I’ve pointed out many times all geologists have file cabinets full of prospects that are only viable at higher prices. I generated my current horizontal drilling project about 10 years ago. No place to go with it when oil was $30/bbl. And today I’m drilling.

Regarding the folks that like to criticize those past incorrect predictions: I would like to see where even one of them predicted the current price of oil a decade ago. Of course, they avoid the discussion of current oil prices because it distracts from their claim that PO is “dead”. And again as I’ve pointed out before: I consider the surge in shale drilling and that production increase as one of the strongest validations of PO. A concept that the anti-POlers avoid like Ebola. LOL.

[westexas]

Based on foregoing assumptions, I estimate that actual annual global crude oil
production (45 or lower API gravity crude oil) increased from about 60 mbpd
(million barrels per day) in 2002 to about 67 mbpd in 2005, as annual Brent
crude oil prices doubled from $25 in 2002 to $55 in 2005. 


At the (estimated) 2002 to 2005 rate of increase in global crude oil production,
global crude oil production would have been up to about 90 mbpd in 2013. 


As annual Brent crude oil prices doubled again, from $55 in 2005 to an average
of about $110 for 2011 to 2013 inclusive, I estimate that annual global crude
oil production did not materially exceed about 67 mbpd, and probably
averaged about 66 mbpd for 2006 to 2013 inclusive.

[sparky]

.
yes I believe this is the eye of the storm
With all due respect to being wrong often enough and trying hard not to walk down the internet street
with a DOOM IS UPON US billboard , the facts are dire

A soft world economy had dampened demand , major oil companies are not making enough money to spurge on R&D
old field are depleting day by day ,
the recent offshore oilfields have a depletion profile much steeper than land based ones
the new great hopes are tar sands , not very easy to ramp up to 5 Mb/d
and the tight oil whose production also would not rise at the 5 Mb/d mark

in a few years , the economy might have rosy cheeks and start looking for new crude supplies
they are not there at the present price ,

[ROCKMAN]

wt - Once again you show your economic ignorance. Any economist will tell you that as the price of a widget increases more will be produced. Increasing prices will always induce greater production. The fact that those reserves don't actually exist shouldn't inhibit one from drawing the appropriately optimistic chart of future crude oil production.

Dumb ass geologist. LOL

[westexas]

Guilty as charged.