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Low oil price, high production equals peak oil? Pt. 3

General discussions of the systemic, societal and civilisational effects of depletion.
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Low oil price, high production equals peak oil? Pt. 3

Unread postby vtsnowedin » Wed 08 Jun 2016, 21:37:22

$this->bbcode_second_pass_quote('AdamB', '')$this->bbcode_second_pass_quote('Whatever', '
')
$this->bbcode_second_pass_quote('AdamB', '
')Oh no, the logic does that all by itself.

What logic? I don't recall any logical comments from you. Remind me.


The logic that says EROEI has anything to do with price.

Have to pick at that a bit. The energy invested in a well certainly had a price and the energy returned certainly had a price even if it was unknown on the day the well was completed. So that argument is to be kind false and to be clear about it stupid.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby Whatever » Wed 08 Jun 2016, 22:04:50

$this->bbcode_second_pass_quote('ROCKMAN', 'N')o...the Rockman isn't a physicist. But with respect to any relationship between porosity/permeability and water cut that's the specialty of reservoir engineers and petroleum geologists. Which the Rockman has been doing for more than 40 years.

So which are you, a reservoir engineer or a petroleum geologist?

$this->bbcode_second_pass_quote('ROCKMAN', 'O')TOH fresh graduate out of school could pull up dozens of published studies confirming everything the Rockman just posted about water cuts.

Yes, I am sure they could. I have no argument with what you said about water cuts. But what you said has nothing to do with what we were talking about.

$this->bbcode_second_pass_quote('ROCKMAN', 'B')ut if folks bother to read What's ramblings you'll noticed he can't post one link to support his bullet*t about water cuts.

My ramblings? What bullsh*t about water cuts? I didn't post any bullsh*t about water cuts. You are starting a fight with me over something pstarr said. Are you senile?

Here is what I said about water cut:

$this->bbcode_second_pass_quote('', '(')No one keeps exact data on the world surface water cut, but estimates indicate that it must be at least 35% as of 2012.)

This initial estimate is refined through the application of the Buckley-Leverett Equation[10]. This equation is a First Law statement that defines fluid flow through a porous media. It is the foundation of all modern reservoir engineering methodologies.

The Buckley-Leverett Equation can not, however be directly applied to the world's petroleum reservoir to determine surface water cut. It requires as inputs several parameters, such as the relative permeability of oil and water in the reservoir, their viscosity, porosity, OOIP (original oil in place), and others. Most of which are unknown. It also makes assumptions, such as a single layer homogeneous reservoir, which the world's reservoir is not.

The equation can, however, be used to determine the form of the surface water cut curve. The form of the water cut function, using reasonable approximations for parameters, always results in a higher order polynomial of the 5th degree. A curve is generated (Graph# 6) using approximate parameters, and the curve is then rotated until two criteria required by the E TP function are met. Those two criteria are:

1) The E TP function generated must approach E G as N p approaches P 140.
2) The $/barrel vs E TP function must produce equivalent results to the $/barrel vs Cumulative Production function.

First criteria: the value for the E TP function generated can not exceed E G, crude's specific exergy; to do so would be a violation of the First Law . The E TP function must also be an increasing function; this is guaranteed by the Second Law requirement that entropy production must accompany any process. E TP increases as N p increases, and N p is bound by P 140. Therefore: E TP → E G as N P → P 140 .

Second criteria: As N p approaches P 140 entropy production in the PPS increases the energy required to produce crude oil and its products. As cumulative production increases, the energy cost to produce it must increase. Therefore, it is to be expected that the price of crude is highly correlated to the cumulative production function. This is shown in Graph #5 where cumulative production is zero (0) for 1960.
~BWHill


$this->bbcode_second_pass_quote('ROCKMAN', 'O')TOH the Rockman doesn't need to: just search "oil reservoir water cuts" and you'll see countless reports confirming What is completely clueless on the subject.

You are the one who is clueless, ROCKMAN. You are arguing with yourself.

$this->bbcode_second_pass_quote('ROCKMAN', 'A')nd the Rockman made no "interpretations": posted the statement exactly as it was written. A statement proven wrong by studies of many thousands of reservoirs. And if anyone wants to understand the various forces that move hydrocarbons thru a reservoir here you go:

http://wiki.aapg.org/Drive_mechanisms_and_recovery
Who cares? I think you are trying to create a distraction.

On the last page, I posted this:

$this->bbcode_second_pass_quote('', '')$this->bbcode_second_pass_quote('pstarr', 'S')omeone here, the Administrator, the moderator, the owner of this site should apologize to you.
They owe everyone an apology!

And they owe everyone an explanation for something else. I was searching through the peakoil.com archive the other day, when suddenly a notice popped up on my screen:

Image

Here is a close up view:

Image

So financialsensearchive.com wants my peakoil.com password!?! 8O Apparently, peakoil.com is sitting on the financialsense.com server! Does Jim Puplava own peakoil.com? Wow. This is very interesting, perhaps even evidence of securities fraud. I will wait for Tanada to explain all of this.
No one has said anything about this yet.


---Futilitist 8)
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby ralfy » Thu 09 Jun 2016, 10:24:31

$this->bbcode_second_pass_quote('Whatever', '
')
$this->bbcode_second_pass_quote('', '')$this->bbcode_second_pass_quote('pstarr', 'S')omeone here, the Administrator, the moderator, the owner of this site should apologize to you.

They owe everyone an apology!

And they owe everyone an explanation for something else. I was searching through the peakoil.com archive the other day, when suddenly a notice popped up on my screen:

Image

Here is a close up view:

Image

So financialsensearchive.com wants my peakoil.com password!?! 8O Apparently, peakoil.com is sitting on the financialsense.com server! Does Jim Puplava own peakoil.com? Wow. This is very interesting, perhaps even evidence of securities fraud. I will wait for Tanada to explain all of this.

No one has said anything about this yet.


---Futilitist 8)


I think what's happening is that some of articles linked in the page have been moved to an archive site, and only Financial Sense subscribers can access the archive.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby EdwinSm » Thu 09 Jun 2016, 13:48:27

I also checked this out for you. The problem seems to have been in the links to the Jim Puplava article in the first posting which has an address link to http://www.financialsense.com/series3/part1.htm.

Somehow the forum software tries to open the link - so if you close the pop-up box you can read the rest of the thread in peace.

You will also get the same problem if you follow other links to the articles by Jim Puplava as they are all on the same site.

You may relax...it must be hard to think up conspiracy theories for whatever you find here. :roll:
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby rockdoc123 » Thu 09 Jun 2016, 14:04:30

$this->bbcode_second_pass_quote('', 'O')ther folks here (such as RM or rockdoc) do have the experience and perhaps math/physics knowledge to enter into a real discussion. Where are they?

I suspect Rockman, like me can’t be bothered to waste his time in an esoteric discussion. Indeed that is all it is simply because what has governed oil and gas production from it’s inception is the value prospect of commodities, not the energy returned.

To put it in terms similar to the academic EROEI the industry looks at MROMI or money returned on money invested and virtually nothing else. Our measurements for that are several they can be discounted profit to investment ration (DPRI), Net Present Value (NPV), Return on Capital Invested (RCI), Internal Rate of Return (IRR) etc. The underlying reason for using money as the measure is that oil and gas companies are in business to make profit, not to produce energy but the details of that are a bit more diverse. I think it best to use an analogy.

Lets look at two oil projects, one in country A another in Country B. Both projects entail drilling to 14,000 MD (measured depth), both use a similar size rig (a triple) with the same kit (top drive, mechanical push etc). Both projects are drilled with the same mud system (lets say KCL polymer for arguments sake) and both assume that all electric logging will be conducted after TD (total depth) is reached. By luck the stratigraphic succession penetrated by the two wells are very similar and drilling times are identical. Both wells are successful and serendipity determines they produce at the exact same rate (4000 bopd for arguments sake) and have the exact same oil characteristics (35 API, 60 cp, 0.5% sulphur, 1% BSW (basic sediment & water), minimal other impurities and a PVT analysis indicates identical behavior of the hydrocarbons). A third party audit determines that the total reserves recoverable from both wells are identical (100 MMBbls for arguments sake). Transportation distance and methodology is the same, pipeline to a terminal.

In terms of energy analysis, the energy input to each well would have to include the energy required to create all of the equipment used in the operation (drilling rig, tubulars, consumables, site construction, construction equipment, pipeline materials and construction etc) and the energy consumed in the drilling of the well. Both projects in country A and country B would have the same energy input given the wells are identical. Because the hydrocarbons encountered are the same, the energy output is also the same. Hence if you wanted to be an academic you could say the EROEI of both projects are the same. But this is meaningless to the oil and gas industry and here is why.

Let’s say the cost of labor in country A is $4/bbl, capital equipment is $1 MM, rig cost is $7 MM, completion cost is $1.5 MM, transportation cost is $10/bbl, opex is $10/bbl, oil price is $40/bbl and government take is 80%. This situation would not be unusual where you are in a relatively remote area of SE Asia where labor is cheap but everything is more expensive due to scarcity of supply and the government has fairly harsh production sharing or royalty tax terms. In country B the cost of labor is $6/bb, capital equipment is $500K, rig cost is $2 MM, completion cost is $500K transportation cost is $3/bbl, Opex is $4/bbl, oil price is $42.50 a barrel and government take is 50%. This situation would not be unusual in a western country where labor is more expensive but everything else is cheaper due to lots of competition and availability and the government has relatively generous terms in order to attract investment.

When you run the numbers the project in country A would lose you about $1.4 billion whereas the project in country B would make a profit of $1.2 billion (undiscounted for simplicity). Both projects have the same EROEI but one is profitable and the other is not, hence one will likely get drilled and the other will not. That is what drives oil and gas E&P. Peak Oil which is the point of maximum production is a product of what gets drilled and produced, not what is theoretically there. Academics in their ivory towers busily calculating energy balances do not determine what is produced, it is oil companies who make those decisions solely on potential profitability.

And of course the calculation of profitability is always changing at different rates around the world. Taxes might increase one place and decrease another, unions may determine labor is costlier in the future in one place whereas abundant unemployed skilled workers in another area may make labor cheaper. If price goes too high less projects are done so competitive service companies drop prices in places where they think they can get work or they have the majority of their equipment. That does not mean that service costs will drop at the same rate everywhere though. Trying to simply the understanding of how this all works into a simple equation that involves entropy is naive at best.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby Whatever » Thu 09 Jun 2016, 14:15:30

$this->bbcode_second_pass_quote('ralfy', 'I') think what's happening is that some of articles linked in the page have been moved to an archive site, and only Financial Sense subscribers can access the archive.

I don't think so. The screen capture I made above happened to be of a Jim Puplava thread, but that wasn't the first time I received such an authentication notice. It seemed to happen whenever I searched through the peakoil.com archive rapidly. Also, if there are links on the peakoil.com site to articles in the financialsense.com archive, shouldn't I have to click on one of them to get an authentication notice from the financialsensearchive.com? The financial sense archive server certainly doesn't send a notice to anyone who looks at a site that happens to contains a link to a financialsense.com article. That makes no sense. You would have to click on the link for the server to notify you that you didn't have access. I did not do that. So would I still like an explanation from Tanada.

$this->bbcode_second_pass_quote('EdwinSm', 'S')omehow the forum software tries to open the link...

Why would it do that?

$this->bbcode_second_pass_quote('EdwinSm', 'Y')ou may relax...it must be hard to think up conspiracy theories for whatever you find here. :roll:

Not at all. I have seen some pretty weird stuff during my various online adventures. It tends to make me a little suspicious of all so called discussion forums.



---Futilitist 8)
Last edited by Whatever on Thu 09 Jun 2016, 14:29:08, edited 2 times in total.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby jesus_of_suburbia » Thu 09 Jun 2016, 14:21:12

Have you considered notifying the cyber police?

If you do, consequences will never be the same.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby Whatever » Thu 09 Jun 2016, 15:09:35

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('', 'O')ther folks here (such as RM or rockdoc) do have the experience and perhaps math/physics knowledge to enter into a real discussion. Where are they?

I suspect Rockman, like me can’t be bothered to waste his time in an esoteric discussion.

Yet ROCKMAN has already been wasting a lot of time in this esoteric discussion and many others. And now you have wasted your time with a long, detailed post about the technicalities of your particular job. None of what you said has anything to do with entropy or thermodynamic limits.

$this->bbcode_second_pass_quote('rockdoc123', 'I')ndeed that is all it is simply because what has governed oil and gas production from it’s inception is the value prospect of commodities, not the energy returned.

Oil men only care about money, not energy. I get it. They don't think about energy return, only monetary profit. But the energy returned from oil is ultimately responsible for the price of oil. Just because you can drill a particular well that can make you a profit tells us nothing about the depletion state of the world's oil reserves.

$this->bbcode_second_pass_quote('rockdoc123', 'T')rying to simply the understanding of how this all works into a simple equation that involves entropy is naive at best.

Pretending that entropy doesn't affect the oil production process is what is really naive.



---Futilitist 8)
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby kublikhan » Thu 09 Jun 2016, 16:14:59

$this->bbcode_second_pass_quote('EdwinSm', 'S')omehow the forum software tries to open the link...
Not the link the image. The post had a link to an image on financialsensearchive.com. Browsers open images by default. That image prompts for a username/password when you try to access it.
The oil barrel is half-full.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby rockdoc123 » Thu 09 Jun 2016, 17:03:50

$this->bbcode_second_pass_quote('', 'A')nd now you have wasted your time with a long, detailed post about the technicalities of your particular job. None of what you said has anything to do with entropy or thermodynamic limits.


the point you can't seem to get through your very thick skull is that thermodynamics have nothing whatsoever to do with what oil gets produced. "oil men" (what a stupid term) indeed care about money and they are the ones who decides what gets drilled and produced and what does not. Who do you thing does all this work some magic thermodynamic genie? It is all about money in and money out. Potential profit is what drives production and it is what drives peak oil behaviors. A good example of that is UK offshore. UK has the interesting two peak production profile that was not predicted by anyone. It was driven by economics, rising oil prices and a UK government who saw the value of lowering royalties to generate more business and ultimately more revenue. If wells and prospects are not being drilled it is because there is no profit either the oil price is too low or the costs are too high. And those two factors vary all the time. Perhaps you can point to us all an example of where some company somewhere has calculated out entropy and Free Energy lost or whatever and then made a drill or no drill decision on it. Let me save you the time no one ever has and no one ever will.

$this->bbcode_second_pass_quote('', 'O')il men only care about money, not energy. I get it. They don't think about energy return, only monetary profit. But the energy returned from oil is ultimately responsible for the price of oil. Just because you can drill a particular well that can make you a profit tells us nothing about the depletion state of the world's oil reserves.


The energy returned from oil is not ultimately responsible for the price of oil. What is ultimately responsible for the price of oil is how many refineries are willing to buy it for its myriad of uses (eg. feedstocks for chemicals, plastics and synthetics) and how much of it is available at the price they are willing to pay. They do not do a calculation of how much net energy a barrel has they just do a calculation based on how much they have to pay for that barrel and how much return they will see from the refined products they produce and sell from that barrel purchased. A lot of production in the system versus few buyers creates lower prices due to competition amongst sellers, limited production in the system versus many buyers creates higher prices due to competition amongst buyers.

My long diatribe was meant to point out that any two projects can have the same EROEI but one might be completely uneconomic and the other have robust economics. The worlds reserves are calculated at any given time as that which is economically recoverable not based on some EROEI concern.

$this->bbcode_second_pass_quote('', 'P')retending that entropy doesn't affect the oil production process is what is really naive.


Oh really? Then perhaps you can give us all an example of where a calculation of entropy drove a decision in the oil patch? Again let me save you time as there is no such example.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby vtsnowedin » Thu 09 Jun 2016, 19:13:41

Rockdoc123
Going through the numbers in your examples it is clear that the government taxation is the largest determining factor and the energy cost to complete the wells still quite minor. That taxation level is subject to change and probably will change as a well that doesn't get drilled will produce zero tax and the governments can't have that.
That the UK reduced taxation on their North sea production speaks to the point.
Also the wells in your examples have EROEI that are way way above the 2:1 the ETP people are talking about as that 50 to 80 percent tax is also oil delivered to the world market.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby Whatever » Thu 09 Jun 2016, 19:24:54

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'A')nd now you have wasted your time with a long, detailed post about the technicalities of your particular job. None of what you said has anything to do with entropy or thermodynamic limits.

the point you can't seem to get through your very thick skull is that thermodynamics have nothing whatsoever to do with what oil gets produced.

That is not true. The total immediately available energy is what is responsible for world economic growth. Oil supplies 38% of the total energy. The dollars to buy oil are generated by an economy that uses the energy from oil to maintain economic growth to generate the dollars to buy oil. Thermodynamics ultimately determines the price of oil and the price of oil determines what oil gets produced.

And the thick skull thing is abusive and unnecessary.

$this->bbcode_second_pass_quote('rockdoc123', '&')quot;oil men" (what a stupid term) indeed care about money and they are the ones who decides what gets drilled and produced and what does not. Who do you thing does all this work some magic thermodynamic genie? It is all about money in and money out. Potential profit is what drives production and it is what drives peak oil behaviors.

I agree. But like I said, thermodynamics ultimately determines the price of oil.

$this->bbcode_second_pass_quote('rockdoc123', 'A') good example of that is UK offshore. UK has the interesting two peak production profile that was not predicted by anyone. It was driven by economics, rising oil prices and a UK government who saw the value of lowering royalties to generate more business and ultimately more revenue.

Give me a good example where increased production is driven by falling oil prices.

$this->bbcode_second_pass_quote('rockdoc123', 'I')f wells and prospects are not being drilled it is because there is no profit either the oil price is too low or the costs are too high.
Or both at the same time. Like now.

$this->bbcode_second_pass_quote('rockdoc123', 'A')nd those two factors vary all the time.
Those two factors do not vary randomly. They are driven by thermodynamics. There must be sufficient available energy to maintain enough economic growth to pay for the continuing production of oil. And the energetic cost of oil production can only rise due to the rising entropy in the oil production system.

$this->bbcode_second_pass_quote('rockdoc123', 'P')erhaps you can point to us all an example of where some company somewhere has calculated out entropy and Free Energy lost or whatever and then made a drill or no drill decision on it. Let me save you the time no one ever has and no one ever will.
Let me save you some future time. I don't disagree with you that individual drilling decisions are made by considering only profit, and not thermodynamics. There is no other way to do it. But thermodynamics ultimately runs the show. How could it be otherwise?

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'O')il men only care about money, not energy. I get it. They don't think about energy return, only monetary profit. But the energy returned from oil is ultimately responsible for the price of oil. Just because you can drill a particular well that can make you a profit tells us nothing about the depletion state of the world's oil reserves.
The energy returned from oil is not ultimately responsible for the price of oil. What is ultimately responsible for the price of oil is how many refineries are willing to buy it for its myriad of uses (eg. feedstocks for chemicals, plastics and synthetics) and how much of it is available at the price they are willing to pay.
The price of oil is not determined by the refiners. That is silly. The refiners have to sell their finished products to consumers in the general economy. Consumers cannot afford whatever price the refiners might want to ask. They are limited by the economy which runs on the energy from oil.

$this->bbcode_second_pass_quote('rockdoc123', 'M')y long diatribe was meant to point out that any two projects can have the same EROEI but one might be completely uneconomic and the other have robust economics. The worlds reserves are calculated at any given time as that which is economically recoverable not based on some EROEI concern.
Got it.

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'P')retending that entropy doesn't affect the oil production process is what is really naive.
Oh really? Then perhaps you can give us all an example of where a calculation of entropy drove a decision in the oil patch? Again let me save you time as there is no such example.
Again, let me save you some time, your entire argument is irrelevant.



---Futilitist 8)
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby ralfy » Thu 09 Jun 2016, 19:28:44

$this->bbcode_second_pass_quote('Whatever', '
')I don't think so. The screen capture I made above happened to be of a Jim Puplava thread, but that wasn't the first time I received such an authentication notice. It seemed to happen whenever I searched through the peakoil.com archive rapidly. Also, if there are links on the peakoil.com site to articles in the financialsense.com archive, shouldn't I have to click on one of them to get an authentication notice from the financialsensearchive.com? The financial sense archive server certainly doesn't send a notice to anyone who looks at a site that happens to contains a link to a financialsense.com article. That makes no sense. You would have to click on the link for the server to notify you that you didn't have access. I did not do that. So would I still like an explanation from Tanada.


It might be the image from the "Powershift" article in the third message that's causing it.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby Whatever » Thu 09 Jun 2016, 20:14:40

$this->bbcode_second_pass_quote('ralfy', '')$this->bbcode_second_pass_quote('Whatever', '
')I don't think so. The screen capture I made above happened to be of a Jim Puplava thread, but that wasn't the first time I received such an authentication notice. It seemed to happen whenever I searched through the peakoil.com archive rapidly. Also, if there are links on the peakoil.com site to articles in the financialsense.com archive, shouldn't I have to click on one of them to get an authentication notice from the financialsensearchive.com? The financial sense archive server certainly doesn't send a notice to anyone who looks at a site that happens to contains a link to a financialsense.com article. That makes no sense. You would have to click on the link for the server to notify you that you didn't have access. I did not do that. So would I still like an explanation from Tanada.


It might be the image from the "Powershift" article in the third message that's causing it.

Yes, I checked it too and I think that might be the answer. Thanks to everyone who helped to figure this out.



---Futilitist 8)
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby AdamB » Thu 09 Jun 2016, 22:02:41

$this->bbcode_second_pass_quote('Whatever', ' ')None of what you said has anything to do with entropy or thermodynamic limits.


---Futilitist 8)


None of the ETP says anything about those things either, so you are even steven.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby rockdoc123 » Fri 10 Jun 2016, 12:15:36

$this->bbcode_second_pass_quote('', 'T')hat is not true. The total immediately available energy is what is responsible for world economic growth. Oil supplies 38% of the total energy. The dollars to buy oil are generated by an economy that uses the energy from oil to maintain economic growth to generate the dollars to buy oil. Thermodynamics ultimately determines the price of oil and the price of oil determines what oil gets produced. 


Oh please. This is just the same “thermodynamics runs it all” view you keep harping about but cannot seem to give a concrete example for. This is esoteric and does not have anything whatsoever to do with what drives decisions in the oil and gas industry. It is those decisions that drive Peak Oil, not economists sitting at their desks figuring it all out after the fact. EROEI does not govern decisions that control supply and demand, if it did every oil company in the world would be calculating it continuously.

$this->bbcode_second_pass_quote('', 'G')ive me a good example where increased production is driven by falling oil prices. 


How about where oil companies who are highly leveraged have to produce more oil at lower prices in order to cover their debt carrying costs, cashflow being king? This has been the case over the past number of months for many companies in the US who had substantial debt and needed a means of keeping the wolves at bay.

$this->bbcode_second_pass_quote('', 'T')hose two factors do not vary randomly. They are driven by thermodynamics. There must be sufficient available energy to maintain enough economic growth to pay for the continuing production of oil. And the energetic cost of oil production can only rise due to the rising entropy in the oil production system. 


That is complete and utter BS. Thermodynamics is not a part of the equation. What I said was that if wells and prospects are not being drilled it is because there is not enough profit…either oil price is too low or the costs are too high. Oil price can be too low because there is just too much production around the world….everyone trying to protect market share, new technology making shales economic and costs can be too high because the expectation in the service industry is “hey they will pay a high price to get this done and we are the only game in town” and suppliers saying “ lets make hay while the sun shines” coupled with a limitation in skilled labor.

$this->bbcode_second_pass_quote('', 'B')ut thermodynamics ultimately runs the show. How could it be otherwise? 


Oh please a non-sequitur at best. Statements like this need to be backed up with proof. Simply saying well the Laws of Thermodynamics govern the creation of life and hence everything that happens in the universe must conserve matter and energy and be required to move spontaneously to a state of random unavailable energy doesn’t explain decisions that are made by people. Again when has anyone in the oil industry (who control what is produced) ever made a decision based on entropy or any other measure of thermodynamics (hey Fred I think we should drill that well in LaForche parish it will help lower our companies Gibbs Free Energy :roll: ).,. That is not how decisions are made. And it is the decisions that are made (drill not drill, complete not complete etc) that govern production and price and hence peak oil.

$this->bbcode_second_pass_quote('', 'T')he price of oil is not determined by the refiners. That is silly. The refiners have to sell their finished products to consumers in the general economy. Consumers cannot afford whatever price the refiners might want to ask. They are limited by the economy which runs on the energy from oil. 

OK, now I am silly when in fact the current price of oil is actually determined by who is buying it. Are you saying otherwise? Are you telling us that if you want to sell a barrel of oil that the price you sell it for is not determined by what a refiner will buy it for and how that matches what another producer is willing to sell it for? Are you suggesting that there is some Thermodynamics god sitting in an office in Geneva that each week calculates up energy balance and tells refiners what they should pay? Or perhaps the refiners each week poll consumers and ask them what they should charge? Perhaps oil dropping to $25/bbl had nothing whatsoever to do with the Saudis discounting crude to Asia customers at a previously unheard of level and continued strong production out of the US and Russia? No it must have been the Thermodynamic gods that determined those prices. The new invisible hand :roll:

$this->bbcode_second_pass_quote('', 'A')gain, let me save you some time, your entire argument is irrelevant. 

I’m sorry, let’s clear this up for everyone then. You are saying that entropy is the driving mechanism behind both oil prices and what we have called peak oil. And it is a given that what drives what production is happening is the behaviors of oil and gas companies. Yet you are telling us that it is irrelevant that oil and gas companies do not take into account entropy or any other measure of thermodynamics but somehow it is still the driving mechanism in their decisions. It is a pretty simple question….just show us an example where the oil industry has ever made a decision based on anything other than a monetary value proposition. This is hardly irrelevant. If entropy is the governing principle of oil and gas production then why has no oil and gas company actually taken it into account? I have known some very brilliant people in the industry why would they not be using this in equations to govern their business decisions? If you can’t answer that question it seems everything you are talking about is actually irrelevant. A statement that the laws of thermodynamics governs the universe is at best a cop-out.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby Whatever » Fri 10 Jun 2016, 19:33:05

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'T')hat is not true. The total immediately available energy is what is responsible for world economic growth. Oil supplies 38% of the total energy. The dollars to buy oil are generated by an economy that uses the energy from oil to maintain economic growth to generate the dollars to buy oil. Thermodynamics ultimately determines the price of oil and the price of oil determines what oil gets produced.

Oh please. This is just the same “thermodynamics runs it all” view you keep harping about but cannot seem to give a concrete example for.

That is just an empty declaration.

1. The total immediately available energy is what is responsible for world economic growth. Do you agree or disagree?

2. The dollars to buy oil are generated by an economy that uses the energy from oil to maintain economic growth to generate the dollars to buy oil. Do you agree or disagree?

3. Thermodynamics ultimately determines the price of oil and the price of oil determines what oil gets produced.

If you agree with #1 and #2, then you must agree with #3.

$this->bbcode_second_pass_quote('rockdoc123', 'T')his is esoteric and does not have anything whatsoever to do with what drives decisions in the oil and gas industry.

We are not talking about what drives the decisions of the oil and gas companies. We are talking about the thermodynamic limit to the oil production process.

$this->bbcode_second_pass_quote('rockdoc123', 'I')t is those decisions that drive Peak Oil, not economists sitting at their desks figuring it all out after the fact.

You have it completely backwards. The thermodynamic effects of reaching peak oil drives the decisions of the oil producers.

$this->bbcode_second_pass_quote('rockdoc123', 'E')ROEI does not govern decisions that control supply and demand, if it did every oil company in the world would be calculating it continuously.
Businesses make their decisions based on money, not the physics of energy.

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'G')ive me a good example where increased production is driven by falling oil prices.
How about where oil companies who are highly leveraged have to produce more oil at lower prices in order to cover their debt carrying costs, cashflow being king? This has been the case over the past number of months for many companies in the US who had substantial debt and needed a means of keeping the wolves at bay.
The wolves cannot be kept at bay forever. If oil prices do not rise sufficiently, production will ultimately fall.

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'T')hose two factors do not vary randomly. They are driven by thermodynamics. There must be sufficient available energy to maintain enough economic growth to pay for the continuing production of oil. And the energetic cost of oil production can only rise due to the rising entropy in the oil production system.
That is complete and utter BS.
No it isn't. You are just making another empty declaration.

1. There must be sufficient available energy to maintain enough economic growth to pay for the continuing production of oil. Do you seriously disagree with this?

2. And the energetic cost of oil production can only rise due to the rising entropy in the oil production system. You cannot possibly disagree with this.

$this->bbcode_second_pass_quote('rockdoc123', 'T')hermodynamics is not a part of the equation.
I know thermodynamics is not a part of the equation that oil companies use. But it really is the underlyning driver. It is just that people are not generally aware of it.

$this->bbcode_second_pass_quote('rockdoc123', 'W')hat I said was that if wells and prospects are not being drilled it is because there is not enough profit…either oil price is too low or the costs are too high.
And I agree. Who are you arguing with?

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'B')ut thermodynamics ultimately runs the show. How could it be otherwise?

Oh please a non-sequitur at best. Statements like this need to be backed up with proof.
Okay, here is some proof:

http://phys.org/news/2009-11-law-thermo ... ution.html

$this->bbcode_second_pass_quote('', 'T')erms such as the "invisible hand," laissez-faire policy, and free-market principles suggest that economic growth and decline in capitalist societies seem to be somehow self-regulated. Now, scientists Arto Annila of the University of Helsinki and Stanley Salthe of Binghampton University in New York show that economic activity can be regarded as an evolutionary process governed by the second law of thermodynamics. Their perspective may provide insight into some fundamental economic questions, such as the causes of economic growth and diversification, as well as why it’s so difficult to predict economic growth and decline.

As Annila and Salthe explain in their study published in Entropy, the second law of thermodynamics was originally formulated to describe the flow of heat from hot to cold areas. However, when formulated as an equation of motion, the second law can be used to describe many other processes in energetic terms, such as natural selection for the fittest species, organization of cellular metabolism, or an ecosystem’s food web. In these systems, free energy is consumed; that is, energy is dispersed in a way to promote the maximal increase of entropy, which is the essence of the second law.

While economic activities are traditionally viewed as being motivated by profit, Annila and Salthe argue that the ultimate motivation of economic activities is not to maximize profit or productivity, but rather to disperse energy. From this perspective, a growing economy consists of entities (e.g. products, labor, etc.) that are assigned an energy density resulting from their individual production processes. These density differences are the forces that direct energy flows (e.g. manufacturing processes) to equalize energy density differences within the system and with respect to its surroundings.

The scientists argue that this tendency to disperse the maximum amount of energy (that is, to consume free energy in the least time) is what gives rise to economic laws and regularities.

$this->bbcode_second_pass_quote('rockdoc123', 'S')imply saying well the Laws of Thermodynamics govern the creation of life and hence everything that happens in the universe must conserve matter and energy and be required to move spontaneously to a state of random unavailable energy doesn’t explain decisions that are made by people.
Ultimately, it does. See the article above. While people may make decisions based on money (and lots of other things), thermodynamics is still in charge. Money is just what humans use to direct invisible energy flows. The decisions made by humans cannot supersede the laws of thermodynamics, so it makes no sense to worry about all of those human decisions when discussing thermodynamic limits. It is irrelevant.

$this->bbcode_second_pass_quote('rockdoc123', 'A')gain when has anyone in the oil industry (who control what is produced) ever made a decision based on entropy or any other measure of thermodynamics (hey Fred I think we should drill that well in LaForche parish it will help lower our companies Gibbs Free Energy
The fact that you are using the term Gibbs Free Energy suggests that you do understand what I am talking about. So your entire argument is just a disingenuous word game. But perhaps it is an improvement of sorts, since you actually seem to understand some physics. Maybe we could have a useful discussion after all. Hey, here is a question that everyone else is afraid to answer:

Is there a thermodynamic limit to the price of oil?

$this->bbcode_second_pass_quote('rockdoc123', 'T')hat is not how decisions are made.
I know that.

$this->bbcode_second_pass_quote('rockdoc123', 'A')nd it is the decisions that are made (drill not drill, complete not complete etc) that govern production and price and hence peak oil.
Oil company decisions cannot defy the laws of thermodynamics. Oil companies do not control peak oil.

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'T')he price of oil is not determined by the refiners. That is silly. The refiners have to sell their finished products to consumers in the general economy. Consumers cannot afford whatever price the refiners might want to ask. They are limited by the economy which runs on the energy from oil.
OK, now I am silly when in fact the current price of oil is actually determined by who is buying it. Are you saying otherwise?
No, clearly I am not. I am saying that the refiners are not the end users of oil. They have to sell their refined product to consumers. Producers sell to refiners, refiners sell to distributors, distributors sell to consumers. Consumers are the ones buying the final product. Their willingness and ability to pay is what sets the price of oil.

$this->bbcode_second_pass_quote('rockdoc123', 'A')re you telling us that if you want to sell a barrel of oil that the price you sell it for is not determined by what a refiner will buy it for and how that matches what another producer is willing to sell it for?
No. I am saying that the refiners cannot charge whatever price they want for oil. The end consumers have to be able to afford the refined product. The level of economic activity determines what consumers can afford. And the level of economic activity is determined by the amount of energy immediately available.

$this->bbcode_second_pass_quote('rockdoc123', 'A')re you suggesting that there is some Thermodynamics god sitting in an office in Geneva that each week calculates up energy balance and tells refiners what they should pay?
No.

$this->bbcode_second_pass_quote('rockdoc123', 'O')r perhaps the refiners each week poll consumers and ask them what they should charge?
No. Refiners try to get the best price they can. Their customers willingness and ability to pay sets the final price.

$this->bbcode_second_pass_quote('rockdoc123', 'P')erhaps oil dropping to $25/bbl had nothing whatsoever to do with the Saudis discounting crude to Asia customers at a previously unheard of level and continued strong production out of the US and Russia?
I did not say that. Are you saying that the Saudis, the US, and the Russians have total control of the price of oil? It has nothing to do with what consumers can afford?

$this->bbcode_second_pass_quote('rockdoc123', 'N')o it must have been the Thermodynamic gods that determined those prices. The new invisible hand :roll:
It is the same invisible hand it has always been. People are just starting to realize that the invisible hand is thermodynamics.

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'A')gain, let me save you some time, your entire argument is irrelevant.

I’m sorry, let’s clear this up for everyone then. You are saying that entropy is the driving mechanism behind both oil prices and what we have called peak oil. And it is a given that what drives what production is happening is the behaviors of oil and gas companies. Yet you are telling us that it is irrelevant that oil and gas companies do not take into account entropy or any other measure of thermodynamics but somehow it is still the driving mechanism in their decisions.
Yes.

$this->bbcode_second_pass_quote('rockdoc123', 'I')t is a pretty simple question….just show us an example where the oil industry has ever made a decision based on anything other than a monetary value proposition.
Why should I do that? I just answered your silly question with the simplest possible answer.

$this->bbcode_second_pass_quote('rockdoc123', 'T')his is hardly irrelevant. If entropy is the governing principle of oil and gas production then why has no oil and gas company actually taken it into account?
Because counting money has always worked in the past.

$this->bbcode_second_pass_quote('rockdoc123', 'I') have known some very brilliant people in the industry why would they not be using this in equations to govern their business decisions?
1. Business decisions have always been based on money.
2. Perhaps the people you know are not brilliant enough to figure it out.

$this->bbcode_second_pass_quote('rockdoc123', 'I')f you can’t answer that question it seems everything you are talking about is actually irrelevant.
I did answer your silly question, so what I am saying is not irrelevant.

$this->bbcode_second_pass_quote('rockdoc123', 'A') statement that the laws of thermodynamics governs the universe is at best a cop-out.
It might be a cop out if that was all I did. But I have spent the last 26 or so pages explaining the Etp model and thermodynamic limits in great detail. You are playing word games.



---Futilitist 8)
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby rockdoc123 » Sat 11 Jun 2016, 13:09:43

$this->bbcode_second_pass_quote('', 'U')ltimately, it does. See the article above. While people may make decisions based on money (and lots of other things), thermodynamics is still in charge. Money is just what humans use to direct invisible energy flows. The decisions made by humans cannot supersede the laws of thermodynamics, so it makes no sense to worry about all of those human decisions when discussing thermodynamic limits. It is irrelevant.


Heres the issue….you can use the argument Thermodynamics governs everything that has or ever will happen. So what? It does not in anyway tell people what decisions need to be made at any given time. It is those decisions that drive oil production and demand and in turn pricing. You could just as easily sit there and argue Thermodynamics is responsible for all wars, or Donald Trump winning the Republican nomination.

$this->bbcode_second_pass_quote('', 'T')he fact that you are using the term Gibbs Free Energy suggests that you do understand what I am talking about. So your entire argument is just a disingenuous word game. But perhaps it is an improvement of sorts, since you actually seem to understand some physics. Maybe we could have a useful discussion after all. Hey, here is a question that everyone else is afraid to answer:

I have a PhD in geological sciences and taught at a university for a few years. Both Igneous and Metamorphic petrology rely heavily on thermodynamic analysis. So yes, I know a bit about physics.

$this->bbcode_second_pass_quote('', 'O')il companies do not control peak oil.


I have never heard a more ridiculous comment. Peak Oil is defined as the point of maximum production. Oil and gas companies are the ones who sign contracts, drill wells and ultimately produce all the hydrocarbons that have ever been produced to date. There is no magic genie sitting out there drilling wells and producing. It is the decisions that oil companies take (drill or not drill, complete or not complete, enter into a new country, investigate ultra deep water, investigate shale etc that governs production at any given point. And they do not take into account energy in any of these decisions, never have and never will. If SOCAL or no other subsequent company had never ventured into Saudi Arabia we would be in a much different world today.

$this->bbcode_second_pass_quote('', 'I') did not say that. Are you saying that the Saudis, the US, and the Russians have total control of the price of oil? It has nothing to do with what consumers can afford?


Straw man. The rapid drop in price from $60/bbl to a low of $25 had nothing whatsoever to do with what customers were willing to pay. Demand was high at $60/bbl, indeed demand and supply were in balance. The fact that demand stayed strong throughout the period 2010 through 2014 where prices averaged close to $100/bbl indicates demand is not the issue. It was all the extra oil from the US, Russia and the Middle East that created a supply imbalance and couple this with the Saudis dropping the price at which they would sell to well below what they had been selling it for as a means of protecting market share.

The rest of your diatribe amounts to nothing more than argumentum ad nauseam. The simple fact of the matter is the production of oil is governed by individuals (oil and gas companies) seeking profits. They could care less how much energy is used or produced, all they are concerned with is how much it costs and how much profit they can make. As long as there is no viable substitute for oil it will be produced and sold at a price which the market determines through supply and demand. Decisions made can have impact on supply and demand and create regular swings in price. The Peak Oil dynamic as Rockman likes to refer is what will govern the shape of production going forward.
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Re: Low oil price, high production equals peak oil? Pt. 2

Unread postby Whatever » Sat 11 Jun 2016, 15:13:25

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'U')ltimately, it does. See the article above. While people may make decisions based on money (and lots of other things), thermodynamics is still in charge. Money is just what humans use to direct invisible energy flows. The decisions made by humans cannot supersede the laws of thermodynamics, so it makes no sense to worry about all of those human decisions when discussing thermodynamic limits. It is irrelevant.

Heres the issue….you can use the argument Thermodynamics governs everything that has or ever will happen. So what? It does not in anyway tell people what decisions need to be made at any given time. It is those decisions that drive oil production and demand and in turn pricing.

We are talking about thermodynamic limits. The oil company decisions are not made with any consideration given to thermodynamics or thermodynamic limits, as you keep repeating. And no decision made by an oil company will change the fact that we reached the thermodynamic limit for the life cycle of oil production in 2012. That means that the price of oil will generally decline from now on. So what the hell do oil company decisions have to do with thermodynamic limits? That seems like a simple enough question. If you can't answer that question, then your entire diatribe is irrelevant.

$this->bbcode_second_pass_quote('rockdoc123', 'Y')ou could just as easily sit there and argue Thermodynamics is responsible for all wars, or Donald Trump winning the Republican nomination.

Yes, I could because it is true.

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('Futilitist', 'T')he fact that you are using the term Gibbs Free Energy suggests that you do understand what I am talking about. So your entire argument is just a disingenuous word game. But perhaps it is an improvement of sorts, since you actually seem to understand some physics. Maybe we could have a useful discussion after all. Hey, here is a question that everyone else is afraid to answer:

I have a PhD in geological sciences and taught at a university for a few years. Both Igneous and Metamorphic petrology rely heavily on thermodynamic analysis. So yes, I know a bit about physics.
Great. But it seems like you missed my question that I put in bold so you wouldn't miss it. You even carefully cut my bolded question out of my quote above to hide it. Nice. You are doing this on purpose. It is very disingenuous to dodge a direct question. I will ask it again.

Is there a thermodynamic limit to the price of oil?



---Futilitist 8)
Last edited by Whatever on Sat 11 Jun 2016, 15:21:40, edited 1 time in total.
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