Otherwise, TOD makes a winning argument everyday. Unless someone is willing to put the time in to understand the issues or, at least, they are open-minded, there is no way to persuade them. This is merely denial, which is common enough -- whether it is slashdot or Forbes.

But maybe we'll catch a few fish here, heh?

For the others, I always love it when people who don't know shit tell us we're wrong.

Oh, and don't take anything personally over there.

Separately, but related, some day the techno-freaks are going to have to come to terms with the un-paid-for costs of technology: water resource damage, loss of biodiversity, etc, etc.

http://www.theoildrum.com/story/2006/4/26/18109/8251

IMO reserves are at best a SWAG.

Oil has a very low price elasticity of supply.  There is very little more oil available at $75/barrel than at $25/barrel.

One example.  Compare 1972 Texas with 1982 Texas.  Price increased by a factor of 10.  Record drilling boom, result 14% more producing wells AND -30% less production.

A decade is "long enough" for any price elasticity effects to take hold.  New technology was developed and used.

Today, Texas produces about 25% of what it did in 1972.  And $100/barrel will not increase that to 27%. (Natural decline will offset any production increases due to higher prices in any time frame).

Saudi Arabia is VERY close to where Teas was in 1972.  They are frantically drilling, on and off-shore.  But decreases due to depletion are likely to balance any new wells.

Mexico will produce less next year, and even less in 2008, 2009 ... regardless of price.  $300/barrel will not make Mexican oil production in 2009 greater than 2005.

The quantity of oil produced in 2025 is difficult to forecast (lower than today in convential production for sure) but there are uncertainites on what could develop in 18.5 years.  OTOH, production in 2013 is not subject to as many uncertainities.  Major new projects that will go on-line by then have to be either started by today or in VERY serious planning.

Best Hopes,

alan

If one takes a couple minutes perusing the BP oil slides one notices a very interesting one. Despite oil consumption relentlessly increasing over the last few decades, the oil reserves to consumption ratio graph shows that we have had a reserve/production ratio of 40 years for the last two decades. That is to say that we have enough known reserves to supply the world oil needs at current production rates for 40 years. And guess what, at the much lower consumption rates of 20 years ago the picture was exactly the same.

...which comes about through using "proven reserves" to represent future ultimate recovery when they absolutely don't show that, their use this way leads to the flawed economic view of oil.

Bulldust, I would be interested to hear you opinions on the Bentley paper.

the known reserve base will also increase as new fields are discovered (e.g. the massive field recently discovered in the Gulf of Mexico, which is only economic at our currently highish price of oil)

I see that you have been taken in by the MSM and the 50% owner Chevron.  To quote from the 25% owner, Statoil of Norway,
......
Test results are very encouraging and may indicate a significant discovery. The full magnitude of the field's potential is still being defined.

Statoil and its partners plan to drill another appraisal well in the Jack structure in 2007.

and

The partners [Devon, Statoil & Chevron] plan to drill another appraisal well at the site in the Walker Ridge Block in 2007. A decision whether to develop Jack may be made in 2007 or 2008, Statoil's Mellbye said. The [Jack] field would start production in 2013  IF development goes ahead, he said...

My emphasis added
.......
Please note that Statoil is 5/8ths owned by the Kingdom of Norway and they are less interested than Chevron in impacting US public perceptions and elections.

The discovery, a mixture of oil & gas, for the entire field, not just Jack, is 3 to 15 billion barrels of oil EQUILAVENT.  This makes it a large but not a massive discovery.  A few months of world oil consumption plus a lot of natural gas.

Again it is NOT a "massive" discovery !

Best Hopes,

Alan

This post is not on reserves or resources, it has no pretensions on leading with that, it just projects into the future current trends in consumption and production.

If one takes a couple minutes perusing the BP oil slides one notices a very interesting one. Despite oil consumption relentlessly increasing over the last few decades, the oil reserves to consumption ratio graph shows that we have had a reserve/production ratio of 40 years for the last two decades. That is to say that we have enough known reserves to supply the world oil needs at current production rates for 40 years. And guess what, at the much lower consumption rates of 20 years ago the picture was exactly the same.

This is a well known phenomenon, in the case of the US, R/P is 10 years since the 1920s, which of course leaves you clueless on the peak in 1970 and the subsequent decline. Considering that consumption is changing globally R/P is quite a valueless measure.

The work of Hubbert allows us today to project in the future the curve of production without knowing the Ultimate Recoverable Reserves. Moreover URR is an output of the Hubbert Method not and input. For more on this please read prof. Deffeyes' "Beyond Oil".

Going back to the 40 years R/P, that assumes an URR of about 1200 Gb for Liquids (Crude + NGPL). Crude Remaining Reserves stand today at 800 Gb, after peaking in 1979 at 1100 Gb. So that leaves you with 400 Gb in Remaining Reserves of NGPL, how plausible is that?

Peak Oil is about Production, not about Reserves. Crude Reserves peaked in 1979; what we are searching here at TOD is the Peak in Crude and Liquids Production.

If you are so interested in reserves I invite you to read Jean Laherrère's "Peak oil and related peaks!":

Part 1
Part 2

I shall skip your insulting insinuation that we don't know what reserves are. Read the Bentley paper that Chris recommends above.

As a mineral economist, you present the oversimplified arguments -- like the IEA -- that oil just magically appears solely as a function of price. You have missed at least four salient points -- there are others, as well --

1. the difference between reserves and production flows (measured, for example, in millions of barrels per day)

2. geological & technical constraints on production flows

3. the discoveries trend -- oil discoveries peaked in the 1960's

4. declines in old, existing fields e.g. Cantarell, Greater Burgan, Daqing, etc. -- you need to know that the global oil production decline rate. We are trying to get a handle on that. I've seen numbers anywhere from 2% to 8%. It's becoming a Red Queen problem -- you must run harder & harder to stay where you are

I could go on, talking about marginal costs because the easy-to-produce oil that built the world you inhabit is gone, etc. For now, just keep these rules of thumb, stated by geologist Greg Croft, in mind

• Production and historical production are facts.
• Reserves are an opinion.
• Undiscovered resources are a fantasy.

The peak of global oil considers the topping out of production. There are hydrocarbons everywhere and you are right, some are economic to produce at a certain price. But others will never get produced at any price or their production is very hard regardless of price. Consider Kashagan in Kazahkstan. When this field was discovered in 2000, various estimates put its recoverable reserves at anywhere between 9 and 17 Gb (billions of barrels). Right now, the view is that there is a 13.4 Gb URR. However, due to the geological and physical context of the discovery, the world has never seen a barrel of oil from there yet and the date at which that is scheduled to happen keeps moving further and further out into the future. We will see some flows from Kashagan -- but how much and in what timeframe? That is a peak oil question.

I have dealt with all this, as has Stuart Staniford, HO and others. You can click on any of our names in the right side-bar and read through the various stories we have published. But you probably won't because, unlike Dr. James Hamilton, an excellent economist, you appear to be one of those Cornucopian economists that thinks the "free market" will always provide. It is just a question of price, right? That's how they teach in school.

I think you may have wandered on to the wrong site. The key proponents of peak oil on this site are well versed with knowledge of the industry, economics, engineering, and oil specific geology.  Whether there are some people jumping on the bandwagon is irrelevant. On this site, you are required to confront some formidable experts, including some who have spent decades in the oil industry.

Your discussion of reserves is pedantic, at best, and hardly needs to be pointed out to most of the people who frequent this site. Again, I think you may have mistaken this site for those sites which consist  mostly of neophytes.

As to the substitution effect, thus far we have mainly exercised that option by substituting foreign oil for domestic oil.  Higher prices did little or nothing to stem the tide of peak oil within the U.S.  We continue to slide.

Yes, there are all kinds of potential substitutions. It does not necessarily follow, however, that these subsitutions will be sufficiently inexpensive to run a world wide energy intensive economy without wrecking the planet with global warming. One of the popular subsitutions is coal.  Ironically, oil is and was a substitution for coal. Now we are going backwards at great environmental cost. Just because we get substitutions doesn't mean we are making progress.

Where the depletion curve is a smooth time curve up to the right (time t on the X axis, price p on the Y axis).

The problems are:

- uncertainty.  Solow says that the last barrel or pound of an exhaustible resource, will be consumed at the moment when the price hits infinity.

But we don't know when that is.  So our assumptions about developing alternative supplies may be wrong.  The actual price path could be extremely jagged.

- substitutability.  the model also predicts alternative sources will come in, as prices rise.

To some extent (Canadian oil sands) that is happening.  Conversely, it's pretty clear there aren't enough substitute technologies now to substitute for even a significant fraction of our oil and gas consumption (other than coal, which has its own set of issues).

So if oil production ceases rising, or even just doesn't rise as fast as we think it will, the price of oil could go to the stratosphere.

The other point, which Deffyes makes very well (and why his first book is worth a read), and so does Simmons (see the powerpoints on Simmons & Co website) is that higher prices does not lead to higher (conventional) production.  US real oil prices have been far higher post 1972 than pre 1972, but domestic lower 48 oil production peaked in 1972 and has followed a remorseless slide since.

This despite the greatest revolution in oilfield drilling since the late 19th century: horizontal drilling and real time 3D imaging.

So the smartest people in the world, with the best equipment, have dug more wells in the US than ever before in history, and found less oil and gas.  Despite the highest real prices ever experienced.

that should give one pause on cornucopian arguments about conventional oil and gas supplies.

It looks like we are well up that Hotelling curve.