tag:blogger.com,1999:blog-86842885465394248042024-03-13T11:45:27.854-07:00Peak OpportunitiesThose of us in the “Peak Oil Community” - as it is called - believe that Peak Oil will lead to a paradigm shift on the order of the Industrial Revolution. And we generally believe that Peak Oil is “upon us”. But with substantial challenges, come substantial opportunities …MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.comBlogger47125tag:blogger.com,1999:blog-8684288546539424804.post-74517726092683334462013-07-29T16:55:00.001-07:002013-07-29T16:57:35.452-07:00Steve Andrews interviews Martin Payne: Is Peak Oil Dead?<!--[if gte mso 9]><xml>
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<div class="MsoNormal" style="margin-bottom: 6.0pt; margin-left: 1.0in; margin-right: 0in; margin-top: 0in; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;"><span style="mso-spacerun: yes;"> </span>By Steve Andrews;
Peak Oil Review—July 29, 2013</span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-size: 8.0pt;"><br />
</span><i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">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?</span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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?</span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-line-height-alt: 1.0pt; mso-outline-level: 1;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">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.</span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-line-height-alt: 1.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">It’s hard
<i style="mso-bidi-font-style: normal;">not</i> 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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">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? </span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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 <i style="mso-bidi-font-style: normal;"><u>and</u></i> 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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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.</span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">Q: So the peak oil problem isn’t dead yet, as has been shouted in
a few headlines? </span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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.</span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">Q: What about the notion we hear that the US will be energy independent
by roughly the end of the decade?</span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">A: There are some, not many,
who promulgate the idea that we’re going to be energy independent. Bob
Tippee, editor of the <i style="mso-bidi-font-style: normal;">Oil & Gas
Journal</i>, wrote an editorial about that, criticizing the boosters.<span style="mso-spacerun: yes;"> </span>“Energy independence is an appealing
idea.<span style="mso-spacerun: yes;"> </span>So is perpetual youth.<span style="mso-spacerun: yes;"> </span>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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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.” </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">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?</span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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.</span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">Q: How does the nagging high price of oil fit with your
understanding of the viewpoint of the oil optimists?</span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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! </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">Q: What’s happening to your costs in your areas of operation?</span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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.</span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: Arial; font-size: 11.0pt;">Q: Is it fair to say that the anti-fracking crowd isn’t having much
impact on drilling in Texas?</span></i></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; mso-outline-level: 1;">
<span style="font-family: Arial; font-size: 11.0pt;">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. </span></div>
<div class="MsoNormal">
<i style="mso-bidi-font-style: normal;">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. (</i><a href="http://www.usefulwildplants.org/"><i style="mso-bidi-font-style: normal;">www.usefulwildplants.org</i></a><i style="mso-bidi-font-style: normal;">).</i></div>
MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-67019463167773311502012-08-22T12:03:00.000-07:002012-09-14T07:11:07.584-07:00Whither Peak Oil?<div style="text-align: center;">
"<i>Unprecedented inelasticity in recent years.</i>"</div>
<div style="text-align: center;">
- a comment from "Mitch"</div>
<br />
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 ...<br />
<br />
These comments come in the wake of a plethora of articles like: <a href="http://business.financialpost.com/2012/06/12/sad-news-for-peak-oil-disciples/">Sad News for Peak Oil Disciples</a><br />
<br />
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?<br />
<br />
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?<br />
<br />
We would have to say that the <a href="http://www.energybulletin.net/node/39308">confusion we have spoken of before</a>
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?<br />
<br />
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.<br />
<br />
Back in June <a href="http://www.energybulletin.net/stories/2012-06-15/modifying-hubbert%E2%80%99s-model-peak-oil-account-rise-production-due-higher-prices">an analyst wrote an article tweaking Dr. Colin Campbell's graphs</a>. (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:<br />
<br />
<div class="post-message publisher-anchor-color " data-role="message">
<div style="text-align: center;">
<span style="color: red;">When you consider Peak Oil on the scale that it needs to be considered, </span></div>
<div style="text-align: center;">
<span style="color: red;">that of a ship executing a turn, then the graph of Dr. Campbell's </span></div>
<div style="text-align: center;">
<span style="color: red;">estimates is remarkably correct, and still plenty scary. A few million </span></div>
<div style="text-align: center;">
<span style="color: red;">barrels more per day in supply due to shale oil, other discoveries, a </span></div>
<div style="text-align: center;">
<span style="color: red;">few million barrels per day less in demand due to the worldwide </span></div>
<div style="text-align: center;">
<span style="color: red;">recession - these things are "noise" in the bigger picture - which is </span></div>
<div style="text-align: center;">
<span style="color: red;">shown with sufficient accuracy on both Campbell's and Deffeyes' graphs.</span></div>
<div style="text-align: center;">
<span style="color: red;"><br /></span></div>
<div style="text-align: center;">
<span style="color: red;">Shale oil and shale gas are important resources that need to be </span></div>
<div style="text-align: center;">
<span style="color: red;">developed. Natural gas needs to be utilized in vehicles. These things </span></div>
<div style="text-align: center;">
<span style="color: red;">won't "fix" Peak Oil. We need a lot fewer vehicles, a lot more mass </span></div>
<div style="text-align: center;">
<span style="color: red;">transit retrofits. We need a focus on conservation as well as new </span></div>
<div style="text-align: center;">
<span style="color: red;">energy supplies, both fossil and renewable. The good news is, these </span></div>
<div style="text-align: center;">
<span style="color: red;">things are happening - we just need to speed the efforts. And we need </span></div>
<div style="text-align: center;">
<span style="color: red;">to realize that these things are not mutually exclusive. They are part </span></div>
<div style="text-align: center;">
<span style="color: red;">of the "all of the above, silver BB solution" that</span></div>
<div style="text-align: center;">
<span style="color: red;">we need to continue to pursue, but at an accelerated rate. We waste </span></div>
<div style="text-align: center;">
<span style="color: red;">valuable time and resources arguing that we shouldn't be doing one, </span></div>
<div style="text-align: center;">
<span style="color: red;">should only do the other, etc. We need them all.</span></div>
<div style="text-align: center;">
<span style="color: red;"><br /></span></div>
<div style="text-align: center;">
<span style="color: red;">So, yes, a little more oil and a little less consumption, but they </span></div>
<div style="text-align: center;">
<span style="color: red;">amount to "noise" in the longer term view. Consider them temporary </span></div>
<div style="text-align: center;">
<span style="color: red;">reprieves. Consider them not an invalidation of Peak Oil, but rather </span></div>
<div style="text-align: center;">
<span style="color: red;">one more chance, a little more time to ramp up the actions which</span></div>
<div style="text-align: center;">
<span style="color: red;">Dr. Hirsch et al said could take 20 years, if severe consequences were </span></div>
<div style="text-align: center;">
<span style="color: red;">to be avoided.</span></div>
<br />
Recently, one of the authors over at <i>Seeking Alpha</i> wrote a very succinct article explaining his continued bullishness on oil, as well as why he was bullish in the first place:<span style="font-weight: normal;"><span style="font-size: small;"><span style="font-family: inherit;"><span itemprop="name"> </span></span></span></span><br />
<span style="font-weight: normal;"><span style="font-size: small;"><span style="font-family: inherit;"><a href="http://seekingalpha.com/article/821541-eog-s-ceo-mark-papa-is-still-bullish-on-oil-prices-should-investors-be-bullish-on-eog"><span itemprop="name">EOG's CEO Mark Papa Is Still Bullish On Oil Prices, Should Investors Be Bullish On EOG?</span></a></span></span></span><br />
<br />
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:<br />
<br />
<blockquote>
<blockquote class="quote">
"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.<br />
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."</blockquote>
</blockquote>
So, let's look at the two main components that are touted, currently, regarding growth in oil supply:<br />
<br />
<span style="font-size: large;"><b>Consequential Shale Oil Plays (Eagle Ford, Bakken, Permian)</b></span><br />
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 <i>Wall Street Journal </i>(<u>Expanded oil drilling helps US wean itself from Mideast</u>, 6/27/2012) that are far out of date with respect to current rates.<br />
<br />
Here are what we believe to be some hard datapoints:<br />
<br />
<b>Bakken</b>: produced 594,349 BO/D in June, 2012 <cite> </cite><br />
<a href="https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf"><cite>https://www.dmr.nd.gov/oilgas/stats/historical<b>bakken</b>oilstats.pdf</cite></a><cite><br /></cite><br />
<br />
From <i>Oil & Gas Journal</i>, <u>Bakken's maximum potential oil production rate explored</u>: 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. <br />
<br />
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.<br />
<br />
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.<br />
<br />
<b>Eagle Ford</b>: According to an article published in the <i>Wall Street Journal </i>(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.<br />
<br />
<a href="http://www.rrc.state.tx.us/eagleford/EagleFordOilProduction.pdf">http://www.rrc.state.tx.us/eagleford/EagleFordOilProduction.pdf</a><br />
<br />
<br />
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. <br />
<br />
<b>Permian: </b>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.<br />
<br />
<b>Bottom-Line: </b><br />
<br />
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 <i>Oil & Gas Journal</i>, September 3, 2012:<br />
<ul>
<li>Current (2012) rate from "tight oil": 1.6 MMBO/D</li>
</ul>
<ul>
<li>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.</li>
</ul>
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.<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-0b2CjWsVDsc/UDUrwfFHsyI/AAAAAAAAAXo/2c9MkRTsyVo/s1600/8-20005.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><br /></a></div>
<span style="font-size: large;"><b>Growth in Canadian Tar Sands Production</b></span><br />
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?<br />
<br />
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:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-Sg0ciIGhp0U/UEq8HsIo_gI/AAAAAAAAAYE/NJ2BsKbPidY/s1600/GCAGSPO011.GIF" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="475" src="http://1.bp.blogspot.com/-Sg0ciIGhp0U/UEq8HsIo_gI/AAAAAAAAAYE/NJ2BsKbPidY/s640/GCAGSPO011.GIF" width="640" /></a></div>
<br />
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:<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-tIFRWeJOyqk/UE4uHVTQi5I/AAAAAAAAAYY/PBshFcRs-E4/s1600/8-30002.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="268" src="http://3.bp.blogspot.com/-tIFRWeJOyqk/UE4uHVTQi5I/AAAAAAAAAYY/PBshFcRs-E4/s640/8-30002.gif" width="640" /></a></div>
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):<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-KM3lOUfkfqA/UE4ukatLl-I/AAAAAAAAAYg/ZGoO7MQrNhM/s1600/8-30003.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="414" src="http://4.bp.blogspot.com/-KM3lOUfkfqA/UE4ukatLl-I/AAAAAAAAAYg/ZGoO7MQrNhM/s640/8-30003.gif" width="640" /></a></div>
<br />
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.<br />
<br />
<br />
<span style="font-size: large;"><b>Summary</b></span><br />
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.<br />
<br />
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 <i>Oil and Gas Investor</i>. 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 <a href="http://peakopps.blogspot.com/2009_01_01_archive.html">Perdido Project</a>.<span style="font-size: large;"><b> </b></span></div>
<div class="post-message publisher-anchor-color " data-role="message">
<span style="font-size: large;"><b><br /></b></span>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.)<br />
<br />
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).<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-Wz5hJIenAYY/UE5Lju_1CtI/AAAAAAAAAY0/eGnkqVbPrHw/s1600/9-10004.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="256" src="http://4.bp.blogspot.com/-Wz5hJIenAYY/UE5Lju_1CtI/AAAAAAAAAY0/eGnkqVbPrHw/s640/9-10004.gif" width="640" /></a></div>
<br />
<br />
<b>Bottom-line:</b> 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 <a href="http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf">Hirsch Report</a>. 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.<br />
<br />
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 <a href="http://www.bloomberg.com/news/2012-09-04/saudi-arabia-may-become-oil-importer-by-2030-citigroup-says-1-.html">Citigroup article</a>. 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.<br />
<br />
<br />
<br />
<br />
<br />
<br /></div>
MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-31657332091919250622012-01-08T13:18:00.000-08:002012-01-08T17:47:32.932-08:00The Perennial Search for Perennial GrainsMost 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.<br />
<br />
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 <i>should not</i> 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. <br />
<br />
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.<br />
<br />
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 ... <a href="http://energybulletin.net/stories/2011-12-18/wes-jackson-perennial-revolution-agriculture">$1.6 billion</a>! 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 <a href="http://www.dtnprogressivefarmer.com/dtnag/view/ag/printablePage.do?ID=NEWS_PRINTABLE_PAGE&bypassCache=true&pageLayout=v4&vendorReference=7ea925fd-c4be-4be9-b3cd-263b87ff6247__1316604097035&articleTitle=Looking+for+Perennial+Answer&editionName=DTNAgFreeSiteOnline">15 % of wheat</a>. 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.<br />
<br />
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.<br />
<br />
Enter <a href="http://usefulwildplants.org/">The Useful Wild Plants Project</a>. 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.<br />
<br />
Here's a case-in-point: <i>Chasmathium latifolium</i>, 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.<br />
<div class="separator" style="clear: both; text-align: center;"></div><br />
<div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-Hw-pHPSjP00/TwoTctp9ejI/AAAAAAAAAVg/RDIrTy-Fc3w/s1600/InlandSeaOatsSeeds.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="http://3.bp.blogspot.com/-Hw-pHPSjP00/TwoTctp9ejI/AAAAAAAAAVg/RDIrTy-Fc3w/s320/InlandSeaOatsSeeds.jpg" width="218" /></a></div><br />
<div class="separator" style="clear: both; text-align: center;"><a href="http://2.bp.blogspot.com/-xRtugzARN4g/TwoUK8QYyiI/AAAAAAAAAVw/ilhRS_hCHG8/s1600/InlandSeaOatsMap.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="277" src="http://2.bp.blogspot.com/-xRtugzARN4g/TwoUK8QYyiI/AAAAAAAAAVw/ilhRS_hCHG8/s320/InlandSeaOatsMap.jpg" width="320" /></a></div><br />
<div class="MsoNormal" style="text-align: left;"><div class="separator" style="clear: both;">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 <i>Chasmanthium latifolium</i>. 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.</div></div><div class="MsoNormal"><br />
<div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-IXuCK1VU82Y/TwoUxhjU4cI/AAAAAAAAAV4/F8lXE8pFH-4/s1600/Plants+2011+009.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="http://4.bp.blogspot.com/-IXuCK1VU82Y/TwoUxhjU4cI/AAAAAAAAAV4/F8lXE8pFH-4/s320/Plants+2011+009.jpg" width="320" /></a></div><br />
<br />
</div><div class="MsoNormal">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.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">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.</div><div class="MsoNormal"><br />
<div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-dw5XombRksY/TwoU48wztnI/AAAAAAAAAWA/NzTQY_jEle4/s1600/Plants+2011+013.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="http://3.bp.blogspot.com/-dw5XombRksY/TwoU48wztnI/AAAAAAAAAWA/NzTQY_jEle4/s320/Plants+2011+013.jpg" width="320" /></a></div><br />
<br />
</div><div class="MsoNormal">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.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">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.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">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 <i>C. latifolium</i> 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.<br />
<br />
How many other prospective perennial grains might there be? The completion of <a href="http://usefulwildplants.org/">The Useful Wild Plants Project</a> 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.</div>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-75754548320390691022011-09-20T18:52:00.000-07:002011-10-01T11:17:26.082-07:00Marcellus 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.)<br />
<br />
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.<br />
<br />
<a href="http://www.usgs.gov/newsroom/article.asp?ID=2893">USGS Marcellus Press Release</a><br />
<br />
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! <a href="http://www.energybulletin.net/stories/2011-08-25/new-usgs-marcellus-shale-anaylsis-drastically-cuts-doe-estimates">One opponent of natural gas was quick to focus only on the very highest probability, and lowest reserve number, that being 43 TCF.</a> Another writer smugly commented, <a href="http://www.energybulletin.net/stories/2011-08-29/peak-oil-review-august-27">"There may not be as much natural gas in our future as some claim."</a><br />
<br />
Additionally, neither of the two articles linked above happened to mention the associated <b>1.6 billion to 3.4 billion barrels of natural gas liquids</b> (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???<br />
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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.<br />
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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 <b>1.6 BILLION barrels of natural gas liquids</b> (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.)<br />
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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.<br />
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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 <a href="http://peakopps.blogspot.com/2010/10/dr-hirschs-new-book-impending-world.html">Hirsch</a>, the <a href="http://energyskeptic.com/2011/german-military-peak-oil-summary/">Bundeswehr</a> 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. <br />
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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.)<br />
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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. MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-74563050283410339562011-09-20T15:06:00.000-07:002011-09-20T18:58:57.451-07:00Not there when you need it - Texas wind energy fails during power emergencyFirst 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.<br />
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Here's a good example:<br />
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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. <br />
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Source of story, here, courtesy Garrett M.:<br />
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<a href="http://www.nationalreview.com/articles/275673/texas-wind-energy-fails-again-robert-bryce?page=1%3E%20%3E#">National Review, 8-29-2011: Texas Wind Energy Fails, Again.</a>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-37672300481375780252011-06-13T20:53:00.000-07:002011-06-13T20:57:46.190-07:00Great 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.<br />
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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:<br />
<iframe align="left" frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=peakoppo-20&o=1&p=8&l=bpl&asins=B003DTLV8U&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 245px; padding-right: 10px; padding-top: 5px; width: 131px;"></iframe><br />
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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 ...MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-50705284448223521192011-06-13T07:41:00.000-07:002011-06-13T20:31:24.027-07:00A snip from 2009, Mechanical Engineering magazineRecently, in cleaning out some articles we found this piece of clarity, from the August 2009 issue of <i>Mechanical Engineering</i>, the magazine of the American Society of Mechanical Engineers (ASME):<br />
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<span style="font-size: x-large;"><span style="font-size: large;">excerpts from:</span><i> the Oil Age</i>, by Frank Wicks </span><br />
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"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."<br />
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"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." [<i>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.</i> <i>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.</i>]<br />
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"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. <i>Adapting to the next half and the end of the Oil Age may be the greatest challenge our civilization has ever had to face.</i>" [emphasis is ours]MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-91941687364567805842011-06-13T07:29:00.000-07:002011-06-13T07:29:44.965-07:00Is it any wonder everyone's confused? Saudi's boost output ...From Bloomberg, June 10, 2011:<br />
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<div class="story_inline attachments"> <div class="image thumbnail"> <div class="thumbnail_container"> <img alt="Oil Falls the Most in Four Weeks on Saudi Output, Economy " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iVAsVDEyhzgg" /> </div><div class="caption">Crude oil tumbled the most in four weeks after al-Hayat newspaper reported Saudi Arabia will raise oil production to 10 million barrels a day next month. Source: Bloomberg </div></div><div class="image thumbnail video"> <div class="thumbnail_container"> <img alt="Gheit Interview June 8 on OPEC Meeting " src="http://www.bloomberg.com/apps/data?pid=avimage&iid=iWBA_4sMO79U" /> <div class="overlay"> </div><div class="play_video_link"><a class="q" data-id="70641174" data-type="Video" href="http://www.bloomberg.com/video/70641174/">Play Video</a></div></div><div class="caption">June 8 (Bloomberg) -- Fadel Gheit, an analyst at Oppenheimer & Co., talks about the outlook for Organization of Petroleum Exporting Countries' oil production. OPEC ministers were unable to reach a decision on production quotas at their meeting in Vienna today. Gheit speaks with Betty Liu and Dominic Chu on Bloomberg Television's "In the Loop." (Source: Bloomberg) </div></div></div><a href="http://topics.bloomberg.com/saudi-arabia/">Saudi Arabia</a> signaled it’s ready to deliver on a pledge to boost the supply of oil after the collapse of OPEC talks two days ago. <br />
The world’s largest oil exporter will increase production, though it’s too early to say by how much, a Saudi industry official with knowledge of the matter who declined to be identified said today. Al-Hayat, citing senior officials, reported earlier that the kingdom will boost output to 10 million barrels a day in July from the current 8.8 million. Oil fell as much as 3.3 percent, the most in three weeks. <br />
Saudi Arabia “wants everyone to understand that they’re serious,” <a href="http://topics.bloomberg.com/olivier-jakob/">Olivier Jakob</a>, an analyst at Petromatrix GmbH in Zug, <a href="http://topics.bloomberg.com/switzerland/">Switzerland</a>, said today by phone. “It’s important that the Saudis are signaling that they’re offering additional barrels.” <br />
The June 8 meeting of the Organization of Petroleum Export Countries broke down after six nations led by <a href="http://topics.bloomberg.com/iran/">Iran</a> opposed a Saudi plan to replace lost output from <a href="http://topics.bloomberg.com/libya/">Libya</a> and aid the U.S. economic recovery, Saudi Oil Minister Ali al-Naimi said on the day. <u>The kingdom, along with Kuwait, Qatar and the United Arab Emirates, wanted to increase production by 1.5 million barrels a day. OPEC accounts for 40 percent of global supply. </u>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-52713378110561970062011-04-27T23:47:00.000-07:002011-04-29T06:17:24.149-07:00More on the Saudi's slash of oil outputSoon after we posted the piece on April 18 regarding the report from the Saudi Oil Minister, Ali al-Naimi, we discovered an article we'd clipped from the <i>Oil & Gas Journal</i>, sourced from the <i>Oil & Gas Journal Online</i>, dated March 28 (two days before the President's energy speech). So, this March 28 article actually contained the news of the "output cut", which Mr. Naimi re-delivered on April 18. The article quotes Barclays Capital managing director Paul Horsnell, and he paints a far different picture of the worldwide supply, demand and capacity issues than did Mr. Naimi:<br />
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<em>"Saudi Arabia's production is estimated at 8.2 million b/d.</em> [which is what Mr. Naimi said they had indeed produced in March, some four weeks later] <em> However, Horsnell said, recent data are pointing to Saudi output close to 9 million b/d in December and "and at that level in January and February."</em> [Mr. Naimi confirmed the 9 million b/d, as to February]<br />
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<em>"He said, "This has two main implications. First, it is the source of another downward revision of start-of-year spare capacity levels, since Saudi Arabia's output has been higher than was originally reported. The second implication is in what it suggests to us about how much Saudi Arabia needs to produce to balance the market."</em><br />
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In other words, Mr. Horsnell is saying that since the world previously thought that the Saudi's were producing less in December than they actually were, then the estimated worldwide "buffer" production capacity was significantly less than believed, as well. Also, his observation that the Saudi's evidently needed to produce at 9 million b/d in order to balance the market is the exact opposite of what Mr. Naimi said, four weeks later.<br />
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Mr. Horsnell went on to say:<br />
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<em>"Even producing 9 million b/d, Saudi Arabia still has left "a significant deficit at the margin of the market with inventories falling faster than normal, even before Libyan exports came off the market. Allowing for a normal second quarter global inventory build and replacing lost volumes from elsewhere seems likely to require Saudi Arabia to move up to 10 million b/d, in connection with higher volumes from the other holders of spare capacity ..."</em><br />
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This doesn't sound much like a market which is oversupplied ...<br />
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Earlier in the same article, with respect to demand, Mr. Horsnell said:<br />
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<em>"Oil demand growth in 2010 earlier was estimated at 2.57 million b/d, with 2011 growth previously forecast at 1.56 million b/d. Now 2010 demand growth is put at 2.83 million b/d-making it "the strongest year for global oil demand growth over the past 30 years."</em><br />
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This doesn't seem to jive with the drop in demand/oversupplied market to which Mr. Naimi referred ...<br />
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Tom Whipple, a former government analyst and current Peak Oil news aggregator came out soon after the Naimi announcement, outlining the oversupply scenario. However, on April 25, Mr. Whipple supplied some <a href="http://www.energybulletin.net/stories/2011-04-25/peak-oil-review-april-25">alternate explanations for the Saudi cutback</a>. One of his explanation's revolved around the fact that Saudi oil production has finally reached the practical limits to its growth, and that the Saudi's could not sustain the 9+ million b/d rate comfortably. Stuart Staniford, a PhD physicist and analyst of Saudi production, provided <a href="http://www.energybulletin.net/stories/2011-04-15/saudi-arabia-did-not-make-libyan-oil">some interesting graphs on April 13</a>. Looking at <a href="http://4.bp.blogspot.com/-gG2C5ExHDlU/TaWWB3BaFGI/AAAAAAAABrA/S3yqjGwmKao/s1600/Screen+shot+2011-04-13+at+8.24.16+AM.png">one of those graphs in particular</a>, what stands out is the substantial rate variation in the 2003-2011 period. Of course, Saudi is the ultimate swing producer. But with the exception of a period in 2005, it appears that rates never stay above 9 million b/d for very long; that is, even in face of high prices and a tight market the rates come down substantially, after a brief peak. One might worry that the "maximum reservoir contact" (MRC) wells in Ghawar and elsewhere are tending to cone water after a short run at high rates, and that some wells might be threatening to water out if these high rates are sustained. If this is the case, this would mean that the often touted "worldwide spare capacity" of 3 million b/d or so ... is just not there (as it derives primarily from the Saudi's). In turn, if the Saudi's can't really sustain even 9 million b/d, then this would have serious implications for the world in that the next, more intense manifestations of Peak Oil may be nearer than we think.<br />
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(Mr. Whipple also offered an alternate explanation in terms of "the Saudi's making a political statement" in their cutting of production. This theory would suggest that the Saudi's were upset with the flip-flops in US support for some of the other Arab regimes, and cut production as a result. This might be, but in light of the prior, substantial fluctuations shown by Staniford, it seems that some production capacity-related explanation is a better fit.)MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-81455267022554470462011-04-18T10:18:00.000-07:002011-04-18T12:50:00.677-07:00"Saudi's slash oil output" ... or did physics?<i>"The market is overbalanced ... Our production in February was 9.125 million barrels per day (bpd), in March it was 8.292 million bpd. In April we don't know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied," Naimi told reporters.</i><br />
Saudi oil minister Ali al-Naimi, April 18, 2011<br />
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Does that statement make any sense? Saudi production goes down in the face of rising demand, and prices skyrocket, and that shows the market is oversupplied??? Wouldn't prices have dropped drastically during that period if the market had been oversupplied?<br />
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Once again, it seems that Saudi oil production went from 9.125 MMBO/D in February, to 8.292 MMBO/D in March. And remember (as we used to always tell the boss) February is always a "bad month" because it has fewer days. Meanwhile, oil prices increased substantially in March.<br />
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You've got to ask yourself, why would Saudi oil minister al-Naimi issue this seemingly nonsensical press release?<br />
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Realize that the Saudis are our "partners" in trying to keep the world economy out of the ditch - they know it is not in their best interests to wreck the world economy, else demand for their product (oil) will go down. So, they are not interested in $200 oil, or even $150 oil. As the King said years ago, "You need the oil, we have the oil." In exchange, we no doubt have security arrangements with them, and sell them billions in defense hardware. (According to the WSJ today, Saudi Arabia had $41.3 billion in defense spending in 2009, compared to Iran's $8.6 billion in that year.)<br />
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So, back to the question. If the "jig were up" - that is, if the onset of production rate decline was imminent, or even past tense - for the country generally believed to have the world's largest reserve capacity in terms of production rate, as well as the largest remaining reserves, then there might be one more ploy, one that might hold up for a few months (or not). That would be to suggest that you were voluntarily cutting back production rate, rather than it happening despite your best efforts to increase it. Or, put another way, that you were cutting the rate on purpose, rather than it dropping due to the inevitable decline in the production rate of a limited resource, aka Peak Oil.<br />
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One other thing: Why would President Obama, in his <a href="http://thecritical-post.com/blog/2011/03/president-obamas-energy-policy-speech-at-georgetown-university-30-march-2011-1136-hrs-est-tcpchicago/">"energy policy speech" of March 30, 2011</a>, suddenly say we need to do more drilling for oil in the US, embrace shale gas and natural gas vehicles? Previously President Obama only had room for renewables in his public speeches. Continued oil and gas development, utilization of natural gas for transportation, conservation (of primary importance), renewables and sensible clean coal and nuclear make up the bulk of the often touted <a href="http://peakopps.blogspot.com/2009/01/putting-liquid-fuels-in-perspective.html">"all-of-the-above solution"</a>. Often touted ... but not by President Obama! Why the sudden shift in "policy"? We already knew the answer, but hearing it from the President sent a chill up our spine, nonetheless. It might be as close to a Presidential Peak Oil admission as we ever get - and likely as close as we really want. It's time to stop petitioning, stop talking about why this or that won't work, and start focusing on what you can do, what your role is in the "all-of-the-above" solution.<br />
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Full press release here: <a href="http://www.cnbc.com/id/42637280">Saudi's slash output</a>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-22168313356485241902011-04-18T09:08:00.000-07:002011-04-18T09:19:38.215-07:00Peak Oil question and answer ...Back in January, an acquaintance asked some good questions about oil supply - "Why worry?" kindof stuff. Questions about Peak Oil are valuable because they indicate where the communication is breaking down, where folks are having a hard time understanding the concepts. In this case, my acquaintance is a highly-educated person who works in an alternative energy field - so one would think he would be biased towards believing the concepts, anyway. That makes his questions that much more valuable, and it shows his honesty with himself.<br />
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<b>Questions</b><br />
i was just reading your blog. i know you are convinced by the peak oil thesis and find its consequences likely to be pronounced. you are also in the industry, a generally smart guy around town, so i ask you to straighten me out on this. <br />
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i'm not a doomer on this topic. in general, i'm not a doomer on any topic. i find our current moment the best in history, and the forces to accelerate that unprecendented. most of this follows from communication tech, most specifically, the web. the positive consequences of the web for me trump all other negatives around us. i could go on and on about all the pro good forces unleashed by the democratization of knowledge and communication access, but i'll resist. still, it is the biggie. like the brain that distinguished humans from all the more powerful and more numerous beasts that contended with our forebearers for food and real estate. <br />
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so back to the point. <br />
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on peak oil, i agree we may be at it, probably already past it, but i don't find the consequences anywhere near dire. in fact, i'm sad they are so soft and so slow. energy is currently way underpriced in relation to the value we get from it, and doubling its cost wouldn't do much. we already see many countries existing with more than 2x energy costs as the us, and they do fine. the world has not collapsed in any european country with $7/gal gasoline. <br />
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this is possible because no one needs to be inefficient with energy anymore. back when we had no choice, cheap energy was important. now i find it much less so. we can use a small amount of expensive energy to get the same industrial value that we used to get by cheap energy used inefficiently. our value produced per energy unit inserted has made lots of progess since 1900s england. so i welcome the increased price signal. i don't see doom in it. <br />
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at 2x the price point, so many other options become realistic that the market will make the others happen finally. we are overwhelmed with tech choices on the energy front. a price signal is most of what is needed. some political signal would help too, but is minor in the larger calculus. <br />
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problem is i think we're not going to get this price signal for a very long time. there are too many currently "unextractable" resources that become thinkable at just slightly higher prices. the canadian tar sands and venezuelen bitumen resources seem massive to me. if we get serious about extracting those, they seem large enough to blunt much of the peak decline. add into this the tremendous amount of nat gas we have everywhere, and our ability to reform it into near anything, and i'm not seeing the pinch. <br />
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on top of this add the proven human inability to know much about complex future predictions, and to date our "extractable" resources continuing to grow vastly beyond what was considered possible just a decade previous. putting all this together, i end up a non-believer in our going into cataclysmic fossil decline in any helpful manner. <br />
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admitedly the above is all handwaving. i don't have numbers on any of this. i have not read the literature closely and critically enough to really believe my assessment. i am a news consumer on this topic, thus lack full faith in my assessment. but nonetheless, that is my assessment. <br />
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this makes me sad, as i want to run out of oil on a faster slope. i think this transition is going to do massive good on near all fronts. fossil fuels are currently one of the most distorting financial, political and environmental forces on the planet. if i could change one thing in the world, it would be to not have this massively source dense and lucrative resource available. it tends to do bad things wherever it is found or overused. <br />
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of course i am partial to giving half of the planet their own personal scale power device, and let them run it off the already distributed fuel found around them. i think a pc of personal energy can deal with most of the power and products that we worry about in peak oil. <br />
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a multi-modal gasification machine can give you electricity, heat, cooling, shaft power, liquid fuels and biochar for ag. and it can do so on the waste that is already around us, sans the distorting impacts of a highly centralized and empowered fossil energy cartel. <br />
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yeah, we all have a few problems yet to solve before we have the fuel agnostic, fully automated, multi-modal gasification machine. but still, we see the solution is accessible. as are many others on other energy fronts. <br />
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so what's the problem? why are we worrying about fossil fuels so much? <br />
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<b>Answers</b><br />
I am glad you outlined all those points, the thought process you are going through - that is helpful to all, I think. Perhaps you are just playing the "straight man", the "shill" here, and want some Peak Oil stuff for the group. Either way, my wife would have told you, "Don't ask him about Peak Oil, whatever you do!" So here goes, you asked for it! <br />
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I will segregate some of your points/questions: <br />
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<b class="moz-txt-star"><span class="moz-txt-tag"></span>Collapse/Doomer stuff<span class="moz-txt-tag"></span></b> <br />
First, like you, I refuse to be a "doomer". (the link you included discusses this, as well). I am fascinated by man's ingenuity, and by the ingenuity of this group. "Our" group, I'll say, because I am proud to be a part of it, even though I have only made drawings of gasifiers, so far, and have only made a few contributions to the group. I had the blessing of meeting you, Mike L., Ron O., Bear, Jay, Markus, Ray M., Donna M. and others, in a short period of time. Then, by coincidence a couple of years ago I helped put together a coal bed methane project around the corner from where Wayne lives, so I dropped in to see him while I was over there,in November I guess it was. So, all this within a month or so. Wow. Blew me away. How many other homemade windturbine, alcohol, poor boy concentrating solar thermal, small steam, stirling, or whatever yahoo groups are there, out there??? We are a nation of tinkerers, and of course these groups transcend nationality. That gives me a lot of hope. On the other hand, we tinkerers are a bit "weird" (in a nice and important way) - we're not your normal folks. As a matter of fact, a guy told me that today, said I didn't like "normal" stuff like everyone else! (of course I was proud of that). But even though these groups now let us meet up in wonderful and synergistic ways, the fact is, there are far more consumers than there are tinkerers; we are a minority. <br />
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The reality is, most of our transportation, neighborhoods, cities, whatever were built on "cheap oil". Oil supplies 40 % of the US overall energy, and 60 % of that is imported. 70 % of the oil the US uses goes for transportation uses. Gasoline makes up 9 MMBO/D of the 20 MMBO/D (2007 high number) we use in the US. We're a lot different than Europe. And they are not necessarily smarter or even more forward-thinking - much of what they did was out of necessity or as a result of geography or politics. Europe is not exactly prospering right now, either. The unfortunate bottom-line is that neither natural gas, electric vehicles, biofuels, tar sands, coal to liquids, algae or any other fossil or renewable partial solution seen so far will replace liquid hydrocarbons in a timely enough fashion such that current lifestyles can be maintained as is; at the least, there will be disruption and hardship. As Dr. Hirsch et al put it, "you have zero chance of not getting burned by this." I would not say, either, that there is a zero chance of even an Olduvai Theory thing - anything can happen, collapse has happened before, will likely happen again. I don't have to accept it sitting down, though. <br />
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Even though we should have caught on to this a lot sooner, there is little we can do about the past. And it is so easy to lay blame, point the finger at corporations, politicians, the government, etc. But think of this - even you (until you finish reading this) don't believe there will be any problem! I estimate only about 25 % of the people have even heard of the Peak Oil concept, and only maybe 10 % (likely optimistic) understand what it is, or get the ramifications. Why? See this link: <a class="moz-txt-link-freetext" href="http://www.energybulletin.net/node/39308">http://www.energybulletin.net/node/39308</a> <br />
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<b>What about the tar sands?</b><br />
So, with respect to tar sands, you can't replace a large SIZE field of ancient AGE and excellent QUALITY (Middle East, US, etc) with even an enormous SIZE, new in AGE field of very poor (melt or dissolve it) QUALITY (Alberta tar sands). I call it the SAQ model, ie using SIZE, AGE and QUALITY of a field/reserve to normalize it for comparison, so to speak. See also this link, where on slide 10, "The SAQ Model - Example 1" it shows the downward revisions of earlier, rosey forecasts of increasing tar sand production rate (even in a substantially high price environment):<br />
<a class="moz-txt-link-freetext" href="http://peakopps.blogspot.com/2010/06/one-more-peak-oil-explanation-and-why.html">http://peakopps.blogspot.com/2010/06/one-more-peak-oil-explanation-and-why.html</a> <br />
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<b>Consumption versus Reserves: </b><br />
Replacing fossil fuels, or liquid fuels in particular, is a problem of SCALE, and TIME. Namely the scale of how much oil the world consumes, versus how much we discover - both currently and even since the 60's! <br />
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So, take a look at the Annual Discovery Curve:<br />
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<a class="moz-txt-link-freetext" href="http://peakopps.blogspot.com/search/label/oil%20discovery%20curve">http://peakopps.blogspot.com/search/label/oil%20discovery%20curve</a> <br />
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This Annual Discovery Curve is representative of the RESERVES the world discovered, in each year, collectively. Notice it peaked in the 60's. Today, even with substantial advances in technology, we discover about 10 B bbls or less, annually. At 85 MMBO/D of consumption, we burn up 10 B bbls in ... 118 days. <i>Yes, this is the issue. Far more is being used than discovered, and it has been that way for almost 50 years now ... </i><br />
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And even if we could through up nuclear plants all over, which of course we can't takes TIME, it would take a long time to manufacture enough electric cars and trucks to replace any significant portion of the fleet we all depend on. (and this doesn't address the fact that there are still electrical storage issues - cost, reliability and supply of lithium). So, SCALE, and TIME. <br />
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<b>Read the Hirsch Report when you get a chance: </b><br />
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<a class="moz-txt-link-freetext" href="http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf">http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf</a> <br />
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a<b>nd read Hirsch et al's new book:</b><br />
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<a class="moz-txt-link-freetext" href="http://peakopps.blogspot.com/2010/10/dr-hirschs-new-book-impending-world.html">http://peakopps.blogspot.com/2010/10/dr-hirschs-new-book-impending-world.html</a> <br />
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<b>So, if the Peak has happened, why haven't we seen more effects? </b><br />
Well, in my opinion, $147 oil provided the pin that pricked the destined to collapse consumption and housing and credit bubble, so I'd say you have seen effects. The magnitude of this recession is a SCALE issue, as well, and it is not well understood/reconciled. I used to worry about inflation. Then I finally began to understand that you couldn't reflate a maybe $500T bubble, without the same multiplying effects that you had previously. Namely, you can print up and hand out a few trillion, but that is small potatoes compared to the bubble. You can't reinflate the balloon, or even come close, without the multiplying effects of the previous goings on; you can give this money to banks, but unless you have the same funny business going on in all directions, you can't catch up to what it was. Which is not to say that we can't have some kind of "banana republic" inflation at some point, if we continue to destroy our currency. Enough on that. <br />
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Bottom line is that consumption dropped maybe 10 % from 2007 - 2009 (but not on gasoline). Doesn't seem like much, but what is also little understood is that "at the margins" is where the major commodity pricing spikes happen, ie the pricing is not stable there, not 10 %, 20 %, 30 % increases. Just a little too much supply, and if it is all marketed, the price tends to zero, in a "calculus sort of way". Likewise, not quite enough when you have to have it, and the price tends towards infinity. Oil supply is not fully elastic, anymore. And there are not elastic replacements that will work, "if we just had higher prices." (Dr. Webber at UT tells the joke about coal to liquids being priced at "oil price plus $10/barrel" forever, ie when oil prices go up, so does the cost of the CTL, it never becomes "economic". Like going to Joe's Crab Shack where there is a painted sign, "Free Crab Tomorrow", but tomorrow never comes. On the other hand, CTL will be important in an era where liquid fuels don't have to compete with oil prices, because we simply won't have enough oil and oil/gasoline/diesel will be rationed.) <br />
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The consensus at the ASPO meeting in Denver, in fall 2009 was that you'd see a series of whipsaws, where oil prices went up, shut down some portion of the economy/demand, then the economy declined as would prices, for a time. But ultimately the subsequent declines in prices would be smaller, over time, as depletion caught up, unless economic activity took on new, drastic lows. <br />
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We need to continue to develop oil and gas, or else the situation will be even worse. The deepwater hiatus is already baked in, will make matters worse. The right hand side of "Hubbert's Peak" anticipates "peddling faster for less", as we are doing with much of our oil industry efforts. If we don't then declines will be even worse, and Hubbert's Peak may become Hubbert's Cliff.. Meanwhile, we need to do more in terms of liquid fuels conservation (where we can have the biggest effect, the soonest). We really needed to get going on natural gas vehicle infrastructure and vehicles ... yesterday. And of course, for us weird mechanics, there is woodgas. I imagine we'll be less weird, everybody's friend, before long! <br />
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So there, you asked for it! My contribution, for now! <br />
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Conserve Baby Conserve, <br />
Drill Baby Drill, <br />
BBB <br />
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<b>Follow-up Questions</b><br />
nope, i'm not being a shill here. i really don't believe it, but don't really believe myself on this one either. <br />
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i'll go read the links with interest. you seem to see clear evidence of our discovery rate vs consumption have a meaningful collison ahead. <br />
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i have yet to be convinced here. i see discovery rate mostly a financial question. you know we've been predicting discovery depletion since 1910 or so. what we consider discoverable keeps changing profoundly. you know this. so you must see something new in these graphs that i don't yet. <br />
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the wildcards for me are. <br />
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1. tar sands <br />
2. bitumen <br />
3. deep sea drilling. like the entire ocean <br />
4. natural gas <br />
5. coal to liquids <br />
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not to say any of these are particularly good ideas. actually most of them are very bad. but they are going to get engaged when the price makes sense, which is likely soon. <br />
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now it is unfair to poo poo all the gtl tech as forever price + $10. these are not mysterious techs. used many times. we need to reinvent the industrial infrasture for current use, but the price point for this is little different than much petro tech. we'll do them just fine, but at terribly co2 cost. <br />
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the rate of infrastructure change doesn't scare me at all. when needed, we can change infrastructure radically in a few years. look at china for a recent example of what can be done in 10 years when it is imporatant. wwII. railroads, the internet. etc etc. govt command, market command, or war can do wonders fast. a decade is a near eternity when the need is clear and compelling. <br />
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any strong case peak scenario seems to me to play out over a couple decades at mininum. this is already half the life expectancy of most power infrastructure. just replacement cycle will deal with most of it. no? <br />
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08 for me showed speculation to have about doubled the "real" value of the commodity oil. that was fleeting. now we're back to a regular price rise with economic activity. the spike ramp in 08 was not the peak oil end scenario as we liked to entertain ourselves with back then. the end did not come. though it did somewhat for the speculative engines that created it. not sure how long that will last though. <br />
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the core of this is i can't answer or well understand the real flexibility we have in "discoverability". at 2x the price, i'm sure the world will do just fine without collapse. and at 2x the price in real demand, not speculative fluff, what is now reasonable to discover and extract? <br />
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isn't the claim that the tar sands and bitumen alone are each their own saudi arabia scale reserve? <br />
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nat gas costs 1/5 liquid per btu, given it is everywhere and barely worth not burning off in fields. so have so much nat gas at our disposal its depressing. <br />
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i think we're going to burn this planet to a crisp before we're anywhere near taxed on finding, buying and using fossil fuels. <br />
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thus i'm trying to get some numbers and assessements of these other resources. i'm not sure if my anecdotes have any substance. <br />
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i'll start with your paper cites tomorrow. thank you for them. <br />
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<b>Answers to Follow-up Questions</b><br />
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Discovery on a small scale is a financial issue. On the worldwide scale, it is ... physics - when you have found most all the big reserves. <br />
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Take the US as a poster child. The US peaked at about 10 MMBO/D in about 1970. (there is a slide on this in one of those links). Currently the US is doing just about half of that, just over 5 MMBO/D, despite substantially higher prices, substantial "access" and lots of technological advances in 3D seismic and horizontal drilling (hint: those things find and develop fields you can't find with 2D seismic or vertical wells. Why couldn't we find them before? Because they are smaller ...). The Bakken play in North Dakota is wonderful, and important to our nation. Today it is making about 350,000 BO/D. That's a lot, but remember SCALE. It's small in the scheme of things. It will grow, but remember, one of the giants that typifies what us peak guys are worried about, ONE field, in Mexico, Cantarell, has declined from 2.1 MMBO/D in 2005 to less than 500,000 BO/D today. Repeat that across the world and try to replace those fields with tar sands or Bakken plays ... it's that SCALE thing. <br />
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Remember in school, in math, where you added curves together to get one curve? Well, do the reverse. Look at the countries that have peaked (most of them, there is a slide in that same presentation). So, take away the countries that have peaked, where it is highly unlikely that they will ever produce at a greater rate. That doesn't leave many countries. No, we will never "run out" of oil, that is a common argument, albeit not really an argument. Oil will be dripping out, we will be producing it at some rate, forever. But that's not what is important. What's important is what kind of rate can you get it out of the ground, compared to the world's demand for it. And RATE is not arbitrary. The available RATE is dependent on the given RESERVE's SIZE, AGE and QUALITY. As in one of those links. <br />
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It would be hard to find a bigger "bull" on natural gas. It is a wonderful transition fuel, and one that will be around for a long time. We should be building vehicles and manufacturing facilities and infrastructure at warp speed (while we cut down on vehicles, add mass transit retrofits, at the same time). Although the government really shouldn't be doing it in the first plaace, if we are going to spend TARP or QE money, it should be spent on infrastructure or manufacturing, thereby creating jobs, thereby having a chance at getting us out of this mess. These are the things that have multiplying effects, not just giving the money to the bankers. <br />
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See the slide on tar sands projected production rates. These are the numbers from the "Canadian tar sands board", not someone who is anti-tar sands. It's that RATE thing. <br />
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I respect those who are concerned about global warming. To what extent is it man made versus natural? It is a modeling problem that is infinitely more complex than peak oil. We know that the climate has changed dramatically, and over fairly short geologic time, prior to industrialization. I suspect our great energy source, the sun, and the wobbles and movements of Earth, Sun, and more have a great impact. Mike L. might vote for warming, about now. <br />
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Exogenous events as "game changers", things like war as accelerants for change? That will do it, all right. But that's not what you would call "smooth, gradual, painless transition". We have not really had a war that has disturbed our lifestyles on a large scale since WWII. Pick up a copy of The Fourth Turning when you get a chance.MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-56722244506778880562011-04-18T08:39:00.000-07:002011-04-18T08:41:32.637-07:00Comments on Macondo BOP'sLast month a report was issued regarding the BOP's on the ill-fated BP Macondo well. One commenter noted that BP was faulting the BOP's, and went on to liken BOP's to the "rear guard" in a war zone:<br />
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<a href="http://www.energybulletin.net/stories/2011-03-28/itsy-bitsy-problem-doomed-bps-well">Itsy bitsy problem doomed BP's well</a><br />
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<div class="dsq-comment-message" id="dsq-comment-message-173304966"><div class="dsq-comment-text" id="dsq-comment-text-173304966">The war zone analogy is a decent one for the handling of a difficult well. However, if you goof up your tanks, your troops and your artillery, and wait until the enemy is 100 yards away to call the rear guard ... you can guess the outcome.<br />
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A parachute might be an analogy for a blowout preventer. Although you function test both and check them regularly, you don't want to get yourself into an emergency situation where you have to use them. That is "Job One" you might say, namely staying out of that situation. Further, if you have to use them, you need to use them early. Waiting, and attempting to close a well flowing at a high rate could be likened to trying to open your parachute at 100 feet.<br />
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So, what are the tanks, troops and artillery in drilling and completing a well? There are many, and in drilling a well, you can "pull the plug on the war" at any time if you are prepared and do it soon enough. Among other things, you design your casing/hole size such that there is enough cement sheath to create effective cement isolation, which also requires the proper cement slurry and centralizing the casing in the hole. Then after the cement job - on a difficult, high pressure well - you stay "on guard" for "gas flow after cementing", ie when gas flows in due to the setting of the cement's removal of hydrostatic pressure - before the cement has set enough to contain it. Then you test your liner top, and you take action to fix any problem. Then you make good decisions about displacing the pressure controlling mud out of the well. Then if you decide to do that, you make sure you have a way to keep track of the mud coming out, versus the seawater going in, to make sure that the well is not "coming in". If the well starts to come in, or flow, you close the blowout preventer immediately and begin circulating the mud back in, then fix the problem that allowed the well to flow. You don't wait until oil and gas are seen at the surface to shut the well in; by that time, it may be too late - you're opening your parachute at 100'. Finally, and most importantly, you have a highly experienced, sufficiently rested person (one person) in charge at all times. All of the above are "standard operating procedures" in any well control manual. These procedures were developed beginning, say, in the 1950's. (The above is just an example, and it is only coincidental if it resembles some of what might have occurred on the Macondo well.)</div></div>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-36006001811457056932010-12-14T12:06:00.001-08:002011-04-18T08:29:15.571-07:00Climate Change: A quote from Kenneth Deffeyes"Warnings about climate change usually carry the implied message that any change is going to be disastrous. Only seventeen thousand years ago, New York City, Toronto, and Stockholm were buried under a mile of ice. (In a 4-billion-year history, 17,000 years is the day before yesterday.)"<br />
<iframe align="left" frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=peakoppo-20&o=1&p=8&l=bpl&asins=0691141193&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 245px; padding-right: 10px; padding-top: 5px; width: 131px;"></iframe><br />
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Kenneth Deffeyes is Professor Emeritus in Geology, Princeton University, and author of <i>Hubbert's Peak</i>, <i>Beyond Oil</i> and <i>When Oil Peaked</i>.MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-30597113748982183032010-11-21T11:45:00.000-08:002010-11-21T19:12:07.196-08:00Wayne Keith unofficially breaks woodgas world speed record ...Wayne Keith is a modern-day woodgas pioneer, a "deacon" of the woodgas community, if you will. Back in 2008, Wayne and crew won second place in the <a href="http://www.wired.com/autopia/2008/10/mad-max-meets-t/">Escape from Berkeley alternate fuel race</a>.<br />
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I had the pleasure of spending Friday, November 19, 2010 with Wayne Keith and family. Wayne first demonstrated his woodgas F150 experimental platform, as well as his woodgas Dakota "daily driver". Later we took the Dakota out for a spin around the backroads of St. Clair County, Alabama. Then, Wayne decided we should "stretch its legs" a little, so onto the Interstate we went. With a good head of woodgas and about 640 F coming into the headache rack heat exchanger, we topped out at about 85 MPH - but only because of traffic! We just couldn't get the cars out of the way on the stretch we were running. But since that is almost twice the current official record of 47 MPH, so we decided to call it a day. If it looks like we were going fast in the video, it's because we were! As you will see, Wayne startled me a little when he took the exit ramp like he had a little Earnhardt in him. No, we didn't roll the Dakota - I just quit videoing. What a fun and instructive day! Many thanks to Mr. Wayne and his family!<br />
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Wayne Keith's unofficial woodgas world speed record video:<br />
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<u>More on Woodgas </u><br />
<iframe align="left" frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=peakoppo-20&o=1&p=8&l=bpl&asins=160322050X&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 245px; padding-right: 10px; padding-top: 5px; width: 131px;"></iframe><br />
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Woodgas is quite simply a combination of H2 & CO, with a little CH4 or other heavies, plus the N2 that comes along for the ride from the air. Woodgas is produced when wood is pyrolyzed and the products are partially combusted and then reduced, forming the CO and H2.<br />
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The "technique" of producing woodgas has its roots dating to the early 1700's. Those early 1800's gas lights in Paris and the US were not from gas wells, but rather from producer gas - aka town gas or hydro gas - which is a cousin to woodgas, and is usually produced from coal. <br />
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Woodgas burns with a beautiful pink/purple flare, and is conducive to higher compression and advanced timing setups when used in existing internal combustion engines.<br />
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Video of the pre-startup flare from a Power Pallet, at the October 2010 All Power Labs workshop:<br />
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<div class="separator" style="clear: both; text-align: center;"><iframe allowfullscreen='allowfullscreen' webkitallowfullscreen='webkitallowfullscreen' mozallowfullscreen='mozallowfullscreen' width='320' height='266' src='https://www.blogger.com/video.g?token=AD6v5dwtcSjAsl9-wV7x5flFKFAD2wRYXcVC8GCecZP4E7vNQEWxTGYbSAeba4kJtyyeVsneAubhSsStEVaca7hd9Q' class='b-hbp-video b-uploaded' frameborder='0'></iframe></div><br />
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Woodgas falls into the partial solution category, with respect to our coming liquid fuels crisis. Woodgas burns cleaner than gasoline or diesel, but it is problematic in terms of operation, at least in terms of the expectations of today's drivers, who expect to be able to turn the key and drive without another thought as to what is going on in the engine. Operating a gasifier and the related systems currently requires mechanical experience and attention to detail. However, it may be possible to work out some of these issues. Also, the difficulties of dealing with a gasifier might be more palatable when it is your only choice for getting from point A to point B in your vehicle.<br />
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<iframe align="left" frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=peakoppo-20&o=1&p=8&l=bpl&asins=1603220283&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 245px; padding-right: 10px; padding-top: 5px; width: 131px;"></iframe>As an example of this line of reasoning, the Department of Energy thought enough of woodgas as an emergency fuel that in 1989 their FEMA arm sponsored the Oak Ridge National Laboratory to design a makeshift woodgas generator which could be constructed out of commonly available materials - in this case metal trash cans and a stainless salad collander, and a few other parts! The resulting design was problematic in terms of tar production (not desirable for engines) so it is shunned in woodgas circles. However, the fact that the DOE was interested in the technique as a potential, partial solution to a severe petroleum shortage - should be instructive. Gasifiers were used to power approximately one million cars, buses, trucks, trains, boats and generators during WWII, in Europe (Egloff 1943). <br />
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We have referred to woodgas in a few prior posts:<br />
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<a href="http://www.energybulletin.net/node/48260"> The coming liquid fuels crisis: the natural gas partial solution.</a><br />
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<a href="http://peakopps.blogspot.com/2010/07/oilpatch-engineer-replies-to-peak-oil.html">Oilpatch engineer replies to peak oil activist.</a> <br />
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Last month I attended a wonderfully interesting three day workshop on gasification at Jim Mason's All Power Labs in Berkeley, California. Jim has unselfishly created an open source project to further the development of woodgas, and All Power Labs now has several products available for developers. The Gasifier Experimenters Kit, or GEK, is available for purchase, as is the Power Pallet - a pallet-sized package consisting of a GEK supplying a 10 KW Kubota genset with woodgas. During the workshop, with the assistance of Jim's friendly and motivated young staff, I was able to help construct a GEK and a Power Pallet. We also witnessed an extended run of the Power Pallet - it is amazing to watch ordinary woodchips be converted into electricity on a small scale! I intend to "write up" the workshop - the people, the experience and the education - but have not yet had a chance to put the notes in final form. In the meantime, details of the workshop and some pictures and videos can be found on All Power's website: <br />
<a href="http://www.gekgasifier.com/">http://www.gekgasifier.com/</a>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-23057249421515968862010-10-15T10:26:00.000-07:002010-11-08T21:18:43.273-08:00Dr. Hirsch's new book: The Impending World Energy MessSeveral folks have asked, "What's up with Peak Oil?".<br />
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Well, largely, the "coming energy mess" is masked by the "current economic mess". Namely, when you reduce growth in oil demand - as the world has done over the last several years - you don't notice the fact that the oil production rate really can't grow too much, anyway. At some point, though, the decline in oil production rate and/or the growth in demand ... meet. Or collide, we should say. When? Maybe 6 months, maybe a couple of years. It really depends on oil consumption, which in turn depends on the poor economic conditions that most of the world continues to experience. However, when demand does meet falling supply - look out. Another price shock will occur, then the economy will retract again, and demand will fall - a little, perhaps. But at some point we are down to bare bones - we've cut all discretionary demand, or at least all semi-comfortable, discretionary demand.<br />
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You may recall previous posts discussing Dr. Robert L. Hirsch, or the report which bears his name - the "Hirsch Report" - which was completed in 2005. This carefully written, non-sensational, 92 page pdf was entitled "<span style="font-style: italic;">Peaking of World Oil Production: Impacts, Mitigation, & Risk Managment</span>". The Hirsch Report became semi-famous due to its quality, its content and also due to "who wrote it for whom". Namely, Dr. Hirsch, Dr. Bezdek and Mr. Wendling wrote the report for SAIC, who in turn was fulfilling a contract with the U.S. Department of Energy (DOE). (SAIC is a government contractor who some call "the biggest company you've never heard of". A few years ago SAIC went public; they have around 40,000 employees.) Initially the report was kept a "secret" to some extent. That is to say, initially the Hirsch Report could only be found on the website of a California high school! I would suspect that the DOE, etc. felt like it would send out shockwaves when folks read it. What they didn't understand was that since it wasn't a reality TV show, a lot of folks would never hear of it. Namely, a lot of folks just don't read. Further, there is a substantial amount of "thought inertia" out there - people have a hard time wrapping their minds around something so transformative. The Hirsch Report was ultimately placed on the DOE website, and it is currently linked on this blog (as is an interview with Dr. Hirsch, regarding the report).<br />
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Dr. Hirsch has been a speaker at the last several conferences held by the Association for Study of Peak Oil, or ASPO-USA. As an attendee at those conferences in 2007-2009, I listened intently to Dr. Hirsch's talks. I also had a few chances to chat with him. Last year I was able to ask him a question from the floor regarding the potential for natural gas vehicles to serve as a partial solution to the coming liquid fuels crisis (Peak Oil).<br />
<br />
In observing his mannerisms over the last 3 years, and from his total focus on Peak Oil, it is my belief that the Hirsch Report had a profound effect on Dr. Hirsch himself. And realize that Dr. Hirsch has "done it all" - almost - in the energy business. He has a doctorate in engineering and physics, and has 40 years of experience, 15 patents and 50 technical publications. Dr. Hirsch was director of fusion research at the Atomic Energy Commission (AEC), Manager of Petroleum Exploratory Research at Exxon's Production Research, Manager of Exxon's synethetic fuels lab, VP and Manager for oil and gas research at ARCO, and then a senior staff member at RAND and SAIC.<br />
<br />
The key takeaway from the Hirsch Report was that Peak Oil should be "prepared for", not "reacted to". Namely, the Hirsch Report posited that our nation could effectively deal with Peak Oil, given 20 years of intense transition efforts; that is, if we initiated efforts 20 years in advance of the peak. However, if only ten years of transition time are available, the Report predicted a painful transition process. And finally, according to the Report, if serious transitioning is not begun until after the Peak then "serious consequences" will result.<br />
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Dr. Hirsch, Dr. Bezdek and Mr. Wendling have now written <span style="font-style: italic;">The Impending World Energy Mess, </span>which was released around October 1, 2010<iframe align="left" frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=peakoppo-20&o=1&p=8&l=bpl&asins=1926837118&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 245px; padding-right: 10px; padding-top: 5px; width: 131px;"></iframe>.<br />
<br />
The book includes a forward by Dr. James R. Schlesinger, the first U. S. Secretary of Energy, former Chairman of the Atomic Energy Commission, former Director of the Central Intelligence Agency and former Secretary of Defense.<br />
<br />
The book doesn't plow a lot of new ground for those of us that have been familiar with Peak Oil. However, the book is an important "signpost" or "threshold" - the first book regarding Peak Oil from a very sophisticated, highly respected, former government analyst. The book is well-written, side-barred and highlighted. It is easy to read, and easy to refer to. The book also goes into substantial detail on various "partial solutions", as well as those which have been "ruled out". Included are excellent discussions on fusion, biomass, ethanol, and coal and gas-to-liquids.<br />
<br />
Some of the most valuable content is that of the discussion of possible rationing plans - for gasoline and diesel. Not voluntary rationing - mandatory rationing. Given the circles in which the authors travel, I would imagine that what they have written is similar to what the government might invoke. Some might wonder why a Prius might be better to have than a Corolla, given that the economics never seem to catch up at say, $3 gasoline. However, in addition to being a means to contribute to conservation, an excellent piece of overall fuel efficiency engineering and a highly drivable vehicle, the Prius will go a lot further on a gallon of gas than will a Corolla. This may equalize the economics, somewhat, when it means another ten trips to the grocery store or school, or perhaps an additional 100 miles per ten gallon tankful, vis-a-vis the Corolla.<br />
<br />
<span style="font-style: italic;">The Impending World Energy Mess</span> should create additional awareness of Peak Oil - we will see what the reaction/consequences are.<br />
<br />
Shown below are a two interviews with Dr. Hirsch, regarding the book, and a book review:<br />
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<a href="http://www.energybulletin.net/stories/2010-09-13/interview-bob-hirsch-his-team%E2%80%99s-new-book%E2%80%94%E2%80%9C-impending-world-energy-mess%E2%80%9D"></a><br />
<a href="http://www.energybulletin.net/stories/2010-09-13/interview-bob-hirsch-his-team%E2%80%99s-new-book%E2%80%94%E2%80%9C-impending-world-energy-mess%E2%80%9D">Steve Andrews of ASPO-USA interviews Dr. Hirsch regarding his book</a><br />
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<a href="http://www.energybulletin.net/stories/2010-09-16/exclusive-interview-robert-hirsch">Matthew Auzanneau interviews Dr. Hirsch regarding his book</a><br />
<br />
<a href="http://www.energybulletin.net/stories/2010-10-04/review-impending-world-energy-mess-robert-hirsch-roger-bezdek-and-robert-wendling">Tom Whipple reviews Dr. Hirsch's book</a>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.comtag:blogger.com,1999:blog-8684288546539424804.post-59106765654454691812010-07-25T18:33:00.000-07:002010-07-25T18:38:31.979-07:00Blowout Prevention Act of 2010According to the <span style="font-style: italic;">Wall Street Journal</span> (7/22/2010, Son of Cap and Tax) last week the House Energy Committee unanimously (Republicans and Democrats) approved the Blowout Prevention Act of 2010 (link to Discussion Draft):<br /><br /><a href="http://energycommerce.house.gov/documents/20100625/Discussion.Draft.Blowout.Prevention.Act.2010.pdf">http://energycommerce.house.gov/documents/20100625/Discussion.Draft.Blowout.Prevention.Act.2010.pdf</a><br /><br /><br />As always, the devil is in the details. This Act will not only apply to deepwater and Federal fee, but will also apply to <b>any</b> onshore drilling operation - on any property, public or private - that the Federal officials determine could "in the event of a blowout, ... lead to substantial harm to public health or safety or to the environment."<br /><br />While this may not sound unreasonable, the problem is that under this language the Federal bureaucracy is expanded and can potentially control any and perhaps all drilling operations. Accordingly, drilling could come to a standstill until the Feds promulgate "how to decide" and "who gets to decide", set up more agencies, etc. Once they determine what applies - and what the process for determination and approval is - the typical inertia of the Federal government could throw a wrench in permitting wells. There is a provision to allow delegation of the task to the states, where said states are capable of making the determination and managing the risk. This would be the best option for all, as opposed to setting up additional, overlapping Federal bureaucracy.<br /><br />Additionally, wells for which the Act applies ("High-Risk Wells", subjectively defined in this Act) will require "two sets of shear rams and two sets of casing shear rams". It would not be hard to imagine that only a few, if any, current land-based drilling rigs have enough substructure space for such a <st1:stockticker>BOP</st1:stockticker> stack. So, if no such rigs exist, many deep wells (and even some relatively shallow ones) could be delayed indefinitely until/unless new, very expensive drilling rigs are built - depending on the interpretations of the Federal government.<p></p>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-52987729779829098272010-07-25T18:31:00.000-07:002011-05-14T09:10:20.212-07:00Oilpatch engineer replies to peak oil activistAs posted on Energy Bulletin's site:<br />
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<div class="content"><blockquote><i> One of the pleasures of editing Energy Bulletin is publishing a wide variety of views. Sometimes they clash, and the results can be fascinating. </i><br />
<i>This time, the clash is between two regular contributors, oilpatch engineer <a href="http://energybulletin.net/search/google?cx=006192834416731087537%3Al0kckfr5ldc&cof=FORID%3A11&op=Search&query=Martin+Payne&form_token=6845f97da9c11cbdabba8b7a68bc4b54&form_id=google_cse_results_searchbox_form#916">Martin B. Payne</a> and long-time peak oil activist and writer, <a href="http://energybulletin.net/search/google?cx=006192834416731087537%3Al0kckfr5ldc&cof=FORID%3A11&op=Search&query=Jan+Lundberg&form_token=6845f97da9c11cbdabba8b7a68bc4b54&form_id=google_cse_results_searchbox_form#917">Jan Lundberg</a>, publisher of <a href="http://www.culturechange.org/cms/index.php">Culture Change</a>. On July 4, we published Martin's article <a href="http://www.energybulletin.net/node/53323">"Take this opportunity to unite our country, not divide it"</a>. Jan wrote some comments to me (as EB editor) and I asked his permission to post them at the bottom of that article. They are as follows:<br />
</i><br />
<blockquote><i> I see the author is basically an oil man and in good standing with API. But just because such a person acknowledges peak oil, does that make his statements worthy when they have no ecological sense or concern for the climate? He's also close-minded to life-style change. </i><br />
<i> I know that it's foolish to believe people cannot go car-free overnight. Also, if fossil fuels are "part of what we are," then we deserve to drown in a BP blowout. The blurb you put on the home page for the article looked intriguing, although the title of his piece obviously pegged him as someone not subscribing to collapse likelihood. He doesn't get Hirsch. Hirsch did not say we have 20 years for a transition (Payne says "during the transition"). Hirsch said that we had 20 years before peak. </i></blockquote><i>In the following article, Martin Payne steps back and gives full voice to "the enlightened fossil fuel professional." </i><br />
<i>Interestingly, the dividing line between activist and oilman is not as sharp as first appears. Before turning to activism, Jan worked for many years in the family business, <a hef="http://www.lundbergsurvey.com/" href="http://www.blogger.com/post-edit.g?blogID=8684288546539424804&postID=5298772977982909827">Lundberg Survey</a>, which reports on the US petroleum marketing industry. </i><br />
<i>And as you will read below, oilman Payne betrays shocking patches of green. </i><br />
<i>(The iniitial article is posted <a href="http://energybulletin.net/node/53323">here</a>.)</i><br />
<i>-BA </i> </blockquote>Thanks for the comments, Mr. Lundgren. ... There is a lot of emotion out there. If we could bottle it up, use it for positive purposes, we’d have the “free energy” Tesla evidently took to his grave!<br />
So, to get started - to find that common ground that Bart referred to in order to solve these problems - we need to start by avoiding the use of stereotypes. I don’t know Mr. Lundgren, and any stereotype I might choose for him would be an unfair, simplistic description for someone who is likely one of those folks who “proudly defies classification”. Being stereotyped really didn’t upset me; in fact, it reminded me, once again, how stereotypes often prevent us from building bridges and making progress on really important issues.<br />
<b>On Climate Change</b><br />
I believe it was Dr. Hirsch, at one of the ASPO-USA conferences, who said that yes, climate change may be a problem, but the problem of Peak Oil is much more pressing, and will impact the world sooner than the problems of climate change. Further, the solutions for Peak Oil - and Peak Oil itself - will tend to reduce carbon emissions. Even if we ramp up our exploration efforts (which is essential), my belief is that - based on the work of Dr. Campbell and Dr. Hirsch - we will be using 3 – 5 % less oil each year, within a few years. This reduction in oil production/consumption will add up in a hurry (one of the key points of the Hirsch Report timeline).<br />
Without opening the debate on whether man has caused or exacerbated climate change, it should be pointed out that 13,000 years ago, sea levels were about 250 feet lower. In other words, sea level has risen about 250 feet in 13,000 years. Further, about 79 million years prior to that, where I now sit was covered with about 150 feet of seawater. The Earth Chamber of Commerce website should include the bullet point: “climate subject to significant, periodic change”.<br />
<b>On Lifestyle Change</b><br />
As I pointed out in the article, I believe that we should be “transitioning how we live, work and eat.” I don’t know how else to suggest lifestyle change. One of my near term goals is to work more towards providing good examples and paths for these “changes”. The good news is that although we have a long way to go, progress is being made.<br />
<b>On Current Dependence on Fossil Fuels</b><br />
If we’re not addicted to fossil fuels, if they are not ingrained in everything – then Peak Oil is a non-issue.<br />
We had the oil, we used the oil. It allowed quantum leaps in quality of life, life span, medicine and materials, among other things. With the benefit of 20/20 hindsight we can say we “wasted” a lot of oil, as well, depending on your frame of reference. The abundance of concentrated energy led to a dependence on same – it would be hard to debate otherwise. This abundance also led to some lifestyles – like suburbia – which were unsustainable. I don’t think anyone planned suburbia in a malicious fashion, nor is anyone even culpable by omission. Suburbia is just a result of using what we had. Currently, suburban sprawl is working its way towards the history books. Rather than wasting time beating ourselves up as to “how stupid we were”, we need to look forward, not backward. We need to figure out how to wisely use what we have to transition to the next lifestyles, the next economy. To get there, we need oil, gas and coal. So take a roughneck or a coal miner to lunch!<br />
So, you ride a bike or walk? Sure, you use far less energy. But the bike is made of coal (smelted aluminum and iron) and oil (tires, seat, plastic), then it is painted with oil. It’s a Gary Fisher, you say? OK, clear-coated with oil, or anodized with coal. Your Nikes or Chacos are pure oil, plus some coal (Chinese electricity) toted over on a smoky, Bunker No. 6-burning container ship. Your PV system (and mine): oil (plastic) and coal (aluminum), in combination with coal (electricity to make the smelt the silicon, refine the cadmium and tellurium), plus some more coal (electricity) to run the plant. And those coal plants which make the electricity to make these “clean energy” solar cells (of yours and mine) are over in China, where they can’t be protested. They’re out of sight and out of mind, unless you’re Chinese and breathing the effluent of a plant which no doubt has far fewer scrubbers and precipitators than those required in the US.<br />
The point is, currently and for the foreseeable future, we are all dependent on these extractive industries, and fossil fuels. So we all need to work together - and not demonize industries that we need - even as we transition to lifestyles with far lower energy usage and local energy production using alternatives.<br />
<b>On the Hirsh Report</b><br />
I have been a follower of the Hirsch Report since 2004-2005 when it was located exclusively on the “Hilltop Lancers” high school website (I think I found it there due to the Energy Bulletin). I have been familiar with Hubbert’s Peak and a student of oil supply since the mid-1980’s. Even so, when I read the Hirsch Report for the first time - saw who wrote it, who commissioned it - it really sent a chill up my spine. I have had the pleasure of hearing Dr. Hirsch on several occasions – both times at ASPO-USA conferences – in Sacramento and Denver. Observing how his report has no doubt affected him, personally – sent another chill up my spine.<br />
In this most recent posting, I paraphrased the time periods stated in the Hirsch Report, for simplicity. Frankly, yesterday’s gone, and it’s what we do today and tomorrow that counts. None of us knows the timing exactly. We do know that we best “get going”. Recently I have tried to “tone it down” a bit: I think the “imminent crisis” theme turns off certain groups of folks. Regardless, there are lots of writers already making the “crisis case”, so it would seem that another approach might reach incremental people. Namely, it’s easy, fun and fashionable to use less oil, and less energy in general. Anyway, a long-winded explanation for why I simplified the Hirsch Report conclusions.<br />
For the record, I have published the Hirsch Report conclusions in detail, previously, in <a href="http://www.energybulletin.net/node/48260">“The coming liquid fuels crisis: The natural gas (partial) solution”</a>, as excerpted here:<br />
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<blockquote>Many of us in the "Peak Oil community" believe that in 2008, the worldwide rate of oil production likely reached a level which, for all practical purposes, will never again be exceeded. In other words, we believe Peak Oil likely occurred in 2008. Dr. Hirsch, in the 2005 report he co-authored for the Department of Energy, said the following: <br />
<ul><li>"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."</li>
<li>"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."</li>
<li>"Waiting until world oil production peaks before taking crash program action leaves the world with a <span style="font-style: italic;">significant fuel deficit for more than two decades</span>." (emphasis added) Additionally, he went on to say, "Late initiation of mitigation may result in severe consequences." </li>
</ul>Perhaps we could say that some of the actions taken over the last several years - due to oil price signals - would count for a year or two of preparation; essentially, though, we are set up for Dr. Hirsch's "severe consequences" scenario.</blockquote><b>On Collapse</b><br />
I am against it. I have read all the books and blogs, from Jared Diamond to the Olduvai Theory to Jay Hanson, and on. The Rainwater Prophecy is linked on the blog. But so long as we are not yet “collapsed”, there is the potential for the great ingenuity of the people of our country and the world to ultimately prevail. I won’t give up hope or effort, and I trust that a lot of others won’t, either. I’m just not a fatalist; I believe we can make a difference. That doesn’t mean, of course, that we won’t have “severe consequences” to deal with.<br />
The reality is - although there is a long ways to go, there is also “a lot going on”, much of it over the last five years. None of these steps, taken alone, will “save the world”. Symbolically, however, they represent changes in behavior and belief that if continued and extended, will have meaningful effects:<br />
<ul><li><b>Vegetable gardening</b> – interest has blossomed in the last few years (just ask the folks in the garden department of Home Depot). </li>
<li><b>Local food movement</b> – on fire in various cities, all over the country; Farmer’s Markets are popping up everywhere. </li>
<li><b>Grassfed beef, pastured poultry, pork</b> – healthier, less energy intensive; can provide scalable starting places for new family farms. </li>
<li><b>Backyard chicken movement </b>– growing everywhere, it seems; keeping chickens is “cool”, now. </li>
<li><b>Vehicle choices</b> – change is ongoing; there are fewer trucks and large SUV's, more small cars. </li>
<li><b>Reusable grocery bags</b> – a small but important and symbolic step; usage is trending upwards. </li>
<li><b>Smaller, more efficient houses</b> – witness the plethora of news coverage and books about smaller or “tiny” houses; the McMansion is no longer cool. </li>
<li><b>Small energy production</b> – innovators continue to advance small wind, PV, solar thermal, woodgas, alcohol, algae, biodiesel, and more. </li>
</ul></div><div class="addnotetitle">~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~</div><div class="addnotebody">UPDATED (July 17): Added full text of Jan's comments at at the beginning. -BA <br />
<a href="http://energybulletin.net/search/google?cx=006192834416731087537%3Al0kckfr5ldc&cof=FORID%3A11&op=Search&query=martin+payne&form_token=09fad2ee2df341236b386e26ec0a47df&form_id=google_cse_searchbox_form#915">Martin Payne</a> is an Energy Bulletin contributor. <br />
Mr. Payne is an "upstream oil and gas professional with over 25 years of experience. Past Chairman, Houston Chapter of the American Petroleum Institute (API). Member of American Society of Mechanical Engineers (ASME), Society of Petroleum Engineers (SPE), American Solar Energy Society (ASES)."<br />
His blog is <a href="http://peakopps.blogspot.com/">Peak Opportunities</a>.<br />
-BA</div>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-318829779443568722010-07-03T10:55:00.000-07:002010-07-03T11:03:37.729-07:00BP - Macondo Incident Summary & Data: Congressional Committee on Energy and Commerce LinkFrom the link shown below, choose the "Letter to Tony Hayward" link for the results of the Congressional investigation, and a good summary of the causes of the Macondo incident:<br /><br /><a href="http://www.energycommerce.house.gov/index.php?option=com_content&view=article&id=2043:chairmen-send-letter-to-bp-ceo-prior-to-hearing&catid=122:media-advisories&Itemid=55">http://www.energycommerce.house.gov/index.php?option=com_content&view=article&id=2043:chairmen-send-letter-to-bp-ceo-prior-to-hearing&catid=122:media-advisories&Itemid=55</a><br /><a href="http://www.energycommerce.house.gov/index.php?option=com_content&view=article&id=2043:chairmen-send-letter-to-bp-ceo-prior-to-hearing&catid=122:media-advisories&Itemid=55"></a>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-21791266371352059112010-06-28T22:59:00.000-07:002010-07-25T18:17:54.078-07:00Take this opportunity to unite our country, not divide it!<b>Energy Solutions</b><br />Nothing - no one energy source - is a "panacea" in itself. Can't we all agree on that? Nevertheless, we seem to continue to publish commentaries and papers that insist on attacking a premise that no one asserts! Namely, I'm not familiar with anyone, not even Boone Pickens, who says that natural gas will solve all our energy challenges. Yet, the first premise attacked by most critics is that someone has said that natural gas is a panacea, or that natural gas can make us energy independent. Likewise about additional drilling - it's not a panacea, and it won't ever make us energy independent, but we need to do it!<br /><br />We need to develop every sensible energy option we have - even fossil fuel ones - while we work on ramping conservation, researching and developing alternatives and transitioning our how we live, work and eat. It will take a while - Dr. Hirsch said 10 to 20 years. Why must we continue to develop fossil fuels, and even deploy natural gas in vehicles in the meantime, during the transition? Because vehicles and fossil fuels are too ingrained in every thing we are, and in every thing we do. We just can't change that overnight - we can't stop using them one day, and shift to alternatives the next. In the meantime we've got to develop oil and gas reserves faster in order to compensate for the smaller discoveries that characterize the right hand side of Hubbert's Curve. "Saving" the reserves for a rainy day is noble thought, but not realistic with the serious situation we face. So if we choose to marginalize and destroy our oil and gas infrastructure - we will see what "Hubbert's Cliff" looks like, due to accelerating depletion. I suspect that the accompanying scenario would make Mr. Kunstler's novel look like a walk in the park.<br /><br />Let's take this opportunity to unite our country, not divide it with a "fossil fuels bad, only alternative energy good" mentality. We'll be more "postcarbon" with every passing year - but we need to get on with the transition, quit bickering and pointing fingers while we continue to wisely develop and use the resources we have to get there as soon as possible.<br /><b><br />MIT gas paper</b><br /><a href="http://web.mit.edu/mitei/research/studies/naturalgas.html">http://web.mit.edu/mitei/research/studies/naturalgas.html<br /></a><br /><b>Video of the BP relief well effort</b><br />Currently there are a bunch of fine men and women working real hard, using billions of dollars of state-of-the-art equipment and techniques to control this blowout. Take a look at this video regarding the drilling of the relief well:<br /><br /><a href="http://bp.concerts.com/gom/kwellsreliefwells062710.htm">http://bp.concerts.com/gom/kwellsreliefwells062710.htm</a><br /><br /><b><br /></b>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-7083141830448739762010-06-05T07:59:00.001-07:002010-06-07T19:07:12.734-07:00How to Use Less Oil (and why we must keep drilling)As we have learned recently, oil can make quite a mess. Nevertheless, oil is a wonderful substance. The world's endowment of oil is/was largely responsible for sponsoring many of the advancements that have brought sufficient food and longer, easier lives to many in the world. Yes, oil has also sponsored "excess", but that is in the process of correction. Oil's highest and best use is not in burning it as a fuel. As Kenneth Deffeyes said in <span style="font-style: italic;">Hubbert's Peak</span>, someday our grandchildren will ask/exclaim, "You <span style="font-style: italic;">burned</span> all those wonderful molecules?!"<br /><br />Since about 70 percent of the oil consumed in the USA is used for transportation, "Peak Oil" is really a transportation issue (initially, at least). It would be wonderful to be able to snap our fingers and have electric car or PHEV replacements (where applicable), but the electrical storage issues are still not resolved (lithium supplies for batteries, or a new technology), so production and replacement can't yet take place on a large scale.<br /><br />The bottom-line is that we must have sufficient fossil fuels as we transition. And we will have to maintain a substantial level of oil and gas exploration and development activity - in fact an increased level of activity - as the law of diminishing returns takes over on the right hand side of Hubbert's Curve. If we continue to follow what seems like the vogue path of seeking to marginalize our fossil fuels industry, Hubbert's Curve will transform into Hubbert's Cliff, with even more catastrophic results at all levels of society and the economy. Such talk and action also drives a divisive stake into the heart of our nation. Fossil fuels or "clean", alternative energy? The reality is, as we transition over the next 20 years or so we will need substantial quantities of fossil fuels AND ramped-up conservation and alternative energy sources. In 40 years we will still need fossil fuels, but far less will be available. So, we must preserve and even enhance our fossil fuel infrastructure even as we ramp up alternative energy sources and implement substantial conservation.<br /><br />Currently our nation and the world have a substantial endowment of recoverable natural gas. Natural gas emits half the carbon of coal, when burned. Further, natural gas can be used directly in vehicles, with fairly easy conversions using existing technology. Natural gas can also be a carbon-neutral, renewable fuel when it is produced from waste biomass (manure, landfills, etc.). So, given the impending oil shortage (currently masked by the economic downturn), and while we wait on electrical storage advances, it makes sense to convert a portion of our truck fleet, bus fleet and our passenger cars - to natural gas. If you want to see a lot of natural gas vehicles in action, just go to Italy, or Bolivia.<br /><br />In an effort to continue to try to explain "Peak Oil", and also to make the case that natural gas is a suitable transition fuel for vehicles, the following presentation was developed for and delivered to the Gulf Coast Association of Geologic Societies, at their annual convention on September 27, 2009:<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X-hHPSANk_k/TAppLYCWOAI/AAAAAAAAATk/WwvfhImplHM/s1600/GCAGSPO001.GIF"><img id="BLOGGER_PHOTO_ID_5479307540801402882" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TAppLYCWOAI/AAAAAAAAATk/WwvfhImplHM/s400/GCAGSPO001.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X-hHPSANk_k/TAppLAzF9dI/AAAAAAAAATc/y3OS2l054Mo/s1600/GCAGSPO002.GIF"><br /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_X-hHPSANk_k/TAppEL_oMNI/AAAAAAAAATU/CDLDGPRqVCc/s1600/GCAGSPO003.GIF"><img id="BLOGGER_PHOTO_ID_5479307417309688018" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://1.bp.blogspot.com/_X-hHPSANk_k/TAppEL_oMNI/AAAAAAAAATU/CDLDGPRqVCc/s400/GCAGSPO003.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_X-hHPSANk_k/TAppDWsrJGI/AAAAAAAAATM/aQCr6am70I4/s1600/GCAGSPO004.GIF"><img id="BLOGGER_PHOTO_ID_5479307403003110498" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://1.bp.blogspot.com/_X-hHPSANk_k/TAppDWsrJGI/AAAAAAAAATM/aQCr6am70I4/s400/GCAGSPO004.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X-hHPSANk_k/TAppCnYBUZI/AAAAAAAAATE/MGS0oOdnH_Q/s1600/GCAGSPO005.GIF"><img id="BLOGGER_PHOTO_ID_5479307390300017042" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TAppCnYBUZI/AAAAAAAAATE/MGS0oOdnH_Q/s400/GCAGSPO005.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X-hHPSANk_k/TAppB57eOyI/AAAAAAAAAS8/dwHeFrVfdx8/s1600/GCAGSPO006.GIF"><img id="BLOGGER_PHOTO_ID_5479307378100681506" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://2.bp.blogspot.com/_X-hHPSANk_k/TAppB57eOyI/AAAAAAAAAS8/dwHeFrVfdx8/s400/GCAGSPO006.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X-hHPSANk_k/TAppA148OWI/AAAAAAAAAS0/m0q8QpRbYIY/s1600/GCAGSPO007.GIF"><img id="BLOGGER_PHOTO_ID_5479307359836453218" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TAppA148OWI/AAAAAAAAAS0/m0q8QpRbYIY/s400/GCAGSPO007.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X-hHPSANk_k/TApo3_eC-yI/AAAAAAAAASs/UgDzeqnyPe4/s1600/GCAGSPO008.GIF"><img id="BLOGGER_PHOTO_ID_5479307207789181730" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://2.bp.blogspot.com/_X-hHPSANk_k/TApo3_eC-yI/AAAAAAAAASs/UgDzeqnyPe4/s400/GCAGSPO008.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_X-hHPSANk_k/TApo3eLpakI/AAAAAAAAASk/ikiZPrpxIKc/s1600/GCAGSPO009.GIF"><img id="BLOGGER_PHOTO_ID_5479307198853638722" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://3.bp.blogspot.com/_X-hHPSANk_k/TApo3eLpakI/AAAAAAAAASk/ikiZPrpxIKc/s400/GCAGSPO009.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_X-hHPSANk_k/TApo3Pg0gRI/AAAAAAAAASc/9aKhmzLz6tc/s1600/GCAGSPO010.GIF"><img id="BLOGGER_PHOTO_ID_5479307194915914002" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://1.bp.blogspot.com/_X-hHPSANk_k/TApo3Pg0gRI/AAAAAAAAASc/9aKhmzLz6tc/s400/GCAGSPO010.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X-hHPSANk_k/TApo2_q0kbI/AAAAAAAAASU/VmI9UZx5oqY/s1600/GCAGSPO011.GIF"><img id="BLOGGER_PHOTO_ID_5479307190662894002" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TApo2_q0kbI/AAAAAAAAASU/VmI9UZx5oqY/s400/GCAGSPO011.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X-hHPSANk_k/TApo2oGtzNI/AAAAAAAAASM/85wgEu9THUo/s1600/GCAGSPO012.GIF"><img id="BLOGGER_PHOTO_ID_5479307184337439954" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TApo2oGtzNI/AAAAAAAAASM/85wgEu9THUo/s400/GCAGSPO012.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X-hHPSANk_k/TApop8yaj1I/AAAAAAAAASE/mKxHNolzTWo/s1600/GCAGSPO013.GIF"><img id="BLOGGER_PHOTO_ID_5479306966551138130" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://2.bp.blogspot.com/_X-hHPSANk_k/TApop8yaj1I/AAAAAAAAASE/mKxHNolzTWo/s400/GCAGSPO013.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X-hHPSANk_k/TApoppuZdiI/AAAAAAAAAR8/cD8eBr7TnUE/s1600/GCAGSPO014.GIF"><img id="BLOGGER_PHOTO_ID_5479306961434015266" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TApoppuZdiI/AAAAAAAAAR8/cD8eBr7TnUE/s400/GCAGSPO014.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_X-hHPSANk_k/TApoowmzPDI/AAAAAAAAAR0/tsq7VmcVlk8/s1600/GCAGSPO015.GIF"><img id="BLOGGER_PHOTO_ID_5479306946101328946" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://3.bp.blogspot.com/_X-hHPSANk_k/TApoowmzPDI/AAAAAAAAAR0/tsq7VmcVlk8/s400/GCAGSPO015.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_X-hHPSANk_k/TApoosomXEI/AAAAAAAAARs/Z0NKeL7kPc4/s1600/GCAGSPO016.GIF"><img id="BLOGGER_PHOTO_ID_5479306945035131970" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://1.bp.blogspot.com/_X-hHPSANk_k/TApoosomXEI/AAAAAAAAARs/Z0NKeL7kPc4/s400/GCAGSPO016.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X-hHPSANk_k/TApooR3OrRI/AAAAAAAAARk/4ojHLb2TzjM/s1600/GCAGSPO017.GIF"><img id="BLOGGER_PHOTO_ID_5479306937848737042" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TApooR3OrRI/AAAAAAAAARk/4ojHLb2TzjM/s400/GCAGSPO017.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X-hHPSANk_k/TApoQvrTGCI/AAAAAAAAARc/WM22obBUt8I/s1600/GCAGSPO018.GIF"><img id="BLOGGER_PHOTO_ID_5479306533534898210" style="display: block; 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margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TAptEM4bRrI/AAAAAAAAAT0/LNsz7Jrdkao/s400/GCAGSPO038.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_X-hHPSANk_k/TApm_VclK_I/AAAAAAAAAO0/F4vmDSyBVY8/s1600/GCAGSPO039.GIF"><img id="BLOGGER_PHOTO_ID_5479305134924442610" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://3.bp.blogspot.com/_X-hHPSANk_k/TApm_VclK_I/AAAAAAAAAO0/F4vmDSyBVY8/s400/GCAGSPO039.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_X-hHPSANk_k/TApm_AUOGWI/AAAAAAAAAOs/6pV0-10cPSs/s1600/GCAGSPO040.GIF"><img id="BLOGGER_PHOTO_ID_5479305129252231522" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://3.bp.blogspot.com/_X-hHPSANk_k/TApm_AUOGWI/AAAAAAAAAOs/6pV0-10cPSs/s400/GCAGSPO040.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_X-hHPSANk_k/TApm-2T91vI/AAAAAAAAAOk/0s-WYv2Eqyk/s1600/GCAGSPO041.GIF"><img id="BLOGGER_PHOTO_ID_5479305126566811378" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://1.bp.blogspot.com/_X-hHPSANk_k/TApm-2T91vI/AAAAAAAAAOk/0s-WYv2Eqyk/s400/GCAGSPO041.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_X-hHPSANk_k/TApm-r9Iv8I/AAAAAAAAAOc/QsbGeEfcL2M/s1600/GCAGSPO042.GIF"><img id="BLOGGER_PHOTO_ID_5479305123786702786" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://3.bp.blogspot.com/_X-hHPSANk_k/TApm-r9Iv8I/AAAAAAAAAOc/QsbGeEfcL2M/s400/GCAGSPO042.GIF" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X-hHPSANk_k/TApmrdTS-uI/AAAAAAAAAOU/uacAk2xLHbk/s1600/GCAGSPO043.GIF"><img id="BLOGGER_PHOTO_ID_5479304793435601634" style="display: block; margin: 0px auto 10px; width: 400px; cursor: pointer; height: 298px; text-align: center;" alt="" src="http://4.bp.blogspot.com/_X-hHPSANk_k/TApmrdTS-uI/AAAAAAAAAOU/uacAk2xLHbk/s400/GCAGSPO043.GIF" border="0" /></a>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-51409413106660798552010-06-05T07:48:00.000-07:002010-06-05T07:57:25.406-07:00Statistics and Shale Plays ...<span style="font-weight: bold;">“There are three kinds of lies: lies, damn lies and statistics.”</span><br /><br /><span style="font-weight: bold;">Mark Twain</span><br /><br />Recently it was noted that there are over ten times more bacterial and fungal cells on or in the average human - than there are human cells! (http://en.wikipedia.org/wiki/Human_flora)<br /><br /><div style="text-align: left;">Along comes a statistician, let’s call him Bob. Now Bob went to a good school, he’s a good public speaker, and he keeps his shoes shiny. All-in-all, Bob is a pretty credible guy. Bob works with a fellow named Billy Red. Billy’s a good guy too, but he’s in the kangaroo business and frankly, he’s a little miffed that humans are getting all the attention these days! Nevertheless, Bob is able to maintain his objectivity. Bob looks at the above discovery, does the math again himself, and states his conclusion, “Humans are not humans at all - they are bugs and mold!” “Why do you say that?”, someone asks. “Well, over half the cells on the subjects analyzed are bugs and mold, so therefore humans must be … bugs and mold!”, Bob replies.<br /><br />Bob goes on to say, “Look, I wish it weren’t so. All I do is look at the FACTS. I’d be happy to go over this with anyone. I truly wish I was wrong.” What could be more reasonable?<br /><br />Along comes Sam. Sam is a noted biologist with a long, distinguished career. In fact, Sam is currently director of the biological survey for his adopted state. Sam’s state mainly has birds, not humans. Over the years though, Sam has known a few humans and he’s found them, well … a little weird! Sam’s impressed with Bob, and believes he’s telling the truth. Sam recommends Bob and Bob’s work, and he goes on to exclaim, “Y’all better pay attention to what Bob has to say.” And so it goes that Bob’s credibility grows, and it’s not looking good for humans remaining to be classified as humans …<br /><br />Who’s telling the truth here? What are the facts? Are humans, humans? Or are they bugs and mold?<br /></div><br />As you can see, statistics don’t always tell the whole story. In fact, in this complicated world we can get badly misled if we limit our analyses to simple, reductionist statistics. Statistics can be quite helpful – but only if they are used in parallel with a full and correct understanding of all the available objective and subjective data.<br /><br />Unfortunately, in this complicated world none of us has time to become “expert” on all things. As a result, we are forced to rely on simplifications or summaries done by others. Problems can ensure if those we are relying on have not gathered and correctly analyzed the requisite data, but instead have made statistical observations based on incomplete data or analyses. Further, in some cases it may not even be possible to come to a correct conclusion – even with all of the available data and the best analysis! The danger of statistics lies (pun intended) in the fact that statistics ALWAYS yield a numerical answer – an answer which may be premature, convoluted or just plain wrong.<br /><br />So, statistics are not facts at all; rather, statistics are just numbers that may - or may not - represent a realistic analysis of a situation.<br /><br /><span style="font-weight: bold;">The Complexity of Shale Plays</span><br />Various rock parameters are required in order for a geographical portion of a given of a shale play to “work”. Just like the rock you see on the side of the road, these parameters vary across an area. We humans tend to subdivide things into convenient, already-existing “buckets”. In the case of land areas, counties are already defined, so we might say Blah County is “good”, and Blah Blah County is “not good”. The fact is, even in a play where 40 counties are “good”, there are always the “edges” - with “edges” representing the transitions between “good” and “not good”.<br /><br />The noted Marcellus Shale expert, Dr. Terry Engelder of Penn State, has come up with the useful analogy of “toast” to explain the important shale gas geochemical parameter known as thermal maturity (sometimes referred to as Ro or Tm). In his slide show, Dr. Engelder shows partially cooked toast, charred toast, and toast that looks like it was cooked “just right”. The genius of this analogy is that we can all relate to properly cooked toast!<br /><br />As it turns out, rock parameters don’t necessarily honor the county lines we have drawn. So, on the “edges” of a play part of a county may be perfectly cooked toast, and part of it may be burned toast! How do we find these edges? Sometimes data exists, but often it is spotty or undependable for whatever reason. Sometimes two analysts can look at the same data and come up with two different answers. Sometimes two analysts can come up with … five different answers! Also, rock parameters don’t follow straight lines on a map; they curve around – in here, out there.<br /><br />So, often we have to find the edges the hard, expensive way - we have to drill multi-million dollar wells. And sometimes even when Company X thinks they know where the edge is, Company Y doesn’t have that same data. So, Company Y may wind up drilling a non-commercial well in an area that Company X had already condemned as “not good”. In this case, Company Y is viewed with disfavor. Given the full alphabet of companies out there, and given the infinitely curvy lines of rock parameters, there can be a lot of failed efforts along an “edge”. All these failed efforts can go into a statistical exercise that views a given portion of a given shale play in a simplistic way. Should the play in general, and Company X in particular, be condemned for the actions of Company Y and its alphabet brethren?<br /><br />On the other hand, sometimes Company Y may have the same data as Company X, but Company Y thinks the data is suspect, or incomplete, or just has a different interpretation. So, in this case, Company Y takes the risk and drills a successful, multi-million dollar well. Company Y becomes a hero and in fact by extending the play in this direction, Companies Z, A, B - and even Company X - may benefit! Meanwhile, the royalty owners in this new area and the schoolchildren of that state (who sometimes get the benefits from the production taxes paid by Company Y and its royalty owners) become major beneficiaries of Company Y’s “guts”. Such is the nature of the oil and gas exploration business in unconventional shale plays!MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-48155728209693443132010-01-20T19:23:00.000-08:002010-01-21T08:54:52.802-08:00Changing Our Hearts<span style="font-weight: bold;">Changing</span> - the change or changes we'd all like to see ... begin with us.<br /><span style="font-weight: bold;">Our</span> - inclusive; we're all in this together - "our" hearts means our own, individual hearts, our Austin, our Texas, our USA, our World hearts ...<br /><span style="font-weight: bold;">Hearts</span> - most folks are familiar with the phrase "what's in your heart"; heart is essentially synonymous with love, which is fundamental to the Greatest Commandment.<br /><br />Note: A new year is a time of renewal, so it should be with a "blog". The above is actually my entry to a "vision statement contest" at church. I accidentally published it here on the Peak Opportunities blog, when I thought I was submitting it to the church blog. I was about to remove it when I thought, no, it belongs here as well.<br /><br />Most of us in the "Peak Oil Community" believe that "Peak Oil" is essentially old news, by now. This despite the fact that probably 75 % of folks have never heard of it, by my crude estimates (little pun problem I seem to have). Of that 25 % who have heard of Peak Oil, maybe only half of those understand it and believe it. Nevertheless, from here on we'll try to focus more on the Peak Opportunities - the action items - and less on "proving up Peak Oil".<br /><br />Sure, we'll have the occasional news on the Cantarell declines, and a few statistics here and there. However, we'll try to focus more on what we can do, what we can change. Not that we haven't had some big picture ideas before (see our The Coming Liquid Fuels Crisis: The Natural Gas Partial Solution.) But from Peak Oil we'll drill down (can't seem to help it) as we can - and we'll "drill up" (philosophize) a little, too.MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-85922568162513436002009-09-22T14:31:00.000-07:002009-09-24T06:09:06.860-07:00Cantarell Update, September 2009: The Peak Oil PosterChild Continues To Plummet<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_X-hHPSANk_k/SrrIvECoBEI/AAAAAAAAAOM/JMtoVO1STvs/s1600-h/GCAGS099.GIF"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 400px; height: 272px;" src="http://1.bp.blogspot.com/_X-hHPSANk_k/SrrIvECoBEI/AAAAAAAAAOM/JMtoVO1STvs/s400/GCAGS099.GIF" alt="" id="BLOGGER_PHOTO_ID_5384837015339009090" border="0" /></a><br />As we last reported, in May 2009, Cantarell Field's April 2009 production averaged 713,000 barrels per day, down from 862,060 barrels per day in late 2008.<br /><br />Now, according to a September 9, 2009 article in the <span style="font-style: italic;">Wall Street Journal</span>, Cantarell is down to 500,000 barrels per day. (presumably for August 2009, and not yet plotted on the above graph). This represents a 30 % drop over only 4 months, which far exceeds the last calculated decline rate of 35 % PER YEAR.<br /><br />A subsequent article in the <span style="font-style: italic;">Oil and Gas Journal</span>, dated September 14, 2009, quoted PEMEX's recent prediction that total production will average 2.5 MMBO/D in 2010 (Mexico's total oil production averaged 3.4 MMBO/D in 2004). The article notes that this rate is down 4 % from the first half of 2009, and down 5.7 % from previous estimates. According to PEMEX, actual production was 2.561 MMBO/D in July 2009, so it is difficult for us to imagine that production could average 2.5 MMBO/D in 2010, given the precipitous decline of Cantarell and small increases seen in the KMZ and Chicontepec fields.<br /><br />The OGJ article went on to state that exports were 1.2 MMBO/D in the first half of 2009, down 14.8 % from that period in 2008.<br /><br />Background: Cantarell Field was producing 2,100,000 barrels per day in late 2004. Cantarell, at that time, supplied around 2.5 % of the world's liquid hydrocarbons (not just crude, but also condensate and natural gas liquids). So, here is a substantial portion of the world's oil production that is declining at a rate MUCH greater than 5 % per year ...<br /><br />Oil exports supply 40 % of the Mexican government's annual budget. (This figure was reported in the recent WSJ article, but it has been quoted since 2007, or thereabouts.)<br /><br />A few important questions:<br /><ul><li>What will replace oil exports in Mexico's revenue budget - in a couple of years or less - when they have no oil to export?</li><li>Mexico will need to import oil shortly after the exports stop - where will they get the oil, and what will they use to pay for it?</li><li>Where will the US obtain the 1.3 MMBO/D that Mexico has supplied, in recent years?</li></ul>For more information, please see our previous postings at:<br /><br /><a href="http://peakopps.blogspot.com/search/label/Cantarell%20Field">http://peakopps.blogspot.com/search/label/Cantarell%20Field</a>MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com1tag:blogger.com,1999:blog-8684288546539424804.post-12384002827717223632009-07-14T14:14:00.000-07:002009-07-14T14:24:27.081-07:00Demand and more - 7/13/09From Tom Whipple, 7/13/09:<br /><br />China is the only economy that *claims* to be making progress, this despite a 21 % drop in exports ...<br /><br />Chinese passenger vehicle sales rose 48 % in June 2009 ... full year sales for 2009 estimated to be 11 million. (MP Note: Some Chinese-released stats have, in the past, been "less than perfect".)<br /><br />Vehicles on the road in U.S.: 250 million, 142,000 powered by natural gas ...<br /><br />IMF forecast says world economy will expand 2.5 % next year ... (MP Note: ???)<br /><br />IEA says demand for oil will increase 1.4 MMBO/D next year, or 1.7 % ... (MP Note: same as above.)MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0tag:blogger.com,1999:blog-8684288546539424804.post-35333284610504009692009-07-14T14:08:00.001-07:002009-07-14T14:11:12.086-07:00NGV incentives: Are we making some progress here?From Tom Whipple, 7/13/09 update:<br /><br />"A bill to increase tax incentives for buying vehicles fueled by natural gas is making its way through Congress."MPaynehttp://www.blogger.com/profile/00462266852119860741noreply@blogger.com0