My source is Richard Heinberg's the Party is Over. In the foot notes he references Colin Campbell so it is essentially it is an ASPO number. The sudden dive in EROEI is being caused by "market forces." Low EROEI Oil was not pumped durning the age of cheap oil but now as prices rise the oil companies go to long lengths to extract it because it is profitable to do so from a monetary standpoint. From an energy standpoint the amount of oil being brought on line now is small.

That's inarguably true, of course, which means that, depending upon one's definition of "cheap", we have already arrived at the peak, haven't we?

We're seeing the initial shock waves of high oil and gas costs spreading out through the global economy right now. The money boys all seem to pretty much agree that the market has established a new pricing floor, which we'll never drop below again.

How can we interpret this as anything but the arrival of Peak Oil? Yes, it's decades earlier than the super-optimists predicted, and years earlier than most of the pessimists said, but Deffeyes and others penciled in last winter as the date, and are they not being proven correct every day now?

We're there, folks. This is it. Get ready to duck.

Where was I before? I don't remember this.
This is a disturbing new concept that I am going to have to mull over...although I did suspect something like this was lurking just under the water. Thank you Novus for bringing this to my attention.

Yes, we have talked about it before but only in bits and pieces discussed in various threads posted over a period of years. If you were not specifically looking for it you probably would have missed it. I only found it because I read a series of books in rapid succession. Twilight in the Desert, Collapse, The Long Emergency, High Noon for Natural Gas, One Thousand Barrels a second, and the Party is over. While reading those books I was also reading articles here. I took all the little pieces and assembled them into one conherent concept called Net Oil. What took me six months to put together I present to you in a 10 minute Essay.

I am also thinking about writing a concise book on Peak Oil and Net Oil to get the word out in terms the public can understand. I think the world needs to know about this.

Thanks for doing that and it was a great essay, and it's true that you had to be looking for it, but lets not get carried away. Doing a google search shows that "Net Oil" was not born on April 7, 2006.

But, it seems the concept of Net Oil (not to mention Peak Oil) was missed by a lot of people and I think you should write the book. I'd hurry though.

Novus, you are spot on to highlight this. I've been trying to raise discussion of this issue here and over at TOD. If I knew how, I'd insert my latest spreadsheet so folks could play around with the assumptions and perhaps someone adept could generate a graphic. It wouldn't look pretty. One can assume decline from Fields in Production of, say 1%-12%. New production will make up for some portion of that, yielding net decline. My best guess is net decline of 2.5-4%. Then, factor in declining EROEI and increasing population to get the big picture. Today, we have 85 MBD at 15:1, leaving 79 MBD net for 6.6 billion people, or 4.4 barrels/person/year. Ten years hence, using my 2.5-4% decline, and EROEI in the 10:1-7:1 range, and population of 7.5 billion, we'll have only about2.5 barrels/person/year. So we'll each have to get by with about 60% less oil. Of course the falloff won't be distributed evenly. Some people (perhaps in China?) will be using more oil than they do today, some will have none available. But any way you cut it, energy intense culture will be feeling a major squeeze, to say the least. If the move to deep water, polar, heavy and tar/shale oil takes overall EROEI below that 7:1 level, it's much worse, as that's about the level where EROEI really begins to bite:

EROEI % Net
15:1 93%
10:1 90%
9:1 89%
8:1 88%
7:1 86%
6:1 83%
5:1 80%
4:1 75%
3:1 67%
2:1 50%
1.5:1 33%
1.33:1 25%
1.25:1 20%

Maybe I dont understand you correctly, but it seems to me there might be a flaw in your logic. Your interpretation of EROEI seems to be that it takes oil to produce oil, hence the concept of 'net oil'.

However, in the case of the tar sands for instance, the input energy is mostly natural gas, which I have read can be replaced by electricity. So if we produce 5 mbd from the tar sands all 5 mbd will be available to us, the input energy being in the form of natural gas. Ofcourse natural gas production is constrained and there are other issues.

So while declining EROEI is a concern, it doesn't seem to me to be the catastrophe that you make out.

I agree completely -- the fact that the Hirsch report called Peak Oil a 'liquid fuels crisis' and definitively not an 'energy crisis' has led to some confusion I think. When oil peaks, the overall amount of energy available will be seriously impacted, and the price of all alternatives will skyrocket right along with oil.

Guys, you should read the linked post that Monte provided (EROEI: Energy Returned on Energy Invested). The logic is inescapable: When the EROEI of oil becomes 1:1, it ceases to be an energy source -- even if you're using a different form of energy to maintain production.

Doesn't mean we'll stop pumping, because oil still might be useful for petrochemicals etc., and as long as someone's making money, they'll keep right on doing it. But when the energy reaches parity, then we're not talking about production, but substitution. Then oil becomes merely an energy carrier, like electricity or hydrogen, instead of the valuable energy source it is right now.

Monte, over and over your posts have helped me clarify. Props and thanks.

Well, it may not be as big of a catastrophe as described, but it still seems like a catastrophe of some sort. Instead of getting less oil per unit of oil, we get less oil per unit of energy. Basically, it's about as bad, especially considering that most of our current sources of energy are non-renewables with production peaks and deminishing returns of their own.

EDIT: It seems I was a little slow to the response, so to clarify, this post is in response to Venky's.

Whether we call it "net oil" or EROI it doesn't matter to me. Its a fact of life that the world is starting to realize. This is what French oil company Total was saying just a couple of days ago when it said the world will never produce 120 mbpd, bc it costs too damn much to do it.

This board has hit this topic many times from many different angles, whether it be EROI, or the topic Peak oil = Peak Refinery Capacity, or now net oil, its all the same. For this reason, KD is right and the world has already passed peak. IF the world was serious about overcoming the net energy issue, it would be building many new refineries to process the heavy oils that are left, or building nuclear reactors in Canada to heat the tar sands instead of using natural gas which is estimated to be depleted in 8 years. We're not doing those things, so, we are at the end of cheap energy, the Russian gas is quickly depleting, they are shutting it off to the Ukraine, Georgia, there is fighting in Iraq and Afghanistan, the US is openly developing a bigger nuclear arsenal, prices keep rising although Lynch thinks otherwise. Assuming money could resolve the problem, Klare was right, the world has opted to settle depleting energy through resource wars. No cites, bc I'm too tired of having to prove anything to anyone, just look at the gas prices at your local station and ask why.

No, his interpretation says that it takes energy of some sort to produce oil. If you use more than you get, it becomes an energy consumer

And since when was "electricity" a source of energy?

A couple of minor points: Here is a slightly revised graph. The data above represents the mideast "internal consumption" divided by the total production. Per the BP review, the middle east only exports about 20% of its refinery production outside the region. For this graph I have added to this figure the natural gas usage, converted to BOE. The mideast actually consumes 90% of the natural gas it is currently producing.

Since about 1985 the ratio of production to consumption has gone up by only about 5%. At this rate of increase, they will still be able to pump oil for a long time. However, this rate of increase will almost certainly not be linear. As they approach the maximum production rate, there will be a discontinuity, no doubt.

The growth rate of natural gas consumption in the middle east is about 7.5%. This is a doubling every 10 years. 90% of the natural gas produced in the middle east is used internally in the middle east. At this rate of increase, the currently stated reserves of natural gas in the middle east will run out in about 2048. I suppose they will hit "peak gas" and go into decline before then. So, presumably, if they are indeed using most of their natural gas to generate power to provide the energy for oil production, this will at some point be a big problem This will probably be the source of the discontinuity.

Thirdly, I am not ready to say that this consumption of energy is necessarily directly related to the pumping of that oil, but I don't think it is necessarily important for this to be the case. The amount of energy those guys are consuming is the amount it is taking to run their society in some orderly way, and take care of the population to a sufficient extent so they can produce oil. Think of it as the "overhead" involved in oil production. You can make the argument that it is going to take an increasing amount of energy to keep the people happy enough to keep the stuff running, and that is equally important if not more so than whatever amount they use to run the actual pumps and drilling rigs. This is especially true in light of the population increase in some of these areas.

Fourthly, I agree with whoever said that these guys will run their equipment even though EROEI is negative, as long as they pump oil, for critical petrochemicals and non-energy usage. At that point, you will have to compute it based on "money returned on money invested".

But. to return to the original point: It is clear that at some point, the internal usage in these places will be sufficiently large so as to not allow them to continue to export. This will be especially true if they start to go into decline. The data at hand at the moment do not allow us to figure out exactly what that point will be. Seahorse is probably right, though, we will be able to tell by reading the numbers on the gas pump.

Hmm, I wonder where Campbell got that figure from, if Heinberg is citing accurately and not just making it up. I don't know of any serious attempts to quanitfy world EROEI. Cleveland and Culter did a few for the US, their most recent one gave an EROEI of about 10 for US oil and gas, down from about 15 in the 1960s. The website at oilanalytics.org is down and got taken over by a porn site but an archive is here, though the relevant image in the results isn't accessible. Given that average US field sizes are on the order of 500,000 barrels white the rest of the world averages about 40 million barrels (source IHS energy) and drilling density is much lower, world EROEI is probably quite a bit higher. Though I would be interested to know how much oil is burnt in the supertankers lugging it around the world.

Novus, thanks for your post. Your idea of Net Oil packages the idea of diminishing returns nicely.