Peak Oil is You
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Page added on August 2, 2014
Has the Gulf of Mexico Hit Peak Oil?
There are enough articles on the “myth of peak oil” floating around the Internet to fill a boo. There are enough books on the subject to fill a small library. One of the common threads throughout these publications is their lack of credible sources, because not only is peak oil real, but we’re rapidly approaching that threshold.
A prime example of evidence is floating in the Gulf of Mexico, which is now smacking the United States and the oil industry right in the face.
According to a new government report, oil and natural gas production in the Gulf has been steadily declining for the last decade. The report looked at oil production in the Gulf of Mexico on federal lands only, not any privately-held lands where production is taking place. Since 2010, according to the report, the annual yield of oil from the Gulf has fallen by almost 140 million barrels.
While the Gulf region still accounts for 69 percent of U.S. oil produced on federal lands, the dramatic decline in production tells a story that the oil industry doesn’t want us to hear. Peak oil is clearly beginning to play a role in U.S. exploration.
Contrary to what some of the peak oil deniers want the public to believe, peak oil does not mean that we’re about to run out of oil. What it means is that the United States is running out of easily accessible, financially viable oil. As that easy-to-retrieve oil disappears, companies have to drill deeper and deeper or in otherwise inaccessible places in order to get their oil.
This makes the process much more expensive and drives costs up to the point that profits are hard to come by. And this is what we’re beginning to see in the Gulf of Mexico.
It isn’t because oil drilling is decreasing in the Gulf, either. In fact, oil drilling in the area has been accelerating in recent years, so the decline in production is not the result of fewer wells being drilled.
On top of the increased drilling, earlier this year President Obama announced that his administration would be opening up an additional 40 million acres of the Gulf for oil leasing, which was a follow-up to the announced 72 million acres that had been opened up for leasing just a few months prior.
This makes slightly more sense with the new information about the declining oil production — the president was giving the dirty energy industry a favor by trying to help them access more readily available oil.
The recently opened lands will likely not help the problem of declining production, because they aren’t solving the ultimate problem of fossil fuel addiction. The industry and their echo chamber have told us that the immediate solution is the natural gas fracking boom will surely take the edge off our oil addiction.
But peak production is even more of a problem with natural gas than it is for oil. As it turns out, production from fracking wells decreased by between 60 and 80 percent in just the first year of activity, which is why wells constantly have to be drilled in new areas.
While reports show that the “fracking boom” will be very short lived, the deniers continue to tell us that it is here to stay, and will also be the solution to weaning ourselves off foreign oil.
Even the industry itself is coming to terms with peak oil. BP, the company responsible for helping to destroy the Gulf of Mexico’s ecosystem with their 2010 oil geyser, recently admitted that there is probably about 53 years worth of oil left on the planet to supply growing demands.
That’s a pretty harsh warning from a company that makes billions off of consumer demand for oil.
Declining production and dire warnings from the industry all underscore the main problem: Human beings are addicted to oil and that addiction is simply not sustainable.
But, in true human fashion, we’ll continue to pump every last drop out of the earth before we attempt to move on. After all, that’s the nature of addiction.
thecontributor.com
4 Comments on "Has the Gulf of Mexico Hit Peak Oil?"
ronpatterson on Sat, 2nd Aug 2014 7:22 am
The article said; “Since 2010, according to the report, the annual yield of oil from the Gulf has fallen by almost 140 million barrels.”
Where did that data come from. Using the data published by BSEE, from the highs of 2010 to current production Gulf of Mexico production has fallen by just over half a million barrels per day.
The average for 2010 fell during the last half of the year due to the Deep Water Horizon disaster, but the from the highest 12 month average, 2009-2010, production has fallen by more than 400 thousand barrels per day.
Yes the GOM has most definitely peaked.
JuanP on Sat, 2nd Aug 2014 8:56 am
Ron, Isn’t 140 millions in annual yield the same as 400,000 barrels per day(140,000,000 / 365 days = 383,561bpd). I don’t understand your comment?
rockman on Sat, 2nd Aug 2014 11:10 am
From the EIA that gets the data from the feds. From
http://www.nola.com/business/index.ssf/2014/07/oil_gas_production_in_federal.html
“But production in the offshore gulf has also fallen every year since 2003. According to the report, total fossil fuel production in the region is less than half of what it was a decade ago, down 49 percent from 7.57 trillion Btu in 2003 to 3.86 trillion in 2013.
The report notes that the region has seen a sharp decline in natural gas production as older offshore fields dry out and more companies invest in newer gas finds onshore, where hydraulic fracturing has led to a boom production. Natural gas production in the offshore gulf was down 74 percent from 2003 to 2013.
The region’s oil production has declined, though less drastically. The offshore gulf produced about 447 million barrels of oil in 2013, down from a high of 584 million barrels in 2010.
Still, the region accounted for 69 percent of all the crude oil produced on all federal lands and waters last year.
Crude oil production in the Gulf of Mexico could to start to recover in coming years, as companies restart major projects delayed after the 2010 Deepwater Horizon rig explosion. The disaster killed 11 men, unleashed the worst oil disaster in U.S. history and prompted a federal ban on deepwater drilling. The ban lasted several months.
The most recent federal lease sale held in New Orleans, in March, drew more than $872.1 million in high bids on more than 1.7 million offshore acres in the central and eastern Gulf of Mexico. Previous sales under President Barack Obama administration’s 2012-17 leasing program have opened 60 million acres offshore and drawn $1.4 billion in bid revenues.”
A decent article but they miss a couple important facts. The reason NG production has declined so much is two-fold. First, starting about 40 years the success rate for drilling for offshore NG zoomed up. What used to be less then 25% now exceeds 90% in many areas. When offshore seismic data quality began improving in the late 70’s we started utilizing amplitude anomalies. Commonly called “bright spots”. We could actually see direct evidence of NG in the reservoirs instead of making a strictly geologic analysis which could only imply some possibility of commercial reserves. Even more important then just indicating the presence of NG bright spots also indicated the size of the trap.
Eventually the seismic data quality onshore became similarly useful by the mid 80’s. Onshore exploration companies took a while to catch on. But geophysicists (like moi) who had worked offshore began exploiting this tech. Starting in 1985 I drilled 25 shallow wells for small NG stratigraphic traps. I hit 23 out of those 25 wells where the strictly geologic success rate was less than 15%.
Second, another problem with chasing Deep Water NG is the need for pipelines which aren’t typically required for oil fields out there. Lots of NG out there though. Some years ago the first significant DW NG gathering line, the Independence Hub, began delivering over 300 bcf of DW NG to the shore.
Bottom line: NG potential on the offshore shelf (above 600′ water depth) has been almost completely developed. And in the DW it will require a number of very large DW NG fields discovered in close proximity to justify the cost of a multi $billion pipeline system.
As far as operator running from the DW plays to the shales there’s not a great deal of crossover companies. The two very different trends draw very different business plans/capabilities. The vast majority of the shale players have neither the expertise nor, more important, the capex to play in the DW GOM.
Dredd on Sat, 2nd Aug 2014 3:54 pm
It has hit peak pollution, but peak death and disease are still in the pipeline.