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Page added on September 28, 2017

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It’s Been A Tough Week For Peak Oil Theorists

Production

In news that is certain to upset adherents to the never-dying cult of Peak Oil, IHS Markit released a study on Sept. 25 indicating that, per their analysis of data from more than 440,000 oil wells in the Permian Basin, the basin still has somewhere between 60 and 70 billion barrels of producible oil to give up in coming years. That’s not exactly the “near-infinite resource” view of the Permian held by Allen Gilmer and his staff at DrillingInfo, but it certainly supports the notion that the basin will remain a very active area for oil and gas development for decades to come.

“The Permian Basin is America’s super basin in terms of its oil and gas production history, and for operators, it presents a significant variety of stacked targets that are profitable at today’s oil prices,” Prithiraj Chungkham, director of unconventional resources for IHS, said in the statement.

The IHS Markit study is the latest in a string of resource estimates in the past year that have produced a growing understanding of the true magnitude of the resource in place in the Permian. Last November, the U.S. Geological Survey (USGS) issued its own resource estimate that a single formation in the Permian, the Wolfcamp Shale, contains 20 billion barrels of technically recoverable oil, by far the largest such estimate ever issued for any single formation by the USGS. Most in the industry understand that this is actually a conservative resource estimate because USGS limits its resource assessments to reserves that are producible using current technology. Given that technology advances in the oil and gas industry every day, such estimates, while useful markers, are out of date before they are even released.

The IHS Markit study advances the knowledge base for the Permian resource by using a completely different method, one that does not limit its resource estimation by tying it to current technology. “Using a new technology we developed, we’ve leveraged our proprietary IHS Markit interpreted formation-tops data to identify accurate formations for completion intervals on hundreds of thousands of wells, and the results change the game for this basin and for geologists’ interpretations,” said John Roberts, executive director, global subsurface content operations at IHS Markit. “It has significantly changed our understanding of the extent of many formations in the Permian Basin and the potential of those formations to yield additional hydrocarbons.”

To put all these huge numbers in context, the largest-producing oilfield ever discovered in the United States of America, Alaska’s Prudhoe Bay field, has produced roughly 12 billion barrels of oil since its first production in 1977. Thus, the conservative USGS estimate of a single formation within the Permian Basin pegs its potential at more than one and a half Prudhoe Bays, and the IHS Markit study finds that the Permian will ultimately yield five Prudhoe Bays. It’s not “infinite,” but that is a lot of Prudhoe Bays yet to be produced.

To be fair to the Peak Oil die-hards ― something I always hate to do ― their theory du jour focuses not on their previous claim that the world was about to run out of oil supply, since no one can make such a silly claim without being laughed out of the room anymore, but on “peak demand”: the claim that the world is always right at the precipice of a dramatic drop in demand for petroleum.

This week brought them bad news on that front as well as the International Energy Agency (IEA) was forced to revise its estimated increase in global demand upward, from 1.4 million bopd to 1.6 million bopd. This marks the third consecutive year in which the IEA has had to make such an upward revision in this annual estimate as the OECD and developing nations around the globe continue to find the need for plentiful, inexpensive energy sources, a demand that petroleum products are best able to fill.

Janet Kong, BP’s regional CEO for supply and trading for the eastern hemisphere, told the S&P Global Platts APPEC conference in Singapore on Tuesday that her company, which has a strong history of accuracy on such matters, now thinks the increase in global demand for 2017 could even reach 1.7 million bopd.

Peak Oil theory, in all of its various contortions, has been consistently wrong for more than a century now. But it will always have its adherents, just based on the belief that, given that oil is a finite resource and the globe is moving to renewable fuels and electric cars, sooner or later the theory will have to be right. At which point, the surviving prophets of Peak Oil will all be able to raise their finger in the air and shout: “Ah-hah! Told you so!”

The news this week indicates that they’ll all have to live significantly longer in order to enjoy that moment.

Forbes



70 Comments on "It’s Been A Tough Week For Peak Oil Theorists"

  1. Go Speed Racer on Fri, 29th Sep 2017 1:23 pm 

    9 10 11

  2. Go Speed Racer on Fri, 29th Sep 2017 1:23 pm 

    Ha ha LOL. The 50rh comment wipes out
    the whole chat board.
    Have you strangled a software
    programmer today?

  3. Go Speed Racer on Fri, 29th Sep 2017 1:25 pm 

    Here we go again

    Hello there Mr Rockman,
    How is it going?
    I hope your white Cadillac
    with steer horns on the hood,
    is riding smooth, and your beam pumps
    have no downtime.

    Well yes i agree every word you said.
    When Mastermind does his napalm
    flame thrower at ya (I will tell him not to
    do that, not polite) anyway he is exploring
    the semantic between a theory and a fact.
    Example, water molecule contains an
    Oxygen atom and two Hydrogen atoms.
    To most of us, this is a fact.
    But for some like Mastermind it’s a theory,
    because he’s not fully accepting the base
    knowledge that makes it into a fact.
    Now the peak oil. I am with you 100%
    that it’s a fact. Not a theory.
    However Mastermind and his flame thrower
    both decided it’s the other way around.
    When I wrote my stuff, I sarcastically
    meant it, the only way to overturn Peak
    Oil is if we could manufacture Crude Oil.
    With all I see of humanity and mankind,
    We should already be exploring that,
    government subsidized. We would make
    the crude oil because it’s not something this
    society can ever do without.
    The best type of reactor would be liquid fuel
    thorium. Burning crude oil is exothermic
    so making it is endothermic. Indeed it is,
    to a colossal level.
    We would discover that making crude oil
    using heat sources would result in crude
    oil that is $3000 a barrel. However that
    is our upcoming reality AND if we were
    to be properly exploring that as though
    we were civilized, likely there could be
    significant cost reductions getting it down
    to $485 a barrel, but fully synthetic AND
    drawing in the CO2 out of the atmosphere.
    As to the purpose of this chat board,
    it is to write at the level of 4 year olds while
    shooting flame throwers and throwing
    spears at each other.
    Seriously yeah it should be for discussing
    decline rates of oil production. Naturally
    Any possible “antidote” such as piping
    in the methane clouds of Titan, or windmills
    that don’t work or solar panels that stop
    generating when one bird poop lands on
    them, yeah the alternatives are also of
    interest.
    Long ago I noticed if I write anything
    intelligent I get flamed so I usually just
    advocate we all have sofa and tire
    fires in our backyards, since that will
    make America Great Again. Those kind
    of posts work better here, than debating which
    type of nuclear power plant is more viable.
    As to garbage and sofa fires, I actually am
    a vigorous proponent of meticulous
    human-assisted recycling. No more
    welfare checks, they can sort the trash and
    Disassemble old vacuum cleaners at
    safe clean garbage sorting centers.
    The remainder can be burned at
    Industrial incinerators, generating major
    energy.
    I think one of the biggest crimes of this
    society is landfill dumps which is a
    massive ruination of what could have been
    Recycled resources and electric energy.
    I simplify that to “everybody should burn
    a sofa in their backyard”
    because this chat board never seemed
    able to handle anything deeper than that
    last sentence. So I think I will get back
    to dumping diesel fuel on my sofa out
    back to make black smoke and choke
    out the neighbors, and hope
    you will have a great day Mr Rockman !

  4. Mick on Fri, 29th Sep 2017 3:06 pm 

    Good post speed that made sense

  5. fmr-paultard on Fri, 29th Sep 2017 4:35 pm 

    GSRtard, burning stuff releases harmful organic pollutants or POP. I love burning stuff too but i’m not tarding that bad.

  6. Go Speed Racer on Fri, 29th Sep 2017 5:43 pm 

    Just stand upwind.
    Make sure neighbors are down wind.

  7. Boat on Fri, 29th Sep 2017 6:28 pm 

    gsp,

    We would make the crude oil because it’s not something this society can ever do without.

    Why think of oil or coal as zero-sum products. The idea is to reduce their use over decades.

  8. Anonymous on Fri, 29th Sep 2017 10:07 pm 

    It’s been a rough decade for peak oil.

  9. Davy on Sat, 30th Sep 2017 4:20 am 

    The thing about peak oil is it doesn’t go away and gets worse with age. I used to be a strong peaker from 2000-2010. This last decade evolved my thinking into the systematic side of macro decline and decay. Peak oil dynamics is still alive and well simmering below the surface. We have serious issues ahead with declining investment, failing oil nations, and normal super giant field depletion. The question for me is demand destruction from financial issues and the possibility of a renewable revolutions driving EV’s. Will demand destruction dominate or will supply hold? Might we have a slow demand destruction that allows a slow supply reduction? Will unconventionals manage to be affordable? Will renewables and EV’s be affordable and explode into popularity? Will our financial system hold together to pay for this all? How bad and abrupt will climate change be? As you see nothing but questions and time. Time is on the side of peak oil and doomers.

  10. Mick on Sat, 30th Sep 2017 5:05 am 

    Davy I got to say you nailed that statement right on the head . That’s been my way of thinking lately as well

  11. Davy on Sat, 30th Sep 2017 5:36 am 

    Thanks mick

  12. Dredd on Sat, 30th Sep 2017 9:20 am 

    “It’s Been A Tough Week For Peak Oil Theorists”

    I must not be one then.

    I am quite certain that the peak of oil will be the downfall of civilization.

    It is a slow train coming.

  13. rockman on Sat, 30th Sep 2017 12:01 pm 

    Racer – I hope you understand how much I appreciate Mastermind’s feedback. Often like shooting fish in a barrel. LOL. For instance this latest gem that PO is just a theory “Just like Gravity”.

    So let’s have a quick poll. All those who feel gravity DOES NOT exist just as Mastermind doesn’t believe that it, like PO, isn’t real, please simply respond with “A”. Which some may interpret to mean “ass”…their interpretation and not that of the always civil Rockman.

    Or if you do believe gravity exists just as some day the world will produce (if we haven’t already reached it) oil at a rate to never be seen again simply respond with “B”. Which some might interpret to mean “brilliant”. Again, not the meaning the Rockman intended to assign it.

    Nothing like starting the weekend off with a good laugh, eh Racer?

  14. Go Speed Racer on Sat, 30th Sep 2017 2:25 pm 

    Hello Mr Rockmam sir. it’s a nice Saturday
    for getting an afternoon steak at the Texas
    Steak house, i will see ya there. Are Texans
    really opposed to ketchup, like I saw in
    “The Right Stuff”?

    One of the most interesting specs I see on global oil
    production is we produce the full raging flow of Niagara Falls, except flowing as crude oil. And flowing for 8 hours a day.

    That’s actually saying we produce one-third of the flow of Niagara Falls, but phrasing it as 8 hours is more interesting. Next imagine the fire that ya get by lighting that much oil. It would be pretty much hydrogen bomb levels of fire.

    Another spec I heard, is global energy consumption is thermally equal to a hydrogen bomb going off every few hours. With energy like that, no wonder we got global warming. Never mind the atmospheric gases, just the straight up thermal output of a fire that big, will warm up the whole planet. Didn’t even get to the part where we cut down all the forests and made them into asphalt parking lots.

    Another way looking at it, is globally we produce about one cubic mile of oil annually. The natural gas and the coal is probly a couple more cubic miles annually.

    To think it’s sustainable is quite a hoot isn’t it Mr Rockman. I sure don’t see any reason not to enjoy it while we have it. That’s why the white Cadillac with the steer horns, outside our Texas Strak House Mr Rockman sir.

    And the most ironic things of all. If I conserve any oil. Somebody else will waste an equal amount. Probably some billionaire internet tycoon flying around in a 747 with a swimming pool and babes installed
    In the back. So i don’t see much reason for conserve either, do you?

    Ya probably answer your survey with a “B” Mr a

  15. Go Speed Racer on Sat, 30th Sep 2017 2:42 pm 

    Ya probly answer your question with a “B” Mr Rockman sir. But with a suggestion. We don’t wanna have Mr Mastermind having a bad Saturday. We want him happy as us. Just cause he got one little detail wrong about peak oil doesn’t mean we don’t want him to stay at the party.

    It should be just like the Tom Cruise movie Days of Thunder, when Cole and Rowdy finally got to the steak house and sat at the same dinner table. Oh they crashed each other’s rental cars just before they got there, but lunch was very civil. That’s what makes
    America Great Again.

    See your challenge isn’t to prove Mastermind is wrong, it’s inviting him over to be agreeable so nobody feels like Hatfield and McCoy’s.

    One key tool for the toolbox. It’s to give your opponent an exit ramp.

    To repeat, “give him an exit ramp”. So if somebody is getting it confused what’s a theory and what’s a fact, he is speeding 100% the wrong direction, he is going south and we are going north.

    If ya give him a hard time he will just push down the gas pedal going in the wrong direction even faster.

    That’s why we encourage him to have that exit ramp. If we wait awhile just drive north slow, after awhile he eill come up behind and he part of our little convoy.

    All that flaming wars stuff, is people not even wanting to get along. But we should all get along, to Make America Great Again. That’s why I didn’t put any ketchup on my steak while we was dining here tofay. Let’s leave Floe a big tip, we can afford it. Have a great day Mr Rockman Sir.

  16. Anonymous on Sat, 30th Sep 2017 10:56 pm 

    Peak oilers have really shifted the goalposts from the whole 2005-2010 era remarks of Simmmons/ Deffeyes/ Campbell/ Ace/ Staniford/ etc.

    At the time, peakers were all discussing a peak in the 2005-2010 time frame, with aggressive decline after. The ICON for posts here on peak oil actually has the failed 2004 prediction of Campbell.

    Even the more sober types said we would be looking at $200+ per barrel oil and grinding down society to some sort of Jimmy Carter 70s misery. (The nutters were full on zombie horde believers, Oldagavi gorge, end of ocean shipping of food, etc.)

    Since then, almost NONE of the peakers have really faced bad predictions. The less lunatic fringe either makes excuses (redefining what “oil” means), but mostly just shuts up and slinks away. The nutters just kind of babble away illogically.

    Really the most reasonable are those who have just moved to mainstream environmentalism, which is always where their hearts were. But they still avoid analytical decomposition of the MESS of peak oil predictions. Just look at how the Oil Drum shut down and ran away.

  17. Davy on Sun, 1st Oct 2017 5:18 am 

    nony, there is more to peak oil and this is why many peakers have evolved and you haven’t you are stuck in the old arguments and gloating. You need to do the updating too because you in no way have succeeded in your other cornucopian arguments you had a few years ago. The old peak oil debates are over but peak oil is not and decline is not. You poke fun at failed peak oil predictions but accept no failures. Most cornucopians are quiet these days because of a laundry list of predicaments that are making themselves felt. I read all your posts because you are one of the best contributors on the nuts and bolts of the oil market. You have a wealth of knowledge and that is what I am looking for. You have a right to gloat too because there were some very bad peak oil predictions but somehow your predictions were half wins or duds. We are in a messed up world and peak oil dynamics is part of that. I could care less about peak oil theory and who won the oil debate. I look around me and see a world failing that is what matters not who won an obscure debate.

  18. Green People's Media on Mon, 2nd Oct 2017 12:50 am 

    All these industry Puffaganda pieces are full-on climate change denial pieces. Anyone else notice that?

    They’re usually delivered in a kind of militaristic voice, although this one article refrained from the America, Made Great Again, is going to obliterate OPEC kind of language.

    And they always completely fail to acknowledge that global climate change has any connection whatsoever to their industry.

    Will the Permian Basin turn out to be this huge oil cornucopia that this IHS Markit says it will? No, of course not, this is a Puffpaganda piece. Pure bullshit. I trust Art Berman’s judgment over these people’s judgment, so I’m calling bullshit.

    But you do have to give the mother-frackers credit: Taking the USA from around 5 MM bbl/day up to around 9.5 MM bbl/day was quite an achievement of petro-technology. Gotta give them that. Probably also contributed 15-20 PPM of CO2 in the atmosphere to date.

  19. Mark Ziegler on Tue, 3rd Oct 2017 6:41 pm 

    Remember that 60 billion barrels of oil is just 2 years worth of oil for the world. So it is really not that much oil.
    The world will probably see shortages well before that oil gets used.

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