I have a model based on irregular oil shocks at the M O B J blog. I think I have the subject semi-articulated, both mathematically and in terms of intuition. Sandiford at TOD got me inspired to work out the details, based on the largely empirical work at fitting to logistics curves.

http://mobjectivist.blogspot.com/2005/0 ... model.html

This model is anti-dedicated to Mike Lynch, a purveyor of exactly what I am still trying to figure out.

I share this feeling myself.. I was left disappointed with Mr Lynch's postings.

What exactly is his position?

I sumarised it for him to "not yet it doesn;t matter" but he then confllated his postion in what appeared to be several rather stupid ways which were way below the level of debate on this forum of (lets face it)part timers. the enviromental point was a complete red herring. a real 2+2=5

that is not to say his predictions on production may not pan out but his argument it made irrelevent the issue of PO was non exsistent if not slightly disturbing .. he also consistently failed to address some questions and made him look weak... the definitions of resource stress was loose and the idea of well growth being offset by improvements in cost efficency as part of his argument was actually rather insane given the notion stress is related to internal cost ether that or i misunderstood it.. he didn't feel he needed to clarify this point, perhaps i was unclear..

i do think people reject economic modeling on this forum a bit too easily as the reaction of human beings will effect how this pans out... if doomers think humans will run to the caves they too are basing their predictions on human reaction..economics must be part of the future prediction game..

here is some questions

why do you think he posted to the forum?

does he believe in his own position?

Boris
London

He probably has some doubts (we all do, no?).
But I believe he believes his position is interesting enough (and, these days, getting rare enough) to pay his bills, especially if he can maintain a sufficiently lively debate about it...

I'd say, based on his responses, papers, and presentations, he thinks exactly what he says: that oil is clearly finite (no more is being created), but that we're not going to run out or face geology/resource-based supply constraints sufficient to halt the growth of oil production within the next 20 years at least.

More specifically:
1. There's more recoverable oil than PO Doomers think. Relative the amounts already consumed (1 Tb) and the amounts currently considered economically recoverable (~1.5 Tb more), the total amount of Oil In Place is very large (5-10 Tb).

2. Markets respond to prices, especially over the long term (5-10 years): if prices rise, consumers will alter consumption habits and producers will bring previously-unprofitable fields into production.

3. Technology lowers costs of extraction, and as the world moves away from a few giant and supergiant fields to a large number of mid- or small-sized fields, even slight reductions in per-well costs will translate into large improvements in production, especially from stripper wells.

4. The definition of "oil" expands over time. Technology and rising prices mean that lots of "unconventional" oil will become quite mundane. Heavy oil, shales and sands, polar and ultra-deep water, deep shelf, etc...

5. The US is a model for some aspects of depletion: gradually, the world will be as thoroughly explored and drilled as the US. Until we see as many stripper wells in SA as we do in Texas, we've got nothing to worry about. Because the ME fields are nowhere near the US' level of maturity (or even the US in 1970), peak is a LONG way off.

6. The US-48 is NOT a model for other aspects of depletion: e.g., the sharp peak followed by a rapid and abrupt decline, as in 1968-1973. Even if Hubbert was right about the US (and not just lucky), there's too many other cases where production has rebounded or hit new peaks to think that every country follows a curve as closely as US-48 did.

7. Hubbert modelling suffers from poor data and a lack of rigor. If it is a hypothesis, it needs to be tested. To the extent that Hubbert modelers haev offered testable predictions of future oil production, those predictions have nearly always been wrong, and nearly always by being too low. The method (or perhaps its practioners) thus seems to have inherent biases towards underestimating URR and production. Even the singular success - Hubbert's prediction of 1970 for lower-48 production - was initially revised, was quite low compared to actual 1970 production, was made in a constant-price environment, and was followed by several more predictions that were very wide of the mark. Even a stopped clock gets the right time twice a day.



PO Doomers have a low opinion of humanity and a distrust of markets. They don't believe that something as impersonal as greed can create an invisible hand for good and complexity. It's just like fundies who simply don't believe that natural selection and self-interest can result in evolution and human intelligence.



Of course.

well what does he/you mean... we peak in 20 yrs time or we don't need to react to it for 20 years?



how widespread is this belief?



yes



does that negate point 2 to keep prices down?



dp points 2 + 3 combine to overcome the upstream effort against the laws of thermodynamics as we expand the meaning of the word oil?

this is simply not addressed by anyone AFAICT



well 20 years?



is the lower 48 the largest multi basin example we have data for? is it considered a multi basin? as you decrease the size of your closed system model or example (and we are trying to map future growth globally) do the variations in production graphs compared with overall global curves matter that much? moreover the breaks in curve in production compared with a hubbert style curve are many times explainable as a variation from a hubbert style curve brought about by real world effects eg bottlenecks EOR etc... but paradoxically they confirm the existence of a underlying base case or curve as you need a constant condition model to form the analysis for change!




I think this is a common problem of all the global prediction players out there.. you simply do not have earth2 to compare against. The scale of our guesswork boarders on the megalomanic.. I think we should inject a high degree of humility into this debate as NO ONE has a clue IMO



I don't think that comparison is correct fair or even intellectually honest.. the myriad examples of some invisible hand not solving problems is legion... that is not say there is no effect... to assign the scientific determinism to this invisible hand position fails to address that like evolution economics is bound by environmental effects external to what the respective theories are capable of describing..

eg the some total of my personality is not genetic dispite genetics is clearly a foundation of it.... it is interesting how evolutionary theory has to expand the meaning of the term environment... PO is an issue that has started a positive debate on the nature of multi-disciplinary analysis in solving or identifying human problems. I am much more interested in finding points of agreement in this lynch vs ASPO thing..

OTOH i find this run to hills thing just insane



shrugs question-ally i guess he must do but i wonder how he reconciles the effect of his predictions even if correct can have?

there is some rather worrying potential for feedback into human perception here

Boris
London

Well according to him he's not earning his money from these debates.

Is there a difference?

PO Doomers think that the market can't react in time because:
1. PO is gonna happen very soon, i.e., 3-5 years. The "normal" adjustment process might require 10 years or more to build all the solar and wind and nuclear and hybrid cars and mass transit.
2. Depletion after PO will be horribly rapid and our institutions will break down.

20 years means tar and shale and other things come on line in quantity. It also means that our current conceptions of the "limits" of oil extraction will probably be radically altered by both economics and technology.

If, instead of 5 years, it's 20 to peak, and if instead of a rapid decline of 10% per year post-peak, we see a long plateau of production followed by gradual declines of 1-2% per year, I'm not sure what the catastrophe is. Other than Global Warming, that is... but that's a different beast, not to be conflated with PO.

I don't know. It certainly depends on #4 below. I think USGS has total conventional and unconventional reserves over 11 Tb. Many authors don't bother to include sands and shale and heavy oil in their estimates. After all, if you include them as part of your economically recoverable projection, the problem disappears.

Yes. But they're face feedback based on total production demanded. Declining costs mean that supply can expand more easily without raising prices as much. It's not a contradiction, but rather both factors will mean that supply can expand. Which will predominate, I don't know, although I suspect rising prices will be more important.

EROEI is not a factor. As long as the EROEI is greater than one, the market can handle the costs. Think of it this way: in a world of cheap energy, a 30:1 return is good, but 3:1 is lousy. In a world of expensive energy, 3:1 is a great investment. Even 1.5:1 is a 50% return on your investment, and that's not bad at all (especially since EROEI avoids inflation). The S&P 500 has a historic average real return of 7%, which would be 1.07:1 by comparison. I think the market can handle EROEI.

I have no idea. Lynch's point is that its not an issue that the PO theorists are even addressing. Sure, offshore and deepwater wells seem different, but onshore fields still account for a far larger share of oil production and reserves. Is Ghawar as densely drilled as East Texas? Even accounting for lower well densities because of increased technology? Not remotely.

Based on total oil production and reserves, the US in 1860 may have had as much oil as SA. The US was the biggest oil producer in the world for nearly 100 years, long a net exporter. SA may have thousands of wells. The US has *hundreds* of thousands of wells.

That's circular - or at least its not falsifiable. Everytime reality differs from the model, we introduce a new variable? How do you make a prediction? The only reason to view each failure of the model as a success is that you a priori accept the truth of the model. Without an independent reason to accept the model, that's not science - it's faith.

That's like a conspiracist asserting that every time the conspiracy is disproved, it just proves the conspiracy is even larger than we supposed!


Agreed. But only one side is proposing a massive change from the status quo, whether it's government control of energy, tax-subsidized wind and solar, auto fuel economy restrictions, mass transit, etc. The burden of advocacy is on that side to demonstrate why change is needed.

I certainly feel that most of those are good ideas, based on the unrelated problems of global warming. And we don't need to subsidize the fossil industries - at least we need a level playing field. Wind and solar are great, auto economy needs to rise, and the current exurban lifestyle needs to change. I love mass transit (rail - not BRT!). But I can support those policies without PO. If PO is imminent and the decline will be rapid, then by all means we should do something. But first we need the evidence.

Compare PO to Global Warming. GW is obvious and very well supported. We should take action now on GW. I don't see anywhere close to the same level of evidentiary support for PO.

[/quote]
I agree it is not a totally fair comparison, because quite clearly the major PO authors DO trust the market under most circumstances. Simmons, for example, made his money in the market. Campbell and Laherre understand the nature of market forces on oil companies as well. They just think that, as I detailed above, the market has incomplete or incorrect information. But I dare say that many of the PO Doomers do not share that understanding.

Even getting people on these forums to agree (as you freely did!) that scarcity leads to rising prices which in turn spurs production, or that URR is an economic determination as much as a geologic one, is like pulling teeth!

That really nails it on the head.
With so little hard data, no one should have such stubborn/steadfast opinions.
A stubborn opinion means you either
1) know something no one else does (which is pretty much impossible with regards to oil estimates)
2) you have a vested interest or are biased
3) possibly, you're playing the devils advocate.

Surely Lynch doesn't feel 100% confident that peak won't happen within 25 years. So, I'd like to ask the more interesting question.
Mr. Lynch, if you aren't 100% confident, why? What gives you pause?

that doesn't work? either peak oil occurs in 20 (X?) years or not if it allows for the substitution of heavy oils in your definition you havn't peaked if your definition changes in time..



I think you need to add that the rate of production must be economically viable... the total amount is in some respects irrelevant.



then how does lynch detect stress... supply could expand out of proportion to OIP... you need to assume OIP estimates are massive compared to accepted estimates for this expansion cost dynamic to hold water...
ASPO holds a all things equakl argument where as this appears to be a all things unequal and changing one.




then the market needs to overcome the EROE not just of the process but the increases in production rates required in harvesting heavy oils that suffer geometric hits due to the nature of AREA minning as opposed to the less EROEI expensive sucking out from a point well production... stripper wells themselves demonstrate this point and the return in the lower 48 has not stopped decline yet the intervention trigger cost is supposed to produce from the invisable hand productions rates greater than stripper well multiplication and sustain growth?

I find that almost impossible to give credance to... if the market could handle it the lower 48 would not have peaked or should at least invert on a sustained scale before we dig up the mid west of the USA and canada



there is clearly a clash in two parts of the argument concerning efficencey and start points in time

EDIT: IS the value total production? we have 500000 wells at peak in the USA how many wells produced 80% of this value?

low production strippers account for what percentage and how much can they add?


YES! Both Lynch ASPO (and science) in general do this... if it snaps to far an alternative model which is more elegant appears



Pretty much yes!..except we have a constant based on extraction technique/voluntary limiting and current rate



as soon as you accept that oil is limited you need to change.. here is the thing the market SHOULD pre empt Lynch if he is taken seriously.. if he is belived his prediction shouldn't happen! the prediction changes the outcome from itself




sort of must be true sometime.. it can not be wrong.. lynch doesn't think its wrong



I find such a comparasion hard to make



human perception and physical reality will collide siomewhere as the market is based on seeing the future and the future will come to a un deferable position on some issues time to time.. the market calls it a readjustment.. but everyone else may call it a bloody disaster

Boris
London

Global warming is being observed presently. Do you believe it prudent to wait until we observe PO before we take action?

4) You understand how deeply entrenched our economic system is and how we have overpopulated our planet beyond sustainable levels and that we have a long road ahead to re-engineer our economy, culture and value systems. And so you exploit the logic of PO to accelerate global awareness of the issue in hopes that this will move governments and industry more quickly toward sustainability. And in the end if the peak is further out in the distance than originally forecasted then you get the added bonus of sufficient energy available to smoothly convert to renewable replacements. One would think all rational humans would have the humililty to recognize this TODAY instead of spending time splitting hairs over exactly when PO will happen, how severe it will be and how much oil is really left.

And if we still tenaciously want to hold on to the status quo of parasitic consumerism on this planet than shouldn't global warming be the extra kick in the pants to get our governments mobilized toward recognizing that yes there are limits to growth in a fossil fuel driven world?

If Lynch frames his arguments that PO forecasting is flawed and that we have perhaps more oil and therefore time to build sustainable renewable alternatives, than there really is no debate. We all agree that more accurate data and prediction will help in the process to re engineer our society, economy and culture.

If however Lynch's efforts to debunk PO are to state that we do not have a potential crisis or do not need to take action on radical reforms of our economic system to address global over population and our culture of consumerism etc. etc. than it is clear that there is a debate and it is less about the viability of PO and more about whether we need to make fundamental radical reforms or whether we can continue with the status quo.

I think Lynch has been vague and non commital in indicating where he stands on the urgency of reform and change and that is more the source of the debate here. I wonder if he would care to comment?

I would also add that it iseems clear that Simmons, Campbell and all the advocates of PO are driven in their analysis by a fundamental belief that time is running out and that this does create a bias toward perhaps accelerating the effects of PO. I am less interested in the academic science and precision of the specifics of when PO will occur and more persuaded by the fundamental argument of PO advocates that we need to WAKE UP. In the end they are right whether or not PO is now or in 30 years simply because the awareness they bring to the table accelerates the transition toward sustainabililty and if this happens with abundant oil in the ground or past the peak it doesn't really matter given the precarious nature of our planet with 6.5 billion people and our current energy habits.

I agree totally with this..

even from a free market POV the need to deregulate or encourage market reforms in third world countries so they would behave in a manner he outlines consuming kerosens instead of firewood... could all be seen as action that needs implementing

Even when we don't dipute this world view there seems to be little reason for inaction in its own terms.

Boris
london

It's kind of annoying when he keeps on reminding us how valuable his time is, and he's got other work to do, and so on. I get enough of that busy-bee arrogance from mid-level bureaucrats at my work who think they get paid by the pound of paper they produce.

agreed - the energy markets are NOT free. If the government is going to to intervene, it should do so in a way that enhances public safety, health, and security. That means discouraging fossil fuel use in preference for renewables and conservation, and providing mass transit.