The Oil Drum

158 comments on DrumBeat: March 25, 2007

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vtpeaknik on March 25, 2007 - 11:00am

Here, at least is a hypothesis: The infrastructure put in place for an oil field closely correlates with the initial estimate of URR...

I think there's something to that. Otherwise, in the Prudhoe Bay example, the pipeline capacity (if too small) would have forced a "mesa shape" to the curve.

But suppose that too-small a pipe had been built. If later the URR was seen to be big enough, another pipe would have been proposed. The reason is that when people see an opportunity for profit, they usually pursue it.

In my view the basic assumption behind the Hubbert method is exactly that. Humans are a "weedy" species, that tend to exploit all resources they can. The method expects such growth, which is indeed driven by economics. It does not depend on a specific rate of growth of production (in the initial, exponential, stage). The same math works for any constant rate of growth. In reality the growth rate fluctuates due to non-geologic factors, but in the long run (and the method applies to decades-long periods) there is usually a roughly exponential development, which slowly and eventually becomes affected by depletion (the growth rate slows down) - the first signs of below-ground factors.

I don't believe the downslope will mirror the upslope though, because I can't think of any underlying reason for that.

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alanisthename on March 25, 2007 - 1:32pm

Thanks for your reply, vtpeaknik. Human economics definitely have a lot to do with it. I agree with you on the downslope not mirroring the upslope. They are separate curves to me - unconstrained human/economic up followed by geology constraint on the way down.

As an aside, I think T. Boone Pickens' prediction above rings true to me. Peak oil is never late for the party. I can't tell you how many times I've heard my own government (UK) say that North Sea is declining 'faster than expected'. How many times do they have to say it before realizing their whole forecasting methodology is wrong? What is more, tax on North Sea production was increased last year. Costs are typically $25/bbl for new production. Add 50% tax and North Sea oil at $50/bbl is marginal. We don't have ANY kind of localization option here with our population density.

I've got to go now. Regards,
Alan

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WebHubbleTelescope on March 26, 2007 - 12:50am

I like the "weedy" species analogy. The Oil Shock Model uses that to the maximum effect. It makes the assumption that extraction will be proportional to the amount available, no matter how small or how large the reservoir. I have previously called this a "greedy" analysis. The inbred greed of humans is the basic premise.

BTW, I don't buy an exponential increase. An exponential increase is often mimiced by a series of damped exponentials that get convolved together.