The Oil Drum

This is the talk I was honored to deliver to ASPO Italy on 3rd May 2008 at their annual conference in Turin. 24 slides below the fold plus narrative of what I said on the day. The narrative boxes are below the slides.

An Italian translation of this post is available here. Thanks to Maurizio Moretto for the translation. Thanks are also due to Jean Laherrere of ASPO France for providing his interpretations of Russian and North African gas supplies.

Questa è la relazione che ho avuto l'onore di presentare ad ASPO Italia, il 3 maggio 2008, in occasione della conferenza annuale tenutasi a Torino. Sono 24 slides integrate dai commenti (i riquadri sottostanti) che ho potuto esporre a voce durante la presentazione.

La versione inglese di questo post è disponibile qui. Un ringraziamento a Maurizio Moretto per la traduzione italiana. Un ringraziamento a Maurizio Moretto per la traduzione italiana. Ringraziamenti sono dovuti anche a Jean Laherrere di ASPO France per aver fornito il suo punto di vista sulle forniture di gas dalla Russia e dal Nordafrica.

For those who didn't see it last night, Tony Jones interviewed Richard Heinberg about peak oil on the ABC's "Lateline" program.

Video - RealPlayer and Windows Media.

TONY JONES: Now to tonight's interview with Richard Heinberg. He's one of the world's leading experts on the phenomenon of peak oil. That's the point at which the world's oil reserves go into decline. The idea is that having reached its peak it's all downhill from there and there's evidence that global rates of oil discovery have been declining since the 1960s, and that new oilfields are becoming more and more inaccessible.

So as demand increases and supply decreases the price of oil goes up and up and up, as we've painfully experienced in recent years. No one really knows when we'll reach peak oil. It may have already happened, it may take another three decades. Why has the price of oil gone up so fast and so high in recent years? How much higher could it go and can anything be done to reverse this relentless process?

Richard Heinberg has written a series of books on the oil crisis including 'The Party's over', 'Power Down' and his latest 'The Oil Depletion Protocol'. I spoke to him a short time ago in Santa Rosa, California.

Richard Heinberg, thanks for joining us.

It isn't hard to see why I am an oil shale skeptic. I outlined my reasons in two essays on oil shale: “Oil Shale Development Imminent” and Oil Shale = Cellulosic Ethanol.

In those essays, I provided some history of oil shale, discussed Shell's unique process, as well as the reasons those "trillions of barrels" remain elusive. But one of Shell's recent moves has raised some eyebrows, as they are in the process of buying up water rights in Colorado to process the shale.

Green River Formation: Trillions of Barrels of Oil?

Analysts Neil McMahon and Ben Dell from Bernstein Research are back with more analysis. When we last heard from them, they were looking for Haradh in all the wrong places and reporting on the widespread dismantling and bulldozing of oil wells in Ghawar, the super giant oil field in Saudi Arabia. As promised, they have returned with a study purporting to show that Ghawar is not rapidly depleting because it is not sinking. Using the the technique of Synthetic Aperature Radar (SAR) Interferometry, which is capable of measuring millimeter vertical movements via satellite, they found not subsidence but actually a slight rise in one area. Despite the rather dubious premise behind this, given that Ghawar is being pressurized by injecting water, it warranted another look. However, before getting to that question, my analysis of their analysis rapidly became one of forensic pathology. Alas, they have misplaced Ghawar by a few miles, rendering their interpretations misplaced as well. Also, their technique for quantifying changes in oil field infrastructure was found to be rather inaccurate. This can't end well.

The big business story of the day has been British company BG's takeover offer for Australian gas company Origin Energy - which will be the second largest takeover in Australian history if successful.

The SMH noted that "Australian energy is in hot demand at the moment. Our resources are near the growth economies of Asia and we have the infrastructure to process and transport them cheaply".

BG has only been in the Australian market for a couple of months, initially buying 10 per cent of Queensland Gas and a 20 per cent stake in the Surat Basin coal seam gas fields - then announcing plans to build a 3 to 4 million tonne per year LNG plant at Gladstone in Queensland to export this gas to Singapore and possibly other parts of Asia.

While exporting LNG from Western Australia and the Northern Territory hasn't caused a great deal of concern (bar the WA state government's attempts to reserve 15% of production for the local market), the BG plan is causing more concern as gas supplies in the eastern side of the country are more limited, with coal seam methane being the major source for the future. Diverting gas offshore pushes up the domestic price and makes the longer term supply situation more clouded.

The ABC's "7:30 Report" last night had a look at the large amount of optimism that many people have regarding Australia's natural gas reserves - "As world oil prices skyrocket, experts warn Australia must find an alternative source of fuel. Some argue a cheaper, greener solution is right under the nation's nose: natural gas."

Both the APPEA and new Energy Minister Martin Ferguson have been arguing this for some time - though its far from clear how long we can continue to expand LNG exports, expand gas fired power generation (as part of the APPEA's "transition to lower carbon emissions" strategy), contemplate building GTL plants and use CNG for most or all of our transport as suggested in this report (not to mention supplying the usual industrial and domestic uses of gas) especially when one major potential source of supply (from PNG via the now abandoned pipeline project) has been removed from the equation.

This is a post by Piccolo, a petroleum engineer working in the petroleum industry.

The Bakken formation in North Dakota and Montana has generated a lot of buzz in the past year. Reserve numbers in the billions of barrels, even tens or hundreds of billions show up in press reports and blogs. Now the USGS has weighed in with a comprehensive assessment of the resource. So just how much will this oil accumulation help the world's largest importer of oil? Is it time to relax or is this just another small blip in the long-term decline of domestic production? We'll examine these questions and others below the fold, using data from the IHS database.

Figure 1 - Location of the Bakken Formation in the Williston Basin, adapted from esask.uregina.ca/entry/williston_basin.html

I actually started on this post about a year ago, and forgot about it until recently. Here I provide 2007 numbers on the sources for oil and gasoline imports into the U.S., courtesy of the Energy Information Administration.

For 2007, the Top 10 exporters of finished gasoline to the U.S. in million barrels were:

Megaproject contribution from 2005 to 2013, the decline rate is 4%/year with a linear transition period of 6 years starting in 2005. Historical crude oil + condensate production from the EIA.