Peak Oil- what it is and how it will impact your life

I was surprised reading over all of the pages of this thread at just how many times I have said "Peak oil is not about running out of oil, it is about running out of cheap oil." I think that is what most people focus on is the most dire of the predictions for a time when there is no readily available oil. That scenario may be in 20-30 years or it may not be in 100. But the ramifications of a tightening supply will we will certainly see, and are seeing. It's like the post from 2006 where I commented on the newscasts crowing about the recent drop in oil prices and gasoline prices. Yay!! It is down to $65 a barrel and gas is only $2.65. When just two years before they were bemoaning the fact that oil had hit the all time high of $40 a barrel and gasoline was nearly $2 a gallon! People get used to anything and this years dire news will be next years good news. Crazy.
The only prediction I myself made that I could find was in a post from Summer 2007;
"I expect to see $100-$150 a barrel oil early in 2008 and $4-$6 a gallon gas by summer. If I were a betting man I would wager any amount that we will be seeing fuel rationing before the end of this decade."

In July 2008 oil hit it's all time high of $145 a barrel and the national average for gasoline was right at $4 a gallon. I'd say two out of three isn't bad. As for the rationing, well if the trend had of held I think it too would have come to pass. Fortunately, or unfortunately, the coinciding world economic downturn forced a drastic scale back on consumption that gave us some breathing room to increase supply and to allow the Bakken and other tight shale plays to start coming on line.

As for world peak, as stated peak oil can only be confirmed in the rear view mirror. With the increased production rates in the US and a few other countries due to enhanced extraction methods, world production, which had been flat for years and only frenzied drilling of new wells was keeping it from starting to decline, rose slightly to 87 million barrels per day. A point where it has stayed for the last 3 years and looks to remain at that level in 2014 also.
This may well be our all time "peak" of production.

Will we see rolling blackouts, food scarcity, fuel rationing, TEOTWAWKI? Maybe down the line, some years from now. But for sure we are going to see rising fuel prices, rising food costs, and possibly resource wars. (I'm still searching for the oil connection tied to this Russia/Crimea thing) And just as we have gotten used to $100 a barrel oil as "Normal", I'm sure we will soon see much higher prices than that as normal. Until it gets to the point where people cannot afford to put gas in their cars will most people even think about the the ramifications. And then of course they will blame it all on those evil, greedy oil barons or the shadowy "they" behind the NWO . Because everyone knows that the earth has a creamy nougat center of oil that replenishes itself and that there is plenty of oil in "them thar hills" if TPTB would just go and get it. We could all go back to $1 a gallon gas and driving our Hummers and SUV's to the market to buy 50 cent a gallon milk. And wave to Mrs. Cleaver on the way.

As in all things, prepare for the worst, pray for the best.

 

By the way, thanks Micro for commenting on this thread and giving me the chance to re-read it and update it. I'm glad to see that it is still getting traction. And welcome to the board!

 

I was reading over the latest posts I made above and one thing has struck me. This quote from the recent article about the costs of this new boom.
"While the boom could survive a brief dip in oil prices, a long slump could slow drilling and cause production to fall swiftly, Maugeri said."

And this about the resultant spike in oil prices after the Katrina disaster.
"As the experience inflicted by Hurricane Katrina merely hints, there is no margin in today's energy markets. Disruption of markets, shortages and steep price increases require only for demand to slightly exceed supply."

That got me to thinking. How will reaching the peak of world oil production differ from reaching the peak of US production in 1970?

The key is the above statement. There is simply no room in today's markets for any disruption or decline. I commented on this in the pages of this thread. When a regional conflict in a minor oil producing country can send world prices shooting up (something that wouldn't even make a dent 20 years ago) that is evidence that we are producing at maximum capacity. There is no one, no country, no field that can offset any lost production, no matter how small.

That is the difference in our world today. In the 1970's as US domestic production peaked and started it's decline, world production was on the rise. Other countries, particularly in the Middle East were on a meteoric rise that offset any losses we were seeing domestically. It became cheaper to import foreign oil than to produce our own dwindling supplies.
But this time there is nowhere to import from. We are already producing our dwindling supply, all over the world, at a breakneck pace. Like I said in another post "we have found better ways to scrape the bottom of the barrel". This recent uptick in production is a blip on the radar. It is not our salvation and the end of the peak oil problem. We are still scraping the bottom of the barrel.

This wild eyed media hype has to be seen in proper perspective. "Wow, we will soon surpass Saudi Arabia in production!!" Yay, look at us!! Sounds like great news right? Well, let's look at this a moment. All of the largest oil fields in the world are in severe decline and have been for several years. Saudi admitted to an 8% per annual decline a few years ago. So they are on a downward slope and sometime in the future we might actually meet them on their way down. Umm, that's not a good sign. That means that at some point in the future the world supply will be so bad, so low, that US production will equal or exceed Saudi production. That my friends is not news to celebrate.

And that is IF we can maintain these new production rates, and IF the price of oil stays high, and IF there is not another financial crises that puts a squeeze on consumption rates again. You get the picture.

So I see this current level of production as a long flat line at the top of the curve. Much more pronounced than those of earlier fields that peaked. And Hubberts model was only about localized fields. He never applied it to world oil, that was done by others after his model successfully predicted the peak of many domestic fields. But in those fields there was not the frenetic drilling pace that we see in todays world. The cost of oil prevented this mega scale drilling activity. The loss of production was simply offset by imports from other places. That is our predicament today. We have no other places to turn to now. So we are seeing the higher cost of oil holding and that cost enabling companies to afford to explore and utilize technologies and methods, and to drill areas and zones that have been cost prohibitive for decades.

My fear, and I will make a prediction here, is that what this is doing and what we will see is not the gradual cresting the peak and a slow decline on the other side. I am afraid that this time it will be a long plateau, sustained by this frenzied rush to get all we can, followed by a drastic and sharp fall off that we have never seen in any field before.
I think the downside is going to be sudden, swift and drastic when it comes.

I'll come back and read this in a few years and see if this is an accurate forecast or not. That is if I can afford the electricity to run my laptop, and if I am not too busy foraging and hunting for food to afford the time.

 

Yes, yes and yes. Peak oil is about oil getting more scarce and therefor more expensive. To a point where only the elite can afford it. Most of the more dire peak oil predictions foresee a time, when who can say, but a time when only the richest people can afford luxuries like air travel and even leisure driving.

But the slump they are referring too is if consumption goes down (this happened in 2008 when the cost of oil and gasoline plus the worldwide recession casued many people to scale back on their usage). Other factors can affect consumption also. The only other way to reduce oil prices is oversupply, but I don't think we need worry about that. I think if we reach the point where it gets too expensive to use is the only way we will ever see prices fall and if prices fall then we cannot sustain the current level of production. It is a catch 22. The higher the price the more we produce, but the more we produce the lower the price becomes. I think the only reason we are not seeing $5 a gallon gas right now is this latest surge in production that is offsetting somewhat, or forestalling, a restriction on world supplies.

 

Wow. Take some time off and this thread explodes. Where to start? Let's start with the simple one first. Abiotic oil. Just as surely as death and taxes there is nothing more certain than someone chiming in on any internet discussion of peak oil with the abiotic oil theory. This has long been debunked, it is based on junk science and has been completely discredited. There has never in the history of the world been an oilfield that miraculously replenished itself. (with new oil). I think it was Ghrit that posted in this thread a very astute observation that even if it was a true phenomena, that it would take such a long period of time, thousands of years at least, to replenish the most minute fraction of what we extract that for that alone it can't even be considered in intelligent discussions on the subject. I'm paraphrasing from memory but I think that was the gist of the post.

And as for the phenomena of wells that replenish themselves given time, yes there are verified cases of that happening, but, there is always a BUT. But it is not new oil. It is oil from a deeper reservoir that migrates upwards into depleted areas. A lot of confusion arises from people not understanding the workings of oil extraction. Most people think of oil as vast lakes or rivers under ground that you stick a straw into and suck out the oil. When in actuality it is more like sticking a straw into a sponge. You can suck all the fluid around the bottom of the straw and if you wait for some time the remaining fluid will slowly soak into the area you have vacated.

One very good example of this is the Cat Canyon field in central California. They had been drilling wells there since the 1920's. They were around 3,000 to 7,000' deep and were good producers for a long time. eventually production started to taper off and many wells were shut in. After several years they went back into these old wells and found that they could resume production at nearly the same rate as before. The geologists started studying this phenomena and determined that the oil was seeping up from a much deeper reservoir. I drilled the first wildcat well in that field that went below 10,000'. At 12,000' we encountered a pressurized zone that nearly blew us off the well. Then the rush was on and the oil companies drilled many wells at that depth and were producing far more than the earlier shallower wells had. When I left there in the mid eighties seismic data was indicating that the main reservoir was even deeper at around 18,000'.

So these wells that replenish themselves are simply wells where the oil is in a deeper, pressurized formation that seeps into the area that is voided by producing the oil out of it. Think of it like a muddy river bank. You can hollow out a depression and it will fill with water. Bail out the water and wait and it will slowly refill.

As for rivers of oil, that too is a misunderstanding of geology. There are no underground rivers. Oil is saturated in the formation. The pressurization of this oil deposit many times causes weaker formations above it, such as salt layers to rise and create "domes". In the early days of the oil industry this was a key indicator that geologists were looking for to determine where to drill. The two primary formations that oil is found in are sand and shale. Most of the last 150 years of oil drilling has been in the sand formations where the wells are easily drilled and the oil easy to extract. It has only been in fairly recent years that the harder to drill and harder to extract shale formations have been developed and produced. And the hard shale formations are where the current uptick in production is primarily coming from.

The advent of improved fracking technology and better drilling methods and equipment has allowed us to exploit these reserves. The use of directional drilling technology and improvement in bit design has allowed us to drill lateral wells into these hard shale formations for thousands of feet instead of the normal dozens of feet that we could drill with vertical wells. And the high cost of oil is allowing us to utilize these expensive methods that were cost prohibitive before. That coupled with the enhanced recovery we are achieving with hydraulic fracturing is spurring the recent drilling frenzy and resultant increase in production rates.

The one poster above stated "If we're running out of oil why are there more known reserves than ever before?"
That too is a misconception. There have been no new giant discoveries of unknown reservoirs. We have always known there were oil deposits in the Bakken, the Marcellus, the Eagleford formations. But as I said they were unaccessible and or cost prohibitive to drill and produce. The rise in an oil companies "proven reserves" is a numbers game. It is used to fuel their stock prices and encourage investors. "proven reserves" are what is estimated to be in the ground, and that is wildy speculative and quite different from "recoverable reserves". Look at OPEC in the 80's. They imposed production quota's on their members that was based on their "Proven reserves". Suddenly overnight the proven reserves of most OPEC members increased and even doubled. Not many countries allow an independent review of the data that they use to determine these "proven reserves" so any numbers, especially from third world countries is taken with a grain of salt.

 

Now on to the harder one. Collapsenik, you seem to have an agenda, all of your posts but one on here are in this thread. You post quite a bit of information but very few facts. I tried to understand your points and your arguments but, quite frankly it is too disjointed and contradictory to follow. I believe that you are trying to say that peak oil is somehow a myth or an incorrect theory. In one post you seem to be agreeing that oil is depleting and is a non renewable, finite resource, but then you say that peak oil has occurred many times. I will multi-quote your posts and see if I can go through them one at a time.

Wow. Ok I have a headache now. Like I said it is very hard to follow your reasoning. If you simply are a proponent for "green" energy and a sustainable energy guru, with solar panels on the roof and an electric vehicle in the garage, then hey, good for you. I support all of that, but it has absolutely nothing to do with the fact that world oil production is declining, and that prices are rising and will continue to rise and that we have a problem that must be addressed. And no amount of wishful thinking, fantasy based theories, or head in the sand denying will change that.