The Oil Drum | Rembrandt Koppelaar's Oil Peak

53 comments on Rembrandt Koppelaar's Oil Peak

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TRE on September 10, 2005 - 11:42am

I still have a nagging question about all these depetion estimates (or maybe two nagging interrelated questions: (1) What is the depletion rate for a resource in which the depletor may deplete it at a rate dependent upon the production rate? (2) People in the overshoot peak oil community, of which I would include myself, often look at the exponential growth tutorials that Bartlett has been giving for years--and very good ones. A must watch. The common example of overshoot, of eating up half the supply of a resource, is bacteria in a dish, fish in a pond. So the issue that always comes to mind is the following: I've looked at bacteria. And fish in the pond. They aren't driving SUVs. They aren't flying their daughter bacterias to Aruba to show up on the bacterial no spin zone the following night.

I realize I've been making this point a few times before and Stuart refers to these issues as second order effects. But I still ask: what makes anyone think that the are second order? What makes anyone think that the depletion rates you compute for the first half of the oil age will look anything like the second half, taking into account the response of the system to the depletion? Yes, I know, new technology will speed up the depletion. Those are words. What will really happen? What are the dynamics of the current depletion numbers in terms of investment, for example? Given the price of oil over the past twenty years, would you expect such depletion rates, running up into a world production barrier. And then entering a new regime? Which could be faster depletion? Or slower, depending upon the response of the system and the investment to slow the depletion rate through taking advantage of the higher oil price to tap into all those odd pockets of oil that currently are not viable.

Are there depletion models that exist? Has anyone considered this? I don't just buy into assumption even if they seem reasonable. I've found reasonable to be often wrong.

Any research out there on this topic?

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TI on September 10, 2005 - 12:09pm

It was M. King Hubbert who modelled the oil depletion. The result is the Hubbert curve. There is a mathematical model and a lot of knowledge aóf oil production behind that. I recommend ASPO (http://www.peakoil.net/) and the Simmons slides (http://www.simmonsco-intl.com/research.aspx?Type=researchspeeches).

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TRE on September 10, 2005 - 12:49pm

I understand that part. But that's not what I'm asking. I've studied Hubbert and looked at the great efforts to model depletion. But I still ask the question: what incentive has there been through the years to invest in the equipment such that the depletion rates would be lower? I suggest none. Because the price of oil didn't support that invesment. Therefore I can imagine oil companies drawing out the easy stuff and then just drawing and drawing and drawing as the production rate drops. While look for other low hanging fruit.

This has been addressed by some folks, who mention that technology will lower the depletion rates but then it will drop much more quickly later. So what I'm getting at is that this should be considered. And in addition, the economic system is going to interact with this depletion. I'm not sure that can be ignored. This isn't like depleting a fishery. As the fish stocks deplete, the fisherman don't get so hungry that they slow down fishing. I'm not convinced that we will see that behavior will fossil fuels. We just don't know. Everyone assume that the economic system is going to draw at that straw as hard as it can. Is that true? As the economic system is strained, it might not draw on that oil sucking straw as much. That will affect depletion.

Because what we are modeling is the interaction of a consumer with a depleting resource. We've never seen how the economic system deals with depletion. We've not really seen it. Not true depletion. Not of this kind. The depletion modeling is great and must continue. But I'm not sure what bearing it has on how this will play out.

Caveat emptor.

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TI on September 10, 2005 - 2:03pm

I think Simmons has had some examples of using new technology to boost the production of depleting fields. The effect has been just that: a short lived modest increase and then dropping back to the original depletion curve. No net effect. Texas is a fine eaxample of the depletion problem. The best technology is in use and there has been the will, the money and the incentives (goverment) to keep up the production. The depletion goes on along the Hubbert curve.

There are now a lot of countries which have experienced their peak oil. Many of them have had great motivation to keep the production up. Most of them accused the lack of investments for the declining production. But that has usually not been true. Any amount of money cannot bring oil where there is none.

I think all the real word experience tells that the effect of investment or R&D in the oil production curve is now quite small. Simmons makes the case that the peak of oil is not fixed beforehand. But what is time range? Not very wide, 1 - 5 years. None of the experts will really predict the exact date. It may never be known because of the bad statistics. So it is rather useless to guess when it will happen. But it is also useless to guess that something (new investments, technology) will postpone it for many more years. The mass of the oil producing system is so big and the geological constraints of supply so well known that this is not possible.

Simmons makes also the point that the Saudi fields (Ghawar) can start declining the same way that happened with Samotlor field in Russia or Prudhoe Bay in Alaska. That could mean sudden 15% decline in a year. In five years that could take 3 mbpd out of production. Something like this is happening right now in Russia: oil production grew 14% in 2004 but this year the growth is nearing zero. This a great change, comparable to the Simmons examples.

And look what is happening in Mexico: "Mexico's Pemex says 2006 oil output steady to higher"
http://66.249.93.104/search?q=cache:CtMWxMHxlYwJ:www.mywesttexas.com/site/news.cfm%3Fnewsid%3D149929 38%26BRD%3D2288%26PAG%3D461%26dept_id%3D474107%26rfi%3D6+Mexico+oil+production+2005+Pemex+Cantarell& amp;hl=fi&client=firefox-a
Read the news item and you will see that Mexican oil production was stable last year, but exports declined 3%. "Carlos Morales, head of exploration and production at Pemex, said projects other than the company's massive Cantarell field should boost production by 85,000 barrels a day in 2006." Note: should boost. But the giant Cantarell field declined 1st Q 2005 y-to-y 60,000 bpd, but is expected to decline 180,000bpd 2005-2006. This makes the depletion rate over 8%. So it is in doubt if Mexico can really boost its production next year. One more country in decline?

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JD on September 10, 2005 - 4:10pm

I think you're missing much of TRE's point, i.e. how will conservation affect the downward side of the Hubbert curve?

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TRE on September 10, 2005 - 5:06pm

Well, he did hit the one half of my point. That we've seen investment on the production side as working fields depleted. And then there's the consumption side. What happens to demand when the entire world is depleting.

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TI on September 11, 2005 - 1:16am

The geological and technical production constraints make only the upper limit of supply. We are probably now near the peak. So real conservation would mean that we should decrease consumption some more than the production would otherwise contract. That would make the fall still steeper: physical constraint + conservation. After the initial phase the rest of the curve would be flatter because we could use the oil spared by conservation. But only temporarily. That is why real net conservation would be very difficult in the beginning because it would steepen the downfall in a situation where it would be rather steep anyway and where the adapting from rising consumption to falling is most difficult. Of course deep depression triggered by oil crunch could do the trick.

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heartlake on September 11, 2005 - 9:43am

Now there's talk of pulling -- temporarily or otherwise -- the federal tax on gasoline. This would be a terrible mistake, leading the public to believe the era of cheap oil/gasoline/POL has returned. Conservation, of course, would again take a back seat. Those SUVs and tank-sized pickup trucks boiling under the sun while sitting on the sales lots will move once again. See the editorial in today's NY Times (www.nytimes.com) for the typically shortsighted media coverage: right about cutting the federal fuel tax, wrong about the long-term benefit (vs. short-term) of increasing the CAFE mileage standard

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TRE on September 11, 2005 - 2:48pm

There is no political will in the US for sensible public policy based upon cost-benefit analysis. Therefore depletion will have to do the work for us.

Another couple thoughts to consider: (1) How do the behaviors of producers change when oil is an appreciating resource when sitting in the ground? (2) How will production behaviors change as world economic growth stalls?

In a flat to decreasing oil price environment, oil in the ground is losing money that could be better placed into incoming bearing investements. Post peak, I don't think this will be the case. Therefore we could be looking at two different issues to consider in all these models: (1) constaints based upon financial reasons on the production side and (2) the consumption constraints I've been blather about for a while now (the wasteful uses of energy such as international travel, unnecessary and inefficient use of SUVs, etc).

I think the assumption by many is that we're going to draw on those oil straws as hard as possible, riding the depletion curves down. I just want to continue to throw in caveats that may cause deviations from the depletion curve.

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TRE on September 11, 2005 - 11:04pm

OK. I've done a little homework. And I don't like the answers I'm finding. I looked at the paper "The Mineral Economy: a model for the shape of oil production curves" by Ugo Bardi. In a nutshell, he produces a model in which technology will lead to an asymmetric production curve, with the fall-off after peak much sharper. See the paper for the details.

Bardi argues that the hubbert curve, even if it fits existing well depletion (local depletions), is not a good model for global depletions. If one well is depleting, there are others elsewhere that make it unnecessary to invest too heavily in that locally depleting well.

Global depletions could have a much different behavior. Another note: In figure 7 he shows an oscillating production model, which I think should seriously be considered.

Where his modeling may be weak, or unrealistic to what may actually happen, is that the consumers, if I read the model correctly, do not weaken in their consumptive behavior. The consumption of oil is a collective behavior, an industrial behavior, what one could almost call an emergent behavior of sorts. It requires industrial society to extract and process it. Depletion will interact with the industrial process and need for energy in ways that need to be considered more thoroughly.

To more accurately model what may happen, I think that the islanders--in the Bardi model--should weaken without dying. Looking at the oscillating Figure 7, one could argue that industrial society will experience shock after shock as depletion sets in. Depletion could be very rapid. That will lead to the first shock. Though I'm thinking that perhaps that first shock need not even occur with depletion. The enormous imbalances that exist in the global economy could very well tip over without depletion actually setting in. That could reduce demand for a time.

It seems that Reynolds has been looking at this issue for a while. I picked up a copy of his book Scarcity and Growth to see what he has to say.

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