The Oil Drum | DrumBeat: October 9, 2006

175 comments on DrumBeat: October 9, 2006

Comments can no longer be added to this story.

Show without comments | PDF version

Dave Cohen on October 9, 2006 - 10:17am

Maybe I woke up on the wrong side of the bed, but I kinda wish Michael Lynch would have the gonads to bring his mystical Cornucopian faith onto TOD and try to support it with real data. Here is the proposition he must defend:

The world will be flooded with new supply in a low oil price environment.

I want him to tell me how that's going to work. I want details. I want specifics. I want to know exactly where the oil will be coming from. I want to know where any substitutes will come from and by what dates. I do not want history teaches us, the markets will provide, technology will save us, etcetera.

I'm ready anytime.

Comments can no longer be added to this story.

dipchip on October 9, 2006 - 10:38am

In todays environment Michael Lynch's never die they just fade away.

Comments can no longer be added to this story.

Hothgor on October 9, 2006 - 10:58am

Did I pass your homework assignment, Dave? :P

Comments can no longer be added to this story.

Dave Cohen on October 9, 2006 - 11:38am

Not quite. You need to work on sorting out wild ass guesses about estimated recoverable reserves versus anticipated production flows. You need to consider the economics -- as in this Norwegian Feasibility study: CO2 injection too expensive and too risky. I may post on this since I have my notes. The prospects for production from CO2 injection in the mid-term (out to 2015) are somewhat limited -- it all ramps up slowly. And the oil price must remain high. CO2 injection already provides some of our current production, mostly in the Permian Basin, where the economics make sense. It's necessary to read stories like CO2 Injection Boosts Oil Recovery, Captures Emissions critically. And I think you already looked at my past story on Weyburn.

You should see Deep Ocean Energy Resources -- A Critical Analysis also. Oh, this reminds me that there is a "Jack #2" appraisal going on at Orphan Basin off Newfoundland. If the test is "successful", expect a similar media blitz. Otherwise, you won't hear a thing unless you look hard.

Hope that helps...

Comments can no longer be added to this story.

westexas on October 9, 2006 - 12:11pm

When I went toe to toe with ExxonMobil and with Lynch (actually Lynch was calling in from Tokyo) on the PBS debate, I did get Lynch to agree that some regions have peaked and declined.

But he asserts that while some regions will peak and decline, in effect the world will virtually never peak and decline, or the worst case is that the peak (or more likely plateau) is decades away. This is exactly analogous to saying that while individual oil wells will peak and decline, the total production from the field--which is the sum of production from individual wells--will virtually never peak and decline. Anyone else notice a flaw in this reasoning?

Comments can no longer be added to this story.

Dave Cohen on October 9, 2006 - 12:21pm

Yes, it's exactly analogous.

With apologies to Prodigal Son...

Comments can no longer be added to this story.

EngineerAU on October 9, 2006 - 12:43pm

Sounds like the reasoning that was popular during the dot com disaster: "Sure we're losing money on each sale but we make up for in volume".

Comments can no longer be added to this story.

neon9 on October 9, 2006 - 3:01pm

Step 1-Assert that growth is infinite and we'll never run of oil
Step 2- ???
Step 3- Profit

With apologies to the underpants gnomes.

Comments can no longer be added to this story.

TrueKaiser on October 9, 2006 - 6:41pm

i am sure you just annoyed a bunch of slash dot posters :P :P

Comments can no longer be added to this story.

toilforoil on October 9, 2006 - 1:00pm

Lynch's family groceries are paid for with income from those with political or financial interests in the endless abundance argument, especially the Saudi princedom and Exxon. The first needs to convince the populace that Osama's case for higher priced oil is flawed and the second wishes to undermine the case for windfall profit taxes.

There are other touts and shills around. Note that the Hudson Institute, another recipient of Exxon funds, has been busy insinuating the Jack2 tall tale into various articles its retainers author.

Facts and logic will not dissuade Lynch or his ilk. Their progeny, however, are likely to remember them with little fondness.

Comments can no longer be added to this story.

JoulesBurn on October 9, 2006 - 1:53pm

Lynch's reasoning could hold water if:

Some areas really don't ever decline (KSA)
Enough new large fields are continually being found to offset the declining ones.

Come on, drink the kool-aid.

Comments can no longer be added to this story.

PhilRelig on October 9, 2006 - 2:49pm

But what if Robert Rapier is correct and tar sands, CTL, GTL, heavy oil, etc., really do all have EROEIs closer to 5:1 rather than 3:2? If this is true, doesn't it give Lynch's argument about a peak decades distant some plausibility?

Comments can no longer be added to this story.

tate423 on October 9, 2006 - 3:27pm

That won't matter when you must consider what I can turn into oil to put into refineries. Even if the tar sands in Canada ramp up to max, they aren't going to be kicking out (mbp. It's just not going to happen.

Comments can no longer be added to this story.

tate423 on October 9, 2006 - 3:28pm

That won't matter when you must consider what I can turn into oil to put into refineries. Even if the tar sands in Canada ramp up to max, they aren't going to be kicking out 9mbp. It's just not going to happen. Sorry for the double post.

Comments can no longer be added to this story.

Dave Cohen on October 9, 2006 - 4:59pm

Re: But what if Robert Rapier is correct and tar sands, CTL, GTL, heavy oil, etc., really do all have EROEIs closer to 5:1 rather than 3:2? If this is true, doesn't it give Lynch's argument about a peak decades distant some plausibility?

No. And your point is?????

Tell how many millions of barrels a day we're going to be getting from tar sands, CTL, GTL, Venezuelan heavy oil, etc. by 2015. Include the economics with start up costs, long lead times to implementation, etc. for each. Think about the CTL & GTL throughputs. Think about Hugo Chavez. Think about the fact that tar sands development is in deep trouble right now, let alone 5 years or 10 years out.

And finally, think about how Robert or anyone else has calculated the EROEI. What is the precision of that?

Then get back to me.

Comments can no longer be added to this story.

Robert Rapier on October 9, 2006 - 5:20pm

First of all, I don't think any of these will scale up fast enough to push a peak off by decades. That is not the point I am making. The point I am making is that by jumping into these technologies instead of focusing on more renewable alternatives, we are doing even more damage to the environment than from conventional oil.

Say what you will about how fast you think they will scale up. But it is fast enough that Canada will abandon their Kyoto commitments, and therein lies my point.

Finally, how I calculated the EROEI was merely a way of putting an upper bound on it. The lion's share of the energy going into extracting the tar sands will be direct natural gas usage. If we have a figure for natural gas, and a figure for how many barrels of oil was produced from the tar sands (which we did), I can rough out an EROEI. Also note that after I calculated that, someone linked to an article in which Suncor claimed the same EROEI as the one I had calculated. I am guessing they have a pretty good idea of their energy inputs and outputs.

And the reason it is important is that it tells you that we will continue to try developing tar sands, as opposed to something like oil shale where the EROEI is much worse. Money keeps pouring into tar sands. It will keep scaling up.

Comments can no longer be added to this story.

Dave Cohen on October 9, 2006 - 5:47pm

Oh sure, I agree with all this.

But PhilRelig and Michael Lynch are still learning.

As for the EROEI, the "lion's share ... will be direct natural gas usage." For PhilRelig & others -- and Lynch if he's eager and willing to learn about what he gets paid to do -- see my Oh, Canada! -- Natural Gas and the Future of Tar Sands Production and also Extreme Production Measures to see what a mess the tar sands production is in.

Comments can no longer be added to this story.

Dave Cohen on October 9, 2006 - 6:04pm

Sorry, two more thoughts.

Re: EROEI was merely a way of putting an upper bound on it.

Right. Our readers need to understand that the world they inhabit was built on EROEIs of ≥ 20:1 -- and also

As you and I have both said, these "unconventional sources" will not scale up fast enough to avoid the peak. At the point where these sources become available on scales that make any difference, the world would just be managing the tail. Moreover, if the world decides to assign a cost to carbon (via cap & trade) as a first step or finally decides to do the right thing -- mandating sequestration of some % carbon -- then this changes any marginal costs calculation.

Comments can no longer be added to this story.

PhilRelig on October 9, 2006 - 6:18pm

But suppose the world decided to engage tomorrow in an all-out, full-front attempt at making the tarsands/heavycrude/CTL/GTL/LTG panoply of options work - a la the Hirsch report "summation of wedges" notion. Wouldn't this make a significant difference?

OK, fine, it will have adverse effects on the environment. But suppose TPTB chose to ignore that (which I expect will increasingly be the case in the long run anyhow). Wouldn't an all-out effort significantly ameliorate the decline to be expected in coming decades, possibly holding what would have been a 5-6% annual decline at a manageable 2-3%, thus successfully enabling the current growth-oriented economic paradigm to continue for a generation-or-so longer?

Comments can no longer be added to this story.

roel on October 9, 2006 - 6:30pm

That is exactly what will happen, we'll keep on digging.

In fact, it's what has been going on from the time oil had a 100:1 EROEI, of course, which is now, let's say, 20:1, if that. That and using exponentially more of it. Work harder to get less result.
That's why we have climate change. 2nd law.

Comments can no longer be added to this story.

Dave Cohen on October 9, 2006 - 6:53pm

Re: But suppose the world decided to engage tomorrow in an all-out, full-front attempt at making the tarsands/heavycrude/CTL/GTL/LTG panoply of options work - a la the Hirsch report "summation of wedges" notion. Wouldn't this make a significant difference?

Hell, yeah! It would guarantee that the planet wouldn't be habitable for our grandchildren. OK, that may be a bit of an exaggeration. Still, it will be tough to locate the exact Beach Front Property line in Florida and Louisiana, not to mention Bangla Desh and a lot of other places.

Click to Enlarge

But seriously -- throwing money at the problem is not going to work. Believe me, Phil, we here at TOD do pay a lot of attention to unconventional subsitututes for crude oil.

Still, I like this -- a Manhattan Project effort to do exactly the wrong thing. But I'm not a well man.

Comments can no longer be added to this story.

PhilRelig on October 10, 2006 - 9:44am

Please do understand, Dave, that I am in fundamental agreement with you, and that I am trying to be a HELPFUL contrarian. I just get a bit frustrated when I think I have a handle on things and someone comes along and throws a monkey-wrench into it by undermining a point of view I had placed my trust in. That's what happened when RR came along with his revisionist 6:1 EROEI tarsands claim a day or two ago. There's a big difference between 6:1 and 3:2! Scientific amateurs like myself (and Tom Whipple) are reliant upon professional researchers having gotten these types of things right; and the present dispute reveals that it is devilishly difficult to know which scientific researchers to trust.

I note, however, that he has significantly modified this in a post below by conceding more like a 3:1 EROEI when it comes to gasoline derived from tarsands.

Comments can no longer be added to this story.

Robert Rapier on October 10, 2006 - 12:24pm

I just get a bit frustrated when I think I have a handle on things and someone comes along and throws a monkey-wrench into it by undermining a point of view I had placed my trust in.

I had also consistently used that 3:2 number, but could never find a source for it. Once I did find some sources, the numbers appeared to be quite a bit better than 3:2. This actually makes sense to me, because I don't believe things have gotten bad enough yet for us to start developing sources with a 3:2 return (unless it is subsidized).

I note, however, that he has significantly modified this in a post below by conceding more like a 3:1 EROEI when it comes to gasoline derived from tarsands.

That wasn't a concession, it was a clarification. Those who quote 3:2 are only talking about the oil extraction step. The 8:1 refers to the oil extraction step. If you want to take it all the way to gasoline, the numbers would be something like 4:1 based on my back of the envelope number, and the 3:2 number would drop probably down in the 1.3/1 range. (Don't have time at the moment to work it out exactly, but the refining step is going to be at least 10/1).

Comments can no longer be added to this story.

PhilRelig on October 10, 2006 - 1:39pm

But maybe part of the problem has been lack of clarity over whether the issue was tarsands-to-sycrude or tarsands-to-usable-transport-fuel. Perhaps the standard 3:2 EROEI that has been floating around the Peak Oil community for so long presupposed the latter to begin with. (Which still doesn't make it the correct figure, I will grant.)

Comments can no longer be added to this story.

Valuethinker on October 10, 2006 - 10:52am

It's no exaggeration to talk about life being impossible for your grandchildren on this planet.

The Permian extinction happened when CO2 concentrations reached 1000ppm.

We are at 381ppm now, and going up by 2ppm a year, a rate which is accelerating.

On the 'business as usual' model of the IPCC, we are over 800ppm by the end of the century.

What we don't know is when, at what ppm, the process becomes self fulfilling, ie it gets warm enough that methane release and plant decay and death begin to accelerate the accumulation of CO2. At which point, human activity becomes irrelevant (turn up the air conditioner dear, it's hot out there ;-).

Scientists used to say that 550ppm was probably the maximum safety level. Now the consensus seems to be shifting towards 450ppm. We will be there before the half century is up. Some say 300 ppm ;-).

Comments can no longer be added to this story.

PhilRelig on October 9, 2006 - 6:23pm

Going hand-in-hand with what I just said is the following general observation: Imminent Peakers, of whom I am one, tend to pay far too little attention to non-conventional substitutes for conventional oil/condensate/NGL production. That is something of an Achilles Heel in the ideological wars, as well as in the scientific case for imminent Peak Oil itself.

Just today, for example, Tom Whipple's weekly ASPO energy review repeated the canard that the EROEI for tarsands is 3:2 or thereabouts (if Robert Rapier and Suncor are indeed correct, that is). Since Tom Whipple is a well-informed commentator who does this full-time, one could consider this to be symptomatic of the movement as a whole not having done their homework.

Comments can no longer be added to this story.

PhilRelig on October 9, 2006 - 6:27pm

But Robert, why should Suncor be believable in claiming this? Don't they have an obvious bias in painting as rosy a picture as possible? An important parallel is the nuclear industry, who also paint a misleadingly rosy picture for themselves of an EROEI of 8:1, when independent and unbiased contrarians (or are they?) have done studies claiming to document an EROEI more like 3:1 for nuclear power.

The problem is that all these types of controversies are inherently complex, and therefore it is easy to obfuscate the truth with lines of argument having a high prima facie plausibility.

Comments can no longer be added to this story.

Robert Rapier on October 9, 2006 - 10:35pm

But Robert, why should Suncor be believable in claiming this? Don't they have an obvious bias in painting as rosy a picture as possible?

I didn't read that as them painting a rosy picture. It appeared to me that they were saying "Crap, our energy efficiency is lousy. We are only getting 8/1." Remember, these are oil guys. They are used to 20/1. The worst fields in the world get 10/1. Here they are getting 8/1, and admitting that they need to do better.

I would also add that this doesn't include the refining step. Add that and you are down to 3 or 4 to 1 from tar sands all the way to gasoline.

Comments can no longer be added to this story.