Peak Oil Matters

Ten months ago, I offered this observation:

This is the reality: we’re NOT running out of oil, and we won’t for several more decades. But that is not the point and never is when discussing peak oil. Peak oil is about the rate of production, the quality of oil, the ease of access, refinement, availability, and affordability. Each of these production elements are now more challenging to meet, and is now happening when worldwide demand is ratcheting up. Finding fewer and smaller fields that consistently fail to keep up with depletion rates, producing less oil, often inferior in quality, more slowly, at greater expense, with much more effort required to satisfy increasing demand (just for starters) is not a recipe for success, profitability, and availability. And it’s not going to get any better. The steady march down the back slope of oil production is soon upon us, and very little that we produce, use, or depend on will remain unaffected by that truth.

Reality can be incredibly inconvenient, but we do ourselves no favors now, short-term, and especially long-term by either falling for the fact-free, feel-good nonsense offered by too many; deluding ourselves into thinking “someone else” is working on this and so we need not be concerned; or perhaps worst of all: simply refusing to educate ourselves about what we’ll soon enough be facing.

With that in mind, I thought it might be best to offer up some inconvenient truths about our fossil fuel supplies we would all do well to keep in mind. How we respond to the realities at hand is absolutely critical to the different future we’ll find ourselves in before too long. Preparation is a good thing; knowledge even better.

A little more than a year ago, Jeffrey Rubin offered commentary on the International Energy Agency’s then-current World Energy Outlook. His sobering take:

Output from currently producing fields is projected to fall precipitously, looking ironically like the steeply declining trajectory of peak oil’s Hubbert curve. (I say ironically because the IEA has historically denied the existence of peak oil.) According to the report, by 2035 three quarters of currently operating oil fields won’t be producing anymore. In fact, current fields are only expected to account for less than one fifth of that     year’s production.
That leaves over 80 per cent of the IEA’s 2035 production projection coming from new oil fields, ones that either haven’t yet been developed or haven’t even been discovered. And the contribution from that undiscovered category alone is still far greater than the one from currently producing fields. That’s a tall order for new field discovery. especially since almost none of it is cheap or easy….

Take that in for a moment. Those projections offer comfort about the future availability of high-quality crude oil only if Major Denial is your standard MO and/or happy, fact-free optimism is your preferred glide path through life.

With all indicators suggesting that we reached Peak Oil production rates more than five years ago (see this as just one observation on the issue), how we pull ourselves out of these difficult economic conditions and restore ourselves onto the path of continuing growth (along with those same expectations from several billion other inhabitants on the planet) demands some consideration from all of us.

If that didn’t get your attention, how about this:

In the 2011 World Energy Outlook by the IEA the Production of Crude Oil from the oil fields that produce oil in 2010 in expected to drop by over Two-Thirds by 2035. Quote: ‘We project that crude oil production from fields that were producing in 2010 will drop from 69mb/to 22mb/d by 2025 – a fall of over two-thirds’. But the IEA still expects the crude world production to remain at 67,9 mb/d per day 2035 from Crude Oil Yet to be found and Yet to be developed (WEO 2011: 122-123)….
The World’s Largest Oil Fields play a very important part for supplying the world’s energy demand. The Top Ten Fields produced 14,26 mb/d; around 20% of the World’s Total Oil Production. If the next ten fields were added the figure was around 25%. In total there was around 70.000 Oil Fields producing oil in 2007 and 20 of these fields produced a fifth of all the oil (WEO 2008: 225-226).
Another fact also stands out very clear; none of these fields has been discovered recently; the ones that was discovered the latest was discovered in 1982 and 1985. Only two of these fields hadn’t reached their Peak in production in 2007; the rest where on decline. During the summer of 2011 there were big headlines concerning an unusually big oil find outside the coast of Norway that is expected being able to produce up to 500-1200 million barrels of oil. Ghawar with its production of 5 million barrels of oil per day produces this amount of oil in 100-210 days. The trends of smaller and smaller findings are something often stressed by researchers within the Peak Oil movement; smaller and smaller fields of oil are being discovered even though the technological tool available to search for new fields constantly develops. [1]

This author’s conclusion states an obvious and painful truth: “[W]e will either have to be very lucky in our explorations or find an enormous amount of small fields.”

Despite putting their best foot forward, those in denial about Peak Oil, who laud the potentials of the tar sands and shale oil (and even those advocating the very necessary focus on alternative sources of non-fossil fuel resources) are unable to come up with any scenarios where production of these unconventional and alternative reserves make up what will be lost over these next few decades from the conventional oil fields we’ve long depended upon.

Denial remains an option, but its utility diminishes by the day. We need to be better.

If subtlety is not your thing, Henry Blodget offers us a more direct assessment:

Oil is at $100 not because of some world war or supply shock or other Black Swan, but because the world’s emerging economies are demanding more oil while the world’s oil producers are producing pretty much the same amount of it….
We’re highly dependent on a finite fuel source controlled by crazy people who hate us
We’ve done next to nothing about this problem for four decades
In some places, this inaction on our part would be referred to as insanity. Or at least gross stupidity.
In other places, it would just be called denial. [2]

And in a recent post by Brad Plumer, more sobering assessments were offered for those still struggling with facts and reality:

Most of the older, easier-to-drill oil fields appear to be running near full capacity, while newer supplies often prove costly and difficult to drill….
But here’s another way to look at it. As a chart from ExxonMobil’s new 2012 Outlook for Energy (via Gregor McDonald) shows, the vast bulk of our oil comes from those older, easier-to-drill fields, with more recently discovered supplies playing a smaller and smaller role:
As ExxonMobil details in its report more than 95 percent of today’s oil comes from fields discovered before 2000. About 75 percent comes from pre-1980 discoveries. While many massive, older fields can keep gushing for decades — Saudi Arabia’s Ghawar field, first tapped in 1951, still hums along at 5 million barrels per day — they seem to be dwindling overall. As Exxon’s chart shows, reserves discovered in the 1960s and before maxed out around 1980 (even as oil companies are trying to recover additional oil from older wells with better technology). What’s more, it seems to be getting tougher to squeeze oil out of newer finds. [3]

This is what confronts us: do we choose to spin it so it sounds better, or do we accept it and then work collectively to meet the challenge?

Simple choice … monumental ramifications.

Sources:

[1] http://www.americanpreppersnetwork.com/2011/12/peak-oil-and-our-mental-models.html; Peak Oil and Our Mental Models – The WikiLeaks Cable and The Worlds Largest Oil Fields, from  http://sibitotique.blogspot.com – 12.15.11
[2] http://www.businessinsider.com/middle-eastern-oil-addiction-2011-12; It’s 2012–It’s Just Absurd That We’re Still Addicted To Middle-Eastern Oil by Henry Blodget, 12.28.11
[3] http://www.washingtonpost.com/blogs/ezra-klein/post/most-of-the-worlds-oil-comes-from-aging-fields/2011/12/13/gIQAaM6CsO_blog.html?wprss=ezra-klein; Oil’s getting harder and harder to come by – Brad Plumer, 12.13.11

What would the New Year be if we didn’t have an offering of more half-truth, delusional nonsense about our fossil fuel status?

Amy Myers Jaffe (nice takedown here) wrote an article for Foreign Policy a while back, serving up another example from the playbook of denial nonsense. As I suggested in a series of posts at the end of 2011 [first one here], it’s high time we start recognizing the strategies of half-truths employed by those whose primary vested interest appears to be their own wallets much more so than the well-being of our nation. But this is a free country, and if nonsense is what you choose to spout, there are forums everywhere.

Just a sampling from that article of what continues to pass for the valuable exchange of information, with my commentary in the [ ] following:

Geologists have long known that the Americas are home to plentiful hydrocarbons trapped in hard-to-reach offshore deposits, on-land shale rock, oil sands, and heavy oil formations….The problem was always how to unlock them economically.
But since the early 2000s, the energy industry has largely solved that problem. With the help of horizontal drilling and other innovations, shale gas production in the United States has skyrocketed from virtually nothing to 15 to 20 percent of the U.S. natural gas supply in less than a decade. By 2040, it could account for more than half of it.

[Facts—damn them!—suggest that the energy industry hasn’t exactly “solved” the problem, and “could account” is not the assurance we should be counting on. Chris Nelder—damn him—took this proposition apart in a very nice post. Nelder had the audacity to use facts, calculations, statistics, reports and assorted other so-called evidence to rebut this now-familiar claim about our natural gas potential, when he could have played by the same rules and tossed in a few “might possibly’s” and “if only’s” … but no, he had to use actual information. I hate that!]

… analysts are predicting production of as much as 1.5 million barrels a day in the next few years from resources beneath the Great Plains and Texas alone — the equivalent of 8 percent of current U.S. oil consumption. The development raises the question of what else the U.S. energy industry might accomplish if prices remain high and technology continues to advance. Rising recovery rates from old wells, for example, could also stem previous declines. On top of all this, analysts expect an additional 1 to 2 million barrels a day from the Gulf of Mexico now that drilling is resuming. Peak oil? Not anytime soon.

[A couple of questions come to mind: Which analysts? Using what evidence? “predicting … as much as” means what, exactly? As for “what else the U.S. energy industry might accomplish if prices remain high and technology continues to advance”: I believe that “if prices remain high” is good for oil company executives and … that’s about it. So that’s not necessarily a good thing for most of us, but if “technology continues to advance”, why then, we might perhaps possibly have some potential good news in the future. Fantastic!]

The picture elsewhere in the Americas is similarly promising. Brazil is believed to have the capacity to pump 2 million barrels a day from “pre-salt” deepwater resources, deposits of crude found more than a mile below the surface of the Atlantic Ocean that until the last couple of years were technologically inaccessible. Similar gains are to be had in Canadian oil sands, where petroleum is extracted from tarry sediment in open     pits. And production of perhaps 3 million to 7 million barrels a day more is possible if U.S. in situ heavy oil, or kerogen, can be produced commercially, a process that involves heating rock to allow the oil contained within it to be pumped out in a liquid form. There is no question that such developments face environmental hurdles. But industry is starting to see that it must find ways to get over them, investing in nontoxic drilling fluids, less-invasive hydraulic-fracturing techniques, and new water-recycling processes, among other technologies, in hopes of shrinking the environmental impact of drilling. And like the U.S. oil industry, oil-thirsty China has also recognized the energy potential of the Americas, investing billions in Canada, the United States, and Latin America.

[Where in our planning for the future should we put “similarly promising”? As regards the second sentence about Brazil, who is doing this “believing” about that nation’s capacity? When might this happen? I didn’t note anything about the actual costs or process of extracting this crude “more than a mile below the surface” of the ocean … I’m assuming some facts might be available to instruct us as to what’s involved and what we     can expect? This nonsense—emphasis mine—speaks for itself: “And production of perhaps 3 million to 7 million barrels a day more is possible if U.S. in situ heavy oil, or kerogen, can be produced commercially, a process that involves heating rock to allow the oil contained within it to be pumped out in a liquid form.” Perhaps it’s possible if? This is the basis for the happy-talk about our fossil fuels? Seriously? I didn’t happen to catch any details about what’s involved in “heating rock.”     The facts would spoil all that optimism, and God forbid we be obliged to deal with reality….And that kerogen deal: they’ve been trying for a few decades now….]

And then there’s this bit of almost-factual opinion from Robert Bradley, touting his very own Institute for Energy Research’s report on our energy “inventory.”

The first red flag is right there in the title of his Forbes piece: “America’s Massive Energy Potential Awaits, Mr. President”

As I noted in that above-referenced November 15 post of mine, “massive” and “vast” are straight from Page One of the right-wing handbook on misdirection and half-truths: use impressive (but unquantifiable) terms to bolster your claim … and hope readers aren’t curious enough to ask how much?

The real problem is that much of our resources are not being developed because of antiquated, heavy-handed government regulations. As a consequence, the American economy is being deprived of significant job creation and new investments….
The blame rests largely on unnecessary and onerous government regulations. Many offshore reserves are still blocked by outdated moratoriums no one is taking the time to reform. New permit applications are almost always subject to massive bureaucratic delays. Existing energy operations have to navigate labyrinthine — and costly — regulations. And regulators themselves are largely free to impose new controls on energy development with little to no congressional check.

This tiresome rant from the Right just isn’t adding much to the discussion any more. It’s a great red-meat sound bite, but devoid of any factual content, its benefits to our well-being are, well, non-existent. (But if you use “liberal”, “taxes,” and “regulations” in a sentence, you earn bonus points!)

Why are these regulations “unnecessary”? What “massive bureaucratic delays” (unique to this issue) and “labyrinthine [sure sounds awful!] — and costly — regulations” are involved? What might happen absent these socialist-liberal-Martian-tax-crazed regulations? “[R]egulators themselves are largely free to impose new controls on energy development with little to no congressional check.” Sounds awful! How about a “for instance” unique to this situation (with context, of course, which I realize violates a basic rule of the playbook)?

Seriously? “Regulations” are all that stand in the way of a limitless bonanza of energy resources for us? These johnny-one-note offerings suggest nothing more than a failure of both imagination and willingness to engage in meaningful and honest conversations.

I remain at a loss to understand why so many insist on tactics like these which have almost no relevance to legitimate, long-term solutions. Sure would be nice to toss some integrity into the mix now and then.

The author then offers this impressive-sounding collection of statements:

Total recoverable oil in North America exceeds 1.7 trillion barrels, which is more oil than the entire world has used over the last 150 years. And that amount alone could meet the energy needs of the United States for the next 250 years.
An estimated 1.4 trillion of those barrels are buried under American soil. For some perspective: the total proven reserves in Saudi Arabia is just about 260 billion barrels.
And even that 1.4 trillion figure might be an underestimation. Future technological innovation may well lead to improved detection techniques, helping us locate oil deposits currently uncovered. Or innovation could improve extraction techniques, enabling us to tap into reserves previously thought unreachable.

I can’t help myself [my emphasis]: “Future technological innovation may well lead to improved detection techniques, helping us locate oil deposits currently uncovered. Or innovation could improve extraction techniques….” Really? More Page One happy talk about all of the “could possibly perhaps” and “just might if” justifications (I use that term loosely). When do we declare a winner in the Happy Talk v. Facts competition?

I don’t recall seeing much in the way of an explanation or facts about all of these magical totals. Costs? Quality? Environmental concerns? Time factor? Return on energy investment? How about depletion from existing fields as a factor?

Robert Rapier offered a damning rebuttal to this author’s propositions, starting with a big hint in the title of his piece: Why Some Republican are Delusional About Oil and Energy Policy. (To be fair, he also offers criticisms of some of the positions offered by Democrats, and commends each party as well for certain other approaches.)

Like Mr. Nelder above, Mr. Rapier wasn’t content to just toss out a fact-free statement and end the discussion there. No, he had to go and conduct an investigation, and then analyze the facts offered above. Damn him! (Another hint Rapier offers comes from a sub-heading discussing the very same report prepared and cited by Robert Bradley: “Misleading Study Obfuscates Recoverable Reserves.”)

Rapier begins his analysis with this: “I find these sorts of reports highly misleading, for the following reason” and then quickly dismantles Mr. Bradley’s contentions in the next few paragraphs.

He then concludes:

The truth is that it will always take too much energy to produce some of those oil resources, placing some of them forever out of reach. But, the magical thinking from many Republicans here is that the oil is there if the political will is there for taking it. The danger in this kind of thinking is exactly the same as the danger in thinking we can smoothly transition to renewables: It diminishes the urgency of our energy predicament. After all, if people believe that renewables will save us, or that more drilling will save us — we are going to put off making the tough decisions that could really save us in the long run.

All of us—conservatives, liberals, whatevers—would do well to heed his advice.

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As I mentioned in my last two posts, there are some common threads running through the mostly nonsensical camps arguing against the reality that oil is a finite resource which is now on the downside of its maximum production rates. We fact-based lunatics call that Peak Oil.

I outlined (only partially tongue-in-cheek) some of the initial red flags readers should be alert to when combing through material discussing the pros and cons of Peak Oil. So far I’ve established five separate “criteria” for making a quick determination whether an article discussing Peak Oil deserves more careful attention. Those two prior posts (my most recent efforts on the subject; see here for more) provided examples of what to look for.

Today’s discussion is about something which I’m not entirely convinced is an actual criteria for my modest little test.

Where on the list does one put outright nonsense?

Several weeks ago, Tim Worstall posted an essay at Forbes which left me speechless. I’m sure Mr. Worstall is a very pleasant man who does a great many good and helpful things for others. That being said, his claim that Peak Oil is just so much nonsense, based on the arguments he put forth, has to be among the most bizarre attempts at refuting something I’ve ever read. (It was not his first article attempting to debunk Peak Oil, either. That is a different topic.)

Any article on the topic of energy supply claiming, as does Mr. Worstall, that “[W]e’re discovering entire new planets to explore for the stuff” probably deserves at least a “Say what?” before plunging in.

What’s most noteworthy is that his is not an isolated example, sad to say.

His post is actually a fairly brief piece, and it might be worthwhile for purposes of this one to read it first, so you have your own sense about the points he was trying to make.

Mr. Worstall disputes and denigrates the concept of EROEI. In a must-read article on the subject of energy, peak oil, production, and our future, Jim Quinn describes EROEI as follows (while duly noting that “The concept of energy returned on energy invested [EROEI] is beyond the grasp of politicians and drill, drill, drill pundits.”):

EROEI is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource. When the EROEI of a resource is less than or equal to one, that energy source becomes an ‘energy sink’, and can no longer be used as a primary source of energy. Once it requires 1.1 barrels of oil to obtain a barrel of oil, the gig is up.

To help us understand what Mr. Worstall attempted to explain, let’s use another example from the world of finance.

You have $100.00 to invest, and decide to do so with Trusty Financial Advisor (TFA). After a reasonable period of time during which TFA uses its expertise to provide you with the best (and honest) return possible, you not only get back your $100.00, you get you another $100.00 in addition, while TFA earns a nice commission in the process. Most people, I’m quite certain, would be happy with a return of 100%. As TFA’s specific “basket” of investments becomes more popular, that 100% return will eventually become more difficult to sustain, but over more reasonable periods of time, TFA is still returning at first $50.00, then $30.00, and now $20.00 for every $100.00 you invest. Not as spectacular as that first investment, but who kicks at 20% returns in this economy? TFA’s commissions decline as well: more effort for less of a return, but so far so good nonetheless.

In energy production terms, EROEI is a lot like the principle behind this example.

If oil exploration and production results in finding more marketable oil than is “invested” (the energy quantity of all of the machinery and technology and staffing and transportation and what-have-you) , that’s a good investment. Early on, as others have noted, using the energy equivalent of one barrel of oil in exploration and production netted oil pioneers as many as 100 barrels of oil in return. Now that’s a damned good investment, and dwarfs my little $100.00 return on $100.00 invested example above.

Pretty straightforward, agreed?

What if your $100.00 investment with TFA is now giving back only $3.50? You are still making more than if the $100.00 stayed in a coffee can, but 3.5% is not all that exciting after a run of great returns in the past. TFA is now expending a lot of time and energy just to get you that return and a much smaller commission as well. It’s still on the plus side of the ledger, and a lot of people in this economy might not bitch too much.

But what if we’re down to just a few pennies in return? Incentives to invest become more difficult to justify, and once we get close to you give TFA $100.00 and TFA gives you back $100.15 and that’s it, time to play elsewhere. TFA won’t get rich that way, and long before then TFA will stop expending so much time and effort and expense if that’s the best it can do. And no one is going to play the game if investing $100.00 gets you only $90.00 of that $100.00 back. That game is over long before that’s a likelihood.

We’re not at the “few pennies” stage of oil exploration and production yet, and probably won’t be for quite some time to come, but we’re getting there. Slowly, steadily, surely, the “easy” oil isn’t being found because it just isn’t there any more. That investment has maxed-out, and now we’re investing elsewhere: deep water, tar sands, shale, perhaps the Arctic … not like the those early stick-a-straw-in-the-ground-and-out-it-comes oil finds.

More effort; more costs; more time; more difficulties in general; less inclination for countries to give up all they have left; increasing demand; less supply day-by-day simply because we’re taking out something that isn’t being replenished … all those factors add up to investing more to get less. That’s not good math.

This is all a long preface to get to the complete nonsense the good Mr. Worstall offered readers in attempting to rebut the reality of what I’ve just described.

In his own words as he first addresses EROEI (“That is, as far as I understand it, the argument.”) we get this [my commentary added]:

Basically, what is being said is that as oil gets deeper, more difficult to pump up, perhaps with tar sands we’ve got to use more energy to purify the stuff, then at some point we hit a boundary, a system boundary [Not the terms I’d use, but okay so far]. We’ll be using more energy to get the oil out than we’ll get energy from the oil we get out. [By Jove, I think he’s got it!] Which, self-evidently, is nonsense, [perhaps I spoke too soon] that’s like the internet companies losing money on every transaction and they’ll make it up in volume. [Huh?! Someone took a sharp right turn off of the I-get-it highway]

In the very next paragraph, there’s hope that this last comment was just a brief detour. Got lost, back on the right road: “… it does work in certain special situations. It would indeed be self-evidently absurd to use 10 barrels of oil at one site to pump up one barrel of oil. [Yes! He’s got it!] Better, obviously, to use one of the 10 you have and have 9 left over.” [Damn. So close! That is, as far as I understand it, the argument: if you keep using up what little you have left because you can’t get more, and are no longer trying, then … uh … uh, at some point, you kinda get to the point where nothing is left. Perhaps that’s not the wisest course of action? Just saying….]

What follows after he makes this statement: “But let’s really go wild here and think about something very different indeed,” is a interesting journey to say the least; more an indication that we have now officially lost contact with reality, and a search party is in order.

If you haven’t read what Mr. Worstall discusses next, he decides to use the growing and producing of wheat (for bread: “the staff of life”) as his way of refuting EROEI. He sets aside other energy components required in growing the wheat (fertilizer, transportation, etc.—all perfectly reasonable to do for these purposes) and claims—I assume accurately—that we expend far more energy in creating a loaf of bread than the energy we get from it. I’ll give him that, and since he is obviously far more skilled mathematically than I am, I won’t dispute his computations as to how much energy is expended and “wasted.”

He decided to focus on just one of the essential elements required in growing wheat: fresh water. His premise is that 1000 tons of water are required to grow a ton of wheat. I’ll buy that, no questions asked. (Keep in mind that for his purposes we’re setting aside all of the other energy components needed.) Mr. Worstall concludes that the solar energy required to evaporate the ocean water which must then fall back to earth as fresh water works out to 35 times the amount of energy (calories) we get back from a ton of wheat.

I’ll go along with that, but immediately after we come to a fork in the road. I’ll go left, and Mr. Worstall apparently beams himself directly to Planet Rational Thinking Not Necessary:

And we’re quite happy with this. We don’t think it odd at all. And we most certainly don’t say that it’s unsustainable because it doesn’t pass the ERoEI calculation.

The reason we’re not worried about it is because we’ve got vast amounts of energy coming to us as sunlight. Huge, massive, great big gobs of it. And we’re entirely happy to use it copiously, waste huge amounts of it, because there is so much. We want that energy in a form that can be used by our bodies and we’re just delighted to waste 97% of the energy in order to get a bit in the form we can use….

And the reason that ERoEI doesn’t mean very much is that we’re not, an any kind of human scale, limited by the availbility [sic] of energy. The Sun simply pumps in so much energy that total energy availability simply isn’t a binding constraint upon us. What we’re interested in is usable energy and we’re quite happy to waste total energy in order to get usable.

So there you have it. We have lots of energy from the sun (no doubts there); we waste a lot of it to grow wheat (okay, I’ll buy that); and since we’re happy eating the bread and wasting the sunlight, EROEI as it relates to finite amounts of oil in the ground is “still nonsense.”

(There’s very little rational comparison between quantities and characteristics of these two vastly different energy sources, but why interject reason into the conversation now?)

Fairly certain that I don’t need to say one more word except … WOW! (and point out this was in Forbes online, not Mr. Wacko’s Wild World Of Online Crazy magazine … WOW! Again.)

As I mentioned in my last post, there are some common threads running through the mostly nonsensical camps arguing against the reality that oil is a finite resource which is now on the downside of its maximum production rates … Peak Oil.

[NOTE: If you have not yet read this terrific article by James Quinn and you have even the remotest interest in the realities of our energy future, take a few minutes to do so.]

I outlined some of the initial red flags readers should be alert to when combing through material discussing Peak Oil. If an article contains some or all of the following buzzwords, it’s a good chance that the argument offered against Peak Oil is likely going to be an at-best disingenuous collection of partial truths with all the damning facts contradicting the assertions neatly omitted; or the “facts” within are not exactly the type of facts used by people here in reality.

(1) Peak Oil proponents/doomers are constantly spreading falsehoods that we will soon be “running out of oil.” [The deniers keep saying we are making those claims, when in fact only they are! We know that is not true, but it’s also not the issue!]

(2) We still have “vast” resources [or “giant”; “immense”; “entire new planets of”, etc. ... the kind of “facts” you can’t assign numbers to.]

(3) Failure to put genuine facts in any kind of truthful context. [As cited in my last post, mentioning a find of 250 million barrels of oil as yet another sign that we Peak Oil nutcases are full of it conveniently fails to point out that a find like that one will meet three days’ worth of oil demand, and thus loses a fair amount of its impressive-sounding luster.] *

(4) The newest talking point: “The now-discredited theory of Peak Oil.” [Each time that assertion is offered, any credible authority substantiating that claim never gets mentioned, curiously enough. So the “now-discredited” part is actually the writer’s own fact-free assessment. Does save research time!]

* A glaring recent example of this comes from David Holt, President of the Consumer Energy Alliance, arguing in favor of more drilling in the Arctic [my emphasis added]:

Energy exploration in Alaska’s OCS, in both the Chukchi and Beaufort Seas, is expected to produce 25 billion barrels of oil over the next 40 years. This is the equivalent of 2010 imports from Iraq and Russia combined. That production will also spur nearly $200 billion in government revenue from royalties and taxes, and 55,000 new jobs per year for generations.

Two comments on this disingenuous-at-best effort to inject meaningful facts into the dialogue:

(1) Take your handy calculator and do the math to discover just how many barrels per year Mr. Holt’s assertions will add to our energy supply (assuming full production at some distant point on the time horizon, while keeping in mind what might be involved in Arctic oil production; and the inconvenient fact that we use approximately 85 million barrels of oil per day);

(2) In reading the jobs claims Peak Oil deniers tout repeatedly, it would appear that only fossil fuel production and exploration produces tax revenue and creates jobs … go figure! (The comparison to imports from Russia and Iraq is important for apparently secret reasons.)

One of the “best” examples of Test Criteria # 5 comes from the same Clifford Krauss (New York Times) I mentioned in last week’s post (and more thoroughly here). In his most recent Peak Oil-related work, Mr. Krauss offered this gem of certainty [emphasis is mine]:

The United States may now have the means to reduce its half century of dependence on the Middle East. China and India may have the means to fuel the development of their growing middle classes. Japan and much of Europe may have the chance to reduce dependence on nuclear power. And, at least theoretically, poor African countries might be able to lift themselves out of poverty.

I may have a winning lottery ticket in my shirt pocket and thus may have the means to purchase my own private island and accordingly may have the chance to reduce my dependence on anyone else to provide anything for me at all; and at least theoretically, I might be the richest man on Earth (and while we’re at it: at least theoretically, pigs might start flying tomorrow).

The tap dance required by these advocates (of an apparently limitless supply of worry-free fossil fuel resources) to make claims with such certainty about complete uncertainties is exhausting to behold. If they weren’t doing so much harm to so many who do not and cannot be expected to have knowledge on this subject, the effort would be Monty Python-esque hilarious!

This kind of physics-defying contortions to make bold claims about nothing is not limited to Mr. Krauss (who, to be fair, has also written many fine pieces for the Times).  In one of several prior posts of mine, I highlighted this CNNMoney-Fortune Hall of Fame effort [emphasis added is mine]:

“There are many oil reserves around the globe that remain untapped, and explorers continue to discover new fields deep beneath the earth’s surface. Depending on how the controversy surrounding the Arctic National Wildlife Refuge turns out, the U.S. could exploit oil reserves in the area, despite potentially grave environmental consequences.”

I then noted that: “‘Depending’; ‘could’ … along with ‘might potentially’, ‘if’, ‘could be possible’, and an array of similar, carefully-worded utterly-lacking-in-certainty phrases are the apparent stock in trade for those denying those annoying facts about declining world oil production.’” (Glossing over “potentially grave environmental consequences” is in a category all by itself.) And perhaps an explanation as to what’s involved in getting to “new fields deep beneath the earth’s surface” might be a good idea?

That article is the poster child for denier nonsense, as I took pains to detail in that February 10, 2011 post. I can only assume that the purpose or intent is to offer semi-plausible assertions to those whom the authors fully expect to accept their claims unquestioningly, thus protecting whatever their ideological, financial, or business interests might be, and all with only the most minimal of efforts at sharing the truth.

Even if they were right and we do have at least several more decades of plentiful, easily-obtained, relatively inexpensive supplies of fossil fuels (which we don’t!), by what perverse notion of long-term thinking are they content to do absolutely nothing to begin the beyond-description complex transition away from fossil fuel dependency?

Anyone looking out their window and/or taking a quick peek at all the gizmos and gadgets inside would have to be completely delusional in failing to realize that almost everything we have, own, use, depend on is in some measure large or small a product of fossil fuel.

Just how much effort, time, money, planning, trial-and-erroring, marketing, producing, implementing, and transitioning to something other than fossil fuel dependency do these deniers think might be involved in swapping out this way of living for a non-fossil fuel existence? Full-blown denial and misrepresentation is their idea of contributing to our collective well-being (and their own)? Seriously?

The Hirsch Report (see this and also my series beginning here) is among the most influential energy studies undertaken in the past decade. A major conclusion reached by the authors left little doubt as to the depth and breadth of challenges we will face (deniers included).

The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.
Mitigation will require an intense effort over decades. This inescapable conclusion is based on the time required to replace vast numbers of liquid fuel consuming vehicles and the time required to build a substantial number of substitute fuel production facilities.  Our scenarios analysis shows:

• Waiting until world oil production peaks before taking crash program action would leave the world with a significant liquid fuel deficit for more than two decades.

• Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.

• Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.

The obvious conclusion from this analysis is that with adequate, timely mitigation, the economic costs to the world can be minimized. If mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction (shortages), which would translate to significant economic hardship.

There will be no quick fixes. Even crash programs will require more than a decade to yield substantial relief.

Is it really in anyone’s best interests to instead rely upon a host of head-in-the-sand “mights” and “possiblys” and “may haves” and “coulds”?

Worth pondering?

More to come….

Happy Thanksgiving!

[NOTE: Back in April, I followed-up on a series of posts which I first began a year ago and last discussed back in April ([links below*). In that series, I’ve discussed the apparently limitless ability of too many to either ignore facts about oil production entirely, or who instead resort to efforts where disingenuous arguments and/or half-truths serve as sole support for their positions. The net effect is that these attempts do little more than confuse their followers, who likely do not have the time, interest, or inclination to explore the truths on their own (perfectly understandable ... life tends to interfere with lots of options). This post is a second another follow-up.

For starters, I’ll offer some familiar and popular contrasting views on the topic of Peak Oil and oil supply (the misleading, incorrect claim made in the first sentence below was addressed in the first of my two prior posts):

“The theory known as ‘peak oil’ has at its core the belief that we are rapidly running out of oil....

“When it comes to our day, the philosophy of scarcity comes full circle in the peak oil theory.  At its heart this philosophy of scarcity utterly fails to take into account human ingenuity, economics, technology and other important factors.  In other words, long before oil actually ran out, the price would go up so much that people would cut back on its use, find alternatives and seek out new sources of supply.” [1]

“Our abundant and rich lifestyle is all made possible from cheap and abundant energy. Our farmers use fertilizers made from natural gas. The tractors and combines burn diesel fuel as do the trucks that transport our food to either processing plants or the grocery store. Our stores are stocked with goods that are either made here or abroad. The goods arrive by planes, trains, boats or trucks that also burn fossil fuels. Everything we eat, consume, or enjoy is made possible through the production of energy. Liquid fuels have created new landscapes of concrete and asphalt highways, parking lots, shopping centers and endless urbansprawl.

“This is all made possible because of oil, the single most important source of primary energy in our world. Crude oil has changed the very tempo of modern life. Oil has increased the productivity of modern economies. It has accelerated as well as deepened the process of economic globalization….

“Oil has changed and transformed the landscape of the world.” [2]

As to the comments offered in the first quote above, I’m always struck by the glib dismissal of any consequences of declining oil production because of some combination of “human ingenuity, economics, technology and other important factors.” Economics has no impact on geology, so no matter how diligent one is in expounding economic principles, they will not create more fossil fuels. That supply is finite … period!

Certainly human ingenuity can always be counted on. Civilization has advanced to this date and in the manner it has because of that remarkable capacity demonstrated since the very dawn of mankind. And we cannot rationally dismiss the tremendous impact of technology working hand-in-hand with human ingenuity to create the marvels of this day and age.

But it is the author’s follow-up comment, repeated by too many others who discount the reality of our finite supply of economically feasible fossil fuel resources, which continues to astound me. “In other words, long before oil actually ran out, the price would go up so much that people would cut back on its use, find alternatives and seek out new sources of supply.”

The statement or a close approximation thereof is almost always uttered with the same assurance one has in stating that the sun will rise in the East tomorrow morning. Basic economic theory is absolutely correct that when the price of something goes up, almost always demand decreases until some other price equilibrium is reached or a less expensive substitute is found to be adequate. That’s not the bone I’m picking.

It’s the same glib certainty that “… people would find alternatives and seek out new sources of supply.” Just like that? I’ve yet to see any person challenging the reality of Peak Oil make a similar if not identical pronouncement who then explains in any detail whatsoever just how we go about finding these alternatives in any manner such that a transition from fossil fuel usage to the “alternatives” is achieved without considerable disruptions to our ways of living and producing.

Given the truthfulness of the second quote I offered above, do these dissidents have any conception at all of what kind of massive, monumental, nearly-inconceivable (take your pick) effort will be required to even approximate a seamless transition away from fossil fuels? Costs? Time? Research? Production to scale? Testing? Marketability? Resources? Expertise? Public understanding? Infrastructure? Pricing? Supply? Demand considerations? Just a few of the many questions that must not just be asked, but answered, before we’re all comfortably making use of “alternatives” and “new sources of supply.” And let’s not forget one of our major political parties’ relentless, shortsighted, narrow-minded efforts to cut back on investments in our future and in those very alternatives. Apparently waiting until we’ve fallen over the cliff before addressing the problem on the scale needed is the strategy du jour for some of our “leaders.” Great!

This flippant assertion that we’ll just simply move on to something else just like that does as much disservice to the future well-being of our citizens as anything I can think of. And in a too-crowded field of nonsense, that’s quite a determination! Listeners who have neither the time, nor interest, nor awareness, nor inclination to examine the matter further are then left with the “comfort” of knowing there’s nothing to be concerned about now, or any foreseeable point in time because some combination of magic “out there” by “others” will take care of this challenge before we know it! Does anyone on that side of the Peak Oil fence have any concept about the necessity of long term planning, integrity, or honesty in dealing with a challenge that will take us decades to fully adjust to? Is “get-what-I-can-today-consequences-tomorrow-be-damned” the strategy?

One final observation on this author’s recent post: “Just in the years 2007 to 2009, for every barrel of oil produced in the world, 1.6 barrels of new reserves were added.” Wonderful, except that those are not the same issues. Produced oil is not replaced by an accounting adjustment. An explanation of that accounting “trick” which created the “new reserves” is conveniently omitted from discussion. Of course, if you are going to make an argument in which truth will disprove your points as soon as the words start flowing, it sounds better if you skip the facts entirely! (See this explanation and refutation of this misleading “new reserves” meme; and read Mason Inman’s entire series on the Daniel Yergin essay in the Wall Street Journal—links provided in the article I’ve just referenced—it is well worth the read.)

The real issue is much simpler:

“… our Peak Oil problem is a case of simple mathematics.

“We stopped finding large oil fields 40 years ago. The production from those fields decreases every year and we simply can’t bring enough smaller fields on fast enough to offset those declines and grow daily oil production….

“The demand side of the equation is no help either. Population grows every year. And the most populous countries in the world grow per capita oil production every year as well. When you consider how many people are in China, India and other emerging countries and then consider how little oil each of them uses, it isn’t hard to see that changes in their lifestyle to include more oil consumption will make a big difference.” [3]

And if that won’t convince you, here’s a bit more:

“Global oil production (crude + condensate + natural gas liquids: C+C+NGL) has been on an 82 million barrel per day plateau for 7 years despite record high oil price, deployment of technology such as horizontal wells and 3D seismic, the development of new oil provinces such as offshore Angola and unconventional play concepts such as the Bakken shale in North Dakota. Oil production rose during the great oil bear market from 1980 to 1998 but has largely stagnated during the great bull run ever since….

“Any discussion about peak oil should begin with decline rates. Yergin’s organisation CERA is well aware of this fact having produced an excellent report on the subject a few years ago.

“Decline is the natural process whereby production rates fall as a result of depressurisation of the reservoir combined with water ingress into the oil-bearing strata. Oil production companies go to great lengths to mitigate for decline by injecting water or gas to maintain pressure, well maintenance programs (work overs) and by drilling new wells. Observed declines are therefore much less than natural declines but nevertheless run at a globalised average of around 5% per annum.

“With global C+C+NGL production running at 82 mmbpd, 5% observed net declines will wipe out 4.1 mmbpd capacity every year. What this means is that the oil industry must add 4.1 mmbpd new capacity every year from new field developments just to stand still. And this new capacity has to be derived from a stock of second-tier assets such as deep water Gulf of Mexico, heavy sour oil in Saudi Arabia, Arctic oil or the Bakken Shale since most of the favoured tier-one assets have already been produced.”

Just when ya think you’ve got the “farce” of Peak Oil pinned down, more of those damned facts pop up at the most inconvenient time!

* http://peakoilmatters.com/2010/10/18/more-on-the-message/

http://peakoilmatters.com/2010/07/12/peak-oil-more-fuzzy-math/

http://peakoilmatters.com/2010/11/22/still-dealing-with-peak-oil-denying-nonsense/

http://peakoilmatters.com/2010/12/20/the-stubbornness-of-denial/

http://peakoilmatters.com/2011/02/03/the-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/02/10/more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/04/27/even-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/09/26/still-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil-pt-1/

http://peakoilmatters.com/2011/10/03/still-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil-pt-2/

~~~

Sources

[1] http://blogs.marketwatch.com/fundmastery/2011/09/19/peak-oil-daniel-yergin-impending-doom/; Peak Oil, Daniel Yergin & Impending Doom By Kurt Brouwer

[2] http://www.financialsense.com/contributors/james-j-puplava/peak-oil-chronicles-when-giants-run-dry; The Peak Oil Chronicles, Part I: When The Giants Run Dry by James J Puplava CFP 02/04/2011

[3] http://seekingalpha.com/article/295546-hess-ceo-an-oil-insider-not-willing-to-sugarcoat-our-peak-oil-problem; Hess CEO: An Oil Insider Not Willing To Sugarcoat Our Peak Oil Problem by Devon Shire, September 23, 2011

[4] http://www.theoildrum.com/node/8391; Peak Oil – Now or Later? A Response to Daniel Yergin – Posted by Euan Mearns on September 21, 2011

[NOTE: Back in April, I followed-up on a series of posts which I first began nearly a year ago and last discussed back in April ([links below*). In that series, I’ve discussed the apparently limitless ability of too many to either ignore facts about oil production entirely, or who instead resort to efforts where disingenuous arguments and/or half-truths serve as sole support for their positions. The net effect is that these attempts do little more than confuse their followers, who likely do not have the time, interest, or inclination to explore the truths on their own (perfectly understandable ... life tends to interfere with lots of options). This post is another follow-up.]

Another in a seeming endless list of far-Right websites recently posted their own take on what the writers called the “farce” of Peak Oil. That they later cheerfully admitted to being believers of the wacky notion of “abiotic oil” (the long-ago discredited notion offered by Russians some fifty plus years ago and heralded by apparently one academic here in the U.S. that oil essentially replenishes itself underground—perhaps via the Petroleum Fairy) is in and of itself the only reason needed to place them in the “loon” category of deniers.

Nonetheless, I found another example of the Right’s also seemingly endless capacity to twist facts into some delusional substantiation of the nuttiest perspectives, one which they no doubt hope readers will not contemplate at all. This website recently offered their take on an article by a Venezuela-based New York Times journalist—the paper’s Andean bureau chief. Raymond Learsy from the Huffington Post—whose opinion pieces will never find their way into the “open-minded” indices—not only echoed those same claims, but introduced us to the concept of “an amplitude of oil” … much more impressive than the increasingly boring “vast” or “massive” quantities, doncha think?

For reasons entirely unclear, the opinions offered were premised on the inane and entirely fact-free determination that the publication of this single article about oil exploration and production represented a dramatic reversal of “editorial policy” on the part of the Times, which has now apparently joined the club of Peak Oil deniers by virtue of this one article. Somehow, the discussion of efforts being undertaken in South America morphed into a final debunking of the “farce” of Peak Oil by a full leap into nonsense—while attributing an incredible amount of journalistic power to a gentleman in Caracas. Cool, huh? “Well, gee, if the Times is now disputing Peak Oil, then of course….” Nice try!

That the article made no attempt to debunk Peak Oil does not matter in a world where facts are only useful when convenient to an otherwise entirely dumb argument. Apparently, the mere fact that exploration is taking place is in and of itself another sufficient reason to completely discredit Peak Oil. This approach does simplify the entire concept of thinking!

Sad to sad, this is not a tactic unique to these two authors.

The Times article begins as follows, (as does the DailyBell piece):

“Brazil has begun building its first nuclear submarine to protect its vast, new offshore oil discoveries. Colombia’s oil  production is climbing so fast that it is closing in on Algeria’s and could hit Libya’s prewar levels in a few years. ExxonMobil is striking new deals in Argentina, which recently heralded its biggest oil discovery since the 1980s.”

A couple of questions jumped out at me as soon as I read that. What does it mean that Columbia “is closing in on” Algeria? Does spending an amplitude of money by “striking new deals” mean that Peak Oil is indeed a “farce?” Kinda think it proves no such thing. That oil companies are now spending so much more in so many more difficult to reach places suggests at a minimum an alternative, common sense explanation. Like basic math, facts, truth, reality, and science, however, this concept seems elusive still to too many. But if reasoned and fact-based opinion is not your thing, then that argument works!

Although facts can be so damned annoying when reality is not a concern, I nonetheless spent nearly thirty seconds on the internet to find the Energy Information Agency’s list of the top oil producers in the world. (Yes, I rested after locating an answer. Whew!)

Let me modify that introductory paragraph by inserting some [bracketed] facts and added bold/italic emphasis to lend some relevance to the article’s opening statements:

“Brazil has begun building its first nuclear submarine to protect its vast (there’s that word again!), new offshore oil discoveries. Colombia’s oil production [currently ranked 29^th in the world] is climbing so fast (Wow!) that it is closing in on (look out!) Algeria’s [ranked 15^th in the world at a whopping, vast, massive, amplitude-iful two whole million barrels of oil per day,  meaning that it could soon supply approximately 1/40^th of the world’s daily production ... pass out the smelling salts, Mildred!] and could hit Libya’s [# 17] prewar levels in a few years (which of course is easily quantified as maybe, possibly, potentially happening … uh, um, in a few years). ExxonMobil is striking new deals in Argentina [# 24], which recently heralded its biggest oil discovery since the 1980s [which, according to a Bloomberg article, is the equivalent of about 150 million barrels of shale oil ].”

Two comments on that last point. Shale oil is a wee bit different than your conventional, drill-a-hole-in-the-ground-and-out-it-comes oil. (See here and here, just for the hell of it—not the final and definitive take on shale exploration, but not to be ignored or dismissed, either.)

World production is somewhere around 85 million barrels of oil per day, so “about 150 million barrels” of an inferior substitute is in the neighborhood of not quite two entire days’ worth of annual production (“annual” is 365 days for those interested in facts. Two days is thus less than 365—if you use Planet Earth’s version of math—and by an amplitude of days.)

But if that’s not enough to convince you, the DailyBell also indicated that “One of the Forbes brothers (of magazine fame) was quoted some months ago as saying the US itself, even in the lower 48, might contain enough oil (not to mention coal and natural gas) to provide for its needs for the next 1,000 years. And that’s with the current technology.” Wow! One entire Forbes brother! Who needs proof when a Forbes brother (“of magazine fame” which is almost identical to being a petroleum expert), says we have enough fossil fuels to last a bazillion years?

Seriously? This is what passes for an intelligent contribution to our understanding of a not-easily-understood challenge everyone will be affected by (yes, even the far Right)? To what end? When do we reach Peak Nonsense?

Consistently missing from all of these supposed rebuttals to the validity of Peak Oil are two more of those pesky mathematical facts. First up: Oil fields deplete as oil is extracted. (I know! Amazing concept, isn’t it?) The consensus offered by those in the know suggest that the depletion rates of existing oil fields is anywhere from 4% to 7% per year. Ballpark, this means that any and all new discoveries must first produce about 4 – 5 million barrels of oil per day just to keep pace with depletion.

Another argument frequently advanced (as was the case in the Daniel Yergin Wall Street Journal article which prompted these posts) is that U.S. oil production has increased in recent years, from which we’re apparently expected to deduce as another refutation of Peak Oil. American production peaked four decades ago. That production has increased in the last couple of years (and not by any amplitude, by the way, although noteworthy nonetheless) should be understood in the appropriate, fact-based context. We’re nowhere near the production level which peaked some forty years ago. Good that more is being produced (although it should be noted that we’re not producing much more of the conventional oil … most of the increases are due to production of the more costly and difficult unconventional sources). Still have a long way to go….

Let’s say you were an unmarried single for a decade. From 1990 – 1999 you earned a bit more each and every year, topping out at $100,000 in 1999. Now we turn the corner into 2000, and you’re married! Unfortunately, your income has dropped to $60,000. Five years later, you’ve also got two new mouths to feed, a mortgage, a couple of car and credit card bills, and assorted other expenses unknown to you in the decade before. But let’s inject a ray of sunshine in this example and say that in the last five years, your income increased to $65,000 per year (but baby # 3 has arrived, along with a bigger mortgage and some unanticipated medical expenses tossed in for good measure). Problems solved? Income has increased, so what’s the beef? You’re making more recently than you did just a few years ago, so what exactly is your problem?

Peak oil is kinda like that in its simplest, simplest form.

I’ll let you ponder that. More still to come.

* http://peakoilmatters.com/2010/10/18/more-on-the-message/

http://peakoilmatters.com/2010/11/22/still-dealing-with-peak-oil-denying-nonsense/

http://peakoilmatters.com/2010/12/20/the-stubbornness-of-denial/

http://peakoilmatters.com/2011/02/03/the-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/02/10/more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/04/27/even-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/09/26/still-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil-pt-1/

Back in April, I followed-up on a series of posts which I first began nearly a year ago and last discussed back in April [links below*]. In that series, I’ve discussed the apparently limitless ability of too many to either ignore facts about oil production entirely, or who instead resort to efforts where disingenuous arguments and/or half-truths serve as sole support for their positions. The net effect is that these attempts do little more than confuse their followers who likely do not have the time, interest, or inclination to explore the truths on their own (perfectly understandable … life tends to interfere with lots of options).

I’ve yet to come up with a satisfactory explanation as to why some seem determined to make such misleading efforts their sole contribution to important discussions….

The blogosphere has been lit up in recent days by discussions pro and con regarding Daniel Yergin’s newest book, The Quest: Energy, Security, and the Remaking of the Modern World. (I have not read it, so please take my commentary in this series of posts with that caveat in mind.)

Needless to say, the Wall Street Journal, among other liberal bastions of enlightened, open-minded thinking, was more than willing recently to publish an opinion piece by Mr. Yergin based on his new book, touting some of his many, longstanding doubts about Peak Oil. Commentaries in support of and debunking his perspective have been around the Internet for years. This time around was no different.

Since I have not read the book, it would obviously be inappropriate of me to offer my opinions on anything Mr. Yergin. I’m more interested in the type of chatter that has been circulating since publication of that WSJ piece by others who are apparently in the same camp as Mr. Yergin. I’ll be devoting this and several other posts to some of the more noteworthy commentary and the inevitable nonsense.

The following are typical of the comments offered by Yergin’s fellow-cornucopians:

“If you’re a believer in ‘peak oil’—the idea that the world is on the verge of running out of oil—you will probably want to burn this book.” [1]

“The theory known as ‘peak oil’ has at its core the belief that we are rapidly running out of oil” [2]

The instant a criticism of Peak Oil and/or its proponents is prefaced by an assertion that Peak Oil proponents are claiming that “the world is running out of oil” meme, any credibility is lost. Repeating that nonsense makes it clear those authors do not understand even the most basic of issues regarding Peak Oil. The deniers are nonetheless quite determined in their insistence that we (who believe that Peak Oil is an imminent reality and great challenge to future prosperity) are always raising alarms that “the world is running out of oil.”

The problem is that anyone who has any working knowledge of the facts about Peak Oil and oil production in general never makes that claim! But again, why let facts get in the way of opinion?

I have repeatedly stated, as have others far more knowledgeable than me (Jeff Rubin, Kjell Aleklett, Richard Heinberg, among dozens of other leading lights) that the issue for us is not and has never been the notion that “the world is running out of oil.”

It’s not! We agree on that point.

There are indeed hundreds of billions of barrels of oil in various forms awaiting extraction and production. The tar sands of Alberta Canada and oil shale formations such as the Bakken here in the U.S. are among noteworthy examples. But in order to make their point (and thus calling into question the validity thereof, a separate point which apparently is lost on these deniers), they try to tar legitimate Peak Oil proponents with a bug-eyed premise we never argue in favor of!

Facts and the truth are convenient casualties in too many political and economic discussions as it is, so why should Peak Oil be any different? Sure would be nice if honesty and integrity mattered more than they do. Sigh….

“We are not running out of oil. The issue is not our endowment of oil resources, it is the world’s production capacity. [My emphasis]. Additions from exploration last replaced annual production in 1987. The easiest oil has been discovered. Costs are increasing for new barrels, where wells can be drilled in water depths of over one mile to targets up to six miles deep, and discoveries can take over a decade to develop.

“Oil field declines are running at more than 5 percent per year. That means we have to add at least 4 million barrels per day each year just to keep production flat.” [3]

Understandable that no one likes to hear that. But why is basic math subject to dispute? (Sorry! Forgot for a moment we have Republicans in Congress for whom math is not much more than a convenience.) Solutions are much more effective when you start with the facts at hand. Why is this such a difficult concept to embrace?

“One of the greatest of all American strengths is the willingness to examine national challenges remorselessly, in the confidence that only what is examined can be repaired.” [4]

Another tactic (as I’ve noted in the series of posts referenced above) is to use impressive-sounding but utterly meaningless buzz-words whose intent, the writers must believe, are to offer assurances to their readers that we nutty liberal tree-hugging socialist gay-loving atheist un-patriotic elites are just conspiring to … uh … take over the world. **

In the Rotman article quoted above, the author adds that there are [bold-face mine]“…vast quantities of ‘unconventional’ gas and oil….The examples are numerous: deep undersea oil reserves off the coast of Brazil where one field alone holds 5 billion to 8 billion barrels of recoverable oil; oil sands in Alberta that contain an estimated 175 billion barrels of recoverable oil and an estimated 1.8 trillion barrels of oil in the ground, waiting for future technology to get them out; another 20 billion barrels of ‘tight oil’ that is likely held in deposits scattered about the United States.”

How much is a “vast” quantity? Mr. Rotman states (which appears by most indications to be true) that one field in Brazil holds “5 billion to 8 billion barrels of recoverable oil.” But like so many others, attending facts either never make it into print alongside these bold statements of partial truth, or they are glossed over. Mr. Rotman notes that the Brazil find is in “deep undersea oil reserves off the coast.” Run that one again. “Deep undersea oil reserves off the coast.” Not exactly like digging a hole in the ground and watching a Jed Clampett-like gusher suddenly materialize….

No mention at all as to what’s involved in drilling, extracting, transporting, or producing this “deep undersea oil reserve off the coast.” No mention either of how much such an endeavor is likely to cost (hint: vast amounts of money), or how long it will take to actually bring that field to market (hint: a vast amount of time). But why explain anything when you can toss out unsupported statements which sound so much better without the facts? Oh, and by the way: “5 billion to 8 billion barrels of recoverable oil” is approximately two to four months’ worth of oil usage worldwide. Hallelujah!

How long should we plan on “waiting for future technology to get them out” (hint: a vast amount of time)? What’s involved? Has the innovation process begun? What are the guarantees of success? How much might that cost from idea to implementation (hint: vast amounts of money)? Who will pay? (hint: check your mirror). How efficient will these unconventional supplies be in comparison to Jed Clampett’s gushers? How much of the current supply of fossil fuels will be needed to provide the energy source for testing, trials, implementation, etc., etc., and where does the supply come from and at whose demand expense? What environmental and societal costs are to be incurred? And what happens in the interim while we’re waiting for this magic technology to materialize? Who is going to volunteer to tell us that we’re putting supply and demand on hold, while telling the Indias and Chinas of the world to just sit tight until we figure all of this out?

“According to the report, by 2035 three quarters of currently operating oil fields won’t be producing anymore. In fact, current  fields are only expected to account for less than one fifth of that year’s production.

“That leaves over 80 per cent of the IEA’s 2035 production projection coming from new oil fields, ones that either haven’t yet been developed or haven’t even been discovered. And the contribution from that undiscovered category alone is still far greater than the one from currently producing fields. That’s a tall order for new field discovery.

“Undeveloped or undiscovered oil fields, growth in tar sands production and increased reliance on natural gas liquids account for all the expected growth in world oil production over the next two and a half decades. Curiously absent from this list is any contribution from conventional oil production–you know, the type you can afford to burn in your car, the type the global economy can afford to use to power transoceanic trade?” [5]

The mind boggles….

To be continued.

* http://peakoilmatters.com/2010/10/18/more-on-the-message/

http://peakoilmatters.com/2010/11/22/still-dealing-with-peak-oil-denying-nonsense/

http://peakoilmatters.com/2010/12/20/the-stubbornness-of-denial/

http://peakoilmatters.com/2011/02/03/the-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/02/10/more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/04/27/even-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

** A particularly loony, fact-challenged post from last week (discussed in greater detail in my next post) did in fact offer this gem of crazy-eyed, tin-foil-hat-wearing nonsense. (How sad is it that there is an apparently decent-sized segment of the population who actually walk the planet thinking like this and believing/fearing such insane notions?!):

“The great Western banking families always float scarcity memes as a way to consolidate control and further expand global   governance. In fact, if the Peak Oil meme is now going out of fashion, this may only mean that some other kind of propagandistic measures is about to be initiated.

“We don’t know what it is but we can guess, as it seems obvious and evident that the powers-that-be are trying to form pan-national building blocks for world government.” [6]

Sources:

[1] http://www.technologyreview.com/energy/38654/?p1=A1; Peak Oil Debunked by David Rotman – September 22

[2] http://blogs.marketwatch.com/fundmastery/2011/09/19/peak-oil-daniel-yergin-impending-doom/; Peak Oil, Daniel Yergin & Impending Doom by Kurt Brouwer

[3] http://seekingalpha.com/article/295546-hess-ceo-an-oil-insider-not-willing-to-sugarcoat-our-peak-oil-problem Hess CEO: An Oil Insider Not Willing To Sugarcoat Our Peak Oil Problem by Devon Shire – September 23, 2011 [citing comments from Hess Corporation CEO John Hess at http://www.energybulletin.net/node/50502]

[4] http://www.frumforum.com/will-america-survive-the-great-recession; Will America Survive the Great Recession? By David Frum [from a lecture given by Frum at the University of Western Ontario on September 20^th]

[5] http://www.huffingtonpost.com/jeffrey-rubin/even-the-international-en_b_787450.html; Even the International Energy Agency Forecasts Peak Oil by Jeff Rubin – November 23, 2010

[6] http://www.thedailybell.com/2973/Americas-New-Production-and-the-Farce-of-Peak-Oil; America’s New Production and the Farce of Peak Oil – September 21, 2011

[NOTE: This is the latest installment in a new PeakOilMatters series (which started here). It’s about finding a new and better vision to get to, through, and beyond Peak Oil and its widespread impact on what we produce, how we produce, and how we live. We won’t be falling off a cliff tomorrow, and the full brunt of Peak Oil’s effects won’t be experienced all at once, either. Gas and oil do not have to disappear entirely, nor do gas prices have to rise into the stratosphere before Peak Oil’s impact is felt.
Gradually, but inexorably, changes will be in the offing, however. We need to come to a better understanding of this, and start preparing ourselves now for the lengthy transition and just as lengthy ongoing impact of Peak Oil on all of us. Many issues must of necessity be considered, and I hope to make a contribution to the public dialogue we need to have. I hope you’ll find these objectives enjoyable as well as beneficial. We have more of a voice than we think we do. Finding that voice just might be our best hope.]

~~~

(This is a continuation of last week’s post discussing a recent essay by Joel Kotkin urging more domestic fossil fuel production. The last quote of his cited in that post is repeated here:)

“Shale oil deposits in the northern Great Plains, Texas, California and Colorado could yield more oil annually by 2015 than the Gulf of Mexico. Within 10 years, these finds have the potential to reduce U.S. oil imports by more than half.”

“Gail The Actuary” recently posted a very informative piece, and actually addressed this very point, (a follow-up to her discussion in that post of claims—echoed by Kotkin—that the oil shale fields in the U.S. could produce as many as 2 million additional barrels of oil per day by 2015).  She offered several observations which seem to counter those could yields and have potentials:

“I am suspicious that quite a bit of the 2 million barrels a day of additional production by 2015 that is being forecast is not really oil. Instead, I expect it will be natural gas liquids. This currently represents about half of the ‘miscellaneous’ layer [in a chart found in her post]. Natural gas liquids (NGLs) include propane, butane, and other gasses (sic)….
“An increase in NGLs would be of lesser benefit than oil, because it is not directly substitutable for oil, and is a cheaper product. Initially, it would mostly make home heating for those using propane cheaper, but then tend to drive NGL developers out of the market. Unless NGLs can cheaply be converted to higher priced oil products (and refinery capacity can be added quickly to accomplish this), it would seem like a drop in prices would quickly put an end to the NGL ramp-up….
“US oil imports have declined about 25% in the five years since 2005. In the next ten years, I would expect oil imports to continue to decline, regardless of what we do, because the amount of oil on the world market will continue to drop, and oil importers will tend more and more to be in recession. It is not clear how much US oil imports will drop, but a 50% drop in the next 10 years would not seem all that unlikely, regardless of what we what we produce, because of oil exporting countries will tend to consume more, and more countries will shift from being exporters to importers. We are currently importing 9.4 million barrels a day, so a reduction by half by 2020 would be a reduction of 4.7 million barrels a day.” [1]

It’s all fine and well to talk about the “potential” for this or that increase in production. But if it is not placed in the real-world context of increasing demand, depleting oil fields, harder-to-find-and-produce newer resources (meaning more energy being used to produce lesser amounts of inferior quality supplies), and the often-overlooked factor that many oil-exporting nations are now keeping for their own use more of their production totals, then the “potentials” lose much of their luster. Just keeping up with depletion rates still represents a net loss in production if demand is increasing and imports are being curtailed for any or all of the reasons just cited.

And let’s also remember that all of these “new,” more expensive, energy-intensive and time-consuming efforts are taking place because there’s no place else to go. Because these enhanced efforts are more costly, energy prices have to remain high for producers to justify the time, expense, investments (financial, manpower, asset-acquisition), and efforts needed to extract these often inferior oil resources. There is a point when it is no longer economically feasible to invest in production given those limitations and challenges. Higher energy prices are generally not looked upon favorably by consumers. Producers need consumers before they make their investments. Consumers cutting back = less justification for investments, and it’s easy to figure out what happens then.

Gail also comments on the claims that there could be a two-million barrel per day increase in production from the oil shale deposits (something she states “would be a tall order”) by offering some well-reasoned considerations:

“There are several reasons why the hoped for increase might not be realized, however. These include:
“Inadequate infrastructure. One question is whether inadequate infrastructure will prove to be a roadblock to meeting ambitious production goals in five to 10 years….
“Inadequate price. What tends to happen when there isn’t adequate transportation for the oil is the selling price of the oil tends to be depressed, relative to other types….
“It is easy for operators to assume that the price differential will get better, and also that the prices of other types of oil will continue to rise. But all of these things are by no means certain. High oil prices tend to send the economy into recession, so world prices may not rise as much as hoped–they may oscillate instead, rising, then putting the economy into recession and falling again. Also the differential of North Dakota types of crude to Brent may stay low for an extended period, if infrastructure issues cannot be worked out.
“Optimism before drilling. There are many unknowns before drilling including how quickly oil production from individual wells will decline, how long wells will prove to be economic, what proportion of wells will have high production, and the level of oil and gas prices in the future. It is natural for those who are trying to get others to invest in these ventures to base their assumptions on an optimistic view of the future. If experience with shale gas in Texas is any clue, once realities start setting in, the level of drilling may decline, and overall production, after an initial run-up, may decline. If this happens, it will be very difficult to meet the ambitious goals presented….
“If overall production is to be increases by 2 million barrels a day by 2015, it will be necessary to overcome these declines, as well as add 2 million barrels a day of new production. What happens is that each year, more and more oil fields and oil wells within oil fields become non-economic. These are closed. Also, what is extracted is an oil-water mix, and the proportion of oil tends to fall over time. This means that if a given volume of oil-water mix is processed from a well, each year the well will yield less oil and more water.”

Not quite a guarantee, is it?

Mr. Kotkin then turns to natural gas, with all the by-now usual qualifiers and non-specific “statements” which one assumes should be taken as fact (bold/italic mine).

“Even more promising, from the environmental standpoint, are huge natural gas finds. Discoveries in Texas, Arkansas and Pennsylvania could satisfy 100 years of use at current demand levels….
“Natural gas is already muscling out coal as the primary source for new power plants. It can also be converted into transportation fuel, particularly for buses, trucks and taxis.”

What if demand doesn’t stay the same? (Probably a damn good bet that it won’t). Then what? How does transportation fuel conversion take place? How long does it take? How expensive is the process? How efficient? How easy is it to do? How much more gas would be consumed by those converted vehicles, and thus how much less would be available for all other consumption?

And while he’s correct in stating that domestic energy production creates the “potential” (that word again) for “hundreds of thousands of jobs”, wouldn’t a national effort to devote our research efforts, skills, manpower, and resources into alternative sources of energy (which will surely outlast declining supplies of fossil fuels) offer the “potential” for just as many jobs, if not many more—given how much of our infrastructure and industrial/transportation foundation will have to change to accommodate new energy sources?

Reasonable questions all, I’d like to think, but no answers at all in Mr. Kotkin’s article.

There’s also the inconvenient reality that the U.S. is a natural gas importer. We do not produce enough of it to satisfy our needs as is. We turn to Canada as our primary benefactor, but as its demands for natural gas increase (it’s also used in significant quantities just to assist in the production of that country’s tar sands), the less natural gas there is to satisfy Canadian—and American—demand. At some point, the math is not going to work.

Facts….

Gail the Actuary conveniently offered a wealth of information in another recent post that sheds a bit more light on those magical “huge natural gas finds” Mr. Kotkin finds so appealing. (The title of the post: “Don’t count on natural gas to solve US energy problems” offers a clue or two.)

“[N]atural gas is only about one-fourth of US fossil fuel use, so it would be very difficult to ramp it up enough to meet all of these needs.
“One issue is whether a rise in shale gas will mostly offset other reductions in natural gas supply. In Annual Energy Outlook 2011, EIA forecasts that shale gas production will increase from 23% of US natural gas production in 2010 to 46% of US natural gas production by 2035, but that these increases will mostly offset decreases elsewhere. Even with this huge increase in shale gas production, the EIA only sees US natural gas production increasing by an average of 0.8% per year between 2011 and 2035, and US natural gas consumption increasing by an average of 0.6% per year per year to 2035–not enough to make a very big dent in our overall energy needs.”

Thud.

Shale gas production, which is being touted as a door-opener for increasing natural gas production, has its own set of risks and problems. Water pollution from the fracking process employed to produce the resource, earthquakes (no joke; see this), apparently rapid decline in production levels, and the fact that shale gas is not profitable at current low prices are just a few of the negatives. Not much incentive for producers there….

Gail touched on the shale gas issues in her post, suggesting for one thing that increasing the percentage of shale gas in the overall total of gas production “will mostly offset decreases elsewhere.” And natural gas’s lower prices will have less appeal as prices rise—surely an inevitability as demand and production costs increase. Then what?

As for Mr. Kotkin’s “100 years” claim, Gail offers more of those damned facts in rebuttal (citing, as she did with all of her other facts, charts and other sources of official information and statistics. Don’t you just hate that? See this article, also.)

“US current consumption is about 24 trillion cubic feet a year. If we divide the ‘U. S. Future Supply’ of 2,074.1 TCF by 24, we get 86 years, which is the source of the statement that 100 years of natural gas supply is available. But it is not at all clear how much of this is economically extractable with technology that we have now, or will be able to develop in the future. If we exclude speculative resources, we are down to 61 years, assuming no growth in natural gas consumption. If natural gas use rises, we would exhaust those resources much sooner.
‘If we exclude both Speculative Resources’ and ‘Possible Resources,’ then the number of years at current consumption falls to 29 (but much shorter, if production ramps up sharply). The shale gas portion of this is about a third of the total, or approximately 10 years, at current consumption levels.”

Thud, again.

Mr. Kotkin does acknowledge the legitimacy of environmental concerns arising from oil and gas production as they compare to the risks now quite evident to all in the wake of the disasters in Japan:

“But compared with the existential threat of nuclear radiation, even potential oil spills and damage to water supplies from fracking shale might be regarded as tolerable risks for which we have considerable experience and technology managing with enhanced regulation.”

Permit me to introduce you to the right-wing of our federal government and the big money interests which largely dictates its agenda. “Enhanced regulation?” Seriously? From this narrow-minded, shortsighted group of legislators beholden to corporate America? This same group of “leaders” who by all indications have little regard for what their own (non-wealthy) constituents are calling on them to do? I’m not sure that relying on them for “enhanced regulation” is likely going to meet with much success, although there is no question that is absolutely necessary.

“The record shows that without effective government oversight, the offshore oil and gas industry will not adequately reduce the risk of accidents, nor prepare effectively to respond in emergencies.” [2]

Credit where credit is due however. Mr. Kotkin does add:

“Republicans, too, need to give up their ‘bests’— including the notion that no policy is always the best, usually a convenient cover for the narrow interests of large energy corporations. Allowing private corporations to unilaterally determine our energy policy makes little sense. After all, most of our key competitors — China, Brazil and India — approach energy not as an ideological hobby horse but as a national priority.”

He concludes with these observations:

“The time has come for both political parties to give up their ‘best’ energy options for the good. A green economy that produces millions of new jobs is a laudable goal. But the renewable sector cannot develop rapidly without massive expenditures of scarce public dollars. To fully develop these technologies, we need lots of money and time….
“It’s time to demand that our deluded, and self-interested, political class develops an energy policy based not ideology but on how to best guarantee prosperity for future generations of Americans.”

Drilling for more oil, or pursuing questionable practices to release shale and natural gas are fraught with their own set of risks and consequences. In truth, there are no energy policies that won’t require significant compromise, sacrifice, and expense. Weighing the advantages and disadvantages, together with the benefits and rewards is no easy, quick, or guaranteed strategy. If we wait until everyone is on board we’ll be having this same conversation 500 years from now.

But to insist that our energy policy must be to keep devoting “scarce public dollars” (and scare private ones, too) to resources on a steady path of decline, guaranteeing only more difficulties and hardships down the road, is an energy policy to nowhere. There’s no doubt that we have enough fossil fuel resources to last a good number of years (given oil depletion and increasing demand, the math makes the exact date irrelevant, and I’m not a seer). But they are resources harder to come by, more costly, and well on their way to soon being insufficient to meet the many legitimate demands and needs of an over-populated world. What’s the advantage in spending “money and time” on endeavors that will lead to a gigantic energy dead-end? How much more trouble should we be looking to create for ourselves?

Our priority—our focus—must turn away from fossil fuels now, while we still have enough available to help ease us into the process of transitioning away from those very resources. That is a task of unimaginable complexity and effort. Waiting for a better day is not a choice. That day has passed. Let’s not let too many more slide by in foolish pursuits.

Sources:

[1] http://ourfiniteworld.com/2011/02/14/is-shale-oil-the-answer-to-peak-oil/; Is “shale oil” the answer to “peak oil”? by Gail Tverberg – February 14, 2011
[2] http://www.infrastructureusa.org/deep-water-the-gulf-oil-disaster-and-the-future-of-offshore-drilling/; DEEP WATER: The Gulf Oil Disaster and the Future of Offshore Drilling – January 10, 2011

[NOTE: This is the latest installment in a new PeakOilMatters series (which started here). It’s about finding a new and better vision to get to, through, and beyond Peak Oil and its widespread impact on what we produce, how we produce, and how we live. We won’t be falling off a cliff tomorrow, and the full brunt of Peak Oil’s effects won’t be experienced all at once, either. Gas and oil do not have to disappear entirely, nor do gas prices have to rise into the stratosphere before Peak Oil’s impact is felt.
Gradually, but inexorably, changes will be in the offing, however. We need to come to a better understanding of this, and start preparing ourselves now for the lengthy transition and just as lengthy ongoing impact of Peak Oil on all of us. Many issues must of necessity be considered, and I hope to make a contribution to the public dialogue we need to have. I hope you’ll find these objectives enjoyable as well as beneficial. We have more of a voice than we think we do. Finding that voice just might be our best hope.]

~~~

I have on several occasions (most recently here) commented on the determined efforts of some to either blindly ignore facts about climate and energy challenges, or present pseudo-arguments which upon even the briefest of examinations prove to be not much more than at-best disingenuous and misleading. To what end, however, I have not yet figured out.

Joel Kotkin recently posted on The New Geography website arguing that the United States must work to expand production of its “ample” (?!) oil and gas supplies. (The website is not exactly a bastion of broad-minded liberal thinking, although Mr. Kotkin is one of the contributors who generally offers reasoned arguments advocating his positions, rather than uttering nonsensical conservative/libertarian sound bites which sadly tend to get more air play—and I say this even though I almost always disagree with his and New Geography’s perspectives.) Although Mr. Kotkin is probably correct that the recent Japanese catastrophe may have ended (whether justified or misguided) any support for nuclear power power here for the foreseeable future, his reasons for urging greater fossil fuel production are governed by the same misguided and factually-deficient motivations that lesser advocates likewise propose.

If you are one who defines “long-range planning” as extending not much beyond a few weeks from now, then pursuing more fossil fuel development as our primary energy policy is a great choice.

As with almost every choice we face regarding the energy resources we’ll depend on in years to come, there are sound arguments for and against most policies under consideration. At some point, however, we will have to make some tough decisions. Delaying the inevitable can no longer be an executive strategy, however. The time to begin making difficult decisions (sure to antagonize, dismay, or confound a sizeable percentage of citizens and experts alike no matter which policies are eventually pursued) needs to begin a couple of years ago.

Richard Heinberg said it best (no great surprise):

“Either we direct public investment toward developing expensive, low-grade fossil fuels (such as tar sands, oil shale, and shale gas) in a vain effort to maintain growth in our fossil-fuel dependent economy, or we direct investment toward building the renewable energy infrastructure of the future.” [1]

I can’t disagree with the premise Kotkin raised that at least some progressives overestimate how quickly and successfully renewable fuels might supplant fossil fuels. But an implied criticism that they will be “highly dependent” on subsidies ignores the fact that the entire Republican contingent in the House recently voted unanimously to continue subsidies for the oil companies. (And I’m not clear why he states that the wind power industry’s receipt of “subsidies many times higher per megawatt hour than fossil fuels” is really the appropriate benchmark in determining that assistance. The renewable/alternative industries have a lot of catching up to do, and it’s delusional to pretend their contributions to our energy future won’t play important roles.)

Worth noting:

“… the big five oil companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — made $893 billion in profits (my emphasis) from 2001 to 2010.” [2]

Given what is at stake in terms of our economic future and increasing energy needs worldwide—on a planet with diminishing fossil fuel resources, coupled with the complexity of and the nearly-inconceivable efforts required to transition us away from fossil fuel dependency in favor of as-yet-undetermined combinations of “other” fuel resources—subsidies are almost mandatory for renewables/alternatives. What may not be so necessary in an economy with limited financial resources to spread around are subsidies for industries managing a tidy few hundred billion in profits.

“In the face of sustained high oil prices it was not an issue—for large companies—of needing the subsidies to entice us into looking for and producing more oil,” [Former Shell CEO] John Hofmeister told National Journal Daily…“The fear of low oil prices drives some companies to say that subsidies should be sustained,” Hofmeister said. “And my point of view is that with high oil prices such subsidies are not necessary.” [2]

Continuing on that same theme, Kotkin criticizes wind power’s relatively feeble contribution to supplying the nation with electricity. He then offers up a right-wing talking point which cheapens his position unnecessarily as he snarks about wind turbines “wiping out whole flocks of birds.” As someone who generally releases insects back into the outdoors when I find them in my home, rather than just stomping on them, I’m certainly concerned that countless numbers of birds have reportedly been injured or killed by the fan blades. Just wish some of that same “concern” would have been evidenced by Kotkin’s conservative/libertarian peers when so much wildlife was killed during the charming Gulf of Mexico oil spill last year. Relying on the birds-being-killed argument as a foundation for dismissive treatment of a renewable is not the type of visionary thinking we can afford at this point. There are others on the Right for whom that nonsense is better suited.

His legitimate concern that solar panel production has been largely taken over by China would have been a fairer statement had he mentioned how little federal support solar production (and all other renewables, for that matter) has been accorded in comparison to the fossil fuel sector. Perhaps a more concerted effort by leaders of both parties might have ensured a more favorable economic environment for that industry to take flight here in the U.S.

Although the comment was directed to Haley Barbour and others flying oil company flags—while they (of course) go on blaming President Obama for high prices at the pump and criticizing his energy policies in general—Joseph Romm’s observation applies just as well here:

“There is a notable theme here — aside from crass political point scoring, these attacks are calibrated to protect oil as a primary energy source at the expense of cheaper green alternatives, while pushing for even more oil drilling here in the United States. These opportunistic attacks come as the oil industry prepares to pump unprecedented sums of money into the political process. Since the midterm elections, the oil industry has ‘been very aggressive right out of the gate because of the huge opportunity with the election of their allies,’ as Daniel J. Weiss, the director of climate strategy at the Center for American Progress Action Fund, told the Houston Chronicle yesterday. Oil and gas companies spent $146.3 million on lobbying last year, and that number is poised to rise as the presidential election approaches. For example, the American Petroleum Institute will start donating money to political campaigns this year.” [4]

(To be fair, Kotkin also mentioned that many conservatives are beholden to the nuclear industry for similar reasons.)

His essay then lapses into the dismal, imprecise-but-sure-to impress buzzword strategy I’ve been criticizing repeatedly (bold/italic mine).

“The pragmatic way out of this emerging energy mess means focusing on our increasingly abundant supplies of oil and gas.”

“‘Peak oil’ enthusiasts may not have noticed, but recent discoveries and improvements in technology have greatly expanded the scope of U.S. energy resources. New finds are occurring around the world, but some of the biggest are in the United States.”

“Shale oil deposits in the northern Great Plains, Texas, California and Colorado could yield more oil annually by 2015 than the Gulf of Mexico. Within 10 years, these finds have the potential to reduce U.S. oil imports by more than half.”

U.S. production peaked forty years ago and we now produce only about half of what we did at the peak! Exactly how impressive are “increasingly abundant supplies” (“some of the biggest” no less!) when measured against that fact? Where is any mention of ongoing depletion rates which mitigate against oil production increases and resources? Conveniently omitting any explanation about what’s involved in the production of oil shale (cost, effort, energy resources used, actual as well as projected production levels, pollution and other environmental degradation concerns, etc.) skews the reality about those “some-of-the-biggest/abundant supplies” just a bit, as does the failure to mention the technological challenges (and hence expense, cost, time) in offshore or Arctic drilling….

“Here we go again. Every time gasoline prices spike, no matter the reason, Republican leaders and talk radio’s libertarian elite reach for the American Petroleum Institute’s (API) latest talking points and crank up the “drill, baby, drill” rhetoric….
“The GOP’s real energy crisis is one of focus. Republican leaders are focusing their energy on keeping America overly dependent on a resource that is far more plentiful outside our own borders. They largely dismiss the strategy of reducing demand and seem content to have us suck our own limited oil reserves dry as quickly as possible. It is a phony solution that they think will play well politically.
“Peddling geologic ignorance may score some points with voters who don’t know any better, but it won’t bring the promised relief at the pump.” [5]

And as for Kotkin’s “could yield more oil annually by 2015 than the Gulf of Mexico” meme:

“Deep-water” begins at 500 metres. In total there are around 70 oilfields in the Gulf of Mexico that are at least this deep. The total production from these wells is 800,000 barrels of oil per day (b/d). BP’s flagship the Thunder Horse platform contributes about 250,000 b/d. They will maintain this maximum production for about 5 years and it will then begin to decline.
“Mars-Ursa is the largest oilfield in the GOM. Production began in 1996, gave maximum production of 270,000 barrels per day from 2001 to 2004, and now production has dropped to 150 000 barrels a day. In a few years it will be finished. New oilfields in deep-water or in the Arctic will experience the same brief history. Those 800,000 b/d that today are produced in the Gulf of Mexico make up approximately 1 % of global production. The reality is that it would be fairly easy to do without all of this production.”

In a world that uses some 85 million or barrels of oil per day, we probably don’t need to spend much time on a resource that provides less than 1% of the total. So touting a replacement that could/might/possibly double that amount still isn’t worth a lot of space on a page … at least if you are also considering depletion rates on existing fields vs. increasing world-wide demand. The math gets ugly, and that tiny percentage becomes even less impressive.

One more point to mull over for now:

“In the wake of the BP Deepwater Horizon disaster—a crisis that was unanticipated, on a scale for which companies had not prepared to respond—changes in safety and environmental practices, safety training, drilling technology, containment and clean-up technology, preparedness, corporate culture, and management behavior will be required if deepwater energy operations are to be pursued in the Gulf—or elsewhere. Maintaining the public trust and earning the privilege of drilling on the outer continental shelf requires no less.” [7]

“Oil reserves have been declining for a decade, and it is an article of faith among petroleum geologists that the easy oil — easier to find, less complicated to drill — has all been extracted and that the explorers are now into the hard oil. When the Deepwater Horizon rig, drilling an exploratory well deep into rock through a mile of water and three miles into the ocean floor off the Louisiana coast, struck a highly pressurized pocket of oil and gas, causing an explosion, it was in some ways a consequence of this iterative, competitive game, each generation of discoveries pushing further into the unknown.
“A few years ago, the industry norm was to drill at depths of 15,000 or 20,000 feet. Now the frontier is 35,000 feet, where engineers find higher temperatures and pressures. ‘The scarcity of new reserves has been driving companies into plays that have previously been seen as extremely high risk and high cost,’ said Brian Maxted, the chief executive officer of Kosmos Energy, a deepwater-exploration company in Dallas. ‘The trend recently has been in going toward ever-deeper waters and ever-more challenging environments.’” [8]

Not cheap. Not easy. Not quick. Not good. (Damned facts!)

I’ll have more to say about Mr. Kotkin’s oil shale observations (and other comments in his article) next week.

Sources:

[1] http://old.globalpublicmedia.com/memo_to_the_president_elect; Museletter [200]: Memo to the President-elect on Energy Realism and the Green New Deal; December 2008
[2] http://theenergycollective.com/josephromm/53216/drill-baby-drill-fails-oil-prices-soar-spite-sharp-increase-us-production-under-oba?utm_source=tec_newsletter&utm_medium=email&utm_campaign=newsletter; Oil prices soar in spite of sharp increase in U.S. production under Obama by Joseph Romm – March 9, 2011
[3] http://wonkroom.thinkprogress.org/2011/02/11/oil-subsidies-ceo/; Ex-Big Oil CEO: Subsidies For Oil Companies ‘Are Not Necessary’ by Pat Garofolo – February 11, 2011
[4] Romm – see [2] above
[5] http://www.frumforum.com/the-gops-oil-drilling-pipe-dream; The GOP’s Oil Drilling Pipe Dream by David Jenkins – March 15, 2011
[6] http://www.energybulletin.net/stories/2011-03-15/%E2%80%9C-oil-arctic-not-worth-risks%E2%80%9D; The oil of the Arctic is not worth the risks by Kjell Aleklett, President of ASPO International – March 15, 2011 (Original article: http://aleklett.wordpress.com/2011/03/15/%e2%80%9cthe-oil-of-the-arctic-is-not-worth-the-risks%e2%80%9d/)
[7] http://www.infrastructureusa.org/deep-water-the-gulf-oil-disaster-and-the-future-of-offshore-drilling/; DEEP WATER: The Gulf Oil Disaster and the Future of Offshore Drilling – January 10, 2011
[8] http://www.nytimes.com/2011/01/16/magazine/16Drilling-t.html?_r=1&ref=todayspaper&pagewanted=all; The Will to Drill By BENJAMIN WALLACE-WELLS – January 16, 2011

In a recent post (here), I indicated that there were two more recent articles unseriously attempting to persuade readers that all is well in oil-production world. I’ll discuss the second piece today. (There are always more, of course, but these two jumped out at me as “better” examples of misguided attempts to deny that we have any fossil fuel resource problems.)

This Fortune magazine piece describes with near-breathless delight the apparent findings of not just one or two or four, but six “huge” oil fields! The existence of these fields is not exactly new news, but no matter. The good news touted here, however, is that we’re “awash in petroleum.” Such good news!

Let’s jump right in [emphasis added is mine]:

“There are many oil reserves around the globe that remain untapped, and explorers continue to discover new fields deep beneath the earth’s surface. Depending on how the controversy surrounding the Arctic National Wildlife Refuge turns out, the U.S. could exploit oil reserves in the area, despite potentially grave environmental consequences.”

“Depending”; “could” … along with “might potentially”, “if” “could be possible”, and an array of similar, carefully-worded utterly-lacking-in-certainty phrases are the apparent stock in trade for those denying those annoying facts about declining world oil production.

Kind of like the “job-killing”, “death panel”-laden health care legislation … these buzz word continuously repeated (without bothering to explain any of the actual facts that the rest of us deal with here on Planet Earth) sooner or later take on a life of their own. Soon enough “could exploit oil reserves” to the many non-discriminating readers simply becomes “lots of easily-accessed oil just waiting for someone to stick a straw in and pump it all out and so-what-the-hell-are-you-all-waiting-for?”

“Depending on how” the “controversy” (?) pans out in the Arctic means … what? Mentioning just the political controversy (my assumption as to the reference) over which nation can lay claim to any possible resources in the Arctic ignores a whole lotta other issues like finding it; getting to it; producing it! Hello! We’re talking about the possibility of finding and extracting fossil fuel resources in the Arctic! The place that’s very, very cold and has a lot of very, very thick ice on top of … everything … most of the time!

Realistically, full production is several decades away, and the total isn’t likely to meet even 5% of our needs. “Cheap, easy, soon” are words one will never hear when discussing the “potential” oil in the Arctic. Damned facts….

And what’s with the “despite potentially grave environmental consequences”? That actually sounds vaguely serious. Perhaps reporter Shelley DuBois might have lingered for just a moment on that phrase and explained … anything about it? “Grave” and “consequences” in the same sentence rarely lead to good things. But hell, if that’s just going to slow down the process of skipping past facts, then by all means, ignore away!

“Elsewhere there are even more reserves, but they’re often in places that are either geologically or politically difficult to access. Some of them come with dangerous security risks to drilling.”

Well that’s a relief! Still reeling from the whole “grave consequences” thing, for a moment I thought there might be some more problems. But since there’s no explanation, I guess not! That was a close one … whew!

This piece then provides brief statements about these 6 “huge” oil fields. [NOTE: all statistics to follow are taken from this Fortune article unless indicated otherwise.] I’ll touch on just a few points.

Mexico’s Chicontepec Basin has 10 billion “estimated” barrels of recoverable crude oil. Wonderful … that’s four month’s worth of world demand, and all from a country whose oil production has tanked in recent years. Hard to imagine a lot of money has been poured into the infrastructure during this decline, so one should wonder about the capacity to extract the fossil fuels, but let’s give Mexico the benefit of the doubt.

Mentioning the recent decline in production in passing at least counts for something, even if there is no tie-in to how this off-setting depletion in existing fields might diminish the attractive estimates from Chicontepec Basin. I guess there’s not much to be concerned about.

The big kahuna in this article is Venezuela’s Orinoco Basin, “a huge chunk of reserves inland, in a stretch of about 20,000 square miles” that is estimated to hold more than 500 billion barrels of oil. Very impressive to be sure. In fact, a 2006 article from petroleumworld.com suggested reserves of more than a trillion barrels, although only about 25% – 30% was then deemed recoverable. I have seen similar figures elsewhere, but I’ll go with Fortune’s figures for this discussion. (About a year ago, I wrote a post devoted to Venezuela and issues relating to its oil production capabilities. You can get more info’ here.)

What the 2006 article was thoughtful enough to provide (perhaps space limitations precluded Fortune from supplying this innocuous fact) is an explanation that producing Venezuela’s “heavy oil” is … well, what you might imagine producing heavy oil to be like:

“Coaxing marketable oil out of the extra-heavy sludge and coal-like deposits of the Orinoco is extremely expensive, labor- intensive, and has required both the technological muscle and cash of Big Oil.”

There goes any possibility of “cheap, easy, soon”! And let’s keep in mind that that country’s leader, Hugo Chavez, is not what anyone would consider to be a fan of ours. We should not expect lots of oil favors from him. As the author of this Fortune article states: “U.S. relations with Venezuela have been tense.” Relations between loony Tea Party extremists and far left bloggers here have been similarly “tense.” I’m not seeing much in the way of better scenarios any time soon.

“The country estimates a substantial jump in production from the area, claiming that the Orinoco will add another 400,000 barrels per day to its production by 2016.
“There’s some debate over whether they’ll make that goal — and even over how much oil Venezuela currently produces. Venezuela claims that its national oil company Petróleos de Venezuela SA produces 2.96 million barrels per day. U.S. estimates are generally lower, around 2.09 million barrels per day.”

Let’s give Venezuela the benefit of the doubt, round up to 3 million barrels per day, and then tack on 400,000 more per day. My math says that’s 3.4 million barrels per day, or almost 1.25 billion barrels per year. Very impressive. Gonna take a while to squeeze out 500-plus billion barrels at that rate (completely ignoring the fact that a one-third recovery is a good ballpark figure for production from most fields.) Of course, this assumes (I can do that, too) infrastructure and investment/economic/production considerations remain supportive, and that those pesky “extra-heavy sludge” factors don’t prove too daunting. I’m sure someone will invent something soon to take care of that—ideally at very low cost, easily utilized, and one that restores the oil fields and basins to pristine environmental conditions in no time at all.

The next source of magic are Brazil’s Santos and Campos Basins, estimated to hold “up to” 123 billion barrels of crude oil. Certainly not a pittance!

But like Jeremy Bowden’s article which I discussed last week, curious facts about the efforts to produce these fields popped up in the DuBois article:

“East of Rio de Janiero, Brazil’s Santos and Campos Basins contain tremendous oil reserves in something called a pre-salt layer. The oil and other petrochemicals are trapped under about two miles of salt and rock layers, which starts about a mile deep in the Atlantic Ocean.”

So … a few hundred bucks worth of investment, coupla weeks off the coast of sunny Brazil, a little bit of work here and there, and presto, we have 123 billion barrels of oil, right? (I’m just supplying “facts” about production … the Fortune article didn’t get around to that. Perhaps, however, I underestimate the challenge? Ya’ think?)

The other 3 fields mentioned in this article are first, an estimated 45-100 billion barrels superfield in Iraq—a real hot-bed of civility, sound infrastructure, solid government, and all the economic wherewithal any oil producer might need, right? And let’s just ignore this little bump in the road:

“The problem with Iraqi oil production is in the refining process. Right now there aren’t enough refineries with capacity to process so much crude. There’s also a paucity of fresh water in the region–a key resource for petrochemical processing.”

The “refining process” is the only problem? Seriously? All by itself that’s an enormous challenge and one not likely to be successfully resolved any time soon. And fresh water in the desert to fix that other problem will come from … ? Sure hope none of the Iraqi citizens get to those limited supplies of water before the oil companies do. They might drink it, or something!

DuBois then discusses the (estimated) 11 billion barrel offshore Kashagan field in Kazakhstan. Slight issue, easily resolved I’m sure:

“Offshore Kazakhstan is tricky to develop. The oil is sulphurous, and it’s combined with a high quantity of high-pressure natural gas. Also, drilling platforms have to be incredibly sturdy to weather the harsh conditions in the Caspian Sea.”

I’m not seeing “cheap, easy, soon” there, either. Also not seeing any facts to explain how those challenges might be handled—easily, cheaply, or soon.

And finally, the jaw-dropping, whopping 1.8 billion barrel (estimated, of course) Jubilee field off the coast of Ghana. That is, Jubilee “could ultimately produce” [my emphasis] that much oil. Pigs could fly, and we all could win the lottery tonight, too. But 1.8 billion barrels of oil is 1.8 billion barrels, enough to satisfy world demand for damn near … 3 whole weeks!

We’re well past the time when we need those in the know about the oil industry to speak the truth and only the truth. We who are not in the know need to better understand the facts and consider the sources of information supplied, and of perhaps greater importance: what’s not being explained. Motivations for disseminating various levels of information can be complicated.

Might not be a bad idea for our leaders to consider this strategy of telling the truth and offering us a heads-up, too.

Our work is cut out for us—all of us.