News When will the world reach peak fossil fuel production?

[mheslep]

This is one of my problems... initially we were discussing consumption, then you jumped to supply numbers and now net imports. There are, of course, subtle differences between them all (nickle and diming, as I mentioned).

So, I'm trying to keep track, but obviously it's just as confusing for me.

ok, understood.

...

I would suggest this is a factor of technology, rather than consumption. As we have seen, consumption has been increasing while production decreasing since 1980.

Well there have been several ups and downs. Here is the consumption data (all liquids) back to '63 this time. Increase up to the '79 Iranian crisis, decline to ~83 then increase, slight decline in 90-91, and then decline again since ~2006-7.
http://205.254.135.24/dnav/pet/hist_chart/MTTUPUS2M.jpg

Note oil consumption per capita (link up thread) has declined pretty much continuously, showing that more efficient cars/trucks/airplanes/ships, the elimination of oil based electric generation and so on have made a difference in consumption.

Think of it as a a feedback loop. In order to maintain supply to match demand, one needs to expend energy. Greater energy must be spent in order to meet greater demand. ... As resources are depleted, more energy must be expended in order to drill up and find new resources. So, in order for us to keep pace with growing demand, we must spend energy to speed up production and to fill any voids left by depleted resources. We begin to exploit unconventional sources more and more and our dependence shifts from the more conventional sources (which are all on the decline). To get energy, we must spend energy

Yes I am familiar with the ERoEI concept.

and the energy we need to spend will only increase.

I don't agree that it will only increase. Yes tar sands initially require more energy than conventional, but from what I read tar sand production energy is declining especially in the last year. I doubt tar sands production energy costs will ever reach conventional, but neither do I see a runaway energy production problem. More like a step increase.

The US is not an isolated case in the energy cycle. Despite any growing supply from within, consumption still outpaces domestic production by about 40% (compared to 20% in 1980).

And compared to ~65% in 2005-6.

It is quite apparent that new technologies and new discoveries are not abating the US need for imported hydrocarbons.

One can argue that new production/efficiency is not the entire reason for the closing gap, or that current conditions won't hold in the future, and I'm happy to see those arguments. But as written that statement is simply not true. US oil imports are falling, and have been since 2005, and now so are gas imports.

...These forms of biofuel generation are still in their infancy...

Yes, and may never go anywhere. I'm simply pointing out that it is not justifiable to say that land use always rules out any kind of way forward for biofuels. I agree land use rules out a corn ethanol future, but not some of the other far more efficient schemes on the table, and which at least don't violate any laws of physics.

 

[CaptFirePanda]

Well there have been several ups and downs. Here is the consumption data (all liquids) back to '63 this time. Increase up to the '79 Iranian crisis, decline to ~83 then increase, slight decline in 90-91, and then decline again since ~2006-7.

Looking at the raw data, the decline coincides with 2008 as 2007 shows a fairly decent increase.

Note oil consumption per capita (link up thread) has declined pretty much continuously, showing that more efficient cars/trucks/airplanes/ships, the elimination of oil based electric generation and so on have made a difference in consumption.

This stat can also be atttributed to many other factors that may or may not be at play here (eg. wealth distribution, age distribution, etc...) I'm not saying they would skew the results, I'm just pointing out that overall consumption is still on the rise and it outpaces domestic production.

Yes I am familiar with the ERoEI concept.

I think the idea of the "ERoEI concept" overshadows basic thermodynamics. One can fixate until the end of time on distinct ERoEI values while losing sight of the thermodynamic quandry.

I don't agree that it will only increase. Yes tar sands initially require more energy than conventional, but from what I read tar sand production energy is declining especially in the last year. I doubt tar sands production energy costs will ever reach conventional, but neither do I see a runaway energy production problem. More like a step increase.

The bulk of oil sands production has come from mining operations to date. Along with that, however, are the SAGD operations. These produce volumes much less than mining operations do (on a one to one comparison), but collectively will account for greater amounts of total contribution to oil sands production. These operations require drilling, thermal processes to create steam, pipelining, etc... and are far less concentrated than mining operations. So, even if energy requirements are decling now they will increase again. SAGD operations will likely account for ~80% of bitumen produced throughout the course of oil sands development.

Thus, we can keep adding up incremental steps of energy increase, which may seem somewhat trivial on their own, but become far more significant when viewed collectively. Futhermore, this goes beyond oil sands. It encompasses the full range of unconventional resources. Energy use will never be statci for a certain process (eg. it will likely decrease over time), but we are in a situation where we are finding more and more resources that require greater energy to produce.

And compared to ~65% in 2005-6.

Taking snapshots in time of these sorts of things is misleading. Overall, historical trends are what describe the system best. We do, of course, take anomalies into consideration and determine if they are part of a trend. On their own, however, they are mostly meaningless.

One can argue that new production/efficiency is not the entire reason for the closing gap, or that current conditions won't hold in the future, and I'm happy to see those arguments. But as written that statement is simply not true. US oil imports are falling, and have been since 2005, and now so are gas imports.

They are falling, but they have only been falling for the last 2-3 years of a 61 year upward trend. As I mentioned above this kind of aberration does not mean much of anything until it becomes a long-term trend. At the moment, it can be explained away by many other factors.

Yes, and may never go anywhere. I'm simply pointing out that it is not justifiable to say that land use always rules out any kind of way forward for biofuels. I agree land use rules out a corn ethanol future, but not some of the other far more efficient schemes on the table, and which at least don't violate any laws of physics.

I don't think I said land-use always rules out the concept of biofuels (if I did, I apologize). I think I indicated that land-use issues will be an impediment to these sorts of operations. There are many sectors vying for space and it is very difficult to justify large extents of land for low relatively volumes of fuel.

 

[mheslep]

...
This stat can also be atttributed to many other factors that may or may not be at play here (eg. wealth distribution, age distribution, etc...) I'm not saying they would skew the results, I'm just pointing out that overall consumption is still on the rise and it outpaces domestic production.

? You mean that, what, the average linear consumption trend for the last several decades is up? Sure, but I hope we agree that recently this is not the case, that the recent consumption figures are
US Consumption, 4 wk average, all oil, mbpd
Feb 2007 21.8 (all time high US consumption)
Feb 2008 20.6
Feb 2009 19.5
Feb 2010 19.3
Feb 2011 19.4
Feb 2012 18.1
i.e. off 17%, otherwise I'm wasting my time here against some kind of dogmatic belief unchangeable by data.

The bulk of oil sands production has come from mining operations to date. Along with that, however, are the SAGD operations. These produce volumes much less than mining operations do (on a one to one comparison), but collectively will account for greater amounts of total contribution to oil sands production. These operations require drilling, thermal processes to create steam, pipelining, etc... and are far less concentrated than mining operations. So, even if energy requirements are decling now they will increase again. SAGD operations will likely account for ~80% of bitumen produced throughout the course of oil sands development.

Perhaps, but in the future we don't know if SAGD will be used over (say) VAPEX that does not require steam. With very cheap natural gas to make steam no doubt SAGD will continue for awhile, but there's no rule mandating that will be the case.

They are falling, but they have only been falling for the last 2-3 years of a 61 year upward trend. As I mentioned above this kind of aberration does not mean much of anything until it becomes a long-term trend. At the moment, it can be explained away by many other factors.

I respect long term trends. The flip side of long term trends is that reversals never seen before have significance. That's why I see a six year reversal 25% off the peak as significant.
US net imports all oil mbpd
2005 12.55
2006 12.39
2007 12.03
2008 11.11
2009 9.67
2010 9.44
2011 8.52 (12 month rolling average)

I don't think I said land-use always rules out the concept of biofuels (if I did, I apologize). I think I indicated that land-use issues will be an impediment to these sorts of operations. There are many sectors vying for space and it is very difficult to justify large extents of land for low relatively volumes of fuel.

<shrug>I don't know that commercial interests are vying for the vast tracks of barren land in the US, at least they have not so far. Certainly there are groups that want these areas left barren and pristine.

 

[CaptFirePanda]

? You mean that, what, the average linear consumption trend for the last several decades is up? Sure, but I hope we agree that recently this is not the case, that the recent consumption figures are
US Consumption, 4 wk average, all oil, mbpd
Feb 2007 21.8 (all time high US consumption)
Feb 2008 20.6
Feb 2009 19.5
Feb 2010 19.3
Feb 2011 19.4
Feb 2012 18.1
i.e. off 17%, otherwise I'm wasting my time here against some kind of dogmatic belief unchangeable by data.

I mean the long term trend. Interesting how the all time high winds up shortly before the 2008 dive.

Perhaps, but in the future we don't know if SAGD will be used over (say) VAPEX that does not require steam. With very cheap natural gas to make steam no doubt SAGD will continue for awhile, but there's no rule mandating that will be the case.

Well SAGD is quite prevalent currently and will continue to be for some time. Whether or not VAPEX ever comes to fruition is up for debate. There are other technologies out there as well, but there is a rather solid line between what is economic and what isn't.

I respect long term trends. The flip side of long term trends is that reversals never seen before have significance. That's why I see a six year reversal 25% off the peak as significant.

Six years reperesents 10% (or less) of the time in which this upward trend has been taking place. It also coincides very well with the most recent reccession (do I sound like a broken record yet?). Listing the early 80's gives you a similar trend, but imports steadily increased until 2008. I see the "reversal" as somewhat short term and a similar return to business as usual will follow.

<shrug>I don't know that commercial interests are vying for the vast tracks of barren land in the US, at least they have not so far. Certainly there are groups that want these areas left barren and pristine.

Whether it is commercial, environmental, social, etc... interests, they will still be at play.

 

[mheslep]

...I see the "reversal" as somewhat short term and a similar return to business as usual will follow.

Yes so I gather, but I don't understand why.

I've cast about for some energy indicator from the '08 recession that is independent of conservation measures and I think I have one. Vehicle Miles Driven is an indicator tied closely (?) to economic output, i.e. the recession. VMD has dropped about 3% since the 2008 recession began, so there is some indication, I think, of the impact the recession had on US oil consumption.
http://www.bts.gov/publications/multimodal_transportation_indicators/february_2012/html/highway_vehicle_miles_traveled.html

That's 3% against an oil import cut of 25%. I'd certainly agree that, should the economy get strong again and unemployment return to normal, the US will see a 3% bump or more of VMD (unless the price of gas goes well over $4/gal). However there are some things that are not going return to business as usual regardless of the economy:

• Automobile mpg. New vehicles have improved mpg by 8% since 2007. Fleet on the road is improving mpg ~2% a year. Those vehicles will not return to old mpg figures should the economy boom.
• Heating oil cuts by 45%: people in Maine are not going to rip out the insulation and destroy their heat pumps and high efficiency wood stoves to switch back to oil.
• Shale oil, Bakken. Like you I don't know how long it will last, but for the next decade or so shale is going to continue to be large, and we can expect other US shale formations to start producing large volumes too. Shale is out of the bottle and won't be put back in.
• Shale gas. We will continue to see a million bpd of liquids cast off from gas, at least.
• Ethanol. Will continue at the current 1 mbpd, at least
• Naphtha for plastics. Has largely come from oil, is now rapidly vanishing and is being replaced by cheap natural gas sourced ethane at 1 mbpd.

etc

 

[CaptFirePanda]

Careful, you've flipped from imports (where the 25% decrease occurs) to consumption (~17%) for comparisons.

I would be, if I had the time or inkling, interested to see what sort of effect this had on the family vacations, and other similar "luxury" things. But this is a little too much "trees" and not enough "forest".

The interesting part is that reduction in consumption is not directly correlatable to use of gasoline or other crude derivatives. In a debt driven economy, when a recession hits keeping pace with debt leads to less and less money for other spending. I'm no economist and I won't pretend to be, but the relationships are far from directly proportional.

You can get bogged down in the minutia, but the simple fact remains is that when a recession hits, oil imports and consumption drop. This isn't something that the general public does in response. This is something that occurs as a result of many other factors.

 

[apeiron]

IMF researchers have put out a study on peak oil that takes into account the geological contraints on production, plus the technological advances in extraction that can be expected, and are still warning of "a near doubling, permanently, of real oil prices over the coming decade."

See http://www.imf.org/external/pubs/ft/wp/2012/wp12109.pdf

Or that conclusion in a little more detail...

While our model is not as pessimistic as the pure geological view, which typically holds that binding resource constraints will lead world oil production onto an inexorable downward trend in the very near future, our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade. This is uncharted territory for the world economy, which has never experienced such prices for more than a few months.

Our current model of the effect of such prices on GDP is based on historical data, and indicates perceptible but small and transitory output effects. But we suspect that there must be a pain barrier, a level of oil prices above which the effects on GDP becomes nonlinear, convex.

We also suspect that the assumption that technology is independent of the availability of fossil fuels may be inappropriate, so that a lack of availability of oil may have aspects of a negative technology shock. In that case the macroeconomic effects of binding resource constraints could be much larger, more persistent, and they would extend well beyond the oil sector.

Studying these issues further will be a priority of our future research.

 

[russ_watters]

So how, in your opinion, does that fit with or contradict the idea of Peak Oil?

 

[mheslep]

The references cited in this IMF paper make me immediately skeptical, especially Deffeyes and Matt Simmons, as these are not only peak oilers but peak oilers that also feel the need to forecast catastrophe and the collapse of civilization. The paper does not mention any the flaws associated with these authors.

Dr Deffeyes has been called production oil peaks in 2000, 2003, 2004, 2005 at least. http://www.princeton.edu/hubbert/current-events-06-02.html:

By 2025, we're going to be back in the Stone Age.

 

[russ_watters]

Noted, but there are two interesting statements in there that seem to contradict the alarmist view:

1. A "permanent doubling of oil prices" does not fit my understanding of Peak Oil, which afaik predicts a continuous (accelerating?) increase.
2. Small continued supply increases is radically different from an accelerating drop.

These two statement to me paint a picture of no near-term peak oil risk.

What I've been seeing lately appears to be pretty strong contradictions of peak oil. The gist of a recent Time article for example is that there are vast untapped reserves out there that require twice the cost to extract as current reserves. Thus a doubling of the price could cause a decades-long stabilization of oil economics.

 

[Jimmy Snyder]

By 2025, we're going to be back in the Stone Age.

Assuming they were burning coal in the Stone Age.

 

[mheslep]

... The gist of a recent Time article for example is that there are vast untapped reserves out there that require twice the cost to extract as current reserves. Thus a doubling of the price could cause a decades-long stabilization of oil economics.

Yes but twice what cost basis? At one point the Saudi's could pull oil for $10/bbl.

It seems to me there are several replacements, using existing technology, that would prevent a price doubling. The first that comes to mind is gas to liquids. The largest plant in the world is Pearl, in Qatar, which cost $24 billion, and produces 192 thousand bbl oil/day from 1.6 billion cf/day of gas. If the twenty year cost of the plant is $30 billion, then the bbl price amortized over the plant life is $30/bbl, plus the cost of the gas to make a GTL bbl of oil is ~$45/bbl @ $4/1000 cf, so ~$75/bbl is the top price from GTL. Apparently a GTL plant is about to break ground in the US, brought on by the spread between natural gas and oil prices.

*The IMF authors mention this, but discount them due to 'problems' with the 'elasticity' of 'replacements'.

 

[mheslep]

Here's another another low cost 'replacement' that negates the price doubling thesis:

RAND predicts the costs [of oil shale production] would decline to $35–48 per barrel ($220–300/m3) within 12 years.

http://en.wikipedia.org/wiki/Oil_shale#Economics

 

[mheslep]

Did you actually compare the Kuwaiti estimates against any of the others?

I looked at one, Brazil, and the Kuwaitis are already falling substantially short of actual production figures. Here's the Kuwaiti estimate for Brazil, in which their model produces a peak production estimate of 2.0 mbbl/d this year, 2010.

Figure 17. Brazil crude oil production model:

Here's EIA, showing actual production in 2008 was 2.4 mbbl/d, already exceeding the Kuwaiti prediction, and by this year will likely be ~2.8 mbbl/d.

http://www.eia.doe.gov/cabs/Brazil/images/br_production.gif
http://www.eia.doe.gov/cabs/Brazil/Oil.html


Given the well known rapid development of Brazil's offshore oil, seem's like they should have tossed this model away and started over when it produced a 2010 peak. ...

Following up on another of the old peak oil forecasts:

Brazil's crude production still increasing. 2.1 mbpd now in 2011, leaving the peak production forecast further in the dust.
http://www.eia.gov/countries/img/charts_png/BR_petcop_img.png

All oil production for Brazil, including ethanol, is 2.68 mbpd

 

[russ_watters]

I've been meaning to update this thread or start a new one: looks like peak oil is over for a while. Fracking is causing an energy revolution in the US, with explosive growth in oil and gas production, which will probably make us energy inndependent in 15-20 yrs: http://mobile.businessweek.com/news...since-first-well-in-1859-signals-independence

 

[mheslep]

Some have predicted liquid fuel independence in North America, i.e. including oil production from Canada and Mexico, in eight years by 2020. I think they'll be proven right, given governments do not interfere. N. Dakota shale oil production is accelerating at 250K barrels per day, per year. Texas production is accelerating at 500K barrels per day, per year. Add that to Canadian tar sands oil, the liquid by-products coming from natural gas production, a little more offshore oil production, the replacement of oil with gas feed stocks in the chemical industry, the increasing efficiency of consumption, a little more biofuel, and the supply numbers roughly equal US demand of ~18 million barrels per day by 2020.

 

[russ_watters]

Some have predicted liquid fuel independence in North America, i.e. including oil production from Canada and Mexico, in eight years by 2020.

Yeah, I consider that close enough -- the main issue isn't independence per se, its not relying on the Middle East anymore.

Still, would be nice to have a few more north-south pipelines built to help make that happen...

 

[rootX]

Yeah, I consider that close enough -- the main issue isn't independence per se, its not relying on the Middle East anymore.

Still, would be nice to have a few more north-south pipelines built to help make that happen...

I wonder if the US need that pipeline:

The WEO finds that the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows. In the New Policies Scenario, the WEO’s central scenario, the United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in energy, in net terms, by 2035.

http://www.iea.org/newsroomandevents/pressreleases/2012/november/name,33015,en.html

I think focus should be on energy efficiency in addition to production as pointed out in the article.

 

[Skrew]

The fact that gas is still less costly per gallon then milk amazes me considering one is a finite resource which is being consumed in vast quantites.

While peak oil may not happen yet, it will happen and happen long before the sun destroys the planet.

 

[mheslep]

I wonder if the US need that pipeline:

http://www.iea.org/newsroomandevents/pressreleases/2012/november/name,33015,en.html

The proposed but blocked Keystone pipeline is for oil, not natural gas. The US is going to be importing oil from somewhere for years to come in spite of the increase in domestic production. I prefer the imports come via pipeline rather than tanker ship.

 

[AlephZero]

The fact that gas is still less costly per gallon then milk amazes me considering one is a finite resource which is being consumed in vast quantites.

That is partly political, if a government decides to subsidize growing crops to make biofuel, rather than using them to feedi cattle (or even to feedi humans).

AFAIK "high milk prices" are not an major election issue, but "high gas prices" certainly are.

 

[russ_watters]

AFAIK "high milk prices" are not an major election issue, but "high gas prices" certainly are.

I burn more than a gallon of gas a day driving to work. Plus what I use in heating my house. That's why its a bigger issue.

 

[rootX]

The proposed but blocked Keystone pipeline is for oil, not natural gas. The US is going to be importing oil from somewhere for years to come in spite of the increase in domestic production. I prefer the imports come via pipeline rather than tanker ship.

I burn more than a gallon of gas a day driving to work. Plus what I use in heating my house. That's why its a bigger issue.

Interesting question is how interchangeable can be natural gas and oil. For example, considering two things russ pointed out:

Heating:

Others have built fundamental models to relate the price of natural gas and the price of oil by analyzing the various end users that can switch relatively quickly between the two. A simple example of this is heating applications, since many residential, commercial, and industrial boilers can burn either natural gas or distillate fuel oil, which has historically been priced about 95 percent that of crude oil.

http://thebulletin.org/web-edition/...urious-oil-and-natural-gas-price-differential

Gas:

Energy Department Announces New ARPA-E Projects to Advance Innovative Natural Gas Vehicle Technologies

http://www.doe.gov/articles/energy-...ojects-advance-innovative-natural-gas-vehicle

 

[russ_watters]

Interesting question is how interchangeable can be natural gas and oil...

Heating:

My house is heated by propane, which is a derivative of oil. I would much prefer it if it were heated by natural gas, at half the price. I have vaguely investigated the possibility of connecting to a local gas main, but nothing has come of that yet. Due to the expanding of the disparity between oil and gas prices though (your link), I may need to look into that more...but since oil has dropped (just not as much as gas), I suspect interest for such a project will be slim in my homeowner's association. I suppose the main issue is whether to put up the capital to make the switch or just let the natural gas supply pull the demand and price for propane down, and ride that out. Win/win.

 

[jim mcnamara]

Viewing only the cost of the energy, not what utilities charge for transporation and distribution:

Current December price is $US 0.4415 per therm. - I'm at New Mexico Gas Company.
This is actually the wholesale price the company pays - we are mandated to charge customers what we pay per therm. Projected price for January is about $0.49.

Retail January projected price for propane here is $2.63/gal. A gallon of propane is close to a therm in energy content: .91994 therms.

So in NM, the projected net difference for a therm of energy is $2.85 for a therm of propane versus $0.49 a therm of natural gas is a factor of ~5.8. Russ, you should switch sooner rather than later.

Also as a side note: one of the liquid by products of raw natural gas is propane. As Russ alluded to earlier.

 

[russ_watters]

I made a spreadsheet a while back for comparing prices and updated it a few weeks ago. Propane was $2.24/gal delivered, so I think you are comparing the commodity/energy price of gas to the delivered price of propane. That said, I didn't get an exact cost from my dad, who is my source for natural gas prices: he thinks he's paying about a dollar.

That equates to a ratio of 2.5:1.

My problem isn't the ratio of the prices though, its the $ per therm difference. If both drop by the same $/therm (for example), the ratio widens but the economics of switching don't actually improve because the amount of heat we use stays the same.

And actually, I thought propane came from oil only, so I looked it up. Seems it comes from both:

Propane is produced as a by-product of two other processes, natural gas processing and petroleum refining.

http://en.wikipedia.org/wiki/Propane#Sources