Monday, July 29, 2013

Steve Andrews interviews Martin Payne: Is Peak Oil Dead?

   By Steve Andrews; Peak Oil Review—July 29, 2013

Q: The industry deserves major kudos for the largest year-over-year increase in US oil production during 2012.  What’s your sense for how long that type of gain might continue?
A:  Both the Bakken and Eagle Ford are wonderful and economic shale oil plays. It doesn’t mean they don’t have uneconomic wells that may be drilled on their peripheries or in areas that aren’t sweet spots. But the rate of production increases in the Bakken has already slowed somewhat.  And the exploration and development efforts look like they’re slowing a little bit, as well.  The Permian is the third major shale oil play, but it’s more of a margin play in many cases.
Meanwhile over the last two years oil production from the Eagle Ford increased by 600,000 barrels a day while roughly half of that was eaten up by declines in the Gulf of Mexico. So it’s a forest and trees situation where you have to look at both.  Former CEO of EOG Mark Papa said those three plays are likely it for the US, in terms of major black oil plays.  So we’ve got to keep things in perspective.  In terms of the forest and the trees, the Bakken and Eagle Ford are trees; they’re big trees, but they’re not the forest. The forest is the world oil supply situation; on a world-wide basis, how do the trees scale in to everything else in the world?
Q:  Yet for the most part the discussion at the national level makes little or no note of that slowdown.  It’s all about covering the boom.   And don’t we all hear that the boom is just going to keep growing.
It’s hard not to get caught up in the boom.  In Houston and Midland and South Texas and North Dakota, the boom is real, people are doing well, and it’s floating a lot of boats.  But you have to go back and look at the big picture, look at the scale of these plays.  These are "trees" — blessings in a way — and they give us a temporary reprieve from what Bob Hirsch called the severe consequences of not taking enough action proactively with respect to peak oil.  The question is will these plays “fix” peak oil?  The answer is no.
Q:  So, in your opinion, M. King Hubbert more or less had it right, at least in the big picture, not down at the granular level?
A:  Some have mentioned that, “well Hubbert….back in the 1950s and 1960s he didn’t have access to the concept of unconventional oil or shale oil plays.  He did good work, but it was only applicable to the conventional oil he knew about.”  I would propose that it doesn’t really matter and that in hindsight, after a couple of more years, it will be more evident that effectively he did take unconventional oil into account because the unconventional oils are not easy oils. 
Conventional oil--which was found in huge quantities, in giant fields in the 40's and 50's - well those giant fields had huge reserves and high porosities and permeabilities - meaning they would flow at very high rates for decades.  This is in contrast to a relative few shale oil plays which have very low porosity and perm and which must be hydraulically fractured to flow. Conventional oil is just a different animal than unconventional oil; some unconventional oil wells have high initial rates of production, but all of these wells have high decline rates.  Yet it’s essential that we produce this oil.  Without unconventional oil, what we wind up with is essentially Hubbert’s cliff instead of a Hubbert’s rounded peak. 
I think Hubbert anticipated a lot of incremental efforts by the industry to make the right-hand or decline side of his curve a more gradual curve rather than a sharp drop.  He was thinking about secondary recovery, though perhaps it was too early for him to think about tertiary recovery, but those are the types of incremental efforts that he would have anticipated.  Likewise, I would say that unconventional oil is another incremental type of recovery, at least compared to conventional oil.
Q:  So the peak oil problem isn’t dead yet, as has been shouted in a few headlines? 
A: Our bottom-line problem here is that if we ignore peak oil as a result of these plays, we ignore it at our peril.  This is no time for complacency. 
Peak oil is still a looming transportation problem—a huge one.  I would suggest that we’ve made some progress…some things have been done.  We’ve made several years worth of efforts collectively, whether it is more movement towards electric cars, mass transit, scaling down our vehicle purchases, or driving less due to price signals.  But we’ve only just begun and we have a long ways to go in order to deal with the still-looming Hubbert’s peak, in order to not deal with the severe consequences that Bob Hirsch wrote about in his 2005 research for DOE.
The big problem is that it’s hard to be proactive when there’s no current crisis.  We’re a country of optimists.  That’s helped us do what we do, including the development of new technologies to create, innovate and develop better than anyone else in the world.  I think it’s imperative to maintain a positive outlook.  At the same time, peak oil is something unique.  Peak Oil is not reflective of optimism or pessimism, or positive or negative; it’s just the result of the finite volume of oil the Earth was endowed with, and the rate at which that oil can be produced.  Some way or another we’ve got to get to where we can be proactive, and we’ve got to work together.
Q: What about the notion we hear that the US will be energy independent by roughly the end of the decade?
A:  There are some, not many, who promulgate the idea that we’re going to be energy independent.  Bob Tippee, editor of the Oil & Gas Journal, wrote an editorial about that, criticizing the boosters.  “Energy independence is an appealing idea.  So is perpetual youth.  The problem in both cases is achievability.”  For me, it’s really hard to understand how the independence crowd could possibly be right; so it’s just not the right message to convey.  We need to press on with conservation and efficiency improvements, natural gas vehicles, development of a better way to store electricity for use in a vehicle.  We don’t need to slow down any of those efforts. 
Just as it might be better if the industry folks touting energy independence toned that down, likewise those who nitpick every shale oil or shale gas play should perhaps let the people who spend the money—or their shareholders—worry about the economics and just be glad that we have these plays to develop in order to create some more time.  There has been a bit of a war between the folks who do things, in terms of discovery and development, and then the folks who review that—the doers vs. the reviewers.  The reviewers have been pooh-poohing these shale oil and gas plays, which actually represent a lot of oil and gas…but not enough to solve the long-term problem. 
There are also those out there who believe you have to kill off the old paradigm before you can have a new paradigm take its place.  Unfortunately, killing off the fossil fuel paradigm is not something anybody wants to do, if they really understand the ramifications.  You can kind of feel their pain, though, as you hear the energy independence chatter that may persuade us to relax and cease to be concerned about the finite oil supply.  In a sense you can understand their frustration with shale oil and shale gas plays because the broader public hears the optimistic news and says “hey, this isn’t any issue any longer.” 
So I can see both sides here.  But we need to work together, not fight one another.  Let’s all get along.  These shale oil and gas plays are stop-gaps and blessings and we need them.  We don’t need to be fighting against them, but at the same time we don’t need to be jumping on the energy independence bandwagon because the numbers just don’t seem to add up.  There’s no way that energy independence can happen when we’re producing up towards 8 million barrels a day of crude oil  now plus between 2 and 3 million barrels a day of other liquids and we’re consuming over 18 million barrels of liquid fuels a day.  The idea that we’re going to come up with another 7 or 8 million barrels of black oil plays doesn’t fit. 
There will be other incremental plays: the Niobrara, maybe the Utica, but we know about the three big ones—the Eagle Ford, the Bakken and the Permian. I need to study the Cline more.  Devon Energy is going wide open on the Cline, but they quickly saddled up with major outside capital by joint-venturing with foreign companies to pay for it.  It’s a lot different when somebody else is footing the bill.  We’ve gotten a little negative feedback on the Cline ... I've read where it can have a high clay content, at least in some areas.
Q: I’ve heard that the Monterey field in California seems to be the one that’s the least ready to give up its very large oil-in-place resource.  Do you read it that way?
A:  The Monterey gets brought up all the time because it has a huge in-the-ground number.  It’s another question mark.  There’s a good chance the clay content may be the issue.  It gets back to the fact that to work, the rock in an unconventional play needs to break like a piece of glass; it needs to be that brittle to work really well.  The presence of ductile clay in high percentages prevents that from happening.  So with a high clay content you can’t create the necessary spiderweb network of fractures and microfractures to provide exit routes for the oil.
I liken it to a highway system: dirt roads feeding county roads, feeding state highways, feeding interstates that eventually go into 12-lane freeways when you get to downtown…where downtown is the wellbore.  You can’t create that underground highway network unless the rock breaks well.  I’m pretty sure that’s the problem with the Monterey.
The Conasauga is a quickly forgotten example of a shale gas play that didn’t live up to expectations.  There were thousands of feet of low TOC rock, but the bottom line was that due to clay content there wasn’t a way to fracture and keep the rock sufficiently open in order to make the play economic.  So even though the numbers were huge on an in-place basis—just like the Monterey, but in gas instead of oil—you couldn't create the highway system, so it wouldn't work. 
Q:  How does the nagging high price of oil fit with your understanding of the viewpoint of the oil optimists?
A:   This seems like a huge no-brainer.  So I’m confused: If we’re awash in crude, after being several years in the big three shale oil fields, why is oil $105 a barrel?  Most people say there is a $10 premium for the turmoil in Egypt and/or Syria situations—general tension in the Middle East.  That’s still $95 oil.  So if we’re going to be energy independent in the foreseeable future, why is the price so high?  One gentleman expressed it as "unprecedented inelasticity in recent years".  In other words, despite the price increase the world supply hasn't risen to reduce that price increase - as would the price of an "elastic" commodity or product.  That sums it up. That is peak oil! 
Raymond James’ forecast made in 2012 for the oil price this year was $65 a barrel.  They were way off.  That’s why a friend of mine wrote that "oil price forecasting is like a leaky lifeboat".  The reason for that is that oil and gas are priced at the margins.  If you have a little bit too much, it may end up getting dumped on the market because zero is what’s pulling on it.  If there’s not quite enough, and everybody has to have it, then the price is pulled by infinity.  That all helps make predicting oil prices a real dismal science.
Q: What’s happening to your costs in your areas of operation?
A:  Costs may have come down a little, but not much.  The supply of oilfield services has kind of caught up with the demand, but prices haven’t come down much.  Water still remains in great demand and disposal costs are still high; the good news is that folks are recycling a lot more and working solutions for using brackish water.  Fuel costs are a large component and they’re high.  So costs just haven’t come down too much.  Frac sizes continue to increase in size and cost.
Q: Is it fair to say that the anti-fracking crowd isn’t having much impact on drilling in Texas?
A: Some reporting rules have changed.  Some of those folks are genuinely concerned about the scenario for leaks into clean water tables.  I think they might be misinformed as to the distance between the producing formation and the water formations, and about the casing and cement isolation that goes on, and that those must be in place to have successful fracturing jobs.  I think some folks are just looking for the perfect emotional vehicle to advance whatever "anti" agenda they might have - because who can be against clean drinking water and preserving our limited supply?  An impactful, emotion-inspiring movie can be the perfect vehicle to use to try to stop the development of shale oil or shale gas. 
Martin Payne has 32 years of experience encompassing most every aspect of the upstream oil and gas industry, was past chairman, Houston Chapter of the American Petroleum Institute, and member Society of Petroleum Engineers. He is also a believer in solar, wind and biomass - and all renewables.  In addition to active conventional and unconventional exploration he operates a small grass-fed beef business, experiments with wood gasification and sits on the board of the non-profit Useful Wild Plants Inc. (

Wednesday, August 22, 2012

Whither Peak Oil?

"Unprecedented inelasticity in recent years."
- a comment from "Mitch"

Sorry folks, it's been a while since we've posted!  It's not that there's no more Peak Oil - rather we've been busy with other things, and we've said quite a bit about the topic in the past.  Not much has changed, if anything.  But an update is warranted in order to address comments from friends and followers - comments such as "Gee, I guess Peak Oil has been postponed?", or "I guess we don't have to worry about Peak Oil anymore!"  Often they have a smile on their face ...

These comments come in the wake of a plethora of articles like:  Sad News for Peak Oil Disciples

So what's the thesis here, what are they talking about?  The gist is that the recent application of horizontal, multi-stage completions to shale oil plays, coupled with a future increase in Canadian tar sands oil will lead to record oil production rates for North America and lessen dependence on foreign oil; some go as far as to say that the USA will become energy independent.  So, no more problems with Peak Oil, huh?

With all due respect to the smart people making those comments, you have to wonder why current oil and gasoline prices (over $95/bbl, around $4/gallon) don't make more of an impression on them, compared to a few news stories on shale oil booms.  However, many people have been touched in a positive way by the recent shale gas and shale oil booms.  Those who live in South Texas, or West Texas, or North Dakota, or the eastern Ohio (or a number of other places around the country) have front row seats to the drilling activities which are providing jobs and business opportunities to virtually everyone in those places.  It you are ever in Carrizo Springs, Texas, drop by one of the few cafes at lunch time (if you can get a seat) and notice all the smiles around the room!  What fool would worry about there ever being not enough oil when you're in the midst of booms like these?

We would have to say that the confusion we have spoken of before is once again on the prowl.  And understandably so - how can anyone, even those of us who keep pretty close tabs on the "oil patch", sort through all of the stories and statistics?
So, if we have so much more oil production rate available now, why is oil currently so expensive?  Granted, things are getting more and more tenuous in the Middle East, but most analysts only allocate a $20 - $30/bbl premium for that worry.   Recall  when oil was $12/bbl (we do, only too well), as recently as 1999.  So?  Well, there hasn't been that much inflation (8X) since then!  So if Peak Oil has gone away, what gives?  Big Oil conspiracy?  We think not.  Something else is [still] going on.  See the quote from "Mitch" above, which expresses Peak Oil in a very few words.

Back in June an analyst wrote an article tweaking Dr. Colin Campbell's graphs.  (As you may recall, Dr. Campbell is one of the modern fathers of Peak Oil.).  It was a good article, but our response was this:

When you consider Peak Oil on the scale that it needs to be considered,
that of a ship executing a turn, then the graph of Dr. Campbell's
estimates is remarkably correct, and still plenty scary. A few million
barrels more per day in supply due to shale oil, other discoveries, a
few million barrels per day less in demand due to the worldwide
recession - these things are "noise" in the bigger picture - which is
shown with sufficient accuracy on both Campbell's and Deffeyes' graphs.

Shale oil and shale gas are important resources that need to be
developed. Natural gas needs to be utilized in vehicles. These things
won't "fix" Peak Oil. We need a lot fewer vehicles, a lot more mass
transit retrofits. We need a focus on conservation as well as new
energy supplies, both fossil and renewable. The good news is, these
things are happening - we just need to speed the efforts. And we need
to realize that these things are not mutually exclusive. They are part
of the "all of the above, silver BB solution" that
we need to continue to pursue, but at an accelerated rate. We waste
valuable time and resources arguing that we shouldn't be doing one,
should only do the other, etc. We need them all.

So, yes, a little more oil and a little less consumption, but they
amount to "noise" in the longer term view. Consider them temporary
reprieves. Consider them not an invalidation of Peak Oil, but rather
one more chance, a little more time to ramp up the actions which
Dr. Hirsch et al said could take 20 years, if severe consequences were
to be avoided.

Recently, one of the authors over at Seeking Alpha wrote a very succinct article explaining his continued bullishness on oil, as well as why he was bullish in the first place: 
EOG's CEO Mark Papa Is Still Bullish On Oil Prices, Should Investors Be Bullish On EOG?

The above article features a nice quote from Mr. Papa's recent conference call with analysts, wherein he does a high-level vetting of the shale oil plays, and further explains why it is unlikely that international unconventional oil and gas plays will take off anytime soon:

"Now I'll provide our views regarding macro hedging and the concluding remarks. Regarding oil, we still think the global supply-demand balance is tight, and we expect prices to strengthen throughout the remainder of the year. Two recent concerns I've heard from oil bears involve horizontal shale oil. One concern is will the U.S. create enough shale oil to affect global supply. EOG's forecast is an increase in the U.S. of 2 million barrels of oil per day by 2015, which, we believe, will not impact a 90 million barrel of oil a day global market. We think there are only 3 consequential horizontal oil plays in North America: the Eagle Ford, Bakken and Permian, and that all other alleged oil plays are either inconsequential on a national scale or really NGL plays.
The second concern relates to possible international horizontal oil shale plays and their potential impact on supply. My answer there is maybe it will happen, but it's not likely for another 10 years at least. Remember, it's been 10 years since horizontal drilling unlocked shale gas in the Barnett, and no one yet has found commercial shale gas outside North America. Also, the key to commercial shale oil or gas is the ability to drill thousands of wells at low per-well cost, and whether this can be done internationally is likely problematic."
So, let's look at the two main components that are touted, currently, regarding growth in oil supply:

Consequential Shale Oil Plays (Eagle Ford, Bakken, Permian)
The production in these plays is changing (increasing) so rapidly that even when you have access to lots of data, you still get behind.  Also, we've seen recent articles published by even the Wall Street Journal (Expanded oil drilling helps US wean itself from Mideast, 6/27/2012) that are far out of date with respect to current rates.

Here are what we believe to be some hard datapoints:

Bakken:  produced 594,349 BO/D in June, 2012

From Oil & Gas Journal, Bakken's maximum potential oil production rate explored:  This article analyzes the total Bakken resource base and the logistics required in order to generate certain peak production rates, as well as one of the leading operator's reserve estimates.  Three models look at 1.0, 1.5 and 2.0 MMBO/D peak production rates by 2020.  According to the article, rates above 1.0 MMBO/D might be difficult to achieve by 2020, due to logistical constraints. 

For comparison, Prudhoe Bay (on the North Slope in Alaska) has been the USA's largest field to date, producing 13 billion barrels, and peaking at a rate of 1.5 MMBO/D from 1980 - 1988.

Depending on which estimate you use, the Bakken has been touted at having 4 - 24.3 billion barrels of recoverable crude.  Reserve numbers on the upper end of these estimates would "jive" with peak production rates of around 2 MMBO/D, based on observations from around the world.

Eagle Ford:   According to an article published in the Wall Street Journal (1/3/2012), the Eagle Ford "produced 109,000 BO/D in August, 2011 and is expected to quadruple in next 5 years" (so that would imply around 440,000 BO/D by 2016).  But the graphs from the Railroad Commission of Texas show the total crude and condensate to have averaged about 270,000 BO/D in the first 5 months of 2012.

The above link is only updated through May, 2012, currently.  Also, it shows totals for the first 5 months of 2012, rather than monthly entries.  Generating an average production from this data can be misleading, as averages are not useful in characterizing a rapidly growing series.  A Railroad Commission representative told us in July that the Eagle Ford was producing 700,000 BO/D, but that number likely included NGL's.  It's not hard data, but an educated guess would be that the Eagle Ford is producing around 500,000 BO/D (crude + condensate), currently.  It's easy to see how confusion abounds. 

Permian:  The "Permian" is the catch-all descriptor of horizontal and vertical, Permian Basin plays (not to be confused with the historic Permian plays) - namely, the Wolfberry, Avalon, Bone Springs, Wolfcamp, more. An industry source tells us they believe the Bone Spring and Wolfcamp will average about 185,000 BO/D in 2012.


A recent analysis by the firm Wood MacKenzie may provide the most realistic estimate of current and projected production rates from the shale oil plays. This work was quoted in the Oil & Gas Journal, September 3, 2012:
  • Current (2012) rate from "tight oil":  1.6 MMBO/D
  • Projected 2020 rate:  4.2 MMBO/D, with 1.3 MMBO/D from the Bakken and 1.3 MMBO/D from the Eagle Ford (correctly includes condensate, but not NGL).  The balance (1.6 MMBO/D) would come from the Permian plays (440,000 BO/D), Niobrara, Utica, Mississippian, Austin Chalk and Monterrey.
So, the bottom-line is that these unconventional, aka shale oil, aka tight oil plays are believed to be capable of providing an incremental 2.6 MMBO/D by 2020.

Growth in Canadian Tar Sands Production
So, in addition to the shale oil (Eagleford, Bakken and Permian, primarily) there is the "tar sands growth" story.  Collectively, the unconventional oil and tar sands growth stories make up the overall, "North American energy independence" story. (sans Mexico, of course -  Mexico was conveniently removed from North America in the articles we have reviewed).  So, what about the tar sands contribution?

Well, back in 2009 we wrote about the dashed hopes for scaling up the Alberta tar sands, about how expectations/projections continually were "written down", year after year:

Well, that was 3 years ago.  Where are the actuals now, compared to the above predictions?  According to CAPP (the Canadian Association of Petroleum Producers, 6/5/2012), the 2011 actual production from the tar sands was 1.6 MMBO/D.  So, with billions of dollars in expansion and near record oil prices, production has increased about 0.3 MMBO/D since 2008, ie in 3 years.  This 6/5/2012 report goes on to project  far greater outputs ... far in the future (much like other long term projections done in the past), namely 5.0 MMBO/D by 2030.  Here's the CAPP table from 6/5/2012:

Remember, production has only climbed from 1.3 MMBO/D to 1.6 MMBO/D in 3 years, and this in a environment of near record oil prices.  The "at least 2 MMBO/D by 2018" from the 7/2009 prediction sounds do-able, but another 3 MMBO/D on top of that?  Recall that 5.0 MMBO/D was the prediction for 2015, back in 2008.  The rock is certainly there, it is a matter of logistics, energy sources, water and environmental issues.  They have certainly convinced the Chinese and Koreans to invest (also from the CAPP report, looks like $18.4 billion, Canadian):

Bottom-line:  An incremental 1.6 MMBO/D from the Canadian tar sands by 2020, according to the CAPP projections.  So, it appears that our oil exporter from the North is likely to be able to continue to supply the US at rates at or above those in the past.

Overall, the new shale oil plays and the Canadian tar sands appear to be capable of adding an incremental - North American - production rate of around 4.2 MMBO/D, by 2020.

Our other geographic partner in North America - Mexico - is another story.  Mexico is expected to have a difficult time maintaining its current rate of 2.5 MMBO/D, according to an article in the September 2012 issue of the Oil and Gas Investor. Mexico's production dropped precipitously in 2004 - 2009, when the giant field Cantarell declined from 2.1 MMBO/D to less than 500,000 BO/D.  A substantial and successful effort by Pemex has stemmed the declines for a time, and held production at 2.5 MMBO/D, recently.  However, they have been running their Cantarell-like field, KMZ, in a hard fashion, and there is worry it can't keep up.  Their Chicontepec onshore operations continue to disappoint, producing only 70,000 BO/D, despite $1.5 billion invested on an annual basis.  A recent deepwater discovery may have found 400 MMBO, but it may take a decade to bring this on production, based on the timeline from Shell's nearby Perdido Project.

According to the EIA, in 2011 the USA produced 5.7 MMBO/D, and consumed 18.8 MMBO/D. (The world consumes about 90 MMBO/D).  The USA imported 8.4 MMBO/D in 2011.  (The difference between total consumption and production plus imports is made up via NGL and other extraction gains.  As previously discussed, NGL is not currently comparable to crude and condensate for the purposes of solving what would be an acute transportation crisis in the USA - due to to the lack of current infrastructure and vehicles.)

So, the incremental production projected to be available by 2020 from the shale oil plays - 2.6 MMBO/D - should be able to reduce our imports from 8.4 MMBO/D down to "only" 5.8 MMBO/D.  This assumes oil production from other domestic fields is flat (ie, any declines are offset by other discoveries - not necessarily a good bet, based on the curve below), and that the market (consumption) stays the same (ie, doesn't increase or decrease).

Bottom-line:  The shale oil plays represent an opportunity to reduce foreign oil imports by 30 % or more, thereby substantially reducing the balance of payments (outflow of dollars from the USA).  At the same time these plays will provide opportunities for jobs and small businesses across the country at a time when such opportunities are rare.  The shale oil plays will reduce but not eliminate our reliance on foreign oil.  Should a supply disruption occur over the next decade, we will be better off having this production than not.  The natural gas and NGL from these plays will provide high-quality, low-carbon heat energy for electricity as well as feedstock for plastics - which could help jumpstart manufacturing.  Overall, these plays don't solve the much larger issue of Peak Oil, but they do help "buy time".  They grant us a reprieve, a short stay of execution, a chance to avoid more of the "severe consequences" outlined in the Hirsch Report.  Namely, they give us more a little more time to accelerate the implement conservation, mass transit solutions and natural gas vehicles and infrastructure, as well as to continue alternative energy and conservation research efforts, while we also continue the development of both fossil and renewable energy sources.  Our challenge will be to use this time wisely, making progress on the all of the above, while we seek to avoid the time-wasting divisiveness that has tended to characterize so many discussions about energy and conservation.

Endnote:  So what's to be expected, price-wise?  If an incremental 4.2 MMBO/D is brought to the market by 2020 and this capacity is not offset by an increase in demand or a drop in supply elsewhere, then oil prices could plummet.  Some would be further convinced there was "no such thing as Peak Oil" (but this would still not be the case).  However, much has been written about drops in exports that are likely between now and 2020, including a recent Citigroup article.  Like rust, decline never sleeps - Ghawar in Saudi Arabia is getting older by the day.  Earlier IEA forecasts counted on finding "a number of Saudi Arabias" in order to keep the world supplied over this period.  And then there is the possibility for some other severe supply disruption in the Middle East.

Sunday, January 8, 2012

The Perennial Search for Perennial Grains

Most would agree that there is no single solution to the challenges brought about - currently and in the future - by inexorably declining, worldwide oil production rates, or Peak Oil.  As Steve Andrews, one of the co-founders of ASPO-USA likes to say - there are no Silver Bullets, only Silver BB's.

So, Silver BB's - also known as partial solutions - can likely be lumped into two categories:  Substitution and Conservation.  It is becoming increasingly apparent how dominant the Conservation category will be.  After only a few years, it is obvious that we can't ever produce enough biodiesel and ethanol to create what Jim Kunstler would deride as "Happy Motoring As Usual".  And even if we could produce enough, it is obvious from a food supply standpoint that we should not attempt to totally replace gasoline and diesel with ethanol and biodiesel.  Nevertheless, even these maligned fuels have niches - they are Silver BB's.  Meanwhile, cellulosic ethanol and algal oil appear to be ever on the horizon, much like fusion or better batteries.  Maybe one of these will experience a true breakthrough, but once again, trying to totally replace the current consumption of gasoline and diesel with these fuels is likely the incorrect path.

This brings us to the topic at hand, a Silver BB of both Conservation and Substitution, and the focus of various research and development efforts, namely "the perennial search for perennial grains".  Why perennial grains?  Primarily to eliminate the fuel, fertilizer and herbicide required for planting, cultivating and growing plants which must be seeded each year - also known as annual crops.  And of course there are other reasons why staying out of the pasture would be a good thing - with topsoil loss being chief among them.  Essentially all of our current grain crops - wheat, corn, oats, barely, rye, millet - require seedbed preparation, weed control and fertilization in order to become established and yield a crop - all within a few months.  The hope is that perennial crops, while they might yield far less, would require a lower energy investment per pound of food produced.

So, what's the status on this perennial grain effort?  A substantial effort is spearheaded by The Land Institute, whose principal, Wes Jackson, recently spoke to ASPO - USA.  Mr. Jackson and his group have been working this problem for decades - a dedication that deserves applause.  However, he explains that the creation of perennial wheat might take another 25 years, and that creation of perennial crops in general might require an incremental ... $1.6 billion!  Meanwhile, a recent success of theirs is Kernza, a relative of wheat, native to Turkey and Afghanistan.  Kernza is touted as currently having yields of around 15 % of wheat.  Importantly, the yield advances that have been made to date have been via selective breeding rather than genetic engineering.  Nevertheless, Mr. Jackson mentions that Kernza as a commercial crop may be ten years in the future.

So, where to find some other plants that might yield better returns, faster ... and for less than billions?  One might guess that plants that are already native or naturalized would be a good place to start looking for domestic solutions.  But what is amazing is how little we know about our native and naturalized plants.  Sure, there is a lot of information out there, but there is no central aggregation of that information such that it can be assimilated into research and development, as well as conservation, education and wise use.  What is needed is a single source which documents all known uses - from prehistoric to modern.

Enter The Useful Wild Plants Project.  For over 30 years, this effort has flown under the radar of most of the public.  To date this group has published three archive-quality volumes, and the fourth will soon go to the printer.  Much of the data is already gathered for the remainder of the volumes, however the effort must be accelerated in order to finish the 14 volume set as soon as possible.

Here's a case-in-point:  Chasmathium latifolium, common name Inland Sea Oats.  It is native in the shady creekbanks around Austin, and it ranges throughout much of the Southeastern US.  It is already a perennial grain!  And I likely wouldn't know about it if it weren't for The Useful Wild Plants Project.

Inland Sea Oats is also commonly used as a drought and shade tolerant landscape plant.  Recently, I noticed a neighbor had, over several years, established two small beds of Chasman­thium latifolium. The beds are intended as a landscape accent, not food, but they made me think, here is a place we could get a semi-realistic yield number, because it is a mature stand and the plants are about as densely spaced as possible. And one of the beds is square, the other semi-triangular, so it is easy to calculate the area.

So, a month or so ago we harvested the seedheads. We had two boys use the “walk through and scrape the seeds off between your fingers into a shoulder bag” method. It took 30 minutes to harvest 148 sq. ft.

I dried the seed heads for a few weeks, and then threshed them using the “Ellison taped blender blades” method from UWP Newsletter 19. I winnowed and screened them and was con­servative as I did not want to lose much seed. A few years ago I purchased a number of small framed screens. The 10/64" round hole screen worked best. It let some hulls through­. The secret to minimizing this is to watch what you are doing, shake it a few times, stop when you don't see any more seeds and discard the hulls. More shakes will lead to more hulls in the product. The threshing took 15 minutes, and I spent 45 minutes on winnowing/screening.  It shouldn't have taken so long - I was piddling and trying to not lose any seeds. Basically, it took about an hour for both.

We started off with 1½ gallons of seed heads, and this, by coincidence, weighed 1 lb 8 oz. The cleaned seeds occupied 6.5 oz. by volume and weighed 5 oz.

This has been a year of record heat. The owner watered to keep her oak trees alive, so the plants got some relief. Neverthe­less, the seeds were half the size of those in a normal year. The yield could easily be twice this in a normal year.

So, here is a perennial grain that is ready today! Of course, the above calculates out to only about 92 pounds per acre.  In the summer of 2011, in one area of North Dakota the wheat yield was 43 bushels/acre (or 2580 lb/ac at 60 lb/bu).  (In 2010, the wheat yield was 65 bushels.)  But, these C. latifolium yields are without fertilization or weed control and under extreme conditions. The important aspects are that this crop is already “perennialized”, it is drought tolerant and it is a native which is already accustomed to our ecosystem in general.  Further, yield improvement is likely a lot simpler than turning an annual into a perennial.

How many other prospective perennial grains might there be?  The completion of The Useful Wild Plants Project must be accelerated so that we can begin to discover and develop other potential perennial grains, as well as Silver BB solutions to other Peak Oil challenges.

Tuesday, September 20, 2011

Marcellus Shale reserves "only" 43 TCF ...

On August 23, 2011, the United States Geologic Survey (USGS) submitted 84 trillion cubic feet (84 TCF) as their estimate for undiscovered, recoverable natural gas in the Marcellus Shale, located primarily in Pennsylvania, New York and West Virginia.  Additionally, they believe 3.4 billion barrels of natural gas liquids will accompany that 84 TCF. (for reference, the great East Texas Field - discovered in 1930, and which helped the Allies win World War II - will produce about 5.2 billion barrels.)

The USGS pointed out that in this new analysis, they were increasing their estimates of recovery from the Marcellus, since their last report.  They actually publish range of estimated recoveries, ranked by the probability or confidence in a given estimate. So, a 50 % confidence level, or N50, is similar to the mean value, or the likelyhood that half the estimates would produce more than that amount, and half less.  Such is the 84 TCF number which the USGS quoted in their first paragraph.

USGS Marcellus Press Release

Curiously, there seem to be many opponents to natural gas, these days.  Some of them would likely tell you they are just opposed to shale gas, not natural gas in general.  But a more in-depth analysis of their positions would show that they just don't like anything except renewables.  So, some of these folks were quick to spin what the USGS termed an increase in estimated recoveries for the Marcellus, into a dramatic decrease!  One opponent of natural gas was quick to focus only on the very highest probability, and lowest reserve number, that being 43 TCF.  Another writer smugly commented, "There may not be as much natural gas in our future as some claim."

Additionally, neither of the two articles linked above happened to mention the associated 1.6 billion to 3.4 billion barrels of natural gas liquids (N95 to N50 estimates)!  That's enough liquid hydrocarbons to qualify the Marcellus as what's known as a "giant" oilfield.  How could they leave out that detail if they were trying to be objective, whatsoever?  The answer can only be that they were not making any attempt to be objective; rather, they were trying manipulate public opinion.  One of the articles also forgot to mention that there was a N5, or 5 % probability of having 144 TCF and 6.2 billion barrels recoverable from the Marcellus. Clearly, these folks want to suggest to the casual observer that "there just isn't very much natural gas in shale plays."  After all, how much could only 43 of something be???

Well, let's look at that.  Some of the folks writing these articles like to use the entire domestic natural gas consumption as the dividend, in doing their comparisons. And they fail to include that multi-billion barrel NGL production that comes along with the gas.  Is that a fair way to look at it?  After all, this Marcellus is a relatively new discovery (2004), and as such it is incremental or additive to the reserves prior to that point.

But let's look at "only" 43 TCF:  using 1 mcf = 1 mmbtu of heat energy (approximation for methane, the primary component of natural gas), 293 kwh/mcf, a combined-cycle gas turbine generation plant efficiency of 57 %, and 570 MW/coal power plant (594 coal plants in 2009, with 338,000 MW of total capacity), we find that 43 TCF could replace the average coal power plant for ... 1430 years.  Or, that 43 TCF could replace ALL 594 coal power plants for ... 2.4 years.  Oh, and then you still have the 1.6 BILLION barrels of natural gas liquids (ethane, propane, butane, etc.) to heat homes, make plastic, even run in vehicles - essentially to use in every application where natural gas can be used, plus a few more.  (Total production from the giant Prudhoe Bay Field in Alaska, has been about 11 billion barrels to date, for reference.)

So, even 43 TCF and 1.6 billion barrels of NGL comprise an awful lot of lower carbon, comparatively clean energy.  Further, those are the low estimates, not the mean, and the mean is about twice those amounts.  It makes one wonder,  "What is going on with all these anti-natural gas efforts?".  We'll attempt to take that up in a future article.

In closing, one might wonder, "Does the Marcellus or the Eagleford or the Bakken - or all the shale gas and shale oil plays taken together - eliminate the paradigm shift of Peak Oil?"  Unfortunately not.  However, these plays will mitigate, to some degree, the effects of Peak Oil.  They are very important in that regard; namely, they will somewhat reduce the "severe consequences" mentioned by Hirsch, the Bundeswehr and others.  But they will only do so if we can quickly integrate natural gas and NGL into the transportation sector, while we simultaneously work on conservation, efficiencies, mass transit retrofits, renewables and every other partial solution.

Note:  Our calculations on the original posting were incorrect - we omitted a "24 hours in a day" factor, yielding an incorrect 34,000 years, versus a more correct 1430 years, for running a single coal plant with 43 TCF (43 TCF being the USGS' N95 estimate of reserves from the Marcellus).  Dividing that number by the 594 coal plants in existence in 2009 indicates that the Marcellus alone could run all of the nation's coal power plants for 2.4 years, not 57 years.   We did have a third party do a quick check on the calculations before the original posting, but evidently they missed the error, as well.  Many thanks to commenter Nate for correcting our miscalculation.  (Nate was gracious, btw, and came up with 3 - 4 years, arriving at that answer in a slightly different, and probably more accurate method.)

We shouldn't have been off by an order of magnitude plus, but of course these calculations are not realistic, anyway.  The Marcellus would never be expected to replace all the coal fired power plants, nor would that be physically or economically possible.  The point is, the Marcellus has huge natural gas reserves, along with giant-class natural gas liquids (NGL) reserves.  Taken together, the natural gas and NGL from the Marcellus and other developing shale gas and shale oil (not be confused with oil shale) plays cannot solve Peak Oil;  however, if we use the resources from these unconventional plays wisely, these plays can help mitigate the serious transportation problems which will impact every facet of our lives, as Peak Oil becomes manifest in the United States. 

Not there when you need it - Texas wind energy fails during power emergency

First let us say, we are supporters of wind energy, solar pv, and solar thermal energy ... as well as fossil fuel and nuclear energy sources.  We support what makes long-term and short-term economic sense, with consideration for the environment as well.  And we realize that not everything makes economic sense, initially.  Often, in any fledgling industry, "loss leaders" and development time are required before economic benefits are realized.  However, folks who exclusively support "clean energy" or "renewables" need to realize the limitations thereof - both from an economic standpoint and from an absolute "energy availability" standpoint.

Here's a good example:

Texas has 10,135 megawatts (MW) of installed wind generating capacity, nearly three times that of any other state.  On August 24, 2011, ERCOT, the state's grid operator, declared a power emergency due to the excessive electrical demands brought about by the extreme temperatures.  At that time, this 10,135 MW wind generation capacity was only able to muster 880 MW, or about 8.7 % of the capacity.  Since low winds are the result of high atmospheric pressure conditions, which in turn result in high temperatures, and thereby create record electrical usage ... this scenario can be expected over, and over again.  This is why natural gas or other conventional fossil fuel or nuclear generation must be "paired" with wind generation, in order to call it "real" capacity. 

Source of story, here, courtesy Garrett M.:

National Review, 8-29-2011: Texas Wind Energy Fails, Again.

Monday, June 13, 2011

Great headset, with mike, for your iPhone (these are hard to find in stores)

Perhaps you saw where the World Health Organization said that holding a cell phone close to your head "might cause cancer".  Who knows (no pun intended), but it makes sense that holding a device emitting so much microwave frequency energy right next to your head is probably not a good idea.

So you would think it would be easy to find a headset, with a mike, for your iPhone.  Not so!  It took us a long time to find this great product, and we have test driven it for over a year, and given away a couple of them.  I have spoken with many other folks who have looked and looked on the racks in stores, for something like this.  You can find Bluetooth devices (could be problematic, as well), ear buds (which tend to fall out of your ears), etc., but it is just plain difficult to find a headset with a mike, in a store.  The cord is really not that difficult to get used to, and the volume goes way up on this unit.  You can wear it slightly in front of your ears so you can hear what is going on around you, at the same time.  Neat product, so we feature it here:

They were $50, now they are only $24.95, so we are going to stock up on a few more, in case they go away, like great products sometimes do ...

A snip from 2009, Mechanical Engineering magazine

Recently, in cleaning out some articles we found this piece of clarity, from the August 2009 issue of Mechanical Engineering, the magazine of the American Society of Mechanical Engineers (ASME):

excerpts from: the Oil Age, by Frank Wicks

"Most oil producing countries have passed peak production.  The United States had been an exporter until production peaked in 1970.  It now relies on imports for about 60 % of the 20 million barrels per day that the country consumes."

"Another rough estimate is that the world started the Oil Age with about two trillion barrels of recoverable oil.  About half of that has been extracted.  The remaining trillion barrels represent about a 30 year supply at the current rate of consumption and will be much more difficult to recover."  [MP Note:  Unfortunately, it won't be possible to extract the last trillion barrels over 30 years, due to the physics of flow through porous media; so the rate of consumption will have to drop, each year.  A good guess would be that the last trillion barrels might last around 80 years - and in order to do that, the rate of extraction will have to drop continuously, and precipitously, once again due to physical constraints, not due to man.]

"The fundamental problem is that oil is too good.  It is required for most things that we do.  The alternatives are mostly inferior or less acceptable.  Adapting to the next half and the end of the Oil Age may be the greatest challenge our civilization has ever had to face."   [emphasis is ours]