LOL all I is I approve of the comment you included at the start of your pdf version.

Given that now real demand is and unknown quantity have changed rapidly downwards its hard to determine if the supply cuts by OPEC are real or simply in response to demand.

It seems like at least one of my "laws" if you will that complex systems when stressed tend to hide their true state and measurable value become unreliable is being played out in spades. Although its difficult to quantify better one gets the distinct impression that the values for the worlds oil supply where more reliable or at least consistent back in 2003-2005. At the moment depending on the assumptions you make about the errors you can predict anything from a massive oil glut to a collapse in production. All outcomes are possible with a fairly reasonable set of assumptions.

If you take KSA's claims of 12mbd of capacity at face value and the fact that major megaprojects probably won't halt because of the current price of oil. Remember the larger projects were planned for a much lower price point. Thunderhores reached full production just months after the lowest oil price in many years.

Then given reasonable expectations of a slow recovery we face a huge glut of oil with capacity several mbd above the 2008 peak and a fairly significant amount not under OPEC control.

The only troubling fact for this scenario is the price of oil hovering around 50 dollars a barrel which is difficult to resolve with the demand level, claimed storage levels and production that should be coming online this year.

http://en.wikipedia.org/wiki/Oil_megaprojects has for 2008 and 2009 4532 kbd coming online including OPEC for the two years its almost 10mbd !

Anyone predicting a glut would have a hard time explaining 50 a barrel oil the combination on non-opec supply additions and demand declines swamp the cutbacks from OPEC oil should be hovering around 20 if not 10 dollars a barrel forcing cutbacks by non-opec producers as some fields simply needed to be shut in.

The glut theory would have to claim that the OPEC cutbacks came fast enough that new production simply has not had time to ramp up to swamp the effect. Its credible and common for these projects to be delayed.

However the glut theory cannot assume all information is perfect and believable it has to make some assumptions.

Between glut and my believe of a crash in production exist any number of theories that make certain assumptions and assign a certain amount of truth or credibility to all the information we have about the oil markets and economy.

Whats important is however with the theory of complexity I'm working on all of them can be reasonably fitted right now ! This has not been the case even as late as mid 2008. The global economy and oil markets have reached maximum opaqueness where the real state of the system is completely unknown.

Now the second part of my toy theory of complexity is when complext systems maximize uncertainty they are going to take one of their extreme values.

So my toy theory predicts that we will either see a massive glut in oil vs demand and the price of oil will crash or we will see a massive spike. The neat thing is when the complex system hits maximum uncertainty it eliminates all the middle cases are paths as viable routes.

In population dynamics you either have a population crash or a population boom. I'd assert that in population dynamics that its a combination of events several critical ones that are unpredictable which determine the outcome. Even something simpler like a rabbit population explosion in Australia is not perfectly predictable based on a rainy season.

Indeed.

http://en.wikipedia.org/wiki/Rabbits_in_Australia

A question remains as to why there was no outbreak before the start of the current infestation. The localised Tasmanian rabbit plague was noted, but it would be surprising if there were no escapes from the many warrens and cages that would have been present throughout the area of European settlement in southeastern Australia. It is possible that native predators, particularly carnivorous dasyurids, were much more effective as natural controllers of the population than the later foxes and feral cats. When their populations collapsed as a result of habitat destruction and sometimes deliberate hunting rabbit populations could rise with far less restraint.

Turns out the predictable population explosions are not as predictable as people assume. As we see with the glut theory its not perfect any more than my crash theory. So even a simple complex system such as species invasion do not allow the perfect prediction of growth.

In the case of rabbits in Australia I think that reasonable and more complex theories are closer to the truth i.e it took several factors before the population exploded. If we had had good measurements of the process then I'd suspect we would find that they did what my theory states and become unpredictable right before the explosion. The habitat loss for predators has a bit of a hole since if they where losing habitat would the not simply change behavior slightly to eat the more abundant rabbits ? The coyote or raccoon hypothesis or even Bear in the garbage dump. Most predators are very adaptable.

The more you did into complex system the more the role of uncertainty become clear.

So now we get to test the second half and see which route the system now takes is it feast or famine ?
Or is my theory complete and utter hogwash and the concept of collapse of the middle is a fevered dream :)

Memmel.

You should not for a minute doubt that a huge amount of additional production capacity will come on-line in 2009 and 2010. These projects were started during the high prices of 2007/2008 and are far to well advanced to be stopped now. Without any doubt there will be a huge glut in production over the next couple of years. And yes. Prices will therefore stay low. Why won't they totally collapse? Well, if they don't it's probably because the cost of production of the last barrel of oil (from these projects) is probably about 50 USD/BBL.

"...if they don't [crash] it's probably because the cost of production of the last barrel of oil (from these projects) is probably about 50 USD/BBL..."

I don't agree that the sunk cost of getting some oil into production keeps the price up. It may well be that the high costs incurred cause a company to become bankrupt as they can't fund these liabilities with lower income. These risks are the same for any long term capital intensive project, in fact there are lots of mining companies in trouble and the assets will just be taken over when they go bust.

Talking of long term, China seems to be stocking up on copper.

tony. Agreed. But there are a lot of small fields close to production which will not be brought online at lower oil prices. Lots of small companies are going banktrupt all the time. But the sunk cost has still been put into exploration wells etc. and the fields then can be picked up and developed by somebody else.

Your Oil and Gas News - Global oil, gas projects delayed in 2009. Plenty of near term projects are in there, such as Perdido in the GOM, or Suncor's oil sands project Firebag Ph 3.

Actually looking at your link only two of the delayed projects where production based.
And delays in projects that where 2+ years out is not relevant to short term production i.e this year.
They will become a issue farther out but not at this moment i.e production of oil over the next couple of months. Now unannounced in field drilling and maintenance projects have probably been scaled back a lot
but we have little info outside of rig counts to guess how much.

One was tar sands which are a joke anyway so they don't coun't the oil equivalent of corn ethanol.

Ecuador well we know that their are financial games that include the US being played out to prevent a second Venezuela. Politics and oil are very much at play there.

This the Perdido platform looks like one of extreme interest in that its a project that was supposed to come online any day and was delayed.

Lets take a look at that one.

http://www.redorbit.com/news/business/1405479/shell_commences_shipment_o...

Perdido is scheduled to begin production towards the end of 2010. Shell, the 35% shareholder of the Perdido Regional Development Spar, is the operator on behalf of partners BP with 27.5% and Chevron with 37.5%.

Well what do you know.

Your link says ..

* March 17 - Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research) said start-up of the Perdido platform in the Gulf of Mexico had been pushed back to the beginning of next year from this November.

The chances this field would have come online even in 2010 is very very slim.

So we have the tar boondogle and a ton of consumption projects shut down. Lets guess what the oil industry thinks about future oil production.

You may want to consider in addition to looking at the oil mega projects for increases in production thinking about the rate of decline. From 2005-2008 global crude production has been relatively flat with 2008 somewhat higher. Crudely looking at the mega project data for those years, to remain flat we may need about 3.5 mbpd of new projects just to stay level. I don't see total available production increasing significantly and non OPEC production will probably continue its slow decline. One thing you may want to think about is if we are entering into a positive feedback cycle. High oil prices --> lower world economic activity (demand destruction) --> lower oil prices --> higher world economic activity --> high oil prices. This is also seen in normal predator/prey populations. For instance wolves and deer. More wolves --> fewer deer --> fewer wolves --> more deer --> more wolves.

Thats assuming a constant capacity or constant energy manifold. If the energy level is decreasing rapidly and say EROEI is also declining rapidly then the predator prey model is running on top of a fast decline base energy level.

The system would then rapidly dampen to head strait up or down depending on how you look at it.

Given the magnitude of the recent price flux and economic change and if a fast collapse in oil production is true on this sloping playground if you will you would I think see.

1.) Energy prices up && production down && economy down.
2.) Economy down && energy prices down && production down.
3.) Economy down && energy pries up && production down.

Some small swings in prices because of three but in general the system dampens rapidly and collapses.

More of a Easter Island than a predator prey. I'm not saying you don't get one and two but they dampen rapidly and the system spends most of its time in state three with minor excursions.

Now if the real peak for oil was actually say 2010-2015 then yes we could get several more waves like what your saying but implicitly this means we at least retain capacity very close to peak production to provide the level playing field if you will for classic predator prey model.

I prefer to see it as the predator prey model being played at through a massive meteor strike :)

You have a numerically higher number of predator and prey species then wham and the natural model is played with a lot fewer players taking part in the relationship and headed toward extinction. The natural system is so disrupted and broken that its natural oscillations rapidly cause system break down and extinction as the feed back into effects of the strike. I.e at first there are number of dead animals to eat and the top predators appear to be fat living as scavengers ( Goldman Sachs ). But then they rapidly have to eat all remaining animals and even their own young ( The American consumer parasite ) to survive.

Another problem with modeling oil as a predator-prey system is that, assuming you don't reach an extinction event, the carrying capacity reaches a limit and may go through limit cycles -- yet this means that the effective URR is INFINITY () !!!

This of course is basically absurd because oil does not have an infinite URR (and oil molecules don't give birth, etc). These kinds of logical gaps make you think that there has got to be a better way to model this stuff.

As a matter of fact I can hear carnivorous dasyurids screeching late at night or maybe it's just the neighbours. One iconic species became extinct in the 20th century and another cute species appears doomed. They eat carrion rather than chase fast prey and don't adapt well. For example they end up as road kill themselves looking for other road kill.

I take your point that predator and prey systems have independent actors with lagged and nonproportional responses. Prediction is very difficult.

You have fancy theories, memmel.
I can sort of understand given the opacity (at least for the unprivileged observer) that you're right to harp on. But opacity is not a license to assume the facts fit one's fancy.

A simpler explanation is that you pricing model is wrong and that the price is not just a function of the "demand level" (how do you observe that?) and storage.
Supply and demand should set the price and, though I can't observe them either, I don't see anything about the price that contradicts this basic (and fairly useless) assumption.

In particular, I urge you again to reconsider the relationship between storage and price.
If you think beyond short-term trading, it makes more sense for speculative storage to be driven by the futures market than the other way around. Think about the implications!

Goldman Sachs and Morgan Stanley peak oil aware.

Think about the implications.

But, at the same time... being "Peak Oil Aware" is also self serving to their stock price. So, that's not a good comparison.

Actually thats my point.

All that matters in our current economic environment is Goldman Sachs stock price.
Everything else is irrelevant well except for the bonus's they plan to give to themselves.

Given they effectively control the US Government the world is now ruled by your typical third world dictator who's first priority is to enrich himself no matter how stupid this goal is.

This dictator is peak oil aware and thus not worried about the "democratic" middle class since they know we won't be around much longer anyway. And worse they have no problem using our vices to help us along our path to extinction.

I know this sounds trivial but really thats all the hardship we are facing now is about. Certainly there are underlying real physical issues such as peak oil but our society has been reduced to this stupid and common form of corruption. For me at least its amazing how banal in a lot of ways things become in the end.

Now Manhattan project to build electric transport now collective efforts what so ever just a few greedy bastard trying to make a quick buck that I guess believe they control the military to support them when things get to bad.

This is the result that comes out of the long post here.

http://netenergy.theoildrum.com/node/5304#comment-493935

We have been at it for a long time and now the only place left to loot and enslave is their own countries and citizens.

@Memmel

Thanks for the interesting comment. I especially found this bit interesting as it makes some intuitive sense to me:

>So my toy theory predicts that we will either see a massive glut in oil vs demand and the price of oil will crash or we will see a massive spike. The neat thing is when the complex system hits maximum uncertainty it eliminates all the middle cases are paths as viable routes.<

Do you have any literature suggestions in which this hypothesis is worked out for different complex systems? Preferably mathematically.

Well the math is which ever chaotic model fits the system.

The closest is probably the logistic map.

http://en.wikipedia.org/wiki/Logistic_map

But the math or at least chaotic math is not predictive because its extremely sensitive on the value of the initial conditions. A small change in initial conditions can lead to exponential divergence in the values
the system takes over time.

http://hypertextbook.com/chaos/43.shtml

However my toy theory differs from traditional choas in the sense I'm also asserting that the initial conditions are ill defined they themselves have noise !

So its a noisy chaotic system.
I actually did a lot of work on something similar called stochastic resonance.

http://en.wikipedia.org/wiki/Stochastic_resonance

Generally studied with bistable systems but not restricted to those.

Next of course the systems are complex by definition this means they are capable of computation which at its most basic level means the system itself is capable of changing depending on the value of its input and some of the outputs are also inputs. At the minimum they are finite automata.

Now we start hitting recent research but you can see some disagreement in the literature here.

http://mulhauser.net/research/tutorials/turing/index.html

Observations About Finite Automata and Chaos

A few features of finite automata are worth keeping in mind when it comes to claims sometimes made about chaos:

* The state space of a finite automaton consists wholly of fixed points and orbits.
* Strange attractors do not exist in the state space of finite automata.
* Finite automata cannot display sensitive dependence.
* Finite automata cannot display chaotic behaviour, as formally defined.

Some stuffy professor wants to sweep this concept under the rug by moving the goal posts.

And in response :)

http://adsabs.harvard.edu/abs/1993chao.dyn..3006K

And even better here.

http://books.google.com/books?id=MVqVAgeZPFkC&pg=PA191&lpg=PA191&dq=chao...

Now understand after all that math the truth is that all this cool math has zero predictive capability.
Especially if you include my conjecture that the system itself is also changing its governing equations
over time as the inputs change. Its reprogramming itself.

This is actually the key feature because its how the system reaches a new stability regime.
Its complex exists in some state has noise and is itself changing. The net result is to actually capture the state i.e think about a system thats moving chaotically it can change its governing equations to capture this orbit is a new stable region the best way is to see that the new equations are completely regular.

As a simply example consider the traditional 3 body problem but driven i.e energy is being added to the system it can be distributed randomly to the three bodies and all kinds of cool stocastic resonance sets up.

However in this case we can bet that at some point one of the bodies will be ejected from the system as the sum total amount of energy climbs past that needed for one of the bodies to take on a escape orbit.
I've actually done this simulation its easier to treat it as a scattering problem and have one body come in from infinity and interact with a two body system and vary the velocity of the incoming body to get different total energy values. Its a subset of the random distribution of energy case but probably does not lose any real information.

The ejection of the third body transforms the remaining two bodies to a simple two body stable problem.

But now you must understand all of this is utter and complete bullshit in the sense that the mathematics are of now value to actually predict complex system behavior for real systems. Can I chase gobs of mathematics and right tons of papers and go to conferences yes. Does it really have any meaning or utility ?
No. Its pure mental masturbation. It just gives you more detail with zero understanding. There is no comprehension here no new laws no real understanding. At best if you have a good model you have a manifold of possible outcomes. Given the nature of the system several are extremes so BFD.

Now of course we have other types of math relevant to oil is of course invoking the central limit therom and at best expanding it via perturbation theory. I.e the shock model.

http://en.wikipedia.org/wiki/Perturbation_theory

This what WHT does however the problem with this approach is its mathematically fragile. This type of mathematics averages out the higher order factors and intrinsicly is incapable of detecting its own failure.

It works till it does not. My own work was effectively the same trick.
http://en.wikipedia.org/wiki/Quantum_chaos

The problem of course is its a trick not one with a strong fundamental basis and thus as I stated subject to failure if your underlying assumptions turn out to be false. And of course you have to actually resort to experiment to see if you got the right answer :) You can never know if a dropped higher order term actually blows up. And of course if the governing equations themselves are changing the perturbation approach itself quickly collapses into a mathematical mess of epic proportions. Don't even go there I have its beyond ugly.

A simply example is to take the three body equation and apply a drumroll... shock to the system by having the mass of one or more of the bodies in the system vary via a independent equation.

Or you can consider a 2D equation thats really 3D and vary the strength of a constant governing the third dimension but restrict yourself to only measuring the 2D variables. The chances of you being able to deduce the real system given the measurements in X,Y are slim. Throw in a chaotic equation and good luck.

However noise in the system and hidden variables are closely related and I'm aware that hidden variable theories are routinely bashed and dismissed but I think we are discarding them to early.

http://en.wikipedia.org/wiki/Hidden_variable_theory

Bohm's (nonlocal) hidden variable is called the quantum potential.

Obviously I'm of the Bohmist persuasion thus unsurprisingly most people who think they understand mathematics think I'm a complete fool.

I of course think that many mainstream approaches are just producing drivel counting the distribution of trees in a number of hypothetical forests tells you absolutely nothing about the forest.

Somebody is really wrong and someone is right. My new approach is to obviously try and see if I can come up with a set of valid observations of complex systems without doing the "math" because the math is bullshit.

This toy theory is completely based on the injection of a non local quantum potential into a quantum computer or computational engine.

http://en.wikipedia.org/wiki/Qubit

Now yes I've not written the great treatise that provides a Bohm variation of the Qubit.
Give me some cash and some time and I'm capable of it :)

Regardless thats where I think the real math that needs to be pursued lies. For now until I get some
free time I'm happy enough to make guess based on simple or toy Bohm qubits and see if I'm right.

I'm not the only one going off in this direction and it looks like you tend to sound like a kook.
http://www.quantumconsciousness.org/overview.html

I believe that somewhere and somehow when you really deal with complex systems that the predictions of the various views of quantum mechanics and classical correspondence and this classical physics diverge.
And Bohm wins :)

Nice.

No, you're not a kook...

Thanks just to add a bit you end up having to evoke a sort of bose-einstein condensation that persists regardles of temperature or size of the field. This condensate can well be virtual particles ala Quantum Wave theory creation and annilation operators. But its the carrier of this quantum probability field.

So you get the virtual particle field in the ground state that permeates everything and is everywhere.

If it sounds suspiciously like dark matter and dark energy then you hit the same conclusion I did.

So on the Universe scale if this really is the way things work and Bohm is right eventually you end up with the need for something not all that different from dark matter and dark energy that acts as the information carrier for the quantum probability field.

A patterned information field that has structure no matter how tenuous eventually has physical effects at a large enough scale.

Of course the other place to look is black holes and here we see hints of information leaks.

Like photons quantum probability fields seem to require at least a very small a fleeting real mass and charge and other physical properties that are barely detectable because the field itself is condensed and patterned.

The ether returns :)
http://www.journaloftheoretics.com/Articles/2-1/bf-fp.htm
Another kook and I think he is in left field to some extent but the problem is you have this danged problem even in respected physics that this quantum probability field seems to keep popping up as a real entity.
To be clear I want to stress the link above is complete junk physics but the concept he is trying to make has some value. Most people make it too real its not really real its a information web that just happens to have structure that might have side effects of having some barely detectable physical effects.

However it does provide the coupling required for any complex system to become a powerful quantum computer calculating some useless equation until periodically it tips the complex system to calculate something else which can have a physical effect. Theoretically if we understood complex systems this should be readily observable and if we understood this then complex systems should be trivial to understand.

Wait a second dang :)

The problem is that most of the chaotic formulations are deterministic. Everything I have tried to do is to place the problem into the stochastic domain.

One of the biggest evolutionary dead-ends that I have seen is the endless pursuit of placing the Logistic curve (i.e. Hubbert curve) into a deterministic context. The solution of the Verhulst equations at the root of the Logistic sigmoid is actually a chaotic system that has a solution in a relatively stable part of the solution space.

But I claim that this is totally wrong-headed, as I can generate a Logistic from a model of dispersive search. This has one element of accelerating growth but the rest is probability distribution effects. In general, I don't think the framework is fragile at all; it's about as fragile as statistical mechanics, which seems to explain large ensembles of particles, and which will respond rather predictably to stimuli. The Shock Model essentially codifies this stimulus/response effect.

Sorry to be clear I meant fragile in the mathematical sense not in the sense that its not a good model given the underlying assumptions. For this type of model I'd argue its probably the best model possible.

The problem with complex systems is we have no way regardless of the type of model to prove its correctly modeling the complex system. How do you know for sure your model made the correct underlying assumption ?

We do know that complex systems in general are capable of rapid change. Statistical mechanics in its simple form can't for example correctly predict phase transitions. I'd argue the theory was extended to include them because we know they exist and the model can readily account for them but the math of stat thermo does not in my opinion actually contain the concept. For that matter liquids are not obvious either although its not a huge leap to go from a gas to a condensed liquid so that transition could in a sense be discovered.
I'd argue that solids would take a stroke of genius and its not "obvious".

What I'm trying to say is this sort of modeling has very little leading hints in the math itself just to complete the model and in general despite the power its a relatively simple problem. I agree 100% that chaotic math itself is intrinsically useless as a model. No problem throwing it out but then what ?

We can of course get into a heated argument on phase transitions and statistical mechanics and if they are what I would call a natural result of the theory. I'd be forced to define what I mean by natural result at that point. The best approach would be to take some smart high school student tech him the stat thermo of gases and see if he discovered water and solids of course it would be nice if this student had never heard of water and solids or mabye the math was cleansed of its physical interpretation :)

When you get into true complex systems that are not homogeneous then its difficult to prove that you have created the correct ensemble.

It the case of the shock model I question one of the inputs which is reserve growth. Is the shock model itself capable of solving for the correct reserve growth given the other input parameters ?
Can it prove or disprove the validity of reserve growth ?

I honestly don't know I've not played with it enough to see if it can be modified to solve for some of its questionable inputs.

This is what I mean by unstable without the perfect model its difficult to know if you left something out or if you can detect questionable input condition or questionable dynamics.

Now with that said I think that the shock model can be extended to only need as inputs the size of the earth and some reasonable constraints on the number of basins. Given its basic premise one would think it could be started with inputs that could theoretically be refined to the point that the input data itself was considered trustworthy.

But even with that you still can't prove you did not miss a shock.

Maybe I can explain it this way if you know quantum mechanics its actually fairly natural to derive classical mechanics most students well versed in quantum mechanics can after a bit hit on the correspondence principle and invent classical mechanics. Of course they would naturally know where the assumptions failed.
The reverse problem was beyond hard and required brilliant insight. Classical mechanics by its nature was really incapable of telling you it was and approximation the true nature of the approximation simply was not intrinsic in the math.

This is what I mean when I say in my opinion the sock model is a good model however its not clear yet whether its classical mechanics or quantum mechanics. I argue we lack a understanding of whatever the real higher level model is and I agree chaos is the wrong route. But then what ?
Under the covers of course we know we are dealing with a complex system dispersive model or not :)

From the dispersive discovery point of view I'd argue a natural extension that not really included is that a single discovery encourages more intensive localized searches. The gold rush effect this does as you correctly point out not ensure that we find the big field first but I'd argue that any find tends to propagate further search from the point of discovery. Some of the first oil fields turned out over time to not be all that important as far as oil bearing basis go. Pennsylvania for example. And of course Hitler was desperate for oil but never even bothered to search the north sea for oil. Why because they did not have the technology so obviously to some extent the search was technically constrained.

Agree or disagree the point is I think these are valid points you could raise vs a pure dispersive search however I'd also argue that the only reason I could raise them was because I happened to know the "right" answer just like the additions of phase transitions to what is really a pure gas model of statistical mechanics I'd argue that these additions would be difficult to add naturally. Its actually a fact that discovery and lack of discovery i.e dry holes influence the search pattern. However how do you model it and even if you came up with the concept on your own since its fairly basic how would you add it ?

Hopefully you agree that there probably is a self propagation term in dispersive search such that success and failure influence the further probability of more searching in the region. Please tell me you at least buy into the concept :)

Assuming you did how could you determine the strength if you will of the variable ?

For gold for example given that the nature of the deposits where well known the search pattern around a gold strike was very intensive same for silver. Finding coal is considered trivial because of the nature of the deposits. Locating good coal seems did not require intensive skill. This is yet another "natural" intrinsice that makes sense but again I'd argue difficult to add. And certainly difficult to consider from scratch.

A simple case lets say that oil deposits hand a big red X on top of them marking their location. I know this sounds funny but rives lakes and streams effectively have this. Most rivers lakes and streams where discovered by simply walking around the area ! A dispersive search for water seems trivial.
However finding the lakes in the Antarctic and Greenland is far from trivial. And of course underground aquifers can be missed for a surprisingly long time.

http://www.uswaternews.com/archives/arcsupply/6nebsan.html

You tell me you created the model how well does it extend if you agree with my concept of what I call stability then how do you feel the model works. I tend to think its a simplification of a higher order but unknown model if you agree what form with the higher one take ? Quantum and Classical mechanics shows that the "higher" model can be radically different yet naturally produce the approximation.

Obviously I think complex systems are computational engines and I think its a natural result of one formulation of quantum mechanics. One of the corrections i.e assuming more or less discovery near a strike or dryhole. Is actually driven by the belief that the underlying system is naturally a computation engine.
This does not require intelligence. Dispersion of seed via wind which one would argue is a perfect dispersive search picks up the selectivity simply because seeds that land in fertile ground disperse more seeds to continue the search while obviously the once that land on rock or water don't propagate so the search is not continued in that direction. Underlying is a rudimentary ability to communicate in the case of seeds it very primitive and the I survived signal is sufficient to alter the search pattern.

You see that communication has this tendency to enter into complex systems even something as simple as crack propagation has the "I survived" signal and cracks can rapidly propagate to the weakest point. You need not even assert biological control.

I'd argue that this feedback is so common and so basic in complex systems that dispersive search without feedback is simply not correct and that because feedback comes from a higher order model that there exists a bigger better model that the shock model is a simplification of a poorly defined meta model.

My own attempts at trying to deduce this has right now resulted in me becoming very concerned about the assumptions we make at least with what I think I know I'd suggest people become very concerned about our situation. This could of course be from lack of understanding or even worse understanding but also overreacting to some of the features that seem to be present.

All I can say right now is I think I know enough to argue that for the case of oil and our economy we are at a crossroads possible in the sense that I really think I've gleaned enough to say that we will know the true nature of our complex system. Either I'm right and we will soon know if we have a oil glut or a fast collapse or I'm really really wrong and the central limit theorem takes the day and we follow a fairly smooth curve.

Whats worse is I might be theoretically right and you can determine if a complex system is following central limit behavior or not but simply messed up the solution with oil. That for me would be the worse outcome :)
But no problem I'll go watch the ice melt at the poles since this is the other complex system that I've decided is going to follow the fast collapse route in fact its what actually lead me to think oil would also follow the same route. It has a similar feedback in that a loose iceberg physically grinds away and shatters the nearby ice. The sandpaper and hammer effect. Same for glaciers once they start cracking they have self propagation built in and of course water moving to the base. I argue that these effects soon overwhelm simple melting.

I've got to be right once or even worse I've got two chances to be wrong. Well three if you count collapse of our civilization which is independent of the rate of decline of oil simply needs it to decline.

Only because complex systems are self similar regardless of the underlying forces do you have to evoke quantum mechanics as providing the most basic feed back channel through extended qubits. A communication theory of complex systems must have a reasonable and basic route for feedback if feedback or computation is indeed the key to complex system behaviors.

At least so far it seems that complex systems in decline rarely follow the central limit theorem once fully constrained. My hearsay is that the central limit theorem only works for complex systems that are still open and have other inputs. Once the system is closed it eventually rapidly moves to and extreme condition.
One would argue that the polar caps are not closed but in my opinion they have transformed to a new system with enough open water to to create a new "closed" water ice sun dynamic. They need no further inputs then what exist now to go to extreme. Closed for complex system just means the feedback loops are no longer varying and thus the system will move to one of its extreme values.

And like I said nothing prevents this from being totally wrong thats one of the problems in my opinion with trying to formulate a higher order theory esp one that based on hidden variables and erroneous measurements :) I can't think of another approach that obviously has the proverbial feet of clay or house built on sand :) It very basis is a collapsing sandpile :)

Given the poor quality of my model that suggest this I'd be excommunicated for suggesting this if I still did science.

I'm keeping my eye on your sand pile computer :)
Dynamic reality made up of communicating units?
I am reminded a bit of the work that was done on biological 'invasive species'.
(Very important in both global agriculture and natural systems.)
Could they be predicted from fundamental characteristics?
The answer seemed to be, no.
Very few of introduced species become truly invasive, but predictably a few of most categories will become invasive, and some of these will become serious pest species. But which? An additional pattern typical of biological invasions also made for difficulty when trying to do a predictive risk assessment (for example RA for genetically engineered versions of known species), and that was the typical very long lag time between the dispersal and establishment of a few feral individuals or small populations and the take-off of explosive invasion. Lag times for real examples were typically several decades and did not necessarily involve genetic adaptation to novel environments that might have explained the length of the lags.

I believe that the processes of discovery and production are distinct from the first-order modeling point of view. All the biological analogies break down for any unified model because this lag does not exist. In predator-prey relationships, the prey gets eaten (produced) as soon as it is captured (discovered).

But the predator/prey population dynamics doesshow a time lag between the two profiles -- one peak (predator) lags the following (prey). Is the prey discoveries then? And is the predator production? Or is it vice-versa? In any case, the cumulatives in either case points to an infinite URR, which doesn't make much sense either. It's all a matter of fitting round pegs in square holes. The analogy does not quite fit, and people hang on to it because it is too tantalizing to let go.

Web I think your to hung up on predator prey relationships yourself. I'd suggest people use them because they are known complex systems that happen to be well modeled. Behind the shock model and biological models exist some basic truths about complex systems. You have hit one which is dispersion.

However :)

In real complex system dispersion creates self assembly its not a pure random walk. We actually know this from current research. As the system disperses on a random walk it finds conditions that are suitable for growth these generally act as seed crystals for further growth. In fact you probably can model complex systems via the dynamics of a system with changes in the number of seed crystals for crystalline growth. I'd argue that using this analogy the current dispersion model is effectively assuming a single seed crystal and thus is not capturing the important phenomena of self assembly. YES it need not be predator prey ! Thats fine but its why others keep coming back to it time and time again.

Now why is this important ?

Well if I'm right and that discoveries and dryholes cause the dispersive search to pattern then the search itself is capable of discovering most of the oil in a region very rapidly. This means that the reserves in a region are well known early in the search phase i.e you have a very good estimate of the total amount of oil fairly early once search has reached the point that wells are being drilled and put into production.

Thus reserve growth can only happen at the start of production later additions are simply unphysical and probably represent increased ability to deplete not any real growth.

So if I'm right and search actually becomes patterned in real complex systems this implies that most of the reserve growth people keep adding into models is fiction not fact.

Realistically we probably only have 1.5 trillion barrels of oil that will be extracted at any reasonable rate and we have burned about 1.2 trillion. Our depletion rate of our remaining oil is then probably somewhere between 5-10% giving us a realistic oil supply that I'd cut off at 25% lower than our current rate of 5-10 years. We would have 10-20 years left before rates drop to at least 50% of the current rate.

Although large changes in URR tend to not move the peak date that much what they do do esp if the real URR is lower and extraction rates have increased dramatically over time is result in a relentless increase in the depletion rate as you maintain high extraction rates. Thus starting with patterned discovery one can fairly easily conclude that most reserve additions actually are simply increases in the depletion rate of the reservoirs given the size of the claimed reserve additions depletion rates have at least doubled are quadrupled over the last 20-30 years. Given that the production decline rates have been kept low and in fact production rates have steadily increases our average depletion rate of remaining URR is sky high right now.

And of course new discoveries are well in the past thus the logical conclusion is that production rates will fall fast or have fallen rapidly as a large number of fields pass 60% depletion. Basically about 90% of the remaining URR is in fields that are 50% or greater depleted. To some extent it does not really matter if they are 50% 60% or 70% whats important is that production profiles drop dramatically when a field itself hits its end production level.

So assuming you go with patterned search and move most reserve growth to be increasing depletion rates you should be able to reproduce my worst case model.

Your correct that Predator Prey is one pattern but Oil has its own pattern and if I'm right the net result is the same sort of crash as found in predator prey relationships even though thats the wrong model the underlying intrinsic self assembly of complex systems as the disperse is universal therefore complex systems that are based on depletion faster than a resource can be renewed probably all have dynamics similar to predator/prey despite being based on quite different processes. Thus patterned search overwhelms the domain specific behavior.

From a stat thermo point of view long range order sets in well before any phase changes actually take place.

For crystallization for example proto crystalline structures form well out into the liquid phase.
We understand skin effects very very well since they are critical to any catalytic process. And we know liquids can take on ordered structure. This is not new.

Many types of crystal growth exist. I can name crystal growth near equilibrium as having completely different dynamics than crystal growth under more kinetic conditions. I did a lot of work on the latter and the old hands who thought crystal growth could only take place near equilibrium were always freaked out by how much control you could impart by working in a kinetic regime far from equilibrium. It got to to the point where you could actually "see" the atoms moving into place. Dispersion in the growth measurements was so real that you could actually pick out beat frequencies due to finite volume effects.

I only mention this because people that deal with crystal growth research have so long dealt with the problem of not being able to measure the results until after the experiment, that they can get really good at imagining what is going on in the mysterious nano-world. Working out the details of oil exploration has a similar relationship; you just have to make assumptions on the variability of the conditions and you can use the same kind of mathematical models (up to a point of course, because nothing ever perfectly analogizes).

"I'd argue that using this analogy the current dispersion model is effectively assuming a single seed crystal and thus is not capturing the important phenomena of self assembly."

This exactly reverses my premise. Dispersion acts on rates of growth. Having a variety of growth rates effectively gives a Pareto-like distribution of crystals sizes in a suspension. If you had a single seed crystal, in a very homogeneous environment then you would have a uniformly advancing collection of crystal sizes.

Dispersive discovery works the same way as fractal crystal growth, in that we have many different exploration rates from around the world acting on varying chunks of volume. The reserve growth occurs as localized dispersion (and diffusion) act on individual areas. About the only thing difficult about this analysis is understanding the length of time it takes to calibrate a discovery curve. If you backdate the discoveries to the original date in a region, then you use the reserve growth kernel function in the Shock Model convolution. That is what Khebab and I both do, as most of the published data gets backdated.

It would turn out different if the data wasn't backdated. In that case the original discovery curve would likely be much broader and the reserve growth kernel would be an integral part of the dispersion model. A tricky duality occurs in this case. One can make these areas very large so that it looks like new areas are not just extensions of previously discovered areas, but who makes the decision between whether a new area is actually a new discovery rather than a reserve growth extension of a previously discovered one?

Exactly :)

I used to do x-ray diffraction so you can image I REALLY got into crystals :)
I used to do space groups in my sleep :)

Now what I'm saying is you need a consistent model for the expansion of original discoveries this must be ab-inito you cannot depend on backdated discoveries since these are corrupted with extraction efficiency.

What I would like to see on the discovery side is the obvious creation of new centers. Your claiming that you do what I'm suggesting but I simply don't see it it your model. For example the discoveries in the ME should obviously in the discovery graphic initiate a new center for seed formation. This is simply a showme request.

Next we have the real boundaries of most basis this is the data that should be feed into the ab-inito calculation the true extent of a sedimentry basin with source rock is well known.

It would turn out different if the data wasn't backdated. In that case the original discovery curve would likely be much broader and the reserve growth kernel would be an integral part of the dispersion model. A tricky duality occurs in this case. One can make these areas very large so that it looks like new areas are not just extensions of previously discovered areas, but who makes the decision between whether a new area is actually a new discovery rather than a reserve growth extension of a previously discovered one?

This is the absolute heart of the problem today reserve growth accounts for to much of the remaining OIP and expectations of the URR its 25-50% of the input data into calculations of peak. The symmetric solutions blow up if this data is incorrect since they all use it as input. If its a pure fractal that does not have obvious new centers bounded by the topology of the basin then your model is wrong you have the seed crystal density to high. I almost wrote about that in my last post but chose not to It looks like to my chagrin. A individual crystal and a rich set of seed are both wrong. You have to seed it with the correct number and size.

GIGO.

This means of course that the shock model is not basic it depends on the topography of the earth but it should. A correct model of the planet earths oil endowment should depend on the real topography and geology of the planet.
A model that does not depend on our unique planet is simply wrong. I argue that the shock model has the right ideas but is not seeded correctly to determine our real oil endowment. Reserve growth data is both corrupt and should not be and input.

Look at it this way worrying about peak production is only and issue once the discoveries are well in the past. If they are well in the past the basins are well defined and can serve as input into the model. Modeling peak before discovery is obviously done is a inexact science at best. The details matter.

From your sig your obviously into astrophysics. The shock model should work for Titan and Mars. We may not have the data in some cases I'd argue that Mars could well have a surprisingly rich hydrocarbon endowment. You need to think about the requirements to turn the shock model into a generic planetary model. If you do then you will find that reserve growth is a complete sham.

Notice I left off maybe or might be or any other escapes. Its a sham its not real it never happened it can't be real. A very small precentage of reserve growth is allocated to expansion of your understanding of a basin at best its less than 10%.

X-ray diffraction is only a bulk diagnostic tool. The scattering cross-section is too small and you don't pick out what is going on at the surface. You need to do surface electron scattering to detect the dynamics at the growing surface.

The solution to Pareto is trivial. Assume a damped exponential range in migration speeds (lots of slow, very few fast). Integrate this distribution over a time which basically accumulates a volume a priori. Then average this over a range of times spanning geological ages, and you get a "Pareto-like" equation. If you put in finite time durations, you get bending in the rank histogram at the largest sizes. Very trivial to show (I won't here because I am sick of trying to do math markup on a blog) and you wonder why no one has ever figured this out before. I get tremendous insight from thinking in this way.

Now, this reservoir size distribution has at most a 2nd order effect with respect to dispersive discovery. Exactly when a big vs small reservoir is found has a weak effect both empirically and statistically (also similar to scattering cross-sections) on the discovery cumulative.

I would argue with the fact that you need to know much geology at all. Every oil reservoir is a statistical anomaly or defect governed by rules similar to Poisson statistics. And that is the way I do my analysis. But then, it is your right to assume that the specific geology rules the eventual dynamics of oil depletion.

Large scale dispersive discovery is to macroeconomics as reserve growth on a basin is to microeconomics. You can use some of the same analysis for both, but trying to determine when micro turns into macro is arbitrary. Reserve growth is simply a matter of discovery at a very localized level. You see the tip of the iceberg and it takes a while to figure out how big the volume is underneath. If you knew the iceberg's size right away then there would be know need to think about reserve growth at all. However, globally, not knowing the size of one iceberg doesn't effect other icebergs that are discovered.

BTW, My sig has no deep meaning, it is a mutated name, kind of like Olivia Neutron Bomb. I like political intrigue and I like science, therefore the sig. Actually I don't care much about astrophysics.

Again to repeat myself a bit.

Reserve growth is simply to large of a contributor to include in a basic equation if it exists at all it needs to arise from the basic calculations.

I'd suggest the biggest argument is when a field is actually well characterized. This certainly depends on technical changes over time.

But the fact that offshore fields are often pre-drilled brought online pumped and abandoned should suggest that we know our fields very well today.

Looking back into the past we find that Ghawar and indeed any field that uses peripheral water injection must by definition be well defined.

Here is a nice simple article on the issue.

http://www.rferl.org/content/How_Do_Experts_Estimate_The_Size_Of_Oil_And...

Now I'm of course asserting that OIP is actually fairly well known and further more generally over estimated as most factors that effect OIP estimates are ones that tend to lower the total.

What changes over time is your estimate of your recovery precentage not really the total amount of oil present. Given that recovery rates are in general low < 50% of OIP your reserve growth can vary a lot depending on how you change your recovery rates. And of course reserve estimates are tied to financial considerations. Inside the oil industry literature I've read reserve growth is repeatedly mixed in with methods that maintain production rates.

Many of the issues are brought up here for NG.
http://www.oilcrisis.com/LaHerrere/Kuuskraa/

Westexas has mentioned a few time that NG/NGL production increases from oil fields as they go into decline. My opinion is the strong increase in NGL production is a warning that all is not well in the oilpatch.

And one last thing. Despite the flaws of HL its the only method that does not include dubious reserve growth. However its a symmetric and empirical approach. HL itself because of the way it works will lead to inflated estimates of URR if technical progress has significantly increased our ability to maintain production rates as fields become depleted.

Reserve growth I argue probably has even more inflation and suffers from a variety of problems one of which is the same mistake of inflating reserves based on better extraction technology.

So it is a safe bet in my opinion to assume that any methods based on HL like heuristics or that include reserve growth are inflated.

Every attempt I've made to correct results in the world being at least 70% depleted of what I call fast oil with a large tail of oil that could be extracted at low production rates from depleted fields. I'd argue that expectations of the final URR with the low total production rates probable once most of the worlds oil fields are past 70% depleted is questionable because of above ground factors.

You have of course posted models that show extraction rate shocks. If you simply combine these with a pessimistic assessment of reserve growth or take a HL URR and assume 10% 20% or 30% inflation and fit the extraction rate shock i.e go with a URR estimate and vary the extraction rate shock you can then estimate "real" reserve growth if you have the non-backdated data.

Regardless given the current production rates if HL is indeed inflated by anything more than say 10% you have to have a asymmetric production profile. Personally in reading about extraction technology I'm convinced that over time we have doubled if not quadrupled the rate at which we can extract oil and these technical advances are retroactively applied to older fields. Ghawar is the showcase. Certainly in some cases it allows commercial production from tight or otherwise complex reserves that would not be commercially produced. However this begs the question of why these reserves that where left behind are now of interest. Where have all the easy to produce fields gone ?

Bottom line is I cannot escape the conclusion that if I'm right and technology has played a role in maintaining production rates while increasing depletion rates even a simple review indicates its a large correction or it has no impact and recovery factors have also increased dramatically even though I can't find any proof of significant increases in recovery factors in general. A few showcase fields but overall increased recovery is small and generally in the final stages of production at very low production rates.

So bottom line is if the depletion rate is increasing over time and the production rate is increasing and the discovery rate is decreasing eventually you hit the wall no matter what model you use. Only real increases in recovery rates at high production rates would result in the projected production profile using either HL or the shock model.

The lack of compelling evidence of dramatic increases in recovery rates is troublesome.

To your first point in the comment. The simplest model IMO for reserve growth uses dispersive aggregation. This leads to the hyperbolic model that Laherrere has referred to. In the most dispersed form this leads to a cumulative that goes like t/(k+t) if the aggregation speed is relatively constant over the lifetime.

At one time I asked Laherrere why he used a hyperbolic kind of curve to fit the data. He said he couldn't explain why, except to say "that everything on earth is curved". Then he said that "hyperbola is the simplest curve with an asymptote".

So we have real issues on how we talk about this stuff. I can only reason in the context of some mathematical model because pure rhetoric fails us at some point. Everyone else seems to talk about this via some heuristic (as Laherrere does, which never attempts to explain anything) or a sophisticated expository narrative that in the end is impossible to disambiguate (due to the failure of natural languages to precisely define and describe most laws). I am not immune to criticism in this regard as all my math is spread out over blog posts and it uses this great math markup language that all blogging software comes with (NOT).

So it is indeed frustrating to always talk past each other. It is almost like the two of us were in the early 19th century talking about a mysterious ether flowing through the wire and we didn't know about Ohm's law and how to apply our arguments in terms of a schematic and applying Kirchoff's circuit laws. We are essentially talking well past the fundamentals (which know one has adequately expressed yet) and assuming that further blustering rhetoric will obviate the need for a basic statistical understanding.

That is all I am working to change.

I don't disagree however I think I'm saying something much simpler. At some point you have to validate your data sources. If you data is corrupt then you have a problem.
I simply see the potential for some serious data corruption and I feel a couple of reasonable assumptions to correct for the corrupted data leaves you with some uncomfortable results.

One last thing any survey of the worlds oil endowment shows that Iraq, Iran and Russia have a significant precentage of the worlds reserves regardless of what the level is. Despite repeated above ground problems leading to poor production rates from these areas we have successfully managed to have cheap oil most of the time. Thus the depletion rate of the rest of the world excluding these areas and their reserves is open to question. Next you see late developed areas such as the North Sea and Alaska go into decline in a few decades.

There exists plenty of room for questioning here and if reserve growth and infield drilling where not so critical to expectations of future production given that new discovery is well in the past I'd drop it.

And last but not least complex systems of all types tend to show rapid growth and collapse or at least are capable of rapid collapse. The spans all complex systems from simple sand piles to markets and computer networks. Understood or not its a intrinsic feature of complex systems. Chaos although its not predictive shows at least how model systems can change rapidly. Its a useful toy for understanding the general dynamics of a system but because of its definition it simply cannot be used to predict.

And back to the top your a scientist if you trust the data fine I don't. It looks like we will find out from experiment. I'm confident that a fast collapse of oil production can be ruled out withing say the next 18 months at most. It either becomes blatantly obvious soon or I'm wrong.

However I believe now that any reasonable model of complex systems needs sufficient logic to prove its inputs. I must work more like a mathematics proof or a computer program. Your model is literally a simplified program that represent the system and runs faster. However how can you know for sure that you don't diverge ala like chaos from the real one ?

And last but not least Peak oil and resource depletion is actually a product of the Petroleum Industry and one of its main predictions has proven valid i.e the peak date for the US.
Its also a sort of duh type argument. You extract a resource thats effectively non-renewable and eventually production will decline. Why is that data needed to reasonably understand the global peak so obfuscated and hidden ? Any understanding of people show that they hide something when they have something to hide. The whole subprime housing game was at its core a simple fraud executed with layers of obfuscation. Practically every single time that humans obfuscate something that should be obvious its not a good thing.

This simple understanding of people is in my mind the strongest argument to question strongly everything that has to do with oil. Obviously I've come to the conclusion that we have lived a big lie over the last 70 years and obviously not just with our oil supply. As near as I can tell it was a whopper with lies about oil at its heart.

If we have corrupt data sources there is nothing more than I can do.
You being a physicist will appreciate the fact that there are theorists and there are experimentalists. Usually in physics academia, the two are kept segregated; the theorist postulates something and the experimentalist tries to demonstrate it. Usually the segregation occurs because of the different skillsets the scientists bring to the table. On occasion you will find the scientist who is great at both. (scratching my head trying to come up with one)

With the bad data sources, I have now officially become a theorist and I will sit back and let someone else demonstrate the results.

If people are purposely trying to hide the data, we have a double whammy on our hands.

Yep thats really my concern. And not only are their more theorist than experimentalist but more theories that theorist :) And old theories seem to hang around for ever long after they should be tossed into the rubbish bin.

However you can use various games of logic and variants of your theory to test the plausibility of the data. We don't care about simple issues just huge blunders.

Moral Hazards are hard to explain but if we have created a moral hazard in the oil industry and I think we have the true cannot be hidden forever. One thing I am confident of is that the Oil industry has certainly obfuscated thing enough that they have plenty of room to execute a moral hazard that makes the current financial crisis a walk in the park. The latitude exists.

Thanks Memmel for the lengthy post. I appreciate it and have saved it for reading when I have some time to go into these matters in detail.