The Oil Drum

This is the fourth segment on the ASPO Conference and follows a report on the Workshop day, the first morning report, and the rest of Thursday. We pick up on Friday morning, which began with a talk by Peter Tertzakian on the impact of resource constraints. He began by showing the rate at which the electric light was adopted into American homes, noting that essentially 100% was not reached until the 1980’s from inception in 1890. Initially the rate of change was very slow. To make a change there has to be a compelling alternative at a cheaper price, and yet as energy consumption has grown there has been a pattern. First the economy grows, then pressure starts to build up, then there is a breaking point, with the introduction of “a magic bullet”, and the cycle restarts. We have reached a point where the cycle has reached the breaking point – and now we look for the magic bullet. He pointed out that this occurred early in Japan in the 1970’s, and that they made the switch and by adding LNG and nuclear they have been able to stabilize oil consumption.

Oil, however, has many attractive properties, so why should we now change from it? From the 1908 arrival of the model T car growth has led us to congestion, urban growth and commuting times that have increased more than 20%. And change is not necessarily productive, after buying fluorescent lights, he now leaves them on longer.

The problem is one of scale, with few realizing not only the size of the current problem but also that to come. In India Tata Motors are about to introduce a car that will cost a Lakh (100,000 rupees or $2,500) which can be anticipated to become an enormous success with their growing middle class, and concurrently a large fuel demand generator. Within the $65 trillion world GDP the largest growth rates are in the developing countries.

UPDATE, NEW POST UP TOP AS OF 1:20 AM EDT, 8/21

We know that many of the models have Dean going into the Bay of Campeche. But what does that mean for supply and production?

Well, if the current forecast holds we could be talking about 2.5 million barrels per day of supply capacity being shut in for a while, and some of that for an extended amount of time. Can that matter when the US consumes about 21 million barrels per day (and the world consumes 85 mbpd)? Yes.

Especially when there isn't "slack" supply to be brought to market. That is what "peak oil" is about.

The markets aren't reacting yet. Do they know something we don't know? Maybe.

But what do we actually know about Mexico and its supply and infrastructure?

Under the fold (click "there's more" below), I am going to try to bring together some of our information we have gleaned to this point. I also encourage you to deliver news tips, forecasts, insights, and other links in the comment thread below.

UPDATE: PEMEX is shutting down ~140 rigs and moving 13,000+ workers on land. Cantarell + Ku-Maloob-Zaap account for 66% of the total oil production of PEMEX in June 2007. Cantarell alone is 47%.

Folks, thanks for your great efforts in this thread. There's a lot of cool stuff down there! Now, if we just knew where Dean was going...so, continue linking to maps (esp. of Cantarell/Jack/Yucatan, but Texas and LA too), oil maps, NG maps, LNG stations, refinery maps, pipeline maps, shipping lanes, rig maps, news stories, weather, track predictions, strategic resources, and all that other stuff in this comment thread. Then I'll go through and start aggregating those for what looks more and more like it will be a very busy week next week. Ideas or assistance are always welcome. (New post on Dean as of 20:50 EDT 8/19 up top.)

Part II: The Titanic, Oilsville, and Saudi Arabia

In Part I, we examined the evolving Hubbert Linearization (HL) of Texas oil production, and found that the predictive precision of the technique was quite poor. The error range was on the order of 3 decades. However, some have suggested that the trends just need to stabilize, and then we can be more confident in the predictions. Others offered rationalizations for why Texas behaved as it did, and suggested that the HL is still a useful predictive tool provided we somehow filter the data. Still others suggested that it is futile to attempt to linearize non-linear data. In this essay, we will push this issue further. I will examine more cases that cast grave doubts in my mind that the HL can accurately predict anything.

But first, does this debate even matter?

Part I- Texas Myths

Like Cindy Crawford, I have done quite a bit of modeling in my career. However, mine has been in front of a computer. There are various types of models. They can be empirical, such that you curve fit data without having a clear explanation of the underlying mechanisms. Or they can be theoretical, in which the system is modeled according to the governing scientific principles and mathematical equations.

However, one thing is critical to keep in mind. If you are going to use the model for forecasting, the model must be tested. Testing the model is called “validation”, or sometimes “back-casting.” This involves feeding the model real data, and observing how well the predictions match up with the observations. If the predictions match up on a consistent basis, and any large variations are explainable, you have the makings of a predictive model. If you have not validated your model, or if you have attempted to validate it and found that the predictions were inconsistent, the model should be used with caution (if at all). In this essay I have done some back-casts on the Hubbert Linearization (HL) model and attempted to use it to make predictions using historical data.

westexas over at graphoilogy has sent a letter to the editors of the papers in the DFW area arguing for increased awareness.  Very much worth the read (go to the link above...or it is reproduced under the fold).

One of our oil industry insiders has sent us some interesting data on rig rates, well type/depth changes, and more on the oil situation in the GOM, as well as how the industry in Texas and the GOM is staffing its rigs.  Lots of interesting stuff under the fold.

Love him or hate him, I doubt many Peak Oil adherents think that Jim Kunstler is wrong about the unsustainability and gloomy future of America's sprawl culture.

View It And Weep -- Figure 1

It started for me this week when National Public Radio did a series of stories about Phoenix Grows and Grows (audio) which according to the latest US Census Bureau statistics, is now the fifth largest city in America. But we're not talking about suburban sprawl. The hottest new demographic is the growth of Exurbia, the suburbs beyond the suburbs.

Following Yankee's story about carbon dioxide injection, it appears that not everyone understands one of the ways in which carbon dioxide will help enhance oil recovery (EOR). I am therefore going to just list some of the previous posts that include carbon dioxide, which was discussed here, and here, not to mention here and here.

Below the fold, however, I am going to repeat, with a little update, the post where I described what carbon dioxide injection can do to an existing oil well, and that itself followed an earlier post. These were pre-cursors to what later became the weekend techie talks, and these really relate to those, and from now on I will include this post in that listing. Since the topic largely relates to oilwell production, the listing this week will be for those sites. For those new to the site, on most weekends (though not next week) I will post a simplified explanation of one aspect of fossil energy extraction. So far we have been covering coal this year, after covering aspects of oil and gas production last year.

Carbon dioxide injection is a current DOE program for enhancing oil recovery from an older oil reservoir that has already produced the bulk of the primary oil that it will yield. Just recently Glencoe have started injection in central Alberta, and though the OGJ article on this is behind their wall, a short quote:

Glencoe Resources Ltd., private Calgary independent, is using the gas to improve recovery of primarily light oil from multiple formations in several depleted oil fields about 100 miles north-northeast of Calgary.

The company hopes to boost the recovery factor to as high as 40% from 10-20%. All of the formations are deeper than 1,300 m.

Glencoe has long-term agreements to purchase CO2 from two industrial plants. It operates about 50 miles of CO2 pipelines and has begun injecting gas from the MEGlobal Canada Inc. plant at Prentiss. A second CO2 separation facility being built near the NOVA Chemicals Corp. petrochemical plant is to go into service in early 2006.

The original post related to cleaning up after elephants*, and was written during the time when I frequently compared Saudi Arabia to a sandwich shop (sorry but no-one every noticed the pun!)

Jerome a Paris has an excellent summary article on natural Gas, with some impressive, though discouraging, graphs of production.  He cites two sources that are worth following up in their own right.  There is a pdf on California by David Maul, which has, in slide 10, the grim picture of the declining life of annual gas discoveries.

He also cites a paper on Texas production that covers much of the story from that part of the world.  Put together they emphasize how hard folks are having to scramble to keep us afloat in natural gas.  With decline rates of up to 45% the supply is critically dependant on new drilling and with smaller and smaller fields being tapped and lasting shorter periods of time, this is not a game with a foreseeable happy ending. (Thanks for the pointer jkissing)