Peak Oil News and Message Boards

Posted: **Fri 28 May 2004, 22:10:11**

I have to commend the excellent work on the site here. I've had an interest in the concept of peak oil for many years, but lost interest during the oil glut 90s. At the time, I figured that surely oil production will peak someday, but maybe not during my lifetime. Anyone remember the cover story in The Economist during the mid-1990s, "Drowning in Oil"?

Boy, have things changed during the past few years. I've found the data and arguments of those forecasting a production peak this decade to be quite persuasive. Matt Simmons, in particular, has done some compelling work. But then I come across some shocking reports like those from the EIA which show no pressure on oil supply or price for the next 25 years, even with demand increasing another 50%!! I have to wonder what is the basis for such forecasts. I'd like some comments on the recent article by Daniel Yergin entitled "There Are and Will Be Reserves" posted here:

http://www.gateway2russia.com/st/art_237427.php

Yergin wrote the widely praised history of the oil industry "The Prize" and is Chairman of Cambridge Energy Research Associates, a seemingly top shelf energy consulting firm. So one must give some weight to his statement that global oil production will peak in 30-40 years followed by a gradual decline. Anyone have some specific information that refutes Yergin's arguments?

Posted: **Fri 28 May 2004, 22:31:06**

Piffle... no piffle-lite.

No numbers, no quoted research, not a link... Nada.

Like many on this board, when someone whips out numbers, I verify the math on my abacus. I'm less than impressed with general statements than specific measurements.

A theme I find in most reasonable assessments is embracing the margin of error. When I read serious scientific opinion from Campbell, or Deffereys, or Simmons et aL, it presents with a tacit admission that the data is incomplete, and so are the predictions. My BS detector goes off when anyone paints a pretty picture without acknowledging the margin of error, or presenting specifics.

Posted: **Fri 28 May 2004, 23:40:04**

I don't know what to think of such a statement. "The Prize" though is one of my favorite books. I was recently reading about Saddam's reign in Iraq. Oh man, he has to go down as one of the biggest f*ck ups in history. So much opportunity for him to make Iraq a world superpower, and months ago we saw him being pulled out of a spider hole! And he was so corny and unoriginal about how he failed...attack everyone like Hitler, while becomg a mock Stalin dictator...

Anyway, aside from that there is at least one funny quote in the above article: "They were frightened by the news that production at Pennsylvania oil fields was declining, and they sold their stocks in a rush, since “there is no oil outside Pennsylvania.” It’s clear now that they were wrong."

At the very least, such a statement puts the whole peak oil situation in perspective...true or not.

Posted: **Sat 29 May 2004, 02:31:14**

The Hubbert people and the Cornucopians are using very different models. If you believe the Arabs and Russians et al have all the oil they SAY they have, then 30-40 years is a reasonable estimate. Campbell and company are discounting the claims of the respective governments/oil ministers and leaning heavily on what they believe to be the geological reality of depletion.

Posted: **Sat 29 May 2004, 08:23:40**

Well don't know this Daniel Vergin, but I figure he's an economist. They tend to think that more money and new technology create more supplies. Economic models don't take depletion into account.

There'se a very interesting article coming out in Energy Policy

The mineral economy: a model to for the shape of oil production curves

Ugo Bardi

Dipartimento di chimica, Universita de Firenze, Italy

He used a very interesting stochastic computer model. He considered an island with a certain population. The island has no natural foodsource. Instead the islanders are living on cans of hardtack which were once washed ashore and buried under the sand.

Now the model is very simple. The islanders have to find the cans to survive and to multiply. If they don't find the cans in time they die and population decreases. You can further complicate the model by introducing various factors such as clustering of the cans, introducing a certain time laps between the find and production, introducing production costs and prices etc.

Now the most interesting part is the production curve. Under unconstrained conditions you get an ideal Hubbert type bell shaped curve.

When introducing technology (making the islanders more efficient in finding hardtack over time) the curve becomes asymmetrical. However the peak production comes earlier (not later) and the drop-off is steeper(!!!!!!!!!!!). Introducing technology will enhance population growth and consumption thus accellerating depletion.

The only thing that delays the peak is conservation. If the islanders store some of the cans and limit population growth the curve swings the other way.

Now this work has been peer-reviewed, and I think it's a sound representation of a mineral source under depletion. It also gives scientific backing to Hubbert's empirical curve. It makes you understand why it has to be bell shaped.

Its a hell of a link I hope it works. I'm sorry I can't provide you with the complete article, but Elsevier is quite strict with illegal copying and I don't want to lose my subscriptions.

http://www.sciencedirect.com/science?_o ... f84c2416c9

Posted: **Sat 29 May 2004, 08:27:52**

smiley wrote:link

http://tinyurl.com/

Posted: **Sat 29 May 2004, 11:15:35**

I just read the article and I think that Aaron has hit the nail squarely on the head.

Daniel Yergin wrote:First of all, they will certainly come from the Persian Gulf and its huge oil reserves. Secondly, the role of former USSR – Russia and the Caspian region – in oil supplies to the world market could become very significant. By 2025, their role may be equivalent to the one the Persian Gulf plays today. Western and Northern Africa is turning into the third fastest-growing region. These three regions will secure the main increase in oil production in the decades to come. Some oil producing countries, which are currently using just a little of their potential, may gain a more significant position. For example, the US sanctions against Libya were lifted in April. We’ll likely see Western investments coming to Libya’s oil sector before long, which will enable it to increase oil production. The market in neighboring Algeria is expected to open to foreign capital as well. These countries have been closed to Western companies for decades. The arrival of new technology would enable them to increase oil production considerably.

The man is making a huge optimistic leap of faith that Russia and the Caspian Sea region as well as Western and Northern Africa is going to yield huge amounts of presently undiscovered oil. The fact is that the Caspian Sea region has largely been a disappointment in comparison to what was projected just a few years ago. Western and Northern Africa have been fairly thoroughly explored. Yes, it is likely that new deposits will be located, but nothing of the magnitude that would be necessary to substantially shift the Peak oil curve to the right.

If you want an optimistic projection, go to the USGS web site. At least they make some kind of attempt to back their projections up with numbers. Disingenuously, maybe, but at least there is an effort. Either Yergin has insider knowledge of a second Middle East sitting somewhere in the middle of Siberia, is just plain ignorant, or has an ulterior motive for soft selling the facts as they really exist.

Posted: **Sun 31 Jul 2005, 20:20:29**

What do you think of this article?

link

...this fear is not borne out by the fundamentals of supply. Our new, field-by-field analysis of production capacity, led by my colleagues Peter Jackson and Robert Esser, is quite at odds with the current view and leads to a strikingly different conclusion: There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16 million barrels a day -- from 85 million barrels per day to 101 million barrels a day -- a 20 percent increase. Such growth over the next few years would relieve the current pressure on supply and demand.

Posted: **Sun 31 Jul 2005, 20:30:30**

"Our new, field-by-field analysis of production capacity, led by my colleagues Peter Jackson and Robert Esser"

Well, is said analysis available to the general public anywhere? How does it compare to the Matthew Simmons version of reality?

Not being sarcastic or ironic here...I'd truly like to know what the exact numbers are and what they are based upon. How much of what they are considering viable supply falls into the non-conventional category?

John Ludi

Posted: **Sun 31 Jul 2005, 20:38:02**

I can't find their report, apparently called Worldwide Liquids Capacity Outlook To 2010— Tight Supply Or Excess Of Riches.

But here's their Press Release

http://www.cera.com/news/details/1,2318,7453,00.html

I think this report was probably discussed elsewhere on this bulletin board, now that I think of it.

Posted: **Sun 31 Jul 2005, 20:44:25**

They make it out to be so certain but where are their real numbers? I would love to see where this 20% increase in oil supply will come from when many of the countries they list are already in terminal decline. I can understand production keeping the same in the next 2 years or so, with the new projects comming online, but a 20% increase in the next 10 years?? I would love to see that information in numbers

Posted: **Sun 31 Jul 2005, 21:04:55**

...this fear is not borne out by the fundamentals of supply. Our new, field-by-field analysis of production capacity, led by my colleagues Peter Jackson and Robert Esser, is quite at odds with the current view and leads to a strikingly different conclusion: There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16 million barrels a day -- from 85 million barrels per day to 101 million barrels a day -- a 20 percent increase. Such growth over the next few years would relieve the current pressure on supply and demand.

I'll just chip in that I saw a similar analysis in The Economist - 13 mbd by the end of 2008, assuming everything opens on schedule. The Saudis and a few others were caught off guard by demand growth in 2003 and 2004 (as the US came out of the recession) and are adding capacity, but it takes a few years for this capacity to come online.

How does it compare to the Matthew Simmons version of reality?

I believe that much of the added capacity is in Saudi Arabia, and on a few supergiants. So I'd expect him to claim that most of that capacity isn't really there, because some of the fields are going to collapse due to mismanagement. (Alternately, or additionally, one could also claim that Saudi field collapses mean that this capacity will at most keep the oil level stable or raise it slightly.)

Applying Matthew Simmons' beliefs to the rest of the report, and understand that I'm playing devil's advocate here:

The report expects Saudi Arabia’s liquids productive capacity to rise by 1.5 to 2.0 mbd by 2010, to about 12.5 mbd, and observes that the country is still “underexplored.”

He would argue that there are no supergiants left to be found in SA, that the unexplored areas are known geologically to be unlikely to hold anything of real significance, that they have been explored but the negative results are not common knowledge, and that there is no way the Saudis will reach 12.5 mbd.

Much of the impetus for high oil prices and increasing spreads between WTI and heavy crude in 2004 was that there was there was no ready refining capacity to absorb the growing quantities of heavy, sour oil.

As the reports note, this will continue. Almost everything that is being found or added is sour crude.

Also by 2020 unconventional liquids will account for 34% of the total liquids capacity in 2020, compared with 22% percent today and less than 10% in 1990.

This is a huge expansion in nonconventional sources (i.e. oil sands, oil shale, gas to liquids, coal to oil, thermal depolymerization) unlike anything the world has ever seen. (Of course, I believe this)

before starting to decline more slowly than might be thought today, as a step change in investment occurs and new technology is pumped into exploration, field upgrades, stranded gas, and heavy oil projects in a manner quite unlike any other period in the history of the oil industry.

And he would probably argue that we're unlikely to develop any more technology that goes beyond the basic method of putting pressure on the deposit with water, gas etc. and that many fields whose integrity has been compromised may not be reattacked to produce more oil.

Discovery outlay is (was? I think it's changed recently) decreasing, suggesting there's little more oil to be found.

Posted: **Sun 31 Jul 2005, 22:00:41**

HOUSTON - (Sept. 1, 2004) - IHS Energy, the leading global source of oil and gas information, analysis and software announced today it has acquired Cambridge Energy Research Associates (CERA), the preeminent strategic knowledge advisor to the world's energy industry and to financial institutions and governments.

"The timing of this merger is based upon our common view of the needs ahead," said Yergin. "We have great respect for IHS Energy's global capabilities, its commitment to meeting the needs of the energy industry, and its core contribution to decision-making in the oil industry worldwide. This new partnership of IHS Energy and CERA provides the capabilities to meet the growing knowledge requirements of the oil industry, the newly emerging global gas business, the electric power industry and the financial community."

IHS

Ahem... errrr.... ahem....

Posted: **Sun 31 Jul 2005, 22:48:21**

I also just realized that I read this article:

http://www.financialsense.com/editorials/cooke/2005/0728.html

Which focuses on some of the assumptions CERA made... (I read it but didn't realize at the time the two were the same...).

Posted: **Sun 31 Jul 2005, 23:29:23**

Someone remind me. I recognize the letters IHS but can't remember why the name is ominous.

Posted: **Sun 31 Jul 2005, 23:48:34**

Aaron wrote:
Ahem... errrr.... ahem....

Aaron is so good at connecting the dots, that all he has to do is clear his throat, and we get the picture.

Posted: **Sun 31 Jul 2005, 23:55:44**

If you are not familiar with it, a man by the name of Chris Skrebowski (Petroleum Review) analyzed all "mega oil" projects known to be coming online and, taking that info along with estimated increase in demand plus estimated rates of depletion, his conclusion is we would have a serious problem after 2007. His original article and update are found on the Oil Depletion Analysis Webstie (ODAC).

Posted: **Mon 01 Aug 2005, 00:22:24**

dmtu wrote:Someone remind me. I recognize the letters IHS but can't remember why the name is ominous.

Ominous to some

IHS is a Greek abbreviation

Posted: **Mon 01 Aug 2005, 03:08:46**

LadyRuby wrote:What do you think of this article?

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/29/AR2005072901672.html

...this fear is not borne out by the fundamentals of supply. Our new, field-by-field analysis of production capacity, led by my colleagues Peter Jackson and Robert Esser, is quite at odds with the current view and leads to a strikingly different conclusion: There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16 million barrels a day -- from 85 million barrels per day to 101 million barrels a day -- a 20 percent increase. Such growth over the next few years would relieve the current pressure on supply and demand.

I thought we have beaten this horse to death the moment the original CERA article came out.

Cheers,

Posted: **Mon 01 Aug 2005, 05:59:17**

I just love to play devil's advocate. Oddly enough I find articles denouncing PO to be a more "fun" read then the the ones that actually paint a more realistic picture of the coming shortage.

I don't know if it's just me being paranoid but it seems that for every one truthful article floating around on the internet there's at least 2 articles that are either inacurrate or downright lies.

Notice how this article makes no mention of the declining oil production in mature fields? It makes absolutely no sense to talk about net gain without mentioning the 2 variables:

net gain in production = new oil coming online - oil depletion in old wells

seems like a pretty simple formula. Unfortunately this article only tells half the story. That's like trying to calculate net profit with only knowing the gross and not the expense. That's for all those "economists" out there who think there's an economical solution to PO. :roll:

What's the old saying, "It's not what they tell you it's what they don't tell you that's interesting."

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THE Daniel Yergin Thread (merged)

THE Daniel Yergin Thread (merged)

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Not the End of the Oil Age (Daniel Yergin WA Post article)

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