News When will the world reach peak fossil fuel production?

[mheslep]

Again, the issue is not the raw number of Saudi fields (well it is insofar it is a state secret) but the size of them. So this is what you need to provide evidence for. Otherwise the statement seems intentionally deceptive.
[...]
A little more source is required, no matter how respected you find the Economist.

Then take it up with the Economist, not me.

 

[apeiron]

We can speculate on several reasons: the rise of North Sea oil, cheaper US and Chinese coal, expense of exporting coal solids, perhaps mines planned poorly long ago mines, now collapsed and flooded, that would still be economic if constructed properly to begin with, and so on.

You can throw in other non-reserve factors too, such as pits were part of the social fabric and spent seams were kept going with subsidies just to provide continuity of local jobs. Thatcher came in and with the bonus of north sea oil was able to take on the mining unions in a power show-down.

But that is beside the point. Hubbert curve thinking is all about the varieties of friction that accumulate and force a shift from a first phase of easy extraction followed by a second of diminishing returns.

Anyway, back to what you were saying about all the untapped Saudi reserves which are known and should give us comfort...

 

[apeiron]

Then take it up with the Economist, not me.

No fair. You cherry-picked this slide from the presentation and gave it to us out of context.

It seems to me a clear reason why "mainstream" sources can't be trusted - the quote is basically spin.

So you are saying you cannot find support for the 1 in 8 statement and want to close the discussion? OK, I can understand that.

 

[mheslep]

You can throw in other non-reserve factors too, such as pits were part of the social fabric and spent seams were kept going with subsidies just to provide continuity of local jobs. Thatcher came in and with the bonus of north sea oil was able to take on the mining unions in a power show-down.

Exactly, agreed.

But that is beside the point. Hubbert curve thinking is all about the varieties of friction that accumulate and force a shift from a first phase of easy extraction followed by a second of diminishing returns...

Not according to Brown in this talk. He clearly states the production curve produces "ultimate recoverable reserves". That might indeed occur sometimes, but as a rule he's simply wrong.

 

[apeiron]

That is, Canadian net exports have increasing mostly continuously since ~1990. To go off and speak at Sandia on a net exports theory and ignore this fact is reckless.

The Canadian story is a little indeed, err, special given Nafta.

One implication of this “proportionality clause” is that although as shown in Trends in Canadian Petroleum Production and Consumption, Canada is a net petroleum exporter, it still has to import petroleum to cover the excess (i.e., the excess over net production minus domestic consumption) petroleum it sends to the USA. Up till now that had not been a problem, because importing petroleum from Europe, the Middle East and from the USA, has been cheaper than shipping oil from Western Canada.

http://crash-watcher.blogspot.com/2010/11/canadapetroleum-superpower-or-super.html

 

[nismaratwork]

Then take it up with the Economist, not me.

Yeah, from someone else I might buy that... not from you. You're way too bright to slip and fall into that one. I'd say, support the post you made with 'The Economist', and find a new source, or remove it. If the problem really is that you can be so easily gulled by this magazine, it may be best that you don't use it as a source.

This discussion over the last two pages has been driven by that piece of misinformation that you're not even willing to support. I find that a bit frustrating from someone as experienced and knowledgeable (according to Gokul, and you... and Russ, and others). Can you think how you might handle this if the situation were reversed... and yeah, I already know how you often have in the past; post records are great.

I'd add, that the Saudi Government ceases to be a meaningful authority in a country of international importance once those resources dry up. Obviously that process, and the possibility of annexation or war, increase as that peak and drop-off approach. I think you could argue that the entirety of Saudi oil production, and the house of Saud in general IS "Machiavellian", and they NOW require that approach. Having painted themselves into a corner politically, and socially with Wahabi Islam... I'd guess the greatest fear of anyone with a stake in SA is in fact that the oil-horizon appears.

 

[apeiron]

A little more on the near-term view on peak oil and conventional reserves.

1) Does Saudi have a lot more up its sleeve?

Here you can contrast the views of two top former Aramco staff. Here is a good WSJ analysis.

http://saudioilproduction.blogspot.com/2008/06/saleri-and-husseini.html

Husseini is sticking to his guns as recent interviews already cited show. And here from his own company website he still emphasises this key quote.

Husseini expressed a negative view about the world's proved oil reserves—
“[World] reserves are confused and in fact inflated. Many of the so called reserves are in fact resources. They’re not delineated, they’re not accessible, they’re not available for production”. By [Al-Husseini's] estimate 300 billion of the world’s 1200 [billion] barrels of proved reserves should be recategorized as speculative resources.
http://www.husseinienergy.com/Press_Releases_Details.aspx?Id=6

You can also check actual production figures for Saudi, which have bumped along at under 9.5 mbd for some years.
http://earlywarn.blogspot.com/2010/07/latest-saudi-arabian-oil-production.html

This does not tell us much I agree. The Saudi's claim to have the capacity as the world's swing producer to pump 12.5 mbd if needed (and Husseini says that's a fact). But with the oil spike/credit crunch/recession, the claim has not had to be tested.

But remember also the US wants Saudi to push production up to 15 mdb this decade. Which is what will show whether Saudi is actually mature as a producer or is stiil sitting on a hidden stash.

2) The actual big hope that Mheslep did not mention is Iraq. The obvious reason for effecting regime change was to get Iraq up from a measely 2 mbd to the 12 mbd where it "should be" for US economic interests and to fully exploit its reserves.

If everything goes smoothly and production gets ramped up in six years (an unparalleled increase in drilling, terminal building, etc) then Iraq could delay peak oil about a decade some say.

http://earlywarn.blogspot.com/2009/12/iraqi-oil-production-history.html

 

[mheslep]

I'm inclined to think CERA's estimates are most reliable. That is, if the demand is there and I don't think it will be.

http://www.cera.com/aspx/cda/imageDisplays/imageDisplay.ashx?PK=16152&t=Image&f=gImageData&n=iImagePK

http://www.cera.com/aspx/cda/public1/news/pressReleases/pressReleaseDetails.aspx?CID=8444

 

[apeiron]

I'm inclined to think CERA's estimates are most reliable. That is, if the demand is there and I don't think it will be.

I'm inclined to think Cera is at least as reliable as the Economist . But anyway, shouldn't you really be citing their most recent revised version of this graph?

https://www.cera.com/aspx/cda/client/report/reportImageDisplay.aspx?KID=5&CID=10720&IID=21246

Or the full report download...
https://www.cera.com/aspx/cda/filedisplay/publicfiledisplay.ashx?KID=5&CID=10720&PK=38356

Your earlier Cera graph shows plenty of growth in conventional oil production yet. The latest one looks to, err, have peaked, sorry to say. Average across all the spurious bumps of their undulating plateau and the line looks pretty flat at 85 mbd to me.

Unconventional oil still does roar away. But not nearly to the same extent as in the earlier graph.

Things overall look flat from 2020 at around 110 mbd. Then compare this current prediction to the one you cite which says supply will soar in a straight line to 135 mbd by 2035, only then peaking and flattening out.

So Cera may be reliable. It also seems to have changed its tune drastically in the space of a few years.

Like the IEA recent conversion to peak-ism, everyone's views are converging as they should. You would not be able to tell this just from Cera's rhetoric of course. So thanks for bringing attention to the graphs.

 

[nismaratwork]

I'm inclined to think Cera is at least as reliable as the Economist . But anyway, shouldn't you really be citing their most recent revised version of this graph?

https://www.cera.com/aspx/cda/client/report/reportImageDisplay.aspx?KID=5&CID=10720&IID=21246

Or the full report download...
https://www.cera.com/aspx/cda/filedisplay/publicfiledisplay.ashx?KID=5&CID=10720&PK=38356

Your earlier Cera graph shows plenty of growth in conventional oil production yet. The latest one looks to, err, have peaked, sorry to say. Average across all the spurious bumps of their undulating plateau and the line looks pretty flat at 85 mbd to me.

Unconventional oil still does roar away. But not nearly to the same extent as in the earlier graph.

Things overall look flat from 2020 at around 110 mbd. Then compare this current prediction to the one you cite which says supply will soar in a straight line to 135 mbd by 2035, only then peaking and flattening out.

So Cera may be reliable. It also seems to have changed its tune drastically in the space of a few years.

Like the IEA recent conversion to peak-ism, everyone's views are converging as they should. You would not be able to tell this just from Cera's rhetoric of course. So thanks for bringing attention to the graphs.

Wow, that's a real 180 turn in their graphs. How the hell did you miss that mheslep? First the Economist, now this... I thought the idea was that we didn't have to fact-check each other.

 

[mheslep]

I'm inclined to think Cera is at least as reliable as the Economist . But anyway, shouldn't you really be citing their most recent revised version of this graph?

https://www.cera.com/aspx/cda/client/report/reportImageDisplay.aspx?KID=5&CID=10720&IID=21246

Or the full report download...
https://www.cera.com/aspx/cda/filedisplay/publicfiledisplay.ashx?KID=5&CID=10720&PK=38356

Thanks

Your earlier Cera graph shows plenty of growth in conventional oil production yet. The latest one looks to, err, have peaked, sorry to say.

Why are you sorry?

Average across all the spurious bumps of their undulating plateau and the line looks pretty flat at 85 mbd to me.

So?

Unconventional oil still does roar away. But not nearly to the same extent as in the earlier graph.

Things overall look flat from 2020 at around 110 mbd. Then compare this current prediction to the one you cite which says supply will soar in a straight line to 135 mbd by 2035, only then peaking and flattening out.

So Cera may be reliable. It also seems to have changed its tune drastically in the space of a few years.

About resources? If you read the report you'd know that, no, they have not. The changes in production are due to changes in other factors, primarily demand. In neither the older or the newer report to they show any calamitous decline in production. As I said above about the earlier CERA production estimate, "if the demand is there and I don't think it will be." As CERA says in the recent report:

Supply evolution through 2030 is not a question of resource availability.

there should be more than an adequate inventory of physical resources available to increase supply to meet anticipated levels of demand in this time frame. Post-2030 supply may well struggle to meet demand, but an undulating plateau rather than a dramatic peak will likely unfold. Moreover, if the “peak demand” now evident in the OECD countries is a precursor of later developments in the emerging markets, world demand itself could eventually move on to a different course.*

But much will happen before then that will affect demand—from changes in the automobile engine and the electric battery to changes in demographics and values. That is why the concept of “peak demand” is so important. Ironically, it may come to be viewed in retrospect as the main driver of peak supply. In that case what happens aboveground will have set the tempo for what happens belowground.

 

[apeiron]

About resources? If you read the report you'd know that, no, they have not. The changes in production are due to changes in other factors, primarily demand. In neither the older or the newer report to they show any calamitous decline in production. As I said above about the earlier CERA production estimate, "if the demand is there and I don't think it will be." As CERA says in the recent report:

But the problem here is that you are asking us to trust people like the Economist and Cera when these are not transparent sources. You call them reliable. On what basis?

Cera is a private firm that keeps its data to itself. The report is a gloss. We don't know the methodology and we don't have the raw figures. And the fact their own projections can jump around so much should ring alarm bells. Why are you so unconcerned?

When you have one projection that says the world will produce a total of 3.6 trillion barrels by 2070, then a second one that says it will be now 2.4 trillion, well that is quite a gap.

Surely something must have changed even if, as you agree, Cera's rhetoric hasn't .

Cera's position is that we can ignore oil reserves because they are effectively unlimited. But as said, the data that might justify that view is not being made public by Cera and is contested by, among others, the recent head of production at Aramco.

Given that stance, then of course Cera's argument becomes that we will produce as much as the market demands. We can model some demand damping due to the rising cost of unconventional production, or due to more conservative pumping to eke out fields for the longest, etc.

But assuming no constraint on actual reserves is such a big leap that it needs to be properly sourced here.

 

[nismaratwork]

...And again, there are compelling reasons for people with a great deal of money and influence to make "peak oil" a surprise... you know... like the housing crash. Ultimately oil is a kind of Ponzi scheme at the highest level, with principalities and wealth awarded to some, diffusing down the line. When that goes, it's going to go all at once, and given the stability of the region:weapons...

 

[mheslep]

But the problem here is that you are asking us to trust people like the Economist and Cera when these are not transparent sources. You call them reliable. On what basis?

I am not asking you trust them apeiron, these are forecasts after all. Make up your own mind, as you will certainly do anyway without my encouragement. I list them here only as mainstream sources, which is the habit of this forum. That is, they're not crackpot or conspiracy or "myoiltruthblog.org" sources, but they're no more the final truth on a subject than an article from the NYT or the WSJ. CERA is different in that it is not a news source but a private consulting firm. I find them more reliable than the numerous other forecasters out there because they are a longstanding professional organization, with an excellent reputation, including numerous experts in economics, the energy industry, and scientists. Its founder is a world famous pulitzer prize winner on energy.

Cera is a private firm that keeps its data to itself. The report is a gloss. We don't know the methodology and we don't have the raw figures. And the fact their own projections can jump around so much should ring alarm bells. Why are you so unconcerned?

When you have one projection that says the world will produce a total of 3.6 trillion barrels by 2070, then a second one that says it will be now 2.4 trillion, well that is quite a gap.

Surely something must have changed even if, as you agree, Cera's rhetoric hasn't [...]

Yes indeed something has changed! As the report says, and I'll say one more time before moving on, demand has changed; demand forecasts are changing drastically in OECD countries from five years ago. World petroleum consumption did not increase, it actually dropped in 2008. US oil consumption in particular has declined every year since 2005. That doesn't mean it will continue to do so, but the recent consumption history facts certainly are a large change from the ever increasing oil consumption forecasts of a few years ago.

Cera's position is that we can ignore oil reserves because they are effectively unlimited.

That's a strawman, they say the opposite.

Of course looking further ahead, it is important to recognize that oil is a finite resource ...

 

[nismaratwork]

I am not asking you trust them apeiron, these are forecasts after all. Make up your own mind, as you will certainly do anyway without my encouragement. I list them here only as mainstream sources, which is the habit of this forum. That is, they're not crackpot or conspiracy or "myoiltruthblog.org" sources, but they're no more the final truth on a subject than an article from the NYT or the WSJ. CERA is different in that it is not a news source but a private consulting firm. I find them more reliable than the numerous other forecasters out there because they are a longstanding professional organization, with an excellent reputation, including numerous experts in economics, the energy industry, and scientists. Its founder is a world famous pulitzer prize winner on energy.

Yes indeed something has changed! As the report says, and I'll say one more time before moving on, demand has changed; demand forecasts are changing drastically in OECD countries from five years ago. World petroleum consumption did not increase, it actually dropped in 2008. US oil consumption in particular has declined every year since 2005. That doesn't mean it will continue to do so, but the recent consumption history facts certainly are a large change from the ever increasing oil consumption forecasts of a few years ago.

That's a strawman, they say the opposite.

re bold: Hardly; it's just an observation that the CERA model has plentiful oil long after we're all dead... hence "effectively.

Oh, and I'd be much happier of the founder was a Nobel rather than a Pulitzer winner.

 

[apeiron]

This should be a thought provoking graph. It shows the close relationship between oil prices and food prices. So for anyone arguing for energy substitution scenarios, one question here is whether there is a substitute for oil when it comes to food production. And also what are the prospects for political stability in the world's poor and populous countries if oil prices must double, treble, etc, as they would do if we have to move heavily into unconventional sources of petroleum.

http://www.paulchefurka.ca/Oil_Food.html

http://www.paulchefurka.ca/Oil_Food.png

 

[PhilKravitz]

It all seems to be unfolding just as projected in "The Limits to Growth" book from 1972(?).

 

[mheslep]

This should be a thought provoking graph. It shows the close relationship between oil prices and food prices.

Yes, and it shows why oil prices and not necessarily corn based ethanol production should be the place to look for as a cause in the spikes in food prices.

So for anyone arguing for energy substitution scenarios, one question here is whether there is a substitute for oil when it comes to food production.

Why not? Food is not literally made from oil; it is the ancillaries - transportation, etc - that need alternatives.

And also what are the prospects for political stability in the world's poor and populous countries if oil prices must double, treble, etc, as they would do if we have to move heavily into unconventional sources of petroleum.

Treble? Tar sand oil is making money at $40/bbl. Why must unconventional fossile fuels, renewable liquids, and electric transportation reach an equivalent of 3X current $/bbl costs?

 

[PhilKravitz]

Why not? Food is not literally made from oil; it is the ancillaries - transportation, etc - that need alternatives.

The primary energy input is human made fertilizer.

 

[apeiron]

Why not? Food is not literally made from oil; it is the ancillaries - transportation, etc - that need alternatives.

As Phil says, fertilizer is a major input. Agricultural machinery and world transport rely on a portable liquid fuel source. So petroleum is behind the green revolution - in a way that nuclear or wind can never be directly, and indirectly, well that quickly becomes expensive.

But an aside you might quickly be able to answer. What about the fact that both commodities are denominated in US dollars here, so the correlation could merely reflect currency fluctuations - dollar against a world average?

I didn't think this was a factor, the dollar being the de facto world currency, but maybe it is?

Treble? Tar sand oil is making money at $40/bbl. Why must unconventional fossile fuels, renewable liquids, and electric transportation reach an equivalent of 3X current $/bbl costs?

Do you have a good analytical paper to back up the $40 figure? I know it is widely quoted. But history also shows that the oil industry goes for the cheapest, easiest development first, so what is break-even for early fields is not going to be the cost when production is in earnest.

If Canadian voters force producers to factor in the cost of environmental degradation, then again, the numbers will not seem so pretty.

The simple EROEI means that tar sands can never match the cheapness of sweet crude. The Canadians might accept wafer profit margins instead of extracting an Opec style profit on each barrel. Or then again, in a free market, they might sting the US for all it is willing to pay eventually.

 

[PhilKravitz]

"Tar sand oil is making money at $40/bbl." I do not support or deny this statement. But one of the major inputs to making tar oil is natural gas to cook the sand. So we have to modify the statement to say "at X $ per cubic foot for natural gas tar sand is profitable at $40/bbl" I do not know what X is assumed by those making the statement.

 

[apeiron]

More on tar sands...the criticisms run along the lines of too much carbon produced, too much water consumed, and even just physically scaling up the production is a major constraint.

http://www.ceres.org/Page.aspx?pid=1251

Shrinking profit margin: The costs of producing oil sands - already the world's most expensive source of new oil - are rising and will continue to do so due to the onset of carbon pricing, higher input commodity prices, and rising costs for water treatment and land reclamation. As a result, global oil prices will need to remain high - possibly approaching $100 per barrel - to ensure a competitive rate of return on $120 billion in planned expansion projects. Oil sand operators must also be mindful that if global oil prices get too high, between $120 and $150 a barrel, it will likely reduce global oil demand and shift markets in favor of alternative fuels.

Water and Other Resource Constraints: Oil sands production is highly water intensive, with up to four barrels of freshwater consumed for every barrel of oil produced from surface mining extraction. Water withdrawals from the Athabasca River watershed are already restricted during winter months to protect fish habitat. If oil sands production volume grows according to companies' estimates, some oil sands mining operations could exceed their wintertime allowances as early as 2014, causing possible production interruptions. Climate change may also exacerbate this situation; glaciers feeding into the Athabasca River watershed are already shrinking.

Growing Land Reclamation Costs/Liability: After 40 years of production, no oil sand companies have yet fully reclaimed the extensive tailings ponds used for holding polluted wastewater. This is because the fine tailings in these ponds take decades to settle out. These tailing ponds, already covering an area the size of Washington D.C., pose risks of contaminating adjoining lands and water resources, and present health problems in downstream communities. Alberta's Directive 74 requires oil sands miners to speed up remediation of existing ponds – an order that creates especially large liabilities for the industry's legacy miners such as Suncor and Syncrude.

 

[PhilKravitz]

I am sure Canada will be left just as clean as Nigeria.

 

[apeiron]

Reflecting the difficulties of ramping up production to "commercial scale", the actual goals are quite modest anyway.

Oil sands companies in Alberta are already producing 1.3 million barrels a day, and their goal is to triple production by 2030.

http://www.globe-net.com/articles/2010/may/24/financial-risks-of-oil-sands-greater-than-bps-gulf-oil-spill.aspx?sub=12

 

[nismaratwork]

I am sure Canada will be left just as clean as Nigeria.

When has Nigeria ever been anything like Canada in terms of geography, population density, or social and religious divisions? I don't see Canada being worried, but rather pleased as they sit on something that is more and more valuable: fresh water. We CAN live without oil, however it might set us back; no water = dead. Oil and fuel have started wars, but they're open to a lot of economic room too... water often leads to conflict.

So, I guess Canada might be terrified that they'll make lots of money, unless you think the USA is going to follow the script of a South Park movie?

 

[PhilKravitz]

. water often leads to conflict.

Yes water from the Canadian northwest is important to continued development of the US southwest.

 

[nismaratwork]

Yes water from the Canadian northwest is important to continued development of the US southwest.

...And how does that lead to Canada as Nigeria?

 

[PhilKravitz]

...And how does that lead to Canada as Nigeria?

it addresses the question of water needs can lead to conflict.

Nigeria has oil and is being exploited by the global corporations (no clean up), Canada has oil (oil sand) and is being exploited by the global corporations. Already the government is unhappy with the slow rate of clean up. How will they force clean up? They have failed to do so over the past 20 years according to a previous post not mine.

 

[Evo]

it addresses the question of water needs can lead to conflict.

Nigeria has oil and is being exploited by the global corporations (no clean up), Canada has oil (oil sand) and is being exploited by the global corporations. Already the government is unhappy with the slow rate of clean up. How will they force clean up? They have failed to do so over the past 20 years according to a previous post not mine.

Please post links to the valid sources that prove your statements to be facts.

You have been making a lot of statements of *facts* in a number of threads without ever providing evidence when asked. Do not post here again until you furnish proof.

 

[nismaratwork]

it addresses the question of water needs can lead to conflict.

Nigeria has oil and is being exploited by the global corporations (no clean up), Canada has oil (oil sand) and is being exploited by the global corporations. Already the government is unhappy with the slow rate of clean up. How will they force clean up? They have failed to do so over the past 20 years according to a previous post not mine.

I'm going to do this, because I suspect you've never been taught about causal vs. casual relationships. Beyond that, would've just asked what Evo is: where do you get this stuff?


So: Here it is...

I found a good version via 'teh googlez..zuh':

Probably the single most important concept that I learned in a college class was the importance of the having the right comparison information when evaluating the importance of a statistic. The question should always be: relative to what?

Example: Someone says 90% of serial killers drink milk. People instinctively think milk somehow causes serial killers. Putting aside the fact that correlation is not necessarily causation, the statistic is only one of four pieces of information you need to evaluate the significance of the claim. What you really need is below:
Serial Killers Non-Serial Killers
Drink Milk 90% 89%
Don't Drink Milk 10% 11%

Now the claim is seen for the more or less trivial thing that it is. But so often just one of those numbers is given, and people assume the rest.

@http://www.metafilter.com/99598/What-scientific-concept-would-improve-everybodys-cognitive-toolkit


Note, that's not a citation, but it's a good example of a logical principle you need to get on, right away.