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This is a follow-up to my most recent post, in which I offered a few observations on commentary attempting to debunk the concept of peak oil courtesy of this recent article by John Kemp. [Quotes here are from the Kemp article unless noted otherwise.] 

Economist James Hamilton, a professor at the University of California, recently shared a report of his which concluded that high oil prices are the new standards all of us should accept as one of the unpleasant realities of 21st Century energy supply and production. Of course, not all are inclined to accept realities which interfere their agendas.

No denier worthy of the name will of course offer up their contribution of nonsense without making certain that the “running out of oil” allegation makes its appearance, and this article honored that mandate:

The simple theory that supplies will run out has been reframed as a more sophisticated one about rising prices.
Peak oil supporters now point to the increasing cost of oil production, diminishing energy return on investment and the diminishing energy return on energy invested to claim that it is becoming harder and more expensive to sustain, let alone increase, crude output.

As I’ve noted on countless occasions, the claim that advocates urging greater awareness of peak oil by running the “we’re running out of oil” meme is simply false. No explanation of the important facts about declining production relies on that notion. Fossil fuels are finite resources, so at some point in this planet’s future, we may very well have explored, extracted, and produced all but the smallest puddles of oil.

Chances are excellent that if we do get to that point, it will be many centuries after we current inhabitants have left the building. That truth won’t stop the deniers from advancing the claim, because … well, because if you can’t deal with facts, making up your own is the obvious Plan B.

Peak oil is about the rate of production. At some point the combination of technological, economic, and geological factors will result in a high point of production—not terribly complicated, actually. Most in the know suggest that conventional crude oil production peaked in 2005; here in the U.S., about forty-plus years ago.

There’s no disputing the surge in production hydraulic fracturing has been responsible for in the past few years. So Kemp’s comment that “Peak oil supporters now point to the increasing cost of oil production, diminishing energy return on investment and the diminishing energy return on energy invested to claim that it is becoming harder and more expensive to sustain, let alone increase, crude output” is simply a recitation of the truth. Those factors won’t go away because deniers don’t like what they suggest.

Adding irrelevancies and/or working overtime to spin facts into something else is also part of the standard MO.

If oil wells were not extremely profitable, North Dakota and Texas would not be experiencing a drilling boom, with demand for both rigs and petroleum engineers at the highest level for three decades.
In focusing on decline rates, Hamilton ignores the ultimate amount of oil and gas recovered from shale wells, which in many cases is higher than from conventional wells.
The second section of the paper suggests that much of the increase in oil output since 2005 has in fact been “low quality” natural gas liquids rather than true crude, but then the fifth section acknowledges production from shale has increased U.S. crude output by a net 2.3 million barrels per day.

What does “extremely profitable” mean? Over what period of time? Current conditions? Expectations? If the “sweet spots” are now part of fracking’s past, meaning higher costs, more effort, with less to show for it all, then what’s the conclusion to be drawn? A spike in profitability because the best spots were produced first (before the high decline rates quickly inserted themselves into the narrative) will in most instances of course lead to a drilling boom, rig demand increases, and more hiring.

What’s the picture  going forward, given higher costs, more effort, with less to show for it all? That part of the discussion didn’t find its way into the script.

As for the third paragraph in the quote above, kudos for the gymnastic effort! Pointing out the facts of “low quality” natural gas liquids while acknowledging the broader definition of “crude oil” are two different issues.

Was it too difficult to explain that production totals have been massaged in recent years to include products neither part of the calculations prior to the peak nor adequate substitutes for conventional crude? Word count limits can be a pain in the ass, can’t they?

Peak oil is simply an acknowledgment that we are dealing with a finite resource which is in fact becoming more challenging to locate and extract, more expensive, and more energy-intensive than it ever has. When you factor in the reality that conventional crude oil’s peak is now a decade into the mirror and the limitations mentioned above, more of our attention ought to be devoted to education, preparation, and adaptation than conjuring up the most creative way to spin facts and reality into some farce designed to benefit the few at the expense of the many.

~ My Photo: dunes at Good Harbor Beach, MA – 09.21.08

 

* I invite you to enjoy my two new books [here and here], and to view my other writings at richardturcotte.com

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