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

S&P, Might I suggest you go to the first page of this thread and start reading from there, it might change your opinion of the matter.

I have no problem with debate on this subject, but to date the only thing I have encountered is technology, science, alternative fuels,etc. will save us, or it's all a ploy by the bad big oil boogy man to fleece us arguments.

I have read the "theory" that there are vast areas of the earth to yet be explored. I just haven't found anyone who could tell me where those places were. We drill for oil in the artic, the jungles, and the deserts. In some of the most remote and innaccesable places on earth, from South America to the South Pole, from the Middle East to Middle America, from the top of mountains to the oceans floors. Where exactly are these vast undiscovered areas?

I read one author who claimed that we had never explored for oil under the worlds major cities. Well, with directional drilling technology we have been doing that for decades.

We have explored for oil on every continent. Are there fields left to discover? Of course. But the discovery of any significant sized fields, enough to make a dent in world consumption, "peaked" in the 1960's and has declined ever since. There has not been a "major" discovery in decades.

Technology has indeed advanced in the 30 years that I have been in the business of finding and extracting oil. But it is being used to access the reserves that were financially untappable a few years ago. Or that were not economically feasible to produce. It is being used to wring out the last of what were played out fields. To find and extract as much as possible fromn what there is left.

No amount of technology can replace a finite resource that is becoming more and more depleted every year.

 

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

I was just going back and browsing through this thread. Wow, a lot of material has been discussed here in the last couple of years. I had come across this article some time back and saved it. It sums up the entire subject pretty well. And it is very balanced, presenting all sides and opinions on the matter. Might be easier reading than this entire thread.MM





http://peak_oil.totallyexplained.com/

PEAK OIL
TOTALLY EXPLAINED

As first expressed in Hubbert peak theory, peak oil is the point or timeframe at which the maximum global petroleum production rate is reached. After this timeframe, the rate of production will enter terminal decline. According to the Hubbert model, the production rate will follow a roughly symmetrical bell-shaped curve. This doesn't mean oil will suddenly "run out", but the supply of cheap conventional oil will drop and prices will rise, perhaps dramatically.

Some observers such as Kenneth S. Deffeyes and Matthew Simmons believe that because of the high dependence of most modern industrial transport, agricultural and industrial systems on inexpensive oil, the post-peak production decline and possible severe increases in the price of oil will have negative implications for the global economy. Predictions as to what exactly these negative effects will be vary greatly. More optimistic outlooks, delaying the peak of production to the 2020s or 2030s and assuming major investments in alternatives occur before the crisis, show the price at first escalates and then retreats as other types of fuel sources are used as transport fuels and fuel substitution in general occurs. More pessimistic predictions which operate on the thesis that the peak will occur shortly or has already occurred predict a global depression and even the collapse of industrial global civilization as the various feedback mechanisms of the global market cause a disastrous chain reaction. The shortfall will cause demand destruction which may be mitigated with planned conservation measures and using alternatives if implemented 20 years before the peak.. If political and economic change only occurs in reaction to high prices and shortages, then the degree of economic damage to importing countries will largely depend on how rapidly oil imports decline post-peak. The Export Land Model suggests that the amount of oil available internationally will drop much more quickly than production in exporting countries.

Timing
The only reliable way to identify the timing of peak oil will be in retrospect. M. King Hubbert, who devised the peak theory, predicted in 1974 that peak oil would occur in 1995 at 12 gigabarrels per year "if current trends continue". However, in the late 1970s and early 1980s, global oil consumption actually dropped (due to the shift to energy-efficient cars, the shift to electricity and natural gas for heating, etc.), then rebounded to a lower level of growth in the mid 1980s (see chart on right). The shift to reduced consumption in these areas meant that the projection assumptions were not realized and, hence, oil production didn't peak in 1995, and has climbed to more than double the rate initially projected. Colin Campbell of the Association for the Study of Peak Oil and Gas (ASPO) has suggested that the global production of conventional oil peaked in the spring of 2004 albeit at a rate of 23 gigabarrels per year, not Hubbert's 13 gigabarrels per year. During 2004, approximately 24 billion barrels of conventional oil were produced out of the total of 30 billion barrels of oil; the remaining 6 billion barrels coming from heavy oil and tar sands, deep water oil fields, and natural gas liquids (see adjacent ASPO graph). In 2005, the ASPO revised its prediction for the peak in world oil production, again, from both conventional and non-conventional sources, to the year 2010. These consistent upward (into the future) revisions are expected in models which don't take into account continually increasing reserve estimates in older accumulations.

Another peak oil proponent Kenneth S. Deffeyes predicted in his book Beyond Oil - The View From Hubbert's Peak that global oil production would hit a peak on November 25th, 2005 (Deffeyes has since revised his claim, and now argues that world oil production peaked on December 16 2005). Texas oilman T. Boone Pickens has stated that worldwide conventional oil production will top out at 84 MB/day (31 BB/yr), while Albert Bartlett paper on Arithmetic, Population, and Energy (exponential growth on a finite resource) gives a different insight into peak oil.

Related peak
The peak of world oilfield discoveries occurred in 1965. Because of world population growth, oil production per capita peaked in 1979 (preceded by a plateau during the period of 1973-1979).

Supply
Peak oil is concerned with the production flow of oil measured as the quantity extracted over time. Recoverable reserves are important only in that they must exist before any oil can be extracted and delivered to the market.

Reserves
Conventionally reservoired crude oil resources comprise all crude oil that's technically producible from reservoirs through a well bore using any primary, secondary, improved, enhanced, or tertiary method. Not included are liquids from mined deposits (tar sands; oil shales) or created liquids (gas-to-liquids; coal-to-liquids).

Oil reserves are classified into categories - proven, probable and possible. Proven reserves are claimed to be "Reasonably Certain" to be producible using current technology at current prices and are intended to be 90% certain of containing the amount specified or more. The "Probable Reserves" category has an intended probability of 50% and the "Possible Reserves" an intended probability of 10%. Some care must be taken with these categories, as the majority of reserves have not been subject to outside audit or examination.

Most of the easy-to-extract oil has been found. Recent oil exploration is being carried out in areas where oil is much more expensive to extract, extremely deep wells, extreme downhole temperatures, environmentally sensitive areas or where high-technology will be required to extract the oil. Oil companies such as Exxon Mobil, Shell, and BP are having to spend more money on oil exploration due to a shortage of drilling rigs, increases in steel, an increase in service charges - like drilling rig rates, and overall increases in costs due to complexity.

Quantifying reserves
In forecasting the date of peak oil — and in testing the validity of Hubbert's theory — one difficulty is the strong opacity surrounding the oil reserves classified as 'proven' (see above). This was best exemplified by the scandal surrounding the 'evaporation' of 20% of Shell's reserves. For the most part, the number of 'proven reserves' are given by the three major players of the oil market: the oil companies, the producer states and the consumer states. All three have an interest to inflate their proven reserves: oil companies may use it to increase their potential worth; producer countries are bestowed a stronger international stature; and governments of consumer countries may use this as a means to foster sentiments of security and stability within their economies and among consumers. Many worrying signs concerning the depletion of 'proven reserves' have emerged in recent years. On the other hand investigative journalist Greg Palast has argued that oil companies have an interest in making oil look more rare than it's in order to justify higher prices.

Unconventional sources
Unconventional sources, such as heavy crude oil, tar sands, and oil shale are not counted as part of oil reserves. However, oil companies can book them as proven reserves after opening a strip mine or thermal facility for extraction. The three major unconventional oil sources are the extra heavy oil in the Orinoco river of Venezuela, the tar sands in the Western Canada Basin, and the oil shale in the Green River Formation in Colorado, Utah and Wyoming in the United States. It is estimated that these sources account for as much oil as the reserves of the Middle East.
The results of one study suggest that within 15 years all the world’s extra oil supply will likely come from expensive and environmentally damaging unconventional sources. This will mean increasing reliance on these hard-to-develop unconventional sources of energy. Oil extracted from these sources typically contains contaminants such as sulfur, heavy metals and carbon that are energy intensive to extract.

A 2003 article in Discover magazine claimed that we could use thermal depolymerization to manufacture as much oil as we could ever need, out of garbage, sewage, and agricultural waste. The article claimed that the cost of the process was $15 per barrel. (External Link) A follow up article in 2006 stated that the cost was actually $80 per barrel. (External Link)

Demand
The demand side of Peak oil is concerned with the consumption of oil measured as the quantity consumed over time. World crude oil demand has been growing at an annualized compound rate around 2 percent in recent years. Demand growth is highest in the developing world, particularly in the People's Republic of China and India, and to a lesser extent in Africa and South America. Where high demand growth exists it's primarily due to rapidly rising consumer demand for transportation via vehicles powered with internal combustion engines.

The U.S. Department of Energy categorizes national energy use in four broad sectors: transportation, residential, commercial, and industrial. In the United States, in contrast to other regions of the world, about 2/3 of all oil use is for transportation, 1/5 goes to industrial uses, and the remainder goes to residential, commercial and electric energy production.

Transportation
Most oil is consumed in transportation, approximately 66.6% in the United States and 55% worldwide, World demand for oil is set to increase 37% by 2030, according to the US-based Energy Information Administration's (EIA) annual report. Demand will hit 118 million barrels per day (bpd) from today's existing 86 million barrels, driven in large part by transport needs.
In his 1992 book Earth in the Balance, Al Gore wrote, "... it ought to be possible to establish a coordinated global program to accomplish the strategic goal of completely eliminating the internal combustion engine over, say, a twenty-five-year period..." (External Link)

Population
Because of human population growth, oil production per capita peaked in the 1970s.. Some predictions suggest that worldwide oil production in the year 2030 will have declined to the same level as it was in 1980, in which case worldwide demand for oil will significantly outpace its worldwide production. Some physicists maintain that the non-sustainability of oil production per capita wasn't addressed due to the political correctness implications of suggesting population control.

One factor that may ameliorate this effect is the rapid decline of population growth rate since the 1970s. In 1970, the population growth rate was 2.1%. By 2006, it had declined to 1.1%. Meanwhile, oil production has continued to grow strongly. From 2000 to 2005, human population only grew by 6.3% World population - Wikipedia, the free encyclopedia@@AMEPARAM@@/wiki/Fileopulation_density.png" class="image"><img alt="" src="http://upload.wikimedia.org/wikipedia/commons/thumb/b/bc/Population_density.png/400px-Population_density.png"@@AMEPARAM@@commons/thumb/b/bc/Population_density.png/400px-Population_density.pngWorld population - Wikipedia, the free encyclopedia@@AMEPARAM@@/wiki/Fileopulation_density.png" class="image"><img alt="" src="http://upload.wikimedia.org/wikipedia/commons/thumb/b/bc/Population_density.png/400px-Population_density.png"@@AMEPARAM@@commons/thumb/b/bc/Population_density.png/400px-Population_density.png, whereas global oil production increased by 8.2% (External Link).

Supplies of oil and gas are essential to modern agriculture, so coming decades could see spiraling food prices and massive and unprecedented famine affecting human populations across the globe. Geologist Dale Allen Pfeiffer contends that to achieve a sustainable economy and avert disaster, the United States must reduce its population by at least one-third, and world population will have to be reduced by two-thirds. Current U.S. population of more than 300 million as well as world population exceeding 6.6 billion are, according to Pfeiffer, unsustainable.

Industrialization
As countries develop, industry, rapid urbanization and higher living standards drive up energy use markedly. The energy supply to drive industrialization mostly comes from oil. For example, thriving economies such as China and India are quickly becoming large consumers of oil. China has seen oil consumption grow by 8% yearly since 2002, (7% annual growth equals a doubling of consumption every 10 years) it currently imports roughly half its oil, with predictions of 14.2 mb/d by 2025. India's oil imports are expected to more than triple to some 5 million barrels a day by 2020. Cars and trucks will cause almost 75% of the increase in oil consumption by India and China between 2001 and 2025. As more countries develop, the demand for oil will increase further.

Mitigation
According to the Hirsch report prepared for the U.S. Department of Energy in 2005, a global decline in oil production would have serious social and economic implications without due preparation.

The effects of peak oil can be mitigated through conservation and finding alternatives 20 years or more before the peak. Because mitigation can reduce the consumption of traditional petroleum sources, it can also affect the timing of peak oil and the shape of the Hubbert curve.

Current events

Peak oil production—has it happened already?
As of July of 2007, analysts still disagree on whether peak production capacity has been reached.

The IEA projects non-OPEC production estimates for 2007 and 2008 to remain largely unchanged from July 2007, at 50.0 mb/d and 51.0 mb/d, respectively. Growth is projected to recede thereafter as the slate of verifiable investment projects diminishes.

The report points to only a small amount of supply growth from OPEC producers, with 70% of the increase coming from Saudi Arabia, the UAE and Angola as security and investment issues continue to impinge on oil exports from Iraq, Nigeria and Venezuela. Matthew Simmons, Chairman of Simmons & Company International, said on October 26, 2006 that global oil production may have peaked in December 2005, though he cautions that further monitoring of production is required to determine if a peak has actually occurred.

In State of the World 2005, Worldwatch Institute observes that oil production is in decline in 33 of the 48 largest oil-producing countries. Other countries have also passed their individual oil production peaks.
World oil production growth trends, in the short term, have been flat over the last 18 months. Global production averaged 85.24 mbbl/d in 2006, up 0.76 mbbl/d (0.9%), from 84.48 mbbl/d in 2005. Production in Q2 2007 was 84.90 mbbl/d, down 0.05 mbbl/d (0.1%), from the same period a year earlier. Average yearly gains in world oil production from 1987 to 2005 were 1.2 mbbl/d (1.7%), with yearly gains since 1997 ranging from -1.4 mbbl/d, (-1.9%; 1998-1999) to 3.3 mbbl/d (4.1%; 2003-2004).

Mexico announced that its giant Cantarell Field entered depletion in March, 2006, as did the huge Burgan field in Kuwait in November, 2005. Due to past overproduction, Cantarell is now declining rapidly, at a rate of 13% per year. In April, 2006, a Saudi Aramco spokesman admitted that its mature fields are now declining at a rate of 8% per year, and its composite decline rate of producing fields is about 2%. This information has been used to argue that Ghawar, the largest oil field in the world, has peaked.

Many commentators have pointed to the Jack 2 deep water test well in the Gulf of Mexico, announced September 5, 2006, as evidence that there's no imminent peak in global oil production. The Jack 2 field, however, may have at best the potential to provide only 2 years of U.S. consumption at present levels. Peak oil theory doesn't suggest that there will be no major or minor oil finds in the future, but rather that new discoveries and new production won't be able to offset depletion in other parts of the world. Also, the new fields will be harder to find, harder to get to and harder to extract out the oil. The Jack 2 field, for instance, is more than 20,000 feet under the seafloor in 7,000 feet of water, for a total of 28,000 feet (8.5 kilometers) of pipe.

This increasing investment in harder to reach oil is a sign of oil companies' belief in the end of easy oil: Chuck Masters of the United States Geological Survey says: These unconventional sources are not as efficient to produce however, requiring extra energy to refine, resulting in higher production costs and up to three times more greenhouse gas emissions per barrel (or barrel equivalent), as analyzed by industry sites such as Rigzone.

Commodities trader Raymond Learsy, author of Over a Barrel: Breaking the Middle East Oil Cartel, contends that OPEC has trained consumers to believe that oil is a much more finite resource than it in fact is. To back his argument, he points to past false alarms and apparent collaboration. He also believes that Peak Oil analysts are conspiring with OPEC and the oil companies to create a "fabricated drama of peak oil" in order to drive up oil prices and profits. It is worth noting oil had risen to a little over $30/barrel at that time. A counter-argument was given in the Huffington Post after he and Steve Andrews, co-founder of ASPO, debated on CNBC in June 2007.

Resource nationalism
Kate Dorian of Platts said "some oil-rich countries are restricting oil sales outside of their country. These countries are now reluctant to share their reserves" As a result of not having access to countries amenable to oil exploration, ExxonMobil isn't making nearly the investment in finding new oil that it did in 1981.

Mexico nationalized its oil industry in 1938, and has never privatized it, restricting foreign investment. Since the giant Cantarell field in Mexico is now in decline, the state oil company Pemex has faced intense political opposition to opening up the country's oil and gas sector to foreign participation. Some feel that the state oil company Pemex doesn't have the capacity to develop deep water assets by itself, but needs to do so if it's to stem the decline in the country's crude production.

Major oil companies operating in Venezuela find themselves in a difficult position because of the resource nationalism that's spreading. Exxon Mobil and ConocoPhilips have said they'd walk away from their large investment in the Orinoco heavy-oil belt rather than accept tough new contract terms which raise its tax take and oblige all foreign companies to accept minority shares in joint ventures with the state oil company, Petróleos de Venezuela (PDVSA).

Iran, now among the world's leading crude-oil exporters, could become a net importer of oil within the next decade due to rising demand and slow-growing production. As the world's second-biggest proven reserves of oil, it infuriated its people when the government brought in petrol rationing on two hours notice. Due to limited refinery capacity, it has been discouraging gasoline usage. Shortly after the petrol/gasoline rationing, which has reduced demand in some areas by 20%-30%, it announced it won't be producing cars powered only by gasoline. In Russia, Vladimir Putin's government has pressured Royal Dutch Shell to hand over control of one major project on Sakhalin Island, to Russia's Gazprom in December. The founder of formerly-private Yukos has also been jailed, and the company absorbed by state-owned Rosneft. Such moves strain the confidence of international oil companies in forming partnerships with Russia. This means consumption is now within 2 Mbbl/d of production. At any one time there are about 54 days of stock in the OECD system plus 37 days in emergency stockpiles. In June 2005, OPEC admitted that they'd 'struggle' to pump enough oil to meet pricing pressures for the fourth quarter of that year. The summer and winter of 2005 brought oil prices to a new high (not adjusted for inflation). On the other hand, some analysts attribute much of this new high to disruptions caused by the war in Iraq.

A combination of factors such as fear of war with Iran and hurricanes caused oil prices to peak at $78.64 on August 7, 2006, followed by falls away from the peak. On September 13, 2007, oil prices hit a new peak of $80.18 and finished the day at $80.08, closing above $80 for the first time since trading on the exchange began, on the back of lower reserve data in the US, generally tight supplies, unrest in Nigeria and Mexico, growing tension with Iran, and a falling US dollar. Production is at or near full capacity.

Oil futures briefly traded over $90.00 per barrel on October 19, 2007. A variety of reasons were given for this new record high oil futures, including a possible incursion by Turkey into Northern Iraq, which could result in oil pipelines in that region being attacked. Another possible explanation is that oil demand is reaching parity with oil supply, and the markets are bidding up the oil futures contracts to higher levels.
An oil price chart can be seen here
.
US economy versus US government
Part of the current debate revolves around energy policy, and whether to shift funding to increasing energy conservation, fuel efficiency, or other energy sources like solar, wind, and nuclear power. For example, in the USA Rep. Tom Udall at congressional peak oil hearings:
The Congressional Budget Office provides debate of government research versus incentives:

A warning of the level of incentive required for market driven research and development is stated by Rogner:

The problems of privately funded research and development, as espoused by Bronwyn H. Hall, are not unique to peak oil mitigation.
The severity of the problem for energy is echoed in the International Energy Agency's latest report.

In the US, transportation by car is guided more by the government than by an invisible hand. Roads and the interstate highway system were built by local, state and federal governments and paid for by income taxes, property taxes, fuel taxes, and tolls. The Strategic Petroleum Reserve is designed to offset market imbalances. Municipal parking is frequently subsidized. Emission standards regulate pollution by cars. US fuel economy standards exist but are not high enough to have effect. There is also a gas guzzler tax of limited scope. The United States offers tax credits for certain vehicles and these frequently are hybrids or compressed natural gas cars, see Energy Policy Act of 2005.

In order to be profitable, many alternatives to oil require the price of oil to remain above some level. So investors in these alternatives must gamble with the limited data on oil reserves available. This imperfect information can lead to a market failure caused by a move by nature; for instance see Hotelling's rule for non-renewable resources. Even with perfect information the price of oil correlates with spare capacity and spare capacity doesn't warn of a peak:

Lester Brown believes this problem might be solved by the government establishing a price floor for oil. A tax shift raising gas taxes is the same idea. Opponents of a price floor for oil argue that the markets would distrust the government's ability to keep the policy when oil prices are low.

Alternative views
Not all non-'peakists' believe there will be endless abundance of oil. CERA, for example, instead believes that global production will eventually follow an "undulating plateau" for one or more decades before declining slowly. In 2005 the group had predicted that "petroleum supplies will be expanding faster than demand over the next five years."

Dr. R.C. Vierbuchen, Vice President, Caspian/Middle East Region, ExxonMobil Exploration Co. believes » "A peak in petroleum liquids production, resulting solely from resource limitations, is unlikely in the next 25 years. Predictions of an imminent peak [basedon the methodology developed by Shell Oil Co. geologist M. King Hubbert] in 1956 don't adequately account for resource growth from application of new technology, knowledge and capability, which combine to increase recovery, open new producing areas and lower economic thresholds."

» "Supplies from OPEC and non-OPEC countries, gas-related liquids and unconventional resources are growing. Furthermore, nations with the largest remaining resources produce under long-term restraints not envisioned in Hubbert’s method. The ultimate peak in petroleum production may result from factors other than resource limitations."

The U.S. Energy Information Administration projects world consumption of oil to increase to 98.3 million barrels a day in 2015 and 118 million barrels a day in 2030. This represents more than a 25% increase in world oil production. A 2004 paper by the Energy Information Administration based on data collected in 2000 disagrees with Hubbert peak theory on several points:
<DIR><DIR>Explicitly incorporates demand into model as well as supply
Does not assume pre/post-peak symmetry of production levels
Models pre- and post-peak production with different functions (exponential growth and constant reserves-to-production ratio, respectively)
Assumes reserve growth, including via technological advancement and exploitation of small reservoirs
</DIR></DIR>The EIA estimates of future oil supply are countered by Sadad Al Husseini, retired VP Exploration of Aramco, who calls it a 'dangerous over-estimate'. Husseini also points out that population growth and the emergence of China and India means oil prices are now going to be structurally higher than they've been.

Campbell argues that the 2000 USGS estimates is methodologically flawed study that has done incalculable damage by misleading international agencies and governments. Campbell dismisses the notion that the World can seamlessly move to more difficult and expensive sources of oil and gas when the need arises. He argues that oil is in profitable abundance or not there at all, due ultimately to the fact that it's a liquid concentrated by nature in a few places having the right geology. Campbell believes OPEC countries raised their reserves to get higher oil quotas and to avoid internal critique. He also points out that the USGS failed to extrapolate past discovery trends in the world’s mature basins.

Some commentors, such as economists Michael Lynch and Michael Moffat, believe that the Hubbert Peak theory is flawed and there's no imminent peak in oil production; such views are sometimes referred to as "cornucopian" by believers in Hubbert Peak Theory. Lynch argues that production is determined by demand as well as geology, and that fluctuations in oil supply are due to political and economic effects in addition to the physical processes of exploration, discovery and production. Moffat contends that as prices increase, consumers will find alternatives to gasoline. Changes in consumer patterns and the emergence of new technology driven by increases in the price of oil will prevent the oil supply from ever physically running out.

Biogenesis remains the overwhelmingly majority theory among petroleum geologists in the United States. Abiogenic theorists, such as the late professor of astronomy Thomas Gold at Cornell University, assert that the sources of oil may not be "fossil fuels" in limited supply, but instead abiotic in nature. They theorize that if abiogenic petroleum sources are found to be abundant, it would mean Earth contains vast reserves of untapped petroleum. However, M. R. Mello and J.M. Moldowan counter that biomarkers show that 99.99999% of all the oil and gas accumulations found up to now on earth have a biologic origin, and that oil is generated from kerogen by pyrolysis.

Past estimates on when peak oil would occur
Although the finiteness of the earth's oil supply means that peak oil is inevitable, technological innovations in finding and drillng for oil have delayed the appearance of peak oil on several occasions. For example, the National Center for Policy Analysis states: (External Link)

In 1855, people could only access whatever oil happened to seep to the surface, and an advertisement for Kier's Rock Oil stated, "Hurry, before this wonderful product is depleted from Nature’s laboratory."
In 1874, the state geologist of Pennsylvania, the United States' leading oil-producing state, said that all the oil would be gone by 1878.
In 1920, the U.S. Geological Survey stated that the world only had 60 billion barrels of oil left.

In 1950, geologists estimated that the world had 600 billion barrels of oil.
In 1970, scientists estimated that the world had 1,500 billion barrels of oil.
In 1994, the U.S. Geological Survey estimated that the world had 2,400 billion barrels of oil.

In 2000, the U.S. Geological Survey estimated that the world had 3,000 billion barrels of oil.

None of this means that new oil is forming, or that peak oil will never happen. It means that newer technological advances allow us to find and recover more oil, though later estimates are based on unaudited claims by countries that withhold field production data and are therefore inconclusive.

 

Read these articles from a few years ago and see whose stance has proven to be the more accurate.

The Jack well discovery 4 years ago has had no effect on world oil prices.

By TOM FOWLER
Copyright 2006 Houston Chronicle
News of a successful test in a potentially huge oil field in the Gulf of Mexico last week may have led some Americans to stop planning for hybrids and go back to dreaming about owning gas guzzlers.






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Chevron and Devon Energy's success with the Jack 2 project some 270 miles offshore and five miles below sea level has been heralded as confirmation that the U.S. can continue to count on the Gulf of Mexico as a key source of energy.
"Biggest find in a generation," touted one news headline. "Oil relief in sight?" another asked, while another predicted "Huge supply has potential to cut prices years from now."
While validating the big discovery may bolster the view of the oil-supply optimists, even they don't predict a return to the days of cheap gasoline in a world where demand is growing so strongly.
That includes Peter Jackson, co-author of a recent Cambridge Energy Research Associates report that predicts worldwide oil production capacity could grow as much as 25 percent in the next decade.
He isn't letting his belief in plentiful future oil supplies change his auto purchase plans.
"The next time I change my car, I will get one that's double the fuel-efficiency," he said.
Last week Chevron and Devon Energy made public the results of an oil flow test conducted recently in an area that has long been suspected of holding good oil and gas reserves.
The region, in more than 5,000 feet of water and another 21,000 feet below the bottom of the sea, is an extension of the Wilcox formation that has been productive onshore in Texas and Louisiana. But no one knew if this deep-water region had the same potential.
Once the companies proved that oil could flow at reasonably strong rates at such depths, it was seen as a green light by many companies with plans for similar deep-water projects.
"I can't think of another play, particularly in North America, that has had this kind of scenario," with all the industry interest, said Steve Hadden, senior vice president of exploration and production at Devon Energy.
'Just Drill Deeper'​

BusinessWeek concluded last week the successful test meant there was "Plenty of Oil — Just Drill Deeper," and the commentary said consumers could " ... tune out all the scare talk about peak oil for a while," referring to the idea that one day soon worldwide oil production will begin to decline.
But the project, which the companies predict could match the U.S.'s largest oil field, in Prudhoe Bay, Alaska, will not counter the country's growing dependence on imported energy, say many other observers.
"It strikes me that these announcements can be dangerous if they give people the idea that there is not a problem," said Kjell Aleklett, a professor at Uppsala University in Sweden and president of the Association for the Study of Peak Oil and Gas.
Large discoveries, like Jack 2, represent about half of the world's oil reserves, but they are becoming increasingly rare, notes Paul Mann, a professor at the University of Texas' Institute for Geophysics.
Using data dating to the 1860s, Mann and a number of colleagues have concluded that worldwide discoveries of oil and gas fields larger than 500 million barrels of oil equivalent peaked in the 1970s at 220 finds.
Giant discoveries fell to 95 in the 1980s and 96 in the 1990s. They are expected to climb in this decade to about 109 because of increased exploration and production of nontraditional oil and gas reserves.
"Despite the technological improvements, they are simply finding fewer giants," Mann said. "Some may say they just haven't looked hard enough yet, but I think it's hard to argue with those curves."​

Hope not facts. The traditional argument. "Something" will save us. But it hasn't come along yet.

Some commentors, such as economists Michael Lynch and Michael Moffat, believe that the Hubbert Peak theory is flawed and there's no imminent peak in oil production; such views are sometimes referred to as "cornucopian" by believers in Hubbert Peak Theory. Lynch argues that production is determined by demand as well as geology, and that fluctuations in oil supply are due to political and economic effects in addition to the physical processes of exploration, discovery and production. Moffat contends that as prices increase, consumers will find alternatives to gasoline. Changes in consumer patterns and the emergence of new technology driven by increases in the price of oil will prevent the oil supply from ever physically running out.




Refuting Peak Oil's "The market won't work" Nonsense.
Silver Stock Report
by Jason Hommel, December 16, 2005

"Peak Oil" is a theory, that is beginning to concern many people, that says the world will soon, if not already, reach a peak of oil production. This theory is based on the observation that with any oil field, there is a time of peak production, at which point, production decreases. And if oil fields have "peaks", and if nations have "peaks", then the world itself will have a time of peak production. And with declining world oil production, and with growing world population, oil prices will only continue to skyrocket, until it chokes off the modern economy, and we all end up back in something like the stone age. We may have declining world oil production, but I can assure you that society is not going back to the stone age. I believe that the market will solve this problem, as I will explain.

My argument is that even if peak oil is true, it will not mean the end of our modern way of life. The reason is that we will continue to travel as much as we do now, but even more so into the future. So, if our cars are not powered by oil, they will be powered by something even more efficient, and cheaper, to allow travel to increase. Hybrids, that run on a combination of electric power from batteries, and gasoline or diesel, will likely be a sufficient alternative to help conserve oil in the face of ever-rising gas prices if Peak Oil is really true.

But the trend of the last century has been one of travel increasing. It's a good thing to assume this trend will continue. There's really no need to worry about the trend changing until after it changes.

I'm not going to refute "Peak Oil"--although I may have already done so. I'm going to refute the notions that all "Peak Oil" proponents believe that I have read so far, which is that the free market cannot supply the solutions to the possible and potential problem of "Peak Oil". I argue that the free market, is, already, funding solutions to the Peak Oil problem.



As economist Andrew Mckillop explains in a recent article entitled, "Why Oil Prices Are Barreling Up," oil is nowhere near as "elastic" as most commodities:

One of the biggest problems facing the IEA, the EIA and a
host of analysts and "experts" who claim that "high prices
cut demand" either directly or by dampening economic
growth is that this does not happen in the real world.

Since early 1999, oil prices have risen about 350%. Oil
demand growth in 2004 at nearly 4% was the highest in 25
years. These are simple facts that clearly conflict with
received notions about "price elasticity". World oil demand,
for a host of easily-described reasons, tends to be bolstered
by "high" oil and gas prices until and unless "extreme" prices
are attained.


While many analysts claim the market will take care of this for us, they forget that neoclassic economic theory is besieged by several fundamental flaws that will prevent the market from appropriately reacting to Peak Oil until it is too late. To illustrate, as of April 2005, a barrel of oil costs about $55. The amount of energy contained in that barrel of oil would cost between $100-$250* dollars to derive from alternative sources of energy. Thus, the market won't signal energy companies to begin aggressively pursuing alternative sources of energy until oil reaches the $100-$250 mark.

*This does not even account for the amount of money it would take to locate and refine the raw materials necessary for a large scale conversion, the construction and deployment of the alternatives, and finally the retrofitting of the world's $45 trillion dollar infrastructure to run on these alternative sources.

Once they do begin aggressively pursuing these alternatives, there will be a 25-to-50 year lag time between the initial heavy-duty research into these alternatives and their wide-scale industrial implementation.
However, in order to finance an aggressive implementation of alternative energies, we need a tremendous amount of investment capital - in addition to affordable energy and raw materials - that we absolutely will not have once oil prices are permanently lodged in the $200 per barrel neighborhood.

In summary, we are a prisoner of our own dilemma:

1.Right now, we have no economically scalable alternatives
to oil. (Emphasis placed on economic scalability, not
technical viability.)

2.We won't get motivated to aggressively pursue
economically scalable alternatives until oil prices are
sky high;

3.Once oil prices are sky-high, our economy will be
shattered, and we won't be able to finance an aggressive
switch-over to whatever modest alternatives are available
to us.

4.An aggressive conservation program will bring down the
price of oil, thereby removing the incentive to pursue
alternatives until it is too late.

5.The raw materials (silicon, copper, platinum) necessary for
many sources of alternative energy are already in short
supply. Any attempt to secure enough of these resources
to power a large scale transition to alternative energies is
likely to be met with fierce competition, if not outright
warfare, with China.

6.The media and government can't tell the public the truth
without creating a panic and crash of the Stock Market.


7.Most of the steps we need to take to deal with this, such
as driving less, would severely hurt large sectors of the US
economy. For instance, an aggressive fuel conservation
program would lower the demand for new vehicles as
people would be driving less, thereby increasing the life of
their vehicles. One out of every six jobs in the US is either
directly or indirectly dependent on the automobile
manufacturing sector. With GM and Ford already on the
ropes, any aggressive program of conservation would likely
send them spiraling into bankruptcy. While some interests
may rejoice at the notion of "Big Auto" going bankrupt, this
is only because they don't realize the devastating effects
a GM and/or Ford bankruptcy would have on all of us,
regardless of our political affiliations.


Read the entire article and see the economists retort to these assertions and judge for yourselves whose position has proved to be the more accurate over the years.

http://www.silverstockreport.com/ema..._peak_oil.html

 

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

Thank you. It is refreshing to have someone else who knows the way the business works and can help to counter this "it's all a big conspiracy" nonsense.

The only thing we really differ on is our respective levels of faith in future production levels. Actually I really hope that you are right. Both of our jobs depend on the continuing flow of the worlds lifeblood. Mine more so than yours.

I have to take reports from Oil Company execs with a grain of salt. They are known for overstating thier reserves. Remember Shell a year or two ago? And national Oil Companies are notorious for vast overstatements and for refusing any type of independent verification.

Besides, in all honesty, this estimating of reserves is hardly an exact science. It is at best highly speculative. And it is the nature of the oil companies to report the most optimistic of those speculations.

But as I said, only time will tell. I would say to hope that your position proves to be the more correct one but to prepare for the possibility that mine may be. I have been urging the readers here to buy fuel effecient vehicles and to convert thier homes to more energy effeciency, examine how they use energy and how to use it more consrvatively and more wisely. I think that to be prudent advice no matter which of our positions proves to be closer to the truth.

 

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

Ditto. I enjoy intelligent debate on any subject. Glad to have you on board. Welcome to the Monkey.
So got any hot tips?

 

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

Now that is a quote I like!

 

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

Ain't it amazing that the collective wisdom of our representatives seldom equals the wisdom of only ONE of them? They seem bent on reducing the collective IQ below the lowest in the group.

 

First I wanted to let folks who may be interested know that the DVD "A Crude Awakening" is on sale at Matt Savinars Life After The Oil Crash website.
http://www.lifeaftertheoilcrash.net/ at the LATOC Store. type "addictedtodoom" in the space for coupon and get 50% off. That's $12.50 for one of the best Peak Oil DVD's out. It is a great source to introduce people to the subject.

Secondly I wanted to comment on an article that just came out.
I try to read articles on both sides of the peak oil issue. I want a balanced view and also to see what the "other" side believes and is espousing. I picked up the April Issue of Popular Mechanics today and it had an article on our current oil situation.
I don't think anyone one consider PM a conspiracy theory magazine. The article was very fair and balanced and I want to quote some of it for you.

On page 75 in the article "How Long Will It Last?" there is a chart at the top of the page and a short article describing it.

"When will our global exploitation of this nonrenewable resource reach the pinnacle of production, known as peak oil? The most pessimistic pundits..." it quotes Kenneth Deffeyes, professor emeritus of geosciences at Princeton University as saying that he believes we have already peaked and that social and political upheavals are soon to follow and "by 2025 we are going to be back in the Stone Age." Then goes on to quote energy market analyst Michael Lynch as saying that he belives that the pessimists overlook the law of supply and demand and that as cheap supplies dwindle rising prices will spur conservation, reduced consumption and spur efforts to develope previously uneconomical sources. "These market forces, optimists say, mean oil won't peak for at least 20 years and that our economy will have time to adjust. This graph reflects a centrist position. Based on data compiled by the International Energy Agency, a consortium of experts from 27 countries"

The graph shows the "Peak" of current proven reserves as occuring before 2005 with existing oil capacities, it moves up to 2010 with developement of existing reserves, with an assumption of continued advances and methods, as yet undeveloped, in enhanced recovery methods and unconventional sources ( oil shale and oil sands ) puts it to 2015, then with the addition of the most unknown and unpredictable factor, future new discoveries, has production climbing to 125 million barrels a day by 2030. Of course it fails to mention that the current predictions, barring a massive reduction in demand, will surpass even the most optimistic projections by 2030.

Some interesting statements in the article;

We discussed Chevron's discovery of the touted Jack field in deep Gulf of Mexico waters. According to the article the testing of that well came in at 6,000 barrels per day and the most optimistic forecast of possibly 15 billion barrels. First let me say that initial flow rates are very misleading. That is a maximum rate and is not sustainable, generaly. It will cause problems with a well to flow it at the maximum rate, one of which is a bridging off, sand and or water influx, and can actualy cause you to lose the entire well. Nearly all wells are "choked" back to something around half or less of the maximum flow rate. This leads to a much longer production life of the well with much less maintenance. Many reports have the probable recoverable reserves at less then 5 billion barrels. So factor in the current rate of world consumption is over 80 million barrels per DAY, and projected be over 100 MBPD by 2015, and you see that it is hardly a "major" discovery capable of altering our current oil crunch.

The article goes on to talk about the "vast unconventional sources... the oil sands of Canada, contain 175 billion barrels of proven reserves - the largest in the world outside Saudi Arabia - but the oil costs as much as $15 per barrel to produce, compared to $2 a barrel for Saudi crude. Likewise, shale deposits in Colorado, Utah and Wyoming hold promise, but no one has yet figured out how to extract them at a profit."

It talks about alternatives. "Wind farms will generate more than 1% of US electricity this year.....could provide 20% BY 2020"
"The U.S. solar industry grew nearly 60% last year - but still ranks below the wind sector."
"Ethanol may provide a bridge to electric cars...engineers at Coska, a start up company.. say they can create ethanol for less than $1 a gallon. The company hopes it's first plant will produce 100 million gallons a day by 2011."
Anyone else see the problem there?

The articles says " only 1% of gas stations in the U.S. are equiped to handle Ethanol."
And this "if all the corn in the U.S. were converted to ethanol, it would provide only 6% of the nations energy needs."

It says of nuclear energy " the Nuclear Regulatory Commision expects to take applications for 32 new reactors by 2010."
So by 2010 they will have only collected the applications to build. None are scheduled to be constructed by then.
It goes on to say, in reference to all of these alternatives, that " by 2017, though, oil and gas are still expected to make up 60% of the American energy portfolio."

Of course others who read the article may see it in a different light,but I think it did more to support the peak oil argument than to debunk it. After reading the article I would still be thinking of how to reduce my personal energy needs.