Sun Nov 06, 2011 8:31 am
Peaks Happen
It is well known that individual oil fields universally see a production peak—often early in their production lifetimes—followed by persistent decline. The geological upshot is that oil is not a lake into which we thrust a straw, slurping as fast as we wish. Rather, oil is a viscous fluid in porous, permeable rock that resists rapid recovery. It’s not a spigot or valve that we can turn at will. Nature has a say in how fast we can claim the oil. When economists speak of reserves-to-production (R/P) ratios to set a time scale on oil depletion (usually a few decades), this “lake” is the implied model. The R/P ratio is a useful number, but its use obscures geological limitations to the rate of recovery. In truth, oil will last longer than the R/P indicates, but at a reduced rate of flow. The decline, meanwhile, is closer at hand than the R/P number alone conveys.
^^^^^^This is where secondary (sea water) and tertiary (CO2 injections) are used - and as a result of these processes - the oil field COLLAPSES FASTER then if it were allowed to geologically decline.
Since about 2004—well before the economic disasters of late 2008—global oil production hit something of a plateau, oscillating within ±3% of 86 Mbpd (source: EIA).
^^^^^ yep a plateau set to turn into a cliff - fairly soon (as in, your lifetime) if not next week with the onset of an oil embargo...then there is the Export Land Model...that pretty much says oil exporting countries are gonna keep their oil FIRST and sell SECOND - one of the primary reasons america likes to bomb women and children in Iraq and Libya - build bases - and plant a flag that says "Iraq's Oil is now Our Oil".
I am additionally swayed by the frequent success of logistic functions to predict total amount of resource well before it is exhausted. This does not always work (i.e., don’t pepper me with exceptions, of which there are plenty). But the fact that it has worked so well for major resources in the past is interesting and compelling.
If for each year, we plot the amount of resource produced in that year as a fraction of the total resource extracted to date against the total extracted resource, a logistic function makes a straight, descending line intercepting the horizontal axis at the value of the ultimate resource. The peak production rate occurs at the half-way point along the trend. By contrast, constant-growth exponentials (infinite resource) follow a flat line: same fractional production every year. Below are four such examples for prized Pennsylvania anthracite coal, British coal, U.S. oil (including Alaska), and global oil.
For U.S. oil, we are far enough along to estimate that the total recoverable resource is in the neighborhood of 240 billion barrels. According to this, we have about 40 billion barrels yet to produce. For comparison, the proven reserves in the U.S. currently total 21 billion barrels, so the logistic plot suggests we have about the same amount yet to find (or to become economically viable). For scale, the (discovered) resource in the Arctic National Wildlife Refuge (ANWR) is approximately 10 billion barrels. The 40 billion barrel estimate is in no way set in stone, but a conservative approach suggests it would not be prudent to count on there being more—at least not at historically “reasonable” prices.
In 1986 all OPEC countries increased their "reserves" by 30% - no data only quotas driving this (i.e., the more reserves a country can "prove" the more they can export - the more Boeing 767s they can buy).
21 billion barrels? well that ain't gonna last a long time and WHAT's more - does anyone think driving a 600 horsepower hummer that a soccer mom/dad "owns" is gonna have priority over the military?
It is rather clear that conventional oil is fated to peak (or plateau) and decline. The worry, then, is that economies are forced into ramping-down use of liquid fuels while oil prices skyrocket. Recession ensues; demand flags; prices return to almost normal; rinse and repeat. If you’ve ever watched a hummingbird (or some large insects) trapped inside, they repeatedly crash into the ceiling. Economic attempts to resume growth likewise will soon rediscover the ever-declining oil supply ceiling. Like the confused bird who does not notice the open window, those who would establish expensive new ventures for alternatives will be hampered by market volatility and uncertainty—worried about going bust in the next half-cycle.
Translation: economic collapse is being defined by Peak Oil.
About ninety percent of the oil in this world is controlled by national oil companies: not multi-nationals like ExxonMobil, etc. If even one major oil-exporting country decides to reduce exports, recognizing that they should preserve a valuable and waning resource for their own future, the decline gets that much worse—sending prices higher and tempting more countries to do the same. If export prices double, a nation figures, it can sell half as much and still keep its economy on an even keel. Nations that do not regard oil as a fundamentally special commodity—a one-time physical endowment not easily replaced with money—may elect to cash in on the bonanza, keeping their export level at maximum capacity (where virtually all operate today). But I doubt that this short-sighted reaction will be universal.
The potential exists, therefore, for major disruption to our accustomed ways of life. We will become viscerally aware of how fundamentally important oil is to all that we do. Even though energy may represent something like 10% of GDP, it’s what makes the other 90% possible. It’s not just another commodity like sneakers or widgets. Curtail transportation and watch the grocery store shelves struggle to stay full. See food prices escalate and cause immediate hardships around the world. Find out how far-flung about the globe the material resources are that comprise a cell phone.
Translation: we eat oil.
The graphic conveys that in order of increasing cost, enhanced oil recovery, tar sands and heavy oil, gas-to-liquids, coal-to-liquids, and oil shale add substantial stocks at production costs that are only 2–10 times that of conventional oil. Those who are primarily interested in climate change are not too happy with the implications, but this situation could alleviate concerns over oil decline.
I should point out that the production costs of the various hydrocarbons in the plot above are based on 2007 energy prices. Using the escalated energy prices brought on by a conventional oil decline pushes everything higher on the scale. So don’t take either axis of the graph literally.
I will admit that personally, this is the strongest evidence I have seen for why I should not worry about peak oil. I will completely understand if we part company here, and you conclude that post-peak conventional oil decline does not pose a significant threat to our way of life. At least I know that you are aware of the potential dangers, and that if things do go off the rails, peak oil will be in your vocabulary. I’m not interested in being right as much as I am interested in awareness so we can anticipate troubles and get busy with earnest mitigation/prevention. I just don’t want to get caught with our collective (size 40,000 km) pants down, and have to listen to “no one could have seen this coming” excuses like we did with the crash of the sub-prime housing bubble.
Production rates shoot the tar sands and oil shale argument in the head everytime. Athabasca will only ever produce 5-7mbpd (assuming unending supplies of fresh H20 and NG
)The bottom line was that initiating all such crash programs in parallel 20 years ahead of the peak (or more to the point, 20 years before the start of decline) may be sufficient to avoid major hardships. Waiting until 10 years before the decline would result in major disruptions as the efforts struggled to establish a large enough foothold in time for the decline. Initiating the crash program at the moment the decline starts was characterized as having catastrophic repercussions. Not treated was the more politically realistic scenario of waiting until 5 years after the start of decline while we bicker about the fundamental cause of our woes and strategies for mitigation.
Why am I prone to heed the conclusions of this report? In large part, it is because of the scale of the problem. A 3% per year decline of conventional oil (considered mild in many models/scenarios), requires that we replace 2.5 Mbpd of capacity each year. Canadian tar sands, for instance, were at 1.2 Mbpd in 2008, and are projected to reach 3–4 Mbpd by 2020. This represents an impressive growth rate of 10% per year. But a 3% decline beginning in 2015 will need five times the marginal oil represented by the gain in this expanding front-runner.
Even in the 70s 55MPH restrictions and gas rationing were employed. Don't you find it curious that NO MITIGATION ANYWHERE GLOBALLY is being discussed? NOTHING - NOT ONE WORD...in fact just the opposite is being bantered by our monkey frauds in suits ..."SHOP till you drop"...this alone is enough to conclude that the human project is being slammed into the brick wall at 500MPH.
We tend to have self-confidence in our ability to solve any problem.
Like the moon landing hoax - it is a part of nearly every state of the union address. Not saying the author subscribes to the landing on the moon hoax - just making a point about how deeply the brainwashing has gone.
But we have no historical analog to the peak of fossil fuels, without a clear (and superior) replacement on the horizon. As a result of our fossil fuel binge, we have unprecedented problems in population, water, agriculture, fisheries, pollution, climate change, and so on. Our moment in history is rather special. It is dangerous to assume that we’ll gracefully handle problems at this scale, because such assumptions amount to dismissals and concomitant inaction. Unacceptable.
Nor have there ever been 7 Billion on the planet - IT WILL BE DIFFERENT THIS TIME.
It bothers me that we don’t have a plan. It scares me that we (collectively) don’t think we even need a plan. Faith in the market to solve the problem represents a high-stakes gamble. We can and should do better.
Yep - me too, but part of our brainwashing (and biological composition [que PM here]) is that we discount the future for immediate gain.
The frustrating thing for me is that I believe it is possible to beat this problem, but only if we aggressively alter our practices. We would never adopt the necessary radical changes without first agreeing on the potential for disaster otherwise. Yet even if I’m wrong about the problem, the shift I imagine may result in a better, more fulfilling life anyway. I’ll have to describe this vision of a possible future at a later date.
I think the power brokers know we won't stop breeding - so slamming the human project into a brick wall at 500MPH seems logical to me from their perspective.
Crash commerce - arrest the JIT system - and reduce the size of the population by 90% in a year or less.
Peak oil is only temporary (temporarily).
Excellent article - must read - and I am gonna sticky - Thanks Ralfy!!
