[dashster]

The oil reserves that get stated I believe are normally "proven reserves". Which means that not only are they known to exist, they can be produced at a profit. Someone who doesn't believe in an emminent peak of world oil production will point to the fact that reserves are equivalent to maybe five decades of production at current rates.

So given all that known producible oil, what is the counter argument that someone like Colin Campbell would make as to why he thinks that we will soon not be producing what we do now? Why won't those proven reserves come out as fast as we need them?

[Paulo1]

Because of the statement: "they can be produced at a profit. "

Today's prices are killing the economy. What would happen if the cost of production was 2X? Not enough buyers to make production feasible. When the cheap stuff is totally gone, the market will decide what is a ueseable reserve and what stays in the ground forever.

Paulo

[ROCKMAN]

Dashster - "Why won't those proven reserves come out as fast as we need them?" Thank Dog...finally as easy question. Very simply Mother Earth doesn't give a f*ck how fast we need to produce those reserves. LOL. For the most part there's a physical limit as to how fast hydrocarbons can move through a reservoir to a well. And that speed is a function of the reservoir dive mechanism and the changing composition of the flow. In the case of a pressure depletion reservoir the energy driving the hydrocarbons to the well declines as it's produced and thus the production rate declines. Hence the very high decline rates in the individual shale wells. This isn't a problem with a water drive reservoir that often shows little reduction in pressure. But there's also a trade off: the water production that eventually develops. There is a max volume of liquid that can move upwards through the production tubing. Which is fine when that limit allows 500 bbls of oil to be produced every day. But when the water production inevitably begins and reaches, say 80%, the well now only produces 100 bopd. I'm currently working in a trend in Texas that produced 4.5 BILLION bbls of oil since it began development in the 1930's. But because of the nature of its water drive it produced 80% of that oil at a 70% water cut or better. IOW it took at least 40 years to produce much of that oil. There's one field that was developed 78 years ago that's still producing about 200 bopd from that reservoir...from dozens of wells making just a few bopd each. And there's still a lot of oil left in it: it has produced 150 million bo with another 150 million bo remaining.

There are methods we use to try to circumvent Mother Earth. But they are limited and in the end She always wins.

[Pops]

Notice on this plot the different types of hydrocarbons and the different shapes of their various forecast peaks. Not all hydrocarbons are flowing oil trapped in a nice pressurised (or pressurizable) reservoir. Increasingly what is deemed reserves are not liquid, not flowable, and some are not even the same stuff as conventional oil. Notice how low the peaks and how long the tails of those curves. The reason is simply that it is not possible to produce those reserves as fast.



Post 1998 SciAm article Neophyte Peakers like me (and the pessimistic oil specialists as well) took a monolithic view of oil, that the peak of discovery in the 60's indicated a peak of production in the oughties. Flowing oil from pressurized reservoirs would peak because we had simply ceased to discover more, in other words; you gotta find it before you can pump it.

The eternal abundance crowd on the other hand said higher price would cause investment in exploration and the discovery of another North Slope or North Sea, and just as in the past and we would soon be back to cheap oil.

At this point it is hard to tell which side was more right. High prices have generated some more production but not from some gigantic new discovery of cheap oil, but rather working harder to dredge the remains of known deposits. Granted there have been some substantial discoveries like the sub-salt deepwater but it is not cheap oil and actually is not being extracted even at this historically high average price.

So after 10 years of frantic investment in exploration enabled by that historically high price, the expected result of a new supply surplus has not appeared so the price has yet to come crashing down as forecast. But the supply of flammable liquids has not gone into immediate steep decline either, partially because more things are classed as "oil" (including natural gas liquids which are fracking pretty good) but also simply because all the valves are open. The supply has edged up with the increased price but I think it is becoming apparent all the cheap pressurized conventional oil reservoirs have been found and we won't be saved by some huge new discovery. Meanwhile the economy is still plodding along and hasn't come crashing down under $500/bbl oil prices as the most doomy peakers argued.

I think the lesson should be: the more rigid the forecast the less the probability of it being correct.

[Outsailing]

I think the lesson should be: the more rigid the forecast the less the probability of it being correct.

Point estimates in a stochastic world just don't work, with you on that one.