There Will Be Oil (advocates of 'peak oil' have wrongly been predicting a crisis in energy supplies)

Wall Street Journal ^ | 09/19/2011 | Daniel Yergin

[SeekAndFind]

Since the beginning of the 21st century, a fear has come to pervade the prospects for oil, fueling anxieties about the stability of global energy supplies. It has been stoked by rising prices and growing demand, especially as the people of China and other emerging economies have taken to the road.

This specter goes by the name of "peak oil."

Its advocates argue that the world is fast approaching (or has already reached) a point of maximum oil output. They warn that "an unprecedented crisis is just over the horizon." The result, it is said, will be "chaos," to say nothing of "war, starvation, economic recession, possibly even the extinction of homo sapiens."

The date of the predicted peak has moved over the years. It was once supposed to arrive by Thanksgiving 2005. Then the "unbridgeable supply demand gap" was expected "after 2007." Then it was to arrive in 2011. Now "there is a significant risk of a peak before 2020."

But there is another way to visualize the future availability of oil: as a "plateau."

In this view, the world has decades of further growth in production before flattening out into a plateau—perhaps sometime around midcentury—at which time a more gradual decline will begin. And that decline may well come not from a scarcity of resources but from greater efficiency, which will slacken global demand.

Those sounding the alarm over oil argue that about half the world's oil resources already have been produced and that the point of decline is nearing. "It's quite a simple theory and one that any beer-drinker understands," said the geologist Colin Campbell, one of the leaders of the movement. "The glass starts full and ends empty, and the faster you drink it, the quicker it's gone."

[Owen]

What about the possibility that some quoted reserves are lies? You do know that the official reporting agencies take government numbers at face value, yes?

Want to bet your kids’ lives on Iran’s quoted reserves?

Go back someday and read carefully about why the Japanese bombed Pearl Harbor. Read specifically about Roosevelt’s oil embargo of them in August 1941. Think they would have started a war with the US if they could have just pumped oil outside Tokyo?

[fireman15]

I couldn’t have said it better myself. If we really were close to running out of hydrocarbons... there would be no need for the global warming alarmists to be rambling on about the dangers of CO2. The “problem” would take care of itself in relatively short order. In relationship to geologic time it would be less than the blink of an eye.

All of these scare tactics are expounded by people with an agenda. Cheap energy is one of the primary drivers of prosperity everywhere in the world. Attacking the world’s sources of energy is primarily a political tool to shift the balance of power.

[svcw]

I am not sure it made a difference to me. I grew up in Santa Barbara, CA not sure if we ever turned on the heater and my Mom didn’t know how to drive so we walked everywhere.
Besides, we were more worried about hiding under our desks during a nuclear attack. ;=)

[USFRIENDINVICTORIA]

“If you drive motorcycles and cars, then you are by definition not hunter-gatherers (hence the quotes).”

No, hunter-gatherers are, by definition, people who make a living hunting and gathering. You don’t have to go to Africa or the Amazon to see them. Hunter-gatherers in Canada’s far north (and Alaska) use snowmobiles, ATVs and pickup trucks to get around.

[GAB-1955]

I just listened to a Naked Scientist podcast in which British engineers have come up with a magnetic refrigerator which activates an iron-vanadium- something-cobalt alloy that in turn withdraws heat from its surroundings. It's twice as efficient as a compressor. Of course, this means that in the future, you'll have to put your kid's pictures INSIDE the box.

[Bob]

What about the possibility that some quoted reserves are lies? You do know that the official reporting agencies take government numbers at face value, yes?

While there's clearly a possibility that quoted reserves contain lies (and further that there are other errors in them), what does that have to do with any of the points I raised?

Do you really believe that we've already discovered all of the oil in existence? Do you really believe that we will never achieve any further advances in exploration or drilling technology?

[buwaya]

The Japanese could not have pumped oil, or generated any substitutes, in the quantities they needed from any of the territories they controlled at the time.

The key is AT THE TIME. A working embargo would have crippled them for many years. They didn’t have the technology, then, to work around the embargo and no time to do it.

Given a decade or so they could have, barring economic collapse, etc., used China’s large coal deposits to create synthetic petroleum just like Germany did. That’s just one option.

What we are talking about here however is not a case of needing oil in a windows of months to a couple of years, but generations, and not in a small patch of the world but all of it.

The argument does not depend on Iranian or Saudi reserve reports. There are multi-Saudi-Arabia size reserves of recoverable petroleum in the US and Canada.

[rustbucket]

Here is what my crystal ball says.

I remember two dollar a barrel oil in the 1960s. Compare that to the current oil price. That increase in price made more reserves economic to explore for and to produce (think arctic and deep water and risky politically unstable areas), and it helps explain some of the rise in production in the chart you posted.

Are you ready for another big increase in the price of oil necessary to supply the world’s future oil needs? That might happen as known reserves of easy to get and produce oil are depleted. If the price of oil increases enough, other sources such as tar sands and oil shale will become major sources of oil. Fortunately, there is a lot of oil in those two additional sources to supply us for some time.

Although they are very large, they are not infinite. The large potential supply in those sources might stabilize the oil price for a while, albeit at a higher level. They are not cheap to produce. If the cost of production is high enough, demand will fall off.

Finally, I do not hold out much hope that enough new oil is being generated in the source rocks of the earth at anywhere near the rate needed to meet future world consumption.

[RayChuang88]

I think all those peak oil advocates forgot a few things:

1. Many of the world's oilfields don't have use the latest in oil extraction technology--as such, 1/3 to 1/2 of the oil in those oilfields have yet to be extracted out.
2. The unstable situations in Iran and Iraq has prevented the exploition of gigantic oilfields that could equal what we have in the Persian Gulf now!
3. There are many offshore oilfields that are yet to be touched--just that could triple the world's known supply of crude oil.
4. We've barely begun to exploit the oil in oil shale and oil tar sands--an amount estimated to be around 5 trillion barrels between the oil tar sands in Alberta, the oil shale in the Rocky Mountains, and the oil tar sands along the Orinocco River in Venezuela.
5. Improvements in coal-to-fuel technology could mean all that coal could be converted to petrol, diesel fuel, and kerosene.
6. Developments in using oil-laden algae grown in seawater could mean an unlimited supply of motor fuels within 20 years!

In short, the whole idea of peak oil is political baloney.

[Owen]

Why is there a plateau? Why isn’t it spectacularly rising from discoveries all over the world? Why is the plateau not calibrated in BTUs rather than barrels, and what is that in BTUs per capita as population rises?

Why would China sell coal reserves to Japan in 1941, when Japan was in the middle of massacres up and down the Chinese east coast?

What is the conversion efficiency of coal to petroleum and can it be done at 80 million barrels per day with all the fresh water in the world?

The Japanese wanted Indonesia’s oil to fuel their society and the US Navy would have prevented that. They would have enforced the embargo. No sovereign nation can allow another to dictate its policy via embargo, just as the US refused to allow the Arab oil embargo to dictate its policy towards Israel. So the Japanese had to react.

Worshiping at the altar of technology necessarily presumes that what we might call miracles will occur and they will occur on an as needed schedule.

Look, the bottom line here is an incredible number of lies are being told. Propane is being called equivalent to crude. In some articles “barrels of oil equivalent” are being used to lump a concept of *hydrocarbons* together and 1 barrel of volume containing room temperature natural gas has 1/1000th the BTUs that oil has.

There is no energy crisis. There IS an oil crisis. There is no answer to be found in conservation. The answer is in military suppression of competing consumption.

[buwaya]

Well, the first problem is that prices have been suppressed for decades due to the cheap oil the Saudis have been sitting on. They have made it largely uneconomic to pursue most other sources on a serious basis until about 5-6 years ago. They have been actively helped by US government policy that has suppressed US petroleum development.

These days demand has grown to a degree that even the Saudis can’t keep other sources off line.

The Japanese held most of Chinas coal resources throughout WWII. Of course the Chinese would let them do what they wanted - these parts of China were under the Japanese direct or indirect control for 20 years. Thats a big reason the Japanese wanted China in the first place - not to make synthetic oil of course, but because Japan was resource-poor.

More generally, we don’t need miracles. We have very well understood, proven technologies to apply to these problems.
The problems have been cost, chronic undercutting by lower cost producers, and government policy.

I don’t see an “incredible number of lies”. You just need to get the unpacked figures and go to the sources, not newspaper stories. The newspaper stuff is written by idiots for idiots. This is not worth getting paranoid about.

[<1/1,000,000th%]

I believe we reached “peak oil” back in 1980.

[buwaya]

And, of course, we are certainly not at a plateau.

Petroleum production is increasing rapidly. Look at the chart.

[Owen]

That’s not petroleum. That’s all liquids. Look up what NGL means.

[Owen]

sorry there buyaya, I got distracted and hit post before I was done.

CERA are oil industry consultants. The industry works by persuading people to give them money with which to explore, and then sell the “discovered” leases as fast as they can before failed production appears.

The graph is all liquids. It includes NGLs (Natural Gas Liquids, which are propane and butane and ethane) and those don’t create gasoline. More important, they lump in “biofuels”, which one thinks at first glance is biodiesel, but it’s not, primarily. It’s ethanol.

Your car won’t run on ethanol. Your car will run on 15% ethanol (if you’re a risk taker) or more likely 10% ethanol. The rest is gasoline.

It’s not about gallons or barrels. It’s about BTUs. British Thermal Units. Or Joules. It’s about energy content. A barrel (42 gallons) of crude has 5.6 million BTUs in it. A barrel of room temperature natural gas has 5.6 THOUSAND BTUs in it, and if you cryocool it and turn it into liquid it’s still only 60% of crude’s energy content.

Gasoline is 18,400 BTUs/lb. Ethanol is only 9750 BTUs/lb.

It’s all deception and lies. CERA can’t permit any aura of “improbable” to be conveyed to possible drilling investors.
You want to draw that graph, draw it in BTUs. You need double the ethanol amount to equal a barrel of crude.

The US didn’t produce 10 mbpd of oil this year. It produced about 5.6 mbpd and it’s had to ramp up hugely the number of drill rigs to do that. This is down from 9+ mbpd back in the early 80s. We are sprinting up (drilling frantically) in the US just to offset the down escalator (old field production decline (5+%/yr).

As for worshipping at the altar of horizontal frack drilling, it’s not new. It’s been around for 20 years. It hasn’t been used because of the crushing reality not spoken of by hypesters trying to attract money, namely:

Horizontals Die Vertically.

You drill horizontal, you fracture the surrounding rock to free what is in its pores, you flow the oil, and YOU ARE THEN DONE. It’s not a gravity drainage methodology. You drill, you get production, and when it goes empty, it does so with a vertical avalanche on the production graph.

The average Bakken well is doing a MAXIMUM of 1200 or 1500 barrels a day, it holds that for a year or two and then it CRASHES. The production falls vertically. You are at 50 barrels a day in 3-4 years. They have to drill frantically to get field production up and then after just a few years as the crashes start, they can’t drill fast enough. The field production will fall.

Contrast this with Ghawar in Saudi Arabia, where wells have produced big numbers for decades. Horizontals die vertically. They aren’t the miracle. They aren’t anything but deception.

[SeekAndFind]

RE: I believe we reached “peak oil” back in 1980

So what do we have today? Unpeak Oil? :)

[rustbucket]

The average Bakken well is doing a MAXIMUM of 1200 or 1500 barrels a day, it holds that for a year or two and then it CRASHES. The production falls vertically. You are at 50 barrels a day in 3-4 years. They have to drill frantically to get field production up and then after just a few years as the crashes start, they can’t drill fast enough. The field production will fall.

Contrast this with Ghawar in Saudi Arabia, where wells have produced big numbers for decades. Horizontals die vertically. They aren’t the miracle. They aren’t anything but deception.

Horizontal wells in tight shale formations like Bakken are a way to get production at economic rates, recover the cost of the well, and make a profit. Vertical wells in the same formation, even fractured vertical wells, would not access the same amount of formation and would not recover the same amount of production.

Scroll down the following link to see some production plots for Bakken. Link Note how oil production from Bakken went way up after the introduction of horizontal wells and hydraulic fracturing. Horizontal wells are not a "deception." They are an economic way of producing such fields.

You mention Ghawar in Saudi Arabia. Comparing Ghawar and Bakken is an apples and oranges comparison. Ghawar is a high porosity (~35%), permeable limestone formation some 170 miles long by 19 miles wide. Widely spaced wells in such huge, permeable formations can produce at high rates for years.

That is not the case in tight formations like the Bakken. One figure given for the average permeability of the best horizontal zone (the middle zone) of the Bakken is 0.04 millidarcies. Average Ghawar permeability is given as 617 millidarcies or 0.617 darcies, some 15,000 times more permeable than the Bakken. Ghawar also has some "super" permeable zones that offer very little resistance to oil flow through the reservoir rock (i.e., permeabilities of tens of darcies).

The best way to produce a tight formation like the Bakken is to open up more rock face to the well. They do that by drilling long horizontal wells that they then fracture. The cracks of the fractures open a lot of formation to the well, and slow flow of oil (or gas) from the formation into the fractures will continue for a while until the shale close to the fractures is drained. Wells in such tight formations would generally have steep declines in production once the areas near the fractures are drained. Tight formations do not flow easily.

If folks do not recognize the difference in production characteristics between the Bakken and reservoirs like Ghawar, then they haven't sought good technical advice. My sympathies.

[Tublecane]

“No, hunter-gatherers are, by definition, people who make a living hunting and gathering.”

Don’t be cute. The term doesn’t apply to people who trade their kill within the context of capitalist economies. The term refers to a pre-civlized, pre-agriculural division of labor, wherein people subsist by foraging.

“You don’t have to go to Africa or the Amazon to see them. Hunter-gatherers in Canada’s far north (and Alaska) use snowmobiles, ATVs and pickup trucks to get around”

That no doubt describes hunters, but I’d be surprised if they do much gathering. Even if they did, they wouldn’t be hunter-gatherers. Just because you hunt and gather does not mean you’re a hunter-gatherer, which isn’t something I’d think I’d need to explain.

[Owen]

You, sir, understand. I am familiar with porosity and permeability. I am also very much aware that Ghawar and Bakken are different animals.

Which Is Precisely My Point. X billion barrels of reserves hyped from the Bakken is NOT equivalent to X billion barrels of reserves in Ghawar. All oil is not created equal, even beyond the absurd equating of a barrel of ethanol with a barrel of crude.

A Bakken well will NOT flow long. It is days of output at 10s of thousands of barrels/day that ramp up the return on investment. If you have to drill (pay to rent on the rig and fund the personnel), collect 2 years of decent flow, and then have to drill again, the Ghawar well crushes the comparative economics. Yes, it’s apples and oranges. It’s apples and oranges in a world where oranges trump apples.

With which you agreed, I know. My annoyance is the hype of the lease traffickers. They don’t lay these things out for . . . no, not the customer. The customers faces caveat emptor. I mean the public. I mean the state’s government. The state’s government which may project flow rates for royalty revenue and run up long term spending plans for its people. The hypesters are tiptoeing on fraud when they tell state oil agencies things like “up to 2 million barrels per day”. They are never going to get there, and if they did, the drillers would be earning an ROI of 0.000001%.

I’ll put up $1 USD in genuine Federal Reserve paper on a bet that that field never exceeds 700K bpd. Alyeska will have shut down by then.

[Tublecane]

“Go back someday and read carefully about why the Japanese bombed Pearl Harbor. Read specifically about Roosevelt’s oil embargo of them in August 1941. Think they would have started a war with the US if they could have just pumped oil outside Tokyo?”

This is one of the worst arguments I’ve seen on one of these threads in a long time. That was an entirely artificial and temporary situation. What could it possibly, in a million billion years, have anything to do with peak oil?