DrumBeat: March 16, 2007
Posted by Leanan on March 16, 2007 - 9:09am
Topic: Miscellaneous
Weekly Offshore Rig Review: OPEC's Big Flex
One of the key realizations that comes out of this look at climbing oil prices is that OPEC can do very little to stop, or even slow, rising oil prices. In fact, when prices reached all-time highs in 2006, OPEC officially did nothing at all (although its individual member nations were very much involved in generating the tensions that drove those new records).Even in times of crisis, particularly in the aftermath of the 2005 hurricanes, OPEC was essentially helpless to affect the rising oil prices around the globe. Saudi Arabia's offers to pump all available crude to meet demand and cover for damaged infrastructure in the US GOM helped to soothe nerves. However, the organization ultimately made only modest increases in production that in and of themselves had little impact on prices.
What it'll take to sink oil prices
Subprime woes, slowing economic growth, even a recession - will anything bring prices back down to $30 a barrel?
The organising committee join me in inviting you to join us in Cork, Ireland, this September for the 6th Annual International ASPO Conference entitled 'Time to React?'
Liquefied Natural Gas Makes a Global Debut in 2007
The problem for the U.S. is that most of its natural gas imports must come from Canada. This is because natural gas markets are regional.That opens the door for LNG because of its global market. The new Imex will let gas producers reach more favorable markets.
Peak Oil and Beyond - Q&A with Heinberg, Campbell and Leggett - Part 1
At January’s Soil Association conference “One Planet Agriculture”, I chaired a session called “Peak Oil And Beyond - a Discussion Circle”, which gave delegates the opportunity to question Richard Heinberg and Colin Campbell, and later Jeremy Leggett, about peak oil and related issues. The session ran for over an hour, so rather than bombard you with it all at once, I will run it in installments over the next few days. It was a fascinating discussion, ranging over peak oil, climate change, agriculture, land reform, and much more.
Climate disasters: three obstacles to doing anything
So, why is so little being done? It is clearly not for lack of awareness of the problem, however much some persons try to deny its existence. Yet, the degree to which the political leaders of the world are ready to do something about it, and indeed the degree to which there is public pressure that they do something, is remarkably low. When there is such a clear disjunction between knowledge and action, there must be obstacles in the socio-political arena to explain this. In fact, there are three quite powerful obstacles to action: the interests of producers/entrepreneurs, the interests of less wealthy nations, and the attitudes of you and me. Each is a powerful obstacle.
Petrobras Loses 188,000b Due to Orellana Protests
Brazil's federal energy company Petrobras has lost 188,000b since halting oil production because of labor strikes in Ecuador's Orellana province in the Amazon, according to press reports.
NPR: Would More Biofuel Use Threaten Food Supplies? (audio)
President Bush promoted the benefits of ethanol during a recent Latin American tour. But the fuel has drawbacks, including the possibility that significant use of corn-based ethanol could mean higher costs for a food staple in many poor nations. Rob Routs, an executive director at Shell Oil, talks with Steve Inskeep.
Correa Vows to Revise Oil Deals in Ecuador's Favor
President Rafael Correa repeated here Wednesday that he is determined to revise Ecuador's contracts with foreign energy firms to ensure the state receives its due as the owner of the Andean nation's oil.
Richard Heinberg Speaks to European Parliament
On February 27 I had the extraordinary opportunity to meet with three members of the European Parliament, and to address a session of the Parliamentary Trade Committee on the subject of Peak Oil.
The target wreckers: Two ministries appear to be set on scuppering the government's plans to combat global warming
Now for the really bad news. Two government departments are actively undermining everything this bill seeks to achieve. One of them is the Department for Transport. It's not just that it is building 4,000 kilometres of new trunk roads and telling the airports to produce "master plans" for a doubling of capacity. It has also sought to frustrate any effort to quantify the impact of its policies.
Shell Oil exec urges policy change
Oil companies need the government's cooperation to develop energy alternatives, a top executive of one of the world's leading gas producers told Montgomery business leaders Thursday.The president of Shell Oil Co., John Hofmeister, said public policy determines whether companies can afford to develop energy alternatives. Current policy, he said, does not.
We don't know when the next big gas crisis will happen, but with "peak oil" around the corner, it is a guaranteed event.
Big Oil Faces Tough Talks on Their Stakes in Orinoco Patch
Six western oil majors are sitting down with Hugo Chavez's government to plot the future of the world's largest hydrocarbons basin. But they face a stark choice: Play a supporting, not leading role, and accept less profit from operations involving Venezuela's massive tar oil reserves, or take a hike.
11 injured in four blasts in restive northeast India
Eleven people were injured in restive northeastern India in a series of blasts that left a gas pipeline in flames and one of the bombers dead, officials said.Police suspect the United Liberation Front of Asom (ULFA) -- which has been fighting for an independent homeland for almost three decades -- of carrying out the four blasts in Assam state's eastern Sivasagar district.
British Gas plans rooftop solar panel launch
British Gas is close to launching its first venture selling household solar panels, the chief executive of its parent Centrica said on Thursday.
Earth has warmest December-February on record
The Earth has just experienced its warmest December-February since records began 128 years ago, a US government agency reported, adding fire to global warming concerns.
Counties launch anti-global warming plan
Residents of Virginia's largest county might soon see more vegetation growing on roofs and more green space in new neighborhoods as part of a multimillion-dollar initiative to combat global warming.
It is strange and striking that climate change activists have not committed any acts of terrorism. After all, terrorism is for the individual by far the modern world’s most effective form of political action, and climate change is an issue about which people feel just as strongly as about, say, animal rights. This is especially noticeable when you bear in mind the ease of things like blowing up petrol stations, or vandalising SUVs. In cities, SUVs are loathed by everyone except the people who drive them; and in a city the size of London, a few dozen people could in a short space of time make the ownership of these cars effectively impossible, just by running keys down the side of them, at a cost to the owner of several thousand pounds a time. Say fifty people vandalising four cars each every night for a month: six thousand trashed SUVs in a month and the Chelsea tractors would soon be disappearing from our streets. So why don’t these things happen? Is it because the people who feel strongly about climate change are simply too nice, too educated, to do anything of the sort? (But terrorists are often highly educated.) Or is it that even the people who feel most strongly about climate change on some level can’t quite bring themselves to believe in it?
Halliburton's move creates hullabaloo
"There's not much oil in Texas anymore," said Dalton Garis, an American energy economist at the Petroleum Institute in Abu Dhabi. "Halliburton is in the oil and gas industry, and guess what? Sixty percent of the world's oil and gas is right here. If they didn't move now, they'd have to do it later."
OPEC Chief: Members Have Upstream Projects Worth $100B
NOC fuel supply cut triggers shortage
Shortage of petrol deepened in the Kathmandu Valley Thursday as Nepal Oil Corporation (NOC) cut down supplies sharply amid fast depletion of stocks in Amlekhgunj and Thankot depot.
Carbon Emissions Concerns Fueling Nuclear Renaissance - Will There Be Sufficient Uranium Mined to Meet the New Demand?
Powering ahead in sustainable fuel revolution
Plans have been given the go-ahead for a plant at Wilton on Teesside to convert 1.2 million tonnes of wheat a year into ethanol, a high-octane substance that can be blended with petrol for use in vehicles. This is the equivalent of around three billion road miles a year for an average car, or put another way, enough to keep 300,000 cars on the road for a year using a sustainable fuel.
Oil companies running hard to stand still
Despite a calm hurricane season, record prices and a forecast consensus from energy agencies that supply would continue to grow, oil production stalled last year. Were the oil companies not trying hard enough?Chris Skrebowski, editor of the British oil industry journal Petroleum Review, would not agree. He has just published his annual Megaprojects report. The numbers show the global oil industry implemented oilfield projects providing an extra 3.2 million barrels a day to the market last year.
This is a historically high level of activity. So why was production flat, and even falling in many countries? The answer begins with "d" and gets to the heart of the debate about when global oil production will finally peak and begin its terminal decline: depletion.
Blood and oil - Elections could further destabilise the violent, oil-rich Delta region
In the past year, attacks on oil facilities have forced Nigeria to shut down a fifth of its production; over 100 foreign workers have been kidnapped in the oil-producing Niger Delta region. Higher security costs and a shrinking number of expatriates willing to take the risks of working there have sharply slowed new investment. The Nigerian government has lost billions of dollars in oil revenues. Now the multinational oil companies, such as Royal Dutch Shell, that operate in Africa's biggest oil producer are bracing themselves for more trouble. The omens are not good; in the run-up to the elections in 2003, violence in the Delta forced Nigeria to shut down 40% of its oil capacity.
OPEC is trying its best to halt the oil price from collapsing due to softening of demand across the globe. The stealth deflation is the killer. In Japan it is manifesting itself over almost two decades. The same affects the U.S. economy since year 2000. The emerging market economies arte just getting introduced to the deflation disease as people in those countries cannot pay back their massive loans against homes, cars, cell phone – you name it.
Could crazy technology save the planet?
There's the man-made "volcano" that shoots gigatons of sulfur high into the air. The space "sun shade" made of trillions of little reflectors between Earth and sun, slightly lowering the planet's temperature. The forest of ugly artificial "trees" that suck carbon dioxide out of the air. And the "Geritol solution" in which iron dust is dumped into the ocean."Of course it's desperation," said Stanford University professor Stephen Schneider. "It's planetary methadone for our planetary heroin addiction. It does come out of the pessimism of any realist that says this planet can't be trusted to do the right thing."
Chinese coal-fired capacity nears 699,700 MW
The total capacity of Chinese fossil-fired power plants in operation or under construction as displayed in the new McIlvaine Chinese Utility Plans database is 699,700 MW.
Alstom and American Electric Power to Bring CO2 Capture Technology to Commercial Scale by 2011
Alstom and American Electric Power (AEP) signed a Memorandum of Understanding to bring Alstom’s advanced sorbent CO2 capture (chilled ammonia) process for CO2 capture to full commercial scale of up to 200 MW by 2011. This is a major step in demonstrating post-combustion carbon capture.
Researchers Propose Hydrogen-Augmented Fischer-Tropsch Processes; More Product, No CO2
Purdue University chemical engineers have proposed a modification to the conventional biomass- or coal-to-liquids Fischer-Tropsch process that could, by their calculations, produce sufficient fuel for the entire US transportation sector.
Raymond James Answers the 10 Most Common Ethanol Questions
Raymond James issued a very interesting report on Ethanol recently. In it they provide their answers to the ten questions they most frequently receive on the topic. The report is well worth the read, but we summarize their points below...
Abu Dhabi: Turning to the sun in the land of oil
Just on the outskirts of this Gulf city, past a refinery and a water desalination plant, the foundations are being poured for an ambitious project intended to take this big oil producer into the next energy boom.Oil, however, will have nothing to do with it.
The sun will.
Confronting BP: Biofuels and the Green Resistance
Now that Al Gore has his "green" Oscar and George W. Bush has closed a deal in Brazil by which American will burn up the cane fields in the name of environmental salvation, it is time to get serious about the realities of biofuel. Clearly research into biofuels is necessary, but few people are aware yet how this research will be carried out, how constrained ideologically it will be, how corrupting an influence it might become on American universities, and how dangerous its products might be to the ecology of the planet. Fortunately, a movement is a foot on the campus of UC Berkeley that may create a wave of resistance to and awareness about consequences of a biofuel economy, especially one governed by oil companies.
Carbon footprint of products to be displayed on label package
The Carbon Trust is launching a green equivalent to the Fairtrade label - a consumer label which details the carbon footprint of a product and a commitment by its producer to reduce it.
Fascinating stuff. The world has been running down its stocks to the tune of a million barrels a day for the past five months (if I've got that right). OPEC claims to have substantial spare capacity, but is keeping it in reserve. World production is dead flat (yet China and India are increasing their imports...) Demand has to increase by that million barrels, mechanically, as people stop drawing down their reserves.
So, will we get to test the hypothesis of a Saudi peak in the next few months, or will they get away with masking it due to inadequate demand?
My question for all of you TODer's, is where is the price signal to deal with this? The only answer I've come up with is, the market will deal with this come Wednesday the 20th when the May contract comes up for bidding. Then maybe the market will then consider the petroleum stocks needs for summer driving season.
My speculation, instant pop up to $72.00 on the May spot market this next Wednesday. We'll then see if OPEC and especially Saudi Arabia is willing to cut the 1.7 Mb/day restriction it has self-imposed. By July or August we can then see what production level its willing to support with the taps open. Even with America possibally in recession by the end of the year, I still think Chindia will mop surplus oil then can get their hands on.
There is no such thing as "May spot." May implies the futures market and "spot" implies the spot market which is always "right now". Apologies for being a nitpicker. ;-)
That being said, nothing short of a world shaking event will cause oil prices to go to to $72.00 (either spot or the May contract) by Wednesday.
Perhaps if Saudi announced that they are in terminal decline, or OPEC announced that those vast Middle East reserves are largely fictional...
Ron Patterson
"nothing short of a world shaking event will cause oil prices to go to to $72.00 "
War in the middle east is likely one earth shaking event we will see this year.
The Hezbos, Hamas/Fatah, and Syrians have been very, very busy the past year building tunnels, smuggling weapons, and fortifying their borders with iranian and Russian missile systems to attack Israel on three fronts (meanwhile the the US and Israel are also preparing while playing poker at the UN to appease the rest of the world (("we tried your way")) and backing off from gaza while making faux peaceful overatures to the palastinians...).
tick...tick...tick
Oh Please...
The squalor of millions caged in refugee camps is JUST A DISGUISE for a massive military machine capable of taking on Israel's US-supplied military? The Palestinians have secretely procured attack helicopters, jets and nuclear weapons?
There's a name for this type of bass-ackwards fantasy, something about the dominator feeling weak.
However, if Israel feels compelled to again seize others' territory, then, as it has been shown, they will face problems...
I agree that Israel and the US have been making 'faux-peaceful' overtures for years.
Yes, the Mid-East is a ticking bomb, capable of exploding repeatedly, but we're not being attacked, invaded or occupied. They are.
Sendoilplease thinks all Shiites are satanic monsters unafraid of sending infantry against Israel's estimated 200-nuke arsenal. Of course, he's careful not to mention that secret arsenal, because, like the neocons, his desire for your sons and your tax dollars to be employed exterminating Iran requires public support. If normal Americans understood that Israel is hiding 200 nukes, the great majority of them would say, "hey, that's plenty of deterrent, you dudes don't need our kind of help to survive."
Nice strawman you've built of me in you decrepit, simpleton mind. A neocon... that hurt ;).
Not all of the parties involved are shiite, and not all shiite are radicals, or, "satanic monsters" as you call them.
Who cares how many nukes Israel has, it did not stop the Hezbo's last year and wont stop them in concert with Syria and the gangs of gaza this year (especially with the support of Iran).
As for exterminating Iran - spare my the liberal apologist hyperbole. Just pay attention and watch what happens this year - and then feel free to apologize for your favorite "victims" while ignoring their role in the mess.
"Who cares how many nukes Israel has, it did not stop the Hezbo's last year..."
Typical zionist distortion of history. For a more informed and rational analysis of events last year in and around Greater Israel please see this column by Jonathon Cook, who writes from Nazareth:
Israel's supposedly "defensive" assault on Hizbullah last summer, in which more than 1,000 Lebanese civilians were killed in a massive aerial bombardment that ended with Israel littering the country's south with cluster bombs, was cast in a definitively different light last week by Israeli prime minister Ehud Olmert.
http://www.informationclearinghouse.info/article17298.htm
Oh godz, now I'm a "zionist" too... (**shudder**)
Look, as much as the apologists would like to pretend otherwise, the Hezbos, hamas, fatah do not want Israel to exist. They are teaming up with Iran and Syria and they will have their "War To Wipe Israel off the map" - likely some time this summer.
Hide behind pseudo "informed and rational analysis" all you want but you are just kidding yourself.
Pick your favorite team (for whatever reason), make your excuses and apologies now in advance, but also make some popcorn and watch from a safe distance if you can.
" Israel's struggle for peace is a sincere one. In fact, Israel desires to live at peace not only with its neighbours, but also and especially with its own Palestinian population, and with Palestinians whose lands its military occupies by force. Israel's desire for peace is not only rhetorical but also substantive and deeply psychological. With few exceptions, prominent Zionist leaders since the inception of colonial Zionism have desired to establish peace with the Palestinians and other Arabs whose lands they slated for colonisation and settlement. The only thing Israel has asked for, and continues to ask for in order to end the state of war with the Palestinians and its Arab neighbours, is that all recognise its right to be a racist state that discriminates by law against Palestinians and other Arabs and grants differential legal rights and privileges to its own Jewish citizens and to all other Jews anywhere. The resistance that the Palestinian people and other Arabs have launched against Israel's right to be a racist state is what continues to stand between Israel and the peace for which it has struggled and to which it has been committed for decades. Indeed, this resistance is nothing less than the "New anti- Semitism"."
The rest of the article at:
http://www.informationclearinghouse.info/article17339.htm
Who said anything about attack helicopters and jets? Are you really that ignorant or just trying to distort the argument to support your cherished view of Hamas and Fatah as innocent victims? Why do you prefer such an ignorant and simpleton view instead of reality? Do you also pretend both Hamas and Fatah recognize Israel and that they do not want it destroyed?
Who is the "we" that are not being attacked? Who is the "we" that uses suicide bombers and fires rockets at deliberatly at civilians during the "cease fire" - and then hides among civilians for protection?
Both sides share blame in the continuing hostilities. My post simply reviewed the reality of what has been happening the past year since the Hezbos made a valiant stand against the IDF.
The trio surrounding Israel have planz of their own. Don't be so gullible. I'm sure they look forward to support from the western anti-semite leftists and cooperation from the media when they stage their "civilian casualties" PR events later this summer.
As for "we're not being attacked" - that depends on who you define as "we" (leftist apologist pansies at a safe distance do not count).
"...something about the dominator feeling weak." Or just plain old paranoia. To speak frankly, Israelis use that paranoia as an excuse to get what they want no matter how nasty..Like confiscating Palastinian lands and filling'em up with Jewish "settlers".
I'm an armchair general too, but digging tunnels and fortifying oneself as preparation to attack something is a non sequitur.
Are suicide bombers and random missile attacks on civilian centers defensive too? After all these years, why now stockpile weapons and build tunnels - including tunnels into Israel?
In any case, as I said in my original post, Both sides are preparing for war. Regardless of which side you favor or make excuses for - for whatever reason-, they are preparing and it's likely to begin this spring/summer.
Nicely put regarding spot versus futures. Too bad everyone on this blog isn't that polite.
I'm probably going to start doing a more or less weekly column on Graphoilogy, probably every Monday, starting in a week or two.
First three topics will probably be on Texas/Lower 48 Model (Revised); ELP & The 40 Acre Plan for Survival and Electrification of Transportation.
In regard to the Texas/Lower 48 article, IMO, Robert's assessment of the Texas data is wrong.
I think that we do see a strong linear pattern in the Texas data, starting in 1958. I am going to ask Khebab to do some modeling to compare predicted post-1972 cumulative production, using the HL data from 1958 to 1966 (inclusive) and from 1958 to 1972 (inclusive) to compare to the actual post-1972 cumulative production. And one thing that I would like to do is to construct a mathematical definition of when to start using the data for a HL prediction--probably in terms of running averages of year over year changes in amplitude on the HL plots.
One benefit of this exercise was to help confirm what I suspected, i.e., the recent "dogleg" in the Saudi HL data is probably just an artifact of the increase in production right before the peak. Right now, I think that the 75 Gb in remaining Saudi reserves is probably the outer limit for remaining recoverable reserves, instead of being the lower limit.
I am puzzled as to why Robert focus didn't focus on this data set in order to evaluate the HL method: http://static.flickr.com/45/145149304_a4a72211e6_o.png
After all, Hubbert did accurately predict the approximate Lower 48 peak--inclusive of Texas--and the post-1970 cumulative Lower 48 production was 99% of what the HL model predicted it would be, using only data through 1970 to construct the model.
And finally, there have been three recent predictions for lower crude oil production, based on the HL method--World; Saudi Arabia; Mexico--and in all three cases, crude oil production is declining.
BTW, anyone notice any similarity between the Lower 48 HL plot and this HL plot: http://static.flickr.com/54/145149301_b930ef7bc4_o.png
Did you see this at EB?
Is there a geek-to-English translator in the house? ;-)
Is there a geek-to-English translator in the house? ;-)
I do know how to explain things in laymen's terms. So, here is a very simple explanation. A model should not be at the mercy of the person doing the modeling. I should be able to explain the technique to someone else, describe the parameters involved and what they mean, and that person should come up with the same answer as me.
The HL is not remotely like that. The parameters aren't tight at all. Does a country peak at 48% of Qt or 60%? You can't say, even though the difference can span 20 years. What should the intercept be? Depends. So you couldn't just hand this to someone with instructions for finding the peak for a given country. It is completely "operator dependent."
Here is the simplest layman's explanation that just came to me in a flash. It's like a ouija board, where the operator can strongly influence the outcome.
Robert, a model is a model, not a absolutely perfect tool for prediction. Models are refined over time and frequently vary case by case (e.g. inflamatory responses within your body follow a model but vary by tissue and by stimulus and between individuals in the population).
What you said could just as easily apply to modeling of ecosystem dynamics or evolution itself. There will be variations for individual cases that cloud the probabilities for each.
Robert, a model is a model, not a absolutely perfect tool for prediction.
I understand full well what a model is and what its limitations are. But if I have a model that behaves like a Rorschach inkblot test such that it allows people to see what they want to see, then I have a poor model.
In science we are stuck with "poor models" more often than not.
We'll see as time passes how well the Saudi puddle follows HL and whose reading of this Rorschach inkblot, tarot cards and Ouji boards was most accruate (and, in hindsight, where the errors were in the inputs by the various operators).
Robert I urged you to do the error analysis on HL I knew full well what the outcome would be but you needed to see it for yourself.
What your not doing now is stepping back and taking a critical look at it. I've done a lot of useful work with unstable equations and gotten good results well past where you would think they would work.
I used to do semi-classical analysis which boils down to correlating a classical path with the density of a quantum wave function. In some cases you can get correlation well below n=10 where the theory predicts it won't work for n < 100 where n is the quantum energy number.
How did I do this I picked the right paths through inspection of numerical results. I've even done this with systems that were chaotic using a method called needle in a haystack. The Poincaré surfaces of section look like random dots.
These results are confirmed with a full wave function calculation. It just shows the human computer can blow the doors off any digital computer for pattern recognition.
Combining the strengths of both can result in some cool results.
One thing you did not do is finish the analysis and calculate HL plots for each year so your not seeing HL narrow in on the the right answer if you would do this you would see that HL gives a Gaussian distribution around the right answer. You gave three plots I had expected about 20.
If you do this then you will see that picking the smooth region of production actually has a firm analytical basis.
I cannot say your wrong in your conclusion but I can say you have not yet finished the analysis of HL and its error.
Until you finish your conclusion are unjustified.
I'll say one more thing your have harped on the fact that if we pick too early and are wrong then we lose all credibility well we are being watched by a lot of people now. The chances are about 90% that WT is right and your wrong by making a stand without finishing the analysis its you who stand to lose a lot of credibility.
So I urge you to continue to look at this and finish the analysis and understand the strengths and weaknesses of HL.
The only reason I like it is that I believe that perturbations to HL average to zero thus its correct. In fact thats a good analysis do some perturbation on the data.
But lets pull back from jumping to conclusions. There are a lot of ways to be wrong in what we are trying to do a early prediction of peak is just one.
Robert I urged you to do the error analysis on HL I knew full well what the outcome would be but you needed to see it for yourself.
Now wait a second. I originally brought up the topic because I had already done a quick and dirty for 1960's Texas, and saw that the precision was terrible. That's when I said I was going to do something more in depth. You did keep reminding me of it, but I didn't need to "see it for myself." I had already seen it, and my hypothesis was that when I did the full Texas history it was going to show poor precision.
One thing you did not do is finish the analysis and calculate HL plots for each year so your not seeing HL narrow in on the the right answer if you would do this you would see that HL gives a Gaussian distribution around the right answer.
What is the "right answer"? I think the problem here is that you are letting the prediction drive the model, instead of the model tell you what the prediction should be. You think you know the answer already (which you clearly show with your 90% view that WT is right). That's the whole point.
The chances are about 90% that WT is right and your wrong by making a stand without finishing the analysis its you who stand to lose a lot of credibility.
My credibility is not on the line, because the Texas case is what it is. What it is not - as we have been told again and again - a good analogy for Saudi. Or, if it is, then it suggests that we are a long way from Saudi peaking. That was what I showed in the essay, but some seem to want to revise and tweak the Texas model, while still presuming the Saudi prediction remains constant.
Point taken we both agree that the HL method seems to lets say wander a bit in its URR prediction. I saw it you saw it. I feel its important to discuss and so do you.
Now I also noticed that it tends to converge your basically claiming that it does not. I disagree. Two extremes in the production timeline don't fit the model at the beginning when the region has not be fully developed and in the production tail when advanced methods and other constraints like water handling cause and over estimate of the URR.
If HL did not converge over a good range of production then you would be correct in your assertions. But it does and in fact shortly after peak production it's practically 100% right. As far as I know KSA overall production peaked a while back.
The import fact is HL converges your ignoring this.
Next its not a perfect model it gives a range +/- a error term that both mathematical and related to how the region was developed. Taking into account more information is simply a way to pick the peak. It would be nice to convert some of this to a reasonably simple and analytical method.
I like the idea of making the initial estimate using a small number of variables then using the rest of the information as perturbation from the base value. The nice thing about this approach is it means your not placing too much weight on secondary considerations like discovery times, swing producer status etc.
And last but not least none of this really matters KSA is done. It would take a drilling campaign not seen since Texas peak for them too arrest the decline of ghawar from other sources. This is simply not going to happen in KSA just like its not going to happen in Mexico. Texas is in that sense a special case. KSA needs to be operating close to a thousand drill rigs assuming they have the fields to drill. They are not and probably because all they really have now are old mothballed fields they are reworking with the latest technology. On top of this the water handling facilities they would need to keep production rates high as their fields water out are mind boggling.
Is KSA going to still be a large producer of oil sure they probably will produce over 4mbpd for decades to come but thats not exactly what the world expects out of them.
If HL did not converge over a good range of production then you would be correct in your assertions. But it does and in fact shortly after peak production it's practically 100% right. As far as I know KSA overall production peaked a while back.
The Texas series didn't converge until 10 years after peak. Did Saudi peak 10 years ago? If not, then why do you think if it converges now that this tells you anything? You could have stopped and looked at Texas lots of other times and it appeared to be converging.
And last but not least none of this really matters KSA is done. It would take a drilling campaign not seen since Texas peak for them too arrest the decline of ghawar from other sources.
Well, you do realize that we have already had some 9 supergiants peak in the past 20 years, and during that time oil production increased by 20 million bpd? That's why I don't buy the argument "if Ghawar has peaked, then the world has peaked." The 9 supergiants amounted to twice the production of Ghawar. So, there is precedent against the argument.
Simple most of the remaining oil is under the control of NOC's over the last 20 years this was not true.
The NOC's exist because of the formally wide spread between production costs and profit. So while the rest of the world was drilling like mad to make small profit compared to the NOC's the NOC's enjoyed a unprecedented profit margin.
Today its a different world after a region peaks the costs of keeping production up skyrocket and the NOC's no longer have this spread to use as a tax base. They are faced with both rapidly rising costs and the need to make large investments which won't pay off for years. And of course during this time production is falling.
Sure the NOC's will be profitable for a while but not insanely profitable. It will take time for them to convert over to post peak style production where cost's are high and profit is low. The whole time absolute production is decreasing and the expectations of their populace are increasing.
So the NOC's face three negative conditions and only one positive.
1.) Production is declining
2.) Costs are rising
3.) Population costs are rising
The positive is prices are increasing but now I don't think at the rate needed to offset the above.
Libya did not open up because they wanted to be nice they opened up because of the spiraling production costs.
In my opinion post peak most NOC's are not viable. In fact we already see that they are on the downward slope of trying to regain the large spread they enjoyed in the past while not making the investments they need to maintain production much less grow it. Not even KSA.
I think a lot of people don't realize how desperate these NOC's will become in a pretty short period of time.
I'd like to see a estimate of KSA's recent production costs if its possible. The bill has to be high.
robert..according to p. 368 of "twilight" , saudi yearly production peaked in 1981 at 9.84 mbd. the secondary peak according to the eia data was 9.55mbd. in 2005. that would make peak 26 years ago, if the saudis were producing flat out in 2005, as many believe. do you think the saudis mature fields are capable of greater than 9.88 mbd. yearly production?
I don't know about their mature fields, but they certainly have projects in the pipeline to bring production up. They have been the world's swing producer for many years, and while they may have produced the most ever in 1981, they certainly didn't peak as in they couldn't produce any more than that. Remember, they produced 9.6 mbpd for 6 months in 2005. If they had peaked in 1981 at 9.84, they certainly would not have been able to pull that off. So I think it is clear that they have not been producing all out.
So I think it is clear that they have not been producing all out."
Do you mean for the six months? IMO, it is very clear that they were flat out, and could not hold that relatively brief span any loonger. Consider... if their capability was a bit more, say 10Mb/d, and 9.5Mb/d was the 'correct' amount, they would have produced exactly that amount for the period, with no declines to be stemmed by a new field coming on line. Well, more proof will be here soon. Price differentials in asia are showing they think they're being starved, latest is that us draws were 45Mb in feb! At what point do you think stocks will be 'just right' and sa will think it is time to increase production?
My biggest point Robert is I don't think you have proved your case and you think you have. Next even if you believe the HL analysis I don't think we have a good handle on what it can and can't do. Again we know the method converges post peak you say so yourself I think we can take this as a fact. What we don't have a good handle on is using it to predict production.
I agree. Whats not been proven is the only place it converges is ten years post peak.
I maintain during periods of reasonably unconstrained production after initial development it converges and works as a predictor with some sort of error around 5-10%.
I don't think that this has been answered either way.
For me the combination of HL and other factors is compelling now. If HL just gives a ballpark estimate that a region controlled by a NOC is 50% depleted thats enough for me since it means they won't be able to greatly increase production.
Finally to repeat myself the problem is not remaining reserves but the cost of producing the oil we have left and these have a far bigger effect on a NOC.
My biggest point Robert is I don't think you have proved your case and you think you have.
My case is that HL is not a very good predictive model, and certainly not capable of calling a specific peak year as Jeffrey is using it. And yes, I think I have proved that case. If you wish to dispute that, show me - using data available at the time - when it would have predicted a peak and how you would have determined it. I think only by going through this exercise yourself will you start to see the problem.
I think thats WT is going to look at the problem some using some interesting methods. If you look at how I post I spend too much time on this its a important issue so its worth it.
But on reason I'm on the computer all the time is I'll rolling some software out of a R&D project in into regular development I won't have any real free time for months.
And being a bit pragmatic we will know a lot more about KSA over the next few months. I've already predicted that they should be able to pull off a feeble surge over a few months from a combination of storage some well brought off line for resting and overproduction. Once this is past if they drop back and the price of oil is still high we know that HL plus other evidence did a good job and we can take a hard look at Russia or we failed.
Predictions for HL on KSA are on the table so to speak I really don't have a lot more to add Russia on the other hand
is not a solved problem. Understanding the results of KSA is I think useful for Russia.
And I hope I have some free time then. Its 9:25 PM on a Sunday night and I'm writing this and going back to do some work :(
One of the problems with being able to work anywhere is you tend to work everywhere :)