Posted by Yankee on July 26, 2005 - 11:45am
The Sunday New York Times had an interesting article called All Quiet on the Home Front, and Some Soldiers Are Asking Why. The second paragraph of the article raises the question:
From bases in Iraq and across the United States to the Pentagon and the military's war colleges, officers and enlisted personnel quietly raise a question for political leaders: if America is truly on a war footing, why is so little sacrifice asked of the nation at large?The article goes on to discuss how the "nation at war" of 2005 bears no resemblance to the behavior of either the government or the citizenry during World War II.* Americans are not being asked to sacrifice in any way, except to perhaps send a care package or two to the troops to ostensibly boost morale. There is no serious talk of a draft (though the liberal blogosphere seems to have its suspicions), and in fact, Americans are even being explicitly told to continue living life as normal to "not to give terrorists a moral victory by giving in to the fear of violence."
*I'll leave it as an exercise to the reader to determine how the national psyche during the Vietnam War fits into this debate.
This is psychologically damaging to the troops. According to the article, soldiers are sensing that the regular citizen's level of committment to this war is pretty weak. Says David C. Hendrickson of Colorado College,
"Bush understands that the support of the public for war - especially the war in Iraq - is conditioned on demanding little of the public."
"The public wants very much to support the troops" in Iraq, he said. "But it doesn't really believe in the mission. Most consider it a war of choice, and a majority - although a thin one - thinks it was the wrong choice."
Now, I find the sentiment expressed in this article this article sort of peculiar. I can understand why the troops would like a greater show of committment by the country, since the feeling that the military is at war but the country isn't is certainly demoralizing. But what I don't understand is what the soldiers would have us do. The pictures that accompany the NYT article reflect the effort that people made with victory gardens and gas rationing during WWII, but wouldn't that kind of effort today be just as symbolic as the care packages? There aren't really shortages of anything right now. One possibility that the article points out is that we could raise taxes to pay off the deficit caused by this war, but certainly the citizenry isn't going to accept that.
I bring this up on The Oil Drum because I think it reflects a salient aspect of the American psyche that's going to cause us great difficulty in a Peak Oil world. It seems to me that many Americans of the 21st century feel a great sense of entitlement. I am not immune to it myself; for example, I believe that our services should run flawlessly, and when a subway stops for 5 minutes in a tunnel or the airplane sits on the tarmac for a while I get indignant. Every American reading this can picture the angered, agitated, high-pitched voice of the customer who believes he'll miss his connection. Considering how minor these things are, imagine what will happen if and when gas is once again rationed, and certain foods are in short supply because we can't grow as much of it as we used to. Will there be riots? We're seemingly at the limits of the rich/poor divide--but could it possibly get worse? I'm going to take the high road. Perhaps once the reality of the situation is crystal clear to everyone, we'll have a massive shift in our collective behavior, and we'll begin to understand why it isn't our God-given right--or even a part of the American Dream--to want for nothing.
Technorati Tags: peak oil, oil, rationing, WWII, Iraq war
Posted by Heading Out on July 26, 2005 - 6:33am
Russia has become almost as large a producer of oil as Saudi Arabia (and may have passed it in the odd month over the past year). Their exports play a significant part in the overall world supply so that any fluctuations in production, particularly since they lie outside OPEC can have a significant impact. Interfax gives the numbers from this January to May:
Oil exports from Russia in January-May 2005 increased 2% year-on-year to 103.8 million tonnes, the Federal State Statistics Service said, quoting Federal Customs Service figures.The figure comparison with Saudi Arabia are worth looking at, given that the EIA table is showing that Saudi Arabia has been producing at 9.5 to 9.6 mbd in that time frame.
According to the statistics, which include figures for Belarus, oil exports in May amounted to 22.7 million tonnes - up 11.6% from May 2004.
Oil production, not including condensate, in Russia in May 2005 amounted to 9.19 million barrels per day, in April - 8.9 million bpd, and in March - 9.21 bpd. For comparison, oil production in Saudi Arabia in these months amounted to 9.507 bpd, 9.438 bpd, and 9.322 bpd respectively.
The data is carried forward to June with a more analytical look at the numbers by The Economist
Russia's oil sector shrugged off eight months of stagnation in June to raise output by 100,000 barrels/day (b/d) to 9.43m b/dâ€”a post-Soviet record. Although the news is positive, it does not yet signal a return to the robust post-1999 oil production growth that has been the engine of the national economy.The article seeks to find a reason for the increase, and does not find it in the large Russian company production (previous performance being given here).
Yukos's problems predominate: . . . output at main subsidiaries Tomskneft and Samaraneftegaz has fallen sharply. . . from a peak of nearly 700,000 b/d last year, production at the two subsidiaries fell to 470,000 b/d in June. . . . According to data from Moscow-based consultancy Petromarket: Lukoil output edged down by some 10,000 b/d in June while TNK-BP and Sibneft both experienced rises of 10,000 b/d. The largest gains were reported by Surgutneftegaz, up 30,000 b/d, and Rosneft which saw output rise by 20,000 b/d to 1.29m b/d. The bulk of the total production rise came from projects developed under Production Sharing Agreements (PSAs) with foreign oil companies, including Shell's offshore Sakhalin-1 project.It is this last source which provides an answer, and at the same time a caution. Because the major increase has come from Sakhalin Island (which lies North of Japan) and is due to the changing season.
Output data for the past few years bears this out. According to the economy ministry, which says that June 2005 output rose by 100,000 b/d, the monthly rise in June 2004 was a remarkable 170,000 b/d. The International Energy Agency (IEA) does not yet have a final output number for June 2005, but its historical data confirm that June tends to witness the largest monthly rise in oil output each year: 135,000 b/d in 2004, 145,000 b/d in 2003, 90,000 b/d in 2002 and 160,000 b/d in 2001. Even in 1998, before the Russian oil sector began sharply to raise output, IEA data show a 160,000 b/d rise in production from May to June.And in the last two months of the year production declines in the face of the Siberian winter. The Economist shares the gloom expressed in our earlier post regarding future production. Most of the gains to date have come from introducing modern technology into ageing fields. I would refer again to the review by Leslie Dienes that explains this in more detail.
There is insufficient investment in new fields to see the gains in production from Russia being sustained, though this is more of a concern for the longer term. In the short term, the Economist also points out that Russia is reaching the current limits of transportation with little in the way of relief being available before 2010 â€“ at which time the shortage of new production may make the additional pipelines no longer necessary, if they happen. From Untimely Thoughts
the Kremlin can and should do more to get oil to the market at a reasonable price and at predictable production levels. Russia also needs to finally decide on new pipelines - a pipeline to transport Western Siberian oil to Murmansk and whether to build a Pacific pipeline to Japan or China.It should be noted that the Economist numbers are at odds with those quoted in the Canadian Globe and Mail which reported earlier this month
Exports from Russia, the world's second-biggest oil supplier, to countries outside the Commonwealth of Independent States fell to 4.22 million barrels a day in June, down 8.5 per cent from May. Russia raised crude oil output 1.8 per cent to 9.43 million barrels a day, or 38.58 million tons in June, from 9.26 million barrels a day in June last year, according to data from Moscow-based consultant OOO Petromarket.
Technorati Tags: peak oil, oil
Posted by Heading Out on July 25, 2005 - 6:09am
Soaring gas prices are undermining the competitiveness of British manufacturers compared with European rivals and ensuring that Britain has enough gas to maintain supply during a cold winter.But the problem is, just as is the current case with Indonesia, the supply, and even the British gas, goes where the money is.
The price of UK gas and electricity (which is derived mainly from gas) has doubled in the past 18 months, compared with rises of just 15 per cent in Germany and 40 per cent in France. According to Nicholson this means that "there is something akin to a two-tier market operating in Europe".
He says: "We seem to be paying 50 per cent more for our gas than the Germans and 30 per cent more than the French."
Also, the UK has become increasingly dependent on natural gas from continental Europe as its own supplies of North Sea gas dwindle. When demand for gas is high during cold weather, it has to be imported via cross-Channel pipelines, notably the interconnector, a two-way pipe that imports gas from Europe.Unfortunately the hope of the British Government has been to look to Norway, but the new pipeline to bring that gas to the UK won't be around for at least two more years.
So what would happen in a severe cold snap? The interconnector - the pipeline which runs from Bacton in the UK to Zeebrugge - is designed to supply gas to the location where there is the highest demand and price but it has not always proved to be 100 per cent reliable. Earlier this year for example, when wholesale gas prices in the UK hit Â£2 per therm in the first week of March, the interconnector was still exporting gas to Europe rather than bringing it in.
Yet another case, as with Indonesia and Colombia, where the locals may go short, since business is, after all, business.
The problem of course that Governments have is that, like us, they rely on the accounting of agencies to give them the information. And there seems to be a growing doubt about how accurate that information is. One of the bases for Daniel Yergin's CERA report that suggests that the world is not going to have an energy problem soon, was the promise that non-OPEC oil supplies would begin to grow significantly. However we have all seen the recent reports from Russia that confess to not being able to increase supplies much higher than they currently are. And now the CEO of Schlumberger points out that non-OPEC in general is falling behind predictions (thanks to Peak Oil for a source).
Gould, responding to a question on a conference call with analysts, said the demand drop in China is of comparatively little concern next to the wanting performance of non-OPEC supply, which lags the amount projected by the International Energy Agency, the energy watchdog for the U.S. and other industrialized countries.Some of that loss, no doubt, is coming from the more severe drop in North Sea production that had been anticipated, a drop that is unlikely to be recovered.
"No one seems to have focused on the supplier and what is really interesting is if you look at the supply numbers for the first half-year, the non-OPEC supply is about 1.2 million barrels a day below what the IEA currently has in their forecasts," Gould said.
What with the US agencies saying that the current increase in demand actually occurred last year, so that there isn't really that much of an increase this year, one begins to wonder if anyone actually knows what is going on. And if they don't then surely we are back in the days of 1976 sailing into a crisis without a plan. And we know where that led, though very few folk seem willing to go back and look.
Ah, peak oil.
Technorati Tags: peak oil, oil
Posted by Heading Out on July 25, 2005 - 2:51am
On the oil energy front today there is a different story. Ah, peak oil.
The United States is a relatively mature part of the world in terms of having seen a lot of the immediately available oil extracted. The oil that remains comes in many cases, from stripper wells, where the flow is small, but can remain steady for many years. Oil here has to be pumped out of the ground. The LA Times has a story on such an operation today on Cano Petroleum.
Johnson laid down $8 million for the field (in central Texas), which covers more than 10,000 acres.The article goes on to describe how the company gets the oil out of the ground using an enhanced oil recovery (EOR) technique.
Today, Johnson's company is using enhanced recovery techniques to pull 80 barrels of oil a day from Desdemona's 60 wells, or about 1.3 barrels per well. These are known as stripper wells â€” wells that yield less than 10 barrels of oil a day â€” and Desdemona is riddled with them.
"Stripper wells are huge in this country," said Jeff Eshelman, spokesman for the Independent Producers Assn. of America. "They're the equivalent of what we import from Saudi Arabia each year."
In 2003, according to the most recent data available, the nation's 393,463 stripper wells produced 313 million barrels, or about 15% of domestic, onshore oil production in the contiguous 48 states. Most of the country's stripper wells are in Texas, Oklahoma and California, with half of California's 42,000 oil wells classified as strippers. In contrast to the stripper wells' output, many larger wells that are being worked over by the likes of Chevron Corp. yield more than 100 barrels a day, according to Iraj Ershaghi, director of the Center for Interactive Smart Oilfield Technology at USC.
Companies pump carbon dioxide, water or steam into old wells to push more oil out of the rock and up to the service. Sophisticated computer simulations can spot caches of oil hidden inside rock that can then be accessed by drilling out from a nearby well.The relative amounts of oil in the fluid (around 0.3%) makes the water cut in Saudi Arabia (about 30%) that have been the subject of some of Matt Simmons comments seem almost like pure oil.
Cano mostly relies on a process known as alkaline-surfactant-polymer, which is used to get the last 16%-25% of oil out of the rock.
First, the wells are flooded with water and then a soap-like chemical is pumped underground that loosens the oil molecules from the rock â€” like dishwashing soap prying greasy residue off a lasagna pan. Finally, the oil is separated from the water and sucked up out of the ground. Sometimes, engineers actually use an industrial-sized vacuum to pull the hard-to-get oil caches out.
Using this technique, Cano's 2,601-acre field in Nowata, Okla., is producing 77,000 barrels of fluid a day, out of which the company is pulling 250 barrels of oil daily. "This isn't thick and tarry oil," said John Lacik, Cano's production, safety, health and environmental coordinator. "It's real pretty, greenish-gold and real lightweight."
The story includes a comment that the company has yet to make a profit, and comments on the lack of experts in the area.
Technorati Tags: peak oil, oil
The cones are mounted with their largest diameter running around the outside of the hole, and thus each cone will have the greatest number of teeth along that edge. We call the outside edge of the hole the gage, and the three cones, bearings and mounts combine to form the drill bit.
Now if we just turned the bit round and round in the hole, it would start to drill into the rock, but after a short while the chips and crushed rock would fill up all the space between the bit and the solid rock, and the bit could go no further. We have to get the crushed rock out of the way, and preferably before it is crushed by the following bit tooth since that would waste energy.
When the old miner was hand steeling, he could either blow the chips out of the hole with his breath, or wash them out with a squirt of water. On a more sophisticated level this still holes true, but with some differences. In very short holes, or special circumstances, compressed air can be used to blow the chips that have been cut from the rock (hence the name cuttings) up out of the hole. However as the hole gets deeper this becomes less practical and some form of liquid must be used. Again it could be water, but there are several reasons why this is not usually the case.
Firstly the rock is much denser than water, and so if the water flow back up the hole (usually between the drill pipe and the rock wall â€“ a gap often called the annulus) is not moving fast enough, then the cuttings will settle back down the hole, blocking the gap and sticking the drill pipe in the ground. For this reason the water is usually mixed with very small particles of different types of material that will increase the density of the fluid so that it will help lift the cuttings all the way from the bit to the surface. This can be as far as 3 miles up or more (15,000 ft or so) and so it's important to choose the right density. Usually the particles that are added to the water are made from finely ground clays, and this makes a mud, and the fluid has thus now, regardless of what is in it, become known as a drilling mud.
The mud has to be thick enough to help carry the individual chips to the surface, but, as we will talk about in the next post on this topic, it also has to keep them held in suspension when the flow stops while another length of drill pipe is being added to the string.
The mud, however, has a few additional things that it must do as it is pumped down to the bit, through the inside of the drill pipe, and then circulates back up the outside carrying the cuttings to the surface. This circulation is sometimes reversed (i.e. reverse circulation) so that the mud flows back up the inside of the drill pipe, but this is not common.
The first thing that it must do is keep the bit cool. As the bit rotates, and the cones turn on their axes there is a lot of friction generated under the thrust being used to push the bit into the rock. Some of this friction will generate heat (in the same way as happens if you press your palms hard together and rub them back and forth) . Because the bit is in a confined hole, without the mud there is nowhere for that heat to go, and so it would otherwise build up, until it got hot enough that the bearings failed, and the bit fell apart at the bottom of the hole. (This is not a good thing to happen since how can you drill through the parts of a broken bit with a new one?) So the mud flow also serves to keep the bit cool enough to keep working.
But there is also a lot of heat that comes from the rock. This is because of something called the geothermal gradient. This is one of the last, almost untapped, sources of energy that we have. While it varies around the world, the numbers where I come from are these: At 500 ft below the ground the rock temperature is 60 degrees F. For every 60 ft you go further down, the rock temperature goes up a degree. So that if you are 1100 ft down, then the temperature is 1100 â€“ 500 = 600 (extra depth)/60 = 10 extra degrees + 60 = 70 degrees F. And at 8,000 ft (a deep gold mine) it will be ((8000-500)/60) +60 = 185 degrees. Which is why they refrigerate the air down there. And this rock temperature in deeper wells can also damage the bit. So the mud flow has to also take account of the depth and the rock temperature.
To keep the bit cool and carry away the cuttings the mud flow has to be quite fast. But there is a small problem that arises (and is not always fixed). As the hole gets deeper the weight of the mud in the hole will press down on the chips that are being formed by the bit. It will try and press them back down against the rock, (it is called chip hold-down). To stop that happening the mud has to be formed into a stream of fluid that can be pointed at the rock and (just as you move dirt with the pressure from a garden hose) will push under the chips and lift them into the circulating mud flow, as it then flows back up the annulus. To do this the mud feeds from the center of the bit out through a set of jet nozzles that point the streams down onto the rock. The deeper the bit is drilling, the closer the nozzles have to be to the rock, in order to have enough power to lift the chips and get them moving.
The third thing that the mud has to do is to act as a seal where the bit drills through the different rock layers. As the hole goes down some of the rocks it will go through are very permeable. In other words the mud can flow into them, or water can come out of them. We don't want that to happen. If the mud flows into the rock, then it is lost, and the circulation of mud stops (its called lost circulation). Without the mud the cuttings settle back down to the bottom of the hole, and the bit is stuck again. So to prevent that the clay particles are made large enough, so that if the mud starts to flow into the rock, the particles cannot enter the very small gaps in the rock. Instead they are filtered out and are left on the edge of the hole. As the water flows into the rock, leaving the clay behind, the clay builds up and forms a layer of clay along the rock wall. This seals the rock from the mud in the well, and stops the fluid from leaking out of the well.
To do all these things, with different temperatures in the well, different chemistries in the different rock being drilled through, and different fluids flowing into the hole, requires that the mud be very carefully selected for each job. And sometimes that chemistry may be such that simple water cannot be used as the carrier fluid. There is a shale in Texas, for example, called the Gumbo shale, that turns from a hard rock to "gumbo" when it gets wet. So if you are drilling through it, either the water has to be treated with chemicals so that it stops being able to wet things, or you use a different base fluid, and change to perhaps an oil. (Googling "Gumbo shale" will give a number of papers on this). So making mud, and using it properly can be an ongoing job on an oil rig.
Again, if there are questions, or comments, let me know.
Technorati Tags: peak oil, oil
Posted by Prof. Goose on July 23, 2005 - 10:44am
Posted by Prof. Goose on July 22, 2005 - 5:35pm
"It took us 125 years to use the first trillion barrels of oil," notes Chevron Corporation's two full-page ad that began appearing in July in the Wall Street Journal, the Economist, Financial Times and elsewhere. "We'll use the next trillion in 30," the ad continues, thus quietly admitting to the Peak Oil that the industry has not previously disclosed.
"One thing is clear: the age of easy oil is over," the ad reveals in a folksy letter from "Dave," Chevron's Chairman and CEO David J. O'Reilly. Most Americans are still unaware of the pending Peak Oil or try to deny the tremendous impact it will have upon us. Chevron proudly presents itself as "the Good Guy" by informing the public of the lessening supply of petroleum at a time when the demand is soaring, especially in China, India, and other industrializing countries.
Chevron's multi-million dollar global corporate goodwill effort includes TV teaser ads throughout the US, Asia, Africa, the Middle East, and Latin America. Airport locations in Beijing, Moscow, Washington, D.C. and elsewhere broadcast the ad, also available online. Yet as the prices of crude oil and gasoline soarâ€”symptoms of Peak Oilâ€”so do the profits of Big Oil.
Chevron is one of the world's four largest oil companies, so it should know a lot about petroleum. Chevron has half the story correctâ€”that Peak Oil is upon usâ€”but they may have the timing off, according to at least half a dozen recent books by oil experts.
"It is my opinion that the peak will occur in late 2005 or in the first few months of 2006," writes geologist Kenneth Deffeyes in his new book "Beyond Oil." Deffeyes was a Shell Oil company engineer and is a retired Princeton University professor.
This sooner-rather-than-later scenario is echoed by Houston-based investment banker Matthew Simmons in "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy." Saudi Arabia is the world's largest oil producer. Simmons "argues that Saudi Arabian production is at or very near its peak."
The Earth may have another 30 years, more or less, of a dwindling supply, which will be increasingly difficult and expensive to extract. I wonder what Chevron's studies reveal will happen to civilization during that time. When they say that "easy" oil is over, how difficult do they think our petroeum-dependent lives will become as a result?
Exxon/Mobil has also recently admitted to Peak Oil, but without all Chevron's fanfare. Their report "The Outlook for Energy: The 2030 View" forecasts a peak in five years. "No oil company has ever discussed peak oil production before," writes energy consultant Alfred Cavallo in the May/June issue of the authoritative Bulletin of Atomic Scientists. "The public should heed the silent alarm sounded by the Exxon/Mobil report," he continues.
Meanwhile, Chevron CEO O'Reilly speaks out of both sides of his mouth. While sweet-talking to the world in the ad campaign, he is tough-talking against China's attempt to outbid Chevron for Unocal. After China's state-owned CNOOC offered $18.5 billion for Unocal, besting Chevron's $16.6 billion offer, the American suitor raised its bid to $17 billion. "Our increased offer has been driven by competitive circumstances," an aggressive O'Reilly stated on July 19, the day his folksy letter appeared in the San Francisco Chronicle.
Behind the scenes Chevron and other corporations are pressuring Congress to reject the CNOOC offer as a national security risk and Un-American, should the Chevron shareholders accept the higher bid at their Aug. 10 meeting. The Chevron-China struggle to buy Unocal and thus control more oil is not over. Wall Street expects CNOOC to raise its bid. China has passed Japan as the world's second largest consumer of oil, behind the US, and is expected to take more assertive efforts to secure its energy needs. The Iraq War may expand from being partly a behind-the-scenes US-China conflict into a more hot war between the world's declining power and the world's emerging power.
The US and China seem headed into an escalating conflict over oil, currency, Taiwan, and other matters. The July 21 New York Times reports "that a Chinese general threatened the United States with a nuclear attack if the United States attacked China during a Taiwan crisis."
Meanwhile, the Chevron ad is classic green-washing. Whitewashing is a superficial coat that makes something appear cleaner than it is; green-washing is an attempt to present something that is environmentally damaging as clean. Now that most oil experts agree that Peak Oil will happen, Chevron wants to appear to be the oil company to act for the public good by informing people that we are indeed running out of oil.
"The same Madison Avenue firm, Young and Rubicom, that put together Bush's TV ads in 2004 and the Army's 'Be All You Can Be!' campaign prepared these ads," according to attorney Matt Savinar. He wrote the book "The Oil Age is Over" and maintains the web-site lifeaftertheoilcrash.net. Savinar spoke to a grassroots Peak Oil group in Sonoma County, Northern California on July 20 at its fifth meeting.
We should ask "the tough questions," fatherly Dave advises in his friendly letter. "What role will renewables and alternative energies play? What is the best way to protect our environment? How do we accelerate our conservation efforts?"
One would almost think that the Chevron chairman was in fact the chairperson of the Sierra Club. Dave makes it sound like one of the world's most polluting companies in one of the world's most polluting industries is actually on the side of the Earth, rather than merely trying to maximize profits by extracting natural resources that lead to global climate changes.
"At Chevron, we believe that innovation, collaboration and conservation are the cornerstones on which to build (a) new world," the ad concludes. I wish that I could accept this as genuine corporate accountability. Chevron's past degradation of the environment leads me to believe that they are once again seeking to fool the public with carefully chosen words at a time when a Peak Oil movement is growing. In Europe and Japan and in some small towns on the mainland citizens and some government officials are making plans to mitigate the impact of Peak Oil.
What sort of "new world" might Chevron have in mind, this skeptic wonders. America's control of the world's oil suppliesâ€”which it seems to be loosing during oil's end gameâ€”enabled it to dominate the 20th century. As petroleum dwindles, so will US power, as China positions itself to be the superpower of the 21st century. Chevron's ad is part of Big Oil's struggle to maintain power. Dave's folksy letter seems inclusive when it talks about "every citizen of this planet" and even calls upon environmentalists to "be part of reshaping the next era of energy." Don't be fooled. Beneath it is an attempt to shore up Big Oil's threatened power base.
As the struggles around Peak Oil and its consequences heighten we can expect more such calculated public relations language to point to Big Oil as the Earth's friend. Seeing through such green-washing will be important. Lets not make the same mistakes during the 21st century that we made in the last century by letting one country, the US, hoard too much of the world's resources, and one industry, oil, concentrate too much power.
Look for yourself at the newspaper ad and see and listen to its television version by going to Chevron's friendly website---www.willyoujoinus.com.
(Dr. Shepherd Bliss, email@example.com, teaches at the University of Hawai'i at Hilo and writes for the Hawai'i Island Journal.)
Technorati Tags: peak oil, oil
Posted by Heading Out on July 22, 2005 - 8:34am
One of the difficulties that I believe that the general public have with the concept of peak oil, arises from announcements such as that just issued by the Canadian Association of Petroleum Producers (CAPP). In it the Association predicts significant growth in crude oil production.
Total Canadian production is projected to increase from the current 2.6 million barrels per day to reach 3.9 million barrels per day (b/d) by 2015. The 1.3 million b/d growth in production represents an increase of 50 per cent over the annual average level of production recorded in 2004.It is the last paragraph that has caught many commentators attention (thanks to Cassandra Oil for the tip). But while the numbers appear large, bear in mind that in a world market of 85 mbd an increase of 1.7 mbd is not a huge amount, and when spread over 10 years amounts to an increase of only 170,000 bd each year. Given that the Norwegian portion of the production from the North Sea is itself falling faster than this (to give but one example) it is not, I'm afraid, going to help all that much. Unfortunately given the way the information is presented, that reality is likely not obvious to the general public. (And it might be worth noting, for the American audience, that the majority of this increase may well end up heading out to China).
"Canadian oil producers are increasing production to meet rising global demand," says Greg Stringham, Vice President, Markets & Fiscal Policy at CAPP.
The primary source of Canada's growing crude oil supplies is the expected development of Alberta's vast oil sands reserves. Oil sands production, which now exceeds the 1.0 million b/d plateau, is forecast to almost triple by 2015 to almost 2.7 million b/d. With 175 billion barrels reserves, Alberta has the second largest petroleum deposit in the world.
The political problems with whose oil goes may be beginning to become more evident.
The Indonesian OPEC governor has just been quoted:
OPEC oil producers do not need to boost their oil output for now because crude prices have fallen below $60, an official for Indonesia, the group's only southeast Asian member, said Wednesday. "OPEC will produce at the current volume for now," Indonesia's OPEC governor Maizar Rahman told Platts in Jakarta. "OPEC will not increase production because we think the oil price isAt the same time the Indonesian government is dealing with a fuel shortage. The Antara News reports:
stable at less than $60/bbl."
The House of Representatives (DPR) has urged the government here on Friday to immediately overcome current fuel oil supply shortages to avoid other serious problems.It is this sort of thing that is leading to riots around the world, particularly in the poorer countries, and which may lead to changes in where those countries sent their oil. But it will come to be true in other parts of the world as well.
. . . . .
Agung also called on the House Commission on energy to tighten control to prevent the general public from increased suffering under the current circumstances.
He said the problem had affected the life of many people and had also increased costs.
In view of the increasing oil prices, Agung suggested that the government adjusted the bench price of oil set in the 2005 budget at at US$45 per barrel.
President Susilo Bambang Yudhoyono has also asked the navy, the army as well as the police to make their cars available in case Pertamina needed them for fuel distribution especially in the eastern regions of the country.
Technorati Tags: peak oil, oil
Posted by Heading Out on July 21, 2005 - 6:22am
Some time ago, while trying to find better ways of teaching, I found Edward Tufte's work on preparing graphics that present information honestly. His advice has remained with me, and I was reminded of it this week in some of the discussion on the progress towards Peak Oil.
The particular passage I was thinking of dealt with the fact that if you magnify the variations in data to a large enough scale it might appear as though events are wildly fluctuating, while, if you were to plot them at true scale, the variations are seen to be relatively small changes that have little overall effect on the longer term trend. And that seems appropriate advice.
There is the news today that oil prices fell because there was not as large a drop in inventory this month as traders had imagined. While last week I posted about prices going up because more tankers were being hired to ship oil, following the reverse news the week before. These sorts of events, and the good news that the hurricanes to date have not done as much damage as expected are all relatively minor perturbations on the overall situation. Though they do not really change the much larger overall picture, they are often given too much credence and prominence, particularly by those who do not want to face the reality that is going to happen. Seizing on the small increase in domestic production of gasoline, for example, does not recognize that the domestic refineries are at about maximum production, and as a result increases are coming from imports of refined product. And as Mike Watkins points out at Trendview demand continues to exceed expected numbers.
That longer term situation is, sadly, no more encouraging than it has been for a while. Production from the North Sea, on both the British and Norwegian side is falling faster than anticipated. The promise of increased Russian production appears to be fading. And the new projects that are the hope for sustaining at least close to current levels of production are being increasingly delayed.
I would note a different sentence from Chairman Greenspan's remarks, the one that says
Major advances in recovery rates from existing reservoirs have enhanced proved reserves despite ever fewer discoveries of major oil fields.The problem with that otherwise encouraging word is that it conveys the intent to use an accelerated rate of removal, which means that the operational life of the reserve is shortened, and for geotechnical reasons the overall recovery is also reduced.
And in the UK, the public are again being told not to worry (from Powerswitch).
Malcolm Wicks (Minister of State (Energy), Department of Trade and Industry) responded:Both of which statements would be a lot more encouraging if there really was a significant oil shale program. Promising a glorious future and that there is no reason to worry is akin to those listed earlier this week that were promising us last year that by this time we would be back to paying $30 for a barrel of oil.
The Government's assessment of the remaining lifespan of global oil reserves is set out in the Energy White Paper 2003 "Our energy future"creating a low carbon economy" (http://www.dti.gov.uk/energy/whitepaper/index.shtml). Paragraph 6.15 of the White Paper notes that
"Globally, conventional oil reserves are sufficient to meet projected demand for around 30 years, although new discoveries will be needed to renew reserves. Together with non-conventional reserves such as oil shales and improvements in technology, there is the potential for oil reserves to last twice as long".
This is consistent with the latest assessment by the International Energy Agency (IEA) in its 2004 World Energy Outlook. The IEA concludes that
". . . global production of conventional oil will not peak before 2030 if the necessary investments are made.")
Technorati Tags: peak oil, oil
Posted by Super G on July 20, 2005 - 9:11pm
TOD readers may remember "The End of Cheap Oil" from the June 2004 issue. That article did a good job of showing how pervasive oil and oil-based products are in our society, but it didn't do much to communicate what running out of cheap oil really means for us. It was also conservative in reporting when the peak would occur, citing Colin Campbell (2016) and the USGS (2040). While that article was somewhat of a letdown, I thought they did an excellent job with global warming ("Signs From Earth", September 2004), so I came into this month's alternative energy article with an open mind.
Michael Parfit's article starts off my reminding us about oil's uncertain future. He repeats NGM's conservative stance on oil depletion: "Oil, no longer cheap, may soon decline". May? He instead makes his case for alternative fuels based on the need to stem global warming. Parfit then describes his own experience with setting up solar panels on his roofâ€”from the ecstasy of energy independence to the agony of cloud cover. This personal anecdote sets the tone that the path to alternatives is going to be rocky.
The article then examines all of the contenders for oil replacements in turn:
- Solar: It's much cheaper than it used to be, but still expensive. Intermittency of sunlight is a problem that must be overcome with lots of batteries. On the land requirement:
At present levels of efficiency, it would take about 10,000 square miles (30,000 square kilometers) of solar panelsâ€”an area bigger than Vermontâ€”to satisfy all of the United States' electricity needs. But the land requirement sounds more daunting than it is: Open country wouldn't have to be covered. All those panels could fit on less than a quarter of the roof and pavement space in cities and suburbs.
- Wind: Europe is way ahead of the U.S. in electricity generation from wind (35 GW versus 7 GW). The article uses a great graphic to show how huge a wind turbine is (60 stories!) A lot of people complain about the aesthetics, but the author points out that they are popular in Denmark,
perhaps because many Danish turbines belong to cooperatives of local residents. It's harder to say "not in my backyard" if the thing in your backyard helps pay for your house.Of course, intermittency is a problem here too.
- Biomass: We are reminded that it's already happening (ethanol blend in gasoline), but it's severely limited by land area (far less efficient per unit area than solar). However, the author doesn't point out that most fertilizer is petroleum-based. He mentions a plant called switchgrass, native to U.S. praries, which grows faster and needs less fertilizer than corn, but entrenched political interests (corn and sugar lobby) are a problem there.
- Nuclear: We have only enough cheap uranium to last 50 years. Reprocessing could stretch out the supply, but generates plutonium and there is concern that it will get into the wrong hands.
- Fusion: Explains it nicely, and makes it clear that it's not coming anytime soon.
As mentioned above, the author's principal concern is global warming, and not oil depletion. For this reason, he does not emphasize that, with the exception of biomass, the alternatives discussed serve only as sources of electricity, and not vehicle fuel. As the readers of this site know, nothing can match oil for its portability, and oil depletion is so serious because of its impact on transportation. The author does discuss hydrogen, and does a good job of pointing out that hydrogen fuel cells are not necessarily clean or renewable (it all depends on how the hydrogen is generated). However, because he is not considering the consequences of near-term oil depletion, he does not address the urgency of building a hydrogen infrastructure.
The conclusion considers what it will take to get these alternatives off the ground, and echoes some things we have heard here at TOD:
Although some politicians believe the task of developing the new energy technologies should be left to market forces, many experts disagree. That's not just because it's expensive to get new technology started, but also because government can often take risks that private enterprise won't.Technorati Tags: peak oil, oil, alternative energy
"Most of the modern technology that has been driving the U.S. economy did not come spontaneously from market forces," NYU's Martin Hoffert says, ticking off jet planes, satellite communications, integrated circuits, computers. "The Internet was supported for 20 years by the military and for 10 more years by the National Science Foundation before Wall Street found it."
Without a big push from government, he says, we may be condemned to rely on increasingly dirty fossil fuels as cleaner ones like oil and gas run out, with dire consequences for the climate. "If we don't have a proactive energy policy," he says, "we'll just wind up using coal, then shale, then tar sands, and it will be a continually diminishing return, and eventually our civilization will collapse. But it doesn't have to end that way. We have a choice."