Trying to stay afloat in deepwater
Posted by Bubba on October 26, 2005 - 6:46am
"Deepwater reserves [for the US] fell to 4.1 billion bbl of oil, down 9%, and 19.3 tcf of gas, down 14%."
and
"New field discoveries totaled 33 million bbl, and new reservoir discoveries in existing fields were 132 million bbl. Most of the new field discoveries were small finds in gulf [of Mexico] federal waters."
I don't need to tell you all that this is not good news. This is the area where reserves and production are supposed to be growing. Now deepwater reserves and production potential in the US are further along the development creaming curve than in other parts of the world, but reserve declines of this magnitude do not bode well for the future of the deepwater in the Offshore US, and are likely the proverbial "canary in a coal mine" for deepwater reserves in other parts of the world.
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Murray, please enlighten me if I'm mistaken. The EIA appears to be including imports and stock changes in calculating the Product Supplied, the two factors that many of us here are looking at. Why is this not a good estimate of demand?
EIA Definitions
"Rumor has it Green Mountain Energy terminated 1/2 of its staff earlier this month, this after having pulled out of Ohio and Pennsylvania."
www.greenmountain.com
As the largest retail provider of less-polluting electricity to residential and commercial customers in the U.S., Green Mountain Energy Company offers electricity that is:
Cleaner - All of our electricity comes from less-polluting sources like wind, water, solar, biomass, geothermal, and natural gas.
Reliable - The source of the electricity you pay for changes, not how electricity is delivered.
Shouldn't alternative energy companies be doing well now?
Remember, we are either just at peak or approaching peak, not past the peak. And remember further, that we are not near the peak of coal, a far dirtier but still very cheap energy source if we choose to pursue it.
In the end, people talk about environment but when push comes to shove, when the choice is dirty power or no power, most people will choose fossil fuels first. This is precisely why so many observers believe that the energy situation must become far worse before alternatives begin to really take off.
Non fossil fuel energy will require more smaller production sites to replace an equal amount of energy. This means lots of capital investment. To replace a large percentage of oil/NG/coal it will have to be a mix of alternative energies spread all over the country, rather than a relatively few refining sites. Lots of small integrated wind, solar, hydro coordinated into the grid with some going to transportation. This will require a huge building boom. In a climate of cheap oil there is not going to be enough return on investment (compared to other uses of the money) for capital to flow to those projects in any meaningful way. They will be proof of concept, or additional, rather than replacement of fossil fuels.
Without some incentive I don't see the market shifting away from fossil, even after peak oil. There will still be more ROI bringing small oil fields online. This will be true even as supply continues to drop. No one has been able to beat the energy density of fossil fuels with any alternative source.
It is good news. The sooner the peak, the less profound will be the damage to the climate. "Bring it on."
Unless you are someone who would sit around a bonfire, burning books, and chanting "bring on the apocalypse" I can't see how you would say this is good news. And if you think that 6 billion poor and desparate people will be easy on the environment, you need to go spend some time in places like sub-Sarahan Africa.
You are absolutely right. We need to wish for change not disaster. Above http://www.theoildrum.com/story/2005/10/24/171216/17#9
I indicate the infrastructure required to replace oil. That takes energy. No energy no construction.
For me you are both right I'd just take another approach than Quickbeam - we don't really need the peak itself to move away from fossil; we need an energy scarcity or at least an indication of it. If for example Saudi Arabia announce that they will close down Ghawar in couple of years to preserve it for the future - this would do the job. Unfortunately it is hardly possible in the current world arrangement.
I guess I'm feeling low on hope these days. Yes, we should be investing every drop of oil in infrastructure for sustainable energy - but we aren't and there is no sign that this is about to change. Yes, six billion people is far too many: all world governments should be providing large incentives to lower the birth rate - but they aren't and the prospects are not good to say the least.
Climate change will make all problems vastly worse, though.
Contrast that with the numbers to come out of the O&GJ article indicating both the magnitude of decline of the currently-booked deepwater reserves (both oil and gas) in the US and the small volume recorded as new-field discoveries. Thirty-tree million barrels in new field oil reserves is less than 2 days consumption in the US. The poor record of exploration success was not for lack of trying, as many deepwater exploration wells were drilled in the GOM in 2004 (trying to find the number, but probably more than 25 and less than 100).
It should be obvious that there is a major disconnect here. However, there is a strong institutional bias to not acknowledge that the emperor has no clothes. There are huge exploration groups, programs, and capital budgets all set up and in place to explore for oil in the deepwater GOM. If history is our guide, many many billions of dollars will have to be spent failing at finding significant volumes of new oil in the GOM for those programs to be shut down and the resources directed elsewhere.
As far as the rest of the world is concerned, you really have Brazil and West Africa. Everything else pales in comparison, and those two other areas have been heavily explored. The easy volumes have been found. Those are the ones that could be seen directly on seismic data. Now we are just muddling around in the dark like the old days.
The biggest problem that I see is this waste of resources on a "dying patient" that could be spent, given an acknowledgement of the problem, on a transition strategy to alternative energy schemes. You may think that oil companies are just greedy, money-making, environment-destroying machines, but they are really large bureaucracies that will work very hard to defend the status quo and internal balance of power, even at the expense of making money.
Anyway, for completeness on this thread, I had posted We're In Deepwater about 3 weeks ago. There, I cite some deepwater reserve numbers for West Africa and Brazil that you are clearly calling into question.
It seems to me that the corporate culture you are describing is past its prime and in denial. Old habits die hard. "Muddling around in the dark" -- indeed.
For some reason I missed your excellent post on this issue. It basically lays out clearly everything I see on a daily basis. Sometimes I actually have to work for a living, which really cuts down on blogging time.
looking at the current This Week in Petroleum Gasoline Section and particularly the gasoline demand, I note that for the week of 10/21/05, gasoline was GREATER than the corresponding week last year.
Can someone explain to me how this in any way bolsters the argument that there has been any demand destruction after the huricanes? From my viewpoint, if there were any SUBSTANTIAL demand destruction, then this year's demand should be consistently below last years, particularly since we are several weeks away from the two huricane periods.
Thnx.
Comparing the two 4-weeks ending 10/21 total supplied leads to the correct 2.2% drop from 2004. Apples and apples.
http://tonto.eia.doe.gov/dnav/pet/hist/wrpupus24.htm
Is the EIA up to something? 1 day difference can make an average difference of 300,000 barrels over 28 days. That doesnt make sense.