<Can we really relax? The Oil Drum MMS Update>

15 comments on And for those who missed this . .

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droskill on September 8, 2005 - 3:04pm Permalink | Subthread | Comments top
Hey all - recent reader enjoying the discussion with a question: a few weeks back Businessweek made the argument that new technology would come online that would offset the increasingly depleted oil and gas fields and that price increases would have the effect of having more companies invest to bring up the remaining oil.  In other words, that the oil that is now consider economically unviable would become more viable.  But what I'd love to hear from the group is this: can the technology do this?  Are we close to this tech being here, or is it going to be like fusion energy?  

These charts from the UK are downright scary....

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Dave Cohen on September 8, 2005 - 3:43pm Permalink | Subthread | Parent | Comments top
Re: "can the technology do this? Are we close to this tech being here, or is it going to be like fusion energy?"

According to what I've read from HO and others about EOR [enhanced oil recovery] technology, the answer to both your questions is NO. There appears to be a double-edged sword here. EOR (e.g. H20 or CO2 injection, horizontal drilling) may lead to short-term gains but can also lead to faster and steeper declines later. This depends a lot on the peculiar geology of the field in question. Apparently J wrote a post on this sometime back with respect to offshore deep sea drilling that showed that these fields deplete fast and EOR techniques do not help. Matt Simmons is of the opinion that all available new technologies have already been deployed and there is nothing new "on the shelf" that will make miracles happen to offset decline rates.
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mw on September 8, 2005 - 5:35pm Permalink | Subthread | Parent | Comments top
Plus we already have CO2 injection and horizontal drilling being used; still the majors are producing less.

Investment is up; drilling rig deployment is at or near record historic highs in many parts of the world -- yet new finds are not as yet delivering on the gusher(s) Yergin's thesis needs to come true.

And some experienced oil and gas CEO's are saying in public that they don't believe there are new Saudi Arabias just waiting to be discovered, with most of the world having been under the microscope for some time now.

It may be that all our new technology has ALREADY been staving off peak oil... i.e. without satellites and advanced seismic etc etc we'd have peaked long ago.

When it comes to finding stuff underground that can be extracted, at some point there will be a peak... that is inevitable. Its possible we are already good enough at finding and extracting it to have largely maxed out the planet.

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droskill on September 8, 2005 - 8:35pm Permalink | Subthread | Parent | Comments top
I appreciate everyone taking the time to reply. I agree that the peak is coming regardless of technology - just curious if it was likely to offset the losses as BusinessWeek feels.

Are there similar charts or graphs for American oil sources?  Or perhaps for Saudi oil (I know their data is questionable)?

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Heading Out on September 8, 2005 - 9:58pm Permalink | Subthread | Parent | Comments top
There are some things that you can do with EOR that will actually enhance overall oil recovery - doing liquid CO2 injection is one of them.  But it will only work in certain situations, and you need a power station that wants to find a way of getting rid of its exhaust to make it work economically. (Pumping the gas into the middle of the North Sea was a non-starter not because it wouldn't work, but because getting the gas there and liquifying it cost too much). maybe you have given me the incentive to do my "Oil Companies and Technology" Post - so I'll go write it for tomorrow.

HO

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MikeTor on September 9, 2005 - 3:52am Permalink | Subthread | Parent | Comments top
Peak Oil theory is not just a theory, it has already been proven true in most countries. Nearly every year another country is added to the list of those who passed peak.
Two links on that

http://www.hubbertpeak.com/blanchard/

http://www.hubbertpeak.com/nations/2004/

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Eroie Van Tanstaafl on September 9, 2005 - 8:57am Permalink | Subthread | Parent | Comments top
"Technology" can do three things.  
  1. accelerate extraction rates,
  2. reduce the cost of extraction and development,
  3. increase the total amount of recoverable oil (Estim. Ultim. Recov.).  

These are often linked: technology that reduces costs may make unprofitable oil profitable at the current price, so extraction is accelerated.  Cost reduction may make some oil that would be unprofitable at any forseeable price (EROEI less than 1) sufficiently profitable that it should be added to the EUR.  And sometimes the unique geology of a field allows extraction-accelerating technology to increase total recoverables - slower extraction may strand more oil in inaccessible pockets as water rises or the field structure collapses.

There have been and continue to be advances in all three aspects, such that reserves and EUR are slowly but constantly being revised upwards.

But there's an exponential scale problem.

Each new field starts out with all the benefits of previous technology - so higher extraction rates and greater total recoverables are already factored in.  If we want technology to increase reserves at the same rate in the future that they have grown in the past, it must develop at an accelertaing rate.  

Example: decades ago, Field X had 100 mb.  Of that, perhaps 30% was recoverable, or 30 mb.  Let's say past technology may have increased recoveries by 10% of the in-ground total, recovering an additional 10mb and raising the total to 40mb.  That's growth of 33%.  Not bad.  Today, if we were to find the 100mb Field X, we would say it has 40mb recoverable.  But if future technology will raise recovery by the same 10% of the in-ground total, that's still another 10mb - but now it's only a 25% increase.  In order to increase our recoverables by 33% again, we need our new technology to raise recovery rates by 13.3% of the in-ground total over the same interval.  

So we need technology to do ever more for use, when in fact it gives us diminishing returns.

There's also a "big idea" problem.  

50-60 years ago, if you'd asked oil geologists for a Tech Wish List, they would have asked for things that were simply not possible:

  • "see" the oil in the ground and accurately map a field without drilling a single well.  
  • Drill multiple wells from a single rig, in any direction - not just straight down, but twisting, turning, miles down into the ground, even horizontally, to hit the smaller isolated pockets of oil in a field, especially off-shore.  

These are the two 'breakthrough advances' of the last 30 years: 3D-seismic imaging and multiple-directional-drilling.

Sure, lots of other improvements have been of the 'incremental' variety: gradual improvments in drilling rigs, well monitoring and sensors, pipeline and extraction technologies, and pushing off-shore into gradually increasing depths or farther onto the tundra and ice.  But those two big breakthroughs have been HUGE - accounting for a very large share of the gains from technology, and both are now 20 years old or more. There hasn't been a 'breakthrough' in a long time.

If you ask geologists what they want today, there are no big ideas out there, just incremental advances.  Those increments may still result in large gains over time, but it's hard to think of any extra abilities we need.

-- E.v.T  (aka Silent E)

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15 comments on And for those who missed this . .

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