Interesting article from USA Today:
http://www.usatoday.com/money/industries/energy/2005-11-24-peak-oil-usat_x.htm

Can oil production satisfy rising demand?
By David J. Lynch, USA TODAY

WASHINGTON -- Energy Secretary Samuel Bodman has asked a high-level advisory board to answer one of the toughest questions dogging the U.S. economy: Can world oil production meet steadily rising demand?

In a previously unreleased Oct. 5 letter to ExxonMobil CEO Lee Raymond, chairman of the National Petroleum Council, Bodman asked for a study of the industry's ability to produce enough oil and natural gas at prices that won't cripple the economy.

"He's asked them to take a big-picture look out several years. ... He wants to get some definitive information," says Craig Stevens, an Energy Department spokesman.

The most noteworthy aspect of Bodman's request is a reference to the "peak oil" debate. At issue: the claim by a vocal minority of energy experts that the world is at, or near, maximum oil production....

[see link for the rest]

Thought for the day. Going the way of the dinosaurs...

It seems to be in our nature to think that bigger is always better which is, perhaps, why we end up consuming resources as fast as we can including oil. But is it? Here's the parable of the dinosaur and the mouse.

The dinosaur said to the mouse. Your nothing. You're not even a snack.
The mouse said that's your problem dinosaur.
And so it was. Which is why we have mice but no dinosaurs.

Of course the survivors of the dinosaurs, the birds, downsized until a mouse became a meal.

And that's the mouse's problem.

In case you haven't seen this:

http://www.wnd.com/news/article.asp?ARTICLE_ID=47529

    WND Exclusive Commentary Is abiotic oil a new argument for Creationism?
Posted: November 22, 2005
1:00 a.m. Eastern

© 2005 WorldNetDaily.com

Craig Smith and I wrote "Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil," without a religious argument in mind. We wanted to present the scientific arguments that oil was a hydrocarbon fuel of abiotic origin, produced deep within the Earth on a constant basis. We wanted to warn America that increased dependence upon foreign oil has serious economic consequences for the strength of the dollar and serious political consequences for reliability of America's national security.

While Craig Smith and I are both Christians who strongly believe in God, we presented in the book no arguments, proof or justifications that derived from or depended upon our religious beliefs.

Recently, "peak-oil" apologists - who support the "Fossil-Fuel" theory of oil's origins - have begun attacking us on the basis that the abiotic theory is really being advanced to support creationist or intelligent design religious beliefs. A forum on the "peak-production" Internet blog TheOilDrum.com recently ran a thread attacking the book. Two posters presented the charge as follows:

    LJR: I'm waiting for the "intelligent design" folks to link up with the "abiotic oil" guys. A marriage made in heaven.

    mikeB: Ab-so-lutely! Which is why I've taken to calling it "oil creationism."

How do I tell my friends I've been quoted by a kook?

What's wrong with this analogy by the Natural Gas Vehicle Coalition?? Does the US have a 9 year supply of natural gas or do we have more?? Inquiring minds would like to know.. If we only have a 9 year supply of natural gas reserves, this would have a bigger impact than peak oil, IMHO..

The level of natural gas reserves varies over time - downward when natural gas is consumed and upward when new natural gas reserves are identified. For the past decade, U.S. proven reserves have ranged from 165 to 170 trillion cubic feet (Tcf) -- although, in 2000, reserves increased to 177 Tcf. It is important to note that reserve levels are greater today than they were a decade ago despite the fact that 185 Tcf of gas has been consumed. Some naysayers still point to the fact that the U.S. used approximately 22.5 Tcf of gas in 2000, and argue, therefore, that if we only have 185 Tcf of reserves, we " only have a 8 or 9 years supply of natural gas left."

This is nonsense. It is similar to saying that we only have a 10-day supply of hamburger left. The level of natural gas reserves is critical to ensuring the balance of supply and demand in the very short term, but is irrelevant to any discussion of long-term supply.

http://www.ngvc.org/ngv/ngvc.nsf/bytitle/supplyfactsheet.html

A week or so ago I commented that I was beginning to get the feeling that there might be some sort of curious connection between the proponents of the abiotic theory and fundamentalist Christians. At the time, I thought my comment might have been a bit over the top and perhaps offensive to some. However, it now appears that this connection may be real and not just the product of my over-active imagination.

Something that I have also noticed (and I have no doubts whatsoever about this one) is that hardcore fundamentalist Christians for the most part dismiss global warming and believe that concerns over environmental problems are nothing more than propaganda by godless leftists.

As I have said before, the True Believer is largely immune to facts.

Has anyone ever heard of OPTI Canada, Inc.?

They claim to have a "proven, patented and low-cost way to upgrade bitumen without using natural gas."  If true, wouldn't they be a great investment?  They're publicly traded on the Toronto Stock Exchange.

Their website, opticanada.com, says that they're developing an oil sands project in a 50/50 joint venture with Nexen.

To me, the drawbacks are:  first, they're a start-up which isn't operating yet.  There's a lot of construction still to go, so they could have big cost overruns.  Second, they need to raise more money to provide their share of the construction costs.  Thus, current shareholders could get diluted if new investors got better terms.

Yesterday's Los Angeles Times had an article about how Venezuela's skilled oil workers have fled the country:  

http://www.latimes.com/business/la-fi-venoil25nov25,1,1954579.story?ctrack=1&cset=true

One article about Sect. Bodman of DOE suggests that Peak Oilers are a "vocal minority" in the oil community.

Is that true?
Is PO a "minority" view?
Do more than 60% of oil experts believe we have decades to go before hitting peak if ever?

Just a thought on the abiotic theory^H^Hlogy? --

The NAS paper mentioned an experiment (pnas.org) in which marble chips, ferrous oxide and some water were squeezed and heated, yielding a small amount of some hydrocarbon. Isn't marble ... or calcium carbonate generally, the product of biology? At least here on Earth?

And, even if supergiant fields (wikipedia) are waiting to be discovered, given this (reuters) kind of news, do we really want to keep exponentially increasing our carbon-burning activities?

There's a good article by Jerome a Paris over at the Daily Kos in which he ends with the quote, "Let's stop worrying about energy supply, and worry instead about energy demand ". He almost gets it right here but he should have taken it a little further and defined what is really at stake and that would be
capitalism as we know it.

FYI: Matt Savinar over at lifeaftertheoilcrash.net has referenced what looks like a really good book-length study of limits on energy and other physical resources that came out in the mid-80s.  Glancing through it, it is reminiscent of William Catton's classic work OVERSHOOT, and of a similar level of quality:

http://www.bu.edu/cees/research/publications/beyond_oil/beyond_oil_contents/contents.html

In my opinion, older books like this one and Catton's - and also the Club of Rome study LIMITS TO GROWTH from the early 70s - are very useful in that they allow one to test the fundamental veracity of relatively recent peak oil predictions against longer range predictions emanating from the same basic set of assumptions.  In other words:  If longer range prophets going back 20-35 years were on the mark at least to a first order of approximation, there is then that much more reason to subscribe to the accuracy of more recent predictions - which may themselves then even be accounted correct to a second- and third-order of approximation, owing to refinements of methodologies, improved and more accurate data, etc.  But their fundamental utility hinges on the accuracy of their basic assumptions, which older studies help corroborate.

 
  Sasquach has it nailed.Until you change the paradigm
 that is used to judge worth in a society,a society is
  almost impossible to change.

    Remember Jimmy Carter? We had the type of leadership      
   that would have made peak a non-entity,had his program  
   been followed.

   Peak is going to hurt alot more due to our haveing followed the path of empire.I dont know how we now can change the culture at this point without major disrution and pain.I come into contact with many folks in my line of work.I speak the truth about peak oil,Tell the lists of sites,and try to raise public awareness,as much as I can.I even gave a presentation to the state legislature.{used the peakoil audiovisual from drydipstick}

    I now know how Cassandra felt....

    The only way out of this consumer consumption nightmare
  is for it to become "fashion" to consume less,as well as treating efficiency as the be all and end all of design criteria...This,in itself can drive some of the  change we will have to make.My only fear is that the powers that be have decided that the same sort of societal change that they initiated in Iraq would work here...and let"the market" design our new society,without such amenities as social security,worker safety ,and a whole bunch of other safety nets that have created our current lifestyle

   

Found this, from Hubbert testifying with regards to the

National Energy Conservation Policy Act of 1974, Hearings before the Subcommittee on the Environment of the committee on Interior and Insular Affairs House of Representatives. June 6, 1974.

At the time M. King Hubbert, was with the U.S. Geological Survey, Department Of The Interior.

M. King Hubbert on the Nature of Growth

By the way, it is a good time for us to review Al Bartlett's simple and excellent explanation of what unsustainable exponential growth is all about (ram file warning). Here's a quote--

"The greatest shortcoming of the human race is our inability to understand the exponential function".

enjoy, Dave

Interesting to read:

http://www.whatdoesitmean.com/index854.htm

Articles like this bring to mind our discussion on whether WalMart would prosper post-peak:

The official holiday shopping season appears to have gotten off to a luke warm start, according to results announced Saturday by a national research group that monitors retail sales. Wal-Mart Stores Inc. was one bright spot in the crowd, reporting its sales exceeded expectations.

http://www.mercurynews.com/mld/mercurynews/business/13264089.htm

I and several others have reviewed WalMart: The High Cost of Low Price here:

http://www.imdb.com/title/tt0473107/usercomments

What does this chart mean?  It shows the blue OIH (Oil Services ETF, a large component of which is the drillers) now outpacing the red XLE (the Energy SPDR ETF, which mainly includes the oil producers, eg. Exxon, Chevron, etc).  For the most part of 2005, the producers lead or matched the drillers in terms of stock appreciation, but they are now lagging the drillers.

My interpretation is that the money has decided that for the coming winter, we have enough crude oil and gas in the pipeline to see us through, but there will be no rest for the drillers.  Indeed when you contemplate the coming push for coal bed methane there will be no rest for the drillers for decades, since so many holes need to be drilled to tap this resource. Want to get rich? Invent a driiling rig to emulate a sewing machine.

http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2005/November/business_November60 6.xml&section=business&col=

Khaleej Times

"New Technologies May Unlock More Oil" - in places such as Kuwait.

DOHA -- Recently developed technologies will help find and extract more crude from the Middle East, the world's richest-oil region, according to oil ministers and executives.
In an interview with Dow Jones Newswires at an oil technology conference here, Royal Dutch Shell PLC  Executive Director Malcolm Brinded said he is seeing "more usage of advanced technologies in the region than is very often recognised."
If their use gets extended it will mean in the "long term, more supply, no doubt about it," through "more exploration success and more recovery from existing fields," he said.
"Raising average conventional oil recovery from 35 per cent to 45 per cent" by using new techniques in the Middle East and around the world "could add some 20 years of current production," Brinded said during an earlier speech at the conference.

TOD bloggers may wish to look at this article and see what they think.

This is big news.

From the EIA.

http://tonto.eia.doe.gov/oog/info/twip/twip.asp

There has been much speculation about the year-on-year decreases in weekly petroleum demand data in the weeks following the production shut-ins and subsequent price increases accompanying Hurricanes Katrina, Rita, and Wilma. Total petroleum products supplied for the 4 weeks ending September 30, 2005 were 19,940 thousand barrels per day, almost three percent lower than the same four-week average last year.

However, EIA has cautioned that weekly data may have overstated somewhat the degree of decline in product supplied, due to its preliminary nature and reporting difficulties experienced by some respondents. In fact, it is not uncommon for EIA's monthly petroleum data to show higher demand levels than estimated from weekly data.

So, what do the latest monthly data tell us about current oil market conditions? For gasoline, it indicates that demand did not drop as much due to high prices as preliminary data may have suggested, and with weekly data now showing some growth compared to last year, it confirms EIA's expectations that gasoline demand is still growing relative to year-ago levels, albeit by less than previous trend rates.

<<<<<< SNIP

No real demand destruction at $3.00 a gallon makes one wonder what price it is going to take.

Another interesting thing is the difference between the monthly and weekly data.

I was at my parents over the Thanksgiving holiday, and while we're all a bunch of rotten liberals, a long time family friend was also there.  This is a gentleman is in finance and has owned several companies, one of which I worked for quite some time.  He is a conservative and he's done quite well for himself, but a fair man who took good care of his employees.  I had not talked to him in about a year.  The conversation turned to his interest in installing a PV system, and from there to PO and GW.  He was well versed on the topics.  He believes that there is a lot of money pouring into alternatives.  He had no use for the present administration or their policies.  I think perhaps he underestimates the amount of energy we'll need, and the size of the infrastructure problem, but these conclusions can be arrived at as long as the conversation can happen.  And I think that was the most heartening thing that I took from what ended up being a long discussion about some serious and scary topics - there are people who know what's happening, and believe these to be very real problems.  This understanding is not confined to liberals or conservatives (although we probably look at it differently), and there is a possibility for a real national dialog to happen.  The question is will there be time, and what can we realistically do?

peakearl mentioned earlier ....."unexpected oil crash in Oman using modern technology?!!"

Something I have pondered is: Is it possible that with new techology that we may better understand that we don't actually have the reserves that we think we have? Because I have read that new technology doesn't always mean more production or discovery.  

Which leads me to my second question. Proven reserves. How are they actually proven? Are the reserves proven in a several different ways? Are the reserves  more of an approximation?  With a tolerance of say plus or minus 100,000. Please explain in layman terms so that those visiting can understand.  

I have posted occasionally about my belief in the predictive power of markets, in particular the oil futures markets as a leading indicator of an upcoming oil peak, or lack thereof. Many readers object to this, largely because the markets  don't indicate a peak in the next five years. Oil futures prices are about the same as today's prices, and they aren't high enough to reduce demand by the levels that would be necessary to match the kinds production declines many here anticipate.

So why believe in markets? The first thing I would say is that it is not good to make your belief in the predictive power of futures markets conditional on whether it confirms your pre-existing ideas. If you only believe in methodologies that support your ideas, you will be incapable of learning new things. So you should believe in markets (or not believe) irrespective of whether market predictions confirm or contradict your existing beliefs.

Personally, the main reason I don't believe in a near term Peak Oil scenario is because of markets. If and when they start showing signs of such events, then I will believe in it. I will rely on the market prediction whichever way it goes, whether it is consistent with my earlier beliefs or not. We should all adopt this kind of philosophy towards prediction methodologies.

Why believe in markets? Markets act to bring people together who have information about the future course of events. By taking positions in the market based on their information, people affect market prices. The net result is that the market consolidates all the information available on the topic, and the result is reflected in prices. If there is high-quality information which shows that a market is mispriced, people will profit by taking positions in the market which take advantage of the disagreement. By doing so they will move the market price until the opportunity for profit disappears.

Markets even make use of private information. Anyone who has private (secret, insider) information which shows that a market is mispriced can profit by taking positions to exploit the difference. Even though they have no intention of doing so, their actions will move the market so that the market price incorporates their secret information.

Given the way markets work, it is illogical to suggest that there is high-quality, publicly available information which the market is ignoring. Yet this is exactly what near-term Peak Oil advocates are doing. They claim that public information about the future course of oil supply and demand amply demonstrates that we face near-term shortages. (Except, of course, that a number of Peak Oil advocates don't believe in near-term shortages.) Not only are they convinced that the data makes their case, they believe (mostly) that there can be little doubt about it. The data not only points to a near-term shortage, it essentially demands it. Any rational person looking at the data in an unbiased manner will, according to them, come to agree that near-term shortages are basically inevitable.

If data like this really existed, markets would not be predicting oil prices a year to five years in the future in the sub $60 range. The existence of this kind of information is theoretically impossible, given how markets work. The only logical possibility is that things are not as clear cut as near-term Peak Oil advocates make them out to be. The future is not certain and there is more uncertainty in the situation than near-term Peak Oilers will admit.

Note that I am not saying that markets are always right; merely that they do an excellent job of incorporating all available information in making their predictions. The fundamental mechanisms that make markets work automatically reward people who bring new information to the market, as discussed above. Sure, there are many cases where markets have been wrong. But in those situations, there was no credible, convincing information that things would go differently. That's different from the near-term Peak Oil situation, where advocates argue that the markets are simply ignoring information that is credible and undeniable in predicting a near term shortage.

In summary, markets incorporate available information; a near-term Peak Oil scenario would lead to a supply crunch that is not reflected in market prices; therefore, available information is not consistent with a near-term Peak Oil scenario.

Something which I've been mulling over a lot recently, and I wanted to get opinons about it:  

If (as we've discussed) there were a serious national effort to address the social, technical, source, conservation, and infrastructure issues, what would the effect on the economy be?  I'm no economist, so it's not clear to me how all this could be funded to begin with, but it seems to me that this would have to be a better thing to base an economy on than borrowing Chinese money to build each other houses.  I'm imagining new products designed and maufactured, new infrastructure on a very large scale.  Whole new industries would be created, or at least an massive expansion of ones beginning now.  It might not be a net increase in jobs, but it would help to offset the decline in tradtional industries dependant on the oil infrastructure.  

Brilliant commentary on marketeer voodoo:

This unique form of behavior -- idealization and absolutization of the free market -- is especially puzzling considering that inability of the market signals to reliably serve as a long term indicator of anything at all has been established beyond any controversy, as lakes of ink have been spilled over documenting the minutia of phenomena such as Enron and LTCM collapses, the hazards of the current real estate bubble and other market phenomena, and as the same breed of analysts who in 1999 were seen busily convincing the public that, say, the common stock of Intel Corp. had been a bargain back then at the price of $80 a share, were spotted in 2000 spreading the message that the same Intel stock had a long way to fall at a price of about $25 a share.

livejournal

About $60 Oil Hitting the Third World.  I am an American currently living in Brazil.  We pay the equivalent of $3.50 a gallon for gasoline down here.  I have not seen any evidence of demand destruction.  Nada.  In fact there is a huge home and apartment buildout going on, a new mall, the largest in South America is presently being constructed.  Further, there is a Ford Factory here, and the roads, all day long, are busy, with traffic jams the norm.  

One last anecdotal piece of evidence.  After Katrina, the price of Gasoline rose 10% per gallon.  No body I know raised a peep.  

Demand Destruction, my ass!

Fantastic, thanks!!!

I would like to comment on proven/proved reserves:

Very interesting read indeed. thanks! I was on vacation during those days it was posted and somehow never saw it when i came off vacation and tried to play "catch up" on TOD news.
 That being said, i do have some questions about the concept of proven reserves.

It would seem that seismic testing and petrophysical tests (not sure what that is), and well tests information as well as numerical modeling to establish boundries would be a definitive source to make an educated guess that there oil in the field. It provides such hard positive data, to prove virtually beyond a shadow of doubt there is or isn't oil in the test field. because it's establishes definative and reasonable PROOF.

It just seems an oil company must provide positive proof of oil through exact positive data, in order to call it proven.

they do not allow any use of probabilistic modeling methods that stuff is like statistics, the #'s can be moved around to mask something else. and if someone has never even been schooled in Stats, then it becomes pretty much Greek.

And maybe the companies do infact do this, but to just arbritrarily pull a number out of the hat using fuzzy math with a touch of "razzle and dazzle" to quantify oil reverves sound really scary.

Economical recovery is one thing, which is really cut and dry: it's either worth it to extract or it's not.

Besides who wrote those rules? lawyers and CPA's? the SEC rules are about as dry as Death Valley. written only by laywers so as to be only read and interpreted by laywers? sounds like a sham to me.  

I stand corrected. after having read the SEC rules, and it is very dry yet informative, and i had to consume lots of fluid to continue the reading, i see that an american company does not use fuzzy math  much less baffle with B.S. but rather must prove oil exist with good data. thanks for the link for that! it was just what i was looking for!