Joined: Nov 11, 2004 Posts: 978 Location: Heart of Canada's Oil Country
Posted: Tue Jul 19, 2005 5:14 pm Post subject:
I disagree with many of your opinions, but thank-you for joining the discussion! _________________ Do not underestimate the difficulties of surviving the transition of peak oil, nor the dangers of global warming. We must embrace nuclear energy and renewables.
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Tue Jul 19, 2005 7:27 pm Post subject:
Mike,
I and everyone here appreciate your input. Its absolutely critical that you participate in this debate. I would hope and ask that you go the the experts forum and look at my challenge questions to you and answer them. Though my intro is too personally harsh, it was intended to get a response from you to answer the questions. Hopefully, you will do so. Also:
(1) what is the explanation for the high oil prices right now? Is it pure speculation? Or, is it as SA says a "down stream" problem which, if so, seems it would take several years to get the necessary refineries built and put into operation;
(2) What was your take on Simmons recent book "Twilight in the Desert"?
(3) I would like to hear your take on the Hirsch report to the DOE about mitigating the effects of peak oil (February 2005);
(4) Recently, SA was quoted in the news as saying OPEC would be unable to meet IEA oil production forecast after the next 10-15 years. Do you believe this is the case and if so, does or should this change the IEA's forecasted peak date for world oil?
(5) Also, your take on the American natural gas issue would be much appreciated. Is North American natural gas peaking? If so, what is the estimated date of peak and will LNG terminals be in place in time to remedy the situation.
Thanks for being here.
Last edited by seahorse on Tue Jul 19, 2005 7:47 pm; edited 1 time in total
As somebody who can't contribute to this discussion but is highly interested in following it I can only agree, please listen to the dissenting voices and don't insult them!
If we claim to follow scientific guidelines we shouldn't look for affirmation of the theories we believe in, but for falsification! (Read Popper)
Because if there is, after profound assessment, only one conclusive evidence or logic which seems to make our models unfit for reality we should change or modify them instead of brushing the counter-arguments aside and only look for affirmation!
There seems to be the point of the rate of growth of reserves - surely it would be no problem to point to sources and figures in such a fundamental matter? If they are different, why so, and what does it come down to?
Also it has been mentioned that the general dissent is not so much IF we peak but rather WHEN? So after all we are in the same PO-boat anyway?
There is no sign that reserve growth is dropping, reserve additions are replacing production
Quote:
The world had 1,188.6 billion barrels of oil reserves at the end of 2004, compared to 1,188.3 billion at the end of 2003, BP, the world’s second largest oil firm by market capitalisation, said.
The 0.02 percent growth rate was the lowest since 1990 and compares with a 10-year average above 1.5 percent per annum.
The world had 1,188.6 billion barrels of oil reserves
How is reserve defined here? I.e. the URR or the ones that remain to be pumped out of the sand? _________________ "Nuclear power has long been to the Left what embryonic-stem-cell research is to the Right--irredeemably wrong and a signifier of moral weakness."Esquire Magazine,12/05
The genetic code is commaless and so are my posts.
I found this nicely worded couple of paragraphs on an investment site written by a broker back in February....if you get past the fact he is "just a broker" I think he does a pretty good job of outlining what the main worries are with respect to reserve replacement
Quote:
While supplies are gradually running out…
We believe that the market has failed to recognize the decreasing quality of oil reserve replacement as reported by the oil companies. Instead of replacing reserves with new discoveries, reserve replacement has instead come from counting, today, exploration barrels discovered decades ago. In addition to the historic exploration component, the technology element is also important, as we have been able to recover more barrels from these existing fields. This, also, has in turn led to increasing reserves – reserve additions that will not be sustained, as recovery expectations for new fields are already higher. We consider both the Exploration and the Technology elements in what follows.
Exploration
Consider. Oil companies have not replaced production with exploration-related barrels since the early 1980s . In fact, the peak performance in discovering new fields was in the early 1960s . Of the world’s top 20 fields, only one, the Kashagan Field in Kazakhstan, was discovered in the last ten years.
The oil industry has always tended to find the largest fields first, simply because these structures are more visible on seismic surveys. Oil companies found more than they could produce from the 1950s to the early 1980s. The oil companies sat on these exploration finds, only moving them forward to development when they were needed. In between, they waited for extraction technologies to improve and for the oil consumption demand to develop.
The reserve booking process only allows exploration finds to be recognized when a field is deemed commercial (usually when the decision is taken to develop that field), so oil companies have been able to live off their inventories of past exploration successes. Unfortunately, much of the remaining inventory of exploration finds is composed of heavier or sour crudes, a lower quality feedstock that the industry cannot adequately process without complex refining capacity, which is already fully utilized.
The fact that the industry has found the majority of the large, higher quality fields means that, even with technology increasing the find rates, the volumes of useable oil found per well and in total each year are decreasing, just as demand is increasing. As such, and unlike some have suggested, increasing investment in exploration will not result in appreciable new supplies.
I think he has captured much of the desperation I hear in my colleagues voices when they talk about the paucity of good exploration opportunities, the ever increasing F & D costs in places like North America and UK North Sea, West Africa etc. The movement of P3 reserves to P2 can only keep us afloat for so long....I can't help thinking that in a lot of the big fields around the world we are getting to the limit of technology when it comes to increasing recovery economically....even at 60/bbl.
I think he has captured much of the desperation I hear in my colleagues voices when they talk about the paucity of good exploration opportunities, the ever increasing F & D costs in places like North America and UK North Sea, West Africa etc. The movement of P3 reserves to P2 can only keep us afloat for so long....I can't help thinking that in a lot of the big fields around the world we are getting to the limit of technology when it comes to increasing recovery economically....even at 60/bbl.
Rockdock since you are in the field either in academia or industry.
Is there an estimate of the % of the earth that has been mapped with 3D surveys? Is the 98% (meaning 5 contintents+sea under 3km) usually quoted accurate?
It would seam to me, that if this number is correct, then no more exploration is possible. Hope it does not sound too naive
_________________ "Nuclear power has long been to the Left what embryonic-stem-cell research is to the Right--irredeemably wrong and a signifier of moral weakness."Esquire Magazine,12/05
The genetic code is commaless and so are my posts.
I think he has captured much of the desperation I hear in my colleagues voices when they talk about the paucity of good exploration opportunities, the ever increasing F & D costs in places like North America and UK North Sea, West Africa etc. The movement of P3 reserves to P2 can only keep us afloat for so long...
Your comments only apply to private Western oil companies. It's true, you are running out of oil and opportunities. That is not a geological problem per se. Fact is, you are being shut out of oil and opportunities by the National Oil Companies (NOCs), who control most of the world's reserves and promising areas. What we are seeing is the gradual Yukos-ification of the global oil industry. The West and the U.S. in particular are using too much oil, and they need to be brought under control. The NOCs are the right vehicles to achieve this. Oil is a weapon, but you don't want to wield it too overtly. Passive-aggressive slow-down tactics are probably the best approach.
The West: Hey NOCs, where's that oil increase you promised?
NOCs: Sorry, we couldn't get that on-line. We've been having technical difficulties, issues with back taxes... all these problems! (snicker, snicker)
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Tue Jul 19, 2005 10:46 pm Post subject:
Webb,
I think ole Rocky mountain high is suggesting the oil problems we are currently facing, i.e. $60 per barrel oil, is not geologically based in OPEC. He's suggesting that NonOPEC oil is having basic peak production problems, but not OPEC, and that OPEC is using this as an opportunity to squeeze the west and gain a cultural, economic, political advantage over them.
While this may be true, I doubt it. SA and the rest of OPEC tried this in the $70s, caused demand destruction, and almost lost their collective asses to all the collective masses that they keep stomping on and, but for a few meager oil profit hand outs, would have had their heads cut off long ago. Further, the former SA oil minister has had several interviews over the last 12 months stating that SA in particular would strain to even pump 15 mbpd in short term and such rates would cause long term damage. So, I think that OPEC, just like the rest of us, is basically greedy. They obviously like their mercedes and whores, which all takes lots of money. They like selling oil, its made them what they are today. So, I think the problems are more geologic, maybe include infrastructure problems, as opposed to some big political move.
Joined: Jul 19, 2005 Posts: 85 Location: New Zealand
Posted: Tue Jul 19, 2005 11:00 pm Post subject:
Extracting oil isnt easy or cheap. Its pretty simple to see theres no easy oil left otherwise why stuff around in 10,000 feet of water for a few billion barrels regardless of graphs and charts of Mike Lynch.
Joined: Jan 04, 2005 Posts: 623 Location: Australia
Posted: Wed Jul 20, 2005 12:25 am Post subject: Re: Miscellaneous points
khebab wrote:
Welcome! It's good to have you on board!
spike wrote:
There is no sign that reserve growth is dropping, reserve additions are replacing production
Quote:
The world had 1,188.6 billion barrels of oil reserves at the end of 2004, compared to 1,188.3 billion at the end of 2003, BP, the world’s second largest oil firm by market capitalisation, said.
The 0.02 percent growth rate was the lowest since 1990 and compares with a 10-year average above 1.5 percent per annum.
Problem is that the BP stat. review data is pretty useless - they just re-gurgitate the official figures complete with the countries with reserves unchanged from year to year. Ditto for the Oil & Gas Journal figures. I'll wait untill IHS Energy releases their report later in the year (usually in november i think?). According to IHS reserves growth is still quite strong (over 400Gb over the past 10 years, ie significantly outpacing production). IMHO this is why Campbell et al. have been wrong in the past, and may well be wrong again. We aren't seeing reserves running down yet, and non-OPEC supply is still increasing. If oil was 60 bucks a barrel and supply was flat or declining, then it would probably signal peak oil, but I don't see how high price signals peak considering that supply rising quite strongly. Its interesting how many people here decry economics, but then point to the price as evidence of imminent peak, despite the fact that supply is still increasing rapidly. (btw not aimed at you khebab)
Doesn't it say at least one point?
Guarantees at least ONE maximum, maybe more but totally rules out a plateau as some of the economists think. It is due to the finite nature of oil. Builds up and declines.
I've said this before and I'll say it again: Economists have a lot to answer for in my view (I have a Master's in the subject and know a little of what I speak) , but they are *not* as stupid as they are made out to be by some on this board. To my knowledge there is *no* economist *anywhere* who thinks, or has ever said, that oil production can remain on a permanent plateau (implying infinite reserves).
Posted: Wed Jul 20, 2005 8:54 am Post subject: Re: Miscellaneous points
Antimatter wrote:
Problem is that the BP stat. review data is pretty useless - they just re-gurgitate the official figures complete with the countries with reserves unchanged from year to year. Ditto for the Oil & Gas Journal figures. I'll wait untill IHS Energy releases their report later in the year (usually in november i think?). According to IHS reserves growth is still quite strong (over 400Gb over the past 10 years, ie significantly outpacing production). IMHO this is why Campbell et al. have been wrong in the past, and may well be wrong again. We aren't seeing reserves running down yet, and non-OPEC supply is still increasing. If oil was 60 bucks a barrel and supply was flat or declining, then it would probably signal peak oil, but I don't see how high price signals peak considering that supply rising quite strongly. Its interesting how many people here decry economics, but then point to the price as evidence of imminent peak, despite the fact that supply is still increasing rapidly. (btw not aimed at you khebab)
Agreed. I don't think prices are a good indicator of the supply situation. Remember the oil crash in the 80s, prices crashed down for 18 months on rumors of an oil glut that was non-existent. We could be very well in a similar situation but with an opposite maket pressure. The truth is that nobody knows the real situation, most of the reserve numbers are fishy and unreliable. _________________ ______________________________________
http://GraphOilogy.blogspot.com
To my knowledge there is *no* economist *anywhere* who thinks, or has ever said, that oil production can remain on a permanent plateau (implying infinite reserves).
Well relying on Cobb Douglas production curves just assumes that though, that there is infinite stuff down there. At some point the "oh explore more, invest more to get more" will hit a brick wall. If you rely on unrealistic models about the real world, you will come to unrealistic conclusions .... even if you do not explicitly state so. _________________ "Nuclear power has long been to the Left what embryonic-stem-cell research is to the Right--irredeemably wrong and a signifier of moral weakness."Esquire Magazine,12/05
The genetic code is commaless and so are my posts.
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