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Page added on August 19, 2014
Peak Oil: Maddening
Those of us paying attention to oil supply issues are on occasion torn by decisions as to whether to simply be amused by the maddening, cherry-picked attempts at analysis of the “myth” of peak oil [similar to the myth of gravity], or just annoyed as hell that even the simplest concepts are either lied about or are so baffling to the anti-fact crowds that their only option is to nonetheless display their lack of understanding by passing along nonsense and misleading pseudo-facts to an unsuspecting public.
Example # 2,478,901:
In his 2005 New York Times best-selling book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy , renowned oil analyst Matthew Simmons outlined his belief that Saudi Arabia’s giant Ghawar oil field would soon begin a terminal decline that would result in permanently falling global oil production….
However, what Mr. Simmons and other peak oil theorists failed to consider is that America’s shale oil revolution could not only make up for Ghawar’s production fall, but even replace the field entirely. [1]
That’s it?! Giving the Motley Fool author the benefit of the doubt by allowing for production courtesy of the shale oil revolution to exceed Ghawar’s total, are we really expect to assume that the “myth” of peak oil can now be put to bed because this revolution has supplanted one field? Seriously?
According to Pioneer Natural Resources, the Permian Basin of West Texas and New Mexico holds an estimated 75 billion barrels of recoverable oil, an estimate that is up 50% in just the last year.
No disrespect intended, but who is Pioneer, and who anointed that company as the definitive spokesperson? And those 75 billion barrels [less than 3 years of world-wide demand, BTW] will be available when? At what price?
Compare this to Ghawar’s roughly 70 billion barrels of remaining oil and then factor in that the Energy Information Administration ( EIA ) estimates the US’s technically recoverable shale oil and gas deposits stand at 223 billion barrels, and one can see there is little cause for alarm.
Really? Why are we comparing questionable estimates of Saudi Arabian oil totals with oil and gas deposits here? They aren’t interchangeable.
If we accept this author’s estimates, couldn’t he or she have supplied us with a few additional facts (the real kind, based on evidence and reality) which would tell us how soon, how expensive, etc., etc.
That impressive feat [making the U.S. the world’s leading producer of the generously-defined and misleading “fossil fuel liquids” – see this more honest take] was accomplished thanks to the incredible growth of oil production from Texas and North Dakota, which increased their production by 117% and 177% respectively between 2010 and 2013.
I and my peers on the factual aside of the peak oil myth debate readily acknowledge that production totals from the shale formations of Texas and North Dakota have exceeded expectations. They’re the reason why production has increased as it has in recent years. Facts are facts, or at least they should be. So no dispute there. If just mentioning the recent burst of productivity was the only requirement, then we peak oil advocates “lose.”
But as is always the case, and as we always point out, the recent story of abundance and all-is-well Happy Talk has a Part Two. High decline rates, energy density/ quality issues, and more costly efforts put a finite spin on the cheerleading efforts. But to even hint that there is a factual and unpleasant set of considerations unaffected by right-wing spin would of course both ruin that narrative and raise a few more questions from the public as to why information is withheld and/or being misrepresented.
(Let’s not forget—although the cheerleaders do work hard to entice the public to do just that—that mentioning massively vast abundant “resource” totals is not exactly full disclosure. Resources are nice and the numbers are impressive as hell, but there’s a Part Two to the “resources and reserves” conversation as well. Shockingly, the Happy Talkers never get around to that discussion. See this.)
Some benefit from those efforts, of course. Too bad the public isn’t among that group.
Lest anyone think all of this massive abundance is limited to just America, the Motley Fool author offers this:
Russia’s Bazhenov shale formation is the size of California and Texas combined and is estimated to also hold 75 billion barrels of oil recoverable with current technology
I’ll pose just a question or two among the many: Just what kind of effort, how high the costs, how difficult the extraction, and what kind of time frame can we expect in order to find about two-and-half years of worldwide consumption in not-exactly-paradise Siberia, over an area as expansive as Texas and California combined? A very expensive barrel here and a very expensive barrel there is probably not a solution. It doesn’t help that the oil industry has to climb into bed with Russian politics, economics, and policies, either. [See this]
The Fool’s author even noted this, which at a minimum suggests a problem or two!
Before we all take to the streets to celebrate the end of the energy crisis, there are several important factors to consider. First of all, recent US sanctions against Russia over its actions in Ukraine have resulted in a denial of key economic resources, including deepwater offshore drilling rigs and fracking equipment. This could hinder exploitation of the Bazhenov formation, at least in the short term, because Russia is increasingly dependent on Western technology to increase oil production from hard-to-drill locations.
Second, much of these resources will never be economically recoverable simply because the amount of energy it would take to extract that oil would be more than is contained in the oil itself. In addition, though much of the oil could prove recoverable, it would require prices so high the world will have moved to alternative energy sources by then.
How soon are we making that apparently effortless transition when we have a battalion of spokespeople offering limited, misleading, and inaccurate info? Why bother mentioning those massively vast abundant resource totals if the author recognizes that they’ll never come close to being produced?
Why not just be honest (ever the idealist am I) and state that we have some looming problems, and rather than waiting on the inevitability of reality to convince the die-hardest of die-hard deniers that facts don’t bend to nonsense, perhaps some intelligent, comprehensive, and honest discussions ought to be taking place now?
And what do we make of this statement? First, the ongoing farcical promotion of gazillions of barrels of oil shale from Western United States region [a full century’s worth of failed commercial efforts being no barrier to cheerleading efforts], and then a subtle “but, oh by the way”:
However, the single largest potential mother lode of oil is Colorado and Wyoming’s Green River Formation, which the US Government Accountability Office believes to hold as much as 3 trillion barrels of oil.
Unfortunately, these resources come in the form of kerogen, which is trapped inside rock that must be intensely heated to extract. It’s estimated that, of this bounty, only 1.8 trillion barrels could ever be technically recoverable due to the intense energy and water resources required. For example, to extract 1 million barrels/day would take enough power for 9 million homes and enough water to supply all of New York City for 45 days.
Seems like a fair trade-off, doesn’t it? And as for the “only 1.8 trillion”? Dream on!
Peak oil is inevitable in the sense that one day the world will find better alternatives to oil and voluntarily choose to stop using it as much. However, perpetrators of the supply side peak oil myth fail to take into consideration the innovative spirit of thousands of engineers, scientists, and industrialists who are constantly looking for solutions to our energy needs. In other words, it’s not inconceivable that your grandchildren might be driving gas-powered cars even 100 years from now.
When is that “one day”? (Notice the subtle pivot from oil to gas-powered.) And several billion people are just going to wake up on a Tuesday and volunteer to stop using oil? Any preparation ahead of time for that moment of civic enlightenment?
“Innovative spirit” from those constantly looking for solutions sounds fabulous! But if that’s what we should be counting on instead of actual planning based on honest dissemination of all the facts, we’re so screwed!
Inane fluff passing as factual assurances helps no one today, and makes it much worse tomorrow. Hell of a strategy!
It wouldn’t hurt for those who know to add some honesty and integrity to these conversations … sooner rather than later.
20 Comments on "Peak Oil: Maddening"
Plantagenet on Tue, 19th Aug 2014 3:48 pm
The 70 BILLION barrels of oil in the Texas Permian are an amazing bounty for the USA. The costs and methods are well constrained…drill, frack, and then repeat as needed over and over and over again.
JuanP on Tue, 19th Aug 2014 4:00 pm
Unfortunately, all the quotation marks got lost here at PO making it hard to understand this article, and the original at the link is a horrible combination of blue texts and backgrounds.
M1 on Tue, 19th Aug 2014 4:06 pm
Corporate Oil would like nothing better then no one gradually prepare for peak-oil.
Plan A: Gradual prepare for peak oil, require higher mpg, and a strong transition to EV’s.
Plan B: No Preparation: At the end, catastrophic failure of society.
Oil Profits:
Plan A: continuous shrinkage of the value of shares and the size if the company, if they do not transition to wind and solar.
Plan B: High to stratospheric profits during the actual peak crisis, but general economy collapse.
How DARE You ask them to run their companies for the Good of America.
M1 on Tue, 19th Aug 2014 4:08 pm
Author gives us the definition of Peak OIl:
Second, much of these resources will never be economically recoverable simply because the amount of energy it would take to extract that oil would be more than is contained in the oil itself. In addition, though much of the oil could prove recoverable, it would require prices so high the world will have moved to alternative energy sources by then.
But, it’s not coming.
Sure.
Bob Owens on Tue, 19th Aug 2014 5:58 pm
It is up to us. Every day, in every way, with every decision we make, we have to set examples for everyone else to follow. They will never change their habits any other way. Logic only works on a very few. Peer pressure by example is slow and painful but it is the only way. It is up to us.
shortonoil on Tue, 19th Aug 2014 6:39 pm
The optimistic 2000 USGS projection of total world reserves was 4,200 GB. No can deny that reserves are immense. Neither can anyone deny that it cost more to produce petroleum in 1930 than it did in 1900. Nor, can they deny that it is costing (a lot) more today than it was in 1990. As a matter of fact, every barrel of petroleum ever produced has, on average, cost more to extract than did the barrel that came before it. Rising cost of production as a resource is depleted can be charted back for 2000 years. The laws of physics also says that it has to happen that way.
Neither, can anyone deny that if the cost of production keeps increasing, a point will be reached when the end user can not longer afford to pay for it. So why instead of drumming on there is a lot of oil (everyone knows that) don’t these analyst sit down, and figure out when the point will arrive that it is no longer cost effective to produce it? If you asked them they would say that they can not estimate future improvements in technology. This is a completely lame answer that we constantly hear. Technology may make more resources extractable, and it may make extracting them faster, but it does not reduce the cost of production. If it did oil would be cheaper today than it was in 1900. The technological advancement has been absolutely incredible.
So why don’t they? There are two reasons; they don’t know how, and/or they don’t want to!
That’s why we did.
http://www.thehillsgroup.org/
eugene on Tue, 19th Aug 2014 7:47 pm
Yrs ago, a friend and I had a conversation re how energy would be a stair step process of shortages and excess. In the end, reality will win. It appears to me we have a whole lot more than energy problems facing us. I fully understand the need for people to choose short term optimism over longer term pessimism.
rockman on Tue, 19th Aug 2014 8:47 pm
“How DARE You ask them to run their companies for the Good of America.” Actually it would violate govt laws administered by the SEC for public companies to do so. A pubco are required to conduct activities which solely benefit the shareholder of that company. Any deliberate deviation from such efforts would subject the officers of the company to fines and even criminal prosecution.
As far as private companies, like mine, the obligation is solely to my owner. He can make decisions for the country’s benefit or completely ignore it’s needs. His choice in a free society.
Of one finds such conditions unacceptable they are free to move to another country where some authoritarian gov’t has complete and absolute control over the aspects of their life.
Richard Ralph Roehl on Wed, 20th Aug 2014 2:24 am
100 Earth years from now,, none of this will matter.
Norm on Wed, 20th Aug 2014 4:45 am
The peak oil theory is a myth. The reason its false, is because God is refilling the oil wells faster than we can pump them out.
As a result, we can drive confidently to church on Sunday, in our Cadillac Escalades, and put money into the white 5-gallon donation buckets, that are handed from row to row.
Ralph on Wed, 20th Aug 2014 7:29 am
In a market economy (however imperfect) the global peak of oil production will come when the price of developing new oil fields faster than the rate at which the existing ones decline exceeds the price the market will bear.
Many factors will and are affecting the exact numbers. The world is slowly becoming more (oil) energy efficient, better technology is making previously uneconomic resources (marginally) economic to extract, and a rigged and imperfect market is investing more money in oil developments than is rational. However, it is hard to see another rabbit like US shale being pulled out of the hat before global peak occurs.
What happens at peak depends on how fast the global economy can more away from oil. Here, most low hanging fruit has already been harvested. It is extremely unlikely that alternative fossil fuel production can be expanded fast enough to keep global net energy supply increasing, and although renewable energy is the only long term solution current rates of investment are too low for them to take up the slack.
The global economy will decline more or less in step with the decline in oil production.
If there isn’t a fundamental reallocation of resources and reset of the global financial system, the economy will follow a stair step decline to collapse as oil prices rise above what the economy will sustain, leading to collapsing demand, price , investment, and production, followed by a price recovery and rinse and repeat.
Davy on Wed, 20th Aug 2014 8:36 am
Ralph, I second your thoughts. IMA though, I am not sure if there can be a reallocation of resources and financial reset except around the margins. The problems are in our highly complex integrated global economic system structure. Since the system we see today is highly complex it is also very brittle and impervious to effective change. There is little adaptive and behavior mitigation in a macro sense. Any large changes have unintended have large scale consequences. This global system is in limits of growth with diminishing returns in the battle against entropic decay and problem solutions. IOW a Mega predicament where changes in one area have dramatic and adverse effects on another area. The proposed changes can only be made around the fringes. With the extent of the problems this fringe mitigation efforts are inadequate. This Mega predicament is related to the converging inclusive multiple predicaments that are going unsolved and worsening. The system is in a stretched disequilibrium in multiple areas. What I mean by stretched is that due to our complex global systems energy intensity and distribution efficiency we have been able to maintain economic activity and position within this worsening Mega predicament. I colloquial speak we are kicking the can down the road. We see this with a financial system disequilibrium of debt and masked growth descent. The can is being kicked down the road with food insecurity, water stress, development mal-investment, worsening pollution management, global ecosystem (ocean) failures, political polarization, and population overshoot. It is unclear if we will have a rapid stair step down, a longer term stair step, or one big step off the cliff. Unlike the cornucopians, we doomers see the paradigm shift to descent in the works. I will admit we doomers have been proven wrong time and again with the habit of forecasting change that fails to occur. My thoughts are this change will happen slowly then suddenly change like phase change in water. Breaks to systems often occur abruptly especially mega breaks. Smaller breaks happen within a system and often are absorbed and mitigated. It is the large abrupt changes that can happen rapidly. I feel we have vital macro nodes to the global system stressing and ready to fracture that will drive sudden change. The most notable are the financial system instabilities, energy growth failures, food insecurity, and political/social polarization. The current global system is vulnerable and sensitive to these vital nodes for stability. In fact any of the above nodes are not exclusive they are related and directly interact in a dangerous reactivity.
Dredd on Wed, 20th Aug 2014 9:12 am
rockman on Tue, 19th Aug 2014 8:47 pm
“Of one finds such conditions unacceptable they are free to move to another country where some authoritarian gov’t has complete and absolute control over the aspects of their life.”
And those of Oil-Qaeda who are destroying this planet are free to move to a planet that does not have to sustain human life if they find that not ruining what is required for 7 billion people to exist is not their style.
sunweb on Wed, 20th Aug 2014 10:42 am
Original forms of energy are the answer. Plants, humans, animals, mechanical wind, and mechanical water.
Is that what is meant by renewable?
Davy on Wed, 20th Aug 2014 11:20 am
Sun, that should be part of the transition plan in my book along with anything and everything.
sunweb on Wed, 20th Aug 2014 11:28 am
Davy – Speaking of anything and everything.
We will do anything and everything to maintain our present personal level of energy use and the comfort it affords us. We will do anything and everything to the earth, to other people and even to ourselves to continue on this path. And if we don’t have the energy level we see others have, we will do anything and everything to the earth, to other people and even to ourselves to attain that level. The proof of this assertion is simple; we are doing it.
Davy on Wed, 20th Aug 2014 11:38 am
Yea, Sun, it is tragic and cruel and this is standard BAU activity now. My thoughts are strictly the transition period from the bumpy plateau we are on now to something below and where below no one knows. I am says we are falling apart everywhere so if we are going to transition with a little civilization left we have to use all available resources in the most efficient means available in the descent period before reboot. This is wishful thinking of course I am just saying that is what should happen. The cliff is near so we need some kind of parachute for the jump into the darkness.
Dave Thompson on Wed, 20th Aug 2014 4:06 pm
The toll road on I90 between Chicago and Rockford is being widened again. Looks to be a three year project. Whats my point? Full speed ahead captain? Yes first mate full speed ahead!
Nony on Wed, 20th Aug 2014 5:26 pm
EIA said in an interview that they keep underestimating the growth. WE will probably hit their 2014-2020 growth goal in 2 years vice 6. I love it…cornie heaven. Like Cartman drinking the tears.
Makati1 on Wed, 20th Aug 2014 8:00 pm
RRR, in 20 years, none of this will matter. 100 years is way too optimistic. In 100 years, there may not be any humans left to care about anything. Whatever the next life cycle on planet Earth, it will not have humans as a part. Perhaps some bug-like creatures will be the next dominant species?