Peak Oil News and Message Boards

According to MS we have until late next year:


http://articles.businessinsider.com/201 ... ity-saudis

Given all factors (like releasing oil from the SPR, Iraq and Libya oil coming back online, QE3 etc) how long do you think we have until prices skyrocket?

If oil supply drops or stays the same while demand increases, prices will go up. If demands drops oil prices will tend to go down.

Most of the predictions I've seen suggest gas prices in the US will probably be going up above $4/gallon this summer and into the fall, mainly due to continuing increases in demand in Chindia. A military conflict in the ME will cause prices to spike up even more. A global recession will depress oil demand and cause oil prices to fall.

I've heard this from a number of sources. The powers that be will have to figure out a way to get us to stop using the stuff. There are a bunch of tried and true methods to accomplish this. One is to jack the price and another is to get a lot of us to stop using the stuff. That can be accomplished by tanking the economy or by having some kind of rationing. Rationing would be the more rational choice, but I think we'll have more "demand destruction". There will still be rich kids burning up a couple of gallons of gas because they are bored and other people who have to give up their car and have to carry their groceries home by foot. Just like now, but more so.

Another possibility (political dynamite) would be a non-wimpy gasoline tax that is specifically earmarked in a bill for energy infrastructure, preferably solar and natural gas, along with the distribution capability.

I believe it when I see it. So far all doomer prognostications from 2008 have been proven utterly false.

I think we'll see $4 gas pretty soon, since I just paid $3.65. That's about 4 times what we paid 12 years ago. When I was born you could get a gallon of gas for around a quarter. Now it's 4 paper dollars. That same pre 1964 90% quarter is worth about $6 today, so it's actually cheaper now in terms of trading a gallon of gas for something that has real value.

I think that once oil producers realize this they will ask for more money for their product and that will make it harder for us to buy as much.

Conventional oil - the $35 onshore, gusher kind has already failed, that's why we're at $110. No matter how much we Yergin the data, we aren't going to see $35 again - not in a good way anyhow. So the answer is some time around 2004 for the oil we've been using for 150 years.

So the next question is, how fast and is it even possible for unconventional oil production to grow enough to compensate for the decline of existing Clampett Oil? And/Or how much demand will high prices kill?

The answer to that isn't clear, we've inched up total numbers by about 1% a year since 2005 by drilling like crazy, long term the growth had been more like 2.5% using much less effort and CAPEX. Even though there are more drilling rigs active in the US today than there were even in 1980.

The difference is today most are directional and horizontal wells and fracked wells costing many times the plain old vertical wells of the 1860s-2010s. There is no difference in concept between the rotary rig vertical wells that replaced the cable rigs my grandfather used in Oklahoma in the 1920's and the vertical wells of today.

But the difference between the old fields and the new fields is the difference between a straw in an shaken Pepsi bottle and a straw in a turnip. Wells today only flow a fraction of what they did 40 years ago initially and go on to deplete much more rapidly to boot.

The scary part is that the economists were right and peakers wrong about high prices enabling "substitutes". Hubbert was an optimist. He thought the substitute would be to something better than oil - like nukes. But he was wrong about the extent we'll go to in order to postpone change. So what we see now, expending huge amounts of sweet light crude and natural gas to "upgrade" what is basically asphalt for example, is the worst case scenario. We're burning good oil after bad and raising the peak higher and higher and pushing it further and further down the road. The effect is that of changing the familiar "bell curve" with a smooth slope into a cresting wave with a steep drop.

Where we're at right now is the remaining cheap, easy, sweet, $30 oil is being rapidly depleting out of sight behind the Amazing Shale Oil Glut headlines. The result I'm afraid will not be the long slow slope enabling a gradual transition like I've always hoped. Because the "new" well technology inherently nets less flow initially but also depletes faster, the eventual peak and decline of these wells will be even sharper than the conventional oil and conventional gas peaks in the oughties. That's my forecast.


If you must have real numbers here is the Megaprojects postat TOD from last year with guesses about as good as any.

High Case scenario for the world production capacity (conventional oil and Canadian tar sands).




Low Case scenario for the world production capacity (conventional oil and Canadian tar sands) is based on the Wikipedia megaproject database. The implied resource base decline rate is 3.6 percent. The F05 forecast represents a low case estimate with a 5 percent probability Monte Carlo simulation of a lower decline rate value. The F95 is the high case estimate with a 95 percent probability of a lower value.

Where we're at right now is the remaining cheap, easy, sweet, $30 oil is being rapidly depleting out of sight behind the Amazing Shale Oil Glut headlines. The result I'm afraid will not be the long slow slope enabling a gradual transition like I've always hoped. Because the "new" well technology inherently nets less flow initially but also depletes faster, the eventual peak and decline of these wells will be even sharper than the conventional oil and conventional gas peaks in the oughties. That's my forecast.

but you cannot compare conventional oil E&P to unconventional. The rapid decline in production from shale is expected and what is sought is the very flat, low rates that go on for a long time from each horizontal. Where the difference lies between conventional and unconventional is in the amount of actual resource available. In conventional a certain amount of oil expelled from source rocks is trapped in either structural or stratigraphic traps, much of the oil is lost to migration pathways, trap spillage etc. In any given area there may be a lot of source rock and a lot of potential reservoir but there are limited traps. In unconventional the source rock is your source, trap and seal. Basically anywhere that shale is mature for oil and the rock is amenable (and it is most places) oil can be recovered through fraccing. Is it more expensive to develop and produce, absolutely but where it is attractive is in the low risk predictability. Once you have a type curve for a given shale there is a very low chance that through fraccing you will get something different. The business hence becomes a bit like manufacturing where it is scalable and one needs to manage costs.

The shale oil business was something that no one anticipated ten to twenty years ago. Technology made it possible and I suspect technology might make it a bit cheaper in the future. Saying it isn't important to the concept of peak oil, however does the concept a complete disservice and would have King Hubbert spinning in his grave. Just like heavy oil the shale sequestered oil will help to flatten the peak curve for longer. It can't eliminate it of course, simply because it is a limited resource as well.

Pops wrote:

Average the overall energy peaks from both graphs you get peaks at 2011 and 2015 with 2013 being in the middle....another vote for 2013.

Bottom line is gas is about $3.60/gallon for 89 octane, the gas stations are always filled up and ready. America's economy is firing on all cylinders despite Obama and the Democrat's best attempts to ruin it.

mmasters wrote:Given all factors (like releasing oil from the SPR, Iraq and Libya oil coming back online, QE3 etc) how long do you think we have until prices skyrocket?

That's just it—there are so many factors that making a prediction is close to impossible.
That's one of the points Chris Martenson's video (below) elaborates on:
http://www.youtube.com/watch?v=8WBiTnBwSWc

Everything seems to be moving in one direction until someone pulls another economic lever and then it changes the game.
Gasoline prices end up looking like this:


It's even more complicated now that this model suggested it would be:

Peak Caviar
Ugo Bardi / The Oil Drum / August 5, 2008

For caviar price vs. production were any of the games that are being played now (QE2, etc.) occurring?

Oh look, here comes another economic alteration.

Greece Debt Drama Is Downside Risk to $100 Oil: Survey
Sri Jegarajah / CNBC / February 12, 2012

Oil prices will likely consolidate around $100 a barrel this week though any move higher will be capped by market uncertainty on what happens next in Greece. On Sunday night, Greek leaders passed new austerity measures crucial to receiving a second bailout package, but violence in Athens marred the vote.

... This week, consensus opinion in CNBC's oil sentiment survey suggests the market will continue to shrug off negative headlines from Europe though any upside move will be limited. Out of ten respondents, 60 percent expect prices to rise, twenty percent expect prices to fall and the remaining twenty percent are calling for prices to remain stable. ...

Another factor driving oil prices higher is Obama's huge budget deficits and the fed's policy of printing money and buying Treasury bonds to finance that debt. Recent QE by the Bank of England and now the EU just exacerbate the problem.

Printing money to finance exploding government debt causes inflation and produces ever-higher prices of oil, gold and other commodities.

rockdoc123 wrote:Saying it isn't important to the concept of peak oil, however does the concept a complete disservice and would have King Hubbert spinning in his grave. Just like heavy oil the shale sequestered oil will help to flatten the peak curve for longer. It can't eliminate it of course, simply because it is a limited resource as well.

I don't discount it at all. In fact lately I'm wanting more and more to find a way to be optimistic enough about it that I could find other things to do with my Sunday evenings.

Are you that optimistic, doc? I'm asking.

Do you think shale/heavy/pre-salt/ultra-deep/arctic/etc can replace depletion of conventional plus resume the 2% annual increase needed to feed JIT globalization growth for any length of time?

I mean, either it's just a bump in the road, we adjust to $100 oil, production resumes growing at a couple mb/d and the party goes on - or - it's the amazing shrinking economy and we're broke down in the ditch. 20mbd for 200 years would be better than a sharp stick in the eye but if we are headed there in, say, 20 or 30 years, that ain't so great.

Pops wrote:Conventional oil - the $35 onshore, gusher kind has already failed, that's why we're at $110. No matter how much we Yergin the data, we aren't going to see $35 again - not in a good way anyhow. So the answer is some time around 2004 for the oil we've been using for 150 years.

So the next question is, how fast and is it even possible for unconventional oil production to grow enough to compensate for the decline of existing Clampett Oil? And/Or how much demand will high prices kill?

The answer to that isn't clear, we've inched up total numbers by about 1% a year since 2005 by drilling like crazy, long term the growth had been more like 2.5% using much less effort and CAPEX. Even though there are more drilling rigs active in the US today than there were even in 1980.

The difference is today most are directional and horizontal wells and fracked wells costing many times the plain old vertical wells of the 1860s-2010s. There is no difference in concept between the rotary rig vertical wells that replaced the cable rigs my grandfather used in Oklahoma in the 1920's and the vertical wells of today.

But the difference between the old fields and the new fields is the difference between a straw in an shaken Pepsi bottle and a straw in a turnip. Wells today only flow a fraction of what they did 40 years ago initially and go on to deplete much more rapidly to boot.

The scary part is that the economists were right and peakers wrong about high prices enabling "substitutes". Hubbert was an optimist. He thought the substitute would be to something better than oil - like nukes. But he was wrong about the extent we'll go to in order to postpone change. So what we see now, expending huge amounts of sweet light crude and natural gas to "upgrade" what is basically asphalt for example, is the worst case scenario. We're burning good oil after bad and raising the peak higher and higher and pushing it further and further down the road. The effect is that of changing the familiar "bell curve" with a smooth slope into a cresting wave with a steep drop.

Where we're at right now is the remaining cheap, easy, sweet, $30 oil is being rapidly depleting out of sight behind the Amazing Shale Oil Glut headlines. The result I'm afraid will not be the long slow slope enabling a gradual transition like I've always hoped. Because the "new" well technology inherently nets less flow initially but also depletes faster, the eventual peak and decline of these wells will be even sharper than the conventional oil and conventional gas peaks in the oughties. That's my forecast.


If you must have real numbers here is the Megaprojects postat TOD from last year with guesses about as good as any.

High Case scenario for the world production capacity (conventional oil and Canadian tar sands).




Low Case scenario for the world production capacity (conventional oil and Canadian tar sands) is based on the Wikipedia megaproject database. The implied resource base decline rate is 3.6 percent. The F05 forecast represents a low case estimate with a 5 percent probability Monte Carlo simulation of a lower decline rate value. The F95 is the high case estimate with a 95 percent probability of a lower value.

This is the very best response, thus far, and has my endorsement. If you haven't read it, do so now. If you have, it is worth reading, again.

Oh, what's 10,000,000 barrels a day between friends? (excellent work JohnRM)

I think we are headed for trouble in the next year or two. If they succeed in reviving the "economy" we will need more of the stuff just at the point that we have a little less. That will lead to price spikes and a crash like 2008 all over again. This time they won't be able to revive the banks as easily, but they will try. We start the machine up again and eventually it needs more oil. It's like an old car. You fix things and live with others until there comes a point when you can't get it through another year. Then you walk.

Are you that optimistic, doc? I'm asking.

I'm optimistic that we have some additional breathing room to start improving the ways in which alternatives can be used. As I think I said a number of years ago there isn't any magic bullet but I think (hope) that by having a peak plateau that is extended somewhat by appropriate pricing so demand and supply are more or less in balance some changes can be made to the way that wind, solar and nuclear are utilized. None of these are a single replacement but if they are all utilized in some manner (and at a much higher level than now) then the plateaus can be lengthened further. Of course you could argue this is a bit like treading water in the high seas, waiting for the deux ex machina supply boat to wander by and rescue you.

Do you think shale/heavy/pre-salt/ultra-deep/arctic/etc can replace depletion of conventional plus resume the 2% annual increase needed to feed JIT globalization growth for any length of time?

From what I've seen of the numbers if the price is appropriate the shale liquids added into the other conventionals could offset the depletion for a period of some years. Whether it can make up for growth in demand remains to be seen as to how much might be in countries outside of North America. I really don't believe that the Arctic will offer much other than gas. The pre-salt in Brazil I believe has been mostly discovered, there is likely some left to discover on the mirror image side of the Atlantic rift in Gabon.

I mean, either it's just a bump in the road, we adjust to $100 oil, production resumes growing at a couple mb/d and the party goes on - or - it's the amazing shrinking economy and we're broke down in the ditch. 20mbd for 200 years would be better than a sharp stick in the eye but if we are headed there in, say, 20 or 30 years, that ain't so great.

Agreed. Which is why I believe the government needs to realize the challenge and pull its thumb out. There needs to be research incentives for additional developments in solar, wind and nuclear and the various think tanks need to start looking at what the energy balance might look like if proper conversions were done so that natural gas could be used more as a liquid fuel offset (GTL or propane). But someone has to get the ball rolling. It doesn't help that the government still doesn't see the looming problem.

There is absolutely no combination of energy sources known to man that will save industrial civilization.

Let me say that, again.

There is absolutely no combination of energy sources known to man that will save industrial civilization.

Even if we discovered that petroleum was created abiotically, within the Earth, where we could get at it for pennies on the barrel, it would never save industrial civilization. Even if we developed a method of generating power through fusion. Even if...nothing. Industrial civilization is all about exponential growth; Exponential growth of the economy and exponential growth of the population. We will run out of Earth, metals--SOMETHING. Our way of life is, by nature, to expand and destroy everything else in our path that doesn't support human life and comfort. It is a culture of death. The sooner it is extinguished, the better. We need to leave this failed way of life behind and try something different.

Thanks doc.

No doubt you've forgotten more than I'll ever know about the subject. I'm pleasantly surprised that we have this additional supply and not just because it makes my life easier but because it comes at a price painful enough to send a clear signal to ll but the most oblivious. There is no surprise in the headlines now when they forecast $5 gas.

Personally, I can't see us replacing oil as we waste it today - we employ approximately 26 oil slaves (just oil slave, working 8/7/365 @100w/hr) for every man, woman and child in the world. That's a tall order. But I can see us dialing our use in the rich world way back from the 144.5 slaves each and every person in the US uses.