[AdamB]

$this->bbcode_second_pass_quote('ralfy', 'O')r we might be looking at multiple crises (including peak oil and global warming) amplifying each other and leading to a "perfect storm."

[ralfy]

One may stay on topic only if it is safe to assume that oil production and use are not connected in any way to environmental damage, global warming, and even the global economy.

[sparky]

.
Hmmm !, like carefully touching a sore tooth , there is something here

the demand is for products , that's a given
the supply is historically about crude extraction

While the consumer hardly care where the juice come from , and really why should he ?
the supplier has been , so far , looking for fossil hydrocarbon far and wide , high and low
from the frozen wastelands to the deep blue sea , and sometime from both
even Antarctica is not unimaginable , just not practical .

while one can think of ways to keep the demand satisfied ,
the supply side is somewhat less cheerful ,
after all most of the leaders in the peak oil theory have been oil geologists
I can appreciate a certain amount of flakiness in the advocate of peak oil ,
still that hardly change some very basic facts
what would be today production if the price was 10$ a barrel ?
for a yearly outlook ,it would seems that the supply/demand tipping point is around 50$
the recent drop in price was due to temporary factors , we now looks at a return to balance

and 50$ seems to be it ,
November 1998 and january 2016 were freak down-peak, unrelated to the business of getting the stuff out of the ground
considering the depletion rate of the old cheap fields ,
fracking and tar sands will have to increase their production to take the slack ,
can they produce 20 millions a day for a decade , 10 millions , 5 millions ?
I don't know !

[ROCKMAN]

Sparky - "...most of the leaders in the peak oil theory have been oil geologists". Hmm, so the individuals whose livelihood requires them to struggle daily to find the next well to drill aren't bubbling with enthusiasm about the future? Go figure. LOL. As said long ago: the easiest jobs out there is the ones someone else has to do. Fortunately for the oil patch we don't lack outsiders setting goals for us. So if we fail to achieve those goals the public has only us to blame.

[ralfy]

Oil producers need higher prices because cost has gone up. Cost has gone up because of peak oil. At some point, production will drop no matter what happens to prices.

Consumers need low prices because their disposable income isn't sufficient. More credit created trickles down to them but the bulk remains in the hands of the rich which engage in financial speculation. That speculation leads to volatility in oil and in other commodities, which makes matters worse. It also leads to financial crashes prompting governments to create more credit to save the rich who lost. Increased credit makes the situation even more volatile, and that also affects the oil industry.

Consumers still have basic needs, and because of the size of the global population, oil demand has to keep increasing just to meet those needs. No amount of credit creation or magical technofixes will be able to replace oil to meet those needs.

The middle class and the rich earn from credit creation, i.e., through investments in businesses that need cheap labor and energy to produce more goods and services to meet those basic needs. As more profits are earned from middle class conveniences, they also want more of those as well. The same goes for consumers, most of whom want not just basic needs but conveniences from furnished homes to cell phones to more advanced health care.

That means not just oil production but that of various minerals have to keep rising considerably until population growth slows down and eventually levels off. At the same time, oil production costs have to drop. As one report points out, in order to just maintain oil production the equivalent of four Saudi Arabias will be needed during the next few decades. To increase production, more than that will be needed. And for material resources overall, the equivalent of one more earth will be required.

Oil consumption leads to more pollution, and that has a financial cost on the global economy. So does global warming, which is one of the results of pollution. That also decreases resource availability because it leads to environmental damage.

[AdamB]

$this->bbcode_second_pass_quote('sparky', '.')

after all most of the leaders in the peak oil theory have been oil geologists

[sparky]

.
OK OK , I concede !! ,

I was thinking of Hubbert , Deffeyes , Cambell and other industry geologists and CEO who have expressed their worries
about an ever rising production .

The demand for C+C has no obvious natural limit , while the supply of C+C face some serious issues
certainly there are other energy and feed-stocks precursors available ,
but they come at a price , both financial , technical and political

Can they be made as cheap and plentiful as crude ?
it would require some very massive effort to work 33 millions barrel a day of Venezuelan or Canada extra heavies
fracking was a divine surprise ,
however a look at the typical depletion curve tell us that if the production reach 10 millions barrels /days
there will have to be a truly staggering number of drilling to keep up with that number .

a few years ago I learned than Santa Claus is not real ,

It seems to me that C+C extraction will peak then decrease , maybe not in a smooth symmetrical curve
this follows the basic law of extracting industries ,
if you dig something out , it will run out

[AdamB]

$this->bbcode_second_pass_quote('sparky', '.')
OK OK , I concede !! ,

I was thinking of Hubbert , Deffeyes , Cambell and other industry geologists and CEO who have expressed their worries
about an ever rising production .

[Darian S]

GTL ?

Can that scale? scale massively? If it can't scale to supply a global fall in supply, even the price of GTL will go up drastically beyond that mentioned.

In any case a hypothetical rise in cost of fuel ten fold will not just affect transportation cost of the end consumer, but will affect the cost of products, labour, everything.

[ROCKMAN]

Ralfy - "Cost has gone up because of peak oil." Might sound picky but not really true. For instance costs boomed in the late 70's for the same reasons as they just did. First, drilling costs ared a function of how much oil you drill and the rig rates. So naturally drilling a 5,000' hz well will cost more then a 1,000' hole. Doing 64 frac stages will cost a lot more then 8 stages. It also costs a lot more to drill a 30,000' hole in 5,000' of water then a 12,000' hole in 400' of water. Second, demand for drilling infrastructure has a huge impact on costs. Prior to the shale boom the identical equipment jumped from around $14,000/day to $35,000+/day. Frac'ng costs increased more then 3X.

IOW the primary cause high drilling cost was the high price of oil. Between longer/deeper wells and very high demand for equipment the increase was predictable. Just as was the huge decrease in drilling costs as a result of lower oil prices.

Think about it: whenever global PO hits we are closer to it now then 3 or 4 years ago. And drilling costs have declined. IOW have costs gone down now BECAUSE of PO? Same APPARENT correlation you used to make your original statement, right?

[Subjectivist]

ROCKMAN, are there any oil formations current or past that have no water layer in the formation? I ask because someone suggested storing Ethanol in old oil formations, but if they have water in them it would dilute the ethanol and make you distill it again to separate the water.

[ralfy]

$this->bbcode_second_pass_quote('ROCKMAN', 'R')alfy - "Cost has gone up because of peak oil." Might sound picky but not really true. For instance costs boomed in the late 70's for the same reasons as they just did. First, drilling costs ared a function of how much oil you drill and the rig rates. So naturally drilling a 5,000' hz well will cost more then a 1,000' hole. Doing 64 frac stages will cost a lot more then 8 stages. It also costs a lot more to drill a 30,000' hole in 5,000' of water then a 12,000' hole in 400' of water. Second, demand for drilling infrastructure has a huge impact on costs. Prior to the shale boom the identical equipment jumped from around $14,000/day to $35,000+/day. Frac'ng costs increased more then 3X.

IOW the primary cause high drilling cost was the high price of oil. Between longer/deeper wells and very high demand for equipment the increase was predictable. Just as was the huge decrease in drilling costs as a result of lower oil prices.

Think about it: whenever global PO hits we are closer to it now then 3 or 4 years ago. And drilling costs have declined. IOW have costs gone down now BECAUSE of PO? Same APPARENT correlation you used to make your original statement, right?

[ROCKMAN]

Ralfy - OK, didn't know what you were referring to...just what you said: "Cost has gone up because of peak oil." Which, as I proved in detail, is not correct. As I said: if the cost has increased because we reached PO then why have costs decreased so much in the last two years...because we've passed PO? And why did drilling costs boom as much in the late 70's as we just experienced...did we hit global PO over 40 years ago?

As I've explained many times: the year after we hit global PO we may see record high oil prices. Or we may see oil prices lower then we had seen for a decade or two. The oil price dynamic is much more complex then just a function of how much oil can be produced at some point in time.

[sparky]

.
The discussion is evolving nicely around the dynamic of demand/supply

Upstream , the feed-stock .
a high price motivate the costly search and development of new resources
it increase supply with a time lag
a low price initially stimulate supply from the cheap existing production
but through depletion after a time lag decrease supply

Downstream , the products
a high price initially depress the consumer by sucking money (value) out of his potential spending into purchase of his habitual usage .
after a lag ,some adjustment or alternate modification of his usage decrease demand

coupled with the natural depletion this lead to rising prices

I conceive this as a cart with a loose load , it add an inertia in the dynamic counteracting any forces to sudden change ,
it is an unstable arrangement , in control system we call it a positive feedback mechanism ,
it's very bad , a change push toward more change until the system bang itself from the floor to the ceiling

Have you noticed any boom to crash in the crude oil business ?

[AdamB]

$this->bbcode_second_pass_quote('Darian S', 'G')TL ?

Can that scale? scale massively? If it can't scale to supply a global fall in supply, even the price of GTL will go up drastically beyond that mentioned.

In any case a hypothetical rise in cost of fuel ten fold will not just affect transportation cost of the end consumer, but will affect the cost of products, labour, everything.

[AdamB]

$this->bbcode_second_pass_quote('ROCKMAN', 'R')alfy - "Cost has gone up because of peak oil." Might sound picky but not really true.

[AdamB]

$this->bbcode_second_pass_quote('ROCKMAN', ' ')And why did drilling costs boom as much in the late 70's as we just experienced...did we hit global PO over 40 years ago?

[AdamB]

$this->bbcode_second_pass_quote('sparky', '
')Have you noticed any boom to crash in the crude oil business ?

[Zarquon]

$this->bbcode_second_pass_quote('ralfy', 'I') am referring to the cost of production chart shared here:
...

AB868.png

[ROCKMAN]

Adam - "Yes we did" Try to stay up with the conversation, buddy: we're talking global PO. Easy to get lost but the thread title, "100 mb/d" should have been a hint. LOL.

But if you want to go with the US that's OK: when US production reached its peak in the early 70's not only was the oil price low but had continually declined over the preceding 25 year period. Of course for geopolitical reasons (the Yom Kippur War embargo) the price of oil shot up after the US reached PO. IOW oil prices increased when the US was producing a near record high volume of oil. And what did the high oil prices yield: an increase in rig count to over 4,500. IOW the US derveloped the highest cost drilling period in history up to that point in time. And why then: high oil prices led to a huge inflation of drilling costs. You young whippersnappers weren't there, but the baby Rockman was. And the monies paid for quickly and poorly constructed drill rigs was absurd. Wells that cost just $150k prior to the oil price increase jumped to $450k+ almost overnight.

Of course the oil price/drilling cost knife cuts both ways: once oil prices collapsed the Rockman was drilling that pre US PO $150k well for $60k. Yes: 15 years AFTER the US passed its PO drilling costs were significantly lower then immediately after the peak. Just more proof that drilling costs have no relationship to PO...global or US. With respect to drilling costs as was said in that movie: "Follow the money". In this case follow the price of oil and not the production rate.