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Tag: Peak Demand

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While all the buzz surrounds oil prices, the global demand side remains on solid footing: up. Supplying 33% of all energy, oil is the world’s primary fuel. Oil is so important that global demand is ever-growing: 67 million b/d in 1990, 77 million b/d in 2000, and 91 million b/d in 2014. I’ll never understand the animosity of some Westerners toward critical fuels that they depend on everyday, making their lives easier in ways their great grandparents only dreamed of. [1]

Animosity” directed to fossil fuels? Has a nice right-wing playbook buzz to it, but those of us concerned with facts have an annoying habit of insisting that all of them be considered, and that consequences must also find a place at the table where overly-broad statements otherwise prefer being alone. And how exactly does one direct animus toward an energy source which has indeed made it possible for society to enjoy a magnificent history of progress and innovation?

Perhaps that’s not really the object of animus—real or imagined … ya think?

Lower prices lead to decreased investments and efforts by oil producers, which lead to reduced production of fossil fuel resources already more difficult to access and extract….The cumulative effect is that the wondrous increases in demand and the truthful expression that those needs can only be met [so far] by fossil fuels will collide with those other truthful realities as well. It’s difficult to make the math work when dealing with a finite resource and ever-increasing demand.

No legitimate proponent of the need to consider our energy supply challenges [let alone climate change] disputes the awesome numbers bandied about when discussing worldwide resource totals. But true to form, we can’t help ourselves; we just have to go and mention the fact that resources underground or under water are not nearly the same as fuel in hand for our use.

The more difficult, expensive, and challenging production becomes under present-day circumstances, the less relevant those resource totals become. And when that issue comes into play, ever-increasing demands are confronted with the harsh realities that we can no longer just dredge up whatever need when we need it at our preferred prices and for as long as desire.

The same oil industry cheerleader offering up the quote above also added this:

Thanks to derivatives gasoline and diesel fuel, the ongoing dominance of oil in the rapidly expanding vehicle market just now reaching into developing Asia is about as sure a thing as we have in our energy/environment discussion today. If there’s ever going to be common ground between fossil fuel companies, liberals, conservatives, environmental groups, Al Gore, and the Koch bros, the anti-oil crowd HAS to get over that fact.

We already know about oil’s dominance in modern society, so we don’t actually have to “get over” anything. What the anti-fact crowd has to get over is the policy of ignoring facts and reality and recognize that their boasts about oil’s prevalence and the impressive factoid that 3 billion oil-dependent cars on the road in another quarter of a century or so are in the process of contributing a big piece to the mother of all energy supply problems.

Technology and ingenuity—alone or in combination—are not new sources of energy. Earth has what it has in terms of finite resources.

Instead of leading the cheers for the legitimately wonderful ways fossil fuels have served mankind and how dependent we still remain on those same finite resources with all of the attendant modern-day production challenges we’re now confronting, perhaps some of that exuberance and ingenuity might be directed to paving the way for the inevitability that diminishing supply and increasing demand cannot be reconciled except at great and enduring cost.

And while couching all of this as now a “moral issue” has a nice ring to it, it doesn’t add much to intelligent planning and preparation. What’s immoral is to continue to mask the unpleasant realities of supply and production with Happy Talk ideology contributing nothing to the long-term well-being of all of us so that the few benefit at the expense of the many.

~ My [wife’s] Photo: New York City at night – 05.02.12

 

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

 

Looking Left and Right:
Inspiring Different Ideas,
Envisioning Better Tomorrows

Peak Oil Matters is dedicated to informing others about the significance and impact of Peak Oil—while adding observations about politics, ideology, transportation, and smart growth.

 

Sources:

[1] http://www.forbes.com/sites/judeclemente/2015/04/19/three-reasons-oil-will-continue-to-run-the-world/; Three Reasons Oil Will Continue to Run the World by Jude Clemente – 04.19.15

 

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An observation worth noting … and pondering, from Mark Lewis (links in original): continue reading…

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Peak oil demand is a provocative theory and would rely on some unanswered questions being met: namely on the  continue reading…

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U.S. oil demand rose 2.7% year-on-year in September to 18.571 million barrels a day, reflecting modest economic improvement in the world’s biggest oil consumer, the American Petroleum Institute said Friday.
For the entire third quarter, demand gained 1.7% from a year earlier, to 18.909 million barrels a day, the trade group said.
‘Demand for petroleum products remains consistent with a gradually improving economy,’ said John Felmy, API’s chief economist.
Demand for gasoline, the nation’s most widely used petroleum product, increased 2.1% in September from a year earlier, to 8.737 million barrels a day, and rose 1.2% to 8.951 million barrels a day in the third quarter from the year-earlier period. [1]

 

PEAK DEMAND?

 

As I’ve noted previously in this series, Peak Demand has a nice ring to it. But like so much else that passes for reassurance from the fossil fuel industry supporters, there’s another side to the “all is well” story. The public will almost never get any of the relevant information with which to make informed assessments about what’s at stake and what sort of messages they’d like their industry and political leaders to act on. Getting the information too late will be much worse than  getting it too early.

For all the talk about the recent production increases here in the U.S. (attributed to the genuinely impressive technological innovations of fracking shale formations), there’s a distinct downside to deriving all of our production increases to that.

 

“REALITY IS A BITCH”

 

The other thing about extraction from shale is that it ends quickly. A conventional well’s production declines at about 5-8% per year, and it can remain productive for decades. By contrast, the first-year decline in shale wells is over 60%, and about 90% of a well’s production occurs in the first five years. That creates a ‘drilling treadmill,’ as new wells are needed simply to replace production from wells drilled a few years before.
Further, studies by Arthur Berman, David Hughes, and Rafael Sandrea have analyzed well-by-well data from existing mature oil and gas shale fields and concluded that the ultimate production from these sources is likely to be much more limited than optimists claim. While fields are large, covering many counties or even states, most production comes from a few ‘sweet spots,’ where drilling opportunities are limited by quality acreage. (links in original quote). [2]

As Wall Street, CNBC, and feckless politicians tout American energy independence from the miracle of shale oil, reality is already rearing its ugly head. Production grew by 24% over the first six months of 2012. Production has grown by only 7% over the first six months of 2013. That is a dramatic slowdown. The fact is that these wells deplete at an extremely rapid rate. Oil companies will always seek out the easiest to access oil first. They have already accessed the easy stuff. This explains the dramatic slowdown. Peak Bakken oil production will be below 1 million barrels per day. The last time I checked, we consumed 18 million barrels per day. I wonder when that energy independence will be achieved? Reality is a bitch. 
By the end of the first year of production, a new well is producing at a rate that is 30% of where it was the year before. That means a huge amount of drilling each year has to be done just to offset the production lost due to these steep decline rates. [3]

Unpleasant detours along the road to energy independence and a worry-free energy supply future, to be sure. But facts will do that to the best of stories.

No one disputes that fossil fuel production has increased in the last few years, more so than peak oil proponents envisioned. There’s also a lot of conversation about impressive increases in reserves. For instance (my comments are included in [bracketed red italics]):

 

SOUNDS GOOD … BUT….

 

With billions of Chinese and Indians growing richer and itching to get behind the wheel of a car, the big oil companies, the International Energy Agency (IEA) and America’s Energy Information Administration all predict that demand will keep on rising. One of the oil giants, Britain’s BP, reckons it will grow from 89m b/d now to 104m b/d by 2030.
We believe that they are wrong, and that oil is close to a peak. This is not the ‘peak oil’ widely discussed several years ago, when several theorists, who have since gone strangely quiet, [such as?] reckoned that supply would flatten and then fall. We believe that demand, not supply, could decline. In the rich world oil demand has already peaked: it has fallen since 2005. [Is this a permanent trend or a reflection of difficult and ongoing economic times? Should we assume we do not want more growth—itself a conundrum?] Even allowing for all those new drivers in Beijing and Delhi, two revolutions in technology will dampen the world’s thirst for the black stuff.
The first revolution was led by a Texan who has just died (link to article in original). George Mitchell championed ‘fracking’ as a way to release huge supplies of ‘unconventional’ gas from shale beds. This, along with vast new discoveries of conventional gas, has recently helped increase the world’s reserves from 50 to 200 years. [Sounds wonderful right up until the moment a few questions pop up: Rate of production? Depletion rates? Expenses? Costs? Until the reserves are out of the ground and in our tank, the numbers are just numbers] In America, where thanks to Mr Mitchell shale gas already billows from the ground, liquefied or compressed gas is finding its way into the tanks of lorries, buses and local-delivery vehicles. Gas could also replace oil in ships, power stations, petrochemical plants and domestic and industrial heating systems, and thus displace a few million barrels of oil a day by 2020. [“Could”? And the infrastructure and technology for this is ready to go?] [4]

Reality, geology, technology, and economics are all part of the mix, and too often the pesky details are ignored in pursuit of a self-serving narrative ensuring fossil fuel industry dominance in the marketplace. There will be a reckoning at some point, and that too will be an unpleasant fact-based, context-rich reality we will all have to deal with.

Putting plans into motion in advance seems like a wiser strategy than hoping.

Happy Veterans Day, and thank you to all our veterans (a special thanks to you, Dad)

~ My Photo: shadows (my wife and I) at Good Harbor Beach, MA – Sept 2012

Looking Left and Right:
Inspiring Different Ideas,
Envisioning Better Tomorrows

Peak Oil Matters is dedicated to informing others about the significance and impact of Peak Oil—while adding observations about politics, ideology, transportation, and smart growth.

            – Check out my new website

Sources:

[1] http://peak-oil.org/peak-oil-news-archive/ – link provided there for the October 19 edition of Peak Oil News [item 12: API: U.S. SEPTEMBER OIL USE UP 2.7% VS YEAR EARLIER]
[2] http://aspousa.org/2013/01/commentary-is-fracking-a-happy-solution-to-our-energy-needs/; Commentary: Is Fracking a “Happy” Solution to our Energy Needs? by Richard Vodra – 01.27.13 [originally published January 2, 2013 as part of the Advisor Perspectives newsletter]
[3] http://www.theburningplatform.com/2013/09/22/bakken-hype-versus-reality/; Bakken Hype Versus Reality by “Devon Shire” – 09.22.13
[4] http://www.economist.com/news/leaders/21582516-worlds-thirst-oil-could-be-nearing-peak-bad-news-producers-excellent; The future of oil: Yesterday’s fuel by unattributed* – 08.03.13
* I believe the comments are from one or more of the authors of the Citigroup study on “Peak Demand” entitled Global Oil Demand Growth – The End Is Nigh

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Capex compression is a term we use to describe the reduction of upstream spending by the oil companies when their exploration and production costs are rising faster than their oil revenues. That’s what’s happening today. Hess is divesting continue reading…

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[W]hy are petroleum prices so high? Although some commentators are quick to blame oil companies or speculators, the main factor keeping the price of oil above $100 a barrel is supply. Yes, OPEC frequently reminds us that the oil market is continue reading…

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High value crude oil — the good stuff with 5.8 million BTU per barrel that we can make into diesel and gasoline and a million other things — has been generally holding on to a global production plateau since 2004. Global production will fall continue reading…

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A new phrase has entered our energy lexicon—peak oil demand. The essential idea: prophets of doom who warned about a continue reading…