Michael Lynch - Disputing Peak Oil

ehv_nl · **Joined:** Sun Aug 15, 2004 12:00 am **Posts:** 35

@Spike

Michael, in an previous reaction you state:

Quote:

Production has to start at zero and end at zero, but that tells us nothing about the shape of the curve in between. In fact, Hubbert admitted that himself. You can (and often do) have multiple peaks, sharp peaks, long rising or falling plateaus, etc. Depends on how you define the region, first, but also geologic, geographical, political and economic factors.

I'd say the Russian production curve would be a perfect example of this, wouldn't you agree? The thing I keep thinking about is that political factors typically show up in production curve's of countries, but since the world has quite a number of large producers political factors will show up as mere bumps in a production curve of the entire world. If I recall properly the world has greatly diversified it's sources of oil after the great oil crises of the seventies and eighties, exactly to mitigate for political disruption.

ehv_nl · **Joined:** Sun Aug 15, 2004 12:00 am **Posts:** 35

@JohnDenver

With regard to the quote of the ASPO newsletter you used in one of your previous reactions I'd like to say that the quote you present is *not* Colin Campbell's. The newsletter itself quotes a William Stanton, and introduces the text as follows:

Quote:

The population of the World expanded six-fold in parallel with oil production during the First Half of the Age of Oil. William Stanton, author of The Rapid Growth of Human Population 1750-2000, contributes the following analysis of how population will have to return to pre-Oil Age levels. Let us hope that it does not come to this, but the options explained do have a certain chilling logic.

Now the words "certain chilling logic" hardly seem like endorsement, and the newsletter expresses hope that "it does not come to this". You make it seem though as if the tekst is of hands of Colin Campbell himself, which is absolutely false.

Apart from that the William Stantons text seem to me like dictatorial crap. I do share worries about the emergence of dictatorial regime's in times of global depression especially since the world has seen that before. I personally endorse a free society, though. Let there be no discussion about that.

linlithgowoil · **Posted:** Thu Jul 28, 2005 5:32 am

Whatever anyone says, Lynch is right - production is still increasing. It soared last year in response to demand, so therefore geology is not the only factor involved.

I think everyone who knows anything about oil knows that each individual field will eventually start to decline and you can extrapolate from that that the entire world will decline at some point, but i still dont think you can project a psecific date for the peak with any accuracy at all, and i actually agree with Lynch that the peak oil date can be moved further into the future each year with new technology and reserve increases.

The oil shales are very interesting, and it may be that we can really ramp up production of those, and continue to use less energy doing it through new tech.

I still see a peak in the near future though - before 2015 seems a reasonable enough estimate.

I still have no idea what that will mean for the world. I still have hope that we can do something about it. I still refute the idea that we are headed for the olduvai gorge.

spike · **Joined:** Mon Nov 15, 2004 1:00 am **Posts:** 241

I mean that I don't think we'll need anywhere near that much oil from Saudi Arabia. I have a suspicion that they could hit 20 mb/d if necessary.
Mike Lynch

Doly wrote:

spike wrote:

4) I'm not sure who you mean when you say "SA", but presume it was some Saudi official. To my knowledge, they don't have an official stance on that. Also, for nearly 25 years, the IEA and others have projected a need for a steep increase in OPEC supplies (long-term), and it hasn't happened, so the Saudis are somewhat skeptical (as am I).

You mean here that you don't expect Saudi Arabia to increase production, or at least, not as much as would be needed to meet demand, as projected by IEA? And if the oil won't be coming from the OPEC, where will it be coming from?

spike · **Joined:** Mon Nov 15, 2004 1:00 am **Posts:** 241

Why aren't you worried about running out of coal, gas, copper, aluminum? That it must eventually go down is not an issue, the issue is whether the peak is near (for geological reasons, not due to taxes, recesssion, etc.) which is what Campbell, Laherrere and others say.

You say that my curve "just goes up" is preposterous. Why? It has gone up pretty steadily for 145 years so far.
Mike Lynch

CalgaryEng wrote:

We are consuming fossil fuel resources that were created over a period of many millions of years. Correct me if I am wrong.

This means that in the long run the production of fossil fuel resources MUST eventually drop to an average level that corresponds to the rate at which they are being produced by the earth. Correct me if I am wrong.

This means that a curve that represents fossil fuel production as a function of time that is currently way above the earth's rate of production must eventually go down.

If this is too difficult to understand allow me a simple example. You have a cage with some mice. You put in a one-time lump of five pounds of food. You then add 0.1 pounds of food each day. My contention is that the mice will feast and multiply on the five pound lump and then, as time passes, adjust their numbers and eating habits to consume 0.1 pounds per day. A graph of daily consumption would rise and then fall.

Now look at the last graph presented by Khebab forcasting World Oil production. Campbell's curve goes up and then down. This basically fits reality as mathematicians and engineers know it. Look at Lynch's curve. It just goes up. That is preposterous. Surely a Ph.D. from MIT can understand basic concepts like finite, consumption, rate of replenishment, etc. The curve has to come down. The wolf will come.

I am sitting in an office right now in Fort McMurray, Canada. I am trying to get my share of the tens of billions of dollars being invested right now in the oil sands all around me. What is amazing is that the tens of billions of dollars needed for this development will only produce a relative trickle of a few million barrels per day. The quantity of natural gas required for the production is enormous. The investors in these projects are betting that the age of cheap oil is over. I am betting that too and I am willingly risking my time and money on that forecast.

spike · **Joined:** Mon Nov 15, 2004 1:00 am **Posts:** 241

A peak could occur due to depressed demand (technological innovation or taxes, etc.) but I don't anticipate it any time soon. I think there will be no peak due to geological reasons until at least 2030 and probably 2050, which assumes some "unconventional oil" such as gas to liquids and tar sands, and maybe shale oil.

Resources are not present in step function, ie., a sharp transition from cheap to expensive. Instead, you will see a combination of unconventional oils, more efficient uses (hybrid electrics, etc.) and probably greater electrification. I think a combination of solar and fission will be the next big contributors. But there will be lots of gas (including gas-to-liquids) and oil will hardly disappear.
Mike Lynch

FatherOfTwo wrote:

Mr. Lynch, again, thank-you for continuing to contribute.

Let's take a different tact on this. Hopefully you aren’t a believer in the theory of abiotic oil. Given this,

1) When you do suggest peak oil will occur?

2) At what point in time will society have to begin transitioning away from oil in order to prevent mass economic shock? Do you concur with the IEA’s recent report that we require 20 years, 10 years if it is a crash course? Or in other words, will relying on the market be insufficient given the amount of infrastructure changes needed?

3) What energy source will we be transitioning to?

spike · **Joined:** Mon Nov 15, 2004 1:00 am **Posts:** 241

We exploited smaller wells because we ran out of the bigger wells. No one overseas looks for the small stuff because there's still big stuff available. Eventually, they will resemble the US in terms of drilling density and well productivity.

Campbell has made much of the suspicious reserve additions in the Middle East, thinking he 'discovered' it and that it's relevant. I was in Kuwait in 1987 and we laughed about it then. Most people were aware of it, and didn't think it interesting because it's PROVED RESERVES which tells us very little about ULTIMATE RESOURCES.

I think what gets Campbell is that people like Peter Odell often show reserves to production ratios, which have been steady for 50 years (not declining) and shot up in the 1980s for the above mentioned reason. But even if you discount those reserve additions, reserves have remained high since they were first reported.
Mike Lynch

pstarr wrote:

spike wrote:

Positive evidence: the density of drilling in the US in 1970, when it peaked, was about 30 times that of the rest of the world now. Field size and well productivity levels around the world are still far above the US level at peak, and reserve additions have been replacing production.
Mike Lynch

Isn't US well density a function of our unique pioneer industry-smaller, independently owned operations with a greater number of wells? So fewer wells elsewhere doesn't necessarilya correlate with higher remaining reserves. As to your second point, conventional wisdon here at PeakOil.com is that at Middle East reserve additions in the 1980s were just quota-based data manipulation.

Antimatter · **Posted:** Sat Jul 30, 2005 11:27 pm

Mower wrote:

spike wrote:

Sorry, what's MRE?

Meals Ready to Eat ... US military rations.

It's a peak oiler term for EOR/IOR, I think Matt Simmons coined it refering to water injection and horizontal wells, though those aren't actually tertiary recovery methods.

entropyfails · **Joined:** Wed Jun 30, 2004 12:00 am **Posts:** 607

Antimatter wrote:

Mower wrote:

spike wrote:

Sorry, what's MRE?

Meals Ready to Eat ... US military rations.

It's a peak oiler term for EOR/IOR, I think Matt Simmons coined it refering to water injection and horizontal wells, though those aren't actually tertiary recovery methods.

Trying to confuse the guy here?

From our moderator Jack, we have it defined as...

What is MRE?

Maximum Recovery Extraction
See Bottle Brush Wells, Pressure Extraction, Horizontal Drilling

seahorse · **Posted:** Sun Jul 31, 2005 4:01 pm

Spike, when do you believe nonpec oil production will peak?

pstarr · **Posted:** Mon Aug 01, 2005 1:56 pm

spike wrote:

We exploited smaller wells because we ran out of the bigger wells.

Deffeyes and Simmons suggest the US exploited the small, medium, and large stuff pretty much at the same time. Are they wrong?

spike wrote:

No one overseas looks for the small stuff because there's still big stuff available.

I (Simmons and Deffeyes) agree. And when the big stuff is done will the Saudis etc. be interested in pursuing the small stuff. They don't have the rural infrastructure and the skilled local population. America could (and can) afford to take out the difficult petroleum because it sits under the pasture or garden and people and infrastructure are there already. Lots of the world's remaining petroleum sits under sand, or water, or unstable ground. Will the big foreign nationals really look for the small stuff? And if not, will their locals ship it to America? Will we be able to afford such expensive oil? We didn't need cheap oil back when we were drilling all those expensive small wells, we had horses. Now we have planes.

spike wrote:

Eventually, they will resemble the US in terms of drilling density and well productivity.

Only if they scale down their infrastructure.

spike wrote:

Campbell has made much of the suspicious reserve additions in the Middle East, thinking he 'discovered' it and that it's relevant. I was in Kuwait in 1987 and we laughed about it then. Most people were aware of it, and didn't think it interesting because it's PROVED RESERVES which tells us very little about ULTIMATE RESOURCES.

I am confused. You earlier claimed that,

spike wrote:

reserve additions have been replacing production.

yet you also just discounted the evidence (suspiciously increased proved reserves) for such reserve additions

spike wrote:

I think what gets Campbell is that people like Peter Odell often show reserves to production ratios, which have been steady for 50 years (not declining) and shot up in the 1980s for the above mentioned reason. But even if you discount those reserve additions, reserves have remained high since they were first reported.

Yes. But don't USGS and EIA base their 20 year peak peaks precisely on these political machinations

rockdoc123 · **Joined:** Mon May 16, 2005 12:00 am **Posts:** 1885

Quote:

And when the big stuff is done will the Saudis etc. be interested in pursuing the small stuff. They don't have the rural infrastructure and the skilled local population. America could (and can) afford to take out the difficult petroleum because it sits under the pasture or garden and people and infrastructure are there already. Lots of the world's remaining petroleum sits under sand, or water, or unstable ground. Will the big foreign nationals really look for the small stuff?

Actually the Saudis are already looking for the small stuff...they are continually drilling exploration outpost wells in what they believe to be compartments in and around Ghawar. As to expertise...there are a number of well educated Saudis who work in the industry but most don't need to...they are guaranteed management jobs...most of the work is done by expat technical experts and service companies...if the Saudis want to get more oil out they have all the resources they need.
As to whether or not the big foreign nationals will look for the small stuff...bloody hell we already are. Oil companies are driven by economics, in some countries (eg. UK) the fiscal regime is so attractive that you can spend excessive amounts of dosh to go after small reserves and still be wildly successful. Over the last 20 years many countries have adjusted their fiscal regimes to recognize that they can't attract foreign companies unless they make it profitable...and that means as resource potential drops the government take has to follow in lock step.
That being said, I don't want to seem like I'm agreeing with Mr. Lynch here.........I am close to the wellhead globally and can tell you it ain't all roses.

seahorse2 · **Joined:** Mon Oct 18, 2004 12:00 am **Posts:** 2059

Spike/Mike,

Here's some questions for you:

(1) What hard data, actual source documents, have you personally analyzed regarding Saudi oil production, to include where you got the documents, who provided them to you, when they were provided to you, and where the documents are now, (include an itemization of all the source documents analyzed, specifying the title of the document, the source of the document, and the date of the document).

(2) Have you had access to any documents concerning Saudi oil production, capacity, reserves, decline rates, or field data that Mathew Simmons has not had? If so, list all the documents, their source, the dates reviewed, and provide a copy of all the information for review.

(3) What is your estimated EUR for Saudi Arabia? In answering this question, provide the source of your information and the data relied upon by that source.

(4) Is Saudi Arabia currently producing at maximum capacity? If the Saudi's are not producing at maximum capacity, what is their current maximum production capacity stated in BPD, and how did you arrive at this figure.

(5) What did Saudi Aramco spend in the years 2001, 2002, 2003, and 2004 on exploration? What is the source of this information?

(6) What is the average decline rate of Saudi oil production? Again, as for all questions, provide the source of this information.

(7) What is the decline rate of the Gharwa reserve? What is the source of this information?

(8 What did the Saudis spend in the years 2001, 2002, 2003, 2004 for increased production? What is the source of this information?

(9) List all countries that you agree are in a state of permanent decline in oil production;

(10) Do you believe that non-OPEC conventional oil production will peak? If so, when do you believe it will peak and what is the source of this information.

(11) When do you believe total world oil production will peak (both conventional and non-conventional)? What is the source or basis of this opinion? Please give your estimated URR for world oil, and provide the basis for this estimate.

(12) Do you believe an alternative to oil be found before your estimated peak in world oil production? If so, will the world shift to an alternative fuel due to a price increase in oil or due to some other reason? If due to an increase in oil price, what would the price have to be in today's dollars? If for some other reason, what would be the reason or reasons be to cause a shift from oil to some other fuel source.

(13) What will the energy source be that replaces oil? How much will it cost to develope? Will it be developed by private enterprise, governments, or a collaboration between the two?

(14) How much will it cost to restructure the world economy to use this new alternative fuel source? For example, new factories, new cars, new planes, etc, and where will this money come from?

(15) As an economist, will the shift to an alternative energy source be instituted by oil companies, other private companies, governments, individuals or a combination? Explain the analysis of how you believe this shift will occur.

(16) What is the maximum production capacity (in BPD) of world oil production prior to your estimated date of world peak. How much of this oil will be conventional oil, how much will be non-conventional oil, how much will come from non-opec countries, how much from OPEC.

(17) What will world oil demand be, stated in BPD, when your estimated world oil production will peak?

(18 What do you agree is a safe prediction for a yearly increase in world demand for oil, up through the year 2020?

(19) What is figure do you use (expressed as a percentage) to calculate average world decline rates in oil production from now until the year 2020?

(20) What figure do you use (expressed as a percentage), to calculate increases in world demand from now until 2030?

(21) Do you agree with the recent Petroleum Review analysis that the world is losing in excess of over a million barrels of oil a day through normal decline rates? If you disagree, state why and what is the source of your information.

(22) What will world oil demand be in the year 2020 (stated in BPD)? What percentage of this demand will be met by OPEC? What percentage will be met by non-conventional oil? And please state how much each of the following countries will have to produce to meet that estimate of world demand in 2020, Saudi Arabia, Iraq, Iran, Russia, Nigeria, Algeria, Canada.

(23) How much investment in exploration and production is needed each year to produce enough oil to meet world oil demand in the year 2020?

(24) What is your estimated date of peak for each of the following countries, and state your estimate for their maximum oil production at peak - Saudi Arabia, Russia, Iran, Iraq.

(25) Will it be necessary for Saudi Arabia to allow outside companies to invest in its exploration/production to meet world demand in 2020?

(26) Will it be necessary for Iran to allow outside companies to invest in its exploration/production to meet world demand in 2020?

(27) Will it be necessary for Russia to allow outside companies to invest in its exploration/production to meet world demand in 2020?

(28 In 2004, you stated that the price per barrel of oil would be back to $30 by the summer of 2005. Do you still stick to this prediction? Why has this not happened?

spike · **Joined:** Mon Nov 15, 2004 1:00 am **Posts:** 241

Good question. Right now I think the global average is about 35-40%. The upper limit is 100% minus something. The something is probably at least 20%; possibly 50 years from now the global average will be 60% or so.
That's guesswork.
Mike Lynch

entropyfails wrote:

Antimatter wrote:

Mower wrote:

spike wrote:

Sorry, what's MRE?

Meals Ready to Eat ... US military rations.

It's a peak oiler term for EOR/IOR, I think Matt Simmons coined it refering to water injection and horizontal wells, though those aren't actually tertiary recovery methods.

Trying to confuse the guy here?

From our moderator Jack, we have it defined as...

What is MRE?

Maximum Recovery Extraction
See Bottle Brush Wells, Pressure Extraction, Horizontal Drilling

spike · **Joined:** Mon Nov 15, 2004 1:00 am **Posts:** 241

Tough question. I'll be publishing a long-term forecast in a couple of months, but it probably will only go to 2030.
I think, non-OPEC non-FSU will not peak before then, but that includes GTL and tar sands. Excluding them, possibly 2020. Ask me again in 3 months.
Mike Lynch

seahorse wrote:

Spike, when do you believe nonpec oil production will peak?

Michael Lynch - Disputing Peak Oil

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