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November IEA global production
Posted by Stuart Staniford on December 22, 2005 - 1:21pm
Average monthly oil production from various estimates. Click to enlarge. Believed to be all liquids. Graph is not zero-scaled. Source: IEA, and EIA. The IEA raw line is what they initially state each month. The IEA corrected line is calculated from the month-on-month production change quoted the following month.
The graph above shows three estimates of average monthly global production since the beginning of 2002 (ie the doldrums after the tech crash in the world economy). The dark green line is the EIA estimate, which only goes through September 2005. The thin blue line is what the IEA says about monthly production in each of their monthly reports (which typically come about 10 days after the end of the month). However, the following month, they report a change from the prior month which generally implies a significant recalculation of the prior month (occasionally they explicitly acknowledge it, but not usually). Anyway, that recalculated line is the plum colored one, and is presumably their more reliable estimate.
The EIA says "Oil Supply includes crude oil, natural gas plant liquids, other liquids, and refinery processing gain." They also mention that the US number includes ethanol added to gasoline. I couldn't find a description of exactly what the IEA includes.
As Freddy notes, the November estimate is the IEA's highest ever raw estimate. Lately, they have tended to revise downwards, so perhaps this one will go down too. However, I caution that over the whole period shown, the average IEA revision is -54kbd, which is 1.35 standard deviations below zero (not statistically significant), so one has to argue that they tended to revise up in 2002, and revise down in 2004-2005. The IEA number is on average 125kbpd below the EIA, but with a standard deviation of 500kbd, and a standard error of 74kbpd. Thus the average difference between the two agencies is only 1.7 standard errors from zero and is not statistically significant either (over this time period).
Overall, it still looks to me like there was a structural break last summer. Whether we are very close to peak, or we will crawl up some more is hard to tell, but the sharp increases of 2002-2004 definitely seemed to stop in the middle of last year. Given my best current understanding of decline rates in current production, and the fact that OPEC is threatening to cut output, it's hard for me to see massive increases in the near term. At least now I've done the hard work of extracting the IEA data and can easily include future months in this graph. We await the December report with eager interest...
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"enhanced" graph.
Anybody knows where to find info to update that graph?
Barbara
(no english mothertongue)
For me is clear that Peak Oil is ON US NOW. We are lucky to see it at this site, I imagine how many years we will wait before the media start to say it. I am sure we will see a lot of Saud's government official lies going to the first pages saing that there is no peak Oil and that Santa Claus will give us all oil we need if we stay good to the Saud...
Happy Peakxmas!
We do seem to be at a point where "Past performance is not a guarantee of future performance" in oil production. Lots of predictions on production seem to be based on trend lines from 2-3 years ago that visually don't appear to be met late in 2005. This means reaching those far off production goals requires even greater % increases over current supply. Not likely in my opinion.
Lastly, lumping ethanol into petroleum liquids seems to be a desperate attempt to pad the numbers. Does this mean that if we stay at a plateau of production, but replace 25% of the petroleum liquids with ethanol and biodiesel over the next decade that we have no petroleum production issues? That peak oil doesn't exist? This just seems like a desperate attempt to minimize the reality of field depletion as the driver for production declines or lack of increase.
In addition to corn I have been looking at some numbers on soybeans and potatoes.
The US harvests about 2.5 billion bushels of soybeans annually, and about 23 million tons of potatoes. Potatoes yield about 25-30 gallons of ethanol/ton or 688 million gallons of ethanol about .5% of our gas consumption.
There has been much talk about bio-diesel from soybeans. The only numbers I can find are that soybeans yield about 9.5 to 10 pounds of oil/bushel. How much bio-diesel will 10 pounds of soybean oil yield?? 1.5 Gallons max, that would make 3.75 billion gallons of bio-diesel. Our annual distillate consumption is 4.5*365*42=69 billion gallons. Soybean bio-diesel would only supply 5.4% of our distillate needs. 3.75/69=.0543.
I hope this can put in perspective our alternate liquid fuels problem. There is no way the USA can ever supply even 10% our liquid fuel with ethanol & biodiesel.
Other than massive nuclear and wind and solar, I don't see what the energy source is going to be once oil goes into serious decline, and that does not address the transportation fuel issue unless we replace our transportation infrastructure. And we have not started yet. Using less energy is the only solution. If we have 20 years, maybe we can do it, but if the top of that curve keeps tipping over....
But don't worry, because I heard on the radio this morning that the Saudis have been pumping like mad, and have produced so much oil that they expect to throttle back early next year, and the gas prices will go down further (back up to $2.29 this morning), and the economy will take off. But there's no need to worry about inflation in spite of all the jobs that will be created. The FCC really needs to work on blocking those broadcasts from other dimensions....
I'm with you on biofuels. Love the concept. Just can't get the numbers to add. It's a last resort idea and requires huge reduction in total fuel consumption.
I understand that Minnesota has enacted a 2% bio-diesel law that requires nearly all diesel fuel to be blended with 2% bio-diesel. Now I don't know how much nearly is, but here is a web-site to explain it further.
http://www.mda.state.mn.us/biodiesel/b2/default.htm
Here is a web-site of oil yield for oil-bearing crops.
http://journeytoforever.org/biodiesel_yield.html#ascend
So we're moving from the theoretical to the practical, at least as a demonstration. Here's the rest.
You get about twice as much energy from wind to wheels using batteries compared to using hydrogen.
If what you say is true, then we are heading down a dead end. Why are smart people throwing time and money away on hydrogen if batteries are the answer? Is it that they just don't know? Do you have a link to a source that proves what you say? I'd like to know because then I'll pass it along to the folks downtown who are building this project.
There are dozens (the calculations are simple), but you might want to start with Future Pundit's roundup before you take my word for it.
I try to retain some sense of optimism about all of this, that either by building an abundance of new nuclear power plants we'll be able to have enough electricity AND stay warm; that Stirling engine solar farms will deliver the solar promise without the drawbacks of traditional PV; that hydrogen will replace kerosene to keep our air fleet flying; that electric cars will keep us all in motion... but when you think of the folly, the stupidity, the blindness, the corruption, the deceit and the wishful thinking that is going on everywhere, I can't help but think, We Are So Totally Screwed. Anyway, it's Christmas Eve, so Merry Christmas and Happy Holidays to you. I've got to get into my Jeep and go to the bank 15 miles from here to deposit a check so I can buy some plastic crap for the neighbors' children while looking at Christmas lights which I used to enjoy which I now know are using up coal that we're all going to need in the future and wondering all the while just how much my house is going to drop in value when fuel becomes so expensive that people abandon the countryside and flock to the cities to stay warm and earn a living under futuristic Dickensian conditions from which we'll never escape. Merry Christmas!
Even the use of sustainable cellulose residue (instead of food crops) can only achieve 14.5 billion gallons (345 million barrels) of ethanol annually. The clear message here is that liquid fuels consumption has to go down. The clearest way to achieve that is migrating to electric transportation which can be supported by solar, wind, nuclear, and clean coal electric generating processes.
We can achieve a sustainable yet advanced technological civilization with what we know today. No, it won't look like what we have today but it's still better than the alternative of collapse. The only question is whether we will do so or not?
However what if sugar cane, coconut and date palms WORLD WIDE gets shunted into fuels. This has already started in Indonesia and Brazil. We already import gasoline and ethanol and we have a big appetite for transportation fuels. I agree again with you that this still won't replace a very large percentage of petroleum. But it could mask declines for awhile in the reports.
Do you have numbers for Canola or Mustard seed?
Soy beans is the worst example to give and in my mind, are a net-energy loss or close to it.
The numbers that I have seen (from coastal areas) say both canola and mustard yield close to 100 gallons per acre. And they also are a great rotation crop for wheat to replenish the soil, so farmers must grow these (or something else) anyway.
There is no way the USA can ever supply even 10% our liquid fuel with ethanol & biodiesel.
This is a very bold statement. We haven't even begun to tap ethanol from wood yet and it is an energy gain and can be processed from existing paper mills, but a cheaper method must be worked out. The average car also get 21 MPG, if this number ever got to 42 (and it will with price) 10% would be more like 6-7% currently.
Here is a web-site of oil yield for oil-bearing crops.
http://journeytoforever.org/biodiesel_yield.html#ascend
Really though it's all speculation, countries that currently use ethanol/biodiesel to power a large % of their combustion, will start to have problems if you are right. OTOH they will suceed and keep showing economic growth if I am right.
Brazil will be the first test case, 40% of their transportation fuel comes from ethanol. Results will come foward shortly. Same with France and Germany who use close to 5% biodiesel. (and they don't use soy)
I'm sure Pomona has data and I can point to many other engineers with data as well.
Just like peak oil, no one really knows when and everyone can use data to claim they know. But claiming the US will never have ethanol/biodiesel power 10% of our transportation, is a rather bold call when other countries have surpassed or are closing in on that number.
Could you post the raw data or a URL to the raw data?
Thanks.
http://www.eia.doe.gov/emeu/ipsr/supply.html
You can read the monthly reports in PDF format from here:
http://omrpublic.iea.org/archiveresults.asp?formsection=supply&formdate=%25&Submit=Submit
whose parent site (public data from EIA) is:
http://omrpublic.iea.org/
http://omrpublic.iea.org/currentissues/sup.pdf (page 51)
...it seems a pretty wide definition to me, but valid enough provided one is aware of it. It would tend to underestimate decline in a narrower definition of oil products since it includes products that would presumably increase in supply as narrower oil supply declines.
I would interpret the graph as you. Looks like most supply increases that could be brought online rapidly and are viable at prices of $50 has been, unless ulterior motives have precluded it.
Perhaps that simplifies the supply prediction problem to:
new projects + infill additions + future recovery improvements - currently producing field declines
Seems that any existing production capacity which can (and there is the will to) be brought online, already has been. Of the above variables I think the field decline rates will be most critical and it looks like they are more likely to surprise to the bad side given what we know of Cantarell, Burgan, and might suspect of Ghawar.
Maybe the biggest fear should be that enhanced recovery techniques result in continued high levels of production in the short term followed by sharp decline rates, as in the Texas fields.
I'm skeptical of the IEA forcasts for the many reasons cited here, but it's good to be skeptical of those calling the peak as well.
It seems that the same kind of "event" happened in 2000 and 1999.
In our analysis we found that annual extraction has gone negative 9 times in the last 30 years.
In short, a leveling or drop in production in 2006, considering all the factors in play at the moment mean zilch. All the conservation and replacement efforts contemplated won't outpace the new demand from China and India and other developing regions. A new middle class is emerging and their demand is insatiable.
Peaksters can get excited all they want watching the mid 2005 plateau and read into it what they want but the rest of us know it was hurricane and refinery related and the trendline will continue into 2010 amid the gnashing of teeth.
Well, Putin and Abdullah basically control the price of oil. How much should they charge? Should they sell it cheap, such that demand will grow fast? Or should they sell it dear so that demand will grow slowly? Or very high so demand will collapse? What's in their best interest? They're not interested in maximizing global growth in oil production, they're interested in maximizing revenues to their respective regimes. I would say that it's in their interest to charge as much as the market will bear without causing a substantial collapse in demand. I suggest that would be high enough that any uses of oil with much elasticity will tend to get weeded out to make room for the growth in BRIC vehicle miles traveled. There's a lot of inefficiencies in oil use such that it's quite possible for demand to go flat for a number of years as developing countries fuel-switch to coal for power generation and the vehicle fleet gets more efficient. So if it's possible for demand to go flat, and it's in the self interest of the people who control the market for that to happen, why is it not going to happen?
Stuart, great graph work and i appreciate your insightful thoughts and questions each week. Though we may not agree on everything, your objective presentations are superb, as is your reporting on conferences. I treasure most of your posts.
As price is set on the open market by the marginal barrel, and demand for oil is relatively inelastic, at least in the short term, a small increase in supply has the potential to drive prices down precipitously. On the other side of the coin, disruptions in supply of one million barrels per day (Katrina for instance) cause significant price hikes in the other direction.
I agree with Stuart that SA and Russia are driven by self interest here. I do not think in either case it is as simple as trying to maximize cash flow for their respective countries, however.
The rulers of SA can only maintain their power through controlling the oil production and keeping the $'s flowing through the econonomy. Also they have made a "bargain with the devil", effectively trading access to oil for protection by the US military. So SA needs to balance maximizing cash flow to the Kingdom without pissing off their protectors - the US Government.
Russia on the other hand is more complex. Putin's power does not flow from the oil industry in his country. In fact, he clearly felt that some of those guys, especially Kodorovsky in particular and Yukos in general, were a threat to his power. I don't think Putin would blink an eye at shutting in 1 million barrels a day from Russia if he felt that it would improve his grip on power.
I have heard for two years now that the price of oil is being priced irrationally in the market and that there is a large "fear" premium in the price of oil. If anything, in hindsight the market has acted exactly as it should have. Demand has soared in the last couple of years without any obvious new supply sources coming on stream to cover this demand. Excess supply capacity has been sopped up - especially for light sweet crude. Without extra under-utilized supply capacity the price had to go up as demand soared. Now that demand appears to have stopped its dramatic increase, the price for oil seems to have stabilized at between $52 and $62 per barrel. Perhaps that in the coming year, with futher recovery from Katrina and Rita, some new projects coming on stream (Bonga and Thunderhorse for example) and a possible downturn in the world wide economy, it is possible to see oil drop back to $35/bbl. However, if that happens I predict it will be short lived.
You would think there would be a lag. Of course the US demand and production has been going in opposite directions.
This is exactly what one would expect since production = demand +/- storage. What would be more interesting are graphs of actual production versus capacity to produce. I would expect such graphs to show actual production approaching production capacity. Does anyone know of a source for such data?
Texas production in 1962: 2.5 mbd.
Texas production in 1972: 3.5 mpd.
Texas production in 1982: 2.5 mbd.
The years after 1972 saw the biggest drilling boom in Texas history, resulting in an increase in the number of producing wells of 14% (by 1982), which did nothing to reverse the post-1972 decline. Perversely enough, Texas actually showed decreasing producing wells as production increased from 1962 to 1972.
I think what this showed is the tremendous importance of the big--billion barrel and larger--oil fields, and I think that this is why Hubbert Linearization works. In truth, what we are probably plotting is primarily the production decline from the big fields.
The Texas analogy completely contradicts Yergin's assertion that a swarm of smaller fields will allow us to maintain, or even grow, world production. Our experience to date in the Lower 48 in general and the North Sea--which are both following the Hubbert/Deffeyes predicted decline path--further contradict Yergin's premise (who by the way was firmly, in November, 2004, predicted oil prices of $38 per barrel in November, 2005).
I think you're right, I tried once to simulate the effect of the field size distribution and the discovery pattern on the total production curve. New discovery are mainly small fields (Category 6, prod < 0.1 mbpd) and there are only a few new megaprojects (Category 2, prod > 0.5 mbpd) per decades. I assumed the following discovery distribution pattern where discovery of small fields is slowly decreasing but we keep discovering the small amount of larger fields:
It leads to the following production curve (Monte Carlo simulation):
Even if production from small fields (Cat 6. and Cat. 5) is almost 60% of the total production, it's resulting only in a heavier production tail but the main peak is coming from the megaproject and giant fields.
When we discuss "Peak Oil" in my opinion, it is the X - Y = Z that is really relevant. (X=oil supply, Y=energy cost of producing X, Z=oil left for non-energy production usages). When Z peaks is when the proverbial substance starts to hit the fan. Note: Z should peak before X.
I have been waiting for a COOP or some such to "close the loop" on the energy side. This will be done when soybeans are pressed into soybean oil which is converted to biodiesel to put the next crop in. Ditto for ethanol from some biomass, except that most tractors run on diesel.
The goal of this is to see what the net crop yield is 1-2 years into it. Ignore fertilizers at the start. You just want to see if you come out ahead when sunlight multiplies your grain yield each cycle. Subtracting out that part of your crop that has to be turned back into liquid fuel. If you don't get a net crop it's all a waste of time. Never been done as far as I can determine.
Indeed this is true.
Consider for example a hypothetical process for converting electricity into liquid fuel. The electricity is primarily generated from burning coal, so in effect what you have is an indirect CTL process of some sort (in light of this, I suppose one would simply compare against a F-T CTL process and see which is the most efficient).
Now consider ethanol. People point at the EROEI of maybe 1.3 or so - not great really. You do however need to consider what the actual energy inputs really are? What fraction is actually oil, what fraction is natural gas, and what fraction of the energy inputs is electricity (which is somewhat more flexible in terms of energy inputs - theoretically even using wind). In fact, some of the energy inputs are ultimately needed for heat (distillation) - one could also imagine that solar could easily be used to provide some of this heat.
In light of this, I would argue that using EROEI as the only yardstick for measuring energy efficiency is really unwise.
The EROEI viewpoint also ignores the fact that we live in an economic world in which adaptation and substitution is the norm. EROEI, like the amount of oil in the ground, places an ultimate limit on certain types of activities, but in and of itself it says nothing about how we do things before we approach those limits. And our behavior pre-peak (for oil, NG, or any other non-renewable resource) is just as critical as is the date of the peak and the decline rate post-peak.
I'm sure I'll get stoned for mentioning this, but there's always the example of flashlight batteries. The energy expended to make one is many times the tiny amount it holds, yet we make them by the bargeload. We're not stupid, we're just behaving in accordance with economics, including the current prices for resources and what people will pay for the finished product. (And yes, I use rechargable batteries for almost everything.) The core problem is that non-renewable resources are not priced as if they're precious, but according to production cost and/or what the market will bear.
As I keep saying over and over: If we look at just part of the picture (just geology or economics, just oil or NG, just technology or public policy) we'll wildly misunderstand our evolving energy situation. In my opinion, EROEI is certainly a valuable analytical tool, but it's by no means something that can be used in complete isolation from economic, market psychology, public policy, and technology considerations.
I think this is the role electricity will have to play. The problem is transportation, which has evolved to a different energy standard, and so the infrastructure will need to be largely replaced, at least eventually. If we could start now in a big way, and could do this over a period of time similar to the present lifetime of an automobile, I guess it would not be too disruptive. I'm not counting on that though.
Now imagine a future when we're short of some kinds of truck fuel, all the larger trucks are getting old, the cables are fraying and there's not much money available for maintenance. It's much harder to pull the wheel up the hill with a larger fleet of smaller trucks, and harder still to keep the speed constant when the controller at the top of the hill can't communicate with the smallest trucks. If the wheel becomes much larger (demand goes up as people switch to electricity when other fuels run short or become expensive), the whole exercise becomes vastly more difficult. The wheel could easily stall.
Nobody said that Adam Smith's invisible hand has a gentle touch. It could come up and give us all a good dope slap or a punch in the gut.
Personally, I'd be amazed if they could even fund their programme as the electricity supply industry is already so heavily indebted (to the tune of about $40 billion). Closing the coal plants would be political suicide as supply is already insufficient to meet peak demand without imports. The market operator came very close to declaring a power emergency (rolling blackouts)several times this past summer. I try to imagine this system coping with a shift toward increasing electricity demand for winter heating as natural gas becomes expensive or unavailable. I try to imagine it somehow absorbing demand for transportation, but it doesn't seem very realistic. Unless economic collapse drastically reduces demand, the power system is already in trouble.
In North America, Texas and Quebec currently operate as islands with HVDC connections, but the rest of the continent is covered by two huge AC grids. As we discovered on August 14th 2003, very large areas can be affected extremely rapidly by cascading system failure, and it can then be problematic getting the system restarted. For instance, in Ontario the nuclear fleet had gone into full shutdown (reactors poisoned) when the control rooms lost power. It took a week for them to return to full power, with the government begging the public to conserve in order to avoid rolling blackouts. If it had been winter there would have been serious problems.
What you do need is margins in spinning reserve and transmission lines or a control system that can break up a failing grid in viable parts where production and consumption match. Investing in such a control system is always a good idea since it helps with manny kinds of realiability problems.
The hardest part is that you can probably not motivate full scale tests of it, it would be as breaking fingers to prepare for an eventual accident breaking a leg. I use to joke that if we were more religious it would be a good idea to tear down the grid yearly on good friday(???) and resurrect it to the next day. :-)
From the standpoint of the shareholders of the electric companies, these things all make a form of sense. The problem is that other than the power not sold, there is no financial cost to the power company when there is a power outage. All of the homes and restaurants that have to discard food, for example. Businesses that cannot open. Etc, etc. The power companies never see these costs, of course.
In my area (and from what I gather this is nationwide) when the power goes out, typically hospitals, and police are the first to get it back, and this all seems entirely proper to me. Then again, after Katrina the office of the VP called down to get restoration of power to the pipelines bumped above hospitals.
Some people argue that the lines should be buried, but that is far more expensive, and the power companies would never go ahead and do this sort of thing just for the fun of ut.
With some services (thinking internet here), a business rate essentially comes with guarantees of service. A homeowner will be brought back online whenever they happen to get around to it - if you are trying to run a business at home using residential cable modem service, and the line goes down, the answer is "so sad, too bad".
I suppose from a business perspective, the power companies could offer a business rate which would come with a guarantee of higher priority of restoration when the power goes down, but businesses would probably not be terribly keen to pay even more for their power.
Small often rural power distributors was bought by by bigger companies and their staff reduced. This destroid the local knowledge needed to quickly service powerlines of low and medium quality. After a few years of general complaints most power distributors started to cablifie the 400V to about 40 kV network or install insulated cables on powerpoles. This was about a 20 year chedule project. Almost exactly a year ago we had a storm of near hurricane strengt, the wors for at least 30 years. About a 1/4 million withouth power and most of europes spare part inventory were emptied within a month. This led to the power companies promising a 10 year cablification and a little to hars laws demanding it do be done in about 5 years. A lot of the power production porfits is financing this massive cablification but it might force some of the smaller and well run power distributors into bankruptcy. Overall it is a trade off between lots of local service personell and more damage resistant technology.
The free market for trading power www.nordpool.com meant that a lot of power trading companies were started, some with their own production. But the market in Sweden has consolidated into three giant companies and few samll ones. The market is open between Norway, Denmark, Finland ans Sweden and the trading areas with different prises are segmented acoring to the grid bottlenecks. Manny of the small traders went bankrupt during price surges in winter with little hydropower available due to little rain. They had to buy high and sell low. There is yet no day to da or hour to hour prising for small customers, only for producers, trading companies and large customers.
The cost for producing power has become lower.
One problem has been the about 3 GW of old oil fired condensing powerplants left over from before the nuclear buildup that were used during extreme winter peaks. This ment between 0 and perhaps 200h duty per year and catastrophical economy so they were mothballed. To solve that problem a tariff on power transmission in the manin powerlines were instututed and it was used to pay for 2 GW of spare capacity for anyone to bid of selling. 2 GW i sto little but its is better then nothing. The reserve is old condensing powerplants, old gas turbines, some new gas turbines and continiously running indstries that can shut down with a few h notice. This is said to be a temporary solution but I guess it will be permanent since it isent that expensive compared to the market turnaround and it is hard to figure out how to create a market that fullfills the need.
Electricity prices are overall going up, due to more consumption and exchange with mostly germany where the prise levels are higher. The "green" power subsidies has been replaced by a law forcing people to buy a small percentage of "green" power to finance building of wind powerplants and so on. The european carbon trading certificats and carbon emission quotas have had an immense economical effect, about 5 times bigger then anticipated. This has affected the whole price level turning old hydro powerplants and nuclear powerplants into gold mines and are strongly encouraging investments in combined powerplants and wind power.
But prices are si high now that it is starting to scare away some industry. A Finnish consortioum of heavy industry are the main financers of their fifth nuclear powerplant that should go on line with about 1600 MW in a few years. A Swedish consortium of heavy industry has recently finalized a gigadollar deal of electricity import from Russia to the nordic market and is building a GW HVDC line for it.
2 x 600 MW of swedish nuclear power has been mothballed, perhaps for ever by the greens but on the other hand the 10 hand the 10 reactors left are being life extended and upgraded with with the same total capacity.
The nordic countris has a cooperation on the running of the high voltage grid where they set the capacity goals needed for the stability and power trading. This has led to a number of strengthening projects and the politica will was bigger after a breakdown in southern sweden a few years ago when the grid had a freak n-3 failure that would have been survided with another powerline or if any of the closed nuclear reactors had been running.
The high load limit is one n-1 failure folowed by another one 15 min or more later to allow startup of new running reserve. This goal is right now not fulfilled for a 10% coldest winter if any powerplant is of line. :-(
I think our deregulation so far has done more good then bad things. But the anti nuclear politicians have muddled it, some of the political manipulation is clumsy, some of it is not as free as it should be and other parts dont work well as a free market right now. And to make things complicated the electricity taxes have been raised significantly, mostly for fiscal reasons.
Small often rural power distributors were bought by by bigger companies and their staff reduced. This led to a loss of local knowledge needed to quickly service powerlines of low and medium quality. After a few years of general complaints most power distributors started to cablifie the 400V to about 40 kV network or install insulated cables on powerpoles. This was often planned as a 20 year chedule project. Almost exactly a year ago we had a storm of near hurricane strengt, the worst for at least 30 years. About a 1/4 million withouth power and most of europes spare part inventory were emptied within a month. This led to the power companies promising a 10 year cablification. And a little to harsh laws demanding it do be done in about 5 years were written. A lot of the power production profits are financing this massive cablification but it might force some of the smaller and well run power distributors into bankruptcy. Overall it is a trade off between lots of local service personell and more damage resistant technology.
The free market for trading power www.nordpool.com meant that a lot of power trading companies were started, some with their own production. But the market in Sweden has consolidated into three giant companies and a few small ones. The market is open between Norway, Denmark, Finland ans Sweden and the trading areas with different prises are segmented acoring to the grid bottlenecks. Manny of the small traders went bankrupt during price surges in winter with little hydropower available due to little rain. They had to buy high and sell low. There is yet no day to da or hour to hour prising for small customers, only for producers, trading companies and large customers.
The cost for producing power has become lower.
One problem has been the about 3 GW of old oil fired condensing powerplants left over from before the nuclear buildup that were used during extreme winter peaks. This gave between 0 and perhaps 200h duty per year and catastrophical economy so they were closed or mothballed. To solve that problem a tariff on power transmission on the high tension powerlines were instituted and it was used to pay for 2 GW of spare capacity for anyone to bid of selling. 2 GW is too little but its is better then nothing. The reserve is old condensing powerplants, old gas turbines, some new gas turbines and continiously running indstries that can shut down with a few h notice. This is said to be a temporary solution but I guess it will be permanent since it isent that expensive compared to the market turnaround and it is hard to figure out how to quickly create a market that fullfills this need.
Electricity prices are overall going up, due to more consumption and exchange with mostly germany where the prise levels are higher. The "green" power subsidies has been replaced by a law forcing people to buy a small percentage of "green" power to finance building of wind powerplants and so on. The european carbon trading certificats and carbon emission quotas have had an immense economical effect, about 5 times bigger then anticipated. This has affected the whole price level turning old hydro powerplants and nuclear powerplants into gold mines and are strongly encouraging investments in combined powerplants and wind power.
But prices are so high now that it is starting to scare away some industry. A Finnish consortioum of heavy industries are the main financers of their fifth nuclear powerplant that should go on line with about 1600 MW in a few years. A Swedish consortium of heavy industries has recently finalized a gigadollar deal of electricity import from Russia to the nordic market and is building a GW HVDC line for it.
2 x 600 MW of swedish nuclear power have been mothballed, perhaps for ever by the greens but on the other hand the 10 reactors left are being life extended and upgraded with with the same total nuclear capacity.
The nordic countris has a cooperation on the running of the high voltage grid where they set the capacity goals needed for the stability and power trading. This has led to a number of powerline projects and the politica will were stimulated by a breakdown in southern sweden a few years ago when the grid had a freak n-2/n-3 failure that would have been survided with another powerline or if any of the closed nuclear reactors had been running. This led to a debate about the grids reliability but it will take a few years to build the additional high tension lines and HVDC links.
The design goal is to handle one n-1 failure folowed by another one 15 min or more later to allow startup of new running reserve in the form of spare hydro turbines and gas turbines. This goal is right now not fulfilled for a 10% coldest winter if any powerplant is of line. :-(
We risk rolling blackouts if we have a few realy cold winter days.
I think our deregulation so far has done more good then bad things. But the anti nuclear politicians have muddled it, some of the political manipulation is clumsy, some of it is not as free as it should be and other parts dont work well as a free market right now. And to make things complicated the electricity taxes have been raised significantly, mostly for fiscal reasons. This has made the deregulation very unpopular.
This is an issue that deserves much clarification. The price of any energy source is a combination of the actual energy provided by that source +/- a whole host of quality factors such as portability, size, density, etc. As such EROEI by itself is only a first order estimate of the price when energy prices are high. It should not be taken too far since, as energy is transformed into various useful forms, the EROEI ratio eventually drops to zero. The EROEI concept is most useful when the energy input is of the same or similar quality to the energy output. It tells you that if the cost of your input is dominated by energy, then (to a first order approximation) for a process to be worthwhile, the energy output must be greater. This should be obvious to everyone but detractors of its use have tended to assume that the concept is meant to be some energy theory of value.
True when energy costs are low relative to the total delivered but not when energy costs are high. For example, in California, typically 30% of residential bills is the cost of wholesale energy. During the energy crisis that figure rose to about 70% at the margin.
But let's add in one more complexity: the issue of substitutability. We don't have an infinite range of choices about how to use our liquids. A given barrel of oil will produce various amounts of gasoline, diesel, kerosene, asphalt, and so on--but most can't be easily substituted for one another. Sometimes the substitutes work in one direction. We can pretty easily substitite ethanol for gasoline (10% as gasohol, 85% as E85), but I doubt the reverse is true.
This has the effect of adding in another huge, difficult management problem. We will probably have critical shortages of the most sought-after products, but less pressure on the less-wanted products. We see this at the broad level with oversupply of OPEC heavy sour crude, and tightness in lighter grades like WTI or Brent.
So I agree, having enough Z net energy is the minimum--it's a necessary condition, but not wholly sufficient. We also have to have enough Z in a form we can (or will) use it. Which won't make it any easier--
What % of X is Y? What % of X is for food? What % of X is for military? What % of X could be construed negative environmental externality,etc? Is the rate of change in Y/X increasing? Someone needs to attempt to do this. (Staniford is 8/5 favorite). As long as Z is increasing, no one will bother asking whether it makes sense to make/buy batteries. Once Z starts to decline, there will be a rush to buy all batteries in sight (and windmills, and solar panels, etc).
Freddy has been talking about 'all liquids', which is becoming a gloomier thing every day - now even ethanol counts. Still 84 - 85 MBD is the top interval given by people like Boone Pickens.
Let's just wait for OGC 4Q stats. As for 'all liquids' I prefer BP's data.
Soaring Demand [IOC] spending shortfalls, falling discoveries... Where's the oil? Costs skyrocketing.... Reading this article, the apparent supply inflection in 2005 is no surprise at all regardless of how many liquids the IEA throws into the mix.
I think that the decline in many fields is such that, by the time the Gulf returns to previous levels, the rest of the world will be down further and May 2005 looks, to me, to be some kind of peak.
I admit to being surprised at how well the oil situation has gone in light of the hurricanes. The "peakers" like Campbell do have a record of being to quick to call the peak, but the oil companies, conventional oil analysts, and national oil companies have an equally bad record of overestimating production, underestimating impact of depletion/decline and putting the peak too for off in every region that has peaked so far.
Maybe some happy medium.
More curious is why August was not the peak to date, that is, just before the gom went down.