Reserves Growth and Production Flows
Posted by Dave Cohen on August 30, 2006 - 4:46pm
Dr. Leo P. Drollas, Deputy Director and Chief Economist for the Centre for Global Energy Studies has issued a response to Heading Out's Depletion estimates and the CGES. I feel that Drollas' comments deserve a response.
The argument concerns what is termed "reserves growth" which Drollas defines as
Growing knowledge tends to result in more oil reserves through oilfield extensions and revisions of reserves -- what is commonly known in the industry as `reserves growth' -- as well as through discoveries of new oilfields....The entire comment is below the fold.If there are no gross additions to reserves the depletion rate is equal to the world's rate of oil production as a percentage of global proven reserves (2.38% in 2005). However, gross additions have not been zero; indeed, since 1954 they have exceeded the world's production of oil.
Overall, the key idea to retain about proved reserves [as used by Dr. Drollas] is that for the majority of countries in the world and, and especially the large producers, the data have no bearing at all on true reserves.Bentley's well documented views support my point in this piece. Here is Drollas's original comment.Not surprisingly, the date at which a country goes over its production peak cannot be determined simply form its proved reserves data; additional analysis is needed...
Response to Heading Out piece posted on Friday, 25th August, 2006A key part of the argument concerns the United States and the view here if that part of the argument is answered, the entire CGES argument is effectively disposed of. So, let's concentrate on this part of Drollas' text.Oil's depletion rate
In a recent piece (25/8/06) the author behind `Heading Out' sought enlightenment on the matter of oil depletion by reading a `report' by the CGES on this subject. Since, by his own admission, the author has remained unenlightened, may we suggest a few reasons why this was so. The CGES piece was not a report but a short proprietary article in our Market Watch series (part of our Global Oil Report), which looks at various topical issues concerning the oil industry. Heading Out contends that the CGES piece `conceals some of the assumptions that it makes, by hiding them within the overbounding simplification of its argument.' The CGES article did not deliberately try to simplify, but attempted instead to make a simple point based on a simple argument. For the benefit of those who have not read the CGES paper, the simple argument we made is as follows.
In any single year the world's oil production rate forms one of the key elements of its depletion rate. Last year, 26.38 billion barrels of crude oil were produced globally (according to the Oil and Gas Journal) yielding a depletion rate of 2.38% on the basis of an average level of proven global crude oil reserves of 1,109 billion barrels in 2005 (again according to the OGJ, but excluding Canada's tar sands reserves). If -- a big `if', by the way -- there are no further additions whatsoever to the world's proven reserves of crude oil, then the world's depletion rate will obviously rise over time from the 2.38% rate of 2006. With no further reserves additions and assuming the same rate of oil production, it is a mere matter of arithmetic to calculate the depletion rate ten years hence (3.1% a year), twenty years hence (4.5% p.a.) and thirty years hence (8.3% a year). However, the world's crude reserves do change over time because companies strive to change them; after all, reserves are the future lifeblood of the industry.
The rate of change of oil reserves is tautologically equal to the rate of gross additions to reserves less the rate of oil production. Gross additions, in turn, comprise new discoveries, oilfield extensions and revisions. It is highly unlikely that during any particular year there will be no gross additions to reserves whatsoever. Discoveries -- small or large -- are being made continuously and with the passage of time and the aid of technology companies get to know more about their oilfields. Growing knowledge tends to result in more oil reserves through oilfield extensions and revisions of reserves -- what is commonly known in the industry as `reserves growth' -- as well as through discoveries of new oilfields.
A case in point is the United States, the world's most mature oil province. At the end of 1973, during the first oil crisis, the US had proven oil reserves of 35 billion barrels, giving it an R/P ratio of 10 years and a depletion rate of 10% a year, provided no new oilfields were discovered thenceforth and no oilfield extensions and revisions were made either. At the end of 2005 the US had proven reserves of 21 billion barrels with an R/P ratio of 11 years, yet had produced in the meantime no less than 86 billion barrels of crude oil! It would be extremely difficult to determine precisely what proportion of the 86 billion barrels actually produced between 1973 and 2005 was due to new discoveries, oilfield extensions or revisions, and in a fundamental sense it is irrelevant because the US enjoyed the benefits of this oil, whatever its source. What really counts is the oil producers' ongoing struggle to replace the oil being produced: whether this is achieved via wildcat wells, or oilfield extensions or reappraisals of existing fields hardly concerns the average consumer filling up his shiny SUV in Los Angeles or his beaten-up truck in Mumbai.
Having made the theoretical point presented above, the CGES article proceeded to look at the global picture and see whether the world's gross additions to oil reserves since 1954 exceeded or fell short of global production. We did not discuss in our short article individual oilfields, or countries for that matter, for there was only enough space to concern ourselves with the aggregate picture; incidentally, for those interested in individual countries do feel free to contact the CGES. As a matter of historical fact, then, one can assuredly say that since 1954 the world's cumulative gross additions to reserves have exceeded its cumulative oil production. If this had not been the case, the world's proven reserves would not have grown at all -- and surely no one is purporting that! This is not to say that we `don't need to worry', as Heading Out contends we are urging our readers, for the future might be very different from the historical record. There are indeed a number of reasons why we should be fearful, the most important being the lack of opportunities afforded to the international oil companies to `grow' their oil reserves, because they are kept out of the most prospective areas in the world.
To sum up, the author of Heading Out was not enlightened by our article simply because he did not read it carefully enough. The CGES set out to find what is the world's oil depletion rate and to see whether it has changed over time. If there are no gross additions to reserves the depletion rate is equal to the world's rate of oil production as a percentage of global proven reserves (2.38% in 2005). However, gross additions have not been zero; indeed, since 1954 they have exceeded the world's production of oil. As a result, proven global oil reserves have grown since then and expansion rather than depletion has been the norm. Oil reserves may shrink in the future and cause depletion to become a serious worry, but they have not done so both in the more remote and the recent past, and that is as much as we dare say on this subject at present.
Dr. Leo P. Drollas
Deputy Director and Chief Economist
Centre for Global Energy Studies
17 Knightsbridge
London SW1X 7LY
United Kingdom
At the end of 1973, during the first oil crisis, the US had proven oil reserves of 35 billion barrels, giving it an R/P ratio of 10 years and a depletion rate of 10% a year, provided no new oilfields were discovered thenceforth and no oilfield extensions and revisions were made either. At the end of 2005 the US had proven reserves of 21 billion barrels with an R/P ratio of 11 years, yet had produced in the meantime no less than 86 billion barrels of crude oil!HO states in his post that
There is still a lot of oil to find, but as fields get smaller, they also produce less individually, so that more must be found, and produced, each year. That is why I am more concerned with production rates than I am with the amount that will ultimately be recovered from a reservoir.In fact, "reserves growth" is the wrong argument—it is a red herring and a misleading indicator of our true concerns. Let us look at production rates for the United States. There is no better place to start than Stuart Staniford's Four US Linearizations.
EIA Field production of crude, and four Hubbert models based on different linearizations. Source: EIA for the data, models as described in the text.
In this story, Stuart was playing around with various fits based on different historical data sets. Ignore models 2 through 4 and concentrate on model 1 which is "a regression of the data between 1958 (which is the point Deffeyes chooses) and today" ie. a complete data set. As you can see, production is well over 9/mbd (million barrels per day) in 1973 but averaged 5.121/mbd in 2005.
What was the "reserves growth" during the period? As Drollas cites, the US started with 35 Gb (billion barrels) in 1973 and produced 86 Gb during the 1973 to end 2005 period. The US has 21 Gb left. So, simple arithmetic says that growth was 72 Gb during the period. Let's take a closer look. From the EIA US Country Brief.
According to EIA's 2004 Annual Report on U.S. oil and natural gas reserves, the United States had 21.4 billion barrels of proved oil reserves as of December 31, 2004, the eleventh highest in the world. These reserves were concentrated overwhelmingly (over 80 percent) in four states. Texas had 22 percent of total US oil reserves, Louisiana had 20 percent, Alaska 20 percent, and California 18 percent (note: all of these figures include onshore plus Federal and state offshore reserves). U.S. proven oil reserves have declined more than 17 percent since 1990, with the largest single-year decline (1.6 billion barrels) occurring in 1991.Reserves have declined more than 17% since 1990. In 2001, the EIA said that the US had 21.8 Gb of reserves and that reserves had declined 20% since 1990. Since we have produced about 6.148 Gb in the 2002 to end 2004 period and reserves differ by only 400 million barrels fewer, it appears that reserves have grown 5.748 Gb since 2001 while production has fallen from 5.746/mbd (2002) to 5.419/mbd (2004, cited above), a percentage drop of approximately 5.7%.
Citing reserves accounting (growth in Gb) and production flows (barrels per day) yields two different results. A final word about R/P ratios. If there is reserves growth that nearly covers production as in the 2002 to end 2004 period in our example just above, the R/P ratio is not a good indicator of what's going on. In 2001, reserves were 21.8 and the R/P ratio was 10.4. However, in 2004, reserves were 21.4 and the R/P ratio was 10.8. Reserves growth occurred, the R/P ratio went up and production dropped 5.7%. What's wrong with this picture?
In summary, this is why some of us regard production data as a more important indicator of problems in the oil supply than reserves accounting. Reserves growth can obscure production declines. Although the world may not have reached peak production yet, it has been in a plateau since the spring of 2004. This is a worrisome trend.
I hope this disposes of the US argument and by extension, the world. As a personal note to Dr. Drollas, Heading Out is a consultant to the energy industry and travels all over the world sharing his expertise on various problems. I am just a journalist writing about energy issues. I have written for various publications but I also know a problem when I see one.
We are all, in our various ways, on the path to enlightenment.
Sincerely,
Dave Cohen
Senior Contributor
The Oil Drum
davec@linkvoyager.com
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Depletion begins when the first barrel is produced, and it ends when the last barrel is produced.
The question is, what is the area under the curve?
So far, the most accurate tool for estimating the area under the curve is the Hubbert Linearization (HL) method.
The Lower 48 peaked at about 50% of Qt, and production has fallen steadily since then. As Khebab and I have demonstrated, post-1970 cumulative Lower 48 production, through 2004, was 99% of what the HL model predicted--using only production data through 1970 to predict post-1970 cumulative production.
But wait! The oil industry has vastly improved its technology!
So, let's look at the North Sea, which peaked in 1999 (29 years after the Lower 48) at about 50% of Qt, and North Sea production (crude + condensate) is down about 25% since 1999.
So, the Lower 48 and the North Sea peaked at about the same stage of depletion, based on the HL method.
So much for better technology.
I have a sneaking suspicion that we find the big fields first. Production peaks when about half the reserves are produced, and the smaller fields we find post peak can't make up for the declines in the old, large fields.
The world is now where the Lower 48 was in 1970, and the latest EIA data show declining production since December (as Deffeyes predicted).
This elaborate discussion of reserve growth by CGES strikes me as an exercise in utter futility.
Jeffrey J. Brown
I'm not sure I would classify myself as an expert; however, in my opinion the North Sea is the definitive proof of the HL method--for many of the reasons you cited--primarily because it could not be more different from the Lower 48, yet both regions peaked at the same stage of depletion.
What the North Sea did have was better seismic and more advanced drilling practices, but again the two regions peaked when about half the reseves had been used.
However, the rise and fall of the big fields drives the production curve--regardless of whether the producing region is onshore or offshore, and (largely) regardless of the state of technology. This is why we can compare the Lower 48, Texas, Russia, the North Sea to the world, Saudi Arabia, etc.
Better technology can help with unconventional production, but that is, at best, hugely capital intensive and low rate of production.
Funny how it is always 'one off factors'....
ONE-OFF FACTORS BLAMED FOR LATEST DECLINE IN NORTH SEA OUTPUT
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IAN FORSYTH
08:50 - 30 August 2006
The decline in UK North Sea production has been continuing, according to the latest Royal Bank of Scotland oil and gas index released yesterday.
Combined daily average output in June was 2,570,537 barrels of oil equivalent per day - down 13% on the previous month, while annual production fell 18%.
This was the worst figure in 13 months and well off the high in this period of nearly 3.35million barrels a day in January.
Last night, The UK Offshore Operators Association (UKOOA) blamed the latest drop on exceptional factors and was hopeful production will climb as the year progressed.
The body expects the monthly figure for 2006 to average out at more than 3million barrels a day.
The Brent crude price averaged 68.69 a barrel in June - a fall of 1.18 on the month before but up 14.24 on June, 2005.
The index said: "Early summer maintenance depressed oil and, in particular, gas production in the North Sea in June, but the sharp decline in production compared to one year ago suggests that the secular decline of the North Sea continues.
"It is a conundrum that the increase in investment spending seen over the last year has not resulted in measurable output growth.
"Soaring costs fail to explain the sluggish supply response - since higher input bills have not prevented a sharp pick-up in drilling activity. This is particularly puzzling, given that drilling activity aimed at the development of new fields or at boosting production of existing fields, which has a more immediate effect on output compared to exploration drilling, has accounted for the lion's share of the recent sharp increase.
"The relative weakness in exploration drilling in turn bodes ill for future production growth."
The index said crude oil prices would only moderate if spare capacity became available, which would cushion the effects of any supply disruption, or if there was a measurable deceleration in demand growth.
Steve Harris, communications director at UKOOA, said the figures from the Royal Bank survey were disappointing, but did not tell the whole story.
He added: "Our members are investing at near-record levels and it is estimated that the workforce offshore has swelled by about 20% in the last 12 months.
"The Royal Bank figures compare a single month with a single month 12 months ago, making no allowance for any exceptional factors that have contributed to this position."
Mr Harris said that the fall reported by the Royal Bank was because of reduced demand for gas in June because of the warm weather and annual maintenance being brought forward.
But he conceded that production was not picking up as UKOOA would like.
"We face challenging times, but our commitment remains," added Mr Harris.
"It is a conundrum that the increase in investment spending seen over the last year has not resulted in measurable output growth''.
Sound familiar?
"Deja Vu all over again"
Exactly!!! Those are some mighty big "ifs".
This is logically flawed. No single working example can prove a theory. You are making an assumption. That the HL method worked for the North Sea does not prove that the method is generally applicable.
Since there are now several examples of oil field depletion (Texas, Yibal, North Sea, etc), perhaps it's time to formulate a set of "Hubbert's Laws" in honor of M.K. Hubbert.
Bokken
Its funny you say this since the Hubbert Law is exactly the same as concept as Moore's Law.
http://en.wikipedia.org/wiki/Moore's_law
Replying to my own post.
Once one can prove that Moore's law no longer holds it has no predictive power for the evolution of cpu complexity post peak. In fact what we are seeing today is a massive drop in the rate of increase in complexity of cpu's made up by multi-cores and addition of memory.
Considering that Moore's law fails post peak circuit density I argue that HL fails for oil production rates after the peak.
"Anything that can go wrong, will -- at the worst possible moment."
Bokken
Until you provide data to prove your assertion, it is worthless. Personally, I suspect that sociological and political factors could make you right, but that's not proven anywhere yet so we're both just guessing. And rather than guess, I'd prefer to look at methods that have a proven track record, like HL analysis.
After peak the production rate of a field is very sensitive to how its been developed produced and the geology of the field itself. Technical factors come into play to determine the post peak production profile. Almost all the offshore fields show steep declines post peak because of the way they are produced. For cpu's and Moore's law heat and static discharge have ben the major factors on the real increase in computing power the last few years.
These technical factors certainly sometimes result in higher production rates then would be predicted with a smooth curve generally in exchange for a drop in production later.
In general just looking at the graphs most fields tend to show a initial slow decrease in production rates post peak for several years say 3-10 followed by rapid drops as technical factors come into play. Look at the field production profiles for Texas and the north sea.
Here is a article on the North Sea.
http://www.energybulletin.net/17262.html
The decline rates post peak are all over the map.
I agree I'm guessing but it would sure be nice to have someone come up with a reasonable explanation why the post peak decline rates won't be steep. I can come up with lots of reasons to expect steep declines and so far not single reason to expect them not to be steep. And yes I take political and engineering issues into consideration because they are relevant.
How can we ensure that we are not headed for serious problems ?
Treat oil as a world resource not a national or resource open the books and do independent analysis. Find out the truth then with this information work out a way to power down in a dignified manner. Transparency regardless of if the news is good or bad is the only answer.
Are we going to do this ?
Probably not.
IOW, the average age of a home or office pc is increasing.
Not so sure!
This may be a chicken and egg problem.
Some applications which would require orders of magnitude more processing power are put on a back burner and not investigated further.
For instance I know of an on-the-fly compression/decompression algorithm which is limited to a few dozen kb/s with current chips, a 100 or 1000 speed up factor would help.
I suspect there are many, many such hidden nuggets.
I ran my pc as a PVR for a while ... but I think that one's better done with a lower horsepower, lower electrical power, device like a dedicated DVR with a big disk.
On the server side Google showed that you could do it with dirt-ball hardware (IIRC their term). Now they are backfilling, not for more horsepower, but less electrical power. Related:
The Server Market Struggles for Growth in Q2, Says IDC
Indeed, blessed are the video-games addicts (some spending 40% of their income), I thank them for the cheap chips we can all enjoy.
Bokken
PS: Until PO hits, then it'll probably be a hoe.
Sort of like milking a dying cow and talking about her many expected years of increased productivity thanks to advances in bovine medicine.
IMO, major oil companies are concerned (with good reason) about punitive taxation if they admit to Peak Oil. I also think that major exporters are concerned (with good reason) about military takeovers if they admit to Peak Oil.
The overlapping area of mutual interest between major oil companies and major exporters (for the time being anyway) is a desire to assure consumers that oil supplies are abundant. In the case of the major oil companies, they assert that they need as much cash flow as possible to bring on more oil supplies and to get gasoline in the US back below $2 per gallon. And why takeover oil exporters, if there is plenty of oil?
I think that there is another emerging theme, to-wit, that world oil reserves, in the hands of national oil companies are not being efficiently developed. This will probably be cited as a reason for declining world oil production. There is some degree of truth to this, but IMO it's a minor effect. The primary reason for declining production is depletion of the old, large oil fields. However, this theme--inefficient development of reserves--may be ultimately cited as justification for military takeovers of key oil producing regions.
With respect to the new meme of "inefficient state production" coming into focus and aimed to make it's way past the thick furrowed brows of angry gas guzzlers and where that leads... well... I noticed it too. It's not going to be pretty.
If your someone who hasn't noticed the geopolitical and economic impacts of our new reality setting in with governments around the world, you will soon enough.
.
There is something seriously wrong with you. This is not analysis. We are trying to bash each others' heads in. I could be wrong - but I would say Westexas, Jack, Dave, Goose, Myself, Halfin, Grinzo, Conner, Sailorman, and others have formed a United Front. It is hard to tell.
Mark Folsom
So, "The Iranians weren't pumping the oil effeciently, that we KNOW they have under the ground, so we had to take 'em over" will actually resonate with most 'merkans.
All your base are belong to us!
(Sorry, could NOT resist)
Some of the posts on TOD would appall a mass murderer.
Its not the taxes they worry about, those can always be passed on to the consumers, its all about the fear of foreign gov'ts nationalizing oil assets. Every major US and European Oil producer has investments in overseas reserves. Unfortunatly we can all ready see that nationalize is under way. Venzuela, and Russia have already effectively nationalized their reserves. What happens when Canada, Norway, Austrialia and others do the same? What happens when these gov'ts begin to impose export restrictions to curb the amount of oil exported?
>In the case of the major oil companies, they assert that they need as much cash flow as possible to bring on more oil supplies and to get gasoline in the US back below $2 per gallon.
I think they would prefer that consumers reduce consumption to prevent global recognition of PO that ends the fungablity of oil. Even Exxon has made statements that consumers need to cut back on consumption.
I think that there are not too many examples of consultants telling their clients that "the emperor is naked".
http://www.stoen.pl/uploads/media/worldenergyreport-2004.pdf#search=%22%20%22Leo%20P.%20Drollas%22%2 2
If you are unsure perform a search for "Drollas" to find the numbers
LONDON, Jan 20 (Reuters) - OPEC producer Kuwait's oil reserves are only half those officially stated, according to internal Kuwaiti records seen by industry newsletter Petroleum Intelligence Weekly (PIW).
It is well known that all the OPEC oil countries have just about created out of thin air the oil reserves that they felt they should have. On top of this, Shell Oil had to write down its reserves because of overstatement.
We can't depend on reserve statements of any sort; they are deliberately or innocently manipulated for many reasons.
Only figures of the oil we are actually pumping out of the ground can really be trusted to any high degree.
Yes, we are finding new fields all the time, but until they are online and pumping we really can't rely on saying much about them that is more than a SWAG (Scientific Wild A*sed Guess). Mexico recently announced a huge oil find that rapidly shrunk back to zero (to illustrate the point).
"We can't depend on reserve statements of any sort; they are deliberately or innocently manipulated for many reasons."
That is EXACTLY CORRECT and one of the things that one learns only by really geting involved in the study of how little we (and by we, I mean everyone, even those in the idustry) actually know about oil reserves worldwide.
So the recent tactic has been to fall back on "production" rates and numbers.
I assure you, these are even more useless than reserve numbers, and tell us ABSOLUTELY NOTHING.
Yet, Dave Cohen says in his rebuttal,
"In summary, this is why some of us regard production data as a more important indicator of problems in the oil supply than reserves accounting."
and you yourself say, "Only figures of the oil we are actually pumping out of the ground can really be trusted to any high degree."
In the narrowest sense, this would be true if we knew how much was being pumped out of the ground, and what percentage of the possible production daily they were producing. But I would go further and say only the oil that has made it the retail station and you can buy can be trusted! :-)
The production numbers are often bogus. Remember, we have no honest accounting from OPEC about their production. They can ship from their storage tank farms, they move oil exports from season to season, they could even buy fuel from another source and resell, their production numbers have been useless, based on the float depth of tankers coming through the Strait of Hormuz as anything else!
Westexas said,
"Although the world may not have reached peak production yet, it has been in a plateau since the spring of 2004. This is a worrisome trend."
Then we should have started worrying about Saudi Arabian peak two decades ago, because that's how long they have been in plateau, and in fact, as other have mentioned on the thread involving the Khurais field, they cannot be proven to ever have exceeded thier 1981 peak production year since then!
Some have made the contention that repeated months of dropping production will prove beyond a doubt that the world has peaked. If they believe that, they have never looked at ASPO and Colin Campbell's own chart of world production history:
http://home.iprimus.com.au/spmack/Hubbert%20Peak2004Scenario.png
Now look at the "Big Valley" from 1978 through 1982, year on year dropping world production for a half decade!! And then when it began to rebound, Please note the half decade plateau from the late 1980's to the mid 1990's, a period of historically record low crude and gasoline prices! Why didn't plateau then cause rapidly rising prices?
If one used production as any type of leading indicator, there could have been no other sensible conclusion: World oil production reached absolute peak in the late 1970's, (note I am ignoring the prior "little valley" after the "73 crisis, which at the time was no "little crisis at all!) and looking backward at world oil production, WORLD PEAK MUST HAVE SEEMED ABSOLUTELY PROVEN BY THE MID 1980'S!
Such is the complete and utterly useless nature of using daily oil production as ANY type of statistical indicator of world oil supply, and certainly it tells us NOTHING about the geological situation.
But, such is the nature of things, the URR and world reserve estimates are now being thrown out as garbage.
I hope those who dismiss the need for usable reserve and reserve growth estimates know this basic fact, of extreme importance:
It kicks the principle statistal leg on which Hubbert Linearization is based out from under it, and destroys it as a statistically useful model. If you do not have a starting data point (Qt as Westexas points out) then the guess as to what half of world Qt (half total quantity) is an absolute blind*ss guess. In other words, one can construct a useful HL as a trailing indicator, based on the then known Qt and half Qt, but cannot use it in any was as a leading indicator. Such is the absolutely crucial NEED of the accurate reserve, URR, and reserve growth numbers. THERE IS NO WAY TO OVERSTRESS THE IMPORTANCE OF THIS. (not yelling, but those who support accuracy MUST see this....
Sorry, but we may be getting all too close to the point of having to tell the emperor they are wearing no clothes. This does not mean that we are not in grave danger from a peak or an energy crisis/shortage, but it means that many insiders of the peak aware movement are beginning to (or at least beginning to appear to outsiders to), for whatever reason, distance themselves from the original, fundamental statistical/mathematical methods and models.
Roger Conner known to you as ThatsItImout
Oil CEO,
No, Greyzone is well within the bounds, after all, I have said some contentious things, and I cannot complain if they are contended! :-)
And he may be correct in detecting my disorientation, and his "prove it" challenge will be of benefit in causing me to do my homework and look for more factual backup. TOD has been invaluable in making me a better student and investigator!
What I can do now, as briefly as possible, is state the questions I am asking myself in improving my "education", and see if these ring with you and other students here at TOD.
Lets begin with some basic numbers. Below is a sentence from A REALISTIC VIEW OF LONG-TERM MIDDLE EAST PRODUCTION CAPACITY
A paper presented by A.M. Samsam Bakhtiari at the ASPO Second International Workshop on Oil Depletion
(Rueil, France --- May 26/27, 2003)
Almost at the opening, he states the ASPO position on OPEC reserves:
"The other eleven jointly control oil reserves estimated by Dr. Colin
Campbell at 805 bnb (42% of world total) --- broken down into 758 bnb discovered and 47 bnb yet-to-find."
"According to Dr. Colin Campbell, the Middle East accounts for 805 billion barrels (bnb) of ultimate recoverable reserves (URR) or some 42% of a global URR of 1,900 bnb"
So we see that right out of the box, Campbell does indeed use a starting place, of URR global, 1,900 bnb. This is actually up from earlier numbers given in 2002 when I first came to this subject of 1,100 bnb. For further reference, Bakhtiari states, "As can be noted, Saudi Arabia controls the lion share's of URRs with 300 bnb.
As we know, others, such as the USGS (which, let me admit, I do not find particularly reliable given their history, but must take into account that they incorporate work from the same database as ASPO, being IHS Energy) and others give the URR global at 3000 bnb (IHS Energy gives it over .
First question:
1. Given this kind of spread, does URR matter at all? Let us split the difference....and say 2,450 bnb URR. Would we assume that could move the "world peak" date, and or change the slope post peak?
Second question:
2. Do we assume there has been Reserve growth in history? If so, would that change peak date, and or change slope post peak? IHS Energy have in the past given a reserve growth of some 373 billion barrels.
Third question:
- Does anyone here at TOD accept that there is a very great difference of opinion in the URR global number? If so, does that matter?
- Does anyone here at TOD accept that there is a very great difference in opinion concerning reserve growth rate, and if so, does that matter?
Now, here is my contention, but first, an explanation: I realized after the fact that it is almost certainly a touchy subject, because when I went through what I call my "Peak Oil Favorites box, which contains easily over 150 websites and an assortment of PDF files from folks pro-peak, anti-peak, and all stripes inbetween that it touched on a criticism made by Michael Lynch and others, that the URR and Reserve growth numbers used by Campell and others (Deffeyes and Laherrere in particular) were not reliable. I am sorry to have independently arrived at a problem that had been covered in years past by an avowed enemy of peak oil and TOD, but that was an accident. The only thing I can say is that I have found Lynch's numbers even less reliable, but for me personally, that only led to even graver doubts in anyone's ability to extract any useful predictive numbers from the statistics that are used as starting points, and these are in great contention. We have seen that Leherrere has since modified his numbers greatly, and broadened his definition of peak to include "all liquids", now realizing that even the definition of "peak" much less it's timing is in grave doubt.My contentions:
- The central one still is, and I have only become more and more convinced of this in recent months: We are running entirely in the blind. This is not due to the lack of effort and talent on the part of people researching peak oil, oil production, oil consumption, and other energy related issues, but due to the fact that we have no reliable statistical data to work with. The historical and even the current numbers have been so corrrupted, it would be like trying to reassemple a bursted egg to attempt to reassemble a usable statistical picture from them. This same liability applies to all sides in the debate, and those who predict peak post 2020 or 2030 are just as crippled by this statistical corruption as those who predict peak next week, next year, or last week or last year. THIS ONLY INCREASES THE DANGER TO AMERICA OR THE WORLD, it does not in anyway lessen it.
- Hubbert Linearization, as it is understood by anyone who has read the method, relies on a clear starting point of global URR (Ultimate Recoverable Reserves) We now realize that this does not exist.
(brief personal aside: This was an astounding thing when I first learned it. The only real URR number I had seen when I came to this topic was Campbell's, and I took it as statistic, agreed on by almost everyone. I later learned that the difference between knowledgable accepted sources in and outside the oil industry on the correct URR number could differ by as much as 300%, and no one could really prove their numbers.2. Reserve growth would matter to at least some degree in setting a peak date. The larger the reserve growth, the larger the date would have to be changed. There is no agreement on reserve growth. Some of it has been purely "paper growth" while in other cases, reserve growth could come from technical advances and higher oil prices. These cannot, despite the assertions of some, be dismissed out of hand. The more that is known about initial URR the less Reserve Growth would matter, (i.e., the United States and the British North Sea, where the Hubbert Linearization have had the most success, as expected.
Worldwide, the method has had more difficulty, with peaks variously predicted at 1995 and 2000
http://www.hubbertpeak.com/hubbert/natgeog.htm
2004
http://en.wikipedia.org/wiki/Hubbert_peak
2007
http://en.wikipedia.org/wiki/Image:ASPO_2004.png
And now, with the adjusted ASPO chart, 2010 or a bit later, or post 2020 all liquids, per Laherrere
To repeat, this is no insult to the method, but demonstrates the difficulty of attempting to build any model, including Hubbert Linearization, on faulty or non-existant beginning data. To repeat, this in no way reduces the danger to the U.S. or the World, but ONLY INCREASES OUR DANGER.
- Acceptance of Reserve growth and URR data, being corrupted, could lead to a catastrophic failure with no warning as easily as it could lead to false warnings of catastrophic collapse. There is no way to no in which direction the data is corrupted worldwide.
- Daily production of oil and gas cannot be used as a predictive tool or leading indicator. Production is modified on a daily basis due to economics, politics, geopolitical issues, logistical issues, "production management" by the producers, and maintainence and equipment repair issues. There is nothing that tells us less about geological limits or possible future production than day to day production.
- However, even people who endorse the Hubbert method strongly have in recent debates and remarks distanced themselves from the need for dependable URR numbers and reserve growth numbers. Perhaps this is because they are realizing that none are available. They are making, I feel, a critical mistake however, in using daily production as an indicator of future production in their rebuttals, defenses and debates. To me, this will serve to undermine the credibility of the issue very greatly, even among those who accept the great danger we are in due to lack of usable knowledge. Defenders of HL did not make the error of denoucing URR only a year ago, but instead tried to deal with what I call our "blindness":
This a reply to a "peak oil skeptic" in a peak oil blog:"Cheryl is correct that a Hubbert analysis is highly dependent upon the assumption that is made with respect to Ultimately Recoverable Reserves (URR). It is true that experts such as Colin Campbell predicted in past decades that Peak Oil would occur sometime in the mid to late 1990s. These predictions were predicated on a pessimistic assessment of Ultimately Recoverable Reserves; the early Campbell predictions were based on a figure of about 1.8 to about 2 trillion barrels of oil. Current estimations of URR are converging on a figure of about 2.4 trillion barrels of oil."
http://searchingforthetruth.typepad.com/searching_for_the_truth/2005/05/answering_a_pea.html
Recall that 2.5 was my original "split it up the middle number" and is as close to an acceptable number as I can get, but I have no way to prove it as valid, some indications are that is wildly inflated by "paper reserve growth", while other indications are that it fails to take in real "reserve growth" and ignores fields that have been hard to reach and/or areas that for political reasons have not been properly surveyed. The world URR could in fact be much higher... recall that Campbell predicted peak in 2004 at 23-GB/yr, not Hubbert's original prediction of an all time peak at 13-GB/yr. That's a helll of a spread, and between two people on the same side of the "Peak Oil: fence.
CONCLUSION: We do know a few things, I guess:
a. The URR of the Earth is somewhere between 1,1 bnb and 3 bnb or more of crude oil.
This may or may not mean anything, depending on who you ask.
b. the URR seems to grow, but no one knows how much.
This may or may not mean anything, depending on who you ask.
c. Peak has been variously seen in 1995,1997, 2000, 2005,2010 or post 2020, and all of these dates come from pro-peak advocates, so it in no way denies the existance of "Peak Oil" to point out the various, er, predictions.
d. New fields are being found, but they may or may not be large producers.
e. Old fields are being reworked and/or brought back into production, but they may or may not produce any usable amount of oil.
f. The major oil producing nations may or may not be producing flat out, we don't know.
g. Saudi Arabia, the world's second largest producer (behind Russia) and largest exporter, peaks,somewhere between 1981 or post 2050, depending on historical data, or Aramco, depending on who you ask.
h. Dialy oil production tells you something, or nothing about future oil production, depending on who you ask.
I. A long sustained drop in production will prove peak, even though it did not prove it in the 1980's when production declined for a half decade, but it was not peak.
j. Logistical peak can mimic real peak, but is a different thing.
O.K., I could go on for days, but I am getting tired....
IF THE ABOVE IS NOT A COMPLETE AND TOTAL PICTURE OF RUNNING IN THE ABSOLUTE BLIND, I COULD NOT IMAGINE WHAT WOULD BE.
As I have said before, I no longer talk to friends and associates in terms of "Peak Oil". They don't buy it, and I cannot possibly find the evidence to convince them, because frankly, it does not exist.
But what I can talk them in terms they understand is of a nation running in absolute blindness with no idea how much oil is out there, exactly where it is, how much can be produced, and for how long, and remind them that almost all our oil now comes from suppliers who refuse to allow for third party auditing or outside confirmation of ANYTHING, and have demonstrated in many cases they may not be friends of the U.S., a danger that is far, far, far worse than peak.
Which argument do you think sways more people? You be the judge.
"I did not become truly educated until I realized how very little I know"
There is one thing I have learned from the whole energy debate.
Humility.
Roger Conner known to you as ThatsItImout
How do you explain the oil sands?
One doesn't start with a "clear starting point of global URR (Qt)." We use the HL method to derive Qt, using annual production (P) and cumulative to date (Q).
This is a simplified version of the method that Hubbert used to accurately predict the time frame for the Lower 48 peak.
In addition to the Lower 48, Russia and the North Sea fit the HL model.
Deffeyes predicted that the world crossed the 50% of Qt mark in late 2005, and world crude + condensate production (EIA) is down 1.3% since then.
Using Khebab's HL work, I predicted that production by the biggest net oil exporters would fall faster than overall world production. So far, this prediction has been accurate.
We now have, IMO, reliable reports that the four largest producing fields are all declining. I have great difficulty in seeing any kind of scenario for rising production when the four fields accounting for more than 12% of world crude + condensate production are almost certainly all declining.
Several people, including myself, have repeatedly provided factual, quantitative case histories to support the premise that we are at or near to Peak Oil, and all of the recent production data support this premise.
I am at a little bit of a loss to understand why you persist in these long, very poortly supported, diatribes, in the face of overwhelming empirical and experimental evidence.
Intuitively, the non-transparency of the Saudis (contrasted th the US/UK cases) would seem to pose a methodological problem... no?
IMO, the errors in the production data tend to average out with time.
Your claim is that Qt (URR) can be calculated from past production. You then claim that from this reserve calculation, we can predict the future production.
Yet others here are claiming that reserves (URR) cannot be used to calculate future production.
Either these two quantities (production and reserves) are related in some way, or they are not. It simply boggles the mind that people are claiming that HL plots can be used to calculate reserves, which, in turn, can tell us future production, but then they turn around and claim that we need worry about future production rather than reserve numbers!
No contradiction there.
You are confusing the HL method with other methods of estimaing Qt (URR).
The point is that the HL method uses a mathematical model to derive Qt, based on two knowns--annual production and the cumulative production to date.
Khebab and I demonstrated (my idea--Khebab's hard work) that the HL method was extremely accurate (99% and 95% respectively through 2004) in predicting post-1970 Lower 48 cumulative production and post-1984 Russian cumulative production, using only Lower 48 production data through 1970 and only Russian production data through 1984 to generate the predicted production profiles.
You can read several articles based on Khebab's work by going to the Energy Bulletin and searching under authors for Jeffrey Brown.
I understand where the numbers come from. You simply cannot deny however that the predicted production numbers from an HL plot and total reserve numbers from the same plot are inextricably linked.
Dave (above) argues that reserves and production are not linked, yet hes cites an HL plot (below; which assumes that they are linked) of the US to prove his point that they are not linked? This makes absolutely no sense.
When I get some free time, I will do a pre 1958 US fit. I don't think you're going to see such nice numbers come out of that exercise. If we can only predict the peak using the pre 1970 numbers (peak around 1972), that means HL is only predictive when we are within a few years of the peak.
If true, we are assuming "we are only a few years before the peak" to prove "we are a few years before peak."
Looks good to me.
On the other hand, his Model 3, using data up to the peak, underestimates URR by 15%, and gives a peak that's a couple of years too early. i.e. (guess) it appears that reserve increases pushed the peak back a bit...
So it does appear that the peak can only be "predicted" accurately after the fact... unless you add in a "fudge factor" to account for this effect?
Have I missed some essential point here?
First they have used earlier production numbers for HL plots.
Basically you need a statistically significant sample during the time period that the field is producing at capacity.
It does not have to be all out but it does have to be steady production. The more numbers you have the better the prediction.
My only issuer with HL is that its post peak predictions of production rates are suspect to some extent. It assumes the decline rate mirrors the production rate. I think its correct in the URR but I question the curve profile post peak.
There are a number of external factors that influence the production profile post peak. If the infield drilling program is moving slow then we will see a plateau then a drop.
Once the field is fully drilled i.e no more new production wells then you will declined based on the average well production decline. This is field dependent and technology dependent the concern is almost all of our modern methods result in a production profile at the well level of plateau and collapse.
Now on to URR and production profile the vast majority of the oil claimed in overall URR will be produced from basically stripper wells so I don't consider it all that relevant. The question that needs to be asked is how much of the URR is in fields that are not close to peaking ?
For some reason the powers that be at the oil drum don't seem to want to tackle the fact that the majority of the URR real or paper barrels will not be extracted at a reasonable rate. At some point you have watered out wells and your dealing with total fluids and your rate limited on the amount of water you can cycle.
I mean look at Cantarell its barely post peak and most of the remaining oil will be extracted at a much lower rate and its not clear how much of the remaining oil will ever be extracted. The reason I feel that HL works on the up slope side is simply because of infield drilling the production rate itself grows at a steadily decreasing rate to a constant then peaks.
We have way way to many fields entering the final phase of production. The only part of the HL method I disagree with is the post peak production profile since individual field and well factors predominate at this point. Case in point the current plateau is not predicted by HL in my opinion.
I'd love to see a discussion of why HL has any predictive power for the production profile post peak.
I agree. Fundamentally, the HL method is estimating the area under the curve, which is why estimates of cumulative production are vastly more accurate that estimates of production rates per se, which gets you back to the water in the bottle analogy--the rate at which you pour the water out of the bottle does not affect the volume of water in the bottle.
THANK YOU !!!
I've been trying to say this for some time now.
And I have a new way to picture the problem.
Consider a bucket with holes in the bottom the holes are oil wells. Assume the bucket is full of water mixed with some sort of dust. Over time the dust clogs some holes so you drill more. Clogging of the holes is the depletion effect.
Every thing is rosy until you have drilled all the holes you can mechanically drill then production plummets.
You can perform HL linearization on the above model playing with the rate that wells are drilled vs the clog rate related to the amount of suspended material.
To get it closer assume the suspended material is not evenly distributed initially but you have a space of pure water at the bottom. This is the oil column. The suspended material represents as one factor the water table gas cap etc etc we can lump all of the field production metrics into this one clogging concept.
The math is easy for the most part its just calculus and I think you will see what I'm trying to say. HL is fine till you drill that last hole or the suspended material hits the bottom then ....
For those not math inclined you can do a simple experiment.
Fill a bottles of water with ground charcoal sawdust or coffee. Drill a different number of holes in each bottle and
time the rate they drain. Do the same for bottles without the particles. You could also pressurize the bottles if you wish but gravity is enough to get and idea since a vacuum will form quickly enough you can bleed air in to simulate pressure maintenance.
My point is that the HL method ignores two things one the fact that you can only drill so many holes next the effect of the particles on the flow rate.
Now the use of production data is in reality providing one critical piece of information which is in reality the number and rate that holes are drilled for the field and the average flow rate.
You should be able to get the same results from first principles if you know the well profiles and drilling program for a field. If you aggregate the data correctly.
That's the problem if you treat it like a water bucket then you should get the right numbers.
I feel my above model can be made exact for oil fields by adjusting various parameters.
Particle size dispersion. ( Water/Gas effects)
The clear region ( oil column )
Pressure drop and make up with air bleed ( Field pressure maintenance)
The finally watering out is done simply as a maximum number of holes drilled with clogging its simple but it has the same effect on the production profile.
True but I feel pretty confident now that I can make a prediction about production rates.
Assuming we have 1,000 Gb of oil left.
Assuming 25% of this can be produced at reasonable rates close to what we have today.
That gives 250 million barrels of oil that we will produce close to today's current rate assuming we are at peak.
This gives.
250/84.0 == 3 years.
Backdating to remove 2005 gives us 2 years of high production rates.
So I'm pretty confident that we will experience a major drop in the world wide production at no less then 2 years from now or 2008 at best say 4 years 2010.
So to average I believe we have about 3 years left before we will experience significant drops in world wide production.
The good news is its probably not going to happen tomorrow.
The bad news is we in my opinion only have 2-4 years left of business as usual with slowly decreasing overall production.
The world uses 31 billion barrels per year (85 million per day x 365), so that gives 8 years.
Arithmetic notwithstanding, I wouldn't assume the 25% part is easily accessible to begin with.
Sorry about the math. I actually started wondering later as I looked at some numbers.
In any case the assumption was actually that we can be reasonbly certian that a certian precentage is reasonably accesible. An its possbile to calculate at least a first approximaton to this number. It would be the oil in all the fields that are not close to peaking.
To rewind using your corrections 25% gives 8 years.
So now the question is how many fields are in good shape ?
How many are in decline.
How many are at the peak or probably close.
Botched numbers and all I still think were not in very good shape.
Can you give a reason why you think 25% is high ?
I thought it was reasonable.
I'm intrested.
All in all, if Baktiari's 2020 prediction of 55 million b/d is to come about, it won't be after 8 years of flat 85-90 million b/d production--the decline will come quicker. And if the exporting countries' consumption levels rise with their rising wealth, the net decline to the importing countries will come quicker.
I must admit I mix the two issues together quite often.
Overall production rate dropping from decline. And our reall ability to produce the rest of the oil that is in the ground.
They are closely related. But my point was that of the 1 trillion barrels we have remaining. Only about 25% of that can be produced at the same rate we have today. In other words 25% or less is in fields that are not declining and becoming harder to produce.
Lets look at a particular case.
http://graphoilogy.blogspot.com/2006/07/attempt-to-apply-parabolic-fractal-law.html
Now this page has the linearization for all of SA.
I'm going to take the low value for URR because it is fitting recent production information.
This gives 186Gb total with a Hubbert decline rate of 6.7%
Now lets assume KSA produces 9mbd ( lower then reality )
This gives
9mbd*365 = 3285mbd or 3.2Gb per year.
Of the graph it looks like they have produced about 100Gb
This gives 86Gb left.
25% 86Gb = 21.5 Gb
21.5/3.2 = 6.7 years.
Now this is for all of KSA if my unproven assumption that post peak only 25% of the reserves are recovered at a reasonable rat this gives KSA 6 years of healthy production.
Now assume the higher URR
.25 = 71.25284
71.25/3.2 = 22.26
If you assume 9.5mbpd you get about 3.5Gb year
and a reduction of
71.25/3.5 = 20 years
So its not all that sensitive to the production rate.
Now to tie in Ghawar how much of that KSA URR is in Ghawar
We can go to this page to look at a few fields.
http://www.mnforsustain.org/oil_forecasting_production_using_discovery_laherrere505.htm#Saudi%20Arab ia
Ghawar has 115Gb URR and 55gb have been pumped.
This leaves 60Gb
So to do the fields on the page with remaining URR
Ghawar 60Gb * 0.25 = 15Gb (4mbd)
= 1.46GbY --> 10years1.46At 5mbd we have 15/1.8 -->8 years.
This page does not have production rates for the rest of the fields but there avialable.
But even with this case does Ghawar really have 8-10s year of robust production in its future ?
Using a real field its obvious that even the 25% assumption is probably to high before the field production decline significantly.
So now lets just caclulate using a yearly decline rate of 10% to make life easy and start with 5mpd
5 @.10 = 4.5
4.5 @.10 = 4
4@ .10 = 3.6
3.6@.10 = 3.2
3.2 @.10 = 2.88
2.88 @.10 = 2.6
So we have for yearly production
5*365 = 1.82Gb
4.5 = 1.64GB
4 =
3.6
= 1.34= 1.183.2
2.88
= 1.050.952.6 =
This totals to 9.44Gb lets round to 9.4
So a reasonable estimate from HL gives 15% as the amount of oil that could be reasonably produced as a high end estimate. Since were assuming the reality will be a production crash we can estimate that 10% may give a better number before external factors become important.
This gives
60*.10 = 6Gb/1.46Gb ==> 4 years
For the world we have
1000Gb *.10 = 100Gb /31GbY = 3.22 years
So this says we really only have 3.22 years
The range would be 2-4 years.
Now once production drops significantly post peak its difficult to estimate the real production rates since you would need to consider a number of external factors most negative. As I posted already you would have fields watering out with no way to add water handling equipment since the Oil industry would be maxed out. Not anywhere near the number of rigs operating in the world as the US had post peak. And you won't have the expertise to exploit these depleted wells. Operational problems will be huge. Political problems etc etc. This is my crash scenario or 25% single year drop in the rate of production.
So even though I completely fobbed the numbers originally
now with more reasonable numbers you still end up the the original 2-4 years now we have already gone through 1-2 of these leaving and estimate of 0-2 years left before experiencing serious production problems.
To for once be and optimist I say two years.
If I'm right the world has far less time to deal with the effects of peak oil and the possibility of a cliff.
Unless I've again made mistakes I think the above is pretty important. And this is why I'm not all that interested in the
total URR since we probably for external reasons won't see the oil produced at anywhere near the rate predicted by HL.
I for example can't see the world producing anywhere near
55mbpd by 2020 probably more like 20mbpd if external negative factors are taken into account. We focus on the effects of peak oil on consumer nations and its pretty obvious are economies are going to crash. The effect ouf our economies crashing on the oil producing nation will be profound since we will try to inflate first to prevent the crash followed by massive deflation and demand destruction.
The oil producing nation will see demand basically halt.
I don't think the goverments in the ME can survive the economic disruption.
What matters is how long do we have post-peak before we see significant production drops that result in crisis.
It looks like we are looking at worldwide production over the period of a few years methods
like HL are not correct to use over such a short production period.
So we really need to answer these questions.
1.) How many fields are not near peak ? Whats the production rate. This we can count on.
2.) How many are at or very near peak apply the .10% rule to URR and estimate time before production drops significantly but at a unknown rate.
3.) How many are post peak ? These we can either use real production profile to calculate there contribution or estimate.
The only production we can be assured of is from fields well away from peaking. The rest we discount using something similar to what I propose. If someone has the numbers and wants to do this analysis then we can probably prove or disprove my theory of serious problems within a few years of the world oil peaking.
Of course the closer we are to the peak, the more accurate the HL plot is going to be--that is why I have been so aggressive with my net export predictions. To me, it seemed to be near certainty that we would see declining net oil exports this year. In regard to the HL method, we consistently see a very noisy data set and then a steady linear progression. Every large producing region that I have seen plotted shows this pattern.
The primary reason to study other regions is to develop a model for the world. The world has been evidencing a steady linear progression for a couple of decades. The world (at about 50% of Qt) is now where the Lower 48 was at in 1970, and you will recall that the post-1970 cumulative Lower 48 production was 99% of what the HL model predicted.
Again, I think that you are confusing other reserve estimates with the HL method.
Confusion reigns. I did not say reserves and production are not linked. What I said was the production declines have continued despite reserves growth. That is the point.
The distinction I just made suffices to explain Stuart's linearization I posted later. Obviously, such a method explicitly links reserves and production -- by estimating the total URR (Qt) from historical production data. The method also defines an explicit decline rate (k).
Instead of spouting off, why don't you ask questions if you don't understand things. Unfortunately, Stuart is not here to explain it to you.
HL explained here!!!111lololol
Westexas,
You used the trump cards, that being in particular the Lower 48 call by Hubbert, and the North Sea (from what I have seen, I think the jury is still out on Russia)
I must admit to being a bit wounded by the word "diatribe" to describe what I wrote, as I was certainly not intending it that way (a diatribe I usually took to mean something of an attack and with hard edged rhetoric...is it your view that it really came across that way? If it was most folks, I wouldn't care too much about their opinion, but I have learned a great deal about the true HL type geological peak from your writings, and have found your work informative and informed (at least as much so as world conditions will allow) so take your views with a bit more weight that some peoples....
On the issue of "long", that charge is true, I have a tendency to work out details in writing, and often try to cover a bit too much ground in one post....but that I won't apologize for, I am fed up with a "sound bite" world, where people do not think anything through and use the excuse of "brevity" to cover a multitude of sins!
On the issues under discussion, what number do you see as valid on global URR?
You mention "Deffeyes predicted that the world crossed the 50% of Qt mark in late 2005, and world crude + condensate production (EIA) is down 1.3% since then."
I am familiar with Deffeyes work and the URR number he works from, and frankly, I think it is just too low (I am going by quotes from him on his websites and in writing,so I am not sure he still uses the same number or has since modified them)., so I think the belief that we crossed 50% Qt worldwide based on his numbers is suspect. That is not to say that it is not possible, but it is suspect to me, and I admit that I am not an expert, but I have to play it by some beginning point.
Your sentence "world crude + condensate production (EIA) is down 1.3% since then."
Now Westexas, this is the absolute core of my problem: I am asking you straight up, do you believe that the drop by 1.3% tells us anything about the world oil supply?
Because, I was burned very badly by this type of logic in the late 1970's-early 1980's, and can tell you that it can lead to really being made an azz of by accepting daily, weekly, or even yearly numbers or production drops as giving any information about the world oil supply. I have used the example many times before...in the late 1970's through the mid 1980's, you would have gotten drops in production year on year that would have made that 1.3 percent look paltry!
Folks who were made azzes of in that period now deny that they ever really believed the oil supply was in trouble...they knew all along it was caused by the Iran-Iraq war, the "tanker wars in the Gulf, shut in production by Iran....
but wait......why aren't they noticing that now? Two of the three biggest OPEC oil producers, Iran and Iraq, second and third behind Saudi Arabia....would we consider them possibly suffering under any "geopolitical" barriers to production? How about Nigeria? Algeria? Even Norway has had labor problems!
I frankly just do not understand how people could so suddenly decide to toss URR numbers aside, and jump over to production numbers as a guide, I think it is a terrible indicator, and a terrible mistake to assume otherwise. If you used production numbers as an indicator, and assumed the pattern we have seen over the last five years would go forward, this means we see production fly through the roof, I mean look at any production chart of the last five or ten years!
I don't believe the next five years will see the kind of production growth we have seen over the last five, but I also don't believe a production decline of a few months proves that as the future pattern either.
"Several people, including myself, have repeatedly provided factual, quantitative case histories to support the premise that we are at or near to Peak Oil, and all of the recent production data support this premise."
Again, the production data is surely not the principle evidence we have been using (?) Everything under the sun can move that, from logistics, politics, geopolitics, wars, equipment issues, price, investment, production "management" weather events....on and on, and these have nothing to do with the oil remaining in the ground or under the sea.
"the premise that we are at or near to Peak Oil"...I have never refuted that, in fact, we may already be past it. But it would be helpful if we had a statistical model valid to help us know it. In the 1970's, many people made terrible planning choices based on the belief that the energy/economic system was not going to get any better. In 1982, on one bright summer day, the stock market took off, and world oil prices crashed through the floor....how could so many have missed it? I knew NO ONE who believed in the late 1970's that fuel prices would COLLAPSE for two decades, it was against all common sense! I am trying to figure out how to play this one a little better, I don't want to get burned twice....miscalling it can make you as poor as peak oil ever could....
I am just trying to find out where the statistical base making these predictions valid and useful is coming from...if that is called a diatribe, so be it...., but I can say, and with some regret, that I am beginning to worry about something else, and that is the way any doubt expressed about the absolute infallability of the dogma is seen as a diatribe or a rant, is questioning the "stats", even when the priesthood abondons or modifies them, considered taboo?...:-(
Roger Conner known to you as ThatsItImout
Note that Deffyes apparently uses crude + condensate, and he uses a Qt of 2,000 Gb, with about 1,000 Gb consumed to date. If you include total liquids, you do of course get a higher Qt (and higher consumption to date).
To answer your question, yes I do believe that the 1.3% number tells us a lot, especially given the 15% to 30% increase in oil prices since December, and the reliable reports of the big fields declining. However, can the initial decline be quite subtle, and noisy? Yes. Texas, which peaked in 1972, didn't fall below its 1971 level until 1976.
As best that I can tell, you are making two principal arguments: (1) you have been burned before regarding Peak Oil scenarios and (2) a lot of production if offline for one reason or the other.
In regard to #1, I am not aware of anyone using the HL method and recent production data who was predicting a peak any sooner than the 2004 to 2008 time frame.
In regard to #2, there is always a lot of production offline for one reason or the other. But also consider the vast volumes of oil we are using--in one year about 26 Gb of crude + condensate, more than twice the recoverable reserves in the largest oil field in North America, Prudhoe Bay.
This is key: based on Deffeyes' estimate, at current rates of consumption we will use 10% of our remaining conventional crude + condensate reserves in the next four (4) years--that would be 30% by 2017.
Westexas,
Sorry for the gap, making the daily bread and all that...:-)
"Deffyes apparently uses crude + condensate, and he uses a Qt of 2,000 Gb, with about 1,000 Gb consumed to date"
Yep, that's about the number I have heard him use....does that seem accurate? Is there any accounting given for "reserve growth" and new discovery? I have been going with a number in my own thing of 2,500Gb before any reserve growth/new discovery, which would put the number on out to 3.000Gb, but I confess, that's just an "average of the consensus" and not in anyway provable, but again, someon has to start with something.
I admit that some of the recent numbers I have seen put forth by those predicting immediate catastrophe have seemed astoundingly low. This was the reason for a post I did recently that asked, what happened to the three decades of "promising growth areas" that have been given out in the press and by the oil industry? Sure, some would be dud finds, but every single one of them? (offshore Indian ocean, North Africa, Persian Gulf, Australia, South America, the onshore areas in Northen Canada, Siberia, Polar regions, and are we now assuming that every single region of onshore Africa and the Middle East are absolutely deviod of any possible oil? This bothered me then and bothers me now...it just doesn't follow anyting like normal logic or history.
New finds, I accept will certainly be smaller, and even much rarer, but there must surely be some coming.....am I completely off base on assuming this?
If the URR stat turns out to be a third higher than Deffeyes estimate, that of course would change "peak date" considerably.
you say,
"I do believe that the 1.3% number tells us a lot"
While I agree with your assumptions about oh, 99.5% of the time, on this one we may have to just agree peacably. :-)
Given the events of the recent past, I am astounded that it is not downside 4% or 5%! I think production moves almost daily for a huge variety of reasons, only one of which is geology.
And to clarify the 1970's-80's reference, of course I am not for a second saying that HL misled anyone, as you point out, it was not known outside a handful of geologists at that time! What did however mislead many people badly was using production numbers and price as an indicator of the worldwide suply situation.
Allow me to quote from a book, a multi million bestseller, written in 1980:
"Through the past half century, fully two thirds of the entire worlds energy supply has come from oil and gas. Most observers today, from the most fanatic conservationists to the deposed Shah of Iran, from solar freaks and Saud sheikhs to the botton-down, brief case-carrying experts of many governments agree that this dependency on fossil fuel cannot continue indefinitely, no mater how many new oil fields are discuovered.
Statistics vary. Disputes rage over how long the world has before the ultimate crunch. The forecasting complexities are enormous and many past predictions now look silly. Yet one thing is clear: no one is pumping gas and oil back into the earth to replenish the supply."
"Whether the end comes in a some climactic gurgle or, more likely, in a succession of dizzyingly destabilizing shortages, temporary gluts, and deeper shortages, the oil epoch is ending. Iranians know, the Kuwaiti's and Nigerians and Venezuelans know it. Saudi Arabians know it-which is why they are racing to build an economy based on something other than oil revenues. Petroleum companies know it-which is why they are scrambling to diversify out of oil. (One president of a petroleum company told me at a dinner in Tokyo nto long ago that, in his opinion, the oil giants would become industrial dinosaurs as the railroads have. His time frame for this was breathtakingly short-years, not decades.)"
"However, the debate over physical depletion is almost beside the point. For in todays world it is price, not physical supply, that has the most immediate and significant impact. And here, if anything, the point even more to the same conclusion."
This was written in 1980 by Alvin Toffler, in his best selling book, "The Third Wave." It is to me, now, more fascinating than it was then. EVERYTHING is there, everything we are discussiong now (the rest of the book is only more astounding, come so many years before the books who are now regarded as "prophets", discussion of producing for ones own use, localization, alternative energy, political and social change, diversification, decentralization, on and on. But the cornerstone of Toffler's view as a belief in a coming long term energy depletion issue, note his words, "years, not decades", and his relience on price, "physical depletion is almost beside the point", compared to price.
To connect directly to the URR discussion, we go for a bit more from the book:
"OPEC aside, an historic trun has taken place over the past despite massive new discoveries like those in Mexico, despite skyrocketing prices, the actual amount of confirmed, commerially recoverable reserves of crude oil has shrunk, not grown-reversing a trend that had lasted for decades. Further evidence, if needed that the petroholic era is screeching to a halt."
This is extracted from page 149 of "The Third Wave" by Alvin Toffler, written in 1980. The book continues on from there to examine what is wrong with a dash to coal, coal liquification, nuclear and "fast breeder reactors", the text would be in place and in time on any day of posts on TOD today. The book is 459 pages, and the breakthrough thinking just keeps coming. Go on Amazon and get a used copy, it will be one of the best investments you ever made. So many today are derivative pretenders borrowing from earlier giants without admitting it.
Final extraction:
"None of this means we are going to be thrown back into the middle ages, or that further economic advance is impossible.
But it surly means that we have reached the end of one line of development, and must now start another. It means tht the Second Wave (Toffler's term for the industrial era) energy base is unsustainable."
I read this first when I was 20 years old, bought the book as a new release when it came out. Now as then, it gives me goose bumps and a knot in the stomach. But, it was in error, wasn't it? Remember, it was coming in "years, not decades".
Based on this work, who could have imagined what actually happened in the 1980's and 1990's? The energy price collapse, the complete abandonment of alternative energy, the massive consumption growth of crude oil and gas, the return to the "gilded age" of the 1980's which created an aesthetic more in common with the 1890's than with the future, giant mansions even for the middle class, giant trucks and 12 cylinder cars, diamonds, jewels, polo clubs....I beg you, could the predictions of an asture energy future given in the 1970's and 1980's depicted the future any less correctly, and for 20 years, the bulk of the best earning and investing years of a young American? Could the depiction as given led the youth, if they believed in a real energy problem, to more misguided decisions and missed opportunities?
Toffler was only one of hundreds of very serious thinkers who were writing the same type of scenario. Young technicians were going into solar businesses, wind energy businesses, companies were designing prototypes of gas-electric hybrid cars.....and then, the collapse came. But the collapse was not, as predicted, of America, but instead of the energy price. The world was awash in cheap oil, cheaper as a percent of income than it had been in the 1950's! As Reagan said, it truly was "Morning in America". Alternative energy pioneers and investors LOST EVERYTHING, and were left by the wayside.
You really had to be there to understand what a catastrophic blow it was to those who were true believers, who had felt it was a patriotic duty to protect America from the coming crisis, and to be wiped out. Oil and gas drillers, equipment providers, oil service contractors, machine shops WIPED OUT.
The sad part is, Tofler and the others may still be more right than anyone can know. The change must surely be coming. Perhaps, now IS the time. I think Toffler's and Hubbert's and Simmons and other great thinkers asumptions on this issue are at their core, almost irrefutable.
But this is a "precision" age. The timing means everything. We are given a very brief time on Earth. If we are RIGHT, but at the WRONG time, we can suffer a level of poverty that is every bit as bad as Peak Oil would have brought to us anyway.
I am a very, very suspicious and cautious person. I sense a very serious lack of information. And for me, having seen what I have seen, and being the age I am, I am compulsive on this issue: I NEED MORE INFORMATION. Almost no amount will suit me as enough. And to repeat my theme: Running, as I feel we are, almost completely in the blind will never, never, suit my tastes!
Roger Conner known to you as ThatsItImout
Why not emulate Sweden and aim to get off fossil fuels by 2020? Why would this result in poverty? Let's leave oil for materials...
JN2,
I absolutely agree...and think how much further the technology would be advanced if we had stayed the course then...as I look over at the crude prices, I see them dropping back into the $60's range...this morning, the local news here in Central KY, quoting national sources, was predicting the gasoline price at possibly $2.50 or lower by Thanksgiving. Without major "surprises", the projection was $2.30 to 2.50 in the winter months, based on souring inventory and new supply coming online.
If history is any indication, and we do go down into this range, there will be NO interest in alternative energy and conservation.
Surprisingly, the rise in gasoline inventory, and drop in price has occured at the same time consumption has risen, and several large oil producing areas have been out of service (the BP pipeline mess in Alaska, the Iraq war, the Iranian crisis, and depletion in Britain and Mexico).
We simply cannot afford another meltdown in price that would collapse interest in the alternatives and in advanced engineering, as occured in the 1980's. It would take decades for the infrastructure of these fragile industry to be rebuilt, and that would be far too late.
Roger Conner known to you as ThatsItImout
So, Roger, you are telling us that you think it's more reliable to predict future production based on URR 'guesses' than it is to do so with historical, factual (to all intents and purposes) production figures?
Historical production figures are (virtually) undisputed, but, as you so rightly said above, URR figures are anybody's guess.
Why on earth would you make predictions on guesses?
What Dave and HO are saying (as I read it) is that reserve figures are virtually useless unless you can produce oil from those reserves at the rate that the world demands it.
If the Canadians tar sands contain the trillion barrels of oil that is claimed, do you think that really matters if we can't produce it at more than 3mbpd?
If we can't pull the oil out of the ground fast enough, irrespective of how much is down there, then we are all in trouble.
Exactly.
Further more just to keep pushing the subject sorry.
Texas managed to keep production above the 71 levels till 76
It peaked in 72 thus production stated flat for 4 years post peak.
We are in year two of the peak plateau which gives us at a minimum 2 more years of production close to where we are today.
My guess is once you reach the peak you can produce 25% of the remaining URR before production drops significantly.
I feel that the URR of recoverable oil is only about
1 billion barrels the rest will probably never be recovered.
Or that 1 billion only about 25% will be recovered close to todays flow rates the rest will be recovered at decreasing rates as depletion sets in say 8-14% with the potential for a intital drop in recovery rate that could be large say 25% in one year.
This means we have about 250 million too at most 500 million barrels of oil we will produce at a reasonable production rate.
Considering the political aspects and other issues I tend towards the lower number there are just too many factors coming into play to presume its much higher then 250.
The message, world production is probably not going to drop drastically in less then two years from now.
The only unknown that could push this date up is if the giant fields collapse before then after two years the probability of a major collapse in the world oil supplies increases significantly.
Reasons to consider a large cliff or why 25%
1.) Almost all the large fields are old. Initially as they start to seriously drop in production enormous pressure will be placed on all other sources initiating over production world wide almost certainly damaging the fields.
In cases where the producing countries decide not to overproduce a realistic estimation of reserves will probably cause them to significantly lower production to preserve the suddenly finite resource.
2.) Its not unreasonable to expect a lot of smaller fields to decline in the next several years since many were put into production in the late 90's and some in the 80's. We have a lot of fields that are 20-30 years old there is a good chance for a serious swarm effect caused by production collapse in a large number of small fields. I seem to be the only one worried about this but I wish we could either verify or refute this claim.
3.) The condition of the worlds oil infrastructure has recently been found to be in fairly bad shape. As water cuts increase over the next few years the condition of today's equipment plus the need for major work to handle water production and separation on the surface is going to cause a lot of fields that can still produce with high water cuts to become unproduceable since we simply can't get the infrastructure in place to handle the water or from equipment failure cause by the increased water cut. Production will cease in these fields under the assumption that it will be temporary until the water management support can be constructed but in reality it will probably never happen.
This puts ever increasing pressure on fields that are not in decline to be overproduces or move to a production profile designed to extend the life of the field so your in a vicious circle. On top of this consider major shortages in drill rigs people pipe etc etc.
4.) The political repercussions under these conditions cannot be ignored they point to massive instability and the potential for one or more major oil producers to undergo significant internal problems far worse then today. KSA is probably the most vulnerable but Iran would not be all that stable either if their fields collapse. Russia could easily be in the same boat. A lot of people in these countries are not going to be happy if they know the party may soon be over. In the consuming countries we can expect serious attacks on the oil companies with there insane profits and political and military pressure on producing countries to produce more.
Considering the above factors a initial collapse of production totaling 25% is not unreasonable. Assuming a intial drop of only 8% we could trigger any of the above scenarios. Each of these could individually cause production to drop by 10-25% depending on how they unfold so its not unreasonable to consider a overall drop in production of 25%. The mega project list reads like a todo list for US military occupation under the above conditions so I expect little will happen out of projects that are not completed before 2009 at the latest.
Its impossible to determine if stability will return after this so we even get a chance to produce much of the remaining oil.
This type of exchange is exactly why I keep coming back to to TOD! WT, please respond to Roger's last post. I'm sure there are others like me (social sciences background with plenty of motiviation--but little training--to understand these complex issues). Believe me, your efforts are appreciated.
What about the "unknown unknowns"? I wonder what they might be.
In sum, the problem you see with Hubbert linearization, is that it works where there is transparency WRT the technical data (US and UK/Norway for example), and becomes intrinsically unreliable when the data is obfuscated (Saudi, in particular).
I've said it before and I'll say it again. You could take your average congressman, tie him up in a chair in a cell, explain Hubbert's method to him, show him the algebra and science on a blackboard for months, do everything including beating him over the head with a 35 lb copy of Deffeyes, and he will still listen only to those clueless people who will lie to him, because he will never understand Hubbert's method.
Money talks. Throughout history a commodity has been measured against it's value and the scarcer/more in demand the commodity the greater the price. This is an economic law that has been perpetuated over thousands of years.
Who cares if it is called peak oil or oil depletion or demand destruction. All we will know is that all of a sudden (historically speaking) this useful commodity is awfully expensive. Arguing about whether or not there is proof of peak oil or not is a moot pioint as it is the symptomes that will be felt. Call it whatever you like.
Marco.
Economists 7 years ago: "Oil will be $5/barrel for a veerry long time." Riiight....
Leaving aside the actual debate, your response displays great maturity and does much to enhance the value of the discussion in this forum. Everyday I learn something from TOD. The obstacles you place in front of any tendancy to settle into orthodoxy is partly responsible for this wonderful experience of learning. So, work away my man.
That said, in my humble opinion, Westexas presents to date the most logical argument.
"Hubbert Linearization, as it is understood by anyone who has read the method, relies on a clear starting point of global URR (Ultimate Recoverable Reserves) We now realize that this does not exist."
In reality the exact reverse is true. The Hubbert method helps us compute URR. Total URR can only be the sum of the individual field URRs. If new fields are discovered then we have additional URR. HL does not rely on "reserve growth" at all, and in fact accurately predicts future production and URR even when the industry says otherwise. Look at Dr. Drollas comments about the reserve growth of the US, yet the HL method would have told him this before it even happened had he applied it in 1970 at the peak of US production.
This is the true value of the HL method, Roger. It cuts past the bullcrap claims of URR growth and accurately tells us what that URR will be, within reason. So far no field that I am aware of has shown more reserves than the HL method predicts but plenty of fields have shown more reserves than experts thought. Yet on those same fields the HL method would have told the experts the truth years ago rather than waiting til now to see that growth.
I feel the overall reserve growth confusion stem from a reluctance of petroleum engineers and analysts to accurately predict what a future field will contain. As some of this comes about from strict SEC regulations to prevent speculation, still you would think that we can quickly calibrate the non-speculative estimates to come up with the realistic estimates.
Most of the reserve growth occurs in the first 5 years of initial extraction according to the Attanasi data:
http://mobjectivist.blogspot.com/2006/01/reserve-growth-overrated.html
I have studied this reserve growth phenomena quite a bit and have had long discussions with the geologist ReserveGrowthRulz over at the peakoil.com message board, and do find it a fascinating topic.
http://mobjectivist.blogspot.com/2006/05/reserve-growth-recap.html
One of the more interesting graphs that I came up with is this one for the USA:
What is very plain to see is that after a while, even though reserve growth continues to increase, it never overtakes the depletion rate, which remains the important point.
Roger, I offer the following essay as a respectful refutation of this quote of yours:
------------------------------------------
Now look at the "Big Valley" from 1978 through 1982, year on year dropping world production for a half decade!! And then when it began to rebound, Please note the half decade plateau from the late 1980's to the mid 1990's, a period of historically record low crude and gasoline prices! Why didn't plateau then cause rapidly rising prices?
--------------------------------
The "Big Valley" was caused by declining US production plus the precipitious fall of ME production from the Iranian Revolution and the Iran-Iraq War. This can be clearly seen from the ASPO graph included in your post. US production decline was geologically-driven, but the ME production decline was politically-driven, not from geology.
It is important to remember history when analyzing past production. Everybody knew back then that Iran-Iraq crude was purposely shut-in; that crude had not reached the peak of production. "The half decade plateau from the late 1980's to the mid 1990's" was due to the continuing Iran-Iraq War, then the Iraq-Kuwait Gulf War 1 and sanctions, the collapse of Russian production, but was held flat by KSA and the North Sea production, among other areas.
The reason prices did not skyrocket during this 'plateau' period was because computerization and just-in-time inventory methods allowed tremendous efficiency gains in leveraging energy plus the reduced demand from stagnating economies.
Today, or within the next few years, the 'Law of Diminishing Returns' will make it much more difficult to increase global energy efficiency. But we can expect increasing political pressure to choke back production from the exporters to extend reserves [Kuwait, for example], or conflicts like Gulf War II or Nigeria to shut-in additional production-- which tends to plateau production until true geologic depletion overwhelms these measures.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
What would we do without you? You have certainly made me put my thinking hat on ... yet again. Actually, I have always thought that the peak oil community's pooh-poohing of the relatively unchanging global R/P ratio has always been its Achilles heel.
In fact you almost understated your case by linking with an old ASPO graph (dated 2004, I think) which peaks in 2008.
The latest version of the Ballydehob gospel (ASPO Newsletter #67) shifts the peak to the right -- now its estimated to be 2010.
Linearization plot of EIA US Field production of crude, together with linear fit for the data from 1958 to 2005. Green data is used for line fitting, plum data is not.
I didn't want to argue the reserves question because I regarded it as irrelevant to my point. However, one could argue about the limitless growth of US oil reserves implied by CGES. Interestingly, the decline rate k = 5.7% in this graph mirroring the 2002 to end 2004 period that I discussed. I was happy to be able to use the US example since we have good data for that.
While this the HL techniques seems to provide a reasonable model after the fact, it's difficult to argue its predictive value when you're heading into the peak.
In this case HL looks great for the US, but your graph uses over 30 years of post-peak data. On this basis, one cannot reasonably conclude that the method can, in advance, predict the peak.
Hubbert did not have enough data to make an accuarate prediction for the world, but he estimated that it would be no later than 2006.
You have addressed the accuracy in two specific circumstances, and have successfully established that
- Pre 1970 US data is highly predictive of US production since that time.
- Pre 1984 Russian data is highly predictive of Russian production since that time.
I however have seen no attempt to address the accuracy of the HL method more generally.Further, with regard to Russian production, last I recall you were predicting impending collapse, yet Russian production is up 2-3% over the previous year. This of course does not proves your prediction wrong (could be a blip), but does not support your prediction.
As of 2005, Russia was basically at about 100% of what the HL model predicted for cumulative production. Russian production is up year over year, but the last EIA report showed it to be down since December.
The HL method accurately predicted the post-1970 and post-1984 cumulative production for the Lower 48 and Russia. These are not just two regions. I am not aware of any single country, including Saudi Arabia,that has produced more oil.
The North Sea production profile, much to the continuing surprise of the oil and gas industry, has precisely fit the HL model.
As predicted by the HL method, Saudi Arabia, the top exporters and the world are showing lower production since December. How much more evidence do you need?
You have provided three examples of HL working, one of which is questionable (Russia), and have showing that it has predictive power in two examples. Again, it fails to be predictive in many other cases (including pre 1958 US data, which does not accurately predict the US peak and Great Britain, as it misses the whole North Sea development, just to name two). Further, there is no theoretical underpinning as to why HL should be predictive.
So yes, I need a lot more evidence before buying in. Changes from December 2005 to now prove nothing (see early 1980s). Unless you wish to argue that year-over-year increases in Russia prove that HL fails.
"Several readers asked for the uncertainty in my date of December 16, 2005 for the peak of world oil production."
-K. Deffeyes
Some kind of Wiki would be really useful to save the main contributors hours of retyping. And if the counter arguments could be summerized, it would give some of the rest of us some research targets we could try to resolve.
For those who want far more detail on HL click on the Stuart Staniford link in right column and then follow the link to his home page.
Deffeyes, in both of his books, put the peak between 2004 and 2008. In his second book, he said it was most likely to occur in late 2005.
I assume that you will recall that Hubbert, in 1956, predicted that the Lower 48 would peak between 1966 and 1971. The HL method is a simplified version of the techniques that he used.
Russia peaked in 1984 in a broad plateau centered on 50% of Qt (five years of pretty flat production on both sides of 1984). The post-Soviet collapse caused considerable problems, but the post-1994 cumulative production (including the collapse and subsequent rebound in production), through 2004, was 95% of what the HL model predicted. Through 2005, cumulative production was about 100% of what the HL model predicted, and Russian production, according to the EIA, has been falling since December.
I did a HL plot of the North Sea, It shows a perfect linear progression, with a peak at 52% of Qt.
All of the following based on HL:
Deffeyes predicted the most likely world peak was in late 2005. Has production fallen since then? Yes.
In January, in a TOD post I predicted an imminent decline in production by the top exporters. Has production by the top exporters fallen since then? Yes (even as oil prices have been up by 15% to 30% since December).
In May, in an article that Khebab and I worked on, we reinforced Deffeyes' work, and we predicted that Saudi Arabia was on the verge of a decline in production. Has the Saudi oil production been confirmed? Yes.
IMO, the most persuasive evidence of an imminent peak are reported declines in all four of the largest producing fields in the world.
The point that I am making here is that the wildly erratic production after the Soviet Union collapsed fits within the HL parameters--thus my prediction that the cumulative post-peak production is much easier to predict than the average production for a given year.
If you want to argue, argue with me. And read Stuart's posts -- all of them. When you're done and if you still hold these "views" then prepare to get waxed....
What's your take?
On the face of it, the concept of reserve additions is fine. In practice, the numbers are uncertain at best, and fraudulent at worst. Shell has been caught for overbooking reserves. Nearly everyone thinks that older OPEC reserve revisions are spurious--but we can't definitively prove it, even though the numbers look outrageous.
Reserves are shaky numbers. Even if a reserve estimate is accurate, it can be misleading without assessing potential production rate (huge tar sands reserve, but small daily output).
Production is verifiable. Trust, but verify. (And that goes for both reserves and production.)
Reserves are an opinion
Undiscovered resources are a fantasy
-- Geologist Greg Croft
I will add that
Reserves growth occurs
Field production eventually declines
Look at me, debating an ecomomist! Something must grow, after all, even if it's not production flows. Life is way too short for this kind of aggravation...
If the US produced 100/kbd, the R/P ratio would be 58620 years. Good deal! Let's cut way back on consumption, things would be looking good then. Jesus wept.
To draw down a field too fast (making the R/P ratio less than ten) or too slow (making it more) is to fail to optimize extraction. In other words, for geologic and engineering reasons, we have to live with a constraint, which is that when it comes to oil in the ground, we see ten years down the road.
When we go those ten years, we see ten more years down the road, i.e., we can see ten more years of oil extraction. So what changes?
Nothing --- EXCEPT HOW MUCH OIL WE ARE GETTING OUT OF THE GROUND. If it is less and less, we might notice the trend and ponder its implications.
My layman's take on Dr Drollas is that he does the equivalent of saying something like this: the headlights of my car permit me to see 100 yards down the road at night. I've gone 200 yards down the road. Therefore the road must be much more than 200 yards long.
Yes, true, but Dr Drollas, this says nothing about how long the road is.
And when debating economists, never forget the magic can opener:
:-)
Form of... Ice Cubes Osama won't allow!
Form of... NO CHILD LEFT BEHIND!
http://home.iprimus.com.au/spmack/Hubbert%20Peak2004Scenario.png
Let me say it again, Productin can never, nor could it EVER be used as a leading indicator of anything!
Roger, I agree that there is political tricks going on, but no matter how hard TPTB try to create false fossil fuel production amounts, Peakshifting by interference, or creating fanciful URRs--depletion will win out.
A bottle of beer irrefutably reaches half-empty, then fully drained. But there is no denying the sweet nectar that passes my lips.
Thus tracking oil production is the best leading indicator, and my guess is that even if maximum political tricks are employed at this late date: it would only shift the Peak date about a year at most. In short, even a created logistical peak will eventually merge with the geologic decline.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
A good one there, Dave.
Tidbid: Slovenia is producing 11.05 bbd (eleven point zero five blue barrels per day) according to the CIA factbook (reference year 2003). I wonder what their R/P ratio is!
https://www.cia.gov/cia/publications/factbook/geos/si.html
Still, the crux of the matter is that while production is decreasing in the US, it is NOT (yet) decreasing at world level. Yet the global R/P ratio remains (more or less) constant. That's the knock-down argument, I'm afraid.
I think this highlights some of my concerns about URR.
Hubbert linearization is good for finding 50% URR which seems to be historically the point at which field production rates start to decline. The reason for the decline is that about this time production is from older large fields that where discovered earlier and small fields that deplete rapidly.
Note the relationship is a empirical observation. No one to my knowledge has proven why this is the case.
Now lets consider URR. My position is that URR for the world is really not that relevant since the production rates for say 25% of the remaining oil in the world could be significantly lower then what they are today.
The reasoning is that world wide a lot of the oil production has been underpinned from two sources very large fields and small offshore fields that have rapid production drops.
We are entering a time when the worlds production rate could drop dramatically as both the large old fields water out and a potentially large swarm of small fields deplete significantly and suffer sever drops in the rate of production.
The reasoning behind the potential for a surprisingly large number of fields to begin to decline at the same time is simple. Discovery/Production has not been smooth over the years but is clustered near times when oil became expensive.
This eventually leads to a clustering of decline in production rates in the future. This has happened in the past but we have always had plenty of oil to discover so
the effects have been minimal.
See
http://www.hubbertpeak.com/laherrere/disctrnd.htm
In other words I don't feel that the predicted production rates from hubbert curves are correct for the world post peak. In fact its reasonable to consider that we will fact a large inital drop in the rate of production as a significant number of fields develop water production problems within a small time period. Followed by a much lower overall production rate with the time to hit URR measured in centuries.
This leave at least 25% or more of the URR in the field for so long its of little interest to us.
The reason for concern is that the economic effects of a worldwide collapse in oil production are orders of magnitude greater then the case of a reasonably slow decline rate.
Understanding the potential shape of oil production around the peak is critical for determining a course of action.
If there is a reasonable chance for a crash in oil production then there is not time to use market forces in formulating a plan to move off oil even if we wait till its late in the game. Instead a immediate and fairly draconian ration/taxation plan with a lot of government intervention needs to be implemented as soon as possible even if it causes a serious recession world wide.
Next major government incentives and intervention are required to reshape both the economies and society to reduce oil dependence and ensure the remaining oil is used primarily for projects targeted at transitioning away from oil.
Of course if production decline rate is slow say 1-8% then
the market can respond and our political leaders will have the proof they need to institute government mandated changes and we could have decades to transition.
So what is the shape of the peak in world wide oil production can we prove within a reasonable doubt one way or another do we need more information ?
As you note, this does not necessarily predict any single year, and yes, if we pull faster just after the peak then there must necessarily be less remaining to be extracted later, thus a steep decline.
The Hubbert Curve is a tool for estimating URR and consequently what the midpoint actually is. It works remarkably well at that. But if you want to model specific fields, I've found WHT's "shock" model very interesting in that regard. Unfortunately, we can't predict future shocks so I'm not sure how well WHT's method is at predicting total URR which is what will place an upper bound on production rates. Perhaps WHT can do more in that regard, or if he has, perhaps he can respond here and point us towards his blog entries on this topic.
I don't think, memmel, that anyone is suggesting that the production curve has to exactly fit the Hubbert prediction. Russia's did not fit the curve exactly but the oil produced was very close to the total predicted production for that period. So the total produced was very accurate even though the real world production curve did not look much like the ideal curve of the model. What they have done in recent years is "make up" for the slowdown in production in the 1990s. But how much they could make up was still constrained by the URR.
In short, the Hubbert Curve does not guarantee a slow decline so far as I can see since the factors you previously cite certainly come into play. But the Hubbert method predicts URR so if I extract more today, then I will have even less tomorrow to extract.
I agree compeletly. HL is a great tool and the main reason I'm pretty confident we are at the peak. My concern has shifted to addressing the actual production rates post peak. Primarly near the peak date for the world.
I don't think HL is the right method to use as a predictive tool for world production over such a short time period.
Now the problem is the actual world production during this time period will have a very large effect on how we handle peak oil and power down. How we handle the five years post peak will have repercussions for a long time to come.
I've listed a number of factors that could effect the production rates post peak almost all negative. Often people mention the logistic peak well the real issue is logistic effects on world oil production post peak. There generally negative and capable of changing the world oil production rates by large precentages.
I'd like to see some of the people that have done such great work proving peak oil begin to focus on the post peak issues. Peak Oil is behind us now.
CBS: Saddam challenges Bush to debate
Iraqi leader reportedly indicates he won't destroy missiles
Monday, February 24, 2003 Posted: 7:51 PM EST (0051 GMT)
Monday, February 24, 2003 Posted: 7:51 PM EST (0051 GMT)
"The White House said it was not taking Saddam's debate suggestion seriously."
http://www.cnn.com/2003/WORLD/meast/02/24/sprj.irq.saddam.debate/index.html
=================Iran president challenges Bush to debate
Ahmadinejad said no one can prevent Iran from pursuing what he called a peaceful nuclear program.
By ALI AKBAR DAREINI, Associated Press Writer
2 hours, 16 minutes ago
"The White House immediately dismissed as a "diversion."
http://tinyurl.com/zfjvo
==AC
Some editorial notes. I don't have a tenth your knowledge about the details. The letter looks thorough and convincing to me. I appreciate your even tone; it helps to make your case.
There must be a reason for that.
I suspect we hit a nerve very close to home. ;-)
I suspect we hit a nerve very close to home. ;-)
I'd be that nerve is in CGES's clients. And they ran the bell at CGES.
Not that CGES wouldn't read TOD. But bothering to respond at length can only mean one thing.
Let's see how long we can keep this one going. I'm predicting we can zero out the column.
Ahhhh.... it takes two or three days to make a decent waterproof hut with those plants. Hmmm......
A party of at least 4 seems advisable for stalking most ungulates with hand thrown weapons.
Good to know. Good to know.
:-)
Yeah, will you shut the hell up. Pretty soon all the parties of 4 will be pissing themselves on account of you. Ungulate. From fear or laughter really doesn't matter. You rule.
C'mon now.
Wrong, he makes it sound as if reserve estimates are only revised upward. This is a patently false assumption. I think that I may speak for a great number of people here in saying that I believe that many reserve estimates will be revised downward significantly in the coming years. Technology and exploration will not make up the difference when all the major fields in the world begin their simultaneous and inexorable plunge down the backside of the HL curve.
Ricko, I really liked that link you posted the other day. Brief synopsis:
The decline of global oil production seems now irreversible. It is bound to occur over a number of transitions, the first of which I have called T1, which has just begun in 2006. T1 has a very benign gradient of decline, and it will take months before one notices it at all. But T2 will be far steeper...My World Oil Production Capacity model has predicted that over the next 14 years, present global production of 81 million barrels per day will decrease by roughly 32%, down to around 55 million barrels per day by the year 2020.
Anybody with even a passing interest in peak oil will immediately understand the implications of this statement. I happen to concur with Dr. Bakhtiari's assessment, so do many others. The present US oil consumption rate will be curtailed. The longer people live in denial about it, the worse it will be. We may still have time to prepare. If not, the adjustment will certainly be traumatic.
http://www.theaustralian.news.com.au/story/0,20867,20302112-1702,00.html
I guess it is a start and it is positive.
http://www.theaustralian.news.com.au/story/0,20867,20302723-601,00.html
Petrol sales declined by 5% over the last year. Other retail sales are up. Demand destruction seems to be in full swing.
Given that vehicals with fuel efficiencies at least twice as good as Australlia's current fleet are readily available, we may be in for a long and reasonably comfortable plataeu and decline in oil consumption.
I'm feeling optimistic right now.
Don't feel too optimistic. Someone is bound to chime in that it takes 14 years to replace the vehicle fleet. :)
There are massive inefficiencies in the way energy is used in developed countries. These inefficiencies are due to a market economy and a plethora of cheap energy.
As energy gets more expensive, there will be demand destruction. It's happening right now. I know that I drove fewer miles last year then any other in the past decade, even though I moved further away from my work. I'm adding insulation to my house. I'm installing a digital thermostat. I'm investigating new heating technologies.
Look at SUV sales - they're through the floor. Why? People realize $3 gas is here to stay.
The big key is the vast majority of this demand destruction will be through the adoption of more efficient technologies. Price drives changes.
Someone's bound to chime in that it would take about 3 months to put a division into your oh-so-fashionable "open floor plan" so that you can go back to heating only the kitchen (to 60F/15C, the other rooms will be kept above freezing by the heat diffusing from the kitchen)
Etc. etc. etc.
Effects like this are probably what confound the people looking for drops in demand due to increasing vehicle gas mileage. Given these factors, the only way demand can decrease quickly is for everyone to drive less distance at slower speeds. This occurs only by Federal mandate (lower speed limits) or serious price pain at the pump. Seriously high pump prices are required because the actual percentage of our income spent on fuel is really quite small compared to our other expenses. My cable TV bill, for example, is about what I spend on gas per month. So I may complain about the prices but I continue to fill up.
This is still fine, less miles from the gas guzzlers if not yet zero.
Things can change very fast when critical mass is obtained.
As always, good piece. For a refresher on reserves I suggest the readers go back and read this piece from last November.
It is important to understand just what kind of BS is behind the all encompassing category of "reserve additions". I suspect that if we stripped out all of the bogus reserve additions done in the 80's by OPEC members made to justify their production quota's, this claptrap about total additions to global oil reserves matching global production since 1954 would be shown for the red herring that it is.
TheOilDrum.com is obviously taken seriously enough that it warrants a response at all!
That is great progress and a testament to the quality of the writing here at TOD.
Keep up the good work, guys!
I also wonder what a Chief Economist does at an Energy Study Group. EROEI analysis? And if there's a chief there must be `chiefed' economists (grin). What a strange world this is.
It also seems the example of the U.S. proves the peak oil point: although lots of oil has been produced since 1973, production rates have never exceeded 1973 rates and are now about half of peak. So exactly what is the relevance of their point about reserve growth?
http://www.iaee.org/documents/06spr.pdf
is very good on reserves and the confusions which they cause, principally because there are at least two different definitions of reserves: P(50) reserves which are a fairly good estimate of how much oil you can get out of a field; and proved reserves - which are generally the oil which is just about to be brought to market, not the total amount of oil discovered ( = P(50)).
I notice that Drollas talks about proved reserves and which is why his numbers don't seem to drop.
Peter.
Re: I notice that Drollas talks about proved reserves and which is why his numbers don't seem to drop
Right. I am interested in the P50 as well as the proved for the US or the world. The R/P ratio is always around 10 for the US. As reserves are being readied for production, they are booked with the SEC. Meanwhile, proved reserves peaked in the US coincident with the production peak.
Proven Reserves have zero predictive value with respect to future production rates!
Have I got that right?
(one of the Top Ten Key Facts? Bullet point for the three-slide PO powerpoint show?)
It seems that Proven Reserves are implicitly presumed to be a renewable resource by the oil industry and the economists... this is perhaps the fundamental misunderstanding???
http://uk.theoildrum.com/story/2006/5/1/151017/4187
Peter.
Eureka.
Thanks.
Roger has a great point, but we need a calculus of economic recoverability against ultimate reserves. And how is the growth in demand figured in to the whole picture?
Frankly, the mathematics is beyond me. But even an old liberal arts major/landman can see that Roger is right that we need to reconsider some assumptions. The base asumption for ultimate recovery is obscure because so many people benefit from having it as either infinite or about to crash, plus the growth in technology for 3D seismic and modeling techniques should be really affecting the estimates.
Until Historical Production (H.P.)to Date + Proven Reserves (P.R.) are Greater Than the HL forecasted URR and remain there for a sustained period(legitimization) then whats the point in debating the fact that reserves keep increasing. Why wouldn't it be logical to assume that H.P. + P.R. be <= URR. Therefore increasing proven reserves up and until P.R.<= URR-H.P. would again seem logical. I agree reserve additions and deletions should on net continue to support this within a standard deviation or two. Some of this is moot since we may never get to that level of transparency especially in the ME required to totally confirm the debate. Thanks for the discussion and supporting data you guys and TOD in general are the intellectual heartbeat of the PO movement.
Another point made earlier in the discussion is also food for thought as to why Oil companies have a vested interest in denying that peak is at hand. From a self-serving perspective as an investor at or beyond PO I would expect an increasing percentage of the cash flow to be directed towards the stockholders in the form of dividends due to the terminal nature of resource. Whats the point in retaining such a high percentage of the cash to build a slowly dying business? Especially in the case of Exxon who sez they are not interested in diversifying beyond FF. So why continue to hoard the cash? If they don't want to show their investors the $$ then why invest. My guess is you would be better off with Canada's Oil and Gas trust styled vehicles.
What do you think of the Prudhoe Bay Royalty Trust (BPT) ?
I do not know anything about the tax effects one of these trusts has for an individual that owns shares. I assume the dividends are just treated as normal income.
Any knowledge you care to share would be appreciated.
Regards
All of these yield between 7.5%-12.75%. Subject to a 15% Canadian withholding.They pay dividends each month. U.S taxes at a U.S. 15% dividend rate and the Canadian witholding is a direct foreign tax credit on your itemized 1040. (Dollar for dollar reduction on the taxes you owe). Usually a percentage of the dividend qualifies as a return of capital and you aren't taxed on that portion. Each trust unit will also be defined as owning a BOE equivalent.(share of a barrel of oil)per unit of trust.
All these trusts have an RLI of at least 11 years and typically have maintained it via the drill bit or by buying out competitors. RLI =reserve life index, thats an estimate of the reserves held by the trust and is based on the proved producing wells and a percentage of the proved probable (unproducing but "discovered" oil or gas). Dividends are pretty much increased or decreased based on the market performance of the underlying commodity and the stock prices move accordingly. I have been invested in them for several years and am still selectively adding to my positions. Do your DD and see if they work for you. If oil hits $65 or a bit lower as many are predicting you should see some better prices and higher yields. Good Luck and remember this is advice may be worth what you paid for it!
Thank you Canada!
Thank you for your thoughtful response.
Much appreciated.
Regards
So, I recommend two oil e&p's, ard and gpor, and two ng e&p's, gmxr and upl, all of which have reserves valued less than anybody else in north america. However, last winter was much warmer than usual, leading to more ng in storage than usual, so ng e&p's earnings and share prices are depressed. I expect to get back into these two following release of 3q results in mid nov.
Income from royalty trusts is treated as ordinary income, much as interest income from a bank deposit. The primary tax benefit in holding shares in a royalty trust is that you get to claim a depletion allowance. Under some circumstances the depletion allowance can more than offset the royalty income, making that income effectively tax free for that year. The bad news is that when you sell shares in a royalty trust you have to recapture any depletion you claimed as ordinary income.
On the other hand, several of the Canadian trusts are considered corporations for U.S. tax purposes, and the dividend is treated like a corporate dividend (mostly). Each trust will discuss the likely tax treatment by the U.S. on their investor web pages. My favorites holdings of this sort are PWE and COSWF.
FWIW, I agree. The oil sands are springing a lot of leaks these days, between cost overruns and the locals finally getting mad at the smell and all the three-eyed fish in what's left of the Athabaska River. About the only ones who believe in "the promise of the oil sands" any more are the Klein government and the Yanks who want us to produce five times as much of the crap.
We're down to US coal now. I don't think there is another thought that has quite the finality of that one.
Regards
I will explain it to them if they ask or even put a post together which explains it in a simple enough way.
Anyway, I will confess that in my early days on this website, I had some pointless arguments with Stuart about all this. I disagree with him that the peak is likely now because I believe that there will be some significant new capacity in the 2007 to 2009 period but that will be about it. Now as much as Skrebowski thinks, certainly not as much as CERA thinks. That' my current view. Ask me tomorrow.
But I won't leave it that because Stuart is like the Borg.
Resistance Is Futile
I'm always in danger of becoming fully assimilated.
That's my view as well. From where I sit at the moment, 2010 looks like a possibility for the peak. But it's pretty hard to see out much further than that.
"You can't change the rules in the middle of the game"
Haha!
They can and they will! Corporations and politicians (governments) frame the data however it best suits them.
You can put an expensive frame on a big pile of crap and with the right sales pitch the sheeple will line up to buy it. Lipstick on the pig, and all that.
None of this changes the total amount of oil in the ground however.
Peak oil is really about 2 things:
1 - A shortage of transportation fuel in the near term while we transition to alternatives.
2 - The world transitioning from a period of high EROEI to a much lower EROEI.
I will say "Wrong -- just wait!" I'm getting ready now.
On the other hand, Stuart may be right.
Hubbert Linearizations
The Harbingers of Doom
Whoa, we're deep into a discussion now.
As I pointed out above, a lot depends on the price we are willing to pay, and it will probably continue to rise. Oh well, at least I'll get rich on crappy US stripper production and infill drilling in depleted fields because my ambitions are modest. But I shudder for my son. Its a hell of a world we are leaving him.
The main points are that
An illustration of HL as applied to Saudi. In particular, a discussion of the data used to calculate the linearization, and of how this can accurately predict the date of peak production even in the context of voluntary decades-long throttling of production.
Since the Saudis have carved the top off their oil production curve, then logically, the flattened production rate can continue well to the rignt of the point when it would have started dropping on a "natural", more or less bell-shaped production curve.
I can understand that, if HL can accurately predict URR, then working back from that will give an idea of when production will drop (it seems to work with Russia, as discussed above). However, the "4 US scenarios" demonstrate that the linearization is fairly sensitive to the data set chosen (changing URR up to 20% and peak by a couple of years). This is what I'd like to see discussed for Saudi Arabia.
Regarding the data set chosen, the full data set shows the best results in Stuart's view (mine too) but Jeffrey and Khebab have done analyses which show that future production can be predicted with a data set that ends at the peak -- Qt = 50%.
I will see if I can put something together. I am not a mathematician which I regard as a virtue in this situation. If I can understand it, anyone can!
Go to the Energy Bulletin and search under authors for Jeffrey Brown, look for our "Lower 48 and Texas" article. Khebab did HL and production rate versus time graphs for: Lower 48; Texas; the world and Saudi Arabia.
Based on the HL method, Saudi Arabia, in 2005, was at the same point at which Texas peaked in 1972. However, Saudi Arabia is far more dependent on its largest field, Ghawar, than Texas was dependent on its largest field, East Texas.
Still rounding out errors, thoughts and collected information that has kept me trying to learn....:-)
First, correcting some misunderstanding in my own thinking, I refer to the words of Stuart, in a prior post here on TOD...
The nice thing about this method is that you do not need to input an estimate for the URR. Instead, you extrapolate the straight line, and it tells you the URR.
http://www.theoildrum.com/story/2005/9/13/162534/953
Stuart then says:
It doesn't work quite as well for global statistics, since the world as a whole is less mature in oil production than the US. But there does appear to be a generally similar pattern where the data is crazy until about 1983, and then settles down to a fairly linear pattern till today. This is shown on p43 of "Beyond Oil". Deffeyes fits a line that gives a URR of 2 trillion barrels, and derives his famous estimate of Thanksgiving 2005 for the peak of the smoothed curve.
So Stuart Standiford, who's words I give a great deal of authority declares the guy who said URR is an output of HL a winner, me dupe on this point...:-( (blush!)
My lapse seems to have come from (a) too long a time gone by since I really went through the math of HL (b) the still conflicting numbers I keep getting from various sources on estimated URR and (c) what got me into this longish contentious discussion in the first place, the seeming willingness by some to reduce the importance of URR and possible Reserve growth, and replace it with other stats. My view of the central importance of URR being accurate, wherever it comes from, remains unshaken,
So I relooked at some more on the peak method, using the single most successful case of it being used as a long range predictor:
http://graphoilogy.blogspot.com/2006/03/m-king-hubberts-lower-48-prediction.html#ref1
Now, a fascinating essay on Hubbert's method from J.H. Laherrère, written in Feb. 2000, we extract what Laherrere calls "constraints":
-Where exploration follows a natural pattern unimpeded by political events or significant economic factors, as for example when OPEC artificially cut production: Hubbert modelling should not be used for the swing producers (Persian Gulf).
"Hubbert himself did not appreciate these constraints since he worked on the US Lower 48 and the world as a whole, prior to significant OPEC intervention."
http://dieoff.org/page191.htm
This is somewhat repeated here:
"It must be remembered that the Hubbert Curve is a theoretical curve that is only likely to occur in long and stable areas (such as the US-48). Most curves are distorted by wars, recessions, political interference, etc, and are rarely symmetrical. But the most important principle of the Hubbert Curve is not the shape but that fact that when approximately half of the total oil is extracted, production will inevitably decline."
http://wolf.readinglitho.co.uk/mainpages/hubbert.html
It is to be noted that the number of areas distorted by "political interference" and intervention has only gone up in the prior two decades.
We can now include for example, OPEC as mentioned, Nigeria, Venuzuela, Russia, Chad, to a lesser extent Mexico (mainly corruption and investment/technical issues. Thus, if we are taking production as the way to estimate URR, does this have any effect? The statement below is rather ironic:
"The comparisons with the Hubbert Curve are clear until the 1970s when the OPEC-induced oil crisis messed up the slope."
This comes from "Wolf At The Door" a clearly "Peak" accepting group.
Now, here is what I am closer to working with"
http://www.cge.uevora.pt/aspo2005/abscom/Abstract_Lisbon_Schoppers.pdf
I will let folks read the above for themselves, (it is only 3 pages).
It touches on the problem of accuracy of bell shaped curves if the estimation of URR is only 1% or so percent off (if the accuracy is as much as 15% or 20% percent off, and other "uncertainties" are introduced, the accuracy becomes very dubious), and says, to our main point:
"The timing of the conventional oil production peak depends inter alia on the size of the (global) Ultimately Recoverable Reserve."
"Unless the URR is known with unusual accuracy, and all other uncertainties are negligible, peak oil predictins that omit error bars run a very large risk of "crying wolf" even if they're appoximately correct" On the scale of 150 years of oil production, "approximately correct" might mean 20 years. Responsibility to the public demands an explicit analysis of uncertainties. This is a task we set themselves."
So if the number we accept as correct for global URR is 2,000 bnb per Deffeyes, if the number were to be 2,500 bnb, how much would that change things if at all? Or are we now assuming that even though the oil is "out there" that it cannot be extracted at useful flow rates? If not, why not? Political reasons, geopolitical, economic? Or, per a true geological peak, pure geology?
As Westexas points out so well, a true geological peak is a different thing from the "above ground issues", meaning that no amount of politics or money can change them (per his great example of Texas)
The problem is, if you are old enough, and have some white hair on the head (I resemble that remark :-( you can recall the URR being given as variously at 1,100 bnb, 1,800 bnb, 2,000 bnb, 2.500 bnb, 3,000 bnb, and higher....frankly, while URR is an output of HL, it seems to be a bit of a shaky one, since it seems to be based on production to date, a statistic that can be moved all over the place (this does not mean that once the oil is produced, it is not a factual stat, but that the amount of oil produced seems to have, in many places in the world, little to do with the amount of oil that could be produced).
In the bigger picture, this does not change one essential fact: waste and consumption seem to be a far greater problem than lack of capacity to produce. For a dozen or more other reasons beside fear of peak, waste and consumption MUST come down.
Roger Conner known to you as ThatsItImout
In regard to production disruptions, we effectively saw that in Texas, where the RRC increased and decreased Texas production in an effort to keep world oil prices stable.
However, even with the "noisy" Texas production, the Lower 48 peaked at about the 50% of Qt mark (the HL plots I have seen put it from 48% to 52%). The point is that the erratic production did not have any kind of material effect on the peak.
As you pointed out, the world has been showing a rock steady HL pattern since 1983. Looking at crude + condensate, the world is now (at 50% of Qt) where the Lower 48 was in 1970, where Russia was at in 1984 and where the North Sea was in 1999.
The Lower 48 and the North Sea have not had any contraints on produciton and they have both shown steady declines post-peak. Russia is a complex case, but as shown up the thread, its post-1984 production fits within the HL parameters.
So,the post-50% of Qt production in three large producing provices--Lower 48; Russia and North Sea--fits the HL model, and the world is showing a perfect HL pattern.
And the EIA says world oil production is now declining. . .
(One reminder: Deffeyes is apparently using crude + condensate for his Qt of 2,000 Gb.)
Disrupted production never has seemed to be more than a few million barrels per day, even during the 1970s oil embargo where roughly 5% of total production (under 3 mbpd) were taken offline to produce the desired market and political effects.
So the disruptions might give us deviations on the order of a few percent in total production up to the peak, and as we have seen, all we need is production data up to the peak to predict total URR.
Now the shape of the curve post-peak is certainly open to debate. EOR is likely to make it steeper but political choices may make it less steep (such as what Kuwait is considering now). In the end though, we have a finite amount of oil and the HL method makes a strong case for the world being at or very close to peak.
Finally, look at this as a historian would - does a peak of 2006 versus 2010 matter much when the oil age has a probable duration of 200-250 years total (and which has seen 150 of those gone by already)? No matter what, if we are at, near, or just past peak, this is new territory for this civilization. How will it cope and adjust? Or will it even be able to do so?
Have no fear though - waste and consumption will come down. They already are. Unfortunately we're not doing this intelligently so the downslope is going to probably be more painful than it need be for many.
I cannot find much to dispute in your post, as I agree with most points, in particular your contention
"does a peak of 2006 versus 2010 matter much when the oil age has a probable duration of 200-250 years total (and which has seen 150 of those gone by already)? No matter what, if we are at, near, or just past peak, this is new territory for this civilization."
I think you are exactly correct on that one, and I do not concern myself with that short of a time span, as you say it would not matter, and I personally think that indeed we must be getting very late in the day on this....but....what if I am wrong? I MUST be willing to accept that possibiliity.
I posted a post about those in reply to Westexas giving the "historical" reasons for finding this issue so important to get right:
http://www.theoildrum.com/comments/2006/8/29/171650/847/152#152
I will not extract at great lenth from it having given the link above, but what it refers to is those of us (and I can say "us" because I was one of them) who miscalled the 1980's so badly as young people in the 1970's, based on projections made then, projections that seemed so certain to us then.
Refering to now, I said:
But this is a "precision" age. The timing means everything. We are given a very brief time on Earth. If we are RIGHT, but at the WRONG time, we can suffer a level of poverty that is every bit as bad as Peak Oil would have brought to us anyway.
Referring to the 1980's, I said:
Young technicians were going into solar businesses, wind energy businesses, companies were designing prototypes of gas-electric hybrid cars.....and then, the collapse came. But the collapse was not, as predicted, of America, but instead of the energy price. The world was awash in cheap oil, cheaper as a percent of income than it had been in the 1950's! As Reagan said, it truly was "Morning in America". Alternative energy pioneers and investors LOST EVERYTHING, and were left by the wayside.
You really had to be there to understand what a catastrophic blow it was to those who were true believers, who had felt it was a patriotic duty to protect America from the coming crisis, and to be wiped out. Oil and gas drillers, equipment providers, oil service contractors, machine shops WIPED OUT.
Greyzone, you are ABSOLUTELY correct that a difference of a few years means almost nothing in "peak" timing. And in fact, even if we are within 20 or 30 years of peak, from a "historians" view, and from the perspective of the future of the modern age and our nation, even that would be a very short time (those who say, "don't worry, peak won't be until 2030", need to look at their 6 year old children, grandchildren and nieces and nephews, and recall that they will only be getting to 30 years old then, in the formative years of their career and life, and still 35 years from retirement!!
But if the differences, the "error bars" as one of the statistical analysts calls them, is plus or minus X percent is 20 or 30 years, in our own PERSONAL life planning this is a fantastic amount of time! This is, for us middle aged folks, probably the rest of our working life, valuable investment years for planning our retirement, and years that if we miscall the future (as "we", and again, I am part of that "we" miscalled it in the 1980's) would be about as catastrophic to our lifestyle as peak itself would be.
For us, that special class who bought into the energy/economic scarcity and crisis in the 1970's, and so were completely wrong in our choices in the 1980's and even 90's (after all, it was coming,we were just a couple of years ahead, it was just a small measurement error...! :-(, we simply cannot afford to be wrong twice, as we are already behind.
There is one more important issue: emotional and mental health.
First to demonstrate that this is an issue starting to be looked at even by professional counselors, and not a "fringe issue" that I have created out of thin air on my own:
http://www.peakoilblues.com/
There are people, in particular young people, who are being deeply affected by their exposure to the "peak oil" issue, and in particular to the "doom" and catastrophist aspect of the issue as portrayed by many (in fact seemingly a rapidly growing wing of the peak issue is of the Armageddon branch, and depict horrific outcomes VERY SOON to occur).
This is creating real mental health issues, involving depression, thoughts of divorce from spouses who "do not understand the situation we face", and even some "crys for help" and thoughts that seem suicidal in implication.
These people are taking the absolute certainty of almost immediate peak very seriously, and accepting almost complete immediate collapse of culture as the almost certain outcome). Who knows, perhaps they should, but not at the cost of destroying thier emotional and mental stability now. It points up one more thing however:
The onus is on the "immediate peak" believers, writers and speakers to be righ, not only in fact, but in timing. Yes, a few years here or there would be meaningless. But if the error is in decades, while it would still require attention now, and would historically be a small amount of time as nation to prepare, it should be pointed out that that level of error is fully possible (as it was in the 1970's, as the level of energy `scarcity" depicted as an assured fact then, and very soon, has not come to pass 30 years later), for the benefit of the individual, so that they do not make terrible and rash errors in life, investment, and family planning.
I personally will be writing more on this topic, as I think these are some things that MUST be confronted if we are to walk and talk with a clean conscious.
People here know my view already, although surprising it seems to greatly anger many:
Accept that we are essentially running in an even more dangerous situation than "immediate peak": that being complete blindness on energy issues, that the statistics have been corrupted to the point of uselessness, that there are factors affecting price, supply, and potential interruption of energy supply that are so complcated and interrelated that any attempt at dependable prediction is a waste of time and useless.
Given our blindness (Matt Simmons once called it "driving down a dark road at full speed with no lights, and no gas gauge", a perfect allegory by him) the danger is locking in on any prediction as valid.
What this means is that we should do DEEP contigency planning for any possibility. Be as ready for oil prices to crash, and the world to be in a glut of oil as for peak oil and scarcity, as either is possible. Be ready for an economic boom as well as collapse. FLEXIBILITY, the mental idea of "surfing" extremely fast changing conditions is the only path forward. Be ready to move in any direction FAST, and do not lock in on any scenario, but do NOT dismiss any extreme or scenario out of hand. The tools: Diversity, decentralization, strategic reserve planning and contracts, acceptance of non fossil fuel alternatives as well as other varieties of fossil fuel (CNG, propane, Diesel, etc., and MOST OF ALL conservation. These are the way people must plan to be ready for sudden changes. Be ready to change fuel, change energy supply QUICKLY. The danger could be having "no energy", but it could also be not being able to use the energy around you, due to "mono-sourcing technology and infrastucture MULTI SOURCE!
Newbies, do not lose your emotional and mental well being by locking in on unproven scanarios! This will leave you defenseless!
Some argue that saying we are running in the blind tells us nothing and is a worthless discussion. I think the opposite, it gives a path forward, and tells us exactly how we, individually, and as nieghborhoods, cities, states, and nations need to act, and FAST.
It allows us to act, knowing that we are not locked into losing everything by accepting the wrong scenario. We may give up some effort and resources by being ready for scenarios that do not occur, but that is nothing more than insurance costs, we all have to carry those!
Again, I owe you guys greatly for an informative and fun discussion, it has allowed me to 're-develop and re-study" many of my own ideas, I have learned much, but still need to know more! Thanks again! :-)
Roger Conner known to you as ThatsItImout
- in a downmarket hall in Sydney Richard Heinberg tells a large but baffled audience his views on transferable energy quotas
- in a swank hotel nearby petroleum exporters (APPEA?) lambast West Australia premier (governor) Alan Carpenter over his idea of reserving 20% of NG for users within the state. A Federal Minister and a Mr Economides say that major LNG buyers have been scared off, it's an affront to free markets etc etc.
Guess the exporters think the UK was right to sell off most of the North Sea gas so quickly. I think Heinberg should switch to the more orthodox CO2 cap-and-trade bandwagon which is gaining momentum.A few short excerpts from the Bloomberg story on the investment communities new fascination with peak. Interesting stuff, with all the big names mention, the "doom" issue talked about, and a new and a thrilling number on URR....Exxon Mobil blows past what I had been calling the highest number I had seen reported of 3,000 bnb, claiming 4 trillion or 4,000 bnb left!! An astonishing number that, and would put peak, ohh, sometime after the sun burned out, and humans would be on the Starship Enterprise a couple of galaxies away, so who would care! :-)
Kidding aside, I am assuming that URR number of Exxon's includes unconventional, such as tar sand, extra heavy oil, and shale oil....but man, what would the carbon release look like if we hit gor all of that...and if your going to count those, why not count coal straight up, which would be as easy to liquify as shale or tar will be to extract?
Anyway, read on:
http://www.bloomberg.com/apps/news?pid=20601109&sid=arur.i7moHMs&refer=news
"Exxon Mobil, which has reaped record profits as the price of oil has surged, has taken out ads dismissing peak oil in U.S. newspapers such as the New York Times."
"The Irving, Texas-based oil giant says the peaksters are being alarmist. In all, the world probably has 4 trillion barrels of oil left, four times the amount we have used so far, the ad says."
Big Question Mark
"No one knows for sure how much oil the world has. That's a big question mark because the peaksters say production will max out once half of the oil has been pumped. So far, we've extracted about 1 trillion barrels in all. In 2000, the U.S. Geological Survey estimated global resources at 3 trillion barrels, enough to push peak production out to 2037, according to the EIA. Campbell puts the total lower, at 2.5 trillion barrels."
" In its 2005 Energy Outlook, Exxon Mobil says the combined production of non-OPEC countries will peak sometime from 2010 to 2020. OPEC will be able to fill the gap, the report says. OPEC produced about 30 million barrels a day in 2005; by 2030, OPEC would have to churn out 47 million barrels a day -- almost 57 percent more than it did last year -- to satisfy the world's needs, the report says."
Political leaders, business executives and investors should assume OPEC won't be able to satisfy future demand, Rodgers says. ``From an energy-security point of view, if you believe in a non- OPEC peak and OPEC is not being transparent, we have to assume they don't have it,''
"OPEC is the big unknown,'' he says."
"OPEC countries will invest a combined $100 billion in the five years through 2010 so they can increase output, OPEC spokesman Omar Ibrahim says. ``We are set to meet the extra call on OPEC to 2030,'' Ibrahim says.
Stephen Andrews, a Denver-based energy consultant who founded ASPO-USA in June 2005, says the alarmists have hurt the peak-oil movement.
"Jim Kunstler, a writer-activist who lives in Saratoga Springs, New York, says peak oil will ultimately destroy suburbia and plunge the U.S. into a violent dark age of feudalism." ``The question is, Can we run our shit the way we are running our shit?'' Kunstler, 57
Matt Savinar, warns, ``Civilization as we know it is coming to an end soon.''
dieoff.com, says wars over oil and other natural resources will eventually erupt and millions of people will be wiped out.
``The peak-oil tent has different voices -- some shrill, some more sober -- reaching different conclusions from the same facts,'' Andrews, 59, says.
http://www.bloomberg.com/apps/news?pid=20601109&sid=arur.i7moHMs&refer=news
Roger Conner known to you as ThatsItImout
oil production numbers by year:
link: http://www.eia.doe.gov/emeu/ipsr/t44.xls
- 11192 (barrels per day)
- 8249
From the data posted in the link it appears that in 1985 US oil production entered its final decline. If you actually graph the production from 1985 - 2005 the decline seems to be somewhat gradual. It is neither slowing nor accelerating during this 20 year time period. So it is not unreasonable to assume that the curve might continue in this fashion.We have a decline to 0.737 (=8249/11192) of the original amount over 20 years. Solving r^20=0.737 we get r = 0.985 or an average decline of 1.5% annually. Of course predicting future decline rates is tricky, but assuming a constant rate of decline from here to eternity we get a total recovery of: Sn = (1-r^(n+1)) / (1-r). Letting n approach infinity we get S = 66.7. S would represent the amount still left to be recovered when compared with amount produced in 2005 which was about 3 billion barrels. So, 3 * 66.7 puts us somewhere in the neighborhood of another 200 billion barrels left to recover before the last well goes dry 200+ years from now.