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Page added on December 19, 2015
Bigger gas reserves undermine Peak Oil
In yet another blow to the Peak Oil theory, a new survey shows that Texas is even richer in natural gas than previously believed. Natural gas – cleaner than coal and very adaptable to other uses – is abundant and available.
Peak Oil, you’ll recall, is the theory driving much of the Obama administration’s energy policy. We’ll soon run out of fossil fuels, we are told, so we’d better spend a lot of money developing alternatives. When we’re pumping all the oil and natural gas we can find – that’s the theory’s “peak” – prices will start to skyrocket and nations could soon find themselves at war over diminishing resources.
But history has a way of undermining that theory.
“North Texas’ Barnett Shale – one of the country’s largest natural gas fields and the birthplace of modern fracking – holds even more reachable gas than previously thought, the federal government says,” the Texas Tribune reports. “The U.S Geological Survey says the 25-county region holds an average volume of about 53 trillion cubic feet of natural gas, according to its updated assessment released Thursday. That’s nearly twice as much gas as the agency estimated in 2003, before a mad dash of drillers transformed the landscape in North Texas.”
Petroleum is so abundant nowadays that oil and gas prices are threatening the viability of some smaller producers. That’s the very opposite of what we’re told should be happening.
Here’s what Peak Oil theorist Richard Heinberg wrote in 2004: “If the U.S. continues with its current policies, the next decades will be marked by war, economic collapse and environmental catastrophe. Resource depletion and population pressures are about to catch up with us, and no one is prepared. The political elites, especially in the U.S., are incapable of dealing with the situation and have in mind a punishing game of ‘Last One Standing.’”
More than a decade on, these predictions have failed to materialize. We have war, but it’s ideologically driven, not resource-driven. The population pressure many nations are feeling now is a lack of new babies.
What’s more, Peak Oil theorists entirely failed to factor in technological innovation in energy efficiency.
“Contained in Exxon’s new Outlook for Energy report is the following damning statistic: Electricity generation will grow by 90 percent by 2040, but the amount of fuel needed to generate that electricity will only have to grow by 50 percent,” the magazine Business Insider reported recently. “And the projected increase in energy demand is 20 percent less than the demand increase seen from 1980 to 2010. The IEA has previously projected that electricity will become more affordable over time in most regions as income levels increase faster than household electricity bills.”
As Ted Pirog, an energy analyst with Exxon, points out, “Our greatest source of energy in the future is our ability to use it more efficiently.”
What all this means is that Peak Oil is a discredited theory. Remember that when President Obama and Secretary of State John Kerry trot out variations of the Peak Oil doomsday scenario to scare Americans into supporting their policies.
24 Comments on "Bigger gas reserves undermine Peak Oil"
Go Speed Racer on Sat, 19th Dec 2015 2:01 pm
Looks like some red meat to throw to the Fox News nut jobs. So if we are running low on oil and we discover we can cut down all the trees and burn them, does that discredit the peak oil theory?
Didn’t conventional oil already peak?
Truth Has A Liberal Bias on Sat, 19th Dec 2015 2:10 pm
Oil with API less than 40 peaked in 2005.
Last time I checked the global agricultural fleet of trucks, combines and crop dusters didn’t run on natural gas.
Idiots.
Tom S on Sat, 19th Dec 2015 3:02 pm
Oh goodness, no.
“Remember that when President Obama and Secretary of State John Kerry trot out variations of the Peak Oil doomsday scenario”
The Obama administration has never even mentioned peak oil, not even once, much less the weird doomsday group surrounding it. That would have been political suicide, which I’m sure was obvious to the Obama administration.
I remember there was a campaign on the Oil Drum, years ago, to get the President just to say the words “peak oil”, but it was ignored.
I think the only US president ever to endorse the idea of an imminent energy collapse was Jimmy Carter in 1979.
This article is a crude attempt to discredit the entire left by bunching them all together with doomsday preppers, and then painting them all with the same brush. It’s like saying that president Bush is discredited because Harold Camping’s end-of-the-world predictions based upon his reading of Revelations didn’t come true.
-Tom S
bug on Sat, 19th Dec 2015 4:13 pm
And with a year left (kerry, obama) they will need to find a new strawperson.
Boat on Sat, 19th Dec 2015 4:19 pm
Truth, the idea that the oil with an API less than 40n doesn’t mean much. You need light oil to mix with heavy oil at many of the worlds refineries. In fact light condensate is desired because most of it has a low sulfur content.
That is the problem with the idea of peak oil. Oil consumption has grown consistently has never been near the final peak.
Davy on Sat, 19th Dec 2015 4:24 pm
The story is so convoluted. We had high prices and now low prices. The less educated peakers and cornies are both clueless about the deeper meaning of the past 8 years. It is more than oil and includes broad based limits and disequilibrium of our global financial system. It is very much related to Short’s ETP results. Generally these articals are lobying excersises by people out to make money or avoid losing money.
rockman on Sat, 19th Dec 2015 4:27 pm
“Barnett Shale…the birthplace of modern fracking”. FYI for those few here that aren’t aware: the BS wells were/are essentially frac’d with the same tech that had been around for decades. In fact about 35 years ago the Rockman pumped a frac into a carbonate shale that was twice as big as the typical BS well.
BTW US NG production, according to the EIA, peaked in 1970 and did not increase significantly above that level for 35 years. And that was in response to NG prices reaching more then 300% higher then the current price. IOW at $6+/mcf we saw US NG production increase about 29% (24 bcf/day to 31 bcf/day) and the great and wise XOM sees NG production increasing 50% to 45 bcf/day to meet future demand. They don’t say what price level that will require but I’m sure it’s not the current $2/mcf. And I’m pretty sure it will have to be a good bit more than the 300% higher price that gave us only a 29% increase. I also wonder what new NG trends they are expecting since a huge number of wells have already been drilled in the known shale trends. After all you wouldn’t twin a well that has already produced its reserves. Even XOM isn’t that stupid.
I can hardly wait to see the XOM report sharing those details. lol
Truth Has A Liberal Bias on Sat, 19th Dec 2015 5:23 pm
Thanks Davy for pointing out the painfully obvious. Staw dogs. The fact remains that crude with an API below 40 has peaked. But hey, whatever makes you feel smart feel free to type it out.
dubya on Sat, 19th Dec 2015 6:26 pm
“Electricity generation will grow by 90 percent by 2040, but the amount of fuel needed to generate that electricity will only have to grow by 50 percent”
– uuuuh, isn’t this because most electrical generation being built today uses no fuel. eg solar & wind; thus by using the idiotic policies of the Obama government to support his own argument.
“We have war, but it’s ideologically driven, not resource-driven. The population pressure many nations are feeling now is a lack of new babies.”
– Yup, those layabout Syrians have no resource problems that can’t be solved by more babies.
…………………
Oh stop the stupid! it burns!
Pete Bauer on Sat, 19th Dec 2015 7:53 pm
http://www.worldoil.com/news/2015/10/22/third-quarter-completions-down-44-year-on-year-api
US Oil well completions dropped 44% in Q3-2015 and expect oil production to go down when the existing oil wells start depleting.
Now the question?.
Can OPEC ramp up their production to supply few million extra b/d to compensate for US supply reduction.
makati1 on Sat, 19th Dec 2015 8:46 pm
Oil, natural gas, coal, methane. ALL are heating up the planet, raising the oceans and killing off the oxygen producers all over the world. Who gives a damn which one is king? We all suffer the same near term fate. Extinction.
rockman on Sun, 20th Dec 2015 12:04 pm
I posted this link elsewhere but I think it will serve as a good counter balance to the BS delivered by this piece about our new “abundant” fossil fuel reserves.
http://www.eia.gov/pub/oil_gas/petrosys … table.html
My comments are about the nature of the oil wells that are currently producing those “huge” new reserves. But check out the distribution of US NG well production in that link.
“It’s the distribution of wells just in Texas in 2009. Note that there were a total of about 142,000 oil wells in the state. And 124,000 were making 15 bopd or less. In fact 60,000 were making less than 2 bopd. And only 60 wells averaged more then 400 bopd for the entire year. IOW only 0.04% of the wells in Texas averaged more than 400 bopd that year.
Think about that as you recall all those high INITIAL production rates posted for Eagle Ford Shale wells that year. I suspect some folks won’t find the OFFICIAL US GOVT DATA believable after all the hype they swallowed from the pubcos and MSM. lol. And try to wrap your head around this: half of the 119 million bbls of oil produced in Texas in 2009 came from wells making 20 bopd or less.”
IOW regardless of those “huge” reserve numbers the cornies like to fling around like monkey poo look at the daily production distribution of the wells delivering that cornucopia. lol. Based on the hype one would think half the Texas oil production was coming from those new high rate hale wells, wouldn’t you? And not from wells only 5 bopd away from being classified as stripper wells.
rockman on Sun, 20th Dec 2015 12:08 pm
I checked link and it wouldn’t open so again:
http://www.eia.gov/pub/oil_gas/petrosystem/tx_table.html
rockman on Sun, 20th Dec 2015 12:11 pm
That worked. Folks should really spend just 3 minutes looking at this table. I think even some of the more knowledgeable here might be very surprised.
joe on Sun, 20th Dec 2015 12:59 pm
The main theme of tight oil is return on investment. A decade of free money has given us the era of risk free investment, and has brought the Dow Jones above 17,000. That time is ending now, and as tight oil is higher risk investment versus opec oil then return should be higher. Granted exports will create a new industry but it’s rate of growth will be slower and so don’t expect it to contribute much to future reserves, particularly since oil may be the prime target of those GW laws in the future. All of this fits a pattern of not only peaking oil production but also of demand, both of which can be modeled in the economies of commodity usage in the world. But don’t expect it’s use to vanish, for example, nobody is so stupid as to stop using it in food industries as it’s an important capital good. Changes in economics are coming. Do not discount ambitions for artificial intelligence, so labour forces in 20 years will reflect a dead middle class, it’s likely only doctors will left, but most administration, civil service, and legal activities handed over cheaply to ai.
Davy on Sun, 20th Dec 2015 1:21 pm
The problem with AI is economic growth gives it economies of scale. In a declining global economy labor will trump automation except in the most complicated of processes. AI is not going away immediately but it has little future in a decaying global world.
rockman on Sun, 20th Dec 2015 2:03 pm
Joe – Despite the hype there’s no practical reason to expect US oil exports to increase now that “ban” has been lifted. Everyone (mostly the Canadians) that wanted to import our oil bought as much as the wanted. So who is going to buy future bbls that aren’t buying them today? Of course US companies could try to take market share away from other sellers (like Libya that shopped light oil to Venazuela they could blend with their heavy crap) by lowering their price. But I don’t see how that would help the US oil industry.
gwb on Sun, 20th Dec 2015 4:02 pm
The author is comparing oranges and apples. The problem starts with the title: “Bigger gas reserves undermine Peak Oil”. Natural gas isn’t oil – writers in the peak-oil space have belaboring this point until they’re blue in the face.
JuanP on Sun, 20th Dec 2015 6:41 pm
As I was scrolling up to read the article after reading the comments my eyes caught this, “The population pressure many nations are feeling now is a lack of new babies.” I saved myself two irreplaceable minutes and skipped the rest of it.
Davy on Sun, 20th Dec 2015 7:06 pm
http://www.zerohedge.com/news/2015-12-20/californias-worst-gas-leak-40-years-and-crews-cant-stop-it
ennui2 on Sun, 20th Dec 2015 7:11 pm
“crude with an API below 40 has peaked. ”
If BAU runs fine on unconventional, then API below 40 peaking is a non-issue, at least as long as unconventional holds out.
Apneaman on Sun, 20th Dec 2015 9:21 pm
Carnage in US Natural Gas as Price Falls off the Chart
“A number of smaller natural-gas focused drillers have already sought refuge in bankruptcy court. The number 2 driller, Chesapeake, which gets 72% of its production from natural gas and 11% from natural gas liquids, has already written off $15.4 billion over the past three quarters! It’s currently trying to “restructure” its debt. Nearly $12 billion of it is junk bonds. Of them, $9.3 billion are unsecured. It has hired restructuring advisors Evercore Partners.
Unsecured bondholders know what that means: their illusions will disappear. And they’re sweating blood.
Chesapeake is currently engineering a bond swap which will make a big haircut for unsecured bondholders permanent. Its myriad bond issues have plunged in value. For example, the 6.5% notes due 2017 trade at around 55 cents on the dollar, though they’re included in the bond swap, according to S&P Capital IQ LCD, and the notes due 2019, also included in the bond swap, trade at around 30 cents on the dollar. Its stock has fallen 87% since June 2014, to below $4 a share.
Investors that stuck it out – or speculators that grabbed the opportunity of lifetime a few months ago – are toast!”
http://wolfstreet.com/2015/12/18/carnage-in-us-natural-gas-as-price-falls-off-the-chart/
rockman on Mon, 21st Dec 2015 6:21 am
Apeman – You probably understand that a large portion of the oil patch has always depended upon the greed of investors. And not just recently but all the way back to the beginning of drilling in the US
Nothing has changed.
meld on Mon, 21st Dec 2015 7:16 am
Food shortage debunked as we found a new supply of spoons!