Peak Oil is You
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Page added on March 24, 2016
Peak oil delayed but not over
Some analysts say peak oil is over and the current global supply of oil proves it. A closer look suggests peak oil remains an issue but it is occurring differently than had been projected.
The peak oil concept was based on the scientific understanding that the amount of conventional, low cost oil in the ground is finite and at some point will be depleted. The late Shell geologist, M. King Hubbert, illustrated that the rate of petroleum production from an oil field increases until reaching a peak and then declining gradually. Production follows a bell shaped curve.
In 1956 Hubbert successfully predicted that oil production from conventional wells in the United States would peak in 1970. Later he predicted that global supplies of low cost conventional oil would peak around 2000. It is suggested that conventional global supplies of oil peaked in 2005.
Conventional low cost oil is produced from wells that are drilled straight down into the ground. Once developed they produce oil for decades with no significant new investment needed yielding low cost oil. Hubbert’s concern was that with dwindling low cost conventional oil supplies economic growth would end producing severe social stress.
As low cost conventional oil decreased, investments in unconventional supplies increased. These energy sources are more costly to secure, use more energy to produce, carry higher levels of risk and are of lower quality. Securing them also releases higher levels of climate changing gases while polluting air and water supplies. Art Berman, a director of the Study of Peak Oil, points out that we are not running out of oil but out of affordable oil.
In 2015 US crude oil production approached 9.5 mb/day, nearing levels of the 1970s peak. In recent years roughly half of the oil produced in the United States has come from unconventional oil sources. The new wells supply oil on average for only three to four years with half coming during the first year of operation. In order to continue producing oil, additional costly horizontal drilling and fracking operations must continue. The oil produced is far more costly than conventional oil. On average oil shale operations need $60 to $70 barrel to be profitable, so with oil around $30, many firms are going bankrupt and production is dropping.
Rapid development of fracking operations was based on large pools of money available from the sale of risky bonds offering high yields. Repayment of the loans depended on the price of oil remaining high. By continuing to develop more wells to sustain production and pay off the loans, when demand for oil dropped, a surplus developed which crashed its price.
The low price of oil and gas is forcing major cutbacks in exploring and developing new energy supplies. Global investments in new projects declined for two consecutive years setting the stage for higher prices in the future. Since the new supplies will come from nonconventional sources, the concern of running out of affordable oil will impact society.
The question is how to use this temporary surplus of low cost oil. Should it be used to expand the global oil infrastructure or should it be used to create a more sustainable energy system based on efficiency and renewable supplies?
31 Comments on "Peak oil delayed but not over"
paulo1 on Thu, 24th Mar 2016 9:03 am
Excellent short article. Will the reporter now be forced to seek other employment?
regarding: “or should it be used to create a more sustainable energy system based on efficiency and renewable supplies?”
I don’t know about that, but I do know that many of us are already doing so on an individual basis. I have a vision of Antarctic penguins waiting on the ice flow….for someone, anyone to jump in and see if it is safe? Finally, one is pushed in. That is our current environmental/energy focused leadership these days. But not everyone is waiting around for a consensous, nor do they believe their efforts will save humanity. They are doing what they believe is the right thing to do for their age, times, and circumstances.
Mak is developing his farm in the Philipines, Sunweb is in Minnesota and seems very well set up, Ghung is beyond his PV and is now developing a new high tunnel greenhouse system, and Wimbi is busy inventing new PV applications and now a waste gassifer system.
Whether it is simply reducing your debts to provide freedom of action, changing your transportation and travel needs/habits, buying local, or even doing all of your own cooking and eating at home, now is a right time to begin that first step. Incidentally, the list mentioned is something I began in my 20s merely because it was a lifestyle I wished to pursue, and because my father-in-law made one simple comment that rang true, (actually two comments). 1) “Debt is economic servitude and the banks like nothing more than to keep people in their debt”. 2) “Pay your house off as soon as you can. It will be like getting a $1,000/month pay raise. After I paid my house off I seemed to always have extra cash, I always had that $100 in my wallet”. (this was in 1980 and $100 was serious coin).
He was right. Good luck going forward. Don’t wait for the ‘authorities’ to tell you what is true, or what needs doing.
regards
Practicalmaina on Thu, 24th Mar 2016 9:13 am
Paulo, well said. I want to hear some more stuff that wimbi is doing because that sounds interesting.
The statement about debt also rang true for me, I know many individuals with a high income (for my area and when compared to me) who continue to deal with debt.
Charlie Bucket on Thu, 24th Mar 2016 9:13 am
Of course the answer is, it should be squandered as quickly as possible.
joe on Thu, 24th Mar 2016 10:27 am
Those bonds also have maturity dates. Oil priced at 30 makes them subprime type debt. I reckon they were 3-5 year maturity, oil has been low for less than a year and and vast numbers of tight oil projects are mothballed.
The high volume wells will start going dry towards this year and early next year. So a price spike must be factored in. Then new wells will come on line, keeping the prices low, and thus the debt bad.
Plantagenet on Thu, 24th Mar 2016 11:26 am
There were a number of very plausible studies by careful earth scientists predicting peak oil would occur ca. 2005.
They were wrong.
Curiously, no scientist has stepped forward to make a new prediction of the timing of peak oil. This is because it is very difficult to estimate the amount of oil that can be be produced by tight shales around the world using horizontal drilling and fracking techniques developed in the USA in the 90s. The amount of oil in tight shales around the world is potentially very large.
Practicalmaina on Thu, 24th Mar 2016 12:02 pm
Plant, That shale oil would also have a very large price tag in terms of capitol water energy and environmental damage.
GregT on Thu, 24th Mar 2016 12:26 pm
Those ‘careful Earth scientists’ forgot to add in everything else that was not conventional oil.
IE: The stuff that is mostly too expensive for the continuation of BAU, and does not provide a profit for the producers.
Apneaman on Thu, 24th Mar 2016 12:34 pm
Planty, links or STFU.
paulo1 on Thu, 24th Mar 2016 1:26 pm
Plant and Practical
Hi Plant: Conventional peaked in 2005,the uptick is all the weird stuff added on as well as refinery gain. You know this so quit trying to stir the pot. 🙂
Hi Practical: Wimbi posts over at peakoilbarrel.com (Ron Pattersons blog). Whenever he posts it is always about his projects.
Bob Owens on Thu, 24th Mar 2016 2:21 pm
Peak oil occurred in 2005 for conventional oil wells. Usage of conventional oil continues a drawdown rate of 4 to 6% per annum. This continues. Discoveries have not outpaced usage rates since 1970 or so. The small 10 years bump from fracking is now over and those wells will be empty in a couple of years. The Peak Oil descent continues and no amount of dreaming changes that.
Plantagenet on Thu, 24th Mar 2016 2:26 pm
@Paulo and Bob
Yes, conventional oil did peak in 2005. But unconventional oil production has continued to grow, and total oil production hasn’t peaked yet.
The claim that discoveries have not outpaced usage rates just isn’t true when you include unconventional oil. Hundreds of billions of new oil was “discovered” when a method of getting oil from tight shale was developed.
The proof is in the pudding—-here we are 11 years after the “peak” in 2005 and global oil production is much higher then in 2005 —so much higher that the world is actually in an oil glut.
Cheers!
Apneaman on Thu, 24th Mar 2016 3:26 pm
AGW consequences not delayed and not over.
Just getting warmed up.
Planty, more “earth scientists” predictions for you coming true and “sooner than expected”
Right smack dab in the middle of denier fossil fuel obsessed land. Fucking retards deserve it.
Hot Winds Fan Massive, Unprecedented March Wildfire Burning 40 Mile Swath Through Kansas and Oklahoma
http://robertscribbler.com/2016/03/24/hot-winds-fan-massive-unprecedented-march-wildfire-burning-40-mile-swath-through-kansas-and-oklahoma/
Plantagenet on Thu, 24th Mar 2016 4:24 pm
@Apneaman
Yes, AGW is coming sooner then predicted while Peak Oil is coming later than predicted.
No doubt we’ve got big problems.
Cheers!
Davy on Thu, 24th Mar 2016 4:32 pm
Ape hole, prairie fires are natural and good for the biota but what would you know about prairie grass.
Apneaman on Thu, 24th Mar 2016 4:41 pm
I know you didn’t read the link or understand it retard. Sound like a denier – just like you did with the winter/not spring floods. Context is lost on you eh?
PracticalMaina on Thu, 24th Mar 2016 5:15 pm
Paulo, thank you man.
Yeah Kansas is a state of emergency because of brush fires, In early spring….on an El niño year (supposed to bring increased rain, correct?) I think global warming is just rearing it’s ugly head, and it it here to stay.
Not a great place to be at all the ogillala is especially low under thAt area. We may see another dust bowl in the somewhat near future. The farmers there need to abandon their current industrial growing techniques ASAP.
Fuck running a jet pump to lift thousands of gallons for a centerpost to grow food for a cow, find another way.
makati1 on Thu, 24th Mar 2016 7:21 pm
It’s not how much burnables that still exist that counts. It is how much of them the consumer can afford to buy. We have passed that peak and are on the way down. When the last well shuts down, there will still be billions of barrels of oil left in the ground and there they will stay until the sun goes nova in a few billion years.
Arguing over when something that has a movable definition has peaked is just masturbating with numbers to prove your point. We passed peak NET petroleum at least 10 years ago. Adding in all burnable liquids is just a denial of reality.
HARM on Thu, 24th Mar 2016 7:52 pm
Yes, at some point we will hit an extraction peak, but it likely (a) won’t be in any of our lifetimes, and (b) will not lead to the kind of global collapse of civilization envisioned (or fantasized about) by so many here –especially not in technologically advanced and militarily powerful countries like the U.S. Will there be occasional local collapses/failed states? Yes; general worldwide collapse? No.
Sorry guys, I used to be a confirmed early peaker myself, but BAU has been so d**ned good at pushing that curve out and extracting ever more fossil fuels faster, I no longer believe I will live to see it happen. As George Monbiot said, “We were wrong on peak oil. There’s enough to fry us all”. Which, by the way is extremely bad news for every other wild species on the planet –as we gradually pollute and overpopulate most of them out of existence (and perhaps ourselves as well, but not for a very long, long, long time).
Harquebus on Thu, 24th Mar 2016 8:00 pm
Unfortunately, the author is another who believes the renewable energy myth. There ain’t no such thing. Population reduction and control is the only solution to curb resource depletion, scarcity and pollution.
twocats on Thu, 24th Mar 2016 11:28 pm
Yes, AGW is coming sooner then predicted while Peak Oil is coming later than predicted.
No doubt we’ve got big problems. [plant]
I mostly agree, certainly AGW is happening way way faster than any scientist was allowed to publish in recent years (even if they were thinking or expressing it in private).
You should listen to the Oracle of Oil interview for a true history of peak oil from Hubbert to today.
The first modern analysts of the issue, Campbell and Laherrere said in 1998 that conventional would peak within ten years. If you believe as many do that conventional happened 2005/2006 then they are well within the mark.
It’s the unconventional that I think most underestimated (certainly Hubbert – who was a key figure for understanding fracking! and Campbell/Laherrere)
“The main weakness of our article was that we only addressed conventional reserves and conventional oil production. Oil demand includes all liquids because “oil” is any liquid which can burn.” [Laherrere, 2008]
But to be clear, most sources I was following back in 2003 going forward were saying peak oil would happen between 2010 – 2030, not 2005. That was considered a very extreme view, and as the years rolled towards 2008 it became clearer and clearer that we had come to an undulating plateau.
Many also thought demand would be much higher (in line with historical demand growth rates) and that this would break the long established credit system of international finance – i.e. that debts would have to be paid. No one foresaw European usage being so thoroughly diminished, and even US oil usage going down so much without it destroying the world economy. So the consequences of conventional peak haven’t been as horrific. But peak oil scientists aren’t economists, so I don’t see that as a huge error.
GregT on Fri, 25th Mar 2016 12:17 am
Hubbert did not underestimate unconventional oil production twocats. A common misconception. On numerous occasions here, I have gone to the trouble of retyping what he wrote in his 1956 paper. It is in PDF format, so cannot be copied and pasted. Read his comments for yourself, specifically on page 24. (of the original document)
http://www.hubbertpeak.com/hubbert/1956/1956.pdf
Harm on Fri, 25th Mar 2016 1:03 am
I clearly remember reading Ugo Bardi and Gail Tverberg, Matt Simmons, etc in mid 2000s on The Oil Drum. The general consensus then was that “oil” (meaning all liquids, not just light sweet crude) would peak relatively soon –not in 20 or 30 years. The people back then (not me) who argued the peak was far off were decidedly in the minority they did not represent the majority opinion.
Sorry, guys I was there and we were wrong on the timing, badly.
GregT on Fri, 25th Mar 2016 1:36 am
Harm,
The volume of oil, as in numbers of barrels, is not relevant. All oil is not the same. It is the cost to extract that oil, and the affordability to our economies that matters.
$12/bbl oil, and $100/bbl oil, are not the same thing. That would be like comparing apples to oranges, and simply calling them both fruit.
HARM on Fri, 25th Mar 2016 3:05 am
@GregT,
The core definition of peak oil is –and always has been– that oil production will reach a peak and then irrevocably decline. Obviously, real world data never perfectly fits an ideal bell curve, but as long as production is consistently hitting new peaks each month and still climbing, we cannot yet say that the top is in.
Yes, EROEI matter greatly and will eventually begin to impact aggregate production numbers, as does LEM (Land Export Model). Nonetheless, at the end of the day, they still do not change the basic macro definition of Peak Oil as stated above. We’re simply not there yet.
Davy on Fri, 25th Mar 2016 7:01 am
We get the usual semantics of what Peak Oil is in the above but the reality is much deeper. It is about peak modern man. Oil is nothing without the cultural connection. It takes a complex interconnected global culture to convert huge amounts of fossil fuels into energy that maintains that culture. Oil AND our global culture is what is peaking. Oil is only part of the peak.
All systems have a finite range of possibly. Our global human society has reached or is very near to its limits and suffering broad based diminishing returns. We are trapped in an existential catch 22 predicament of our own creation we cannot adapt to or out of. Oil and fossil fuels are intimately part of that trap.
It goes much deeper than economics and resources. This predicament goes to our very DNA and our intelligence. We are incapable of handling what we created. We have destroyed a planet that had reached a level of complexity that is truly amazing. We destroyed that wonderful planetary ecosystem in a self-organizing and adaptive way. Our large brains have fantasy and illusion to imagine we are exceptional creatures and this world is our world to mold in our image. We have even taken our spirituality and warped it towards these goals.
Peak modern man is about a peak at all levels including oil. I don’t need to repeat the whole peak oil thAng. We regurgitate peak oil dynamics here daily. It is apparent there is serious depletion of both the quality of oil and the quantity. We may be in a glut but look at discoveries in relation to use. Look at the molecular value of the oil we produce and plug that into a business model. Look at our culture that benefits from oil and that has built a way of life on cheap oil that is no longer cheap.
You can look at peak oil as a tree and loose site of the forest. The greatest defect of modern man is our attitudes that prevent sustainable and resilient lifestyles. We will collapse and necessarily collapse per natural law. Forget the good or bad of it. This is a natural process that all life has followed. This current situation where we feel exceptional and somehow able to transcend natural law is an evolutionary defect. It is like the gazelle that thinks she can drink from the water hole filled with crocs during the dry season. She did it a few times and nothing happened. The wise gazelle waits until the dumbass gets caught. Modern man is the dumb gazelle that does not know restraint. Peak oil is about restraint. It is about the realization of limits. If you can’t respect limits then you don’t understand peak oil dynamics.
efarmer on Fri, 25th Mar 2016 11:07 am
I am happy to announce that resource limits previously announced and predicted have been shifted to the future by the discovery of more resources available in the immediate future. Resources are of course still finite to some degree relative to your lifetime and event horizon of personal significance. Please discuss economic models and disparage each other in various ways until such time as resource limits again force us to converge and ruminate on the subject and seek consensus again. Thanks,
E
Boat on Fri, 25th Mar 2016 11:44 am
Lol efarmer.
You got it right. The world will collapse very soon for one reason or another for centuries and then it doesn’t.
GregT on Fri, 25th Mar 2016 11:57 am
@harm,
“The core definition of peak oil is –and always has been– that oil production will reach a peak and then irrevocably decline.”
Agreed, but there should also be a much deeper understanding. Oil that is too costly for our economies to afford, that cannot turn a profit for producers, should not be included in these numbers. It may as well be unobtainium. They say that there are some 20 million tons of gold in the oceans of the world, and while we have the technology to extract that gold, other than showing an increase in gold production numbers, doing so would be pointless.
GregT on Fri, 25th Mar 2016 12:48 pm
The Boat non-sensical quote of the day:
“The world will collapse very soon for one reason or another for centuries and then it doesn’t.”
Apneaman on Fri, 25th Mar 2016 1:16 pm
efarmer, the signs of resource depletion and declining net energy are all around you if you know how to look.
“Every 4 years, the American Society of Civil Engineers releases a Report Card for America’s Infrastructure that depicts the condition and performance of the nation’s infrastructure in the familiar form of a school report card by assigning letter grades to each type of infrastructure.”
AMERICA’S
G . P . A .D+
Estimated Investment Needed By 2020 3.6 Trillion.
http://www.infrastructurereportcard.org/
Analysis: 61,000 U.S. bridges ‘structurally deficient’
http://www.usatoday.com/story/news/2015/04/01/61000-bridges-structurally-deficient/70730956/
Flint fallout could cost US $300bn in infrastructure upgrades to replace all lead pipes
https://www.rt.com/usa/334686-flint-lead-infrastructure-cost/
Aging US Power Grid Blacks Out More Than Any Other Developed Nation
http://www.ibtimes.com/aging-us-power-grid-blacks-out-more-any-other-developed-nation-1631086
And it just goes on and on and on. Can only extend and pretend for so long. It’s not unique to the US either, they just further along then the other western nations. All this while the consequences of AGW are beating the shit out of the infrastructure everyday.
Apneaman on Fri, 25th Mar 2016 1:27 pm
Hey leaky boat, you live in a town where the mayor ran on a platform to fix the pothole epidemic and WON. How far along collapse do you need to be for it to get that bad? Shitty air and water in Houston too. Big oil money town with 3rd world road infrastructure. It easy to believe in your “every thing is awesome” fantasies when you ignore the inconvenient evidence.
Leaks in Boston area gas pipes exceed estimates
https://www.bostonglobe.com/metro/2015/01/22/natural-gas-leaks-boston-area-are-far-more-extensive-than-thought/5BykQrnaGRr2XLtxpHqLIM/story.html
As Infrastructure Crumbles, Trillions Of Gallons Of Water Lost
http://www.npr.org/2014/10/29/359875321/as-infrastructure-crumbles-trillions-of-gallons-of-water-lost