Peak Oil Media Guide

[Dardedar]

DAR
I subscribe to a little newsletter called "Peak Oil Review."

Are we standing on the edge of a cliff? Certainly the edge of a slope.

***
Announcing A Peak Oil Media Guide

Written by Chris Nelder
Monday, 07 July 2008

As those who understand peak oil are no doubt aware, coverage of the issue in the media has been extremely uneven. Some observers cite the best available data and production models, which indicate that there are perhaps 1.2 trillion barrels of economically recoverable conventional oil yet to produce. But a few seem intent on promoting an optimistic industry view (despite historical evidence to the contrary) that one day, the world can recover most of the estimated 12 trillion barrels of original oil in place—a factor of 10 variance in estimates!

Such a wide range of expert opinion has only served to confuse the public at a time when it is critically important that they get up to speed on the simple facts of oil production and understand what they might realistically expect in the future. In an effort to close this enormous gap, I have collaborated with Steve Andrews, a co-founder of ASPO-USA, on a new “Peak Oil Media Guide,” to address the important questions that regularly come up about peak oil. We encourage those who engage with the media to distribute the guide. It is my hope that the guide will become a “living document” which can be updated and enhanced as time goes on by knowledgeable experts.... The full document can be located at www.aspo-usa.com.

Here is an abbreviated summary of the Guide’s key points (first edition).

It’s not the size of the tank which matters, but the size of the tap.

Peak oil is not about “running out of oil,” it’s about the peak rate of oil production. It’s not the size of the tank which matters, but the size of the tap. This is an essential concept. Talking only about the number of barrels of oil that might exist somewhere, without also talking about the rate at which that oil can be produced, and when, entirely misses the target.

We are now at, or “close enough” to the peak.

Right now, the world is producing between 86 and 87 million barrels per day (mbpd) of oil, and that rate has changed little since 2005. Our analysis suggests that world production is unlikely to ever exceed 90 mbpd, and might not increase much above where it now stands. It appears we are now on the oil peak/plateau, or close enough to it that the date of the technical, absolute peak doesn’t matter. Within the next three to six years, as the world goes into terminal oil production decline, it will be forced to live within an ever-decreasing supply of oil. Not only are we “close enough” to the peak, we’re far too close to it. According to the June 2008 revision of Colin Campbell’s model for world oil production, the global peak is this year, 2008.

Oil production in the U.S. is well past its peak, and is in long term decline.

U.S. oil production has been in decline for most of the last 38 years. This is not due to politics; it is simply the nature of petroleum extraction. The U.S. uses about 20+ mbpd of petroleum, and produces about 7 of that. The other two-thirds are imported, and there is no possible way that the U.S. could produce that amount domestically, no matter where or how quickly we drilled.

Oil shale: the fuel of the future…and it always will be.

After decades of fully authorized, commercial, even subsidized attempts to develop oil shale into a usable liquid fuel, no one has ever been able to make it economically feasible. Even if oil shale extraction does become economically viable some day, it’s unlikely to ever produce more than a modest flow (though perhaps a very long-lived one) of extremely expensive synthetic oil.

ANWR and the continental shelf are no panacea.

We believe that if all limits on domestic drilling were removed, including those on ANWR and the outer continental shelf, it could only increase U.S. oil production by 2 mbpd at best, and would require several decades to reach that level. Once that production comes online, it will be a drop in the barrel compared to the loss in global oil production. The idea that we can somehow drill our way to independence from imported oil is, therefore, misleading in the extreme. The only way we could become energy independent soon is by severely curtailing our oil demand.

Oil prices aren’t all about us.

It’s an all-too-common belief that if only we had authorized more domestic development of oil, our gasoline prices would be lower. With the global supply and demand balance as tight as it is for oil, natural gas, and coal, it is highly unlikely that a slight increase in U.S. production could make any noticeable difference in our gasoline prices. Once we take into account the decades it will take to bring new domestic resources online, any additional production we can manage will only slightly nudge the decline curve in global oil production, and only slightly depress domestic prices for gasoline, for a short while.

Decline rates are relentless.

Decline rates are also frequently misunderstood. The concept is simple: Oil production first must make up for the decline rate of mature fields before any net additional oil can be counted. It’s like pouring water into a bucket with a hole in it. Anyone familiar with a balance sheet should understand this concept, but many observers routinely miss it. World oil production must first struggle against a background decline rate of 4.5% or higher from mature fields before it can manage any increases. Currently, the net increase in global oil production is about 1% per year.

Expectations for the future are shrinking.

Peak oil deniers often like to point to the International Energy Agency’s (IEA) past estimates, which have projected that world oil production would rise from 86 mbpd today to as much as 130 mbpd in the future. However, the IEA’s estimates have been shrinking for the last several years, when it became clear that world net oil production had stopped growing. The old 130 mbpd estimate was reduced to 115 mbpd, and will soon be reduced again to 100 mbpd in a report to be released later this year.

Improved technology cannot move the peak.

The potential of enhanced oil recovery (EOR) techniques is well known, after over four decades of experience in the field. What that experience has shown is that (with a few minor exceptions) improved technology cannot move the peak. What it does is increase, over time, the overall amount of oil that can be produced. On the bell curve, it thickens and lengthens the tail. But it does not change the point in time at which production peaks.

Link

[Dardedar]

DAR
Little news bits about Peak Oil that strike me as important:

***
4. Energy Briefs (clips from recent Peak Oil News dailies are indicated by date and item #)

•

Russian oil production declined in June 1% over June 2007. Russia's crude oil exports fell much faster, an estimated 5.3%, year-on-year, from January-May 2008. (7/2, #21; 7/1, #15)

•

The EPA is reviewing congressional requests to relax rules mandating the use of ethanol in gasoline, which some lawmakers say is straining corn supplies. The Department of Agriculture says corn supplies will be 10 percent smaller than last year's record crop and that report was released before rains washed out numerous fields in the Midwest. Floods in the corn belt have helped send the price of ethanol up 21 percent since the beginning of June. (7/1, #5; 7/4, #7)

•

Republican Senator John Warner (Va) is proposing that Congress might want to consider reimposing a national speed limit to save gasoline and possibly ease fuel prices. (7/4, #8)

•

The Air Transport Association expects airline fuel expenses to total $61.2 billion this year, compared to $41.2 billion in 2007. It is going to be much worse for aircraft manufacturers as the airline industry will cut capacity by 9% in 2008. (7/4, #10, #11)

•
The tiny western Pacific nation of the Marshall Islands has declared a state of economic emergency as soaring fuel prices threaten to shut down electricity supplies. (7/5, #10)

•

British demand for gasoline fell by around 8 percent year-on-year in January and February. Recent surveys show that Britain is leading the way with the change in driving habits, probably because pump prices here are higher than the global average. (7/3, #16)

•

Natural gas, trading at a 39 percent discount to crude, may climb to reach the equivalent of record oil prices as demand for cleaner-burning fuels increases, according to energy ministers from Qatar and Algeria. (7/2, #2)

•

US imports of Venezuelan oil and oil products fell by 11.7 percent to a five-year low in the first four months of the year while Venezuela boosted oil shipments to China instead. (7/2, #8)

•

Utah this summer will become what experts say is the first state to institute a mandatory four-day work week for most state employees, joining local governments across the nation that are altering schedules to save money, energy and resources. (7/2, #16)

•

The speed at which gas prices are climbing is forcing a seismic change in long-held American habits, from car-buying to commuting. Last week, Ford Motor reported that S.U.V. sales were down 55 percent from a year ago, while demand for its full-size F-series pickup, a gas guzzler that was the country’s best-selling vehicle for 26 consecutive years, is off 40 percent. The only Ford model to show a sales increase was the midsized Fusion. A Ford spokeswoman says the market shift is “totally unprecedented and faster than anything we’ve ever seen.” (7/6, #18)

•

For the first six months of 2008, U.S. sales for all light-duty vehicles are down 10.1%, while June sales are down 18.2%. Car sales dropped 1.6% by volume, while truck sales have dropped 18 percent. (7/2, #19)

•

Electric and natural gas shut-offs in Massachusetts are predicted to increase by at least 20 percent this summer as 125,000 low-income households face energy bill debts totaling about $100 million. (6/30, #16)

•

While the US oil industry wants access to more federal lands to help reduce reliance on foreign suppliers, American-based companies are shipping record amounts of gasoline and diesel fuel to other countries. The biggest share of U.S. oil products exported went to Mexico, Canada, Chile, Singapore and Brazil. (7/5, #11)

•

German truckers are planning work stoppages and demonstrations for government relief from soaring fuel prices and toll increases. A market-research company said 51,000 medium-sized German companies are close to failure because of rising costs. During the last year the cost of diesel for a large truck has risen by $12,000. (7/6, #13)

•

South Korea announced it is implementing a multi-stage contingency plan aimed at reducing energy consumption before increasing oil prices push Asia's fourth-largest economy into a full-fledged crisis. (7/6, #14)

More at this link.

[tmiller51]

Here's an article about Saudi Arabia's oil production capability. At least for the next five years, SA oil production will be just about flat. I think the availability of oil for export from SA will be even worse. I have read that SA is taking advantage of their cheap oil by adding energy intensive industries such as aluminum smelting--which means less oil for export.

The Saudis say they can ramp up production to 12.5 million barrels a day. But a field-by-field breakdown obtained by BusinessWeek shows that's not likely.

[Barbara Fitzpatrick]

Well, we've known the "solution" for over 30 years - the collection of silver BBs that include mass transit, efficient vehicles and appliances, alternate fuel sources (wind & solar charged EVs - and now the plug-in hybrids, which weren't know of 30 years ago - and non-food based ethanol), pedal-powered transport, and old-fashioned "shank's mare". It seems that $4/gallon is bringing us back to where we were 30 years ago, but with less flexibility left for the change over.

[Dardedar]

DAR
Don't you just love it when the position with facts on their side challenges the other side?

Blurb for chart below:

***
Dear ASPO-USA Supporter:

Following the 2007 Houston Conference, we sent you an appeal announcing Bob Kanner's Matching Grant Challenge to raise money, hire full-time staff, carry the Peak Oil message even further, and take dead aim at Peak Oil Deniers. We’ve done all that and much more... we’ve hired a professional staff, and gained nationwide media coverage brokering a $100,000 wager against CERA’s optimistic production estimates. Of course, CERA declined the bet, but news outlets across the nation- from the Wall Street Journal to World Oil magazine- covered the story, and CERA’s Oil & Gas Optimist Club lost some members. CERA flunked our first annual Peak Oil Score Card (below), but we hope that remedial studies in Peak Oil analysis will bring them up to grade.



LINK

[Dardedar]

EDITORIAL BOARD INTERVIEW WITH T. Boone PICKENS

Oil man tells U.S. energy 'horror story'

July 10, 2008

Billionaire oil investor T. Boone Pickens talked with the Tribune editorial board Wednesday about America's addiction to oil and his newest energy venture, wind power. Pickens wants the U.S. to build wind turbines and use natural gas resources to replace more than one-third of the oil the nation imports. "This is very close to war," he said.

Here is more of what he had to say.

The country has been in denial for a long time. I'm doing what I'm doing for the country. It's that simple. I think I know more about the oil industry than anybody else around. These [presidential] candidates do not understand. They don't understand how critical this all is.

I've talked to presidents before about energy. I was going to be the key energy adviser for Bob Dole in 1996. He said he wanted me to be chairman of Texas when he ran against Bill Clinton. I said, "OK, if I get to be the energy guy in the deal."

So maybe a month or two later, I said, "Do you think it's time to talk about energy?" He said, sure, go ahead and talk about it. He listened and said, "OK, now I'm gonna teach you something about politics. Right there, on the floor, that's a sleeping dog. Politicians don't kick sleeping dogs. Bill Clinton doesn't give a damn about energy and I don't either. Neither one of us is gonna kick a sleeping dog and so energy will not be an issue in this campaign. But in case one of us stumbles over the dog," he said, "you will be the guy that advises me on the issue." Neither one of them had a problem with energy, just like he said. They didn't want anything to do with it.

To blame Exxon Mobil for the price of gasoline being $4 a gallon is silly. The total amount of oil available every day in the world is 85 million barrels. That's it—that's blood, guts and feathers. That's the whole thing. And Exxon has 2.5 percent of that. That's all they have. Exxon is a peanut as far as owning oil in the global sense of things. Seventy percent of all the oil owned in the world today is owned by state-owned oil companies. The [U.S.] oil companies do not own the oil.

The OPEC countries this year will receive, in oil revenues, $700 billion [from the U.S.]. What does all that mean to us? I don't know what you call it—naive, weak, stupid or whatever—but we have drifted, drifted, drifted to where we're now importing almost 70 percent of our oil. In 40 years, we have never had an energy plan. Republican, Democrat, it doesn't make any difference. No one, nobody, has ever had an energy plan.

Ethanol is not a good fuel. It's an ugly baby, but it's our ugly baby. I'd rather have ethanol than I would foreign oil. I'd rather have anything than foreign oil.

The president said he wanted 35 billion gallons of ethanol by 2017. If all the corn went to ethanol, it'd be about half that amount. So you'd have to have something else to fill in if you're gonna try to make it 35 billion. It has to have something else.

You'll actually supplement [wind energy] with natural gas. You'll always have some natural gas working with your wind. And solar and wind can work together too. What's happened is we've never been pressed to find a solution because the oil was so cheap. Maybe some of these things will cost a little more than cheap oil. But oil is getting more and more expensive.

Coal is a resource that we have and it's cheap. It gets much more expensive when you start sequestering the carbon dioxide.

But you got to do it and it will work. There's no question it will work. And we gotta do it. I'm for everything, if it's in this country, because it creates jobs for us, it helps the economy. We just can't have the money leaving the country. It's a horror story.

Chicago Tribune

[Westfall]

Interesting. I've been aware of peak oil for quite some time. It represents a great callenge to our oil-dependent society. some of the PO guys and some people from ASPO have a very gloomy & pesmiistic view of the future, I dont think it is so bleak. High oil prices should push the free market to develop batteries or capasitors capable of storing energy effectively, at which point the crisis is averted. One company EEstor already claims to have come up with a solution if they have, we're in good shape.

WF

[Dardedar]

Interesting. I've been aware of peak oil for quite some time. It represents a great callenge to our oil-dependent society. some of the PO guys and some people from ASPO have a very gloomy & pesmiistic view of the future, I dont think it is so bleak.

DAR
I don't think it is so bleak, but it may very well be in the future. I do think, as do the peak oil guys, that we have some bumpy road to travel as we transition off of plentiful oil. It's going to be very hard to replace.

High oil prices should push the free market to develop batteries or capasitors capable of storing energy effectively, at which point the crisis is averted.

DAR
Those two things would be a great help, but I don't see how an energy storage system going to replace net energy. You still have to use energy (and a lot of it) to charge up your batteries/capacitors.

One company EEstor already claims to have come up with a solution if they have, we're in good shape.

DAR
I've been around a while Westfall and have looked into this Zenn company a little bit. I wish them the best but they have very hopeful talk with very little to show for it. This is very common in the EV industry. Talk is cheap especially with regard to battery ranges and vehicle speeds. Right now they are making cute little cars that go at golf cart speeds. Making vehicles that can get approved to travel at regular speeds is a whole different ball game even aside from their capacitor claims.

Having read their website, and this and this I am left very skeptical of their capacitor claims. But I wish them the best. It's just that claims like this have been going round and round a for a very long time.

D.

[Doug]

Right now they are making cute little cars that go at golf cart speeds. Making vehicles that can get approved to travel at regular speeds is a whole different ball game even aside from their capacitor claims.

DOUG
Today an online article about golf-cart speed electric vehicles (NEV's--Neighborhood Electric Vehicles) said that they are becoming very popular. For going to the grocery store or around an urban area, they are fine. Zap Motors is getting 50 orders a day for their versions.

[tmiller51]

MIT News Article from today:

In a revolutionary leap that could transform solar power from a marginal, boutique alternative into a mainstream energy source, MIT researchers have overcome a major barrier to large-scale solar power: storing energy for use when the sun doesn't shine.

Full Article

I'm always leery of news like this but since it's from MIT it might be worth following. I'm disappointed that the article doesn't say how efficient the process is or provide comparisons to other methods of spitting water into H2 and O.

Tim

[Dardedar]

Zap Motors is getting 50 orders a day for their versions.

DAR
ZAP stock was up 35% today. But it's still a penny stock (81 cents). This happens a lot. They get some news coverage their stock shoots up for a bit, then it slumps back. HYBR.OB plays the same game. I wonder if this ZENN company is public.

D.

[Savonarola]

... spitting water into H2 and O.

No O is produced from splitting water. O2, on the other hand, is:

2H2O --> 2H2 + O2

[tmiller51]

What if you start with only 1 water molecule?

[Savonarola]

What if you start with only 1 water molecule?

Then your car wouldn't go very far, would it?

[Westfall]

I don't think it is so bleak, but it may very well be in the future. I do think, as do the peak oil guys, that we have some bumpy road to travel as we transition off of plentiful oil. It's going to be very hard to replace.

There's a great bit of uncertaintly as to how bad things will get. If production drops off very rapidly economies start to collapse as business models become obsolete very quickly...

e.g. airlines, aircraft manufacturers, US autos, Hotels, Travel, Casinos (dependent on travel), cruiselines, etc. Oh and not to mention cost of shipping increases, which would serve to cut our imports, but also our exports...

DAR
Those two things would be a great help, but I don't see how an energy storage system going to replace net energy. You still have to use energy (and a lot of it) to charge up your batteries/capacitors.

We have plenty of energy coming in from the sun. If we had an efficent energy storage system we could use inefficent (with regards to power) but inexpensive solar cells. On such example would be to throw some genetically engeineered algee in water where it collects sunlight and produces energy, then store it. This could be scaled up to large amounts at low costs if energy were easy to store. everyday the sun rains energy down on us en mass, the problem is all we have are small leaky buckets.

An effective method of storing energy would make solar panels justifiable. I dont use energy when I am away at work, but instead I just fill up the energy bucket with the sun. When I get home, I start using the energy for everything including filling up the small energy bucket in my car. if it is cloudy, no big deal, I just pay to borrow from someone who has more energy stored up. Once we start downt his path economies of scale begin to make it more and more affordable, until energy is cheap...but until we get to the smooth road, we will have to endure some turbulant issues as we are forced to reduce our consumption of oil.

WF

[Dardedar]

There's a great bit of uncertaintly as to how bad things will get. If production drops off very rapidly economies start to collapse as business models become obsolete very quickly...

DAR
Because we are so used to near constant growth, and our economies are largely built around that, even a leveling off or slow drop off of production is going to be something to adapt to. We are going to have to get vastly more efficient.

We have plenty of energy coming in from the sun. If we had an efficent energy storage system we could use inefficent (with regards to power) but inexpensive solar cells.

DAR
Hopefully those are coming soon. I think they are. Right now they don't compete with cheap oil/gas/coal. The sun's energy is quite diffuse, spread out, and we can only catch and convert about 10-15% of that.

On such example would be to throw some genetically engeineered algee in water where it collects sunlight and produces energy, then store it. This could be scaled up to large amounts at low costs if energy were easy to store.

DAR
My uncle is always mentioning this. He calls it "pond scum." It probably has great potential but look into how much effort, energy, equipment, water and land area goes into creating 5.8 million btu with that technology. That's the energy content of one barrel of oil. The world uses about 88 million of those every single day. The US uses a billion of them every 40 days. That's a lot of energy, a lot of products and (people don't realize) a lot of fertilizer. Pond scum can help but only a few generations from now our great grand kids are going to look back at the wonderful energy dense properties of oil and shake their heads at how we pissed so much of this inheritance away.

Once we start downt his path economies of scale begin to make it more and more affordable, until energy is cheap...

DAR
Coal and nuke will carry us quite a way, but we will need some real breakthroughs to have cheap energy in the future.

My wife asked me about this the other day. Someone had told her it would take a whole roof worth of solar panels to run a hair dryer. She thought that didn't sound right, couldn't be right. I said no, the person was about right. A 100 watt solar panel costs about $400-$500 right now and takes up a pretty good space. A hair dryer uses 1500 watts so you would need 15 of these to run your hair dryer, not counting inefficiencies of converting to AC and battery storage.
That's $4,500 worth of solar panels to run one hair dryer. My electric stove, electric water heater, electric hot tub, electric clothes dryer, electric air-conditioner use a lot more than that. Even a coffee maker pulls about 800 watts. Few people have any concept of how much energy they use every day. As the oil peaks and declines, we are about to find out. One lady asked me if she could power her house with a windmill, about the size of a box fan, placed on her fence (she lives in a suburb). As if this would do anything toward her energy usage (a box fan, on high speed, pulls about 50 watts).

D.

[tmiller51]

Converting watts to another until helps me get a better feeling for how much energy that is.

Powering one 60 watt light bulb is the energy equivalent of you lifting a 44 pound box straight up at a rate of one foot per second.

Tim

[Dardedar]

PEMEX: The age of easy oil has come to an end


Mexican oil production will fall to 2.7 million to 2.8 million barrels a day next year as the country's main oil field continues to decline rapidly, Carlos Morales, the head of exploration and production at Petroleos Mexicanos, said.

Mexican output has slid by 20% since peaking in 2004, and officials warn that the country will see exports completely dry up over the next decade unless Pemex accelerates oil exploration in new areas such as the deep waters of the Gulf of Mexico.

Cantarell is producing just over 1 million barrels a day, and Pemex expects it to fall to around 600,000 barrels a day by end-2012. Mexico's second-largest oil field, Ku-Maloob-Zaap, will also head into retirement in 2010 after hitting peak production of 800,000 barrels a day.

"The age of easy oil has come to an end," Morales told lawmakers at a forum. "We don't expect to find another Cantarell or Ku-Maloob-Zaap."

Pemex expects production from fields currently in operation to fall by 1.8 million barrels a day by 2020. This means the company must find and develop new pools of oil, such as the Chicontepec basin in northern Mexico.

Pemex plans to boost output at Chicontepec to 600,000 barrels a day by 2020, up from a trickle at present. Chicontepec is a geologically challenging area where oil wells only produce 50 to 400 barrels a day, compared with wells at Cantarell that currently average 6,000 barrels a day.

"At Chicontepec we will need 70 wells just to replace one well at Cantarell," Morales said.

ASPO

[tmiller51]

Ethanol has been getting a lot of bad press lately. Ethanol biofuel advocate David Blume thinks that is because we're doing it wrong with massive corn based operations. He thinks the ethanol should be made on a smaller, more local scale. Here is a link to an interview with him on NPR's Science Friday: Link (click the play button near the upper right hand corner)

Tim

[Dardedar]

DAR
I listened to about half of it. I was skeptical at first but... very interesting!