When will the world reach peak fossil fuel production?

[ThomasT]

So we are still on track for economic adjustments like we are seeing in Greece right now.

Do you really think so? I don't see the US as having Greece-type economic problems ... ever.

 

[apeiron]

Do you really think so? I don't see the US as having Greece-type economic problems ... ever.

I was thinking of the world, or that part of the world which is used to having expectations of wealth.

 

[mheslep]

Since the 1980's the US had drilled about 220,000 gas wells so the 150,000 number equates to about 25 years of drilling (certainly not an overnight fix). Also with gas prices where they are now, it would take a lot of incentive and recovery for anyone to keep pace with historical rates of drilling (especially when drilling techniques are far more expensive).

Recent drilling rates are much higher as that EIA data shows: 20.5 thousand gas wells per year 2007-9. Yes these frac wells are much more expensive, but the US industry as a whole is also drilling 3X fewer feet of dry hole than they were back in (say) the 1960s, and that's against today's higher drilling rate.

By 100 bbl/day are you talking "barrel of oil equivalent" (BOE)? ...

I was referring to actual oil, and was estimating how many shale oil wells would be required for domestic production to meet consumption. The N. Dakota (Bakken) per well average is 86 bpd.

Thanks for the well sourced replies. More later ...

 

[ThomasT]

No, in fact, those unconventional sources are a sign of peak oil. But understand, peak oil is more of a misnomer for cheap oil.

I don't understand. These are, afaik, vast oil resources. Peak oil is about exploitable resources, isn't it?

 

[MarcoD]

The problem is exponential growth with limited resources. If it is exponential, then there is a doubling time, which implies a time where you will use exactly the same amount of resources as throughout the whole of history, as well as consume the last resources during that period.

 

[mheslep]

No, not falling. Recovering perhaps, but definitely not falling.

Yes, and falling. Product supplied as of last week was down to 18.054 mbpd (4 week average), or 1.2 mbpd less than the same time last year. The last time US petroleum consumption was below the current level was March of 1997
http://205.254.135.24/dnav/pet/hist_chart/WRPUPUS24.jpg
http://205.254.135.24/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wrpupus2&f=4

 

[ThomasT]

The problem is exponential growth with limited resources.

But there's not exponential growth wrt consumption of fossil fuels, is there? Yes, consumption is increasing. But so can production. At least, as far as I can tell, for the next century ... and maybe a lot longer.

 

[SixNein]

I don't understand. These are, afaik, vast oil resources. Peak oil is about exploitable resources, isn't it?

The textbook definition is the peak production of oil.

And there is reason to believe we might have peaked out on production. For example, oil prices have been rapidly increasing over the last decade while production has been hanging out on a plateau. Economics would suggest a constrained supply.

And the military says this:

By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day
..
..
..
While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India."

http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf

Make no mistake... the problem is quite serious.

 

[CaptFirePanda]

Recent drilling rates are much higher as that EIA data shows: 20.5 thousand gas wells per year 2007-9. Yes these frac wells are much more expensive, but the US industry as a whole is also drilling 3X fewer feet of dry hole than they were back in (say) the 1960s, and that's against today's higher drilling rate.

Those numbers are for dry (eg. non-productive) exploratory and developmental wells (both oil and gas). Looking at the producing numbers, the footage is fairly substantial. It is good to know we are drilling less for dry holes based on technological advantages, but there is certainly a need to drill a lot of footage (and, in some cases, well over historical numbers)

I was referring to actual oil, and was estimating how many shale oil wells would be required for domestic production to meet consumption. The N. Dakota (Bakken) per well average is 86 bpd.

Thanks for the well sourced replies. More later ...

You're welcome. I didn't notice the jump to oil.

Anyway, there are currently around 500 (I'm picking a high number here) wells drilled per year in the Bakken (overall, there are ~5,000-7,000 oil wells drilled per year in the US, but I cannot break out the shale oil wells at this point. I suggest that they represent a small portion of this number). Hitting that 150,000 mark would be a pretty significant.

I would also caution against the average production rate. One, you are including historical data for oil not necessarily produced from shales (the Bakken isn't all shale). Also, this doesn't show the natural and rapid decline in production of these wells. Wells peter out quickly and are replaced by new wells in a short time frame (likely 1-2 years).

I'll comment further on the the consumption in the US (I need sleep!). Suffice it to say, the recession isn't over and recovery will not be a smooth line. The long term trend is still upwards and, unless some form of technology that I haven't heard of has offset consumption since ~2008, the trend will continue upwards.

 

[mheslep]

That's all well and good, but since the 1980's the gap between US production and consumption has widened significantly.

Since 2005 the gap has closed significantly as those graphs show, and are continuing to close. US oil imports have dropped ~25% since the peak back then.

The over-riding reason behind those recent drops in consumption/import numbers is the extremely significant recession that we experienced in 2008.

That conclusion is not justified, especially given the recession was Fall 2008 and imports have has been falling since 2005. Yes economic slow downs deserve some of the blame for energy imports and consumption, but other factors apply apply including improvements in economic energy intensity and increase in domestic supply:
1. US energy intensity (energy per unit of economic output) has been cut in half since 1980,and improved 10% the period 2007 to 2010.
2. US domestic crude production has been rising since ~2007 (up 1 mbbl/day), as have natural gas liquids (up ~500kbbl/day)
3. Ethanol production has doubled in the last couple years (see graph from earlier post), now 1 mbbl/day.
Those three things contribute strongly to the reduction in imports and consumption.

I could substitute any sort of energy source in there but it doesn't make your point any more valid. All I have to do is expand the picture to global consumption because, as we know, the US is not the only consumer of hydrocarbons in the world and there are at least 2 developing countires that will more than pick up any slack US citizens are willing to give.

A fair point. Note though that energy prices have a way to go before they are constant around the world, and exports to the highest bidder immediate. Natural gas for instance is priced overseas at several multiples of the of the US price (for now). Bakken oil sells at a $30/bbl discount locally (for now). I doubt a squeeze in supply meeting demand becomes serious enough to stop a build out in more energy infrastructure.

(I like this one at 500 bbls/acre-year). I don't know what may or may not work, but once an approach is proven I have little doubt of industrial ability to scale up rapidly - as shown by corn ethanol.

As I've mentioned, land-use issues will inevitably arise with respect to any of these sorts of technologies. Whether they are taking up arable land or otherwise, there will be significant limitations on how large they can grow.

The depends on the efficiency of the biofuel method and the consumption at the time. That 500 bbl/acre-year engineered bacteria approach (should it work) requires 13 million acres to meet all of US current consumption (18 mbbl/day). That compares well to the 90 million acres in use currently for all US corn crops, not that such an approach needs arable land.

 

[ThomasT]

The textbook definition is the peak production of oil.

And there is reason to believe we might have peaked out on production. For example, oil prices have been rapidly increasing over the last decade while production has been hanging out on a plateau. Economics would suggest a constrained supply.

And the military says this:


http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf

Make no mistake... the problem is quite serious.

From the graph, it doesn't seem to me that the price of oil has anything to do with supply and demand. Maybe you can explain it to me.

So, what, exactly, is the problem? As far as I can tell there's no current shortage of oil. And prices rise and drop more or less arbitrarily.

 

[SixNein]

From the graph, it doesn't seem to me that the price of oil has anything to do with supply and demand. Maybe you can explain it to me.

So, what, exactly, is the problem? As far as I can tell there's no current shortage of oil. And prices rise and drop more or less arbitrarily.

There are many different types of oil fields. For the most part, we have been getting most of our oil from conventional oil wells. These are very easy to extract oil from, and they have the highest EORI. The production on this type of field has peaked and is entering decline. Part of the problem is replacing the lost production with other sources be it shale, ethanol, or tar sands. These are more intensive to produce and have lower EORI. In a basic nutshell, the industry will need to flat our run in order to stand still.

The other part of the problem is dealing with global demand:

The number of registered cars, buses, vans, and trucks on the road in China reached 62 million in 2009, and is expected to exceed 200 million by 2020, though by 2050 it will be surpassed by neighbouring India and be pushed to second place in total automobiles.[

http://en.wikipedia.org/wiki/Automotive_industry_in_the_People's_Republic_of_China

There is also the issue of growing internal demand in exporting nations.
In a basic nutshell, the ultimate problem is gas prices are going climb.

 

[SixNein]

In a basic nutshell, the ultimate problem is gas prices are going climb.

The ultimate question is how deep are we in the muck? We won't know until we find out how fast we can get these unconventional sources up and running and at what levels of production.

I seriously doubt we can match convention production with unconventional sources. EORI on these sources really seems to indicate that they are not going to keep up.

 

[SixNein]

I was in the middle of a detailed response message when the power went out and I lost my work. Ironic that it happened while I was posting about energy developments! Anyway, the main issue, imo, is that people can't expect that current consumption patterns are going to magically cause solar power, fossil fuel supply, or any other aspect of energy resourcing to behave in ways they expect it to. People act as if the energy sources have to meet their cultural expectations instead of the other way around. If solar doesn't work it night, it may be that people are going to have to adapt their cultural patterns to go without electricity at night. It may not be necessary to do this right away or all at once, but it makes more sense to me that if you estimate that eventually it will be inevitable that you would rather transition slowly than wait for the sh*t to hit the fan, so to speak.

Very good point and likely imo. There is simply no way we can meet demand for everyone in the world to consume energy like Americans.

Currently, I believe the political-mechanical issue is whether free-markets are suited to adapt to energy production and consumption needs for the future. Presumable with valid knowledge about the future they would be, but the problem is that market interests themselves exert influence on future-knowledge in a way that suits short-term profit-motives and consumer-habits. In short, consumers are willing to pay to be told what they want to believe, even if that means making the disaster worse in the long run. Many people simply don't believe there's any disaster even coming - that it is just a trick on the part of people who want to generate cultural change.

The biggest question is whether government should allow solar developments to get priced out of the market, or whether some combination of subsidies and business-model intervention could push the solar-energy industry in the direction of making technologies more accessible, affordable, and therefore widespread. Of course, if existing energy-interests decide that growth of solar is going to interfere with their ability to maintain infrastructure with a narrower customer base, they will probably focus on preventing solar from gaining market share, just because they need the money to continue funding their operations, which they have a stake in maintaining.

Great post

 

[SixNein]

it is relatively common knowledge that world reserves today are larger than they were in the past.
.
.
.
The only standard is the prescisely defined proved reserves, which are subject to regulation and verification.

Correction... there is regulation and verification in the US.

The same is not true of the international community. OPEC countries are unaudited and report whatever they damn well please. In fact, they have motivation to over-report their reserves.

Outside of looking at their fudged numbers, for example, see the numbers in red here:
http://en.wikipedia.org/wiki/Oil_reserves#OPEC_countries

We see stuff like this:

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

 

[SixNein]

Interesting
http://www.nature.com/nature/journal/v481/n7382/full/481433a.html

 

[ThomasT]

There are many different types of oil fields. For the most part, we have been getting most of our oil from conventional oil wells. These are very easy to extract oil from, and they have the highest EORI. The production on this type of field has peaked and is entering decline. Part of the problem is replacing the lost production with other sources be it shale, ethanol, or tar sands. These are more intensive to produce and have lower EORI. In a basic nutshell, the industry will need to flat our run in order to stand still.

I see.

The other part of the problem is dealing with global demand:http://en.wikipedia.org/wiki/Automotive_industry_in_the_People's_Republic_of_China

There is also the issue of growing internal demand in exporting nations.
In a basic nutshell, the ultimate problem is gas prices are going climb.

I forgot about increasing demand in China, India, etc. . Ok, the picture/problem is getting clearer for me. Usable petroleum products are harder and increasingly more expensive to produce, and demand for them continues to increase. Hence, higher prices.

Any predictions on what it will be in the US in, say, 2020?

 

[SixNein]

I see.

I forgot about increasing demand in China, India, etc. . Ok, the picture/problem is getting clearer for me. Usable petroleum products are harder and increasingly more expensive to produce, and demand for them continues to increase. Hence, higher prices.

Any predictions on what it will be in the US in, say, 2020?

Right, the unconventional sources are harder to produce. And in particular, there is really no chance of getting the kind of rates we need. A lot of people think about volume in the ground, but don't really think about volume to the market. In other words, how much volume can one get out of the ground and to the market with any given oil field per year. The volume to the market determines how much oil we have to use for any given year. Tar sands for example have plenty of volume in the ground, but the rates are limited in ways that conventional oil is not due to processing the sand. On top of that, the EROI is much lower. So the rates we get out of the tar sands are much lower. At the end of the day, the peak of conventional oil wells signal a peak of oil production. Now put that on top of increasing demand, and it doesn't take much to see one has a really big problem.

The 2020 price will depend a lot on the state of conventional oil wells, politics, and demand. There is quite a bit of uncertainty on the conventional well reserves because there is no accountability on the figures provided by oil producing nations. In a basic nutshell, we don't have access to trustworthy data. So projections vary from now to 2040 on world production decline. But by looking at current world production for crude, it seems to have leveled off for the last 9 years. What production gains we have had comes from other liquids. And that is one of the reasons we've seen so much speculation on oil in the market.

Here is a link with a break up on liquids:
http://www.theoildrum.com/files/Screen shot 2012-02-13 at 9.02.36 AM.png

 

[SixNein]

A study by a German military think tank has analyzed how "peak oil" might change the global economy. The internal draft document -- leaked on the Internet -- shows for the first time how carefully the German government has considered a potential energy crisis.

http://www.spiegel.de/international/germany/0,1518,715138,00.html

The government was warned by its own civil servants two years ago that there could be "significant negative economic consequences" to the UK posed by near-term "peak oil" energy shortages.

http://www.guardian.co.uk/environment/2011/jun/15/peak-oil-warning

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency

 

[DrClapeyron]

China is ramping up production of solar pannels.

China Encourages Solar-Product Makers to Expand Amid Supply Glut
By Bloomberg News - Feb 24, 2012 8:29 AM CT

China set targets for increasing production capacity at key polysilicon and solar cell makers, part of the government’s plan to ensure its companies survive a slump in prices.

China wants each “leading” company to have 50,000 tons a year of polysilicon capacity by 2015 and targets 5 gigawatts for each of its top solar-cell makers, according to a five-year plan posted on the Ministry of Industry and Information Technology website today.

And in other news BP is finding it difficult to compete with Chinese solar pannel manufacturers.

BP Plans to Withdraw From Solar-Energy Venture in Australia
By James Paton - Feb 24, 2012 1:59 AM CT

BP Plc (BP/), Europe’s second-largest oil company, plans to withdraw from a venture seeking Australian government funds to build a solar-power project in the state of New South Wales.

“We’ve indicated that we wish to leave the consortium and that we won’t be part of the new bid process,” Jamie Jardine, a Melbourne-based spokesman for BP, said by mobile phone today.


...

The company decided to exit the global solar business after 40 years because it has become unprofitable, Mike Petrucci, the chief executive officer of BP’s solar unit, told staff in an internal letter in December. The industry faces oversupply and price pressures after Chinese competitors increased production.

 

[apeiron]

And in other news BP is finding it difficult to compete with Chinese solar pannel manufacturers.

Comparing China vs US energy strategies ought to tell us a lot about where the world will be going in next 30 years.

A Chinese political scientist told me it boils down to China being a nation run by engineers and the US a nation run by lawyers.

 

[mheslep]

I think this may be at the heart of it. We need everyone to switch to electric cars. And then even if we do that, trucks, planes, farm equipment and military hardware still needs the grunt of diesel.

So we are still on track for economic adjustments like we are seeing in Greece right now.

Electric motors have more than enough 'grunt' for any heavy duty transportation task one cares to imagine, as we all are reminded (or should be) every time we board the electric subway that accelerates 50-200 tons from 0 to 60 mph in 10secs or so. The limitation brought on by batteries lies with long distance range and perhaps extreme temperature cases, for now.

 

[mheslep]

But by looking at current world production for crude, it seems to have leveled off for the last 9 years. What production gains we have had comes from other liquids. ...

Here is a link with a break up on liquids:
http://www.theoildrum.com/files/Screen shot 2012-02-13 at 9.02.36 AM.png

But why look at just crude? During the same 9 years all liquid fuels increased 10-11 mbpd. Consumption is largely agnostic about source.

 

[SixNein]

But why look at just crude? During the same 9 years all liquid fuels increased 10-11 mbpd. Consumption is largely agnostic about source.

We look at just crude because we are interested in the production of those conventional oil wells. If we were to combine all of that information, we would arrive at Simpson's paradox, and we would draw incorrect conclusions about their state because of the lurking variables.

 

[apeiron]

Electric motors have more than enough 'grunt'...

Energy density is the issue...
http://www.global-greenhouse-warming.com/support-files/biodiesel_deer_future.pdf

 

[mheslep]

Energy density is the issue...
http://www.global-greenhouse-warming.com/support-files/biodiesel_deer_future.pdf

Yes, of which range is a linear function. At some point though I hope these 50:1 joule/kg comparisons shown in the front matter of these presentations go away, as heat engines inevitably through away more than half of that energy. Then of course diesel and gasoline engines don't run by themselves, they require the additional mass and volume of a fuel pump, oil pump, water pump, an air intake system, exhaust system, starter, large radiator, transmission with four or more gears, differential, on and on, none of which are required in an EV. Apparently a 4:1 range ratio, 400 miles to 100, is the practical ratio today.

 

[CaptFirePanda]

That conclusion is not justified, especially given the recession was Fall 2008 and imports have has been falling since 2005.

From the plot it is obvious that the numbers have not been in decline since 2005 and looking at the raw data confirms this (with minor dips lasting no longer than a year).

Yes economic slow downs deserve some of the blame for energy imports and consumption, but other factors apply apply including improvements in economic energy intensity and increase in domestic supply:
1. US energy intensity (energy per unit of economic output) has been cut in half since 1980,and improved 10% the period 2007 to 2010.

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.

2. US domestic crude production has been rising since ~2007 (up 1 mbbl/day), as have natural gas liquids (up ~500kbbl/day)

Definitely an increase (although it is closer to 0.7 mbbl) and much of this can be attributed to the Bakken. Unfortunately, as we know from every other source of hydrocarbon, production peaks and then drops off - more so with respect to the shale plays as, without constant hydraulic fracturing and drilling, production drops off rapidly.

3. Ethanol production has doubled in the last couple years (see graph from earlier post), now 1 mbbl/day.
Those three things contribute strongly to the reduction in imports and consumption.

They contribute, yes; whether they contribute strongly is a very different thing. They offset some increases in consumption, but they do not come anywhere close to offsetting the historical rise in consumption and the drop in production. Ethanol is, at best, a stop gap and it doesn't account for much of the overall hydrocarbon picture.

A fair point. Note though that energy prices have a way to go before they are constant around the world, and exports to the highest bidder immediate. Natural gas for instance is priced overseas at several multiples of the of the US price (for now). Bakken oil sells at a $30/bbl discount locally (for now). I doubt a squeeze in supply meeting demand becomes serious enough to stop a build out in more energy infrastructure.

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 production increases, resources are depleted quicker. 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 and the energy we need to spend will only 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). It is quite apparent that new technologies and new discoveries are not abating the US need for imported hydrocarbons. We can nickle and dime the numbers until the end of time, but the long term historical trends are such that the US relies rather heavily on foreign production of hydrocarbons. In order to bridge that 40%, there will need to be some sort of technological epiphany or the fundamentals of geology/thermodynamics will need to be turned on their collective ears. In the face of a huge global shift in energy consumption, the US will need to make some pretty significant strides in the next decade or so.

The depends on the efficiency of the biofuel method and the consumption at the time. That 500 bbl/acre-year engineered bacteria approach (should it work) requires 13 million acres to meet all of US current consumption (18 mbbl/day). That compares well to the 90 million acres in use currently for all US corn crops, not that such an approach needs arable land.

These forms of biofuel generation are still in their infancy. For as long as ethanol has been used and produced in the US, it still accounts for a fraction of US fuel.

 

[mheslep]

That conclusion is not justified, especially given the recession was Fall 2008 and imports have has been falling since 2005.

From the plot it is obvious that the numbers have not been in decline since 2005 and looking at the raw data confirms this (with minor dips lasting no longer than a year).

To what data are you referring?

http://205.254.135.24/dnav/pet/hist_chart/MTTNTUS2a.jpghttp://205.254.135.24/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttntus2&f=a

 

[MarcoD]

Energy density is the issue...
http://www.global-greenhouse-warming.com/support-files/biodiesel_deer_future.pdf

The picture on page 11 didn't look too bad to me. Sure, you lose cargo space, but not that much. Is there anything known about the size, or durability, of the engine which would drive a hydrogen based truck?

 

[CaptFirePanda]

To what data are you referring?

http://205.254.135.24/dnav/pet/hist_chart/MTTNTUS2a.jpghttp://205.254.135.24/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttntus2&f=a

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.