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Tag: U.S. production

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[P]eak oil naysayers hardly have reason to gloat. The supply of oil may be rising, but the nature of the fuel mix is changing quickly, adding greater uncertainty to the long-term outlook for the world’s largest energy source.
Pockets of cheap, easy-to-produce oil — called conventional crude — are gradually drying up after more than a century of exploration. Exxon Mobil, the world’s largest publicly traded oil and gas company, said it expects output from developed conventional oil fields to decline through 2040. Conventional crude output actually peaked in 2006, at 70 million barrels a day, and has since plateaued, the International Energy Agency said in its 2010 World Energy Outlook report. [1]

continue reading…

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I ended last week’s post on the topic of Confirmation Bias* with these questions:

After all, who among us wants to be wrong about important matters on which we’ve staked no small amount of credibility?

But what if being wrong about those important matters winds up being the least of our problems?

continue reading…

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Without a serious revisiting of the questionable optimism that dominates any dialogue related to longer-term world oil supplies, without a harshly realistic scrub of the facts, we face unnecessarily large energy policy risks. [1]  continue reading…

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CAPEX, AGAIN

 

[T]he 2013 WEO has the oil industry’s upstream capex [see this and this] rising by nearly 180 per cent since 2000, but the global oil supply continue reading…

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At the risk of starting a cat fight where truth may too quickly become a casualty, why don’t we more forcefully challenge those who deny peak oil (and global warming) and who do so for reasons that generally ignore reality in favor of narrowly-defined interests? Those motivations will ultimately do nothing but promote more eventual harm by denying the truths to those who clearly need them the most….
Of course, we run the risk of getting bogged down in he said/she-said arguments that quickly devolve into the lowest forms of ‘debate’, but why let those types of offerings go unchallenged? They feed on themselves, and it is tiresome and time-consuming to have to rebut all the nonsense. But if we don’t, uninformed readers and listeners have no reason to at least consider the possibility that there may indeed be other facts out there that should at least be examined in order to make informed assessments, rather than accepting the words of the few. More information is rarely a bad thing, and giving everyone the opportunity to examine the facts and engage in rational discourse as a means of seeking common ground makes for a healthier and more productive society.

That’s from a post I wrote three years ago, and my attitude hasn’t wavered. The constant flow of articles and opinions give me yet more opportunities to bat down the nonsense passing as advice and learned observations about the world of energy supply.

 

AN OBSERVATION

 

The most significant characteristic of modern civilization is the sacrifice of the future for the present, and all the power of science has been prostituted to this purpose. [1]

There’s a fairly consistent pattern of denial which serves as the common thread running through  almost every written or spoken piece denouncing those of us who are urging greater awareness of our future oil supply challenges. The “myth/theory” of peak oil is consistently targeted by an assortment of disingenuous, pseudo-factual might-possibly-could perhaps arguments, as I’ll continue to point out—here and in future posts.

Just wondering: if it was indeed anywhere near as much of a nutty concept as the body of fact-free, Happy Talk cheerleaders insist, why do they keep at it? That they are unable to do so without some impressive contortions of facts and geological realities seems to be delivering a not-to-subtle message they probably do not intend.

Below is a sampling of the typical straight-from-the-buzzword-playbook typically found in the bag of Happy Talk team members. The next few posts in this series will take a closer look (including facts as a bonus contribution) at some of these sorry displays of pseudo-certainty, and why pointing out the nonsense is so important.

 

SOME POPULAR APPETIZERS AT THE DENIAL BUFFET

 

Oil production in Canada as well as the U.S. – long written off as a virtual resource wasteland – began to creep up, then roar. [2]

The fact is, governments have almost always thought their countries were about to run out of oil….[3]

The implications [of future production possibilities] are vast. [4]

In hindsight, you drive oil to $147 barrel and lo and behold, five years hence the world is swimming in oil. It really is that simple. [5]

But it’s now clear that a revolution has occurred: U.S. crude oil production is up 50 percent since 2008. [6]

North Dakota, the center of the now-famous Bakken Formation shale, has overtaken Alaska and California to become the second-largest oil-producing state in the country, outpaced only by Texas. (links in original) [7]

Christoph Frei, Secretary General of the WEC said that the chances of the world running out of oil were slim, citing the fact that global reserves of the engineering resource were 25 percent higher than in 1993 while production has increased by 20 percent. [8]

[T]here is little reason to fear that the oil will run out before an alternative can be found. [9]

‘[T]he unconventional oil and gas revolution has already had major impact in multiple dimensions. Its significance will continue to grow as it continues to unfold.’ [10]

Not only are oil companies looking for more places to drill, but they are trying to maximize the amount of recoverable oil per well [11]

The Arctic’s potential for oil and gas production is huge, massive, colossal even….The U.S. has six of the 18 major Arctic fields (not including Russia), which means it will be able to cash in on the huge potential….
Imagine the potential: If just one play could yield that much oil and gas, then more is sure to come in other areas….
The Arctic is just one of many plays America has the potential to see continued production from — the Gulf also has some promise. [12]

There are 89 billion barrels of oil still trapped inside America’s oil wells. That’s because the average oil well in America only gives up 30% of its black gold. This is oil that’s vital to fueling our economy and it’s just sitting down there.
To put this into perspective, if the U.S. could recover all its oil, our nation would rival Iraq and Iran as a top five holder of oil reserves in the world. [13]

One of the keys to unlocking all of the oil still trapped is to find the right technique to unlock it. [14]

A lasting lesson of the crisis years is the power of markets and their ability to adjust to disruptions, if government allows them to. The iconic images of the 1970s—gas lines and angry motorists—are trotted out whenever some new disruption happens. Yet those gas lines weren’t the result of markets. They were the largely self-inflicted result of government interference in markets with price controls and supply allocation. [15]

Keep in mind that this was just a sampler, but a good one. There’s lot more … unfortunately, as future posts in this series will discuss. But first, I’ll pick apart the comments above to shed a bit more light on the “geological gibberish” of peak oil. (Facts—the other side of the peak oil story—still suck….)

~ My Photo: an approaching storm in Gloucester, MA – early July, 2008

 

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Excerpts are being posted as of January 15th

Looking Left and Right:
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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.theburningplatform.com/2010/11/19/as-things-fell-apart-nobody-paid-much-attention/; As Things Fell Apart, Nobody Paid Much Attention by Jim Quinn – 11.19.10 [quoting William James]
[2] http://www.drjandmrk.com/?p=3845; The Welcome Death of Peak Oil by George Koch – 10.04.13
[3] & [4] Ibid
[5] http://ftalphaville.ft.com/2013/11/13/1693722/recollecting-the-false-messiah-of-peak-oil/; Recollecting the false messiah of peak oil by Izabella Kaminsky – 11.13.13
[6] & [7] http://www.politico.com/magazine/story/2013/11/congratulations-america-youre-almost-energy-independent-now-what-98985.html; Congratulations, America. You’re (Almost) Energy Independent. Now what? by Daniel Yergin – November 2013
[8] http://why.knovel.com/all-engineering-news/2774-global-energy-report-dismisses-fears-of-peak-oil.html; Global Energy Report Dismisses Fears Of Peak Oil (unattributed) – 10.23.13
[9] http://www.bdlive.co.za/opinion/editorials/2013/10/21/editorial-no-need-to-panic-about-peak-oil; EDITORIAL: No need to panic about ‘peak oil’ – 10.21.13
[10] http://www.huffingtonpost.com/daniel-davis/domestic-oil_b_2898256.html; Awash in Misinformation: America’s Domestic Tight Oil ‘Bump’ by Daniel Davis (quoting Daniel Yergin) – 03.22.13
[11] http://www.dailyfinance.com/2013/10/23/the-us-oil-boom-is-far-from-over/; The U.S. Oil Boom Is far From Over: Part 1 by Callum Turcan, The Motley Fool – 10.23.13
[12] http://www.fool.com/investing/general/2013/10/26/the-us-oil-boom-is-far-from-over-part-2.aspx; The U.S. Oil Boom Is far From Over: Part 2 by Callum Turcan, The Motley Fool – 10.26.13
[13] & [14] http://www.fool.com/investing/general/2013/10/12/oil-production-isnt-even-close-to-drying-up.aspx; Peak Oil Is Dead Wrong by Matthew DiLallo – 10.12.13
[15] http://hockeyschtick.blogspot.com/2013/10/peak-oil-redux-world-oil-production-is.html; Peak Oil Redux: World oil production is 50% higher today than in 1973 by Daniel Yergin – 10.14.13

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As I mentioned in the first post of this short series, we are once again being subjected to differing interpretations of the same set of facts. It does make planning and strategizing a bit more challenging…. continue reading…

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The U.S. will surpass Russia and Saudi Arabia as the world’s top oil producer by 2015, and be close to energy self-sufficiency in the next two decades, amid booming output from shale formations, the IEA said. (links in original) [1]  continue reading…

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An observation worth noting … and pondering, from Chris Martenson: continue reading…

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An observation worth noting … and pondering, from the Energy Policy Information Center: 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