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

Re: Peak Oil; what it is and how it will impact your life

So much for the good news. Back to the doomer news. The last two articles are from todays headlines. The first one is from 2003. Prophetic?
I have been going back and reading these older articles and it is chilling to see it coming to pass.

From 2003;

Eating Fossil Fuels

by Dale Allen Pfeiffer

October 3 , 2003, 1200 PDT, (FTW) -- Human beings (like all other animals) draw their energy from the food they eat. Until the last century, all of the food energy available on this planet was derived from the sun through photosynthesis. Either you ate plants or you ate animals that fed on plants, but the energy in your food was ultimately derived from the sun.

In the United States, 400 gallons of oil equivalents are expended annually to feed each American (as of data provided in 1994).[7] Agricultural energy consumption is broken down as follows:

· 31% for the manufacture of inorganic fertilizer

· 19% for the operation of field machinery

· 16% for transportation

· 13% for irrigation

· 08% for raising livestock (not including livestock feed)

· 05% for crop drying

· 05% for pesticide production

· 08% miscellaneous[8]

Energy costs for packaging, refrigeration, transportation to retail outlets, and household cooking are not considered in these figures.

To give the reader an idea of the energy intensiveness of modern agriculture, production of one kilogram of nitrogen for fertilizer requires the energy equivalent of from 1.4 to 1.8 liters of diesel fuel. This is not considering the natural gas feedstock.[9] According to The Fertilizer Institute (http://www.tfi.org), in the year from June 30 2001 until June 30 2002 the United States used 12,009,300 short tons of nitrogen fertilizer.[10] Using the low figure of 1.4 liters diesel equivalent per kilogram of nitrogen, this equates to the energy content of 15.3 billion liters of diesel fuel, or 96.2 million barrels.


In a very real sense, we are literally eating fossil fuels. However, due to the laws of thermodynamics, there is not a direct correspondence between energy inflow and outflow in agriculture. Along the way, there is a marked energy loss. Between 1945 and 1994, energy input to agriculture increased 4-fold while crop yields only increased 3-fold.[11] Since then, energy input has continued to increase without a corresponding increase in crop yield. We have reached the point of marginal returns. Yet, due to soil degradation, increased demands of pest management and increasing energy costs for irrigation (all of which is examined below), modern agriculture must continue increasing its energy expenditures simply to maintain current crop yields.
Quite plainly, as fossil fuel production begins to decline within the next decade, there will be less energy available for the production of food.

Modern intensive agriculture is unsustainable. It is damaging the land, draining water supplies and polluting the environment. And all of this requires more and more fossil fuel input to pump irrigation water, to replace nutrients, to provide pest protection, to remediate the environment and simply to hold crop production at a constant. Yet this necessary fossil fuel input is going to crash headlong into declining fossil fuel production.


In the United States, each person consumes an average of 2,175 pounds of food per person per year. This provides the U.S. consumer with an average daily energy intake of 3,600 Calories. The world average is 2,700 Calories per day.[33] Fully 19% of the U.S. caloric intake comes from fast food. Fast food accounts for 34% of the total food consumption for the average U.S. citizen. The average citizen dines out for one meal out of four.[34]


To provide all of this food requires the application of 0.6 million metric tons of pesticides in North America per year. This is over one fifth of the total annual world pesticide use, estimated at 2.5 million tons.[37] Worldwide, more nitrogen fertilizer is used per year than can be supplied through natural sources. Likewise, water is pumped out of underground aquifers at a much higher rate than it is recharged. And stocks of important minerals, such as phosphorus and potassium, are quickly approaching exhaustion.[38]


Our prosperity is built on the principal of exhausting the world's resources as quickly as possible, without any thought to our neighbors, all the other life on this planet, or our children.

Considering a growth rate of 1.1% per year, the U.S. population is projected to double by 2050. As the population expands, an estimated one acre of land will be lost for every person added to the U.S. population. Currently, there are 1.8 acres of farmland available to grow food for each U.S. citizen. By 2050, this will decrease to 0.6 acres. 1.2 acres per person is required in order to maintain current dietary standards.[40]

Presently, only two nations on the planet are major exporters of grain: the United States and Canada.[41] By 2025, it is expected that the U.S. will cease to be a food exporter due to domestic demand. The impact on the U.S. economy could be devastating, as food exports earn $40 billion for the U.S. annually. More importantly, millions of people around the world could starve to death without U.S. food exports.[42]
Domestically, 34.6 million people are living in poverty as of 2002 census data.[43] And this number is continuing to grow at an alarming rate. Too many of these people do not have a sufficient diet. As the situation worsens, this number will increase and the United States will witness growing numbers of starvation fatalities.

None of this research considers the impact of declining fossil fuel production. The authors of all of these studies believe that the mentioned agricultural crisis will only begin to impact us after 2020, and will not become critical until 2050. The current peaking of global oil production (and subsequent decline of production), along with the peak of North American natural gas production will very likely precipitate this agricultural crisis much sooner than expected. Quite possibly, a U.S. population reduction of one-third will not be effective for sustainability; the necessary reduction might be in excess of one-half. And, for sustainability, global population will have to be reduced from the current 6.32 billion people[42] to 2 billion-a reduction of 68% or over two-thirds. The end of this decade could see spiraling food prices without relief. And the coming decade could see massive starvation on a global level such as never experienced before by the human race.





From todays headlines;


How Hunger Could Topple Regimes


By TONY KARON Mon Apr 14, 10:00 AM ET

The idea of the starving masses driven by their desperation to take to the streets and overthrow the ancien regime has seemed impossibly quaint since capitalism triumphed so decisively in the Cold War. Since then, the spectacle of hunger sparking revolutionary violence has been the stuff of Broadway musicals rather than the real world of politics. And yet, the headlines of the past month suggest that skyrocketing food prices are threatening the stability of a growing number of governments around the world. Ironically, it may be the very success of capitalism in transforming regions previously restrained by various forms of socialism that has helped create the new crisis.

Haiti is in flames as food riots have turned into a violent challenge to the vulnerable government; Egypt's authoritarian regime faces a mounting political threat over its inability to maintain a steady supply of heavily subsidized bread to its impoverished citizens; Cote D'Ivoire, Cameroon, Mozambique, Uzbekistan, Yemen and Indonesia are among the countries that have recently seen violent food riots or demonstrations. World Bank president Robert Zoellick noted last week that world food prices had risen 80% over the past three years, and warned that at least 33 countries face social unrest as a result.
The sociology of the food riot is pretty straightforward: The usually impoverished majority of citizens may acquiesce to the rule of detested corrupt and repressive regimes when they are preoccupied with the daily struggle to feed their children and themselves, but when circumstances render it impossible to feed their hungry children, normally passive citizens can very quickly become militants with nothing to lose. That's especially true when the source of their hunger is not the absence of food supplies but their inability to afford to buy the available food supplies. And that's precisely what we're seeing in the current wave of global food-price inflation. As Josette Sheeran of the U.N. World Food Program put it last month, "We are seeing food on the shelves but people being unable to afford it."
When all that stands between hungry people and a warehouse full of rice and beans is a couple of padlocks and a riot policeman (who may be the neighbor of those who're trying to get past him, and whose own family may be hungry too), the invisible barricade of private-property laws can be easily ignored. Doing whatever it takes to feed oneself and a hungry child, after all, is a primal human instinct. So, with prices of basic foods skyrocketing to the point that even the global aid agencies - whose function is to provide emergency food supplies to those in need - are unable, for financial reasons, to sustain their current commitments to the growing army of the hungry, brittle regimes around the world have plenty of reason for anxiety.
The hunger has historically been an instigator of revolutions and civil wars, it is not a sufficient condition for such violence. For a mass outpouring of rage spurred by hunger to translate into a credible challenge to an established order requires an organized political leadership ready to harness that anger against the state. It may not be all that surprising, then, that Haiti has been one of the major flashpoints of the new wave of hunger-generated political crises; the outpouring of rage there has been channeled into preexisting furrows of political discontent. And that's why there may be greater reason for concern in Egypt, where the bread crisis comes on top of a mounting challenge to the regime's legitimacy by a range of opposition groups.
The social theories of Karl Marx were long ago discarded as of little value, even to revolutionaries. But he did warn that capitalism had a tendency to generate its own crises. Indeed, the spread of capitalism, and its accelerated industrialization and wealth-creation, may have fomented the food-inflation crisis - by dramatically accelerating competition for scarce resources. The rapid industrialization of China and India over the past two decades - and the resultant growth of a new middle class fast approaching the size of America's - has driven demand for oil toward the limits of global supply capacity. That has pushed oil prices to levels five times what they were in the mid 1990s, which has also raised pressure on food prices by driving up agricultural costs and by prompting the substitution of biofuel crops for edible ones on scarce farmland. Moreover, those new middle class people are eating a lot better than their parents did - particularly more meat. Producing a single calorie of beef can, by some estimates, require eight or more calories of grain feed, and expanded meat consumption therefore has a multiplier effect on demand for grains. Throw in climate disasters such as the Australian drought and recent rice crop failures, and you have food inflation spiraling so fast that even the U.N. agency created to feed people in emergencies is warning that it lacks the funds to fulfill its mandate.
The reason officials such as Zoellick are sounding the alarm may be that the food crisis, and its attendant political risks, are not likely to be resolved or contained by the laissez-faire operation of capitalism's market forces. Government intervention on behalf of the poor - so out of fashion during globalization's roaring '90s and the current decade - may be about to make a comeback. View this article on Time.com



Friday, Nov. 16, 2007
After the Oil Crisis, a Food Crisis?
By Kathleen Kingsbury
Is the world headed for a food crisis? India, Mexico and Yemen have seen food riots this year. Argentines boycotted tomatoes during the country's recent presidential elections when the vegetable became more expensive than meat; and in Italy, shoppers organized a one-day boycott of pasta to protest rising prices. In late October, the Russian government, hoping to ease tensions ahead of parliamentary elections early next year, announced a price freeze for milk, bread and other foods through the end of January.

What's the cause for these shortages and price hikes? Expensive oil, for the most part.

The United Nations Food and Agricultural Organization (FAO) reported last week that, at nearly $100 a barrel, the price of oil has sent the cost of food imports skyrocketing this year. Add in escalating crop prices, the FAO warned, and a direct consequence could soon be an increase in global hunger — and, as a consequence, increased social unrest. Faced with internal rumblings, "politicians tend to act to protect their own nationals rather than for the good of all," says Ali Ghurkan, a Rome-based FAO analyst who co-authored the report. Because of the lack of international cooperation, he adds, "Worldwide markets get tighter and the pain only lasts longer."

What's more, worldwide food reserves are at their lowest in 35 years, so prices are likely to stay high for the foreseeable future. "Past shocks have quickly dissipated, but that's not likely to be the case this time," says Ghurkan. "Supply and demand have become unbalanced, and... can't be fixed quickly."

The world's food import bill will rise in 2007 to $745 billion, up 21% from last year, the FAO estimated in its biannual Food Outlook. In developing countries, costs will go up by a quarter to nearly $233 billion. The FAO says the price increases are a result of record oil prices, farmers switching out of cereals to grow biofuel crops, extreme weather and growing demand from countries like India and China. The year 2008 will likely offer no relief. "The situation could deteriorate further in the coming months," the FAO report cautioned, "leading to a reduction in imports and consumption in many low-income food-deficit countries."

Hardest hit will likely be sub-Saharan Africa, where many of the world's poorest nations depend on both high-cost energy as well as food imports. Cash-poor governments will be forced to choose between the two, the FAO says, and the former has almost always won out in the past. That means more people will go malnourished. Further exacerbating the problem are the current record prices for freight shipping brought on by record fuel prices. An estimated 854 million people, or one in six in the world, already don't have enough to eat, according to the World Food Programme.

Nearly every region of the world has experienced drastic food price inflation this year. Retail prices are up 18% in China, 17% in Sri Lanka and 10% or more throughout Latin America and Russia. Zimbabwe tops the chart with a more than a 25% increase. That inflation has been driven by double-digit price hikes for almost every basic foodstuff over the past 12 months. Dairy products are as much as 200% more expensive since last year in some countries. Maize prices hit a 10-year high in February. Wheat is up 50%, rice up 16% and poultry nearly 10%.

On the demand side, one of the key issues is biofuels. Biofuels, made from food crops such as corn, sugar cane, and palm oil, are seen as easing the world's dependence on gasoline or diesel. But when crude oil is expensive, as it is now, these alternative energy sources can also be sold at market-competitive prices, rising steeply in relation to petroleum.

With one-quarter of the U.S. corn harvest in 2007 diverted towards biofuel production, the attendant rise in cereal prices has already had an impact on the cost and availability of food. Critics worry that the gold rush toward biofuels is taking away food from the hungry. Jean Ziegler, the U.N. Special Rapporteur on The Right to Food, recently described it as a "crime against humanity" to convert food crops to fuel, calling for a five-year moratorium on biofuel production.

Leaders in the biofuel industry respond that energy costs are more to blame for high food prices than biofuels. "Energy is the blood of the world, so if oil goes up then other commodities follow," Claus Sauter, CEO of German bioenergy firm Verbio said following Ziegler's comments. Others argue that cleaner-burning biofuels could help stem the effects of climate change, another factor identified by the FAO as causing food shortages. Ghurkan notes that scientists believe climate change could be behind recent extreme weather patterns, including catastrophic floods, heat waves and drought. All can diminish food harvests and stockpiles. But so can market forces.

 

Re: Peak Oil; what it is and how it will impact your life

Thats how i see it in a nut shell. I cant complain too much though, it has created a massive movement in my Field of work.

 

Re: Peak Oil; what it is and how it will impact your life

An article was touted in another thread about the massive new discoveries in Russia. Seems Russia is in decline as much as any other producing nation. We are finding some new fields and supplies but we are sucking them down at a record pace.



Fears that Russian oil output has hit its peak
By Carola Hoyos and Javier Blas in London
Published: April 15 2008 03:00 | Last updated: April 15 2008 03:00

Russian oil production has peaked, one of the country's top energy executives has warned, fuelling concerns that the world's biggest oil producers cannot keep up with rampant Asian demand.

The warning comes as crude oil prices trade near their record high of $112 a barrel, -stoking inflation in many countries.

Leonid Fedun, vice-president of Lukoil, Russia's largest independent oil company, told the Financial Times he believed last year's Russian oil production of about 10m barrels a day was the highest he would see "in his lifetime". Russia is the second-biggest oil producer.

Mr Fedun compared Russia with the North Sea and Mexico, where production is declining sharply, saying that in the oil-rich region of western Siberia, the mainstay of Russian output, "the period of intense oil production [growth] is over".

The Russian government has admitted that production growth has stagnated, but has shied away from saying that postSoviet output has peaked.

Viktor Khristenko, Russia's energy minister, said last week: "The output level we have today is a plateau, stagnation."

Russia was until recently considered to be the most promising oil region outside the Middle East. Its rapid output growth in the early 2000s helped to meet booming Chinese demand.

The trend, however, has turned, with supply dropping below year-ago levels for the first time this decade, according to the International Energy Agency, the energy watchdog.

Russian Oil Slump
Stirs Supply Jitters
Production Decline
Is First in 10 Years;
Squeeze in Siberia
By GUY CHAZAN and NEIL KING JR.
April 15, 2008; Page A1

Russian oil production, for years a vital source of new supplies for world markets, is showing signs of a slump, adding to uncertainties that have helped push oil prices to record highs.

Russian output fell for the first time in a decade in the first three months of this year, according to the International Energy Agency, which represents industrialized oil-consuming countries. It said Russian production averaged about 10 million barrels a day, a 1% drop from the first-quarter of 2007.

Declining production from the world's largest oil producer and one of its largest exporters puts further pressures on an already strained market and adds to the potential for higher prices for a global economy coping with a slowdown. Global production constraints -- along with surging demand, rising oil-field expenses and political instability in petroleum-rich regions -- already have sent oil to more than $110 a barrel from $30 in about four years.

In New York futures markets Monday, oil reached another new high on the falling dollar and other supply constraints. It settled at $111.76 a barrel, up $1.62, or 1.5%.

Industry watchers and Russian officials generally blame the country's production slowdown on a combination of weather and tight electricity supplies in some parts of the country. In a longer-term worry, they also point to aging Siberian fields that once fueled its production growth.
Many Russian oil officials say the industry could still resume growth. Some Western analysts point to more optimistic data and forecasts. Citigroup said in a report late last month that it expects Russian oil volumes to increase by 1.5 million barrels a day between now and 2012, largely thanks to new projects in eastern Siberia.

Still, it cautioned: "Russian oil production growth is no longer to be taken for granted."
The IEA predicts Russian oil production will resume growth this year. But it estimates an annual increase of only 0.8% over 2007, compared with an average 2.5% in the past three years and much faster growth before that.

Russia's energy ministry expects a rise of 1.8%. But earlier this month, Yuri Trutnev, the nation's natural-resources minister, said on Russian television that the country's full-year production may be lower than last year's.

Russia's stumbling production growth highlights a troubling reality: Despite soaring oil prices in the past five years, crude output from nations outside the Organization for Petroleum Exporting Countries has remained essentially flat since 2005, defying the normal link between high prices and increased production.

The tightness has increased the pressure to find new supplies outside OPEC. Shares of Brazil's Petroleo Brasileiro SA, known as Petrobras, surged Monday after it reported a potential big new find off that country's coast.

Exploration Costs
The reasons for the non-OPEC plateau range from spiraling exploration costs to the increasingly remote climates where new oil pockets are being found. Also, many major sources are aging. Europe's North Sea, Alaska's Prudhoe Bay and Mexico's Cantarell field in the Gulf of Mexico have all seen declining output.

The economic downturn in the U.S., by far the world's largest oil consumer, has taken some steam out of oil demand. But fast-growing Asia and other places are still adding to demand, and many analysts worry that a global supply pinch later this year could send prices higher.

"There isn't a lot of supply coming on right now, so this [lack of non-OPEC growth] is framing the whole narrative of the market," said Roger Diwan, a financial energy adviser at consulting firm PFC Energy in Washington.

OPEC supplies more than a third of the world's petroleum needs, which reached about 87 million barrels of oil a day in the first quarter, according to the IEA.

Russia's rising affluence, leading to greater domestic consumption, is also reducing the amount it can export to the rest of the world. Driven by Russia, demand from the former Soviet Union is expected to rise 1.6% this year to 4.2 million barrels a day.

In an interview, Leonid Fedun, vice president of OAO Lukoil, one of Russia's biggest oil companies, said a mild winter and higher temperatures mean Siberia's icy ground is less stable, making it harder to move drilling rigs between oil wells.

He acknowledged that the fall also reflects a longer-term trend -- the depletion of Siberia's older fields. "Western Siberia is repeating the fate of Prudhoe Bay, with a time lag of five to six years," he said. "When the well's productivity falls, you have to keep drilling more and more. You've seen it in Alaska and the Gulf of Mexico, and now you're seeing it in Siberia."

Russian oil output collapsed after the breakup of the former Soviet Union when the price of crude plummeted and investment dried up. But it began to recover in 1999 as newly minted private oil companies used Western techniques to rejuvenate mature fields. Russia became a major source of new barrels. Its petroleum output grew from six million barrels a day in 1996 to an average of about 10 million barrels last year, according to the IEA. Saudi Arabia during the same period went from around 7.9 million barrels a day to 8.5 million barrels last year.

Business investors have grown wary because the Kremlin has increasingly intervened in the energy sector. Russia nationalized former oil giant OAO Yukos and forced foreign investors like Royal Dutch Shell PLC to sell half its stake in a big project off Russia's east coast to the state-run OAO Gazprom. TNK-BP has also come under pressure: Last month, intelligence services arrested one of its employees on suspicion of industrial espionage. TNK-BP said it is cooperating with authorities.

In an effort to kick-start investment, Russia's government recently unveiled a $4.2 billion tax cut for the sector. It was broadly welcomed in the industry. "It's a very important point that the Russian government has realized that with cost growth and inflation, there needs to be additional relief for companies to develop fields," said Bob Dudley, chief executive of TNK-BP, BP PLC's Russian joint venture.

It may not be enough. Lukoil's Mr. Fedun says Russia's oil industry needs $1 trillion of investment during the next 20 years just to maintain production of 10 million barrels a day. Analysts worry the tax cut is inadequate to achieve that. "We still do not see it generating enough free cash flow to the industry...to support higher investment levels," Citigroup said in its report.

Russian oil officials and the world's oil companies say the country needs to open up the remote, untapped expanses of East Siberia to ensure future growth. But the lack of infrastructure such as roads and pipelines and the harsh operating conditions limit growth. Oil companies also have been deterred by heavy taxes that provide little incentive to invest in new production.

Oil companies are dealing with the depletion of reserves in western Siberia by diversifying. Lukoil, for example, is focusing on new areas like the North Caspian Sea, and expanding abroad in places like Turkmenistan.

Falling Short
New developments so far are failing to offset the decline. Sakhalin 1, a huge project off Russia's east coast led by Exxon Mobil Corp., accounted for much of Russia's production growth in 2007. But output there will drop by more than 25% this year, according to OAO Rosneft, the state-run oil giant that is a partner in the project. In a statement, Exxon said it "has met and continues to meet or exceed the project production targets approved by the Russian authorities."

Most forecasts predict that liquid-fuel demand world-wide will hit 100 million barrels a day by 2015. To meet that, producers will first have to make up for steep declines in existing fields. That decline rate now subtracts an estimated 4.5 million barrels a day from annual output.

Former big producers like the U.K., Norway and Mexico are also fighting to squeeze oil from once mighty but now increasingly old and tired fields. In Canada, where output is increasing thanks to massive investments in Alberta's oil sands, production costs now top $65 a barrel by some estimates. Mexico last week pushed a plan to allow its state oil company to enter into service agreements with foreign oil companies, but observers said it may not be enough to attract big investment.

There are bright spots on the production front. Analysts point to big projects in the Caspian as well as deep-water projects off Australia, Brazil and in the Gulf of Mexico, including BP's long-delayed Thunder Horse platform.

 

Re: Peak Oil; what it is and how it will impact your life

How Far is the US From Food Shortages and Food Riots?
by Monica Davis ( davis4000_2000 [at] yahoo.com )
Saturday Apr 12th, 2008 2:37 PM

As Americans complain over high gasoline and food prices, many third world countries are experiencing food riots over price and scarcity of food. In some parts of the word rice is so expensive that it is transported in heavily guarded convoys and farmers guard their fields from thieves.

Food riots are becoming more common, as more land and crops are being diverted from the food chain by the world biofuels industry. According to an investment magazine, the crisis shows no signs of weakening. Food, the bread of life, is fast becoming the "gold" of the Twenty-first century.

Fatal food riots in Haiti. Violent food-price protests in Egypt and Ivory Coast. Rice so valuable it is transported in armoured convoys. Soldiers guarding fields and warehouses. Export bans to keep local populations from starving. (Globalinvestor.com)

The face of food security is rapidly changing around the world and there are no quick fixes experts say. What worries many is that food stockpiles are at historic lows. In the United States alone,
stockpiles of wheat hit a 60-year low in the United States as prices soared. Almost all other commodities, from rice and soybeans to sugar and corn, have posted triple-digit price increases in the past year or two. (Ibid)

Experts say the high prices will continue for years, putting billions of people at risk for malnutrition or starvation. World leaders continue to cast fearful eyes at the burgeoning bio-fuels industry, noting that the competition generated by the industrial biofuels industry and food agriculture is pushing up food prices and making it more profitable to grow fuel crops for industrialized countries than it is for big farmers in Third World countries to grow food for their own citizens.

What has put many world leaders on notice is the fact that this artificially generated food crisis has not yet peaked. As of this writing, no one knows when the situation will reach a crescendo, or to what extent this demand will affect food security and political stability in the world.
Many believe that the food crisis is in its infancy and they worry about increasing food-based political instability worldwide.

British Prime Minister Gordon Brown said this week he's worried that ethanol production is pushing up food prices everywhere, and he called for an urgent review of the issue. Economist Dr. Hazell has said that filling an SUV tank once with ethanol consumes more maize than the typical African eats in a year. (Ibid)

So far, Americans have been able to weather the storm. While rising fuel and food prices have generated grumbling from the populace and hand wringing from the politicians, this country has yet to experience the level of social unrest and rioting that high food prices have generated in other parts of the world.

In Haiti, ongoing instability and riots over food prices has led to the probable ousting of the nation’s Prime Minister. Newswires are reporting "A Haitian senator says that parliament has voted to dismiss Prime Minister Jacques Edouard Alexis following deadly riots over rising food prices." (Wire services)


A few analysts believe that the United States is on the verge of a major economic revolution, a process, which will change where we live, what we eat, and how we view agriculture. Looking at the rumbles from around the world we are already seeing wars over oil and energy resources, not to mention the violent eviction of traditional farmers in South America and other parts of the world by the industrialized bio-fuels industry.

The fight over finite land resources is slowly taking shape out of sight of most of the United States as agribusinesses lay claim to land around the world. Agro-conglomerates chase natives off tribal lands in South America, Indonesia and parts of the Far East at gunpoint. Murder over land continues in the Third World, as conglomerates move onto jungle and rain forest land, clearing acreage with slash and burn campaigns.

What was once climate producing tropical rain forest has become fields for sugar cane, corn and other biofuels. More profitable biofuel crops have now deprived the food chain of a large supply of corn and other crops, driving up the cost of corn-based food such as corn meal, tortillas, corn syrup and a hundred other crops and products which grace our tables at ever greater cost.

The food riots in Haiti are mirrored by riots in parts of Africa and Asia, sending shock waves throughout the Third World. According to a report from the United Nations, the 60 per cent price increase in the price of corn and feedstock over the past two years can be directly traced to the increased demand on corn and soybeans made by the biofuels industry. The United States, as the world’s largest exporter of corn, has diverted millions of pounds of corn and soybean crops to the growing biofuels industry, creating a market that makes fuel crops more profitable than food crops. National surpluses of grains have give way to increased demand for biofuels, driving up the price of corn and grains around the world. (World Bank)

Traditional food crops—rapeseed, maize (corn), palm and soybean are in demand by both food agriculture and the growing biofuels industry, creating an increased competition, which is driving up food costs by double digits, generating food riots around the world. Thai farmers and other farmers are now guarding rice crops, as skyrocketing grain prices are leading to crop theft and food riots around the world. According to international reports:

Rice farmers here (Thailand) are staying awake in shifts at night to guard their fields from thieves. In Peru, shortages of wheat flour are prompting the military to make bread with potato flour, a native crop. In Egypt, Cameroon, and Burkina Faso food riots have broken out in the past week. (Thoughtcriminal.org)

In Thailand and other rice and grain producing nations, food theft is rising. Crops are stolen directly from fields.

The reported thefts in five rice-growing provinces in central Thailand are the first signs of criminal activity in this region stemming from the sharpest global spike in commodity prices since the oil crisis in the mid-1970s. Across the world, higher food prices are triggering thefts and violence – both by people who can’t afford to eat and those who want to make an easy buck. (Ibid)

The United States produces 46% of the world’s biofuels, with Brazil coming in at a close second with 42%. (Biofuels: the Promise and the Risks). As a world leader in food exports, grain in particular, the United States has altered world grain markets by diverting grain into fuel production, thereby increasing demand for grains with a resultant rise in the price of the commodity because of demand. The ensuing market shortage has generated price increases in the world grain market, making food staples too expensive for much of the world’s poor to afford.

So far, Americans are mostly bystanders in the game, content to grumble at the gas pump and complain in the grocery aisles. As a "First World" nation, the United States so far has not been subject to the food riots, which we have seen in Haiti and other parts of the world. Americans have more per capita income than much of the world; hence the crisis of the Third World, so far, is inconvenience in the "First World" and in developed nations such as the United States.

That said, however, we must understand that this situation is not sustainable. While Americans do have more disposable income than the rest of the word, that income is not unlimited and our food supply is much more vulnerable than we think. When it comes to food security, both in terms of supply and accessibility, this country is much more vulnerable than we think.

As one retired grain salesman noted, most of the nation’s grain is moved around the country by just TWO railroads. Little is stored in the event of disaster and the whole system is extremely vulnerable. While we in the United States look at the food riots in other countries with a sense of disbelief, we are not immune. Under the right circumstances, we could be in the same boat. (Ibid)

In order for riots to break out the whole food supply doesn't have to be wiped out. It just has to be threatened sufficiently. When people realize their vulnerability and the fact that there is no short-term solution to a severe enough drought in the Midwest they will have no clue as to what they should do. Other nations can't make up the difference because no other nation has a surplus of grain in good times let alone in times when they are having droughts and floods also. (Robert Felix, "US Food Riots Much Closer than You Think")

Critics say the US is currently too preoccupied with foreign excursions and oil to pay attention to food security, particularly how concentration of suppliers and processors threaten the food chain. The highly concentrated meat processing industry has generated millions of pounds of recalls this year. Outbreaks in e.coli and other food borne pathogens continue to haunt the headlines, as food prices rise around the world.

The concentration of food processing, cultivation and distribution into the hands of a few companies is wrecking havoc around the world. A Canadian reporter noted the connection between market concentration and price increases around the world:
In Mexico and most other countries, a handful of international companies is controlling more and more of the food production line—from growing crops to purchasing crops from farmers, to warehousing, processing and distribution.

Carlsen said investigations following the tortilla crisis found that huge stores of corn in warehouses had cut down the supply and led to a jump in prices. (Matthew Little, Epoch Times, "Food Prices Skyrocket Amidst Growing Shortages.")

Food security, that is the availability and affordability of food, has been pushed aside by the War on Terror, and continues to lag behind our awareness, despite their being linked together in a dangerous dance of death, which has been created by the bio-fuels industry. Ultimately, the price of oil, depends on supply, demand and risk (War), and the price of food has now become dangerously linked to the energy market by the requirements of the fuel crop industry. We now are dealing with a ‘double whammy’ that is dangerously impeding our food supply.

Living in the "Breadbasket of the World," it is hard for most Americans to even conceive of the idea that food could become scarce in this country. Few of us are paying attention to the close relationship between biofuel, grain crops and price inflation.

Think tank analyst Pat Mooney noted the close connection between corn and oil prices.

"The market place does now tie the price of a bushel of corn to the price of a barrel of crude and when it does that it means that poor people are going to lose out," said Mooney. (Ibid)

The world’s grain and food markets have been turned on their heads. Where once the price of fuel and oil-based fertilizers used to cultivate crops added to the cost of the crop, now the use of crops as fuel generates still another tier of demand on the world’s soils and crops.

With finite amounts of cropland, competition between fuel and food crops for land and economic resources, and unpredictable natural disasters, wars and pestilence waiting in the wings, our food supply is not as secure as we think it is.

Even the United States is not immune from the potential for food shortages, food riots and food insecurity. We’re just blind to the possibility.

 

Re: Peak Oil; what it is and how it will impact your life

So we know now where those record profits are going.


Global offshore drilling spend to reach $80 billion by 2012
By OGJ editors
HOUSTON, Apr. 16 -- Over the next 5-year period to 2012, high oil prices will continue to drive oil and gas industry spending on offshore drilling to a total of $380 billion. This is an increase of nearly 60% compared with the $240 billion spent in the previous 5 years, according to a forecast released by Douglas-Westwood Ltd. and Energyfiles.
The latest edition of the "World Offshore Drilling Spend Forecast 2008-12," released Apr. 14 by the two research firms, forecasts that by 2012 the global drilling market will be worth an estimated $80 billion, more than doubling since 2003.

Based on data derived from Energyfiles' global database, nearly 18,000 offshore wells were drilled over the last 5 years. "The forecast for the next 5 years is generally stable but with a peak in 2010 and a slight dip in 2011, ultimately equaling a little over 20,000 for the period, and representing a rise of 13%," the forecast said.

Currently, Asia is seeing the highest activity, followed by North America and then Western Europe, the forecast said. "These areas are expected to continue to see higher drilling levels although average numbers will decline significantly offshore Western Europe," said Michael R. Smith, report author with Energyfiles.

"With oil prices more than quadrupling over the past 5 years," said Steve Robertson with Douglas-Westwood, "drilling rig utilization has reached close to 100% and maximum day rates have soared from $225,000 to more than $520,000, with a future contract agreed at $637,000 for a latest generation deepwater rig."

Deep waters rising
Substantial growth, the forecast said, is taking place in the deep water. In 2007 it is estimated that nearly $50 billion was spent on shallow-water drilling compared with $18 billion in the deep water. However, by 2012, deepwater spending is expected rise by more than 40% while spending on shallow-water drilling is expected to increase by just 6%.

"Despite today's political environment there are still lots of offshore opportunities," Smith said. Even within the Organization of Petroleum Exporting Countries, Smith said, "activity is now increasing." For example, Nigeria, Indonesia, and Angola—the three OPEC countries with deepwater potential—are promoting outside investment into their deepwater basins, Smith said, adding, "And countries around the Persian Gulf are drilling many more shallow-water wells, as well as encouraging foreign companies to develop their huge gas reserves."

Smith said shallow-water development spending in the near future "will be generally flat although will show modest gains after 2010." Some areas, however are seeing increases, he said, such as the Persian Gulf and in Russia and Azerbaijan, "where unexploited areas are being developed in massive, long-term schemes."

Increasing more rapidly still, deepwater development drilling is increasing rapidly "in all regions," Smith said, "where fields have been discovered, supported by the many ultradeepwater projects now proceeding, especially in West Africa, Brazil, and the Gulf of Mexico."

Smith concluded, "Though rigs have increased their relative share of drilling spend, the money is not just being spent there. In 2007 it is estimated that 37% of expenditure was billed by the rig contractors, just over a fifth was earmarked for support, 6% went towards geoscience, and the remainder went towards well engineering.

"But as the industry probes more complex geology, spending on anything related to longer and more tortuous well paths is expected to grow disproportionately to other technologies," he said.

To access this article, go to:
http://www.ogj.com/articles/article_display.cfm?ARTICLE_ID=326018&p=7

 

Re: Peak Oil; what it is and how it will impact your life

I don't know if you all will find this as interesting as I do. Myself and other oilmen have been watching this develop and it is amazing. A few years ago this would have hardly made a mention in industry papers but with todays high oil prices in the news daily this is being carried by media around the world. The existence of "shale oil" in the mid-continent region has been known for decades. It hasn't been exploited because of the extreme financial investment needed to make it anywhere near a viable source. These wildly optimistic reports are based on a report by the USGS, known in our industry for thier vast overstatements and woefully inaccurate reports.

Read the statements by Marathon, who holds lease on 320,000 acres in this "new Saudi Arabia". They are forecasting that thier developement will yield 20,000 barrells a day by 2012! That's nowhere near a "new Saudi Arabia".

The only ones who are "giddy" over this new discovery are the speculators.

This is a good discovery and it will certainly help to add to our national reserves and production, but this pie in the sky reporting and "giddy" feelings are premature. I suppose it is just reaction to high prices. People are jumping on every piece of encouraging news.

I would just warn folks to take these reports with a grain of salt and not let these "giddy" reporters get our hopes up too much.

And then you see reports like this and it just fuels the "we have plenty and the oil companies are hiding it" rhetoric.

We wouldn't even be looking at a high risk, high expenditure, venture like this if prices weren't so high.



Bakken Area The New Saudi Arabia?
by Kerry Laird
Rigzone 4/11/2008
URL: http://www.rigzone.com/news/article.asp?a_id=60085

While recent advances in heavy oil recovery have proven useful in bringing the highly viscous liquid to surface, the United States Geological Survey (USGS) estimates of Bakken Formation hydrocarbons released April 10 are being met with a ticker-tape parade, as well as a tad bit of skepticism.

"It's not a silver bullet," said USGS scientist Brenda Pierce, "but it is very substantial."

As operators wait to "digest" the information offered by the USGS, some in the industry are giddy over the possibilities.

One intrepid industry writer has even named North Dakota "the next Saudi Arabia."

Still, many of the current operators contacted by Rigzone said it will take time to determine how much of the reserves reported are commercially viable.

The disbelief in the so-called inflated numbers was rebuffed by a North Dakota Department of Mineral Resources representative, who said that the methodology of the USGS should not be undervalued since they use the best-available practices with plenty of assistance from independent operators and engineers.

As one of the largest operators in the area, Marathon Oil said it is continuing on its current path with the plans it previously had in place before the USGS report.

Marathon spokesperson Lee Warren told Rigzone that Marathon has "long-term plans in the area," but at this time there will be no changes based on the USGS estimates. Since the company has not had time to review the USGS report, Warren said Marathon was not yet prepared to issue a response to the estimates.

Marathon holds 320,000 net acres within the expanses of the Bakken Formation, located in North Dakota and eastern Montana. According to the company's web site, the acreage "has the potential to add more than 20,000 net barrels of oil equivalent per day of production by 2012."
Altogether, Marathon anticipates drilling approximately 300 wells over the next five years.

"The company draws upon its extensive experience in reservoir characterization, horizontal drilling, well stimulation, and commercial and marketing expertise in the Rocky Mountain Basins to leverage this substantial position in the Bakken Formation," Marathon stated on its Bakken holdings.

In "Delivering America's Energy Security," Marathon Senior Vice President Worldwide Production Steven Hinchman, addressing a largely North Dakota audience at the Great Plains Energy Exposition, said "North Dakota has an important role to play in how we approach the challenges of delivering America's energy security and how we can remain competitive in the global race for energy."

Production in the Bakken Formation is not your typical operation. Characteristically, the highly organic black shale source rock encases a 30 to 70 foot sandy dolomitic horizon. Wells are usually drilled to 10,000 feet of true vertical depth before extending horizontally 10,000 feet or further.
Other operators in the area are digging in for the long haul also.
Hess Corporation also has big plans for Bakken in 2008. The company will increase the number of drilling rigs from six to eight while expanding facilities for crude oil production.

Last year, Brigham Exploration increased its total land acquisition in the area to 174,000 acres.

Other players in the Bakken battle for heavy oil include Kodiak Oil & Gas, EOG Resources, Whiting Oil & Gas, Continental Resources, Petroleum Development Corporation and Petrobank.

The Bakken formation is found in the Williston Basin, underlying much of North Dakota, eastern Montana and extending up into southern Saskatchewan. The Mississippian aged Bakken is an extensive regional resource play with the oil contained mostly in siltstones and thin sandstone reservoirs with low porosity and permeability.

 

Re: Peak Oil; what it is and how it will impact your life

Viscous, eh? Well they aren't called "tar sands" for no good reason. Ft. McMurray proved that. (I think, but do not know, that is the same formation, just closer to the surface in Canada.)

 

Re: Peak Oil; what it is and how it will impact your life

I was going through some files and found this from 2006. I never posted it. It is a pretty good summary.


The Truth About Oil
Fact . . .Over 1.5 TRILLION barrels of oil equivalent have been produced since Edwin Drake drilled the world’s first oil well in 1859. The world will need that same amount to meet demand in the next 25 years alone. And if you’re thinking that it’s all for your gas tank, you’re only half right . .

You see, petroleum isn’t just at your local Gas n’ Go station. It’s found in virtually every product that you buy, own and use. Be it your shoes, your Starbucks coffee cup, or the computer on which you are reading these very words.

And I’m not just talking about transportation from the factory to the stores where goods like these are purchased and consumed. I’m talking about the petroleum used in making the product itself and, more importantly, the petroleum needed for the technological breakthroughs that made these products a possibility.

Chew on this:
• To construct the average car, approximately 27 to 42 barrels of oil, or 1,100 to 1,700 gallons, will be consumed.
• Making average desktop computer requires more than 10 times its weight in fossil fuels.
• Every calorie of food eaten in the U.S. requires roughly 10 calories of fossil fuels.

You see, we simply can’t have computers, silicone, wire coverings, outlets, artificial limbs and electron
microscopes without oil. Whether you want to believe it or not, oil does make the world go ’round.

Now, if you’re curious and want to see how advanced a civilization can be without the use of petroleum, all you have to do is head to what gawking Long Island tourists call "Amish Country." To the locals, it’s Lancaster, Pennsylvania.

These people, whose everyday lives have sadly become a tourist attraction, are living in suspended animation at the peak of their own society, before petroleum came into the mix.

No electricity, no flashlights, no plastic, no cars, no telephones, no Starbucks, no sneakers, no health clubs, no computers, no supermarkets (except to sell the wooden products they’ve made), no cell phones, and no Tasty Kakes. To which the modern world as a whole says: no thanks!
Today, talk of "peak oil" is dismissed by big oil companies as pure nonsense—a rumor spread by those who would take us back to the Dark Ages.

But that couldn’t be further from the truth.
Far from being a rumor, this problem has even the King Kong of oil companies in a thinly disguised frenzy to find its next couple of million barrels. As you’ll see, this problem has been piling up, ignored, for more than 30 years. Now the dominoes are all lined up and the first one is about to tip.

The Crippling Power of Oil
People who think that the oil crisis of 1973 was strictly an embargo have another think coming.
It was an omen. And the first sign of our vulnerability to the ever-dwindling supply of oil in the world.
You see, in October of 1973, Middle Eastern OPEC states stopped exports to the U.S. and other western nations. They meant to punish all the infidels that supported Israel, their foe, in the Yom Kippur War. It was then that these oil-rich desert countries realized the extent of the world-halting power they possessed.
The lesson nearly drove us mad . . .
Blocking just 5% of our imported oil supply was enough to nearly quadruple the price overnight.

It was a lesson we should never have forgotten. But it wasn’t the first time—or the last—that oil, not weapons, proved to be the true "war machine."
In World Wars I and II, sabotaging the German supply lines was quite possibly the most crucial element to thwarting Germany’s military.

Oil is so important to the strength of a nation’s economy that it was the United States’ final plan of attack to crush the Soviets.During the late summer of 1985, the Reagan administration had a sudden stroke of genius.
Tired of the stalemate, the American government knew that the only alternative to physical destruction of the Soviet Union was to nuke their economy. And knowing that much of its economy was based on two exports—oil to Europe and military weapons and training to anti-Western countries—we found an in.Mindful of the saying "the enemy of my enemy is my friend," we decided to make a little pact with Saudi Arabia—an offer the Saudis couldn’t refuse.You see, high oil prices from OPEC kept Soviet exports to Europe and other countries profitable. It also allowed Iraq, Iran and Syria to purchase advanced Soviet weapons and training. And those countries had been threatening Saudi Arabia for years.The high oil price also allowed the Soviet Union to keep a military presence in South Yemen, Syria, Ethiopia and Afghanistan.The idea was to bankrupt the Soviet Union by having Saudi Arabia drop its oil prices far below what the Soviets could afford to sell for.
Once non-Soviet prices were lowered, former Soviet oil clients would cease buying from the USSR, killing the communist giant’s income. It would also harm the Soviet economy because Iraq, Iran and Syria would no longer be able to sell their oil at prices high enough to be able to afford Soviet weapons and training.It was a sucker punch to end the Cold War, a numbers-crunching accountant’s wet dream . . . and it was just crazy enough to work. But that’s also where the problems begin.In short, we taught the Saudis how to cook the books and how to make their supplies appear larger than they really were to keep the oil prices low.
In December 1985, the price of oil was $26.46. And then, suddenly, on March 31, 1986, it plummeted to $10.25. The Soviets couldn’t keep up, and their economy began to collapse.Our part of the bargain for Saudi Arabia’s aid in bankrupting the Soviets would become known as Operation Desert Storm.But the book-cooking lessons learned by the Saudis would soon become widespread among OPEC nations—and even among Big Oil companies. And after decades of inflating their actual reserve numbers without finding any more significant oil resources, the future of the world’s oil is falling apart faster than a canvas shoe on a rainy day.You may be asking yourself, "What do you mean they aren’t finding any more oil? There’s tons of oil being discovered, isn’t there?"

Well, it’s like I mentioned before: Since 1859, we have consumed 1.5 trillion barrels of oil. And with our forecasted rate of consumption, it will take only 20 years to consume another 1.5 trillion. In the past two years alone we’ve consumed over 60 billion barrels of oil—and that rate’s about to take off.

With an exponential increase in consumption, we are faced with a dire problem.
The number of "giant" oil field discoveries has declined dramatically since the 1960s. The large reserves and production capability of these fields are essential to increase world oil production; the combined output of smaller oil fields serves at best to offset declines in the older giants. Unfortunately, since 1990, there have been few giants discovered in the world—a total of 35—and none of these has a production capability above one million barrels per day.

Before the 2006 "Jack" oil field discovery, which we all know has problems of its own, the last confirmed giant find occurred in 2003 off the Brazilian shore. But the oil found there contains mostly heavy (dirty) oil and is not expected to come on-line until 2011.

Although it’s a sizable find, the 700 million-barrel Papa-Terra field lies in almost 4,000 feet of water (Jack is under 7,000 feet of water, and more than 20,000 feet under the sea floor.) Curiously, both the Papa-Terra and Jack discoveries caused Big Oil to jump for joy like a fifth-grader getting a snow day.

The size of the Jack field is still to be determined. But to put the size of Papa-Terra into context, at current global oil consumption rates, that amount of oil is consumed every 8.3 days! The world needs many more
giants just to replace the consumed reserves. And we aren’t coming close. In fact, we would need 85 Papa-Terras to make up for global consumption over the last two years.

The world’s largest oil field, Ghawar in Saudi Arabia, was discovered in 1948 and currently produces approximately 4.5 million barrels per day. With an estimated 60–70 billion barrels in remaining reserves, it could continue producing for several decades, but nothing of its size has been discovered since. The importance of Ghawar and other older giant fields to global oil production can not be overstated.

Twenty years ago, 15 fields had the capacity to produce more than one million barrels per day. Today only four fields can produce that much:
• Ghawar (Saudi Arabia)
• Kirkuk (Iraq)
• Burgan (Kuwait)
• Cantarell (Mexico)
But I’m only getting started. You see, it gets worse—much worse . . .

The Last Domino Is About to Fall
There’s an issue that has the world’s finest geologists, physicists and investment bankers as nervous as an agoraphobic in Central Park.
These rational and conservative professionals are absolutely terrified by the fact that there soon won’t be enough oil to keep the world’s economies running. And the fear is spreading faster than the panic after an Orson Wells broadcast.The reason for their terror starts with an indisputable fact . . .Oil production follows a bell curve. But demand only increases.

As much as some may dream, oil is not renewable. It works like this:
Every year following the peak of oil production (believed to have happened already by highly respected researchers, geologists and investment bankers like Matthew Simmons), the world’s output will go into steady decline. And the rate of decline is staggering . . . as much as 10% a year! And this isn’t just a one-field observation. It is true for every oil-producing country and the world as a whole.

Assuming, for simplicity’s sake, that the world reached its peak oil production back in 2005, that would mean that by 2025 there would be as much oil produced as there was in 1985. Fine, there was a lot of oil for the world in 1985. Only there’s a slight hitch.

By 2025, the world’s demand for oil is going to be 60% greater than it is today, while production capacity is thrown back to 1985 levels. This is due to the world’s rapidly growing population and increasing industrialization. China’s annual oil consumption growth rate of 7.5% and India’s of 5.5% are both expected to take a quantum leap over the next decade.

It’s easy to see there’s trouble ahead. But rising demand is only a tiny part of our problem.

How 72.4% of ALL Statistics Are Made Up on the Spot
Remember the Reagan strategy for bankrupting the Soviets? Well, it’s now come back to haunt us.

During that time, something weird was happening in the Middle East. In some miraculous way, the OPEC countries were reporting that their new reserves weren’t depleting. In fact, they reported them growing. It’s something I like to refer to as "The great oil swindle of the 1980s."
The "official" reserve estimates are reported by government-owned oil companies and are often bloated to suit political and geopolitical interests.

Fact is, many OPEC governments see their respective country’s oil reserves as more political than geological. And they use the numbers as a way to add to the value of their "stock" in the geopolitical market.
No one’s sure exactly how much more crude OPEC’s oil fields still contain. But there’s strong evidence to suggest the official oil reserve numbers put out by OPEC governments have been fudged on purpose. Let me explain . . .
Back in 1989, Saudi Arabia claimed to be sitting on a total of 170 billion barrels of oil. But only a year later—without the discovery of any major new oil fields—the official reserve estimate somehow grew 51.2% to 257 billion barrels.

One has to wonder exactly how any country increases its oil reserves by 87 billion barrels without finding any major new fields.
In fact there’s no way they could. The truth of the matter is probably that this increase came from a little "creative accounting."
Saudi Arabia wasn’t the only country to significantly—and mysteriously—add to their oil reserves.

Five other OPEC countries also magically added more reserves, virtually overnight. The United Arab Emirates managed to increase their reserves by nearly 200%!

It seems OPEC was rubbing the magic oil-lamp and passing it around like a Playboy magazine at an all-boys school. And for a while, the Middle East abacus trick worked like a charm.

But in a 1998 report, the International Energy Agency (IEA) finally admitted to knowing about some of OPEC’s wizards cooking their books.
Petroleum Intelligence Weekly found something spine-tingling in Kuwait’s filing cabinet on January 23 of last year that would, the very next day, raise oil prices by $2.13 per barrel.

Kuwait, the world’s fifth largest oil producer and an upstanding member of OPEC, had less than 50% of the oil reserves that it officially claimed. And that wasn’t the bad news.

Their findings reported that Kuwait’s now 49 billion barrels of oil didn’t distinguish between their proven, possible and probable reserves.
In other words, they were pretty sure they had 49 billion barrels of oil instead of the 99 billion they reported to have. But they don’t know how much of that 49 billion barrels can actually be extracted from the field.

Though it’s long been suspected, until then no one had caught a glimpse of "the inside story." Still, OPEC claims that they can increase their production to 20 million barrels per day. But how can they increase their output when it’s been found that Middle East oil nations, even Saudi Arabia, are pumping oil from known "post peak" fields? There’s one answer . . .

OPEC Has Passed the Peak
According to the U.S. Department of Energy’s special report, the world will face "peak oil" by 2015. But many of the world’s best informed professionals think the end is much closer than that. Some, like Matthew Simmons, think that it has already passed as far back as 25 years ago. And their reasoning is disconcertingly solid.

"It’s no secret anymore that for every nine barrels of oil we consume, we are only discovering one." –The BP Statistical Review of World Energy.

Over in the Middle East the oil fields are already using water-flooding, a version of advanced oil recovery, to get out what oil they have left. That is a major sign that they have passed their peak of easily extractable oil.
This is especially true in Saudi Arabia.

The Saudis have over 300 recognized oil reservoirs. But 90% of the country’s oil production comes from only five fields discovered between 1940 and 1965.
They are:
• Abqaiq Field (official reserve estimate: 12 billon barrels)
• Safaniya-Khafji Field (official reserve estimate: 30 billon barrels)
• Berri Field (official reserve estimate: 12 billon barrels)
• Manifa Field (official reserve estimate: 11 billon barrels)
• And the granddaddy of them all: Ghawar Field (official reserve estimate: 70 billon barrels)

Ghawar is so large that its production accounts for about 60% of all Saudi Arabian oil. No wonder that, among the many prolific oil fields in the Middle East, the giant Ghawar field stands out as the region’s crown jewel.

The massive field was discovered in 1948. Production at Ghawar began two years later and reached a peak of 5.7 million barrels per day in 1981. This is the highest sustained oil production rate ever achieved by any single oil field in history.

During the mid and late 1980s, Ghawar’s production rate fell as it was restricted for market reasons. But by 1996, with the development of two other areas in the southern part of the field, production went back up above five million per day.

Since its discovery, Ghawar has produced more than 55,000 million barrels of the black goopy stuff. And there’s still more to be found deep under the earth. But no one is sure exactly how much crude the Ghawar oil field still contains. Like I mentioned before, there’s a lot of evidence that suggests the official oil reserve numbers put out by the Saudi Arabian government have been fudged on purpose. So it’s quite likely that there’s not as much oil at Ghawar as the Saudis say. In fact, there’s probably a lot less. And for the oil-starved economies of the world, that’s seriously bad news.

But it gets worse . . .
Water, Water Everywhere
In Saudi Arabia, seawater is injected into oil fields to increase pressure and stimulate production.

Now, normally only 30% of the oil in a reservoir can be extracted. But water injection increases that
percentage—known as the recovery factor—and maintains the production rate of a reservoir over a longer
period of time.
Over time, howe
ver, the volume of water that is lifted along with the oil increases, decreasing the volume of oil proportionately until, eventually, what flows out of the reservoir is almost pure water and the field is no longer worth operating.

Now here’s the bad news . . .
Saudi Aramco, the national oil company of Saudi Arabia and Ghawar’s operator, is currently injecting a staggering 7 million barrels of sea water per day back into the Ghawar field in order to prop up pressure.

And at the Offshore Technology Conference a few months ago, experts claimed that Ghawar was producing about 55% water, that is, more than half the fluid brought up the well!

For now Ghawar is still far too productive to abandon. But because of increasing problems with
managing the water, it is becoming very costly to maintain. One day in the very foreseeable future it will become uneconomical to extract Ghawar’s oil and the field will be abandoned.

Only 821 Days of Ghawar Oil Left

The "official" reserve estimate at Ghawar is about 70 billion barrels—about 12% of the world’s total. Yet, given the possible numbers fudging that’s been going on, who’s to say how much oil is really still there?
But the heck with it. Let’s give the Saudis the benefit of the doubt, and let’s assume that there really are 70 billion barrels of crude in the ground at Ghawar. Shoot . . . let’s even assume they’ll be able to get every last drop of crude out of the ground. So we have 70 billion barrels of oil, right?

So what!
According to the Energy Information Administration, the world consumes about 85.29 million barrels of crude per day.
That hypothetical 70 billion barrels at Ghawar would only last the world 821 days!
You read that right—the largest oil field in the world, under the best of circumstances, holds only enough oil to last the world just over two years!
And that figure hasn’t even taken into account the ever increasing worldwide demand.
Granted, Ghawar isn’t the only oil-producing field around. Still, it is the undisputed heavyweight champ when it comes to oil fields. And like they say, if the head dies, the body will soon follow.

Prognosis: Terminal
Today, the giant field produces about five million barrels per day—about 6.25% of the world’s total oil
production. This field is one of only four able to produce over a million barrels per day. (Cantarell in Mexico produces nearly two million barrels per day, Burgan in Kuwait produces 1.7 million barrels per day and Da Qing in China produces one million barrels per day.)
Ghawar is, therefore, extremely important to the world’s economy and well being. And unfortunately for the world, few know the actual state of Ghawar.

We do know that Ghawar’s production rate is in decline.In April 2006, a Saudi Aramco spokesman admitted that its mature fields are now declining at a rate of 8% per year, implying that Ghawar may have peaked.You read that right . . . it’s likely that Ghawar has peaked!And if Ghawar has peaked, Saudi Arabia has peaked. And if Saudi Arabia has peaked, the world has peaked!In fact, three of the four fields that I mentioned a moment ago are in confirmed decline!
This means several hundred thousand barrels of oil per day will have to be added every year just to make up for the diminished output. And you and I both know that’s not likely to happen.Saudi Aramco has estimated that total production capacity from all its fields in 2011 will be 10.15 million barrels a day. That’s about the same as its current capacity.But to meet expected world demand, says the United States Department of Energy’s research arm,Saudi Arabia will need to produce 13.6 million barrels a day by 2010 and 19.5 million barrels a day by2020.Saudi Arabia has been the world’s leading oil exporter for over three decades. Today, the country produces about 8 million barrels a day—roughly one tenth of the world’s needs. If Saudi production fellshort, the consequences would be significant.
And Ghawar’s decline is the fi rst sign of this happening.While the world has other large producers like Russia and Iraq, these countries do not have the massive reserves or excess oil capacity for export like those found in Saudi Arabia. Therefore they will not be able to make up for short supply. And the new oil fields found elsewhere around the globe are tiny when compared to Ghawar and therefore will not be able to deliver enough oil to make up the difference.
As a result, supplies will tighten and oil prices will increase further. The global economy will soon begin to feel the squeeze. Previous spikes in oil prices have helped cause recessions. But this time I’m afraid that the effects are going to be much worse.And we’ll soon fi nd that with every barrel they pump in the Middle East, the cost of extracting additional barrels accelerates.According to Matthew Simmons, considered to be the most knowledgeable man on the planet when it comes to oil, within the next three to five years, Saudi oil production is going to collapse by as much as 30–40%.Clearly, this would push oil well over $100.

Since Kuwait’s "late night shredding sessions" were discovered, analysts have found that the disease of inflated oil reserves has spread even to the Big Oil companies.

The King Kong of oil, ExxonMobil, while claiming that the world has plenty of oil, was caught redhanded on February 7, 2006. According to SEC filings, the oil giant reported that it was replacing 112% of the oil
produced and sold.

In reality, Exxon replaced only 83% of the oil it sold last year. That’s a 17% drop in production! It’s this type of accounting shenanigans that we’re seeing former CEOs going to jail for right now.

Keeping in mind that a drop in our oil supply of as little as 5% in 1973 was able to increase the price of oil by as much as 400%, imagine what will happen if the Simmons hypothesis is even remotely accurate.
According to him, we could easily see oil shoot up above the $200 dollar range.

This is the kind of scenario we’re facing.
But running out of our "easy oil," aside from skyrocketing prices, has bigger implications, especially to Americans, than you may first realize.

The Destruction of the Dollar
At the end of WWI, the strength of our currency shifted from the "gold standard" over to, what is now called, the petro-dollar.
For decades, OPEC’s currency for all oil exported was the good old greenback.

And today, 50% of the strength of the United States currency is dependent of cheap, plentiful oil.

But what would happen if OPEC would successfully shift their currency from the U.S. dollar to the Euro, as Iraq and Iran have tried to do? The answer is simple but drastic. The value of our dollar would plummet by roughly 50%, and we would once again be in an economic state far worse than the Great Depression.

The terrifying part is, without our military presence in the Middle East, it would happen.
But with all of the light shining on the actual amount of oil the Middle East has and no more Giant oil fields
being discovered, we are finding a new, safe place for America’s energy and independence from terrorist
suppliers.

Our Only Alternative is Several Alternatives
President Bush’s 2006 State of the Union Address was dead on . . .
"We are addicted to oil."
The value and power that oil has is never to be underestimated. While it is harmful to our environment, there is simply no more cost-efficient method for energy. But while that resource of easy to attain oil is depleting, we have to stop finger-pointing and look at what options we have from here. And despite your opinion of the cur-rent President, his solution, to have many solutions, is the only way that we can continue our way of life. The reason for needing many different energy sources is that with what we have today, switching to only one doesn’t stand the chance of hell freezing over. But when solar, wind, geothermal, nuclear, hydroelectric, ethanol and oil come together, we have a fighting chance of sustaining our way of life. And that is something that wars are fought for.

 

Re: Peak Oil; what it is and how it will impact your life

It is not just oil that is going up. Natural gas isn't far behind and a lot of people are predicting a sharp rise in it's cost in the near future. I get tired of posting these doom and gloom reports, but my hope is that by sounding the warning some folks will heed it and prepare. If this is correct your electric bills are going to skyrocket soon. So start your preps now.
Insulate, insulate, insulate. And look for alternative ways to heat and cool your homes.


Surge in Natural-Gas Price
Stoked by New Global Trade
By ANN DAVIS and RUSSELL GOLD
April 18, 2008;

Americans feeling the pain of record gasoline prices now face the likelihood of another fuel shock, from natural gas.

Prices in the U.S. have risen 93% since late August as power-hungry nations like South Korea and Japan compete in a global natural-gas market that scarcely existed a half-decade ago. Still, U.S. prices are as low as half the level of some overseas markets, suggesting they have much further to rise.

The global appetite for natural gas has profound implications for a U.S. economy already tipping toward recession and struggling against inflation pressures. The fuel heats half of U.S. homes, generates 20% of the country's electricity and is used to make everything from fertilizer to plastic bags. In March, rising natural-gas prices contributed to a higher than expected 1.1% increase in producer prices, according to the Labor Department.

U.S. natural-gas output has actually been rising in recent months, and not everyone agrees that prices are destined to surge. However, a significant number of financial players are now betting on an increase.
On Thursday a report by the Barclays Capital unit of Barclays PLC warned that, partly because of rising natural-gas prices, the U.S. could start to see spikes in electricity costs in as little as a year. "Power is at the cusp of its next boom cycle," analysts said. "When power markets tighten, prices do not notch up, they skyrocket."

On Thursday, natural-gas prices on the New York Mercantile Exchange fell five cents per million British thermal units, or 0.5%, to settle at $10.383, ending a three-day upward march. That's 33% shy of the record close of $15.378 on Dec. 13, 2005, when a cold snap jolted the market.

What's new is the global price competition. Prior to 2003, gas was primarily a regional commodity, consumed near where it was produced and transported by pipelines. Often, it would be simply burned off as waste at oil wells, since transportation was so difficult.

That changed with development of cheaper methods for supercooling and transporting the fuel across the ocean in liquefied form, which requires 1/600th the space. The global trade took off.

Attracting Imports
Today, a tanker of liquefied natural gas, or LNG, pulling into port in Japan can command close to $20 per million BTUs, roughly double the price of the U.S. benchmark. As a result, the U.S. is having trouble attracting the imports it needs to supplement homegrown production.

Last weekend, Cheniere Energy Inc. inaugurated a massive new LNG terminal on the Texas-Louisiana border capable of accommodating six tankers a week, making it the largest terminal in the U.S. However, observers expect few tankers to dock there until they can obtain higher prices for their cargo. Cheniere's stock is down 70% from its 52-week high; earlier this year, it put itself up for sale.

For the moment at least, the import slowdown means the U.S. has a glut of LNG import terminals like these. From California to New England, proposals for such facilities have faced staunch community opposition. This month New York Gov. David Paterson said the state wouldn't issue a permit for a proposed terminal in the Long Island Sound, arguing that it wasn't appropriate for the environmentally sensitive area.

Overall, U.S. imports of LNG have slid over the past nine months to a five-year low, and natural-gas inventories are running relatively low. Deutsche Bank commodities chief David Silbert says that if the U.S. is unable to attract LNG supply this summer, prices could spike up sharply within a few months if a hot summer were to reduce the ability to build a cushion of gas going into next winter.

As the odds increase that the U.S. will pass climate-change regulations that raise financial penalties for burning coal, cleaner-burning natural gas is gaining favor as the fuel to power electric plants.

Overall, gas demand from the U.S. power sector grew by 10% last year, according to the Energy Information Administration. By 2025, the U.S. could see domestic production lag demand by 15 billion to 20 billion cubic feet a day, Linda Cook, executive director of gas and power for Royal Dutch Shell PLC, told a recent energy conference.

The increased global trade in natural gas was driven partly by huge investments since 2003 in facilities to liquefy gas for export -- chilling it to negative-260 degrees Fahrenheit -- as big Western oil companies saw a business opportunity and ramped up spending on LNG infrastructure. This created economies of scale and further drove down the price of producing and shipping LNG long distances.

This triggered a revolution in gas markets. Previously, countries like Nigeria, which has ample natural gas, had no easy way to sell it due to a lack of pipelines to markets needing the fuel. Same was true for Qatar, also home to enormous gas reserves.

Early thinking assumed the globalized market would cause prices to fall because countries tight on supplies could more easily import. Former Federal Reserve Chairman Alan Greenspan, in 2003, predicted LNG would create a "price-pressure safety valve" to stabilize prices in the U.S.

Sellers With Clout
But the market is evolving differently. One key change involves the way LNG sales contracts are written. Until recently, buyers were in the driver's seat: They were able to strike long-term deals and lock in their costs for many years. A seller like Indonesia, for instance, might have agreed to ship LNG to Japan for 10 years at relatively rigid prices.

Today, however, sellers have the clout. They are demanding that contracts be loosened to let them divert their output to markets where prices are higher. (In return they generally agree to share the profits with the customer.)

Free-for-All
This free-for-all has let suppliers shop their product to the highest bidder, adding to price volatility.

One example: When an earthquake last summer forced a massive Japanese nuclear plant to close, utilities there ramped up natural-gas use. Prices soared in Japan, which in turn drove up prices in far-off European countries, including the United Kingdom.

This kind of situation can trigger domino effects world-wide. Late last year, the global scramble for scarce LNG worsened as a drought hit Spain, cutting its ability to use hydroelectric power. Spain normally leans on neighboring Algeria and Egypt for LNG imports -- but in February those countries were busy shipping to Japan where prices were twice as high as Spain.

Turning to Trinidad
Spain turned to Trinidad for imports. But that has meant less gas for the closer -- but lower-priced -- U.S. market, which in the past has taken most of Trinidad's output. Trinidad's shipments to the U.S. through the first two months of the year are down 31% from the year-earlier period, according to government data.

Not everyone agrees U.S. natural-gas prices are certain to rise. Domestic producers such as Chesapeake Energy Corp. have made significant strides tapping into new sources of natural gas, sending U.S. gas production up 7% in January from a year earlier, to 68 billion cubic feet a day.

Chesapeake Chief Executive Aubrey K. McClendon sees production continuing to grow, holding U.S. gas prices between $7 to $10 per million BTUs and avoiding the need to increase imports. And Michael Stoppard, a senior director of energy consultant CERA, predicts world LNG supply will grow by 30% in the next two years, making more chilled gas available for the U.S.

Nevertheless, more financial players are lining up against the bears, saying low prices won't last. They point out that, even as U.S. production increased in 2007, prices still rose 19%.

Meantime, as Asian buyers grab more LNG from the Atlantic basin, U.S. prices, though at 27-month highs, still look cheap. Energy hedge funds in Houston and New York have placed a flood of bullish bets on U.S. gas prices for delivery several years from now, say some of the traders and their Wall Street brokers.

One argument underpinning that bet: U.S. gas is far cheaper than it has historically been relative to crude oil. Until 2004, the price for a barrel of oil was roughly the same as the price of 6,000 cubic feet of gas, the equivalent amount of energy. Now oil is almost double the price of gas on that basis, Lehman Brothers analysts point out.

In a twist, the effort to build alternative-energy projects like solar arrays and wind farms also boosts construction of gas-fired plants. Because wind is unpredictable, it's often necessary to build back-up generators, and gas-fired plants have an advantage in that they can be started up relatively quickly, says Doug Kimmelman, senior partner with Energy Capital Partners, a private-equity firm focused on the power sector.
In addition, regulatory approval and construction times are shorter for gas plants than coal or nuclear. For reasons like these, new gas-fired power plants continue to be built or planned.

 

Re: Peak Oil; what it is and how it will impact your life

The Peak Oil Crisis: The Silly Season Is Upon Us
Written by Tom Whipple
Thursday, 17 April 2008

During the past week, the surge in oil prices continued with crude, gasoline and diesel prices all hitting new highs.

U.S. gasoline consumption may be down by a few tenths of a percent (which seems logical) or then again, it may be up a bit in recent weeks depending on which numbers you are reading. Our Presidential candidates, or at least their handlers, are beginning to grasp that we have a problem here and are beginning to make proposals.

We have clearly entered the silly season, for all three major candidates now have endorsed the notion that the U.S. should stop buying oil for its strategic reserve in order to force prices back down. This might sound sensible until you learn that the U.S. is only squirreling away eight ten-thousandths of the world’s production each day.

The Republican candidate for President is now calling for a "holiday" that would suspend the 18.4 cent a gallon federal gas tax. This proposal of course will never pass, but if it should, the hoped-for jump in gasoline sales will quickly move gas prices higher. At a time when prices are rising about 5 cents a week, cutting taxes is unlikely to boost Hummer sales.

Up on Capitol Hill a lot of folks are worried, but as yet few have mustered the courage to propose realistic solutions. Some are beating on the oil companies and are calling for the umpteenth investigation of gas prices.

Others want to yank the $18 billion annual tax break the oil industry gets and move the money to researching renewables. The rest just want to increase drilling for oil somewhere – usually in the Atlantic or Alaska -- without mentioning that at best it would take decades to produce the oil should some be found. No one wants to mention that our energy crisis now seems months, or perhaps less, away.

It is hard to really blame the politicians. As long as most of us cling to the hope that high gas prices will go away or that a painless silver bullet that will solve our energy problem is just around the corner, few candidates for public office are ready to propose what are thought to be "painful solutions" to our problems. They still shoot messengers.

The great irony in all this is that the problem is simple to understand.

World crude oil production has been essentially flat for the last three years while 1.3 billion Chinese, 1.1 billion Indians, and another quarter billion or so living in oil exporting countries continue to increase their oil consumption at a prodigious pace. Incidentally, the Chinese just announced that their diesel imports during the first quarter of 2008 were up seven fold over 2007.

Currently, the real issue is how long it will take the American people to understand the seriousness of a problem that will require decades of pain, discomfort and inconvenience to mitigate. When gasoline and diesel prices go up a few more dollars a gallon, or when permanent shortages develop, everybody will get the message and media will start to talk coherently. Until then, understanding will be incremental and painfully slow.

Every now and again, however, a voice of reason is beginning to appear in the mainstream media. On cable business news, every 500th guest now speaks of looming oil shortages in terms of inadequate supply to meet growing demand. This message is immediately drowned out by wave after wave of talking heads explaining that now is a great time to find bargains in the equity markets and high oil prices are caused by a temporary surge in speculation.

In general, there seems to be progress in that most, but not all, of the major national newspapers will now acknowledge that world oil production will peak some day. Rather than presenting imminent oil depletion as a fact, the major papers are writing "balanced" stories in which somebody says peak oil is imminent, somebody says it is 40 years away, and wise expert arbitrator splits the difference saying oil supply problems are 10 to 15 years out. The reader of course accepts all this, breathes a sigh of relief that he still has 15 years and goes about his business.

A poll of Congress, their staffs and senior government officials is likely to produce similar results – world oil production will indeed peak, but that day is not close enough that I have to risk public ire by proposing painful and unpopular solutions to my successor’s problem.

Unfortunately for the future of America, The Washington Post, which is read religiously by everyone of consequence in the federal government, has been among the slowest in acknowledging that a paradigm-changing worldwide oil shortage is imminent.

Last week, with oil pushing above $110 a barrel and gasoline prices setting new records each day, The Post felt impelled to say something about the issue. After telling us that prices are indeed going up and the Presidential candidates are coming up with inadequate solutions, The Post cites one of the many pronouncements by the CEO of Shell oil company, Jeroen van der Veer, to the effect that "The fundamentals are no problem." "He blamed the lack of spare oil production and refining capacity, and tensions in the Middle East, for keeping prices high."

The Post adds the coup de grace with "Shell's Van der Veer said he expects a crunch in energy markets in 10 or 15 years." The rest of the story is taken up with how speculators and hedge funds fleeing the falling dollar are driving up oil above its "true" prices which is a few dollars above the cost of production. The Post suggests this "true" value could be anywhere from $10 to $60 a barrel, depending on which oil field it is coming from.

So there you have it. Our national leaders now know that the peak oil crisis is 10 or 15 years away and that speculation is largely responsible for your soon-to-be-$4 a gallon gasoline.

 

Re: Peak Oil; what it is and how it will impact your life

Almost four years ago, when oil was trading at around $40 a barrel, Paul Roberts wrote a story for Mother Jones on a bleak scenario gaining currency among energy insiders, but not yet in the mainstream consciousness: peak oil, basically the notion that the world's petroleum resources are nearing exhaustion. If the theory held true, Roberts warned, oil prices could soon leap to "perhaps as high as $100 per barrel—a disaster if we don't have a cost-effective alternative fuel or technology in place."

Welcome to the disaster: $100-a-barrel oil is in the rearview mirror, and no cost-effective (or even cost-prohibitive) alternative has emerged. The most dire consequences of this failing—hurricanes, drought, extinction—are occurring far more rapidly than even Slideshow Al could have predicted four years ago. And then there's the war.

It's easy enough to blame Dick Cheney, Big Oil, Detroit—all of whom have done their part in obstructing progress. But their chicanery distracts us from the far greater problem, one that, unfortunately, comes down to Organic Chemistry 101. Every technological advance of the last 150 years has been powered by a unique, extremely energy-dense, but finite—and, as it turns out, planet-killing—source of fuel.

Switching away from fossil energy requires an economic and social transformation at least as great as the Industrial Revolution. And we have to build this new economy on the fumes of the old, hoping that we don't run out of gas, or ice caps, before we get there. As Roberts points out in this special issue on energy, if we sit on our hands or let the process be hijacked by vested interests, "there may not be enough crude left in the ground to fuel a second try."

 

Re: Peak Oil; what it is and how it will impact your life

here is a waste of oil, bet you didnt know this:

http://starbulletin.com/2001/06/10/news/story3.html