Does the peak oil "myth" just fall down? - our response to CERA

The Oil Drum via The Energy Bulletin ^ | 16 Nov 2006 | Dave Cohen

[SunkenCiv]

Peak Oil is the theory, with resulting hypotheses, tested with data, that the world's incremental production of conventional oil over time will reach some high water mark and decline thereafter. There are a number of ways to define "conventional" but, for our purposes here, such oil consists of crude oil, condensate and natural gas liquids... As Figure 2 clearly demonstrates, the peak of United States oil production measured in billion barrels per year for crude oil plus condensate occurred in 1970. We will have more to say about CERA's analysis of this graph in section 3 below. Notwithstanding any subtleties of interpretation, it is impossible to deny that the U.S. peak did occur and thereafter, production never reached the 1970 high water mark ever again... The question of recoverable reserves estimates versus production flows is central to the argument about the timing of peak oil. CERA states that "Reserves/Resource Definitions and Estimates Cloud the Debate". We agree. You will note that our definition of "peak oil" above does not mention reserves at all but, rather, focuses on production flows measured as the quantity extracted over time.

[SunkenCiv]

[SunkenCiv]

Peak Oil Theory – "World Running Out of Oil Soon" – Is Faulty;
Could Distort Policy & Energy Debate
CERA Press Release | November 14, 2006 | Cambridge Energy Research Associates
Posted on 11/15/2006 3:13:09 PM EST by E. Pluribus Unum
http://www.freerepublic.com/focus/f-news/1739159/posts

Greenland makes oil companies melt-(oil oil everywhere but here)
afp | 7/16/06 | Slim Allagui
Posted on 07/16/2006 4:18:55 PM EDT by Flavius
http://www.freerepublic.com/focus/f-news/1666768/posts

[SunkenCiv]

Ping!

[SunkenCiv]

millions bbl a day US production

11/17/2006 -- 5.269
11/18/2005 -- 4.579

(interestingly, there was also a bit of an increase in imports over this time last year)

http://tonto.eia.doe.gov/oog/info/twip/twip_crude.html

[2ndDivisionVet]

Here's a good take on "peak oil"
http://libertyunbound.com/archive/2005_12/otoole-oil.html

The Ludwig Von Mises take on it: http://www.mises.org/fullstory.aspx?Id=1717

The tinfoil hat far-lefts take on it: http://www.prisonplanet.com/Pages/Oct05/041005oil.htm

[Overseez]

That's about equal to the daily production of the Ghawar oilfield in Saudi Arabia.

See the petroleum club online.

[theBuckwheat]

The problem with Peak Oil is that it confuses the MSM's "instant experts". They in turn utterly to fail to convey the real picture about US and world energy supplies to the general public. Happily, more and more of the public can bypass the gatekeepers and dig for the facts themselves.

The simple truth is that hydrocarbons from a wide variety of sources can be converted into liquid fuels that are suitable for different types of vehicles. The main fuel groups are: gasolines used primarily in automobiles and to a lesser extent in lawn mowers, boats and piston aircraft; kerosene used in turbine engines; diesel fuel, used for boilers and home heating as well as diesel engines like trucks; boiler fuels used in industrial and marine applications.

(If any Freeper cares to add to this list, please post)

All of these fuels are presently made by taking the molecules in crude oil, breaking them down into short chains of hydrocarbons, and reassembling them to the desired end product.

But, the lie called "peak oil", like the lie called Global Warming" starts by the omission of key facts. Peak oil implies that when we run out of crude, we will not have any more fuels derived from crude. The truth is that the hydrocarbons in fuel can come from any other source. It is only a matter of how much it costs to acquire the raw source and how much it costs to convert it.

The best example is that coal can be converted to gasoline or diesel fuel. The Nazis used this process to provide fuels during WW II. So did the South Africans during the international boycott.

The US has so much coal that the state of Illinois is almost floating on top of a sea of it. Indeed, there are more hydrocarbons in the form of coal under Illinois than in Saudi Arabia in the form of crude oil.

Other sources include oil locked in shale and above ground organic sources such as the waste from slaughtering turkeys and sewage sludge.

All in all, the US has many years of energy locked in various sources. All it takes is the necessary conversion facilities to create the desired fuels. The advocates of Peak Oil never like to bring this up. This tells us that "peak oil" is not about a peak and not about oil. It is yet another way to bash the country, to impose Utopian visions, to raise taxes and to reduce freedoms.

[SunkenCiv]

Thanks, 2DV.

[SunkenCiv]

Thanks. Peak Oil also assumes that petroleum is "fossil fuel", which puts its origin in the dim and distant (and unrecoverable) past.

[Zeppelin]

good post.

might I add that the tipping point for coal gasification to become economical is when crude hits approximately $80/barrel.

my company constructs facilities for the OG&C (oil gas and chemical) industry, and are currently working on a coal gasification plant. i've been told that crude will not stay above $80/barrel for very long at any given time, for that very reason.

you should also mention how much natural gas reserves we have from oil wells that we've drilled in the past. I dont know the numbers, but it's huge.

for those of you who dont know, when you pump oil, there's 3 main constituents: crude, dirty water, and natural gas. we've started doing what's called "reinjection," where we pump the natural gas and water back down into the well to increase the pressure and help push the oil up more. it's also a good way to dispose of the crap that comes up with the oil.

after a well is pumped dry, they either extract the natural gas or cap it off. until recently, we hadnt tapped into those wells full of natural gas just sitting there; again, it just wasnt economical to do so.

[Zeppelin]

Thanks. Peak Oil also assumes that petroleum is "fossil fuel", which puts its origin in the dim and distant (and unrecoverable) past.

yeah, where's PETA on that one?

"HOW MANY DINOSAURS HAD TO DIE SO YOU COULD DRIVE TO WORK?!?!?"

[SunkenCiv]

you should also mention how much natural gas reserves we have from oil wells that we've drilled in the past. I dont know the numbers, but it's huge.

I've read that natural gas fields are likewise difficult to get a handle on -- there's a depletion allowance (serves as a write-off against royalties) but the fields typically don't decline as predicted, a situation which can go on for decades.

[SunkenCiv]

Gas (Methane) Hydrates B
A New Frontier
Robert L. Kleinberg and Peter G. Brewer

Recent mapping conducted by the USGS off North Carolina and South Carolina shows large accumulations of methane hydrates. A pair of relatively small areas, each about the size of the State of Rhode Island, shows intense concentrations of gas hydrates. USGS scientists estimate that these areas contain more than 1,300 trillion cubic feet of methane gas, an amount representing more than 70 times the 1989 gas consumption of the United States. Some of the gas was formed by bacteria in the sediments, but some may be derived from deep strata of the Carolina Trough. The Carolina Trough is a significant offshore oil and gas frontier area where no wells have been drilled.

[ModelBreaker]

I read a good two thirds of the article. Not once does it mention price. Yet in a market economy (which I'm suspect the authors hope to eliminate someday), price is the driver of innovation and increased production.

The US figures may well be accurate. But they cover a 35 year period of declining real oil prices (until, of course, last year). The amount of recoverable oil at a declining price would, all other things being equal, be expected to fall even if reserves were not declining.

So, Hubbert's curve is exactly what you would expect in an era of declining real prices and it says nothing about production in different pricing contexts.

It may be that the era of CHEAP energy is over sometime in the next century. But that will only occur if governments butt-in and prevent markets from functioning properly or if we have hit some yet unknown physics based limits that will prevent markets from responding to higher prices with new technologies.

[ModelBreaker]

might I add that the tipping point for coal gasification to become economical is when crude hits approximately $80/barrel. my company constructs facilities for the OG&C (oil gas and chemical) industry, and are currently working on a coal gasification plant. i've been told that crude will not stay above $80/barrel for very long at any given time, for that very reason. you should also mention how much natural gas reserves we have from oil wells that we've drilled in the past. I dont know the numbers, but it's huge.

Hmmm. I thought I looked up SASOL (from South Africa) some time back and they claimed to have been converting profitably at $35 a barrel for 20 years. Was I mistaken?

[grayhog]

The data from last year was impacted by the hurricanes and not a good comparison. This past week is still below 11/19/2004 of 5.3 mboed.

[IllumiNaughtyByNature]

The US is dependent on foreign oil by choice. And at such low prices, why not keep our in the ground and off the coast till we really need it?

[SunkenCiv]

I think that is part of a longstanding conscious policy of the US gov't.

[SunkenCiv]

Thanks! That makes sense.

[SunkenCiv]

The amount of recoverable oil at a declining price would, all other things being equal, be expected to fall even if reserves were not declining. So, Hubbert's curve is exactly what you would expect in an era of declining real prices and it says nothing about production in different pricing contexts.

That is a very good point.