Saudi Arabia isn't Texas

[peripato]

Opening up the taps would oversupply the market, and cause prices to drop.

Opening up the taps could also provide more of a spur for their products by accelerating world GDP growth, which is what we've been witnessing the past few years. One could argue the reverse that not supplying the market at such high prices can cause a slowdown in growth and consequently a turndown in demand for product.

[pup55]

Hello, Robert:

I am with you on several points:

http://peakoil.com/fortopic27445-0-asc-0.html

The main one being that we are looking at the data and from that trying to imply "intent". Or, rather, making the assumption that Saudi's statements about their ability to incease output are necessarily false.

As to the HL method, I always thought it was a really interesting calculation, and gives elegant graphs and results, but it is a big world, the thing we are trying to measure is underground, and so difficult to apply this globally. I think it ought to work great for smaller fields with finite boundaries.

Stop back and visit us again.

[WebHubbleTelescope]

As to the HL method, I always thought it was a really interesting calculation, and gives elegant graphs and results, but it is a big world, the thing we are trying to measure is underground, and so difficult to apply this globally. I think it ought to work great for smaller fields with finite boundaries.

Hubbert Linearization relies on the mathematical characteristics of the logistic curve. The logistic is a nonlinear variant of a stochastic differential equation which requires a rather large aggregate of entities to hold true. As fields get smaller and finiteness looms, the laws of stochastic processes give way to determinism. Why again would HL work better on smaller fields?

Let me put this another way: If we have a finite cube of oil containing crust, say 1000 meters on a side, how would you from first principles derive anything that derived a logistic equation?

This can't be that hard to do! Yet know one has done this exercise. You know why? Because you can't. The fundamental equation describing the logistic curve does not describe anything on this scale or these units. The only thing close it describes is population dynamics, and population dynamics does not play out on a smaller field.

Birth and death rates, P = population:
B = B0 - B1*P
D = D0 + D1*P

Population dynamics:
dP/dt = (B-D)*P

expanding
dP/dt = (B0-B1*P-D0-D1*P)*P = (B0-D0)*P - (B1+D1)*P[sup]2[/sup]

correlating to the logistic:
dP/dt = rP*(1-P/P[sub]infinity[/sub])

So where again does oil fit into this derivation?

[threadbear]

Exactly Web Hubble, You took the words right out of my mouth!

[WebHubbleTelescope]

Exactly Web Hubble, You took the words right out of my mouth!

That's what happens on a forum called "Depletion Modeling". Mathematical wankery at its finest.

[pup55]

Why again would HL work better on smaller fields?

Perhaps size of the field is less important than the complexity of the region in question, and the ability to extract the field in a non-constrained way. Examples: The HL curve for Norway is fine: the fields were a known size, pumped in an organized fashion, and no revolutions or invasions to contend with, so the HL method works fine in predicting with good accuracy the shape of the curve.

However, the case of Iran is quite different due to the above-ground chaos associated with the way the region was exploited.

The importance of the "rather large aggregate of entities" is that the noisy outliers are averaged out. I see your point on this.

I do not know enough math to get into an argument on this, except to say that enough of the world's oil production comes from places like Saudi and Russia and Iran that have constrained extraction rates because of political factors, that it may throw off the global calculation enough to make a difference.

[Tyler_JC]

We're missing the point.

Saudi Arabia's oil production is controlled by a monopoly which seeks to maximize its own profits while maintaining marketshare (a very tricky game).

Oil production in Texas was controlled by no one at first (leading to rampant overproduction, evaporating profits, and the bankruptcy of plenty an oil company).

Then Texas production was controlled by the TRC whose sole purpose was to keep prices from falling too low. The TRC was not in the business of ensuring high oil profits as it was run by the state, not the state-owned oil company (because there wasn't one...)

The difference between the two organizations is the critical reason why oil production looks like a perfect bell curve in Texas and will NEVER look like a bell curve in Saudi Arabia.

TEXAS. Pump as much as you can, as fast as you can. Look anywhere, drill everywhere, make as much money as humanly possible in the shortest amount of time possible. (Uber Capitalist model). Limiting factor? Geology.


SAUDI ARABIA. Pump only as much as you have to. Maximize long term profits and marketshare. All profits go to a single government-run organization. If you overproduce, you are punished. (State-Run Model). Limiting factor? Economics/Politics


The two oil producing regions are very different from each other.

There's a reason that the USGS doesn't try to come up with depletion models...the reason is that depletion models are guesswork when you're talking about a country whose oil production is controlled by a king running a monopoly, not a CEO in a highly competetive marketplace.

The Persian Gulf is full of oil and the Saudis aren't even bothering to look. They don't need to.

[peripato]

There's a reason that the USGS doesn't try to come up with depletion models...the reason is that depletion models are guesswork when you're talking about a country whose oil production is controlled by a king running a monopoly, not a CEO in a highly competetive marketplace.

Rubbish. The USGS does not want to come up with depletion models for political reasons, which is why its 2000 report is so flawed. It makes wildly optimistic assumptions of the “undiscovered resources” waiting to found around the world which have not been borne out by the actual discovery trend since even before the study was first published.

The Persian Gulf is full of oil and the Saudis aren't even bothering to look. They don't need to.

Total rubbish. Edward Price, who was Sadad Al-Huseini's predecessor, as head of Aramco, and who oversaw the transition to Saudi control, cites an exhaustive (though unpublished) study of that country back in the 1980’s which only had 16 billion barrels left to find there, as opposed to the USGS's absurd claim of 87 billion barrels. Any unjustified pronouncements coming out of SA, that their proved reserves are about to increase significantly, can be dismissed as political tub-thumping on the part of a no doubt anxious regime, faced by the inevitability of decline in their fields for all the same geological reasons, regardless of how they are managed.

[threadbear]

Thank you Tyler It's so clear, so beautifully clear and yet very few here can grasp this. Peak oil is an intuitively appealing concept. Oil will run out one day, but the exact timing can't be known.

Do any of you naive doomers understand what the implications of Tyler's post is???Hmmm? The implication is,( barring a disruption in shipments, due to some political event), when the economy starts to fail it's possible oil will drop way down in price, unless the spigots are intentionally tightened. And from a business model perspective, why would the cartel do this?

[peripato]

Thank you Tyler It's so clear, so beautifully clear and yet very few here can grasp this. Peak oil is an intuitively appealing concept. Oil will run out one day, but the exact timing can't be known.

Exact timing yes, but why is this so important to know the exact timing? Is it not perhaps better to concentrate on what happens to "all of this" after that event? And as for oil running out, who on a peak oil website even discusses it in those terms? You only here of PO referred to as "the oil running out" from the industry (which has a lot to lose), economists, or others who plain don't get it, or want to.

Do any of you naive doomers understand what the implications of Tyler's post is???Hmmm? The implication is,( barring a disruption in shipments, due to some political event), when the economy starts to fail it's possible oil will drop way down in price, unless the spigots are intentionally tightened. And from a business model perspective, why would the cartel do this?

I fail to see how doomerism is in anyway associated with the matter of Saudi oil reserves. Sure oil may drop in price, but what comfort if the underlying reason for this is its permanent decline, hmmm?

[WebHubbleTelescope]

Two contributing factors to explain the basic SA plateauing: (1) they continue to make discoveries and (2) they may be upping the relative depletion rate. What people tend to forget that it is not just a single curve which explains production but multiple curves all convoluted together which include a discovery curve at the front end.

We're missing the point.

.........

There's a reason that the USGS doesn't try to come up with depletion models...the reason is that depletion models are guesswork when you're talking about a country whose oil production is controlled by a king running a monopoly, not a CEO in a highly competetive marketplace.

There's a reason that the USGS doesn't try to come up with depletion models ... ??? WTF are you talking about? Of course they try to come up with depletion models. I see a veritable cottage industry of USGS geologists trying to come up with theories of reserve growth. Attanasi & Root, Verma, Arrington and other names if you want to look them up. And SA is about 10% of production so they should be able to factor this in with still a relatively small margin of error.

But the reason that these USGS models don't work is not because they are guesswork, it's because most of these geologists are basically morons when it comes to understanding basic math and statistics.

If on the other hand, if you are suggesting that the USGS has recently basically given up trying to figure this stuff out, then its the arrogance of people who couldn't give a rip pitted against my arrogance in calling them on their shoddy work.

[threadbear]

If on the other hand, if you are suggesting that the USGS has recently basically given up trying to figure this stuff out, then its the arrogance of people who couldn't give a rip pitted against my arrogance in calling them on their shoddy work.[/quote]

I love it when you talk that way, you big lug!

[peripato]

If on the other hand, if you are suggesting that the USGS has recently basically given up trying to figure this stuff out...

Yes, this is what I'm suggesting...but for political reasons, as the previous 1995 report (Masters) was more realistic on the size of the ultimate and in keeping with most other projections.

Regards.

[Tyler_JC]

If on the other hand, if you are suggesting that the USGS has recently basically given up trying to figure this stuff out...

Yes, this is what I'm suggesting...but for political reasons, as the previous 1995 report (Masters) was more realistic on the size of the ultimate and in keeping with most other projections.

Regards.

The 1995 report didn't include the outliers because they didn't fit into a nice, neat model. The 1995 report also dramatically underestimated future reserves and reserve growth due to improvements in technology. There is an entire cottage industry of people whose job it is to increase recoverable oil reserves.

The statisticians who created the inaccurate 1995 report were fired and replaced by petroleum geologists and economists.

[Kristen]

Why would Saudi Arabia want to slow down the global economy and possible cause it to go into decline?

Why would SA wait unil 2002 to implement a massive scam to raise all of this wealth?

It's great Mr R that peak oil might be farher down the timeline, and you get to fly around the world and give speeches, but what about the collapsing dollar and wealth inequality? People's quality of living have declined since 2002. Sure the slope isn't like a cliff, but obviously something is going on. Here is a poem that better illustrates my point

[align=center]The Sadness

by Kristen Mcgreagor a.k.a "Micks"[/align]

The Sadness in their eyes
As men are dragged and butchered for Christ
All for the dark grease in the great sands
Cast Into the horrors and the burning of nightmare land

The Sadness in their minds
As towers of rubble circumscribe
The barricades block out the glowing flam beaus
They are prisoners to the machination of the fight

Why must they antagonize with my head?
Filling my ratiocinations with dread
Their parsimonious prophecies of paucity
The tenebrific tactics of thievery

The portrait of angst, bright and bold
An empty wallet in my hold
A stack of unopened envelopes three miles high
Nuclear missiles exploding in the sky
Sirens sing and echoes of alarms ring
Until the dire Din goes silent

The Sadness in my life
The complexity of strife
The future less times blossom this pain
Insanity is sanity for the insane

[threadbear]

Yeah, man, why would Saudi Arabia do that. You know it's hard to explain, but the word "profits" springs to mind. There seem to be many rational arguments based upon studies of human behaviour, but instead of discussing them, I've choreographed this little dance to explain. Excuse while I get my tutu and toe slippers on....

[PraiseDoom]

There's a reason that the USGS doesn't try to come up with depletion models...the reason is that depletion models are guesswork when you're talking about a country whose oil production is controlled by a king running a monopoly, not a CEO in a highly competetive marketplace.

HAH!!! Like referencing the organization which produced the likes of HUBBERT will get you anywhere around here!! REPENT!!

[PraiseDoom]

There's a reason that the USGS doesn't try to come up with depletion models ... ??? WTF are you talking about? Of course they try to come up with depletion models. I see a veritable cottage industry of USGS geologists trying to come up with theories of reserve growth. Attanasi & Root, Verma, Arrington and other names if you want to look them up.

Since when are reserve growth models the same thing as depletion models?

[WebHubbleTelescope]

There's a reason that the USGS doesn't try to come up with depletion models ... ??? WTF are you talking about? Of course they try to come up with depletion models. I see a veritable cottage industry of USGS geologists trying to come up with theories of reserve growth. Attanasi & Root, Verma, Arrington and other names if you want to look them up.

Since when are reserve growth models the same thing as depletion models?

I don't know since no one has ever established a comprehensive framework for understanding what actually occurs from discovery to eventual production, preferring instead to rely on heuristics and empiricism.

I would suggest that there are two branches. A discovery model which would include the concept of "reserve growth" as a feature. And then there is an extraction/production model that would take the discovery model as an input.

[PraiseDoom]

I would suggest that there are two branches. A discovery model which would include the concept of "reserve growth" as a feature. And then there is an extraction/production model that would take the discovery model as an input.

Sounds good to me. Separates out reserve growth and depletion into different categories, which is appropriate I think.