[AirlinePilot]

Flow,

I heard Rush's show the other day also and the caller was not 100% correct about his gas price analogy. Do some research on that. While he wasnt flat wrong, he wasnt right either. Its not quite as rosy as he said.

I think that most of the evidence is pointing to something happening sooner rather than later. There are a number of factors which are present now that havent been in the past. Specifically for me they are these:

1. World depletion

2. Crude discoveries (big ones)

3. World Demand

4. Technology

5. Oil "Culture"

For me number 5 is a big one. Changing worldwide consumption mores prior to a crisis in my mind won't happen.

I do not claim to know when or how bad it will be. What I do think (and believe me I was a skeptic at first too!) is that some time in the next few years we will know if everything is all right or not. There are many areas which point to things just not being "quite" kosher. I am very worried about Saudi production. I don't trust what they are saying right now. I am very leery of US Government numbers or CERA and IEA etc. A lot of thier forecasts have been very flawed and it's not in a good direction.

I don't believe Technology is at a stage where we can overcome Peak Oil anytime soon. I don't trust that we will see some form of "miracle", however I hold out some small shred of hope for it to happen

If we don't find some very big reserves of Oil soon then I dont see how one can come up with the fact that current production can be sustained for more than the next few years. If Demand is as inelastic as I believe it to be then we are in deep trouble. My opinion is the only way to decrease demand enough to buy us some time is to have a global depression. If that happens then how do you bridge the gap to a sustainable way of life that looks anything like the one we have right now? How do you even attempt it without a viable and strong economy?

This is what bothers me most and after seeing what happens to our very thin veneer of civilization after Katrina and some of the other small events as of late, I hold little hope for a sustainable Utopia to materialize.

I do agree that a lot of these sites where you can find info are quite "out there". Take it with a grain of salt, but I think what it signals is the first hints of those who seek more than the daily pablum and the alarm bells are going off. Just because we have knowledge about something early doesn't mean its all wrong. Some is flawed, some is opinion, and some is probably close to truth. You will find with an open mind that after reading this forum for a few weeks/months and going to links and reports, news items , listening to folks who actually work on rigs and in the fields, your opinion won't be quite so smug.

Thats what happened to me, it took a while, but I think a lot of things I have seen here fit in ways which point to something ugly coming down the road. I think it will affect my life in a big way, and I'd like to be prepared and ready while others flail.

[Flow]

$this->bbcode_second_pass_quote('Keith_McClary', '')$this->bbcode_second_pass_quote('Flow', 'S')o let's go with the new numbers. I used the chart found on this page for my numbers (I plotted it out year by year by found & produced):

http://www.lifeaftertheoilcrash.net/Sec ... #anchor_75

Here is what I came up with (The first running total of 41.1 assumes that because the past discoveries verses what we have used will need until 2040 gives us an extra 34 billion barrels of oil). The produced numbers assume that we peaked in 2004.

Year - Discover - Need - Procude - Running Total We Peak Oil

2005 - 8.0 - 30 - 29.1 - 41.1 (includes 34Gb)
2006 - 7.82 - 30.75 - 28.23 - 46.4
etc....
2010 - 7 .11 - 33.94 - 24.99 - 49.72
etc..
2013 - 6.58 - 36.55 - 22.81 - 33.54
etc...
2015 - 6.22 - 38.40 - 21.46 - 13.88

According to this - Peak Oil happens between 2016 and 2017.

[Flow]

$this->bbcode_second_pass_quote('AirlinePilot', 'F')low,

Thats what happened to me, it took a while, but I think a lot of things I have seen here fit in ways which point to something ugly coming down the road. I think it will affect my life in a big way, and I'd like to be prepared and ready while others flail.

[GreyZone]

$this->bbcode_second_pass_quote('Flow', '')$this->bbcode_second_pass_quote('woodcutter', 'I')f you're convinced that there is no problem, then what else is there to say?

[GreyZone]

$this->bbcode_second_pass_quote('Flow', '')$this->bbcode_second_pass_quote('AirlinePilot', 'F')low,

Thats what happened to me, it took a while, but I think a lot of things I have seen here fit in ways which point to something ugly coming down the road. I think it will affect my life in a big way, and I'd like to be prepared and ready while others flail.

[Joe0Bloggs]

How about this?

We've heard a hundred times that the easy oil is on the upslope of the curve and the hard oil is on the downslope.

Could it be that tar sands, oil shale etc. is our hard oil?

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('Flow', 'T')he problem with this school of thought is it completely overlooks unconventional oil reserves (Tar Sands, Oil Shale, etc). If you ingore these other types of fuel you could easily come up with the conclusion that Peak Oil happen soon.

[threadbear]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('threadbear', 'H')ow is demand going to outstrip supply if we are headed for an economic crisis of huge proportions, globally, peak oil aside?

[MonteQuest]

$this->bbcode_second_pass_quote('threadbear', '')$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('threadbear', 'H')ow is demand going to outstrip supply if we are headed for an economic crisis of huge proportions, globally, peak oil aside?

[Flow]

$this->bbcode_second_pass_quote('Joe0Bloggs', 'H')ow about this?

We've heard a hundred times that the easy oil is on the upslope of the curve and the hard oil is on the downslope.

Could it be that tar sands, oil shale etc. is our hard oil?

[GreyZone]

$this->bbcode_second_pass_quote('Flow', '
')Now you may ask "if that is the case, then why aren't we using them now to bring the prices down? First, these companies don't want to get burned again by investing a lot of money in these other technologies because if the price of oil falls again below a point where they can make a profit, they are screwed again. Second, because we are still able to meet demand, we don't have too. Finally, it can't happen overnight - developing these technologies to be able to mass produce oil isn't that fast process in the world.

[AirlinePilot]

Excellent post Grey Zone!

I guess I'm just too lazy to post the links most of the time. This is the crux of the problem I think. Demand and supply issues coming to a head right now and it's not like anything we have seen in the past. If you forget about depletion (as a lot of folks do) then your missing a HUGE part of the equation.

A little bit here and there due to conservation or real demand destruction does not solve the ultimate problem.

Why is this so hard for people to see? How is this so hard to get ones arms around? I admit it took a while but I'm finally seeing the light.

Flow,

You seem like an open minded person and intelligent to boot. Don't fall prey to unconcious denial. You seem steeped in it right now. I think we all went through this stage at some point. Im passed the fear and denial and Im into planning. I still plan as though we could maintain something close to mormalcy, but a prudent man needs to be ready for the worst.

[Ludi]

$this->bbcode_second_pass_quote('AirlinePilot', '[')b] a prudent man needs to be ready for the worst.

[Flow]

GreyZone wrote:

$this->bbcode_second_pass_quote('', 'N')ote further that of the estimated 1.7 trillion barrels of oil equivalent estimated to exist in the Athabasca deposit, that they believe they can recover only 175 billion barrels. They further estimate that another 350 billion barrels are recoverable with advanced technologies.

[Flow]

Also, let's not forget about the 1 trillion tons of coal in the world.

Here is an article about what China is doing with their coal:

http://www.gasandoil.com/goc/features/fex43159.htm


Highlights.....


1) China signed an agreement with Sasol, a South African energy and chemicals firm, to build two coal-to-liquid fuel plants in China.

2) These plants will jointly produce 60 mm tons of liquid fuel (440 mm barrels) a year.


If need be China, India, Russia, Ukraine, Germany, Poland, South Africa, the United States and Australia, who all have extensive coal deposits could build these plants to supplement decline in oil as well.

This is in addition to the 20% of diesel fuel the US could replace by cranking up the production of biodiesel, plus ethanal, etc.

[Keith_McClary]

$this->bbcode_second_pass_quote('Flow', '
')Like I said, I used the chart found here:

http://www.lifeaftertheoilcrash.net/Sec ... #anchor_75

I plotted out the amount of oil already discovered from this chart above the production line. Then I plotted out the amount of oil we consume below the production line (minus future discoveries from the chart). We have discovered 34 billion barrels more than we should consume (assuming a 2.5 percent growth in production and production=consumption through 2040).

[Flow]

$this->bbcode_second_pass_quote('Keith_McClary', '')$this->bbcode_second_pass_quote('Flow', '
')Like I said, I used the chart found here:

http://www.lifeaftertheoilcrash.net/Sec ... #anchor_75

I plotted out the amount of oil already discovered from this chart above the production line. Then I plotted out the amount of oil we consume below the production line (minus future discoveries from the chart). We have discovered 34 billion barrels more than we should consume (assuming a 2.5 percent growth in production and production=consumption through 2040).

[GreyZone]

Flow, I am curious how you arrive at 720 billion barrels based on demand and growth by 2025? When I sum up 1.7% growth (Exxon's estimate) in demand over current growth, we have a raw demand total of 795 billion barrels from 2006 through 2025 inclusive using the 84 mbpd of 2005 as the baseline (which sets 2005 at 30.660 billion barrels). Right there I think your numbers are too small which may lead to conclusions more optimistic than are warranted.

Second, how can you assume 2.5% growth in production for the next 20 years? We are seeing serious shortfalls in new reserves. Take the Gulf of Mexico for example. We'll pump just short of 500 million barrels out of the Gulf even with the shut-ins currently in place running to the end of the year. But new discoveries were less than 35 million barrels total this year in the Gulf. The North Sea is experiencing this. The US has already experienced this. The Saudis have no new discoveries and I'd appreciate an explanation of your basis for assuming a 2.5% growth rate in production for the next 20 years on top of the existing depletion. Or, if you are saying that it's only 2.5% new production, then what depletion numbers are you assuming since those should be subtracted from the totals to get the actual production for any given year?

I would also note that PEMEX (Mexico's National Oil Company) stated in May of this year that they are in decline and that Russia has warned that it will peak within 2 years and is considering legislation to ensure that Russian oil stays "at home" for their use first by 2010. Also, have you considered the comments by Matthew Simmons about Saudi Arabia's situation? Those comments are now corroborated by Edward O. Price Jr., the former head of exploration for Saudi Aramco. Also Sadad al-Husseini, another Saudi Aramco executive, has made statements that, while supporting current production levels for Saudi Arabia, call into question any ability to grow that production significantly between now and 2020. Remember that Sadad al-Husseini only left Aramco this spring so his knowledge ought to be considered current. (Remember also that Saudi Arabia has publicly promised to increase production to 11 mbpd for over 2 years yet has not achieved that yet and seemed to struggle to even add a few hundred thousand barrels per day this year.)

Finally, several other nations that you list as "not in decline" have demonstrated difficulty increasing production above current levels. And given the high price for oil right now against historical precedents, coupled with optimistic views held by some in the industry, now would seem a time to "strike while the iron is hot", so to speak, and make as large a profit as possible. But that's not occurring.

In short, I think your 2.5% annual growth in production for the next 20 years is excessive and is the primary basis of the differences in our conclusions, thus I am interested in how you arrived at a 2.5% annual production growth for the next 20 years.

Thanks for your feedback and I will definitely review those EIA spreadsheets when I get home this evening. The primary differences in conclusion seem centered around depletion rates and production growth rates. Understanding the basis for your assumptions can help me improve my own understanding of the situation and perhaps improve my own model somewhat.

[Flow]

$this->bbcode_second_pass_quote('GreyZone', 'F')low, I am curious how you arrive at 720 billion barrels based on demand and growth by 2025? When I sum up 1.7% growth (Exxon's estimate) in demand over current growth, we have a raw demand total of 795 billion barrels from 2006 through 2025 inclusive using the 84 mbpd of 2005 as the baseline (which sets 2005 at 30.660 billion barrels). Right there I think your numbers are too small which may lead to conclusions more optimistic than are warranted.

Second, how can you assume 2.5% growth in production for the next 20 years? We are seeing serious shortfalls in new reserves. Take the Gulf of Mexico for example. We'll pump just short of 500 million barrels out of the Gulf even with the shut-ins currently in place running to the end of the year. But new discoveries were less than 35 million barrels total this year in the Gulf. The North Sea is experiencing this. The US has already experienced this. The Saudis have no new discoveries and I'd appreciate an explanation of your basis for assuming a 2.5% growth rate in production for the next 20 years on top of the existing depletion. Or, if you are saying that it's only 2.5% new production, then what depletion numbers are you assuming since those should be subtracted from the totals to get the actual production for any given year?

I would also note that PEMEX (Mexico's National Oil Company) stated in May of this year that they are in decline and that Russia has warned that it will peak within 2 years and is considering legislation to ensure that Russian oil stays "at home" for their use first by 2010. Also, have you considered the comments by Matthew Simmons about Saudi Arabia's situation? Those comments are now corroborated by Edward O. Price Jr., the former head of exploration for Saudi Aramco. Also Sadad al-Husseini, another Saudi Aramco executive, has made statements that, while supporting current production levels for Saudi Arabia, call into question any ability to grow that production significantly between now and 2020. Remember that Sadad al-Husseini only left Aramco this spring so his knowledge ought to be considered current. (Remember also that Saudi Arabia has publicly promised to increase production to 11 mbpd for over 2 years yet has not achieved that yet and seemed to struggle to even add a few hundred thousand barrels per day this year.)


In short, I think your 2.5% annual growth in production for the next 20 years is excessive and is the primary basis of the differences in our conclusions, thus I am interested in how you arrived at a 2.5% annual production growth for the next 20 years.

[GreyZone]

When I go back and interpolate the graph points that you show as a smooth line between each supplied point, I end up with 756 billion barrels (755.934 billion but let's call it 756). That's still higher than your number but we can let that go for the moment as 30 or 60 billion barrels is just one or two years at today's consumption and even less in the future.

On your production numbers, you simply extrapolate technological improvements to get your presumed increase in reserves but I can do the same thing again in 20 years and 20 years after that. Where does the realistic limit end? The real problem is that technical fixes cannot drive the "proven reserves" above the total actual number of barrels physically in that field. Further, each technical advance, just like in any industry becomes increasingly difficult to execute and expensive to achieve. In other words, I doubt the panacea of endless boosts to existing production from technical fixes can continue forever. Most geologists I've met think the same thing and the only question is whether the next technical advance is going to be economical or not.

When evaluating the existing fields, I've looked at the existing production and the comments from geologists and engineers who have worked with those fields. For example here is a reservoir engineer's comments about Brazil, often assumed to be a growing producer with lots of headroom to grow further:

$this->bbcode_second_pass_quote('', '
')Albacora is in the north part Campos basin It had an estimated 400 million barrels of oil equivalent recoverable. It was discovered in 1984 and began producing in 1996. The production has already peaked in 1998 at 174,000 barrels of oil equivalent per day (boe/d). Thus this field produced 139,860 barrels of oil per day in 2003. It is a declining field.

Albacora Leste with 700 million boe was discovered in March 1986. The field is currently producing but will peak in production at 145,000 boe/d in 2006. Thus, its peak production is only two years away.

Barracuda was discovered in April 1989. It holds 867 million barrels of oil with 10.7 billion cubic meters of gas. Its production will peak in 2006 at 150,000 boe/d, just two years away.

Caratinga was discovered in 1994 and holds 362 million barrels of oil and 4 billion cubic meters of gas. The field will start producing in December 2004 with a peak production of 125,000 barrels of oil by 2006.

Espadarte field, along with the Voador and Marimba fields hold 428 million barrels of oil. Production started in August 2000 and Espadarte and Marimba combined will produce a peak of 65,000 barrels of oil per day in 2006.

Roncador is estimated to hold 2.7 billion barrels of oil and was discovered in 1996. Production started in may 2002. This field will not reach its peak production capacity until 2011 when it is expected to produce 481,000 boe/d. In 2003 it produced 77,000 boe/d.

Marlin was discovered in January 1985. It has 1.7 billion barrels of oil reserves. It will peaked production in 2002 at 586,000 boe/d. It is a declining field. In 2003 it produced 532, 000 boe/d. This illustrates how rapidly a field can decline.

Marlim Leste has 150 million barrels of oil. It is a small field discovered in January 1987. The field will reach peak production of 153,000 bo/d in 2008.

Marlim Sul was discovered in November, 1987. It has 700 million barrels of proven reserves with possible reserves of 1.7 billion. It will reach a peak production of 419,000 boe/d in 2010

Jubarte was discovered in January 2001. It has 600 million barrels of proven reserves. The production will start in 2005 and peak in 2008 at 150,000 barrels per day.

Cachalote was discovered in November 2002. It has 350 million barrels of oil. It is in the planning stage.

Bijupira-Salema fields began producing in July 2003. It contains 170 million barrels of reserves. The peak production will be 80,000 b/d but the date is unspecified. My suspicion is that it was late last year or early this year.

[Keith_McClary]

$this->bbcode_second_pass_quote('Flow', '
')b) Exxon-Mobil is predicting a 50% decilne in production worldwide in the next 10 years???? That is the most radical estimate I have heard to date.