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Page added on September 16, 2014
Peak Oil: The Mirage
Several months ago, one of this year’s better features on the subject of peak oil was offered by John Kaufmann in his article entitled: The Energy Independence Illusion. It’s an excellent read [adapted from a presentation to the World Affairs Council of Oregon this past march] for anyone interested in this topic. [Any quotes here are from that article unless noted otherwise.]
[T]he purported benefits of energy independence are simple: an improved economy due to the reduced outflow of dollars, improved national security, and more flexibility on foreign policy, particularly with regards to the Middle East and now Russia. Those objectives are substantial, if they can be achieved.
However, drilling and mining our way to energy independence is a mirage. First, it may provide temporary economic gain, but will not cure our fundamental economic problems. Second, it will have very limited benefits for foreign policy and national security; the problem is not US dependence, but rather the dependence of our allies and trading partners. Third, it is simply unachievable. And last, it ignores carbon emissions; the real goal should be independence from carbon-based energy sources.
Okay, but if we ignore those facts, then we have nothing to worry about, Right? Gee, that was easy!
Ah, but for the pull of reality….
“Temporary economic gain;” “very limited benefits;” “simply unachievable.” Is it just me, or is that suggesting we might still have some concerns worth addressing, fossil fuel industry cheerleading notwithstanding? Perhaps those in the know might want to share all that they know, rather than releasing just some of the details after being fully massaged?
Hell, we might even be able to fashion a sound plan or two with that additional information! wouldn’t that be an interesting experience!
As for those lowly consumers bolstered by prospects of lower prices (every little bit helps these days), well … not so fast. As Mr. Kaufmann notes:
Some sources believe that energy independence will mean lower prices for consumers. However, any increased domestic production will come from unconventional sources, such as shale oil or tar sands, which are more expensive than conventional oil. It only became economic to produce because of high world oil prices over the last several years. In addition, oil prices are tied to the world price of oil. Energy independence will not reduce consumer prices.
So close to good news! Doncha just hate it when facts spoil happy endings?
At what point do the adults in the room sit down and deal with those facts rather than pitching yet another context-free, fact-light narrative to those dependent on sound information to address their own needs adequately? How is making the problem worse later, for more people and industries, in more ways, with costlier and fewer options at hand to address them all a wiser course of action?
The slow, costly, and complex transition to a future no longer—of necessity—reliant upon the same marvelous energy resource responsible for the advances and growth enjoyed by society today is going to be a slow, costly, and complex one! Shading the facts to buy one more day of profit and survival is a better option? Seriously?
I don’t own a business and I’m not an elected official, so I’ll acknowledge shortcomings in my thought processes and understanding, but I’m struggling with this concept of making things worse as the better approach today.
No one wants to have to deal with a problem of this magnitude. The smaller magnitude challenges almost all of us are dealing with on a daily basis is quite enough, thank you very much. But what future awaits us if we cannot be courageous and honest enough to plan for that future with the full range and understanding of all the facts now at our disposal?
No individual, no family, no group, no business enterprise large or small, no athletic team, no organization plans for the short- or long-term future with just a few tidbits of select information and then pads those with hopes and preferences. Better plans and better outcomes derive from an assessment and incorporation of all available data. That really shouldn’t be a revelation.
Some few are likely to benefit in some manner from continuing to deflect reality and the facts of energy production to a later time and place, but what price will the rest of us have to pay in the interim?
More to come in the next post.
15 Comments on "Peak Oil: The Mirage"
Nony on Tue, 16th Sep 2014 9:19 am
Don’t reprint these bolded, italic screeds please.
GregT on Tue, 16th Sep 2014 9:47 am
The size, shape, colour, or style of the font doesn’t change the message. The message is worthy of consideration. I look forward to reading the next one.
Solarity on Tue, 16th Sep 2014 10:33 am
Peak Oil is NOT a mirage; it is statistical fact — a 100% likelihood of occurrence.
“The real goal should be independence from carbon-based energy sources.” When ALL fossil fuel has been consumed, there will be such a future. But in the meantime, we should be mindful about not expending this resource frivolously, as we are doing so today. Much of it should be dedicated to developing and constructing an energy infrastructure that is entirely independent of fossil fuels.
“Drilling and mining our [US?] way to energy independence is a mirage.” Independence implies living within ones means, achieved by balancing two processes: having more supply and/or consuming less.
“Transition to a future no longer reliant upon [a] marvelous energy resource … is going to be a slow, costly, and complex one!” Yes, this transition period will last several hundred years of decline. Framed against historical energy use, it will resemble a Seneca collapse.
shortonoil on Tue, 16th Sep 2014 11:05 am
“The purported benefits of energy independence are simple: an improved economy due to the reduced outflow of dollars, improved national security, and more flexibility on foreign policy, particularly with regards to the Middle East and now Russia.”
The shale industry has been promenading the energy independence theme about like a debut at her coming out party. It is stated in such terms that we are expected to believe it “a priori”; without any substantiation. It is intended to fall into the same category as “God is good”.
Since we don’t necessarily take used car salesmen at face value either, that is “it must be a good car because it was only driven to church on Sundays by a little old lady” we decided to do our own research into the energy independence theme.
To get a feel for the underlying assumption that is presented we did a study on 4,598 Bakken wells through May, 2012. The average first year production on those wells was 107,967 barrels. Assuming the wells had a 10 year life expectancy they would produce on average 259,202 barrels. Bakken wells are not cheap; they average about $8.5 million apiece. After some calculations it can be shown that it takes the energy from 46,865 barrels to drill the well. That is, 43.4% of the first year’s total energy production from these wells is needed to just drill the well. Since oil straight out of the ground isn’t good for much (besides oiling old bolts) it has to be processed. That processing also takes a lot of energy. The energy needed to refine 107,967 barrels requires the energy from 53,983 barrels. The total energy needed to drill the well, and process the oil into something usable is 100,848 barrels. 93.4% of the energy from the first year’s production is needed to drill the well, and process the oil.
Looks like our debut tripped on her gown, and fell down the stairs , and apparently that little old lady was actually running a 13 state wide catering service. Maybe she lied to the used car salesman, and we hope the poor girl wasn’t hurt?
http://www.thehillsgroup.org/
Northwest Resident on Tue, 16th Sep 2014 11:20 am
shortonoil — It’s always good to a little scientific factual backup from you and your group to support what common sense and a high level of perception seems to indicate — that the whole “shale oil” debacle is nothing more than hype, lies, debt and piles of bullshit.
Davy on Tue, 16th Sep 2014 11:59 am
Yeap, NR, I don’t believe PO because I want to. I believe in the phenomenon because the science points to it. When I say science this is multidisciplinary approach. Short and others here do a better job than the articles we read here at exposing the dynamics of PO. Honest people have to take pause when Short and others throw out some of the analysis they do. It is solid and transparent. Short is not on here to make money. He is a concerned citizen like most of us here unlike the bought off cornucopians that support the “all is great” meme found in many of the articles we read.
Bob Owens on Tue, 16th Sep 2014 12:59 pm
Very few people, unfortunately, can be swayed by logical reasoning. The best we can do is be an example for everyone as to how to live. Forget about changing people. Change yourself. If you are lucky a few of your neighbors will eventually see the value in what you do. This is a very slow, painful process.
Northwest Resident on Tue, 16th Sep 2014 1:32 pm
Nony — I know you’re out there somewhere, always ready to defend the bright future of shale fracking and the enormous energy that shale provides. I remember that one time I made the statement in one of my comments that “shale oil is crap”, and you disputed that characterization of shale oil. Here’s a comment by a commenter over on Ron Patterson’s blog along the same lines (below) — I’m wondering what your thoughts are on the subject:
Watcher says:
September 13, 2014 at 6:35 pm
That is the most powerful diagram of this year. SOOOO much obfuscation. The diesel content (of shale oil) is crapola.
The digging I did found articles about refinery difficulties dealing with huge variances out of the shale sources not just in API but also in metal content. The refineries don’t know from one train car to the next what they are going to be processing and that doesn’t work. For this light stuff they have to “Tune” things to get it to refine. If they have to go thru every train car to find the stuff the works with the present tuning, that costs money.
rockman on Tue, 16th Sep 2014 2:17 pm
First I’ll again repeat the obvious: they are not speaking about “energy independence”…they are talking about import independence.“ Two very different conditions. Even then they are measuring “independence” by the number of bbls…not $’s. Despite the surge in US producing we are more dependent upon foreign oil than ever before when based upon cost and not volume. Even though we are importing fewer bbls we are shipping more $’s overseas for oil then before the domestic production surge.
And consider this statement: “The purported benefits of energy independence are simple: an improved economy due to the reduced outflow of dollars, improved national security, and more flexibility on foreign policy”. Out flow to who: foreign oil producers or all oil producers including domestic companies? The US oil consumer is transferring 3X the amount of wealth to all oil producers compared to what they were spending before the surge in domestic production. How exactly does increasing the cost of oil 300% lead to an “improved economy”? And if the day comes when the US imports no oil we’ll still be pledge to lend both financial and military support to allies who become entangled in oil supply battles. For instance how would the US not importing any oil give us any leverage in the Ukrainian crisis or the current war against ISIS? Flexibility in foreign policy: would we then abandon out pledge to aid the EU? The Ukraine? Iraq? Saudi Arabia? I think not.
Nony on Tue, 16th Sep 2014 3:29 pm
Watcher is full of it. He’s a conspiracy theory guy who will take one data point that fits his view and run with it as proof and ignore 10 that go the other way.
Bakken=WTI=more $$ value than heavy sour crude.
Craig Ruchman on Tue, 16th Sep 2014 7:08 pm
“93.4% of the energy from the first year’s production is needed to drill the well, and process the oil.” Makes you wonder what the ERoEI will be in ten years, as the most the most productive wells are drilled first.
Ralph on Wed, 17th Sep 2014 3:36 am
With modern offshore wind turbines in a windy place like the North Sea, the energy payback time is about 6 months, then the next 20 years of operation provides electricity for very little extra energy expense.
A shale oil well takes 11 months to energy payback is more often than not plugged and abandoned in 5 years.
Where should I invest my money?
James A. Hellams on Wed, 17th Sep 2014 7:44 pm
Short, congratulations on your assessment of the energies needed to produce and refine the oil.
I would add another calculation to the fine work you have done; that you need to consider.
You need to consider the amount of energy needed to ship the oil to the refineries; and from the refineries to the consumers of the products from the oil.
The transport of the oil and oil products, alone, would involve a lot of barrels of oil equivalent.
I do not have the calculations on the energies needed to ship the oil. These would be valuable to know. I suggest this to contribute to your very worthy comment.
GregT on Wed, 17th Sep 2014 9:53 pm
Questions for Short, or anyone else that may have some insight.
It’s clear that all barrels of oil are not created equal, and EROIE is very straight forward and easily understood.
What are the differences between shale oils, tar sands oils, light sweet crude, heavy crude, etc., in respect to refined products?
What are the differences in profits between the different barrels of oil, and what are the demand for those products?
Do all of these barrels of oil have the same net worth to markets, and industrial society as a whole?
And finally, does it really matter if we increase global oil output by X numbers of barrels of oil per year, or is the oil being produced actually worth less to society in general.
GregT on Wed, 17th Sep 2014 9:54 pm
Sorry, EROEI.