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PeakOil is You

PeakOil is You

A personal overview of the peak oil theory

General discussions of the systemic, societal and civilisational effects of depletion.

Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 11:26:39

wildbourgman wrote:I can't believe this debate continues in the same manner year after year. Peak Oil is obvious, the fact that I'm sitting on a deep water drillship in thousands of feet of water where we drill over 30,000 feet down for a resource when 26 years ago in the beginning of my career I sat in 100 feet of water drilling 14,000 feet down tells a lot.


No one disputes that the oil we now produce is quite a bit "harder" (for lack of a better term) to drill and produce then it once was.

But that isn't peak oil. Right now, peak oil because of using "harder" oil isn't even the issue for the CAUSE of peak oil. Peak oil demand is.

If you weren't on a drill ship maybe you would have noticed how much things have changed!! Just kidding, and good luck to you. My couple of years offshore convinced me to take a 65% pay cut to get back into an office.

wildbourgman wrote: Also having this debate without discussing the affects of central banking on currency and commodity prices is futile.


Peak oil, within its definition, doesn't include central banking, currency and price considerations. It is flowrate of oil. As Hubbert laid it down, it begins and ends at zero, and in between those two points, hits a maximum. That is peak oil.

All the add-ons are interesting no doubt, but they aren't peak oil. You ought to know that, as an oil man.

wildbourgman wrote:Oil fields deplete that's a fact, its whether or not we deal with that depletion in the same manner we dealt with other depletions of fuel sources, wood, coal, whale oil, ETC, that's the big question mark.


No one says oil fields don't deplete. They have been doing it before you and I were born. The good news is that the more modern concept of a dynamic resource model is in play rather than the primitive one since invalidated.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 11:29:47

asg70 wrote:We've gone from "how to leach acorns and make flour" to trying to fan the flames of "muh debt-bomb" while we casually sit down to a fully stocked Thanksgiving dinner.


With fully fueled SUVs parked in the driveways all up and down the block, half loaded jet aircraft zooming around the country today taking last minute holiday travelers on cheaper flights to grandma's house, all at relatively low prices and with no lack of supply in sight. Matter of fact, the current situation is defined by what known production can't even produce! Libya, Iran, Venezuela, Saudi production cutbacks. There is something afoot, and it sure ain't scarcity!

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Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 11:33:33

diemos wrote:
AdamB wrote:While McPeaksters haven't yet learned from the past and really like those sand castles, the scientists sure can't be faulted for being that kind of blind.



And yet, the amount of fossil carbon in the ground is finite and will one day be used up.


Of course. The quote you reference meaning more "but we all sure know better now than to ask the kid making the sand castles when!".
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 11:59:30

Tanada wrote:
Adam wrote:
But prices. Do you really think it is an honest extrapolation that people as smart as Hubbert in the timeframe of 1930-1970 were thinking that oil prices were never going to change?

This question isn't specific to oil people, as Hubbert's perspective was wider than just what industry insiders would think.


Actually that is the most believable part to me. Up until 1914 the USA had never experienced serious inflationary pressure for the entire history of settling this continent. Then after a decade of inflation the price of oil became extremely stable in modern terms. IOW in 1956 oil had reverted to its "normal" stability and a vanishingly small portion of the population understood this was an artificial situation created by supply controls put in place by the TRRC.


So, the most believable part is that because prices had been stable, they would continue stable. I understand this completely as a short term assumption, the only issue being the definition of "short". But in this stable environment (1930-1970) we also know that the TRRC was arguably in control of supply, in order to control price. It has been initiated as a way to RAISE prices, because after the discovery of the East Texas field, it looked like everyone was going to go under. So we have what is arguably a regulatory body, the job of which is to maintain steady prices, in this time period.

Now we match that with something else. In 1938 Hubbert called for his first US peak oil, by 1950. in 1943 Harold Ickes was writing articles titled "Are we running out of oil?" in places that were noticed. So for 15 years into this stable price environment, we had people supposing that things weren't always going to be the way that was visible at that point in time. Now, this entire angle is defeated by what happened after WWII when the GOM opened up and oil development went offshore, but for those first 15 years, there was this thing...and my beef is so far, I can't find a reference for anyone saying "yup...the price...its gotta go up!". Typical neo-Malthusian running out stuff sure, but not the corresponding claim or link to a price consequence of that scarcity.

Economics and economists were around by then, so it is my assumption someone must have said something. Unfortunately, I can't prove it. Fortunately, I haven't researched it yet, so there is a reasonable chance I can prove it. Just not yet. :(
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Re: A personal overview of the peak oil theory

Unread postby wildbourgman » Thu 28 Nov 2019, 14:36:25

Peak oil, within its definition, doesn't include central banking, currency and price considerations. It is flowrate of oil. As Hubbert laid it down, it begins and ends at zero, and in between those two points, hits a maximum. That is peak oil.


Adam, I think that pro and anti peak oil theorist both overlook the affects of central banking and that's why they will both get things wrong with forecast that can't possibly predict what consequences will occur from every move on the chess board.

For instance the shale miracle was due to low interest rates, it was a another bubble created by easy money looking for a place to work. It was no different than the housing bubble. So can a cornucopian really point to that massive the production (flow) increase as proof that peak oil is wrong when the reason for the increase was dumb money entering a Ponzi scheme? To me if profitability isn't taken into consideration, what's the point in the endeavor?

Just like a peak oiler can't point to high prices brought on by inflation and say "see that's proof that we are running out". No, its the value of the currency is going down, not necessarily current or future supply.

Today I feel like we very well might be able to change to another power source as needed if the worlds debt problems don't push us into a deep economic crises (which would certainly slow energy demand).

But heck I just had a huge Offshore thanksgiving meal and I'm not quite right yet, so what the heck do I know.
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Re: A personal overview of the peak oil theory

Unread postby diemos » Thu 28 Nov 2019, 15:10:46

I wish Gail the Actuary was still around to make us a graph of global per capita oil consumption.
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 15:15:23

wildbourgman wrote:
Peak oil, within its definition, doesn't include central banking, currency and price considerations. It is flowrate of oil. As Hubbert laid it down, it begins and ends at zero, and in between those two points, hits a maximum. That is peak oil.


Adam, I think that pro and anti peak oil theorist both overlook the affects of central banking and that's why they will both get things wrong with forecast that can't possibly predict what consequences will occur from every move on the chess board.


I agree with you to some extent. I can even explain most of it. Peak oil as it was explained and predicted going back as far as 1919 DID NOT include accompanying financial theories, correlations with price or even market involvement. This is because it was invented by the natural science / geologic types, and as I have discovered over the past decade, they aren't always amenable to what the dismal science thinks about their relatively pure natural science.

wildbourgman wrote:For instance the shale miracle was due to low interest rates, it was a another bubble created by easy money looking for a place to work.


Development of light, tight oil and shale gas was no miracle to those of us doing it back in the 80's. And borrowing money goes back to Drake doing it for first oil well in America. Development of our countries resources has happened with cheap money, expensive money, stolen money, etc etc.

Was it helpful that low interest rates arrived when they did? Sure. But just as importantly $100 oil arrived, and the idea and occurrence of $15/mcf natural gas didn't hurt either, and when investors take a look at those commodity prices, and drill-baby-drill able to create some decent returns, well, Saudi America. But predicating Saudi America on just financial gimmicky in some cases is only a small part of the story.

In either case, because the definition of peak oil doesn't involve or require a financial relationship, all of the background information is just part of the tale, not the cause of the tale. I would venture your idea fits in quite nicely with the current dynamic model of resource development, the state of art thinking and modeling includes the economic component of resource extraction. Correctly in my opinion.

bourgman wrote: It was no different than the housing bubble.


Of course it was different. The extraction of non-renewable natural resources isn't construction. Remember what the mantra was during the heyday of peak oil? An idea you are now wholesale lambasting? "You can't buy more oil in the ground!!" You appear to be contradicting the mantra taught to baby peakers at birth!!

The idea you are angling towards, if toned down to just "economics are involved in resource extraction" is completely reasonable. And already in use by the modern methods of estimating oil production.

wildbourgman wrote:But heck I just had a huge Offshore thanksgiving meal and I'm not quite right yet, so what the heck do I know.


I was always quite happy with offshore food, particularly the weekly steak day. But really, once you miss an entire spring living on a rig, the exotic nature of the work begins to wear off.
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Re: A personal overview of the peak oil theory

Unread postby Plantagenet » Thu 28 Nov 2019, 16:38:06

AdamB wrote:. Peak oil as it was explained and predicted going back as far as 1919 DID NOT include accompanying financial theories, correlations with price or even market involvement. This is because it was invented by the natural science / geologic types, and as I have discovered over the past decade, they aren't always amenable to what the dismal science thinks about their relatively pure natural science.


Actually, Interactions between oil supply and demand and oil prices are implicit in the peak oil theory. According to the law of supply and demand, oil prices will inevitably go up when demand exceeds supply. Isn’t that obvious?

These interactions were made explicit by Colin Wilson and the ASPO. Colin Wilson, in particular, developed the idea that economic growth produced ever more demand for oil, ultimately leading to peak oil. Wilson suggested peak oil would lead to high oil prices which would lead to economic recessions which would lead to lower oil demand. This in turn would result in lower oil prices followed by resumption of economic growth followed by increased oil demand and high oil prices......and so on.

Wilson’s model held that peak oil would produce interactions intereactions between oil prices and the economy leading to cycles of economic growth and recession.

You can’t be more explicit then that in linking peak oil to markets and finances. The whole point of Wilson’s model was that peak oil would lead to cycles of high oil prices and low prices and concomitant periods of economic growth and recession.

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Re: A personal overview of the peak oil theory

Unread postby Tanada » Thu 28 Nov 2019, 17:08:19

diemos wrote:I wish Gail the Actuary was still around to make us a graph of global per capita oil consumption.


She still posts regularly, she just doesn't bother posting here because the traffic level has shrunk so much. More of article at link below quoted section.
Gail Tverberg wrote:Understanding Why the Green New Deal Won’t Really Work

The reasons why the Green New Deal won’t really work are fairly subtle. A person really has to look into the details to see what goes wrong. In this post, I try to explain at least a few of the issues involved.

[1] None of the new renewables can easily be relied upon to produce enough energy in winter.

The world’s energy needs vary, depending on location. In locations near the poles, there will be a significant need for light and heat during the winter months. Energy needs will be relatively more equal throughout the year near the equator.

Solar energy is particularly a problem in winter. In northern latitudes, if utilities want to use solar energy to provide electricity in winter, they will likely need to build several times the amount of solar generation capacity required for summer to have enough electricity available for winter.

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Hydroelectric tends to be a spring-dominated resource. Its quantity tends to vary significantly from year to year, making it difficult to count on.

Image

Another issue with hydroelectric is the fact that most suitable locations have already been developed. Even if additional hydroelectric might help with winter energy needs, adding more hydroelectric is often not an option.

Wind energy (Figure 3) comes closest to being suitable for matching the winter consumption needs of the economy. In at least some parts of the world, wind energy seems to continue at a reasonable level during winter.

Image

Unfortunately, wind tends to be quite variable from year to year and month to month. This makes it difficult to rely on without considerable overbuilding.

Wind energy is also very dependent upon the continuation of our current economy. With many moving parts, wind turbines need frequent replacement of parts. These parts need to be precisely correct, with virtually no tolerance for change. Sometimes, helicopters are needed to install the new parts. Because of the need for continued high-technology maintenance services, wind energy cannot be expected to continue to operate for very long unless the world economy, with all of its globalization, can continue pretty much as today.

[2] Depending upon burned biomass in winter is an option, but we already know that this path is likely to lead to massive deforestation.

Historically, people burned wood and other biomass to provide heat and light in winter. If biomass is burned for heat and light, it is an easy step to using charcoal for smelting metals for goods such as nails and shovels. But with today’s population of 7.7 billion people, the huge demand for biomass would quickly deforest the whole world. There is already a problem with growing deforestation, especially in tropical areas.

It is my understanding that the Green New Deal is focusing primarily on wind, hydroelectric, and solar rather than biomass, because of these issues.

[3] Battery backup for renewables is very expensive. Because of their high cost, batteries tend to be used only for very short time periods. At a 3-day storage level, batteries do nothing to smooth out season-to-season and year-to-year variation.

The cost of batteries is not simply their purchase price. There seem to be several related costs associated with the use of batteries:

The initial cost of the batteries
The cost of replacements, because batteries are typically not very long-lived compared to, say, solar panels
The cost of recycling the battery components rather than simply leaving the batteries to pollute the nearby surroundings
The loss of electric charge that occurs as the battery sits idle for a period of time and the loss related to electricity storage and retrieval

We can get some idea of the cost of batteries from an analysis by Roger Andrews of a Tesla/Solar City system installed on the island of Ta’u. The island is in American Samoa, near the equator. This island received a grant that was used to add solar panels, plus 3-day battery backup, to provide electricity for the tiny island. Any outages longer than the battery capacity would continue to be handled by a diesel generator. The goal was to reduce the quantity of diesel used, not to eliminate its use completely.

Based on Andrews’ analysis, adding a 3-day battery backup more than doubled the cost of the PV-alone system. (It added 1.6 times as much as the cost of the installed PV.) The catch, as I pointed out above, is that the cost doesn’t stop with purchasing the initial batteries. At least one set of replacement batteries is likely to be needed during the lifetime of the system. And there are other costs that are more subtle and difficult to evaluate.

Furthermore, this analysis was for a solar system. There seems to be more variation over longer periods for wind. It is not clear that the relative amount of batteries would be enough for 3-day backup of a wind system, or for a combination of wind, hydroelectric and solar. The long-term cost of a solar panel plus battery system might easily come to four times the cost of a wind or solar system alone.

There is also the issue of necessary overbuilding to make the system work. On Ta’u, near the equator, with diesel power backup, the system is set up in such a way that 40% of the solar generation is in excess of the island’s day-to-day electricity consumption. This constitutes another cost of the system, over and above the cost of the 3-day battery backup.

If we also eliminate the diesel backup, then we start adding more costs because the level of overbuilding would need to be even higher. And, if we were to create a similar system in a location with substantial seasonal temperature variation, even more overbuilding would be required if enough capacity is to be made available to provide sufficient generation in winter.

[4] Even in sunny, warm California, it appears that substantial excess capacity needs to be added to avoid the problem of inadequate generation during the winter months, if the electrical system used is based on wind, hydroelectric, solar, and a 3-day backup battery.

Suppose that we want to replace California’s electricity consumption (excluding other energy, including oil products) with a new system using wind, hydro, solar, and 3-day battery backup. Current California renewable generation, compared to current consumption, is as shown on Figure 4, based on EIA data.

Image

California’s electricity consumption peaks about August, presumably due to all of its air conditioning usage (Figure 5). This is two months after the June peak in the output of solar panels. Also, electricity usage doesn’t drop back nearly as much during winter as solar production does. (Compare Figures 1 and 5.)

Image

We note from Figure 4 that California hydroelectric production is extremely variable. It appears that hydroelectric generation can vary by a factor of five comparing high years to low years. California hydroelectric generation uses all available rivers, so any new energy generation will need to come from wind and solar.

Even with 3-day backup batteries, we need the system to reliably produce enough electricity that it can meet the average electricity generation needs of each separate month. I did a rough estimate of how much wind and solar the system would need to add to bring total generation sufficiently high so as to prevent electricity problems during the winter. In making the analysis, I assumed that the proportion of added wind and solar would be similar to their relative proportions on June 30, 2019.

My analysis suggests that to reliably bridge the gap between production and consumption (see Figure 4), approximately six times as much wind and solar would need to be added (making 7 = 6 +1 times as much generation in total), as was in place on June 30 , 2019. With this arrangement, there would be a huge amount of wind and solar whose production would need to be curtailed during the summer months.

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[5] None of the researchers studying the usefulness of wind and solar have understood the need for overbuilding, or alternatively, paying backup electricity providers adequately for their services. Instead, they have assumed that the only costs involved relate to the devices themselves, plus the inverters. This approach makes wind and intermittent solar appear far more helpful than they really are.

Wind and solar have been operating in almost a fantasy world. They have been given the subsidy of “going first.” If we change to a renewables-only system, this subsidy of going first disappears. Instead, the system needs to be hugely overbuilt to provide the 24/7/365 generation that backup electricity providers have made possible with either no compensation at all, or with far too little compensation. (This lack of adequate compensation for backup providers is causing problems for the current system, but it is beyond the scope of this article to discuss them here.)

Analysts have not understood that there are substantial costs that are not being reimbursed today, which allow wind and solar to have the subsidy of going first. For example, if natural gas is to be used as backup during winter, there will still need to be underground storage allowing natural gas to be stored for use in winter. There will also need to be pipelines that are not used much of the year. Workers will need to be paid year around if they are to continue to specialize in natural gas work. Annual costs of the natural gas system will not be greatly reduced simply because wind, hydro, and water can replace natural gas usage most months of the year.

Analysts of many types have issued reports indicating that wind and solar have “positive net energy” or other favorable characteristics. These favorable analyses would disappear if either (a) the necessary overbuilding of the system or (b) the real cost of backup services were properly recognized. This problem pervades studies of many types, including Levelized Cost of Energy studies, Energy Returned on Energy Invested studies, and Life Cycle Analyses.

This strange but necessary overbuilding situation also has implications for how much homeowners should be paid for their rooftop solar electricity. Once it is clear that only a small fraction of the electricity provided by the solar panels will actually be used (because it comes in the summer, and the system has been overbuilt in order to produce enough generation in winter), then payments to homeowners for electricity generated by rooftop systems will need to decrease dramatically.

A question arises regarding what to do with all of the electricity production that is in excess of the needs of customers. Many people would suggest using this excess electricity to make liquid fuels. The catch with this approach is that the liquid fuel needs to be very inexpensive to be affordable by consumers. We cannot expect consumers to be able to afford higher prices than they are currently paying for fossil fuel products. Also, the new liquid fuels ideally should power current devices. If consumers need to purchase new devices in order to utilize the new fuels, this further reduces the affordability of a planned changeover to a new fuel.

Alternatively, owners of solar panels might be encouraged to use the summer overproduction themselves. They might set the temperatures of their air conditioners to a lower setting or heat a swimming pool. It is unlikely that the excess could be profitably sold to nearby utilities because they are likely encounter the same problem in summer, if they are using a similar generation mix.

[6] As appealing as an all-electric economy would seem to be, the transition to such an economy can be expected to take 150 years, based on the speed of the transition since 1985.

Clearly, the economy uses a lot of energy products that are not electricity. We are familiar with oil products burned in many vehicles, for example. Oil is also used in many ways that do not require burning (for example, lubricating oils and asphalt). Natural gas and propane are used to heat homes and cook food, among other uses. Coal is sometimes burned in making pig iron and cement in China.

Image

Electricity’s share of total energy consumption has gradually been rising (Figure 7).* We can make a rough estimate of how quickly the changeover has been taking place since 1985. For the world as a whole, electricity consumption amounted to 43.4% of energy consumption in 2018, rising from 31.2% in 1985. On average, the increase has been 0.37%, over the 33-year period shown. If we assume this same linear growth pattern holds going forward, it will take 153 years (until 2171) until the world economy can operate using only electricity. This is not a quick change!

[7] While moving away from fossil fuels sounds appealing, pretty much everything in today’s economy is made and transported to its final destination using fossil fuels. If a misstep takes place and leaves the world with too little total energy consumption, the world could be left without an operating financial system and with way too little food.

Over 80% of today’s energy consumption is from fossil fuels. In fact, the other types of energy shown on Figure 8 would not be possible without the use of fossil fuels.


Our Finite World October 4, 2019
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: A personal overview of the peak oil theory

Unread postby asg70 » Thu 28 Nov 2019, 19:15:34

Here is a good rebuttal to Gail's perma-doomerism.

Tony Seba's updated #CleanDisruption presentation.

https://www.youtube.com/watch?v=6Ud-fPKnj3Q

I think Tony Seba's thesis/narrative probably deserves its own thread by now.

HALL OF SHAME:
-Short welched on a bet and should be shunned.
-Frequent-flyers should not cry crocodile-tears over climate-change.
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 19:34:15

Plantagenet wrote:
AdamB wrote:. Peak oil as it was explained and predicted going back as far as 1919 DID NOT include accompanying financial theories, correlations with price or even market involvement. This is because it was invented by the natural science / geologic types, and as I have discovered over the past decade, they aren't always amenable to what the dismal science thinks about their relatively pure natural science.


Actually, Interactions between oil supply and demand and oil prices are implicit in the peak oil theory.


Interactions are nice, implicit means folks weren't talking about it but might have been thinking or mentioning it along the way, and the definition certainly doesn't contain the concept as I've mentioned. I have explained how the modern oil modeling certainly recognizes the economic necessity in doing a proper oil rate analysis.

Plantagenet wrote:According to the law of supply and demand, oil prices will inevitably go up when demand exceeds supply. Isn’t that obvious?


Peak oil was once obvious. Until it wasn't. I certainly am not required to buy into your obvious, or even know what you mean when you write it. Economics, even basic economics, were generally derided by the McPeaksters, in case you've forgotten.

Plantagenet wrote:These interactions were made explicit by Colin Wilson and the ASPO. Colin Wilson, in particular, developed the idea that economic growth produced ever more demand for oil, ultimately leading to peak oil. Wilson suggested peak oil would lead to high oil prices which would lead to economic recessions which would lead to lower oil demand. This in turn would result in lower oil prices followed by resumption of economic growth followed by increased oil demand and high oil prices......and so on.


Really? And did Colin change Hubbert''s definition along the way in order to make this relationship? Anyone associated with ASPO is obviously a suspicious source, but if you've got a reference, I would like to see it. Economists, Hamilton springs to mind, have been studying oil since the US lost the role of marginal supplier.

No one said that folks haven't studied oil and economics, only that Happy Mcpeaksters weren't the ones doing it, and in many cases completely disavowed using the dismal science, as obviously (to them) money wouldn't create more oil.

Plantagenet wrote:You can’t be more explicit then that in linking peak oil to markets and finances.


Sure you could. Happy McPeaksters could have built it into their own definition, and then not derided the use of that science in general.

Realize of course I don't tend to refer to post "we told you so McPeakster" sources, hindsight being 20/20, I imagine there were quite a few Monday morning quarterbacks pretending they had it figured out...AFTER it happened.

As far as Wilson's model, the reference for it might be? It would be interesting to compare to the latest scientifically based work to see if it has the necessary technical chops, or is just another economist doing what economists do. Not that this disqualifies his idea or model of course, it is just that we have modern examples of folks doing not ONLY economics concepts.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 19:43:53

diemos wrote:I wish Gail the Actuary was still around to make us a graph of global per capita oil consumption.


She undoubtedly does. And she does the worst analysis I have ever seen. It isn't consistent with her older work, she repeats herself endlessly, she states conclusions without evidence, she provides evidence that doesn't support her conclusions, says things and expects them to be taken seriously just..because. Being of more advancing age myself I don't want to use the word doddering....but I just did.

I once explained to her on TOD why her discovery charts were censored. She thanked me for the information, and then interestingly went on continuing to use the censored graphs. Still did, last time I bumped into one.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 20:03:52

Plantagenet wrote:These interactions were made explicit by Colin Wilson and the ASPO.


So, i have a copy of all the ASPO news letters, and did some googling on Colin Wilson and ASPO, peak oil, economic model, etc etc.

Nothing popped up under the combinations I used, do you have a footnote in some article that referenced him and his work perhaps?
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Re: A personal overview of the peak oil theory

Unread postby coffeeguyzz » Thu 28 Nov 2019, 20:06:12

Boy, this is one of the better oil related threads that I have read in quite some time.
Remarkable how much can be learned when varying, even opposing views, can be presented in an adult, informative manner.

To somewhat address the financial aspects of the unconventional world that both Adam and wildbourg were touching upon ...
A huge factor - somewhat overlooked or even dismissed - is an emerging reality that operators are on the cusp of having economically viable operations at $2.50 HH and $55 WTI.

This is something I would not have thought possible a few years back.

For those quick to regurgitate the "They going broke! Funny money rules! Ponzi!", you clearly have not been following along.
Sure, the poster boy of all that ails - Chesapeake - may not be around in current form by end of 2020, but its MASSIVE footprint will be carved up and taken over by others - and run profitably - for years to come.

The cost to produce oil/gas in the unconventional industry has plummeted these past few years ... and continues to drop.
That big decline in rig count?
~55% offline of legacy rigs while only 10% of the Super Specs are idled (H&P the source of that from a few weeks ago).

Marathon claims $4.9 million to D&C a Bakken well with a recent 4 well pad costing $4.5 per.
EOG says its Bakken wells now average $5 milluon.
EQT is shooting to operate in a $2 HH world and - if they cannot - they will come close.

Russian pipeline gas is being undercut in Turkey by US LNG.
Likewise, Algeria is cutting back on European bound gas - via pipe - due to cheap LNG.

However the coming years play out, energy wise, the abundant, cheap US hydrocarbons will 100% exert a crushingly large influence on world affairs.
Garownteed.
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 20:10:33

asg70 wrote:Here is a good rebuttal to Gail's perma-doomerism.

Tony Seba's updated #CleanDisruption presentation.

https://www.youtube.com/watch?v=6Ud-fPKnj3Q

I think Tony Seba's thesis/narrative probably deserves its own thread by now.


He called a peak oil in 2020. Seems a bit early compared to the other think tanks and whatnot, but hey! We left old school McPeaksters to their own devices for like decades whining about peak oil tomorrow and getting it wrong for 20 years, seems like we can give Tony some slack for awhile.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 20:18:57

coffeeguyzz wrote:Boy, this is one of the better oil related threads that I have read in quite some time.


Hey, get 2 oil field guys together and we can make a difference!! Hard to find greyhairs in the industry anymore, they are disappearing quick! But if you can find them online, you can still have a grand old time!

coffeeguyzz wrote:A huge factor - somewhat overlooked or even dismissed - is an emerging reality that operators are on the cusp of having economically viable operations at $2.50 HH and $55 WTI.


Some of us were doing tight/light oil and gas development at $2/mcf and $20/bbl. No surprise from me that the engineers are getting their optimized routines down, you could see the last round during the 14/15 price drop. It isn't as though we are paid to be stupid about how we spend our money!

coffeeguyzz wrote:However the coming years play out, energy wise, the abundant, cheap US hydrocarbons will 100% exert a crushingly large influence on world affairs.
Garownteed.


We already have been. Stopped the Saudi's and OPEC from the kind of price control they had exerted for 30-40 years. Saudi America Rulz!!
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby coffeeguyzz » Thu 28 Nov 2019, 21:35:36

I've become fascinated with the natgas world in recent years, more specifically LNG.

The Venture Global Calcasieu Pass plant will be 10 metric tonnes per annum, and consist of 9 blocks of paired .626 mtpa trains.
The Plaquemines Parish plant will be identical but twice the size.
30 freakin' tonnes - twice Yamal - at a fraction of the cost.

Combined with Tellurian's Driftwood and Next Decade's Rio Grande LNG - both 27 mtpa - you have MORE than Qatar's 77 mtpa with just these 4 projects.
The Lego-like modularization process is enabling uber fast, uber cheap construction compared to historical norms.

(On Alibaba, there is a small scale LNG plant offered for $6 million price.
No shit. Think Amazon will deliver?)

With Golar setting up an FSRU in Barcarena, northern Brazil, for a planned power plant, they (Golar) are seeking a buildout of small scale barges/ships to transport LNG throughout the region to supply aluminum smelters and fertilizer plants.

Absolutely amazing how quickly this global transformation is taking place.
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 22:02:27

coffeeguyzz wrote:Absolutely amazing how quickly this global transformation is taking place.


About 3 or 4 years ago, I was at a conference somewhere and one of the presenters was making the case that within the next 5 years teh world would be oversupplied with LNG and it would have disastrous consequences for price. The argument being that too much was coming online, in to close of a timespan, and that usual overbuild business model chaos would ensue.

So...some 3 or 4 years later, how are prices holding up?
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby ralfy » Thu 28 Nov 2019, 22:37:04

The problem isn't price but production cost. That's why the former has been volatile due to financial speculation while the second keeps rising. Meanwhile, peak oil is seen as a "theory" because the industry has been looking for more oil sources.

Use the ignore function on those who can't understand these obvious points.
http://sites.google.com/site/peakoilreports/
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Thu 28 Nov 2019, 22:59:13

ralfy wrote:The problem isn't price but production cost.


Neither price, nor production costs, are "problems". One is the confluence of supply and demand (and therefore dependent on both) and the other is just....cost.

My used car cost $2800. My other used car cost $25,000. Neither costs were a "problem", but one was certainly larger than another.

ralfy wrote:That's why the former has been volatile due to financial speculation while the second keeps rising.


The former is volatile because of that aforementioned supply and demand thing, although speculation might be a concern on occasion, such as the spike in 2008. The second is actually related to the first. Did you know that when oil prices drop, drilling and completion costs do as well? Service companies are tricky that way, and understand the supply/demand relationship thing. So you can't make the categorical statement that production costs are riding without knowing that they also go down, often it depends on activity levels. Throw in general inflation, and you could also argue that production costs go up because everything is.

But neither of your statements can be categorical. The way that price operates, and the oil and gas industry, can't be represented by a simple cartoonish way of looking at the moving parts.

ralfy wrote:Meanwhile, peak oil is seen as a "theory" because the industry has been looking for more oil sources.


Peak oil, as defined by Hubbert, is a given. Everyone knows that. And what is NOW known, is that no one cares about peak oil, because peak oil via demand is difficult to make into a scary vision of the future.

ralfy wrote:Use the ignore function on those who can't understand these obvious points.


I learned as a scientist to listen to all points of view, so certainly I won't put you on ignore ralfy just because your views on price and cost and whatnot are inexpert in nature. Rockdoc and I have been in this game for maybe a half century now, and have a slight advantage on the newcomers.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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