[Zero-point]

The New Pessimism about Petroleum Resources:
Debunking the Hubbert Model
(and Hubbert Modelers)
Michael C. Lynch
http://www.gasresources.net/Lynch(Hubbert-Deffeyes).htm

Has anyone read that paper? Any comments? He makes a very good case and if I'm not mistaken all peak oil is based on Hubbert type models which are flawed and not based on real oil production and related influences.

[cipi604]

Yeah, I may have a comment on this one:
$this->bbcode_second_pass_quote('', 'T')he primary flaw in Hubbert-type models is a reliance on URR as a static number rather than a dynamic variable, changing with technology, knowledge, infrastructure and other factors, but primarily growing. Campbell and Laherrere claim to have developed better analytical methods to resolve this problem, but their own estimates have been increasing, and increasingly rapidly.

[Zero-point]

If I understand the URR flaw correctly, it's revised upwards for a variety of reason not just improved extraction technology.

What about the other criticisms of Campbell and Laherrere, i.e. they do not explain their methods, they don't provide adequate data to back up their claims, etc.

$this->bbcode_second_pass_quote('cipi604', 'Y')eah, I may have a comment on this one:
$this->bbcode_second_pass_quote('', 'T')he primary flaw in Hubbert-type models is a reliance on URR as a static number rather than a dynamic variable, changing with technology, knowledge, infrastructure and other factors, but primarily growing. Campbell and Laherrere claim to have developed better analytical methods to resolve this problem, but their own estimates have been increasing, and increasingly rapidly.

[TheDude]

We have an entire thread dedicated to Mike's criticisms, including responses from the man himself - user name "Spike" - Michael Lynch - Disputing Peak Oil.

[ROCKMAN]

Zero,

I’ll offer some insights re: this report based upon 34 years as a petroleum geologist. This doesn’t make me an expert but does show I have some base knowledge. Above all else, the conversation becomes very messy and confusing when we mix ultimate recovery with maximum flow rates. This is true whether we’re chatting about a single well or all global oil production. Of course, everyone is free to frame the discussion as they wish. I just to keep it simple. As far as the ultimate amount of oil the world will produce: I don’t have a clue and could care less. I know intimately how such numbers are generated. I’m not inferring that anyone’s number is more correct or not. Whatever that number is it will have no bearing on the world’s economies or our life styles. I see no point in waging academic warfare to prove one position or the other. Whether there are 200 billions bbls of oil left to produce or 200 trillion it won’t effect the supply/demand situation. And it’s that s/d relation that determines the health of the world economies.

The basic Hubble concept is really about rate. Some try to extrapolate it to mean much more. Hubble projected that US production would peak on a certain date. The US production did peak and very close to his date. Lucky or smart? I don’t know and I don’t care. He was correct: US production peaked. After reading the article some might think he was wrong. He wasn’t. FACT. At some point a well/a field, a geologic basin/the world will generate a production rate that will peak and then decline there after. In some cases, this rate decline might reverse and peak again for a short period. This is especially true for a well or field. But as the population becomes larger (many fields/many countries/the world) the possibility becomes much less likely. You can imagine it’s not to difficult to take a well that peaked at 1000 bbl/day (but now is making only 10 bbls/day) and turn it again into a 1000 bbl/day well by recompleting it to a shallower zone that has been behind casing all this time. Now, go to the other extreme: imagine taking a continent which peaked production at 10 million bbls/day but has now declined to 2 million bbls/day. What will you have to do to return this continent’s rate to 10 million bbls/day? Simple: just duplicate the successes you have on this landmass the last 60 years. Not so simple, eh? But you might go to another continent which has been explored very little and find another 10 million bbls/day. But now we’re talking about total global production rate. This is the PO that I refer to: that maximum rate the world will ever produce oil. This is not a theory as the article tries to frame. It is physical and undeniable fact of nature. Remember, we’re talking about how much oil can be produced daily….not how much is left to produce. I can promise you that there is more oil left to produce in the world then the most optimistic have offered. But it means nothing if it’s produced at a rate that does not support the needs of the world’s economies.

We can debate when that peak might arrive (if it hasn’t already). We can debate whether it will be a single peak or a series of peaks occurring along a plateau of sorts (my personal vision). We can debate that demand destruction will stretch out the periods between peaks. The decline of the world’s existing oil fields continues regardless of a drop in consumption as we’ve just experienced. Their production rate diminishes every day regardless of the decreased demand…just not as quickly. New fields coming on line (off shore Brazil etc), will add to the daily rate potential. But from the first day of production from these new fields they are beginning their own decline. And the old fields keep declining. The global economy will grow only as long as there is sufficient energy to fuel it. In time alternate forms may supplement that growth. But right now, and into the foreseeable future, extracted hydrocarbons will drive progress. And that progress can precede no faster then the flow of those hydrocarbons. Be it peak oil, peak coal or Peak natural gas, there will be a limit met one day.

[diemos]

URR can never exceed 100% of the oil that is present.

Therefore an increase in current extraction efficiency can change the date and maximum rate of the peak but oil will still peak and then decline.

[shortonsense]

$this->bbcode_second_pass_quote('Zero-point', 'T')he New Pessimism about Petroleum Resources:
Debunking the Hubbert Model
(and Hubbert Modelers)
Michael C. Lynch
http://www.gasresources.net/Lynch(Hubbert-Deffeyes).htm

Has anyone read that paper? Any comments? He makes a very good case and if I'm not mistaken all peak oil is based on Hubbert type models which are flawed and not based on real oil production and related influences.

[shortonsense]

$this->bbcode_second_pass_quote('ROCKMAN', 'Z')ero,

I’ll offer some insights re: this report based upon 34 years as a petroleum geologist. This doesn’t make me an expert but does show I have some base knowledge.

[yesplease]

There's also refinery capacity, which is going to cut the top off of a peak. No company is going to invest in refineries that may not recoup the build costs due to lack of oil to refine.

[DrBang]

ROCKMAN
Excellent post!

Cheers

Dr Bang

[ROCKMAN]

Holy Crap II Short,

No, I understand how that can be irritating but I didn't recall seeing zero here before.

Excellent rewrite of that statement IMO. I think that's where some folks get confused about the implication of PO. When demand destruction hits like it just has and the world seems like it's drowning in oil some folks think it will always remain the same. That's one reason I don't get into the oil price predicting game....too many what ifs have to be decided to come up with the number. That's also why I favor the plateau analogy with reciprocating peaks and troughs. What has surprised me is how quickly we've cycled between the two. I still suspect the future speculators may get a good bit of credit for that.

BTW.... have patience: next April I'll be able to say I have "35 years experience". See....PE Obama was right: change is on the way.

[TheDude]

Hey ROCK -

Any famous projects you've worked on? I understand the need for discretion+anonymity, but presumably the statute of limitations has run out on some of your portfolio. Always keen to hear another anecdote from the oil patch.

[shortonsense]

$this->bbcode_second_pass_quote('ROCKMAN', '
')
Excellent rewrite of that statement IMO. I think that's where some folks get confused about the implication of PO. When demand destruction hits like it just has

[ROCKMAN]

Now those are fighten' words short!!!!

On the one hand, demand can never exceed max production rate if you define "demand" as what the consumer can afford to pay. If OPEC were to magically loose 10 million bopd delivery tomorrow then oil would shoot through the roof again...let's say $200 bbl. The only buyers will be those who can afford that price. Thus demand will be met.

But the story takes on a whole different meaning if you define "demand" as the volume of oil the world economies need to sustain their economic viability. Just isolate the US as an example. If we lost 5 million bopd from our exporters tomorrow what do you think our economy would look like? No a pretty picture in the least. This would assume the US can't compete with the rest of the importers on a price basis. Maybe that might never happen...maybe it will. But eventually some fraction of the industrialized economies will not be able to acquire the energy they need to sustain themselves. Of course, such a deprivation would cripple that country’s economy and reduce oil demand proportionally. One could then say supply/demand is in balance. That point in time is my definition of PO and it is far from irrelevant.

Do you not think there will be a point in the future when the maximum delivery rate of oil from all sources will be half of what it is today?

[MonteQuest]

$this->bbcode_second_pass_quote('shortonsense', ' ')If demand/consumption can be kept under total rate, total rate doesn't matter. Its just that easy, and presto, PO is irrelevant.

[ROCKMAN]

I have a million oil patch stories Dude but not many pertinent to the discussion. Working on some Deep Water GOM projects now that will have there day in the sun soon. But nothing explosive to offer. Probably the most significant update I can offer along the way is the decline of the unconventional NG plays. Working inside one of the biggest players allows me an early look. Eventually all that info will hit the street as it's a public company.

Other then that, all I can offer is the continued effort to convince folks that the oil companies aren't wrapped up in one big conspiracy to screw the American people. God...if that were only true I could stop worrying about the slow up. I’ve worked for most of the majors at one point or the other and they can barely coordinate their internal efforts let alone those with the other companies. Back in the mid 80’s, when I was delivering produce to restaurants in order to pay the bills, I wished every day the companies had the ability to control oil prices.

[TommyJefferson]

$this->bbcode_second_pass_quote('Michael Lynch', '.')..while the bell curve is not necessarily the precise path likely to be followed, its presence is hardly proof of an immutable, natural, scientifically-determined law.

[yesplease]

$this->bbcode_second_pass_quote('TommyJefferson', 'I')t's the opposite. Immutable, natural, scientifically-determined law specifies the curve, not the other way around.

[TheDude]

$this->bbcode_second_pass_quote('ROCKMAN', 'N')ow those are fighten' words short!!!!

On the one hand, demand can never exceed max production rate if you define "demand" as what the consumer can afford to pay. If OPEC were to magically loose 10 million bopd delivery tomorrow then oil would shoot through the roof again...let's say $200 bbl. The only buyers will be those who can afford that price. Thus demand will be met.

[TommyJefferson]

$this->bbcode_second_pass_quote('yesplease', 'S')o now we have accurate laws regarding how demand/supply will behave?