[onlooker]

Asg, that is patently wrong. We Realists not Doomers constantly are relying on the Science and the Scientists to support our claims. The general public and Media of the US are the ones who tend to denigrate that Science and what the Scientists are saying. Not only that it is pretty clear that strong pressure and censorship is occurring to try and impede certain messages from the scientific community from coming out. As one example, the famous climate scientist Dr. James Hanson was muzzled at NASA when he tried to voice is concerns about climate change. So, the literature is quite clear now on climate change. Peak Oil is a bit more convoluted but definitely we are on the downslope and waning days of the Oil Industry. Nobody can say definitively when the final slide of our Oil dependent societies will occur but certainly the better days have passed regardless of what you hopeless optimists might say.

[donstewart]

@Rockman
Did the ETP model predict an increase in EROEI?
We have to be very careful when using ROI, EROI, EROEI and similar concepts. I believe you said the other day that EROI had increased because the cost of well services has declined. That development has nothing to do with EROEI as it would be defined in the ETP model. The inputs are measured in energy (or at least translated from dollars to energy) and the outputs are measured in energy. What Halliburton charges for doing their work is not relevant. It IS relevant that fracked wells involve moving a lot of sand and water around, which requires a lot of energy.

The ETP model is based on the notion that the cheaper wells would tend to be drilled first, with the more expensive wells deferred until later. So, No, the ETP model does not predict that wells will get cheaper in terms of energy in vs. energy out.

One can make inferences from the ETP model which might indicate that wells could have higher ROIs as the oil industry begins to collapse. Companies are under pressure to produce cash flow, which causes them to charge less than the amount they need to continue as stable, innovative companies. Such 'going out of business' strategies can make the ROIs improve and create opportunities for people such as yourself to game the system and make some money. But they don't foster a growing industry for the indefinite future.

Which is why Mr. Hill keeps talking about reserve replacement. An industry which is not replacing its reserves does not have a long term future. It can report profits, and some people can make some money, but it is going out of business.

Don Stewart

[donstewart]

'The only thing that matters is the data.'
Not true on the surface, but possibly has a deeper truth. Let me explain.

As Lisa Barrett explains, our decision making is dependent on how we feel about things. Now let's consider someone going out and getting in their new SUV or Rolls-Royce or whatever and picking up their girl friend and going for a drive to some nice place. They are likely to feel uniformly good, if things go well with the girl friend. They don't worry about climate change or Peak Oil or the fact that the city can't afford to maintain the roads. They don't worry that keeping gas in the tank requires that millions of people in the middle east die.

But then, into the good feelings, education begins to somewhat change things. They begin to learn about the negatives implied by driving around. So they have some internal conflict. Nobody ever said life was going to be easy. Barrett makes the point that one of the existential conflicts humans face is 'getting along vs. getting ahead'. As semi-social animals we are not designed to live along like a male Grizzly Bear. We are designed to live with other people. But neither are we like an ant or a bee which is almost totally submerged into the colony. There is no magic formula, but nature has designed our brains so that we can form concepts which help us navigate the stormy waters.

Jeffrey Sachs, the Harvard economist, quotes E.O. Wilson, the beetle expert: 'we have stumbled into the 21st century with stone-age emotions, medieval institutions, and near godlike technologies. In short, we are not yet ready for the world we have made.' The statement is not only wrong, it is dangerous. We are born into this world with some very basic interoceptions: pleasant vs. unpleasant, warm vs. cold, etc. We develop our emotions as we experience the world. Therefore, all American adults today developed their basic emotional repertoire in an industrial society. The notion that it was our birthright to drive a car to pick up a girlfriend developed in our teenage years.

Now let's consider what happens when that emotional state meets with some cognitive dissonance in the form of predictions about climate change and peak oil and ecological devastation and some unpleasant facts about middle eastern wars and politics. Some people will swear off cars, but most actually keep right on driving. Politicians, and scientists speaking in public, tend to assure us that we will still have cars, they will just be electric. They tend not to tell us how daunting it would be to try to replace all the oil energy with solar and wind energy in the form of electricity. The public, which is not as dumb as many think it is, react with distrust to the statements by the politicians and the scientists trying to reassure us. Paying more money for cars which don't perform as well is not a dream of the advertising agencies. At this level, experiences favor conservatism...doing what we learned to do as teenagers.

Now, suppose that climate change really happens, we really do hit thermodynamic limits in terms of fossil fuels and internal combustion engines, and the environment begins to look like Beijing. Then we can predict that humans WILL adjust or die. Going by the experience of the Soviet Union, many may die, but not everyone. Boys and girls will still fall in love. With modern birth control, they may be very reluctant to start families. In short, they will make fairly rational decisions when confronted with a reality they cannot change. How much reality does it take to prompt change? That is going to vary by individual. But at some point, the teenager experiences will fade into the background, except for rueful reminiscences. So old experiences become less relevant.

Don Stewart

[asg70]

$this->bbcode_second_pass_quote('donstewart', '
')Which is why Mr. Hill keeps talking about reserve replacement.

[asg70]

$this->bbcode_second_pass_quote('onlooker', '
')the better days have passed regardless of what you hopeless optimists might say.

[donstewart]

@asg70
'price goes up...endless circles'
We go around in endless circles because the ETP model is about thermodynamics, while many critics want to talk as if the economy is an exercise in money.

Don Stewart

[onlooker]

while many critics want to talk as if the economy is an exercise in money.---
Precisely and endlessly revert to the economic axioms like supply/demand interaction without trying to see more deeply and with more foresight.

[donstewart]

money and the ETP model
I have come up with a thought experiment which may illuminate the differences which keep the discussion going around in circles. Bear with me.

Suppose you are a modern American with a laptop who survives a shipwreck and ends up on a desert island. The laptop has a small solar panel on it, so it keeps working after the battery would otherwise have died. So you can get all the information that is on the internet. If you want to know how to climb a coconut tree, you can find the information. If you want to know how to make fishing tackle out of what you can find and work by hand, that information is available. If you want to build a steel mill, you will find directions. But let’s also assume that the outside world has no interest in you whatsoever. No quantity of SOS messages will bring Dmitry Orlov in his Quidnon to your rescue.

The island has some coal. But after a little experimentation, you discover that it costs more calories to dig and use the coal than the work you can get from it. But you have platinum credit cards which, theoretically, give you lots of money. You also have a few thousand dollars in your wallet.

Now think about how you will live. And I submit that the money is irrelevant. The information is essential, because otherwise you would quickly die. After a pretty steep learning curve you are living at about the level of the polynesians when Captain Cook encountered them. It’s not a bad life, once you get used to it. But it is sure not the life you led back in Cupertino, CA.

Don Stewart

[ROCKMAN]

Don - "I believe you said the other day that EROI had increased because the cost of well services has declined.". Actually that's just the opposite of what I said. If the price of oil is fixed and drilling/frac'ng/completion costs DECREASE it would allow companies to drill prospects with lower EROEI's. That's because lower costs would increase the rate of return and thus allow target a smaller oil recovery.

It's the significant DECREASE in the price of oil that has INCREASED the EROEI of wells drilled today compared to comparable wells drilled a few years ago. Remember we base drilling decisions on the rate of return...not the EROEI. Well A has an EROEI OF X and an accerptable ROR of Y because it recovers 200,000 bbls of oil that sells for $90/bbl. And Well B is identical to Well A but oil is now selling for $50/bbl then the only way for Well B to generate the same ROR of Y it will have to recover a lot more the 200,000 bbls of oil. Which essentially means Well B has to be a better prospect the Well A. Which is exactly what we're seeing now: better initial production from wells drilled not to those of a few years ago.


"...has nothing to do with EROEI as it would be defined in the ETP model." So how is it defined? As far as I've seen everyone defines it the same...even those there's a good bit of variation in the calculation based upon different assumptions made. If the model is not defining EROEI the same as the rest of the world then it explains why it doesn't fit into a context many here can follow.

But my question, which I don't think you answered: did the model assume the EROEI (as most here define it) of oil development would increase the last two years?

[AdamB]

$this->bbcode_second_pass_quote('donstewart', 'D')oom is predicated on pretending that things don't change

No, most doom is predicted by studying trajectories and trying to figure out where they lead.

[ROCKMAN]

Don - "...you discover that it costs more calories to dig and use the coal than the work you can get from it." And if that's the assumption (that the petroleum industry is a net money loser) the model it's based then it's obviously wrong. If you want to argue then you'll have to explain while the global petroleum industry is still drilling wells if producing and refining 90+ mm bopd at a loss.

And a warning: you just can't say "because someone calculated it is". To give a credible answer you'll need to present DOCUMENTED numbers.

[AdamB]

$this->bbcode_second_pass_quote('ROCKMAN', 'A')dam - Pay attention: the Rockman didn't define anything...Halliburton did. Don't like what the say go bust their balls. LOL.

[AdamB]

$this->bbcode_second_pass_quote('onlooker', 'I')t seems to me that Rockman is doing what your claiming he is not Adam. Focusing on Geological factors rather than economic with the statement
""Unconventional reservoirs are essentially any reservoir that requires special recovery operations outside the conventional operating practices. "

[AdamB]

$this->bbcode_second_pass_quote('onlooker', 'A')sg, that is patently wrong. We Realists not Doomers constantly are relying on the Science and the Scientists to support our claims.

[rockdoc123]

The term unconventional reservoir has had a number of "flexible" definitions. This poster presented at an AAPG annual convention summarized the issues:

Cander, H, 2012. What are unconventional resources? A simple definition using viscosity and permeability. Search and Discovery Article #80217.

$this->bbcode_second_pass_quote('', 'T')here is no formal definition of “unconventional resources” despite the fact that unconventional resources are the most active petroleum play in North America. Meckel and Thomasson, 2008, defined unconventional resources using purely a permeability threshold (< 0.1 md). Yet, coal bed methane plays are considered unconventional and many have permeabilities exceeding 1 md over large portions of the fairway (ex: San Juan Basin, Powder River Basin). Other workers have defined unconventional resources based on an interpretation of the petroleum system and have stated that unconventional resources are “continuous” or “basin centered” and lack traditional traps. While some have restricted the term to product type (i.e. unconventional gas), many shale and tight sand plays have gas, wet gas, and oil fairways and all can be considered unconventional. Heavy oil and oil sands are also unconventional resources and many of these deposits are in reservoirs with permeability exceeding 500 nd. Thus, unconventional resources include both low and high permeability reservoirs with both low and high viscosity fluids. Previous definitions have not accounted for all phases of petroleum in all types of reservoirs in all types of petroleum systems. This paper proposes a simple graphical definition that incorporates properties of both the rocks and their fluids. All petroleum reservoirs can be plotted on a graph of viscosity versus permeability (both in log scale). On this graph, conventional resources all plot in the lower right quadrant, regardless of fluid phase. All unconventional resources plot outside this quadrant due to a low ratio of permeability to viscosity. Unconventional resources are thus defined as those petroleum reservoirs whose permeability/viscosity ratio requires use of technology to alter either the rock permeability or the fluid viscosity in order to produce the petroleum at commercially competitive rates. Conversely, conventional resources are those that can be produced commercially without altering permeability or viscosity. This simple graphical definition avoids the pitfalls inherent in a petroleum system interpretation (i.e. basin centered or self- sourced versus migrated petroleum). The graphical definition accommodates and delineates tight gas, tight oil, shale gas, shale oil, heavy oil, coal bed methane, and even offshore reservoirs with low k/viscosity ratios.

[donstewart]

@rockman
(I tried posting this once, but I don't think I succeeded. So, second try.)
@Rockman
OK. I think I understand your argument. A couple of years ago somebody who was calculating EROEIs in the tar sands pointed out that declining production increased the EROEI calculations. I’m not an expert practitioner of those calculations, so I accepted the statement at face value. If we accept that, at any given time, there is a distribution of prospects, then lower prices will tend to restrict the choices to the more profitable prospects. EROEI will go up.

You could talk to Mr. Hill, but I don’t think ETP works that way at all. It uses aggregate statistics such as price to estimate cost (except for the anomalous period of the Arab Oil Embargo). It is also very important to understand that ‘cost’ means the cost of production for a stable company…not one going out of business. The ETP model is not about stripper wells. The assumption is that price reflected cost. If price had been lower than cost, companies would have exited the market. If price had been a lot higher than cost, companies would have increased production rapidly. So the assumption that, over longer periods of time, price equals cost is not necessarily a bad assumption.

Using that kind of information, Hill’s Group could back into a calculation of EROEI. They DID NOT study several thousand oil fields. Therefore, their numbers are not affected by things like the slowdown in the tar sands nor the decline in drilling in the US. But then the EROEI is not a determinant of the outcome in the same way that Charles Hall would use the number.

As for ‘DOCUMENTED NUMBERS’, you will never be happy with the ETP model because it does not start from information about fields and it is not primarily about money. It is a little like the dispute in economics. Mainstream economists insist that macro modeling must start from the micro…aggregating all the households and firms, for example. But Steve Keen responds that starting from the micro is impossible, and when attempted leads to disastrous results. Instead, Keen uses aggregate numbers such as growth of private debt. So far, I think Keen is doing a better job than the mainstream modelers. Similarly, the ETP model is mostly built from aggregate numbers. We know that the car is going down the road at 70 miles an hour, but we don’t know the details of how each cylinder is firing.

Insisting on micro to macro is like saying that ‘I won’t believe Keen’s analysis of the Crash of 2008 because he didn’t start with household budgets’. If the macro is convincing, and cannot be derived from the micro, then you pay your money and you take your choice. I take the same agnostic approach to the ETP model. Is it describing what I can see in the economy? Does it explain why credit growth is out of control? Does it explain why wages for the bottom 95 percent are falling? And the answer, as in all science, is that the ETP model is NOT FALSIFIED by what I can see happening. The more reality behaves in the way one would expect from looking at the ETP, the more confidence I have in it. But I am always open to better explanations.

Don Stewart

[donstewart]

@AdamB
'the great prognosticators'
I distinctly remember the presentations by Robert Hirsch between 2005 and 2010. He wrote a book around 2010 with an introduction by James Schlesinger. He pointed out that electricity could be generated lots of ways. That the real issue was transportation. No primary source of energy could approach crude oil in terms of powering transportation. The same theme carries through Alice Friedemann's book When Trucks Stop Running. And the same theme makes its way through David Fridley's recent study where they state that 99 percent of the payloads carried are carried by trucks, trains, ships, and planes which are powered by diesel or equivalent. If there has been enormous advances in carrying payloads since 2005, I am just not aware of it. Incremental improvements such as streamlining trucks and perhaps working on the backhaul issue, but nothing dramatic so far as I know.

The question of whether oil has passed its half-way point, as Mr. Hill maintains, is just as relevant as it ever was.

Whether light, tight oil is a thermodynamically suited fuel for carrying payloads has been a subject of dispute here.

Don Stewart

[asg70]

$this->bbcode_second_pass_quote('donstewart', '
')No primary source of energy could approach crude oil in terms of powering transportation.