The Oil Drum

This is a guest post by Patrick Déry and Bart Anderson. Patrick Déry is a physicist, energy, agriculture and environment analyst and consultant in Quebec, Canada. Bart Anderson is a former reporter, teacher and technical writer; he currently is co-editor of Energy Bulletin.

Peak oil has made us aware that many of the resources on which civilization depends are limited.

M. King Hubbert, a geophysicist for Shell Oil, found that oil production over time followed a curve that was roughly bell-shaped. He correctly predicted that oil production in the lower 48 states would peak in 1970. Other analysts following Hubbert's methods are predicting a peak in oil production early this century.

The depletion analysis pioneered by Hubbert can be applied to other non-renewable resources. Analysts have looked at peak production for resouces such as natural gas, coal and uranium.

In this paper, Patrick Déry applies Hubbert's methods to a very special non-renewable resource - phosphorus - a nutrient essential for agriculture.

I thought that, with the indulgence of the more technically qualified of the commentators, I might take a little time to explain in my own way, some of the many issues that were debated here at TOD over the past week. So, this post is going to be a little bit of a simplified technical explanation of some of those issues--and I will try to bring in some of the comments explaining the issues that appeared somewhat far down the list in our comment threads as well.

But first there was an interesting piece of data that I hadn’t seriously noted until I saw the article. It relates to the actual size of the reserves that remain in Saudi Arabia, a subject I usually shy away from since production rates are more interesting. However, given the numbers it is worth consideration and debate as to what these particular values mean.

This is a guest post by Miquel Torres.

A recent post by Martin Sevior has invigorated the nuclear energy debate causing over 240 comments with the most diverse opinions. I would like to further pursue this debate, as the question of whether nuclear power can provide a big part of the worlds energy needs is extremely important in the Peak Oil debate, because it is the only alternative energy source beside coal providing the type of electricity production necessary for the current electric grid model: big, base-load capable power plants. If that role is fulfilled, the current electricity production system can continue beyond Peak Oil, and even expand to provide the energy necessary for electrified transport. If it falls short, a new energy model is needed.

We know that some countries (around 56) have seen their production peaked (also called type III depletion). The remaining group consists of 17 countries that have the potential to grow or maintain their current production (the type II group). I propose to apply the HL technique only on the total production from the the type III group and try to assess the future production decline coming from that group. My observations are the following:

• The type III group (~56 countries) seems to have peaked around 1999 at 40 mbpd with an URR around 1.0Tb and a cumulative production of 600 Gb in 2005.
• The decline rate in the group III is currently around 1% per year but will accelerate with time and possibility reach 2% after 2010
• When a high case scenario for the production derived from the Canadian Tar Sands is included, the decline rate will be reduced around 0.5% per year until 2010.
• In order to satisfy a relatively moderate demand growth at 1.5%/year, the supply coming from the type II group should be around 3.5-4.0%/year and reach a production level of 56-59 mbpd in 2010 (from 40 mbpd in 2005).
• The total production from Russia and Saudi Arabia that are leading the type II group, is almost flat since mid-2004 despite record oil prices.

Production from the type II group added to the logistic curve modeling the production coming from the type III group. The dots represents the actual values for the world production of crude oil + NGL.

Cautionary note: In this story, I'm talking strictly about production of Crude Oil plus Condensate and NGPL (CO+NGL in short).

Courtesy of Dave and Matt Simmons I learned that the Center for Global Energy Studies (CGES) has just released a report on Oil's Depletion Rate (pdf file). Since this is the basic concern that underlies a considerable portion of the current debate about Peak Oil, and figures being quoted for depletion vary from 2% to 14%, depending on which field, and which period one is discussing, I looked for some enlightenment in their conclusions.

I learned, to begin with that

Although it seems straightforward, depletion as a concept is not easy to pin down. The very use of the word "depletion" in this context - synonymous as it is with exhaustion - implies that oil resources are being run down and that one day they will dwindle into insignificance. Oil resources may well become insignificant in the years to come, but it is not certain whether this will be due to their physical exhaustion or to the world moving away from oil and towards another source of energy.

Unfortunately, this suggests, as does the tone of much of the article that follows, that being concerned about oil supplies, largely from the point of the reserve available, is a pointless worry. I say unfortunately because this cornucopian view of the world of oil glosses over the changing situation in the world and conceals some of the assumptions that it makes, by hiding them within the overbounding simplification of its argument.

This is the third post on the life of a large oilfield, after first looking at a very idealized outline of how a major field might be developed, in the second post I gave some of the events that happened at Abqaiq, which is one of the great oilfields of Saudi Arabia, and which approximated my model. What I would like to try now is to explain some of the reasons that the reality is quite a bit different from the ideal, and some of the geological factors that make the considerable difference between the two.

To begin, Abqaiq, like most giant fields, has been around for a long time, and when it was first developed, by a relatively small group during the Second World War, there were many other things going on that limited development so that it took 4 years to go from drilling the first well to the fifth. Technology was not nearly as advanced as it is now, and the wells were spaced considerably further apart than the spacing I placed mine at in the model. Further while I had estimated the OIP as being some 62 billion barrels, based on porosity, in reality the number was half that. I am grateful that both westexas and plucky underdog had the reasons for this.

With your indulgence I am going to try and explain a little bit more about some of the stages that an oil reservoir might go through, to clarify some of the topics that have arisen in discussing oil production from large oil reservoirs. To do this I am going to build a simple model, to try and illustrate the odd point, concerning production and reservoir collapse. (This might help in understanding some of the debate between Matt Simmons and Jim Jarrell, as reported by Marco. Please bear in mind that this is a very simplified example, to illustrate the points - to those more knowledgeable, I apologize. But please jump in and clarify what I have not made clear or not explained correctly.)

Let me start by assuming that I have a layer of rock that is 300 ft thick, five miles wide and thirty miles long. Let us then assume that this has been folded in the middle, so that it now has trapped oil within all the pores of the rock. And, for the sake of discussion let's assume that it has a porosity of 20%. Now having found this reservoir - which is, let's say some 6,500 ft below the current surface of the ground - back some years ago, the oil moguls of the time decided to drill into it and extract the oil.

This must needs be a short note since old Heading Out is off on his travels again for a few days. But I noted that there was some comment on the imminence or otherwise of CTL plants, and I had mentioned that last week Roger Bezdek had commented that one of the solutions to our coming energy shortage would be that each year would see five 100,000 bd of CTL plants constructed in the United States. Since there is some comment on whether we have any, I draw your attention to a story in the Energybiz insider that comments on the situation.

The company has a project in East Dubuque, Illinois, which it expects to be the first commercial coal-to-liquids plant in the United States by 2010. Even before that, it expects to show the project is doable. A demo plant in Colorado will be producing 10 barrels of coal-based oil a day by the first quarter of 2007, says Ramsbottom.

"The future of coal-to-liquids in the United States is no longer a theoretical, what-if, conversation," says Ramsbottom. "We plan to have a fully commercial, fully operational coal-to-liquids plant up and running by 2010.

Oh, dear it looks as though I have to disagree with an economist again.  But this time it is the magazine rather than an individual. As has been pointed out, and to an extent discussed in recent comments thanks to which I was able to read the initial article, the Economist came out with an article this past week that suggested that the current problems with the supply of oil are not really serious, or long-term.

There are several ways to address the issues of the article (you will have to wait a bit for discussion of the author's book since I only ordered it on Friday), but it appears to me that a primary criticism has to lie in the misunderstanding that the author appears to have about the role of technology and the slow speed with which things happen.  I am not going to argue the point that there is still a lot of oil lying around.  Yes there is, and even when we have depleted a field, we are leaving perhaps 60% or more of the original oil in place.  And yes, given enough money and time we can even get that oil out.

Nor am I going to argue, at present about the longer-term existence of large volumes of oil. Rather, I would argue that the problem that we have is of getting an adequate supply of oil, each year, to meet the demand that there will be for the oil in that year.  Under the current methods of production, and against an increasing level of demand  it is becoming more difficult to produce enough oil to meet that demand.  There are two major reasons for this, neither of which is properly recognized in the Economist article.  

News today to add to the "Business Consequences of Ignoring Depletion" file. AP reports that

Power merchant Calpine Corp. said Tuesday that it has replaced its longtime chief executive as well as its chief financial officer in an abrupt shake up that sent the company's stock price below $1 as investors fretted about a possible bankruptcy.