Peak Oil (was "petroleum geologist explains US war policy")

It's interesting reading back in this thread and realising that the things that were predicted 9 years ago are steadily coming true. The inability of SA to expand production. The ridiculousness of biofuels exposed. We're past the peak of conventional oil and now we're watching the non-conventional oil going gangbusters to replace the losses due to depletion of existing fields. So far they're catching up, but will they be able to expand exponentially as the conventional oil decline starts to steepen? Economics and physics says not likely

It's odd that that the Saudi oil minister really doesn't understand why prices are behaving the way they are - his country has just authorised the construction of a fleet of 12 nuclear reactors to safeguard its water supplies, a conventional missile strike away from Iran and Israel (thereby converting them into nuclear missile strikes).

He needs to check his numbers more carefully. Saudi production capacity is roughly 15 million barrels per day. Saudi domestic consumption is roughly 5 million barrels per day. Saudi MAXIMUM export capacity is 10 million barrels per day. This recent increase isn't them adding new production to take up slack - it is them saturating their discretionary export capability.

Here is where the fun starts. It has a population of 25 million, growing at 2% per annum (i.e. it will double in 35 years). Their main water aquifer has fallen 150 meters in the last 25 years. No-one knows when it will run out, and therefore have to assume it can run out at any time, and govern their energy arrangements accordingly. Energy demand is inelastic - they need power for cooling, and for water desalination. Water desalination for 50 million people requires colossal quantities of energy. Its domestic energy demand is therefore growing at 5% per annum (a doubling time of 14 years).

Project demand forward against fixed production capacity, and Saudi ceases oil export in about 16 years. They aren't building new capacity (because, unlike us, they have access to their real oil reserve numbers, not the political ones the ruling Saud family publishes to help it cling to power), they are building nuclear reactors. And they are the last remaining "backstop" swing producer in the global petroleum system.



THAT's why prices are behaving the way they are, Mr Oil Minister, and why you are building nuclear reactors. You disingenuous little fuck.

[This is the so called "Export Land Effect" minus the decline in production capacity, for those with an interest in such matters].

They and many other in a position of power/responsibility aren't going to bluntly tell us the truth very often because being honest about it bring the implications forward. The reality is not all that counts, the perception has big implications too. Which is why I was quite fascinated as the elephant in the room occasionally shuffled into mainstream view at various brief moments over the last 7 years or so. I was waiting to see if it got up and started singing, but mostly its been a brief whimper and relatively hushed tones.

When looking back at the nearly 10 years that I've been at least vaguely aware of peak oil, there are only a couple of areas where expectations have not panned out quite as expected. I can't tell how much time they have bought from non-conventional oil just yet, but non-conventional gas certainly seems to have changed the expectations that we'd already be in the midst of a perfect storm of oil & gas production declining notably at the same time. I've not much sense of how much time this has bought either. The financial crisis has obvious changed some equations on the other side, but this was expected and represents exactly the sort of threats to the system we should expect from peak oil. Austerity and peak oil are in bed together, but the relatively obscurity of peak oil in terms of mass politics has lead to more pillow talking than pillow fighting so far.

An interesting story about Brent backwardation, and how problems at Buzzard & Elgin may prolong this trend despite the return of light Libyan crude:

http://www.bloomberg.com/news/2012-...y-brent-crude-relief-from-libya-s-return.html

Buzzard is worthy of further investigation, since older North Sea fields declined its become a big part of production. It hasn't been operating that long (only discovered this century I think) and it looks like its suffered from multiple problems in recent times.

Peak oil discussions have recently taken place in other threads, but we aren't going to let this thread die are we?

For some years now the IEA has been more in tune with peak oil possibilities than they used to be, and I've sometimes been quite impressed by how far Fatih Birol has been prepared to go. Most recently this article caught my eye:

http://www.hurriyetdailynews.com/ir...omist.aspx?pageID=238&nID=18587&NewsCatID=344

May I also recommend the video interview with him on this Australian news channels special oil crunch feature:

http://www.abc.net.au/catalyst/oilcrunch/

I have not yet had time to look at the other videos on the site.

No, I hope not.
This thread is a good record of the Peak Oil story (which I think has some resonance with the Kübler-Ross model ?)

These are the chickens coming home to roost after the OPEC "Quota Wars" in the 1980's. OPEC members introduced a quota system in 1981 for allocating production rights between members. Members were only allowed to produce in proportion to their claimed fraction of total OPEC reserves. This created a strong incentive to distort reserves figures - the more you claimed you had, the bigger proportion of OPECs aggregate revenue you got. Since OPEC reserves are not audited (in fact, a state secret) they ripped the arse out of the system competing with each other over revenue share, adding 300 billion virtual barrels - 25% of currently assumed world reserves - over the next 10 years without drilling a well. It's the pink stuff below, what we call "paper barrels" in the industry. You'll remember Kuwait giving up the pretence a few years ago and writing them off as non-existent.





That matters. In this graph (which I get slated for repeating, but which is effectively the X-Ray for what is going in on energy and for which I therefore make no apology), the green ASSUMES that 300 billion barrels is real. It isn't there, and the red projections are therefore highly optimistic.

This is, of course, why the Saudis are building nuclear reactors.

What's Iran's oil reserves like? Just wondering if their nuclear program is related to this in any way.

Iran pulled the same trick. I imagine their nuclear programme has similar aims (although the completely opposite relationship with the USA complicates matters)

Anyone else shitting themselves over this?

Ever since I learned about it, yes.

Maybe we could burn the shit, use it as a replacement for oil. Like what nomads do with camel shit.

Unfortunately, we passed peak shit in 2008

Iran is mostly about gas. But the real story in all of these countries isn't the size of their domestic resource, it's the size of their domestic demand, and the instability of their societies.

They buy civil order through subsidised energy (petrol mostly) and cash handouts. That creates aggressive exponential demand. Exponential domestic demand wipes out any conceivable resource you might have irrespective of any estimate you might make of its size (that's one of the unintuitive properties of exponential growth).

That is why our assumption that they will continue to obligingly prop our economies up by threatening their own is naive to say the least and, yes, why unstable regimes with alleged fantastic untapped hydrocarbon resources are building nuclear reactors.

And, when you think about it, that's pretty much how we ensure domestic civil order.

I wouldn't say Iran is mostly about gas, that paints a slightly misleading picture. Iran can be ted to demonstrate your point about domestic consumption, although again I think you rather hype that aspect. Its a real factor, but Im not sure the term exponential should be thrown around so loosely.

It is the only term that can be used to describe any phenomenon which increases in proportion to its current size.

OK fine, but are you really trying to tell me that the term aggressive exponential growth is appropriate in this case? Whats aggressive about it?

Misleading unless you mention how quickly the resource is wiped out, which is obviously based on the size of the estimate and the rate of growth in demand.

It is a pleonasm. There is no such thing (in finite systems at least) as unagressive exponential growth. However, given that this is not universally recognised yet, the pleonasm is justified.

Useful review of the status of peak oil by Kate Mackenzie at the FT:

Of course we can't go into the issue of carbon restraint. How else would we be able to continue to argue ourselves into an inert stupor over various technical mirages?

Oh pull the other one, its not a pleonasm, you are using it to add to the impact of the phrase.

I feel that the term aggressive is not very helpful at all, because for its meaning to be completely clear you have to describe what it is aggressive towards. And when applied to behaviour of animals and evolution, a study of aggressive behaviours will look at whether the aggressive behaviour may help the animal survive & reproduce, not just negative potential of aggressiveness.

So surely its clearer to simply talk about unsustainable growth, which seems to hit the relevant nail on the head. You are acting as if the word exponential being tacked onto the word growth offers some great new level of insight about the nature of the growth, something that the masses haven't properly considered yet. I struggle to see how this could be the case, people don't even have to understand the term exponential to understand that the sorts of growth we hear about on the news is in relation to the level we have already reached, and that the bigger we get, the more is required to continue to grow at the same rate.

Maybe I'm missing some crucial aspect, but really I think the word exponential only adds what you are implying it does if its used in the context of talk of maintaining growth at a certain percentage rate over time. You were talking about how fuel subsidies cause aggressive exponential growth in domestic demand, yet you don't claim anything concrete such as 'the year on year growth rate will be sustained at x percent' or 'the growth rate will increase over time'. So I think the word growth would have been quite enough, and the words exponential and aggressive are not just obsolete there but also potentially misleading, for they may tend to lead the reader towards imagining some accelerating or consistent growth rate is implied.

I wouldn't bother making this point if you weren't being so obvious in your avoidance of mentioning timescales and rates in some of your recent posts here. Take the following statement of yours:

Its not unintuitive. People understand this, and they know that the word EVENTUALLY belongs in the sentence. People know that finite resources don't last forever, and that the rate you use them at matters, and the rate you discover matters. Where the disagreement is to be had is down to timescale, alternatives, and what can be sustained in the absence of growth, in decline, how much we can learn to live without, how much more efficient we can make certain things, etc.

Im going to stop picking on you soon and take a break from these discussions for a few weeks, honest, but before I do I'll return to your subsidies & domestic demand in oil-producing countries point again, since that was what the aggressive exponential stuff I moaned about was related to.

When looking at the future of oil, its certainly important to look at how domestic demand is doing, and we will see it play a noticeable role in stagnant or declining exports from various places. Subsidised fuel obvious has an impact on demand, but obviously there are other factors at work, such as whether peoples incomes are growing, shrinking or stagnating and a bunch of other aspects of the state of the economy.Under some conditions even an increase of subsidies or cash handouts may not keep up with other factors, and there will not be growth in demand.

One of the ugly ways the world may absorb the oil supply issues for a bit is by the dramatic decline of demand in certain countries, as economic factors cause them to drop of the list of countries whose populations have the routine ability to afford oil products. We have seen attempts at lowering or removing subsidies in some countries, a scenario that populations obviously react to with horror, and sometimes there is plenty of turmoil and a hasty undoing of the subsidy cuts. It is certainly appropriate to draw attention to the fact that when this happens in oil-producing countries, oil production can suffer, amplifying the problem for all concerned. And how the fear of this will contribute to demand-sustaining policies in many of the producing countries that can afford them (and producing countries are certainly more likely to be able to afford them).

So Im not moaning at you for bringing these issues up, just wanted to talk about them a bit differently.

I can't quite make out if you are making a joke. Apologies if you are.

A drop of water, placed in your hand and allowed to double every minute, fills the volume of Wembley stadium in 50 minutes.

It does that essentially irrespective of your estimate of the volume of Wembley stadium.

4 minutes before you drown, chained to a chair on the top row, Wembley Stadium is 94% empty space.

People don't really know where they stand in relation to EVENTUALLY, and their intuition doesn't serve them well.

My experience of having giving talks to thousands is that almost no-one understands the exponential growth function properly.

Which is why a little pleonasm doesn't go amiss.

I was looking for Bartlett's classic lecture on the exponential function, but found this:



http://www.blindspotdoc.com/

Bartlett's original lecture is "Arithmetic Population & Energy - The Most IMPORTANT Video You'll Ever See" (youtube).

It is.

No I wasn't meaking a joke, I stumbled badly over the definition of pleonasm, as I attempted to demonstrate that the word aggressive is ambiguous and so the emphasis which you sought to obtain from using that word was not really a pleonasm.

Anyway all this stumbling around, which I am in danger of repeating, will hopefully not distract from your dishonest use of the term exponential. Your Wembley stadium example demonstrates this point well. You are talking about exponential growth where the growth rate is a constant percent.

What has such a nice clean and dramatic exponential curve got to do with the graphs for consumption of oil in Iran, or indeed the vast majority of the graphs we look at when discussing peak oil and related issues? Very little, for the growth rates of production, discovery, consumption and economy are seldom constant for long enough to get such curves.

I am perplexed as to why you feel the need to do this. Please explain, isn't the measured reality bad enough?

Great example of how unintuitive this is. Apparently tiny growth rates yield colossal numbers. A general audience (even well educated) does not generally understand that 5% energy growth rate eliminates 15 million barrels of Saudi export capacity by 2030. All you are saying is that the numbers vary between different colossal amounts.

Meanwhile:

This is not a regime that is easing its colossal domestic subsidies any time soon, which is why domestic demand growth is so high.

Not bad enough, apparently, to actually get anyone to do anything about it. Do you feel we are all in need of a little more "nudging", and a few more telly adverts suggesting we walk to the corner shop for our Sunday paper?

I'd have to say that the graphs of Iranian gas consumption figures for the last decade don't match up with your agressive exponential growth description.

If anything the growth looks more linear than exponential for that period, and a 3% drop in consumption reported for last year doesn't really fit your description either, though obviously it could just be an anomaly.

As does a graph of water level in Wembley Stadium for the first 46 minutes of the 50 minute experiment. Exponential curves in finite systems have a "hockey stick" point of inflexion, and look linear before that point. You need a longer timescale. I know this is per capita and electricity, but this is the underlying energy demand function. Energy intensity is growing at 5% per annum since 1980 i.e. doubling every 14 years. Population is growing at 1.4% per annum i.e. doubling every 50 years. Energy demand is growing at (5.0+1.4%) = 6.4% i.e. doubling every 11 years. They are trying to substitute domestic oil consumption for gas to boost oil export revenues so you can't say anything about the balance, but the aggregate domestic hydrocarbon demand growth is ferocious.



The real point is that global demand growth is exponential (non-OECD population growth is exponential and 80% of global population, non-OECD energy intensity is 25% of OECD, and they are industrialising).

1.45% per annum global demand rate is a doubling time of under 50 years. In that 50 years, we would need to produce as much oil cumulatively (1 trillion barrels) as all the oil that has ever been produced until now (1 trillion barrels). There is nothing about the exponent "1.45%" that hints at that colossal quantity, to the uninitiated.

1.45% is aggressive.

Britain may have enough offshore shale gas to catapult it into the top ranks of global producers, energy experts now believe

Wow! Energy independence beckons!

Oh.

Indeed. Here is latest academic opinion on that:

Shell give the game away, at least to the discerning:

which is a problem since:

So, to summarise: the UK just found colossal quantities of a fuel source environmentally worse than coal, that you can't afford.