[thuja]

JD- your thesis is that because we have been plateauing for two years, and we haven't experienced a grave recession yet- that therefore there will be no "serious" ramifications for a world that starts to decline in oil production?

Seriously? Do you disagree with the Hirsch report completely then?

[Twilight]

You don't think economic impacts might be lagging?

We are on the plateau... all is good.

We roll off... all is good.

Then it isn't.

[Oil-Finder]

I'd like to see a detailed analysis of the Bakken formation's potential.

Some more links of possible interest to you:
http://tonto.eia.doe.gov/ftproot/features/ngshock.pdf
http://www.mogulenergy.com/pdf/EGYPT_hydrocarbon.pdf
Good history and overview here:
https://www.dmr.nd.gov/ndgs/newsletter/ ... mation.pdf
^
And here is another source for my flow rates information. Page 5:

"The per well cost is approximate $2.2 million with the potential for the well to produce 500 to 700 BOPD initially, leveling off at 250 BOPD with virtually no water.

.

[JohnDenver]

JD- your thesis is that because we have been plateauing for two years, and we haven't experienced a grave recession yet- that therefore there will be no "serious" ramifications for a world that starts to decline in oil production?

Seriously? Do you disagree with the Hirsch report completely then?

My thesis is that the world will smoothly transition to alternatives based on market forces. While there may be a minor recession or two due to snags in the transition, there will be no major economic dislocations or great depression etc. Growth will continue without growth in oil, just like it has the last 3 years. That growth will be based on high oil prices (which benefit producers) and explosive growth in EBO (Everything But Oil). In fact, the overall effect of peak oil will be very *stimulative* to the global economy.

There is no need for any "crash program" or other governmental intervention to mitigate the problem. In fact, I regard calls for such intervention as totally counterproductive. For example, Hirsch's calls for a "crash program" of CTL are thinly veiled calls for subsidies for the status quo oil companies who would build the CTL facilities. CTL is an inefficient distortion which should not be supported. If we're going to run vehicles with coal, it's twice as efficient to burn coal in ordinary power plants, and use the electricity to power EVs. In short, CTL is a moronic waste of resources. What Hirsch is proposing is a government bailout of the grossly inefficient oil/ICE industrial complex. The real threat from their standpoint is a too-rapid shift to electric vehicles which would screw up all the sunk investment in oil/ICEs.

Have you read the Hirsh report carefully? Did you know that 30% of its "mitigation strategy" involves ramping up heavy oil production in Venezuela (of all places) from 0.6mbd to 6mbd in 10 years? Does that strike you as something an intelligent, well-informed person would propose? I guarantee you, if I proposed that idea without telling you where it came from, everyone in here would be calling me a wholesale idiot with my head up my ass. The Hirsch Report is absolute rubbish.

[thuja]

Sorry- I didn't mean the mitigation steps that Hirsch outlines...I meant the likely outcomes if major changes are not made well in advance of any peak (he posits 20 years for smmooth transition).

You are saying that even though we are at plateau and most likely starting to decline slowly, that we can have a smooth transition without "serious problems."

What I am suggesting is that we are only starting to see the nasty outcome of a peak in oil- and we are only two years into a plateau. We are seeing record gas prices, 100$/barrel oil, rapidly rising cost of food and now the likelihood of recession (compounded by numerous other factors). And this is just 2 years of "plateauing".

So serious problem...yes I would say that indeed the plateauing of oil production is already showing up as a "serious problem." I think if you asked most people they would say that high energy costs and constraints are a "serious" problem.

It seems strange and illogical that someone with the depth of understanding that you have would not see that this is a "serious problem"....baffling.

[thuja]

JD: There is no need for any "crash program" or other governmental intervention to mitigate the problem.

You believe that governments should do nothing about this issue. Does that mean you oppose incentivizing alternatives, tax breaks for efficiency and governmental promotion of conservation?

I have problems with many ideas for mitigation- ethanol being one of the worst mitigation ideas...CTL another. But saying these things are bad and therefore governments should do nothing is like throwing the baby out with the bath water. There are things that can be done that are smart. Raising the CAFE standards...switching to flourescents...these are two good things in the recent energy bill...along with a host of bad things...

Yes high prices for oil will stimulate growth in alternatives and efficiency/conservation. But these can be aided by judicious governmental support to promote dramatic change before the crisis deepens to a level that is beyond simply "serious".

[joewp]

My thesis is that the world will smoothly transition to alternatives based on market forces. While there may be a minor recession or two due to snags in the transition, there will be no major economic dislocations or great depression etc. Growth will continue without growth in oil, just like it has the last 3 years.

I'm inclined to let him believe that growth will continue, for ever and ever, based on "market forces"

Let him be surprised when his thesis turns to shit. Let him wonder why "market forces" are forcing him to cut back on everything except very meager food supplies, if he can even afford that. At this point, who cares what the deniers think? Let them become the boiled frogs they obviously want to become.

Sure JD, growth will continue unabated for the rest of your life and all your descendant's lives. Hope they enjoy sleeping standing up, shoulder to shoulder with the mass of humanity covering the dry land of the planet. You just keep doing what you're doing, don't mind us peak oil nuts.

[JohnDenver]

It seems strange and illogical that someone with the depth of understanding that you have would not see that this is a "serious problem"....baffling.

As I said, I define "serious problem" in this context as a global recession. If peak oil can't even cause a global recession, it's basically a joke/nonevent.

I think partly your view is conditioned by hanging out here at peakoil.com, where you've got a hothouse of people willing to interpret basically anything as a huge problem, and a "sign of the end" so to speak. It's kind of like hanging out with a depressed person who refuses to look at anything at all in a positive light.

Personally, I spent most of last year ignoring peak oil and living in the real world here in Osaka. Yes, gasoline prices here have risen slightly, but other than that there haven't been any large effects. I know hundreds of people here. Virtually none of them drive (neither do I) so high gas prices aren't a serious problem. Where's the beef? If this is such a serious problem why isn't anyone in this huge city even *aware of it*? You'd think that a serious problem would force people to pay attention to it.

[JohnDenver]

duplicate post

[JohnDenver]

You don't think economic impacts might be lagging?

A three year lag? Isn't that a little long for economic variables? I think the FED estimates that it takes less than a year for a rise in interests rates to work its way through the system.

I've been told dozens of times by peak oilers that the world works like this:

The end of oil production growth, translates to the end of economic growth, and thus the end to monetary growth.

You know... oil is absolutely essential to producing and moving every part of the modern world, and economic growth is impossible without growth in oil. And yet, in the last few years, the world has been growing at a rapid clip, without any growth in oil. That seems to be a contradiction, and I'm not sure that "lag" is an adequate explanation. What was the mechanism of the lag? How was growth fueled during the lag, if there was no growth in oil? How can factories/businesses which need oil to function continue to grow for 2.5 years after growth in oil stops? It's like saying a person continued to grow for 2.5 years after they stopped breathing because there was a "lag".

[wisconsin_cur]

You know... oil is absolutely essential to producing and moving every part of the modern world, and economic growth is impossible without growth in oil. And yet, in the last few years, the world has been growing at a rapid clip, without any growth in oil. That seems to be a contradiction, and I'm not sure that "lag" is an adequate explanation. What was the mechanism of the lag? How was growth fueled during the lag, if there was no growth in oil? How can factories/businesses which need oil to function continue to grow for 2.5 years after growth in oil stops? It's like saying a person continued to grow for 2.5 years after they stopped breathing because there was a "lag".

I'm going to wander in here with a question:

in the last few years we have seen an increase in the price of oil and, as we have noted, a plateau or stable supply. Isn't it possible that the growth we have seen has just come from taking oil from those sectors which do not grow the economy (reallocation by price) to continue to fuel those areas which do grow the economy (and, thereby, are able to outbid those that do not grow the economy)?

If the supply is roughly the same as it was three years ago and China, India and others are using more then either the supply line is becoming leaner (just in time delivery) or someone is not getting the oil that they use to. As long as I, as an individual, continue to be part of the worldwide economy that is able to outbid someone else, then the decline does not bother me. At this point marginal uses are being priced out so very few of us are being out of the market. We have peaked (so goes the argument) but the avalanche of falling supplies have not caught up with too many people yet.

I understand that we would have different opinions regarding how fast the avalanche is moving, mitigation efforts that could be used to reduce its impact, etc... but is it unreasonable to say that just because the avalanche (mudslide whatever metaphor you like) begins slow and only swallows up some unimportant people to begin with that those of us a little farther down the line should not be worried or moving in a rather determined manner to get out of the way of the approaching mass?

[TonyPrep]

[My thesis is that the world will smoothly transition to alternatives based on market forces. While there may be a minor recession or two due to snags in the transition, there will be no major economic dislocations or great depression etc. Growth will continue without growth in oil, just like it has the last 3 years.

It's a commonly held hypothesis because that is what most of the world wants to happen. Unfortunately, we live on a finite planet, with mining of other worlds still a very long way away. Economic growth is unsustainable.

I'm not sure why you keep posting the graph of conventional crude oil production. Sure, it's very important but stocks and unconventional oil have kept the growing demand satisfied, to some degree. However, it is a nice cosy feeling to believe that we are well into decline without any effects, so I doubt you'd consider alternatives to that.

[JohnDenver]

Let him be surprised when his thesis turns to shit. Let him wonder why "market forces" are forcing him to cut back on everything except very meager food supplies, if he can even afford that.

Actually, joe, I'm one step ahead of you on that one. I've got my own thread here at peakoil.com detailing my descent into starvation due to my flippant attitude about the realities of PEAK OIL (scary theramin music):
JD's Gruesome Starvation Thread
I'll be updating again at the beginning of March so be sure to tune in. The teaser is that I think one of my ribs is showing already.

[TonyPrep]

A three year lag? Isn't that a little long for economic variables?

Peak liquids may not yet have arrived. Production was up in October and November, to all time highs, according to IEA figures.

And because major countries have stocks, what you should be looking at is a graph of consumption. The EIA has figures up to August 2007 and world consumption has risen in each of your 3 years. However, the US consumption declined slightly last year and may be struggling to maintain that consumption this year (and aren't they growing more slowly as a result?).

So stop with the "peak is a non-event" sermon and please wait until consumption has declined for a year or two, before starting this all again.

[TheDude]

I'd like to see a detailed analysis of the Bakken formation's potential.

Hundreds of pages to read here:
http://www.undeerc.org/price/

I meant something more bloggish/discussionish, like a TOD piece, or your Daily Reckoning forum discussion. More voices, people who've been around, to raise more of these obvious caveats.

Your third link for sustained flows was this blog with some interesting info. He says to drill 3 wells, then use the 500 bpd from those to finance a whopping 63 more:

Step 5. After 2-3 months, expand your program to 3 rigs per month. What you are playing here is nested time series of numbers... and your limits are your acreage position and access to rigs. I happen to know that using this scenario, it will take 63 wells to achieve the cash flow needed to have the operation sustain itself from cash flow. You are asking yourself, What the hell? 63 wells x 4 million dollars is 252 million dollars! Well, that IS all in. If you use your cash flow to offset, you will see you will need to borrow only about $130 million.

This is based around an almost certainty of getting something for the wells drilled; he gives a 95% probability. He's expecting big returns from just three wells in a short time span. At 1500 bpd with oil at ca. $100 (damn I hope the price doesn't go anywhere, very easy for calculations!) you'd have $20m in about 133 days, not including costs of course. About four months. Wonder how much that depends on oil being as valuable as it is. Hasn't been worked on with horizontal drills until the mid 90s - Story. Of course Findley was making it work when the price was far lower.

The reason why estimates of URR are all over the place is because no one really knows. The only thing to do is to start drilling.

Bit of a gamble, then. Much as skyemoor said.

No denying the Bakken is profitable. We're just figuring it into the global picture - how much it can really mitigate things. 50kbpd doesn't really stand up too much next to those megaprojects. You'd need 10 Elm Coulees to even register much, and even with their longevity if we're going to maintain supply for the country those wells need to be drilled soon. It's like a microcosm of the US, where we're the third largest producer in the world - with over half a million wells, orders of magnitude more than the rest. That'll take a while to drill all those holes.

Nice change of topic.

We're no longer talking about what was in your OP anyway, right? There's still lots on the plate crisis wise, especially NG - which Simmons has said will be more of a crisis short term than oil.

[OilmanChoke]

Errr, happened on here and find it quite interesting. Quick disclosure: I am an independent oilman from the technical side.

First: This topic "DO You Want It To Occur" is exactly the right question. Why would you WANT this to occur unless you are bigoted against hydrocarbons?

Second: Clearly, the world needs as much energy as it can lay its hands on. Hydrocarbons, today the dominant player, will continue to play an important role in the future at some level. We should encourage whatever alternatives there are that have the opportunity to be economically attractive.

Third: We should not hobble any one economic energy supply in favor for another. Politicians and their hacks will NOT define the new technologies... Scientists and investors will. Humans cannot afford to be bigots in this game.

Fourth: Energy technology advancement will also take place in the hydrocarbon arena, where the resource base is huge in non-conventional plays, including clathrates. It is not just a solar.wind.tide paradigms.

Let the most fundamentally economic win. Also, at what point is a supply base considered "sustainable"? 100 years? 300 years? 500 years? Forecasting 100 years into the future is a fools game, it seems to me. No wonder "non-profit" foundations that want to perfect society from the malevolence of mankind and politicians enjoy doing it so much.

By the way, I was the source for the Bakken versus State Waters post. Bakken wells are all over the place. I just drilled a dry Bakken well. Like all reservoirs, they have a log normal per well productivity distribution. That is why this is a "statistical play". They also decline. The 3 wells example was meant to illustrate how you can get an obscene amount of mezzanine financing with relatively little cash flow and a great acreage position, and how you shouldn't let the idea of your finacing costs being higher than your IRR per well get in the way. Your goal is to drill as many wells as you can in your acreage to define the maximum number of proven undeveloped locations... and no more. The PUDS have a significant value and will dwarf your proven producing reserves in value when flipped to someone with lower costs of capital. Here are the links to the posts that set up the Bakken post, and a follow up on divestiture of assets in a Bakken-like play. That these plays are being opened up all around us is no fluke. We are truly finding world class oilfields and gasfields "hidden" within our existing basins in rocks we thought wouldn't produce economically. There are several basins we know have a hydrocarbon system that have never had good reservoir rocks we are evaluating as an industry right now. Domestic new field discoveries are in the "b"illions of barrels again, just like in the 1950's. Of course, these wells aren't Saudi Arabia good or Iran good, but they sure as hell are $60+ dollars per barrel good.

http://openchoke.blogs.com/open_choke/2 ... il_bu.html

http://openchoke.blogs.com/open_choke/2 ... _bu_1.html

http://openchoke.blogs.com/open_choke/2 ... d-gas.html

[camefromthecorn]

why would anyone want peakoil to happen? Just think at all the hardship which will come when we reach the peak.

Unfortunately its not important what we want.

I't will happen regardless if we want it or not ...

If we had of been smarter with our resources peak oil wouldn't matter. The hardship is us in the classroom.

[skyemoor]

2. The author/authors state "The methods used by Price to determine the amount of hydrocarbons generated by the Bakken are different from the traditional petroleum geochemical practices and are under dispute."

Here are the complete technical papers by Leigh Price:
http://www.undeerc.org/price/

You can find more here - this is some of the work by 2 of the other geologists mentioned in the state of ND piece:
http://www.searchanddiscovery.net/docum ... /index.htm

Linking Price's paper, or one with an Exxon/Mobil engineer, does nothing to show that his methods and findings are not under dispute.

3. The 'research' performed by Oil-Finder (OF) resulted in these findings;

The first well drilled was the Burau 4 well in Burau County. Although oil and gas indications were not detected during drilling, the well was completed and is producing at a stabilized rate of approximately 25 barrels per day of oil with 65% water cut.

Hardly suggesting that "flow rates stabilize at around 150-300 bpd and stay that way for an extremely long time", whatever 'extremely' means. While 2007 production from Elm Coulee averaged ~53,000 barrels per day, there is no confidence in extrapolating any figure over 1000s of wells without well-documented drilling data from all of the sites in question.

I gave you 3 links here,

This is the one I quoted from above that had one of two exploratory fields, in promising locations, producing at 25 barrels per day.

here

A regular journalist quoting oil execs and bankers having "large land positions" in the Bakken formation. Hardly anything to hang one's hat on.

and here

The blog intro states, "Open Choke is the nom de plume of an anonymous oil and gas industry executive." Others may differ, but I don't consider these as references to make serious projections by.

I can find you other sources too, if you like.

If you can find something from a reliable source, we'll look at it.

4. Well numbers and spacings: OF's provided reference ( http://www.secinfo.com/d11MXs.v1Eu2.c.htm ) states that well spacings are 640 acres and the gross acreage of the Williston Basin - Bakken Oil Play is 90,000 acres. This translates to 140 wells, not 35,000. 140 wells at the above referenced 25 barrels per day equates to 3500 barrels of oil per day, which is chump change at best. Even at 'higher' production figures of 200 barrels per day, Williston-Bakken is still a very minor player at best.

Those 90,000 acres are one company's leases, not the entire size of the Bakken formation! Specifically they're the leases of Teton Energy - which isn't even a particularly big company.

Ok, I admit my error.

Now, I notice you also stated;

The reason why estimates of URR are all over the place is because no one really knows.

And one of your references also state;

But how much of the Bakken oil in place is recoverable using today's technology? Based on conventional production methods, perhaps only 10 per cent. But horizontal drilling, combined with a new production technique, known as hydraulic fracturing, has increased recovery rates by another five per cent.

and another of your references

... science places the oil potential of the Bakken between 10 and 400 billion barrels of oil

So perhaps as much as 15% recovery of 10 to 400 billion barrels after drilling, by your estimate, 10s of thousands of wells, which in this era of old, rusty equipment, low inventory levels, high percentages of skilled oilfield workers at retirement age, and complicated fracturing methods, you claim prices for each well could be $2 million. Suffice to say, this provides us with little, if any, confidence in your claims that such shaky evidence can dissuade us from concerns over economic impacts from doubtful future petroleum production levels.

[OilmanChoke]

I am unclear about the "disaster" scenarios... and the theme that "we haven't planned for after oil and gas".

There is a lot of energy available at higher energy prices. Our "dependence" on oil or gas is based on low cost, and terrific low loss delivery mechanisms.

[skyemoor]

I am an independent oilman from the technical side.

First: This topic "DO You Want It To Occur" is exactly the right question. Why would you WANT this to occur unless you are bigoted against hydrocarbons?

Welcome to PeakOil.com.

It is not a case of wanting it to happen; rather it is a case of it happening because of a number of factors, from field maturity/exhaustion to field sizes vs. numbers to accessibility to equipment and skilled worker availability, etc.

Second: Clearly, the world needs as much energy as it can lay its hands on. Hydrocarbons, today the dominant player, will continue to play an important role in the future at some level. We should encourage whatever alternatives there are that have the opportunity to be economically attractive.

I disagree. The 'world' doesn't need as much energy as it can get its hands on; there is so much wasted energy now that much can be recouped by simple energy efficiency and conservation alone. The world does need sustainable energy sources that do not contribute to global warming.

Third: We should not hobble any one economic energy supply in favor for another. Politicians and their hacks will NOT define the new technologies... Scientists and investors will. Humans cannot afford to be bigots in this game.

Politicians have hobbled renewable energy supplies by, among others;
- Providing billions in tax cuts to oil, gas, and coal producers
- Providing billions in subsidies to oil, coal, and gas over the years

Fourth: Energy technology advancement will also take place in the hydrocarbon arena, where the resource base is huge in non-conventional plays, including clathrates. It is not just a solar.wind.tide paradigms.

A grand prediction, but this remains to be seen.

Let the most fundamentally economic win.

How do we determine which is the most 'economic'? Do we count external costs as well such as GHG emissions and military spending to invade/defend ME oil resources? Do we count the likely recession/depression to result from the peaking of global oil production? Since you are new here, you may want to read a couple of primers, such as the one here at PeakOil, one of Matthew Simmons', etc.

Also, at what point is a supply base considered "sustainable"? 100 years? 300 years? 500 years?

It would certainly need to be more than the 0-5 years we have before oil peaks. A truly sustainable energy source would be relatively indefinite, barring a civilization-ending event such as a giant asteroid strike, our sun going through a planetary nebula phase, etc.