Tuesday, January 20, 2009

Putting Liquid Fuels in Perspective: A visit to Perdido

A few weeks ago, in the name of Peak Oil and … fishing … we traveled to Shell’s Perdido Project in the Gulf of Mexico. Perdido is a floating spar platform in 7800’ of water. Despite the fact that the spar was put in place last summer, it has already created a mini-ecosystem that favors all marine life. Don’t tell anyone, but the fishing was great! Of course, getting there is a bit of an adventure, since Perdido is about 150 miles off the Texas coast!

Much like the engineer in the “girl and the bicycle” joke, I spent the first 30 minutes taking pictures of the spar, while everyone else was catching fish! Currently, the project is fairly unremarkable at the surface, as the topside deck has not yet been set. So, it looks much like a big floating tank, only it doesn’t move with the ocean since it is pulled tight against the seafloor with huge chains and ropes. (Yes, high-tech polyester ropes.) The spar itself is about the same height as the Eiffel Tower, but only the top 75’ or so is visible above the ocean. In the distance, Noble Drilling’s Clyde Boudreaux semi-submersible drilling rig is drilling some of the first wells, which will feature subsea controls and will be connected by flexible pipe to the Perdido spar. The Perdido project includes a number of subsea innovations.

Now, some math. When Perdido is put on production it is designed to produce a maximum of about 100,000 barrels of oil per day. That’s a lot of oil, right? And, it is domestic oil. It won’t contribute to our trade imbalance, and it won’t be subject to geopolitical problems. Perdido has created a lot of good jobs for steelmakers, welders, pipefitters, designers, engineers, roughnecks and a whole bunch of others. Overall, it is a great project for all of us - diatoms and fish included - and hats off to the folks at Shell Offshore, Inc. for getting it done.

But hold on, let’s put this $3 billion, state-of-the-art, deepwater project into Peak Oil perspective.

Cantarell Field, the world’s second or third largest field, is located in “shallow water” a few hundred miles to the south of Perdido, offshore Mexico. It is one of the “giant” oilfields on which the world has been unconsciously relying; in the case of Cantarell, since 1979. Unfortunately, Cantarell’s reserves and production make Perdido look like what we call a “stripper” project in the industry, by comparison. Cantarell had a peak production rate of 2,100,000 barrels of oil per day, as recently as the end of 2004. In 2005 it began to decline. And it had never declined, before. By the end of 2008, Cantarell was producing “just” 862,060 barrels per day.

That’s a decline of over 1,200,000 barrels, in just 4 years. And Perdido will produce at a maximum rate (before it begins to decline) of “just” 100,000 barrels per day. And it has taken 13 years to get the Perdido to the production stage, from the initial leasing!

So, you are beginning to see the picture. The old “giant” oilfields are going away (all have peaked like Cantarell, except maybe Ghawar), and our new, incredibly expensive, state-of-the-art projects that can take a decade or more - can’t begin to replace the declining “giants”. That’s Peak Oil.

What to do about it? Well, this doesn’t mean that we shouldn’t encourage projects like Perdido. Perdido is a win-win-win for mankind, the environment and the United States of America. Believe me, the fish are having a great time at Perdido! So, we should facilitate drilling and production offshore Florida and the East and West Coasts. Furthermore, in most of these areas the water is much shallower, so the projects will be simpler.

At the same time, we need to keep it all in perspective. No, offshore drilling won’t solve all of our problems. But alternatives won’t either. We need both, along with significant conservation! We need what has increasingly become known as the “all of the above solution”:

• energy conservation (this is where we can have the greatest effect, the soonest)
• mass transportation retrofits (likely optimized and marketed bus and carpool efforts)
• natural gas vehicles and stations (start with fleets to solve the Catch-22)
• expanded natural gas drilling (solve infrastructure & supply problems)
• wind energy (stop the tax credit hocus pocus - fix it for a reasonable time period)
• vehicular electrical storage research (cost effective and reliable batteries or other devices)
• design & production of more efficient cars (lighter, smaller EV's, plug-in hybrids and diesels)
• offshore drilling (offshore West Coast, East Coast, Florida Coast)
• biofuels research (enzyme & pyrolysis-based cellulosic ethanol, algae-based oil production)
• biomass (use grasses and waste products, but be cognizant of soil needs)
• nuclear plants (fast-track & standardize the design, licensing and construction, use breeders and reprocessing to minimize waste)
• coal plants (use best available, cost-effective clean up technology)
• coal-to-liquids (limited by rate, but part of the solution)
• solar thermal innovations & implementations
• geothermal and waste heat recovery installations

So, you offshore guys, don’t be tempted to scoff at the solar guys. And conservation guys, stop pointing your fingers at the “oil companies”. We need all of the above. In 2009 let’s get past the finger-pointing, and get on with good jobs leading to energy solutions! And quickly!

Endnote: For the record, given where we are now, we can’t keep liquid fuel supply flat, let alone grow it, even if we do all of the above. But, going this route could make the coming tough transition a more manageable process.

1 comment:

Clifford J. Wirth, Ph.D. said...

This article should be viewed in the larger perspective of Peak Oil.

Global crude oil production peaked in 2008.

Global crude oil production had been rising briskly until 2004, then plateaued for four years. Because oil producers were extracting at maximum effort to profit from high oil prices, this plateau is a clear indication of Peak Oil.

Then in August and September of 2008 while oil prices were still very high, global crude oil production fell nearly one million barrels per day, clear evidence of Peak Oil (See Rembrandt Koppelaar, Editor of "Oil Watch Monthly," December 2008, page 1) http://www.peakoil.nl/wp-content/uploads/2008/12/2008_december_oilwatch_monthly.pdf.

Peak Oil is now.

Credit for accurate Peak Oil predictions (within a few years) goes to the following (projected year for peak given in parentheses):

* Association for the Study of Peak Oil (2007)

* Rembrandt Koppelaar, Editor of “Oil Watch Monthly” (2008)

* Tony Eriksen, Oil stock analyst; Samuel Foucher, oil analyst; and Stuart Staniford, Physicist [Wikipedia Oil Megaprojects] (2008)

* Matthew Simmons, Energy investment banker, (2007)

* T. Boone Pickens, Oil and gas investor (2007)

* U.S. Army Corps of Engineers (2005)

* Kenneth S. Deffeyes, Princeton professor and retired shell geologist (2005)

* Sam Sam Bakhtiari, Retired Iranian National Oil Company geologist (2005)

* Chris Skrebowski, Editor of “Petroleum Review” (2010)

* Sadad Al Husseini, former head of production and exploration, Saudi Aramco (2008)

* Energy Watch Group in Germany (2006)

* Fredrik Robelius, Oil analyst and author of "Giant Oil Fields" (2008 to 2018)

Oil production will now begin to decline terminally.

Within a year or two, it is likely that oil prices will skyrocket as supply falls below demand. OPEC cuts could exacerbate the gap between supply and demand and drive prices even higher.

Independent studies indicate that global crude oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time, demand will increase. Oil supplies will be even tighter for the U.S. As oil producing nations consume more and more oil domestically they will export less and less. Because demand is high in China, India, the Middle East, and other oil producing nations, once global oil production begins to decline, demand will always be higher than supply. And since the U.S. represents one fourth of global oil demand, whatever oil we conserve will be consumed elsewhere. Thus, conservation in the U.S. will not slow oil depletion rates significantly.

Alternatives will not even begin to fill the gap. There is no plan nor capital for a so-called electric economy. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment. The independent scientists of the Energy Watch Group conclude in a 2007 report titled: “Peak Oil Could Trigger Meltdown of Society:”

"By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame."

With increasing costs for gasoline and diesel, along with declining taxes and declining gasoline tax revenues, states and local governments will eventually have to cut staff and curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers won’t be able to get to work. We are facing the collapse of the highways that depend on diesel and gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing, and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, large transformers, steel for pylons, and high tension cables from great distances. With the highways out, there will be no food coming from far away, and without the power grid virtually nothing modern works, including home heating, pumping of gasoline and diesel, airports, communications, and automated building systems.

Documented here: