Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on July 1, 2018

Bookmark and Share

THE ENERGY CLIFF APPROACHES: World Oil and Gas Discoveries Continue To Decline

Geology

As the world continues to burn energy like there is no tomorrow, global oil and gas discoveries fell to another low in 2017.  And to make matters worse, world oil investment has dropped 45% from its peak in 2014.  If the world oil industry doesn’t increase its capital expenditures significantly, we are going to hit the Energy Cliff much sooner than later.

According to Rystad Energy, total global conventional oil and gas discoveries fell to a low of 6.7 billion barrels of oil equivalent (Boe).  To arrive at a Boe, Rystad Energy converts natural gas to a barrel of oil equivalent.  In 2012, the world discovered 30 billion Boe of oil and gas versus the 6.7 billion Boe last year:

In the article, All-time low for discovered resources in 2017, Rystad reports, it stated the following:

“We haven’t seen anything like this since the 1940s,” says Sonia Mladá Passos, senior analyst at Rystad Energy. “The discovered volumes averaged at ~550 MMboe per month. The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11% (for oil and gas combined) – compared to over 50% in 2012.” According to Rystad’s analysis, 2006 was the last year when reserve replacement ratio reached 100%.

The critical information in the quote above is that the world only replaced 11% of its oil and gas consumption last year compared to 50% in 2012.  However, the article goes on to say that the last time global oil and gas discoveries were 100% of consumption was back in 2006.  So, even at high $100+ oil prices in 2013 and 2014, oil and gas discoveries were only 25% of global consumption.

As I mentioned at the beginning of the article, global oil capital investment has fallen right at the very time we need it the most.  In the EIA International Energy Outlook 2017, world oil capital investment fell 45% to $316 billion in 2016 versus $578 billion in 2014:

In just ten years (2007-2016), the world oil industry spent $4.1 trillion to maintain and grow production.  However, as shown in the first chart, global conventional oil and gas discoveries fell to a new low of 6.7 billion Boe in 2017.  So, even though more money is being spent, the world isn’t finding much more new oil.

I believe we are going to start running into serious trouble, first in the U.S. Shale Energy Industry, and then globally, within the next 1-3 years.  The major global oil companies have been forced to cut capital expenditures to remain profitable and to provide free cash flow.  Unfortunately, this will impact oil production in the coming years.

Thus, the world will be facing the Energy Cliff much sooner than later.

 

goldseek



27 Comments on "THE ENERGY CLIFF APPROACHES: World Oil and Gas Discoveries Continue To Decline"

  1. dissident on Sun, 1st Jul 2018 8:01 pm 

    No problem, executives and the MSM tell is that there are centuries of fossil fuel good times ahead. Who you are you going to trust, feel good shysters or inescapable mathematical and physical constraints?

  2. deadly on Mon, 2nd Jul 2018 1:11 am 

    https://www.youtube.com/watch?v=-IzgyM1r1y8

    I watched the video a couple of days ago. The irrational exuberance is still there, alive and well.

    One shale oil proponent said that under all of the oil in Saudi Arabia there is shale. It has never been drilled.

    If you have discovered 6.7 billion barrels equivalent, that is seven days of consumption.

    3 trillion barrels, half gone, 36 billion consumed in one year, 1,500,000,000,000/36,000,000,000=1500/36=500/12=125/3=42. 42 years of oil at a rate of 36 billion barrels burned per year.

    Just to illustrate what will happen, you can get the picture.

    The video is worth watching, if you have the time.

    At some point in time, there will be an energy crisis multiplying to many crises.

    CMO, cubic mile of oil.

    36.5 billion barrels is 5 billion metric ton of oil. A cube one thousand m by five km by one thousand meters will be five billion cubic meters. It takes less oil to fill one cubic meter, there will be more volume displaced than five billion cubic meters of oil.

    42 gallons per barrel, 7.2 pounds per gallon, a barrel weighs 302.4 pounds. 7.147 barrels per metric ton. 7.147 times 302.4 pounds equals 2161.2528 pounds, almost a metric ton.

    One mile equals 1609.34 meters.

    4 168 150 745.66 cubic meters is one cubic mile.

    More than one cubic mile of oil is consumed each year.

    The estimate, wag, is 50 cubic miles of oil still in the ground.

    Eventually, you will end up short. Might be sooner than later, a very big surprise when the reality sinks in.

  3. Cloggie on Mon, 2nd Jul 2018 1:45 am 

    No problem, open your wallet and order your shiny brand-new turnkey offshore windpark in Europe now.

  4. deadly on Mon, 2nd Jul 2018 1:52 am 

    Correct the 7 days of consumption to 70.

  5. k martins on Mon, 2nd Jul 2018 2:31 am 

    deadly: 6.7 billion barrels = 50 days of consumption, not 6.
    It is worth trying to get your math right.

  6. bfot on Mon, 2nd Jul 2018 4:24 am 

    6.7bn barrels = 67 days? (100mn per day roughly now)

  7. onlooker on Mon, 2nd Jul 2018 6:48 am 

    And that is with state of the art technology. Humans cannot seem to wrap their heads around limits and accelerating growth trajectory of rapacious and multiplying humans. We ARE the yeast in the petri dish

  8. deadly on Mon, 2nd Jul 2018 7:34 am 

    I realized the mistake. I rounded bigly. The numbers are more or less in the ballpark.

  9. Antius on Mon, 2nd Jul 2018 8:40 am 

    As an engineer, I tend to look for technical solutions. It is a weakness in my mind-set, as in this case the best solutions probably aren’t on the supply side. But here is something that comes to mind. Take a look at the global coal resource maps below:

    https://www.researchgate.net/figure/Global-Coal-Distribution_fig2_268256932?_sg=Kq7sYbBvJbkMGR5Yh-4d7QJZf3ZP6zbhMaizMRRFtuF_FLjIya6yJ1aYOOi_IF7G5RGAO53sv3Q_TU_0JsI2WQ

    https://static.seekingalpha.com/uploads/2016/5/26/saupload_105414-004-7b3e5668.png

    It would appear that there is plenty of coal; it just isn’t in the sort of places that make it easy to mine and transport to where it is needed. There is plenty in Russia, US, Canada, South America, South Africa, Australia, etc. In Australia in particular, there is a huge lignite deposit that will likely remain uneconomical to mine and transport to port cities on the East and Southern coasts, because it’s energy density is too low and the cost of building railways to do it would push the investment window beyond the interest of most investors.

    Oils are cheap to transport in large volumes, as they can be pumped through carbon-steel pipelines. They can be pumped onto ships docked at a simple jetty; no expensive loading facilities are needed. They are also commodities that sell for a high price: they are valuable. The logical thing to do with low-value coals of this type would be to convert them into oils or some other liquid, which can be piped to the coast and onto tankers waiting at jetties.

    How does one liquefy coal? These links provide useful information.

    http://carbon.atomistry.com/distillation_coal.html

    https://web.anl.gov/PCS/acsfuel/preprint%20archive/Files/32_3_NEW%20ORLEANS_08-87_0142.pdf

    The easiest approach is first to crush it into powder and then heat it to 500C. About 30% of its weight is then released as poly-cyclic tars, ethylene and ammonia containing tars. These can be pumped as hot liquids, further cracked using hydrogen or mixed with light oils or methanol solvents and then pumped. Next; heat the coal to 800C and another 5-10% of its weight will be released as hydrogen. This can be used to crack tars or react with CO in the fischer-tropsch process to make methane, methanol or heavier hydrocarbons. The remaining residue is about 40% coke and 10% ash. About one third of the coke can be oxidised to CO and reacted with hydrogen to produce methane / methanol. I would be looking to make methanol and mix this with the tars as a solvent, to reduce their viscosity and allow pumping. The remainder of the coke can either be oxidised into CO, partially reacted with steam and converted to methanol using the fischer-tropsch process, it could simply be discarded on site, converted to briquettes and transported to port by road or rail, or ground into a fine powder and transported as slurry in sea water. The final option is probably the most interesting, as coke could provide a compact transportation fuel for seagoing vessels. More about this later.

    Coal pyrolysis is an endothermic process, as we need to break chemical bonds. Where would the energy used to power the process come from? The most promising option would be wind and solar energy, which are available in different proportions across the globe. In Australia, US, Africa and South America; solar thermal power can produce temperatures up to 500C and maybe up to 1000C using a combination of trough and dish collectors. Elsewhere, wind power can provide the energy to resistance heaters or inductance heaters. Wind and PV can provide the power needed fans, pumps, etc.

    What about excess carbon dioxide? The best option I can see would be to cool it to 10C and compress it to 45bar. At this point it will liquefy. Pipe it to the coast through a buried steel or polypropylene pipe and release it into the water at a depth of 450 metres. It will stay liquid, because the temperature of the water at this depth is 45bar. It will sink and fill deep ocean depressions until it finally dissolves into the deep ocean water.

    Thus, we convert a presently useless fossil fuel into valuable liquid fuel, by using renewable energy available at the site.

  10. MASTERMIND on Mon, 2nd Jul 2018 9:40 am 

    I emailed Professor Douglas B Reynolds PhD, Oil and Energy Economics, University of Alaska.
    http://uaf.edu/files/som/REYNOLDS-Doug-2016-CV.pdf

    And I asked him if our upcoming oil shortage will cause a global economic collapse?
    https://imgur.com/a/rBtIrfg
    He replied;

    “Yes, it will be like that, but may be worse with other extenuating circumstances such as war or the decline of international trade. Hyperinflation as happened in the Soviet and Post Soviet economy is a certainty.”

    https://imgur.com/a/rktmHdt

    RIP 7 Billion

  11. print baby print on Mon, 2nd Jul 2018 10:33 am 

    https://www.yahoo.com/news/m/8694b489-59ed-30ba-b9c1-338b4a607e2a/ss_libyan-oil-production-nearly.html
    This is news and oil down 2% hahahahhahah

  12. MASTERMIND on Mon, 2nd Jul 2018 10:35 am 

    Some people think there are way too many people on the planet living off $1 a day or less. If we got rid of those people, we could keep consuming incredible amounts of resources for much longer..

  13. Antius on Mon, 2nd Jul 2018 10:59 am 

    Tesla is tanking.

    https://www.zerohedge.com/news/2018-07-02/tesla-tanking

    The latest in a long line of failed battery electric vehicle attempts.

    When you are selling an inferior product at a superior price, you are onto a loser.

  14. Outcast_Searcher on Mon, 2nd Jul 2018 11:36 am 

    diss: Let’s pretend PM sellers have no self interest re their predictions. Let’s ALSO pretend that if oil prices ramp up, which they will a LOT if demand grows relative to supply, that more production and especially more exploration won’t occur.

    Let’s also pretend that higher oil prices (hopefully far higher) won’t be great for green energy, and make ICE’s go away much more quickly. At high gasoline prices ($5 or more), HEV’s and even PHEV’s suddenly look MUCH more attractive.

    The news is far from great, but given the realities of AGW, on balance, it’s about as good as can be hoped for in a world where BAU growth continues despite all the signs that it should not.

  15. Outcast_Searcher on Mon, 2nd Jul 2018 11:40 am 

    Antius: Let’s pretend that Tesla is the entire BEV picture. Let’s pretend that whether Tesla makes it financially or not, like BEV’s aren’t coming in massively increasing numbers within 5 years.

    Further, let’s pretend HEV’s and PHEV’s aren’t viable, to help offset higher gasoline prices.

    Unlike almost everyone else, I’m neutral on Tesla itself — but things like the $48 billion commitment to batteries for EV’s by VW can’t be ignored by people more perceptive than ostriches.

  16. JuanP on Mon, 2nd Jul 2018 11:40 am 

    MM “Some people think there are way too many people on the planet living off $1 a day or less. If we got rid of those people, we could keep consuming incredible amounts of resources for much longer..”
    Why don’t you start by getting rid of yourself, motherfucker? Is it not enough that those people mostly lead miserable lives? Now you want to kill them, too? You are repugnant! Considering that you claim to be black, your solidarity towards your race leaves much to be desired considering that most of those living under $1 a day are Africans! Or did you forget that under this identity you are supposed to be an African American millenial?

  17. MASTERMIND on Mon, 2nd Jul 2018 11:43 am 

    This and no other is the root from which a tyrant springs; when he first appears he is a protector.

    -Plato

  18. JuanP on Mon, 2nd Jul 2018 12:00 pm 

    “The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11%”
    What can’t be sustained, won’t be sustained. It is only a matter of when!

  19. JuanP on Mon, 2nd Jul 2018 12:13 pm 

    MM “This and no other is the root from which a tyrant springs; when he first appears he is a protector. Plato”

    Hmmm! Kinda like someone claiming to moderate and neuter rabid anti Americans for the benefit of other board members while insulting and abusing others all the time? Does that qualify?

  20. MASTERMIND on Mon, 2nd Jul 2018 12:48 pm 

    Dinesh D’Souza, Recently Pardoned by Trump, Shares Tweet With #burntheJews

    https://www.haaretz.com/us-news/d-souza-recently-pardoned-by-trump-shares-tweet-with-burnthejews-1.6224329

  21. Outcast_Searcher on Mon, 2nd Jul 2018 1:18 pm 

    So, if we look at a timeframe of more than an hour, Antius, Tesla is NOT tanking.

    This Zerohedge piece was empty rubbish, even considering the source.

    Tesla is a volatile stock. Bulls and bears both push the stock price around.

    So up over 6% on the day, down about 3% on the day, and now down less than 1% on the day.

    So the real news (no surprise) is likely that going through contortions to barely make the number via “burst” mode is pretty much a non-event.

    The market needs to wait and see about things like sustainable production, costs, profit margins (if any), quality, service, etc. etc. etc.

    Only the blind (like zerohedge, Tesla fanbois, Tesla super-bears, etc) would have a hard time seeing that, since it’s so obvious.

  22. Anonymous on Mon, 2nd Jul 2018 1:50 pm 

    First of all “conventional” seems to exclude a huge area of new development (shales).

    Secondly, the way discoveries are accounted for in time is not really correct. If they find more oil in an existing field, the amount of discovery is just edited for the past, rather than listing it as new availability. Perfect example is Kern River, California.

  23. Antius on Mon, 2nd Jul 2018 3:55 pm 

    “So, if we look at a timeframe of more than an hour, Antius, Tesla is NOT tanking.

    This Zerohedge piece was empty rubbish, even considering the source”

    OK. I will admit that I have been a bit lazy and not spent that much time looking into Tesla as a company, aside from the products themselves, which I think offer poor performance considering their cost. Maybe I’m wrong. If the company has expanded into something bigger in a few years time, and its BEVs have a larger share of the car market, then I will concede that I was wrong. But I somehow doubt it, unless there is a fundamental change in what Musk is offering.

  24. Don Zenga on Mon, 2nd Jul 2018 6:38 pm 

    Many industries know about this threat, but they don’t dare to talk about it for fear of Big Oil. That’s why they silently support the Electric Vehicles.
    Today there is a big news.
    Tesla achieved production rate of 5000 Model-3s in 1 week.

  25. Cloggie on Tue, 3rd Jul 2018 2:43 pm 

    https://deepresource.wordpress.com/2018/07/03/ecovat-seasonal-storage/

    Development from my home town: “Ecovat”, seasonal thermal energy storage with an energy efficiency of 93% over 6 months.

    Idea: collect solar heat in the summer and retrieve it from the storage in the winter for space heating purposes.

  26. Antius on Tue, 3rd Jul 2018 5:51 pm 

    “Development from my home town: “Ecovat”, seasonal thermal energy storage with an energy efficiency of 93% over 6 months.

    Idea: collect solar heat in the summer and retrieve it from the storage in the winter for space heating purposes.”

    Excellent innovation. The sort of thing that you build once and your great-grandchildren will still be able to use it in another century.

    The only downside would appear to be the need for heat distribution networks. That would be a significant capital cost.

    Another use for a long-term heat store could be electric power generation. If you can gather solar heat and store it as hot water at 70C say, and run a heat engine between the hot store and the outside air, then you effectively have a form of solar power that is fully controllable and can fill in the lull periods between other types of renewable generation. If the hot source is at 70C; ambient is 10C and the vapour cycle powerplant generates at two-thirds Carnot efficiency, then cycle efficiency is 11.7%. The storage energy density would be 8.2Whe per litre, which is only 1/20th as much as a lithium ion battery. But batteries are expensive and water is extremely cheap.

  27. NK on Thu, 5th Jul 2018 11:20 pm 

    All bets are regular time solely unless other is stated.

Leave a Reply

Your email address will not be published. Required fields are marked *