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63 comments on Oilwatch Monthly - November 2008
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63 comments on Oilwatch Monthly - November 2008
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The drop in world crude production looks like the biggest single month drop on the chart. Is it the biggest single month drop ever? Does anyone else find that ominous? Non-OPEC seems to be heading into a particularly sharp decline rate.
With prices this low, how likely is it that any of the mega projects we've been hearing so much about will come on line?
Is this a good thing--less production now means more available later?
Or is is a bad thing--fast crash will prohibit any substantial investments toward a viable transition?
@dohboi
Most of the megaprojects generate sufficient returns at oil prices below 40 dollars per barrel. So most of them will come on-stream.
Do you have a source for that? Others (I think rockdoc was one) have claimed that some megaprojects are not economic below $50.
A bigger question is where all the new liquids are coming from. World crude is down by over a million, yet total liquids are up by nearly 2. That means there are some three million in some kind of liquids that make up the gap. According to figure 2, it's not from biofuels. So is it all LNG?
@Dohboi
My claim and that of others are aligned. I didn't say all, only that most projects will be economic below 40 dollars per barrel. Some megrapojects are indeed not economic below 50 dollars, for example new deep-sea developments in Brazil and Angola. My information comes from various proprietary sources.
- Most of additional liquids in EIA data is LNG (0.5 million b/d since beginning 2005) and unconventional oil (tar sands/extra heavy).
Thanks, Rembrandt. Yes, I believe rockdoc was specifically talking about the deep sea projects. So current low prices should put a bit of a damper on recent projections of production coming from those sources.
The megaprojects struck me as the last reasonable prospect for a bump up or at least an extension of the plateau for a few more years. If prices stay near or below $50, and if that price cuts into even some of the megaprojects, it seems to me even more likely that we are about to start the slide down the other side of the curve. And of course as the recession worsens, we could yet slip below $40.
Thanks for the confirmation of my suspicion about LNG. Won't tar sands become uneconomical to produce at these prices too?
@dohboi
Yep, new tar sand projects are also uneconomical at these prices.
shouldn't all these discussions about X is only viably at $Y oil take into account that the $US hasn't exactly been steady over the last few months, with a large-ish increae in value as "a few" american $ return home?
Also, with less than 1/4 of world oil being sold to america i would think that the weight of the other 75% of the oil use would have a significant effect.
Is that rockdoc123 from the peakoil.com site? Does he ever make it to TOD to post?
Sorry. I meant rockman who posts regularly here. I haven't heard much from rockdoc of late.
A sharp OPEC production drop during this winter can be attributed to the financial crisis. There is a shortage of paying customers and it takes time for the world to rethink and retool for what will be in demand during the next round of growth.
Big problem is most people think financial crisis is the beginning and the end of it all. When the money panic is over and confidence restored, happy days will be here again!
If you go over to economics forums (forae? fori?) such as economics alltop and read comments:
http://economics.alltop.com/
... you almost never see resource or peak oil mentioned.
I guess it's gonna kinda sneak up them, eh?
High prices encourage alternatives, too. While that is true, we shouldn't wait for high prices again to pursue alternatives. But that will happen if we simply rely on the market. Given the volatility of this market, that is just insane. Everything is cheaper at the bottom, so now is the time to invest, not when a subtantial amount of capital is devoted to taking care of prices for oil. Sure, we are in a recession, but we are also spending billions less now on oil and gas than we were just a few months ago.
We should be doing everything we can to get off oil, anyway, so why all the concern that the oil industry and the oil countries will cut back on investment. If we use this opportunity to invest in alternatives, including transportation alternatives, we will not have to be concerned with shortages of oil in the future. For years now, the meme on this site is that we are at or near peak oil and virtually no amount of investment will change that. The prescription for that problem is the same, regardless of any short term changes in oil prices.
If the oil industry is foregoing megaprojects because of lower prices, that is being very short sighted. Let that be their problem, not ours.
It sounds like Obama gets it that now is the time to invest billions in alternatives, especially because of, not regardless of the recession. With the current deflation,we should be able to get more btus for the buck.
Er, remind me again: what are the alternatives to oil and the other hydrocarbons -- the ones that scale up to the amounts needed to continue consumption on anything like the present scale? (By alternatives, do you mean alternative sources of energy, or do you mean alternatives to its consumption -- like transporation as you say?)
I can't say about Europe and Japan, but here in the US, there is absolutely no alternative that can give you the bang for the buck that conservation and restructuring can give, at least until a lot of that waste is squeezed out.
In any case, I don't think it's just oil we have to get off of, it's energy in the amounts we use -- no renewable source can supply that amount.
Either solar or wind can provide far more energy than the world currently uses, so raw amounts of energy aren't a problem.
The actual problem, at least as I understand it, is two-fold:
There's really no question that these changes are theoretically possible - the wind power capacity needed to power 800M EVs amounts to literally a few months of world manufacturing capacity. That capacity won't (and can't) be 100% devoted to wind turbines, however, which makes the question of "how much, how quickly" very complex.
Dave, you said, "Er, remind me again: what are the alternatives to oil and the other hydrocarbons -- the ones that scale up to the amounts needed to continue consumption on anything like the present scale?...(By alternatives, do you mean alternative sources of energy, or do you mean alternatives to its consumption -- like transporation as you say?)" The implication being that we were stuck for transportation fuels.
There have been any number of threads on TOD over the past 2-3 years about using wood gas/charcoal/home generated methane as transportation fuels. Do a search. Many even include pictures.
Does this allow the continuance of BAU? No. But at the same time it won't be the end of the world for some people.
Todd
@dohboi - It is also interesting to see that the spare capacity has gone down significantly. When 'spares' are used up, is it accounted as production?