Hofmeister v. Simmons
Posted by Prof. Goose on March 21, 2008 - 7:00pm
Topic: Supply/Production
Tags: John Hofmeister, matthew simmons [list all tags]
Short video from CNBC with John Hofmeister explaining why peak oil isn't a problem, and where Matt Simmons went wrong. They also get in a dig about the "religion" of climate change at the end.
And here's Matt's response (text not video): http://www.cnbc.com/id/23728987
Dear Matt:
Regarding your question "do you know anything other that crude oil that sells for 15 cents a cup?"
Yes, corn sells for about 5 cents a cup.
Sincerely
x
5 cents for a cup of corn is all well and good, but it will only provide .34 cups of ethanol, and that’s before you subtract the fossil fuel imbedded in it. That seems to make crude and ethanol both about 15 cents a cup.
1 bushel = 8 gallons dry
1 bushel = 2.72 gallons of ethanol
Ugh, Why is that just painful to watch?
Because it's wearing thin - very, very, very thin.
Excerpt of a review of “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy” (Published in May, 2005)
http://www.amazon.com/review/product/0471790184/ref=cm_cr_dp_synop?%5Fen...
bad news from the SPE, via a Texas investment banker , June 16, 2005
By R. Hutchinson "autonomeus" (a world ruled by fossil fuels and fossil minds)
How do you say 1972 in Saudi Arabia?
2005.
I thought he was pretty radical stating
growth will come from unconventional oil.
I agree Izzy. It seemed like he was substantiating crude oil peak, of course without stating when, but then saying other forms of oil would replace crude. Really, we're going to replace crude reductions in production with other forms of oil? How much food production will have to be diverted to accomplish that, and as a result how many people will starve?
"Continued growth of greenhouse gas emissions, for just another decade, practically eliminates the possibility of near-term return of atmospheric composition beneath the tipping level for catastrophic effects."
Target Atmospheric CO: Where Should Humanity Aim?
http://www.columbia.edu/~jeh1/2008/TargetCO2_20080317.pdf
James Hansen, Makiko Sato, Pushker Kharecha, David Beerling,
Valerie Masson-Delmotte, Mark Pagani, Maureen Raymo, Dana Royer, James C. Zachos
Whether the issue is Peak Oil or Global Climate Change, the Iron Triangle cannot integrate information that shows the status quo for what it is: a one-way trip to Ecological and Geopolitical Armageddon.
Some people will insist that Hansen, et al, are simply whoring themselves for bigger grant money.
My guess is that if they wanted to make the most money they would simply hire themselves out to the Heartland Institute or some other propaganda wing of the petroleum industry, the coal industry, the nuclear power industry, or the ethanol industry.
We need radical and immediate culture change. This is not at all likely, and so we will all ride through a violent and volatile time as our species enters the bottleneck of the next 20 years.
Even were we to achieve fast, radical change to a permacultural orientation, times will be difficult.
The Iron Triangle cannot accept the very changes we must make, and so marginalizes those who point out any need for such changes.
We have created a fragile artificial cocoon for those of us who are part of the industrialized nations. We mistake the cocoon for an independent reality when actually it is absolutely dependent upon the planet. Our denial of this relationship is precisely what imperils us, and yet we are so frightened of this that we encourage intentional ignorance.
Scientists are mocked while shrunken men with everything invested in the superstition of traditional economics are idolized.
Well said.
We're marginalised now, but will be persecuted later....
It never ceases to amaze me how the least qualified to answer questions like these get to the top and the mental midget media ask them to answer the difficult questions. We are at or near peak oil. What Mr. Hofmeister fails to mention in his ramblings is that alternatives to conventional oil are EXPENSIVE and will only get more expensive as time goes on. Tar sands release A LOT of CO2 to the air during extraction and processing not to mention the extraction process has laid thousands of square Kms to waste in Alberta. He also fails to mention that new fields being found are meager compared to the finds of the 50s and 60s and that most of them will also be EXPENSIVE to get at. There is a lot of oil left in the ground - undoubtedly more than has been pumped out. But the remaining oil will get tougher and tougher to pump out of the ground, hence what Matt Simmons says, time and again, is that the ability to produce oil will drop as time goes by and therefore by definition we have or sill soon reach a peak in oil production.
Sometimes the pickle heads of CNBC just amaze me with their 7th grade grasp of the world...
What TOD needs is a NO "EASY OIL" button similar the the Staples ad. Maybe like
(EASY)OILJohn Hoffmeister seems to be at odds with Jeroen Van Der Veer's idea of Scramble or Blueprints. John seems to be pushing BAU but maybe that is just the nmessage for the American market. At the same time he says "sure we gonna peak someday" but then gives the impresion that it's not anytime soon. As for that idiot journalist at the end who couldnt string the words together to make his point, get rid of him.
He has no option as he is trying to grow his company and maximise profit, and, like you and I he doesn't know for sure when we will peak - at least he admits production will peak!
As usual he says peaking won't be caused by lack of oil in the ground - we know this, it isn't what causes the world peak - just the normal old smoke and mirrors!
The peak is caused by inadequate investment in production to ensure that the price of oil constantly falls in real terms - so that we can all afford to demand more (~2% more each year for BAU.) The reason the investment isn't made is because the costs are rising as the oil gets ever more difficult to find and to make a profit the price the product must sell at must keep going up in real terms - this is very risky for an oil company since they don't know the shape of the future demand curve.
We (and Hoffmeister) know for sure that at some stage demand will fall away - for more than three years now the price has been such that demand for 'all liquids' has been flat.
Demand for exported crude (the market that Hoffmeister mostly deals in) is actually falling at current prices - if they only rely on imported crude (and not alternate liquids) somebody somewhere doesn't have BAU growth.
The steeply rising crude prices (in real terms) indicates the oil companies, in total, can't or won't pump any more at the moment.
If a world recession causes the demand to fall below what the oil companies are willing/able to produce at maximum, then the price of oil will fall - this is very risky for oil companies when a deep water oil well can cost >$200 million just to drill the hole - if the price falls so far that the oil company doesn't make a profit it's bye bye oil company.
These are dangerous times for oil companies as each new well gets ever more expensive at the same time as the overall business climate deteriorates - in order to maximise profits in the long term it might be better to hoard the oil and not drill too many new holes at the moment, which would imply a very steep decline rate in a few years.
My mother always told me to watch what they do, not what they say. While Hoffmeister trumpets there's no peak in sight and unconventional oil will save us, he maintains a rolling mill and farmland in Lancaster Pennsylvania, a fact that was removed from his Shell bio, but still referenced here http://www.eenews.net/tv/transcript/483
The President of Shell America is a doomer.
So is the president of what is a shell of what it once was, G. Dumbya Bush. Lives in an off-grid home while telling us all to eat cake.
*beep!*
Cheers
"Peak Oil" just needs to be changed to "Peak Oil Flow" so people will always question what the flow part is about and not concentrate on what is left in the ground, however large that may be. Instead of PO lets all use POF.
No, let's just use POOP.
Peak Oil On Parade?
Peak Oil On Purpose?
Or POPP -- Peak Oil Peak People.
How about PONYPD -- Peak Oil Now You've Peak Denial....?
POMEO -- Peak Oil Means Expensive Oil.
No, I don't have a great new acronym that everyone will understand -- not yet, anyway. :)
Unconventional oil is most of what is left.
Most of it is located in Canada, Venezuela and US.
I find it strange that Shell sees unconventional as the future but isn't fully developing it in politically safe North America. This fact alone proves the hollowness of his argument against Peak Oil (the tar sands is hardly another Saudi Arabia or Russia).
The brain-dead media never seems to ask them why? They must give TV personalities IQ tests to screen out basic reasoning skills.
BTW,
Who is the ape at the end who starts hooting about a Global Warming 'religion'?
He 'hijacks' the interview ( what's Hofmeister's time worth--$100 a minute?)to sympathize with Big Oil having to kowtow to environmentalists. Hofmeister just sits and smiles.
Majorian, Actually Shell is developing tar sands in Canada and will more than triple and may even quintuple tar sands oil production. But that takes years to do.
Shell is also in the lead developing technology for oil shale extraction. But they do not believe they can get oil shale into production before 2015. It is their long schedule for oil shale combined with the constraints on Alberta tar sands production that makes me believe unconventional oil sources can't delay Peak Oil.
According to the article you posted they currently produce 155000 barrels per day and are seeking licenses to increase that to 770000 barrels per day. I find that laughable. The GOM Mars field 130 miles off the coast of Louisiana is designed for 250000 barrels per day with expansion to up to 500000 barrels per day.
http://www.offshore-technology.com/projects/mars/
Hofmeister talks big about unconventional but the big money goes to conventional oil drilled in horrible places.
The last I heard, Shell had pulled their heaters out of Mahogany(temporarily).
If you are buying the press releases I think you should dig a bit deeper.
IOW, something doesn't add up.
He's right about that. The warming has stopped
http://www.theaustralian.news.com.au/story/0,25197,23411799-7583,00.html
Sigh! The "controversy", it grows!
Please see a reputable climate science source, e.g.
http://tinyurl.com/379hjo
Cherrypicking. Here's the actual data:
Yes, an excellent idea. Otherwise, we get something like a comment I got from one of my students a few days after my peak oil lecture "...but my dad said that we have 80 years of oil left."
Somehow the term "peak oil" doesn't convey enough information about flow rates and EROEI.
These concepts must be understood so that even the average person can watch the video clip and realize that the prez of Shell Oil is full of baloney...
I think that is a pretty amazing admission. He seems to be saying that acceptance of peak oil is now the dominant intellectual position with the people he deals with. Have we really made such progress?
Hofmeister sees himself as fighting a rear guard action against an overwhelming idea. Simmons has really been an incredible leader on this issue. I wonder how he/we will weather the production uptick we now seem to be seeing? Is the momentum such that it will not even matter if the prices stay up?
If intelligent well off people start flocking to carbon capture and storage based agriculture (permaculture), laptop battery driven electric retrofitted cars, and solar panel investments, the dog and pony show of the "media" will be dumbfounded into asking why. If millionaires and billionaires enmasse migrate to a low carbon lifestyle without sacrificing their quality of life it doesn't become ridicule, but instead how can I also join the crowd?
As the saying goes, don't argue with a fool, someone might not know the difference. Talk is cheap. Actions are priceless. Since we can't expect everyone to think (alas), time to set the new trend instead. Then it's no longer why, but why haven't you?
sorry off topic... btw, the al gore ad on the left can't accept canadian postal codes (maybe british as well?). You want to save the world but you can't bother to hire someone to test your website haha
THE ONE TRUE CHURCH
engergyblog,
I agree with you. Build it, don't talk it. That is why my respect grows daily for the firms involved in PV solar cells, and for groups like Calcars who build instead of talk.
But, I have to say I think you missed the single essential point of the CNBC interview. If we were to look for consensus across the board, from the posters who expound daily at The Oil Drum, to the executives of the oil companies, to the commentators/hosts at CNBC, we get one absolute wall of agreement: The alternatives will not work. Solar, wind, renewables were dismissed in one breath by Hoffmeister, and it was interesting to hear the host of "Squack Box" use the term "silver bullet" in regards to the alternatives to petroleum. In the term, and in his dismissive swiping away of the alternatives to oil, he could have qualified himself as an able TOD poster, having passed the litmus test: IT'S PETROLEUM, OR NOTHING. In this, the debate is essentially declared over, the argument becomes about the details: Will it be conventional or unconventional oil? Natural gas? Coalbed methane? Shale oil? Coal to liquid? It matters not, in the end, because it will be petroleum, fossil non-renewable energy. There is simply no other choice.
The "religion" of the world is not "global warming", it is simply this: Fossil Fuel Is God. Anyone who thinks otherwise is deluding themselves. In the Medieval mind of the "modern" age human, to consider sailing away from fossil fuels is to sail off the end of the Earth into oblivion. The mantra is repeated at TOD "there is no choice", at the oil companies, "there is no choice", at the business journals and broadcasting outlets, "THERE IS NO CHOICE". All ye who dwell in the darkness of believing in false gods who would dare to defy the one true God of Oil, hear ye, repent and accept THE ONE TRUE CHOICE. There is no point in debating, the fates were sealed long before this age, the prophecies were written by the prophets of the petroleum industry, the only true seers such as Hubbert and Deffeyes, and the modern seer Simmons, all patron prophets of the petroleum industry, the One True Church.
This is what has been referred to, with due appreciation to Alvin Toffler (seen as a "false prophet", he not being of the Church of Petroleum) for coining the term, as the "Coming Superstruggle".
There are many who think they are the voice of the future (some even here at TOD) but at the end of the day, they are voicing the same old message, Petroleum Is God. They are terrified of it, and even more terrified of being deprived of it. It is the manifestation of religion, in which one fears the creator God (oil, the creator of an age), but is even more terrified of separation from the God force, of being deprived of the Godlike power that only the one true creator can bring. Thus, the haters of the oil age share in common with the lovers of the oil age (and those who fear it being deprived from them) a worship of the force, the one true force that has created them, and thus can destroy them. The worship of oil is indeed manifested with all the trappings of a religion, with it's own language, it's own rituals, and it's own prophecy.
There is a small group who have dared to think out of the box, that threatens this order as surely as Martin Luther once threatened the one true church. A group of thinkers who see oil/petroleum for what it is, a convenient combination of the two most abundant elements in the universe and upon the Earth, a force that can be freed by way of one of the most ancient rituals of humankind, burning. This group of thinkers see oil as convenient yes, but carrying with it many liabilities. They also see the elements of the God, hydrogen and carbon, everywhere, being combined and separated by nature with no problem. Hydrocarbons are indeed not rare at all, but are the very building blocks of life, as much a part of nature as the air and the water. These are the heretical pioneers in the labs and the shops of the world, in the PV solar factories, in the fabrication shops designing components for Concentrating Mirror Solar installations, designing nanotech batteries and materials for advanced energy storage.
These are the heretics who dismiss the worship of oil as displayed at TOD, at the oil companies and in the business press as part of the long powerful wall that is, part of the one true church of petroleum, now facing the rumblings of a reformation, or should I say, a Reformation.
These heretics, exiled from the petroleum church must surely at times feel as Martin Luther did, overwhelmed, overpowered, and themselves in awe of the one true church of petroleum, the very church of creation of our whole modern age.
But, with each passing day, the power of the heretics grow. Just as the earthly princes came over to the Reformation, one by one, and then brought their wealth and armies to the side of the heretics in the days of Martin Luther, so the earthly princes of commerce are seeing the age of the one true church beginning to pass, beginning to recede into the past. Simmons, Hoffmeister, TOD, and the printing presses of commerce are all on the same side, the side of worship of petroleum and the power of creation it once possessed, and fear of what seperation from the power of creation it seems to alone possess might bring. These priests of The Church Of Petroleum throw forth the last defense of THE POWER OF PETROLEUM.
Though seemingly in division, seemingly in argument, seemingly at odds with one another, the oil executives, TOD, and the peak oil theorists such as Simmons are actually united in their devotion to the one true God.
On the other side of the coming superstruggle are the heretics, who believe the unbelievable, who accept the unacceptable, who preach the sacrilege: THERE ARE ALTERNATIVES. There are other ways to proceed into the future. There is a future outside of the one true church.
This is the two sides of the conflict fast approaching, The Coming Superstruggle. To use a fitting apocalyptic analogy, the Superstruggle will be so great that even the powers that be in heaven will be shaken.
Thank you.
RC
ThatsItImout , thank you for this alternative read.
Fossil is king !
( OFF TOPIC, if anyone need a laugh .. then this is it, skip to halftime onwards .. http://my.break.com/content/view.aspx?ContentID=467869 )
I appreciate the Martin Luther analogies. I'm more partial to Dilbert myself, given our collective deer-in-the-headlights future ;)
If what we want is a hot-swappable replacement for oil, it doesn't exist. No renewable can give us that, not solar but most certainly not tar sands or unconventional oil as it relies on natural gas (Canada).
Also there is no pipeline going East West in Canada. When the Eastern provinces go cold while oil is still being pumped to the USA, this will cause a North American crisis which the US is not prepared. Quebec for example received 90% of it's oil from the Middle East. (Ref: Gordon Laxer, Alberta Parkland Institute). Is the US prepared to invade Canada too?
Everyone is just going to have to scale down and go on less stuff. It is possible. Not live worse, mind you, just less stupid junk. Noone ever talks about living with less or can even accept the idea. Is a duel of twits equal to a ship of fools?
I was watching this and wondered who in the group would bother to learn for a year how to be a gardner? Or even repair a bike? Or use a hammer? Maybe when they're abandoned by the rest of us?
The multipliers are there, closer communities, some low tech, some high tech. However it'll work out; at some point the sudden pop of hubris will render the debate away from nice quaint sniveling chuckles to real hard action. Something resembling sincerity might return.
I actually think it'll be fun. People are mostly marginalized in their lives and jobs. We didn't win the lottery today. We're all just mulling about. Suddenly we'll be working together and finding common ground as we re-plan our urban disaster areas. We'll have a purpose for once. A sense of civility and community not seen for 50 years will grow like a new seedling. I was thinking of the movie 12 Angry Men. There's a sense of civility in that movie that just does not exist today.
By the time our change or Reformation occurs, anyone would rather not be a blow-hard loser who want his oil, hence my comment above on moving forward as a "trendy" thing to do now while they babble on. Civility and community, whatever shape it takes, is likely to be the only true renewable resource that always works. A strength we used to have can be found again. Everything else is just details.
This video is a reminder of the depth of the problem.
I'm not much for the Puritan model, more a mixed modern science educated 21st century pioneer style. Say, Firefly without the ships?
Amen!
You forgot the other religion, Uranium-worship:
http://www.guardian.co.uk/environment/2008/mar/22/nuclearpower.energy1
http://www.guardian.co.uk/environment/2008/mar/22/nuclearpower.energy
Phil
(Long time reader first time poster)
PhilR I'm not sure if you are support nuclear energy or are criticizing it. Personally I'm pro nuclear energy. This is a result primarily of reading the prophetic 1956 paper 'Nuclear energy and the fossil fuels' http://www.energybulletin.net/13630.html by King Hubbert the chief geologist of Shell at the time.
In this, the original peak oil paper, that correctly predicted peak oil for the US in the 1970's, and predicated would peak production by about 2000, Hubbert explains how we are not all doomed due to peak oil and how nuclear energy is a feasible replacement for fossil fuels. (It's true there are waste disposal/storage issues, but at least nuclear waste isn't pumped directly into the atmosphere like coal power plants and cars do with their waste).
Now please allow me to defend Hubbert, (Deffeyes), and Simmons against ThatsItImout's ridiculous attacks.
In defense of Hubbert, he was not a "IT'S PETROLEUM, OR NOTHING" believer at all. In fact nothing could be further from the truth, he's an early (the original?) alternative energy guy. Later in life Hubbert warmed up to the idea of solar energy. But in my view at this current time nuclear energy is the only known to work for sure replacement for fossil fuels (this includes automobiles as electric cars are now feasible for short trips and railways and waterways never stopped working for long hauls, so good news we are not all doomed due to peak oil).
Simmons is the head of the largest investment bank for the energy industry. He is funding research on cutting edge alternative energy technologies like wave power. The idea that he is a "IT'S PETROLEUM, OR NOTHING" believer is just as ridiculous as for Hubbert.
Unfortunately I'm not so familiar with Deffeyes so don't have knowledge of his position.
Now I would like to address the original topic of this top level news item the CNBC video segment.
As a futures trader (including crude oil futures) I have CNBC on most of the time (usually on mute). The guy who referred to 'global warming religion' was Joe Kernighan, he's a leading anchor on CNBC. Personally I find Joe likeable, pretty quick and entertaining to watch. I also share Joe's skeptical view of imminent catastrophic climate warming due to man made greenhouse gas emission. I'm skeptical of this view because I can't find scientific evidence to support it.
If anyone knows of a compelling scientific paper that supports the idea of imminent catastrophic climate warming due to man made greenhouse gas emission I would really like to know about it! Please, please, please send me a link. Honestly I am open minded, but I need to find a scientific paper like 'Nuclear energy and the fossil fuels' before I can believe. I'm even willing to read something from the (increasingly discredited) IPCC as long as it's science based.
To summarize.
Hubbert, Simmons - good guys pro non fossil fuels energy
Peak Oil - credible theory support by scientific research
CNBC - entertaining and informative but somewhat anti peak oil
Climate change - Where's the science? I've read most of the related wikipedia pages, not convinced.
Thanks for reading, that's all for now.
I'm criticising the new pro-nuclear religion, and all the deliberately dishonest hype that goes with it.
I'm not sure what dishonesty and hype you are referring to.
There is a medium term problem with uranium production, but in the extremely long term (1000 years say) there's plenty of uranium (let alone thorium) to meet our energy needs at say 2x the current world consumption rate (see graph at end of this comment). The uranium spot market is currently tight, but in the medium term (5-15 years) supply problems can be solved by expanding existing mines. The main resistance to expansion is political opposition but public education may help address this.
Waste disposal is a problem, but there's hope "plasma gasification" converts nuclear waste to harmless road fill see http://en.wikinews.org/wiki/Israeli_company_develops_new_radioactive_was...
Even without plasma gasification it may well make sense to replace coal power plants with nuclear ones. (Having said that I'm very pro coal except for the pollution, we may have to heavily depend on it for a decade or so if oil production drops of precipitously. Better coal than a permanent black out).
Nuclear power plants blowing up and spewing radiation into the atmosphere is something to be concerned about. I've heard that modern pebble bed reactors shouldn't do this - but I haven't had time to research that deeply. OTOH apparently the fall out from Chernobyl wasn't nearly as damaging as the media made it out to be. I can't find it now but there was an article (here on the oil drum?) about how the fall out from media declaring that people were going to die was actually worse than the direct effects of the meltdown itself.
I think I would be ok living 30km away from one, but the further away the better.
Having said all that I'm not stuck on nuclear. Definitely solar and renewables in general would be superior if they worked as well (reliability is a big problem). Also there's still the problem of converting the transport fleet to electric, there's a real shortage of lead and nickel for batteries. Basically no lead mines are coming on line any time soon. (And electric planes, does that even make any sense?).
If I'm wrong and we are headed towards power down, then that may still be a positive in the long run. As after a very painful period and die off we may go back to our traditional (pre-industrial revolution) way of life and this could result in spiritual advancement (turning away from material things) and an increase in happiness (for those who survive).
One final comment, I'd just like to apologise to ThatsItImout for labelling his criticisms of Hubbert, et al ridiculous attacks. Yes I think he's dead wrong on this point, but rereading his post I agree with his general theme. People here are too hooked on fossil fuels. There are feasible alternatives (electricity) and we need to adapt and move into the future (electricity) and beyond the past (fossil fuels).
In my opinion the best thing people can do (at least those who can afford it) from a humanitarian perspective is to bid up the price of commodities futures (crude oil, food etc). If we can get the price of food and oil higher now that will help conserve them and mitigate the danger of wide spread power down and famine.