Whither Peak Oil?

"Unprecedented inelasticity in recent years."

- a comment from "Mitch"

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

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

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

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

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

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

When you consider Peak Oil on the scale that it needs to be considered,

that of a ship executing a turn, then the graph of Dr. Campbell's

estimates is remarkably correct, and still plenty scary. A few million

barrels more per day in supply due to shale oil, other discoveries, a

few million barrels per day less in demand due to the worldwide

recession - these things are "noise" in the bigger picture - which is

shown with sufficient accuracy on both Campbell's and Deffeyes' graphs.

Shale oil and shale gas are important resources that need to be

developed. Natural gas needs to be utilized in vehicles. These things

won't "fix" Peak Oil. We need a lot fewer vehicles, a lot more mass

transit retrofits. We need a focus on conservation as well as new

energy supplies, both fossil and renewable. The good news is, these

things are happening - we just need to speed the efforts. And we need

to realize that these things are not mutually exclusive. They are part

of the "all of the above, silver BB solution" that

we need to continue to pursue, but at an accelerated rate. We waste

valuable time and resources arguing that we shouldn't be doing one,

should only do the other, etc. We need them all.

So, yes, a little more oil and a little less consumption, but they

amount to "noise" in the longer term view. Consider them temporary

reprieves. Consider them not an invalidation of Peak Oil, but rather

one more chance, a little more time to ramp up the actions which

Dr. Hirsch et al said could take 20 years, if severe consequences were

to be avoided.

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

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

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

So, let's look at the two main components that are touted, currently, regarding growth in oil supply:

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

Here are what we believe to be some hard datapoints:

Bakken:  produced 594,349 BO/D in June, 2012  
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf


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

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

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

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

http://www.rrc.state.tx.us/eagleford/EagleFordOilProduction.pdf


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

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

Bottom-Line:

A recent analysis by the firm Wood MacKenzie may provide the most realistic estimate of current and projected production rates from the shale oil plays. This work was quoted in the Oil & Gas Journal, September 3, 2012:

• Current (2012) rate from "tight oil":  1.6 MMBO/D

• Projected 2020 rate:  4.2 MMBO/D, with 1.3 MMBO/D from the Bakken and 1.3 MMBO/D from the Eagle Ford (correctly includes condensate, but not NGL).  The balance (1.6 MMBO/D) would come from the Permian plays (440,000 BO/D), Niobrara, Utica, Mississippian, Austin Chalk and Monterrey.

So, the bottom-line is that these unconventional, aka shale oil, aka tight oil plays are believed to be capable of providing an incremental 2.6 MMBO/D by 2020.

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

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

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

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

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


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

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

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

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

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

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

The Perennial Search for Perennial Grains

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A snip from 2009, Mechanical Engineering magazine

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

excerpts from: the Oil Age, by Frank Wicks

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

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

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

Is it any wonder everyone's confused? Saudi's boost output ...

From Bloomberg, June 10, 2011:

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

 

Play Video

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)

Saudi Arabia signaled it’s ready to deliver on a pledge to boost the supply of oil after the collapse of OPEC talks two days ago.
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.
Saudi Arabia “wants everyone to understand that they’re serious,” Olivier Jakob, an analyst at Petromatrix GmbH in Zug, Switzerland, said today by phone. “It’s important that the Saudis are signaling that they’re offering additional barrels.”
The June 8 meeting of the Organization of Petroleum Export Countries broke down after six nations led by Iran opposed a Saudi plan to replace lost output from Libya and aid the U.S. economic recovery, Saudi Oil Minister Ali al-Naimi said on the day. 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.

More on the Saudi's slash of oil output

Soon 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 Oil & Gas Journal, sourced from the Oil & Gas Journal Online, 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:

"Saudi Arabia's production is estimated at 8.2 million b/d. [which is what Mr. Naimi said they had indeed produced in March, some four weeks later]  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." [Mr. Naimi confirmed the 9 million b/d, as to February]

"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."

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.

Mr. Horsnell went on to say:

"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 ..."

This doesn't sound much like a market which is oversupplied ...

Earlier in the same article, with respect to demand, Mr. Horsnell said:

"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."

This doesn't seem to jive with the drop in demand/oversupplied market to which Mr. Naimi referred ...

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 alternate explanations for the Saudi cutback.  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 some interesting graphs on April 13.  Looking at one of those graphs in particular, 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.

(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.)

"Saudi's slash oil output" ... or did physics?

"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.
Saudi oil minister Ali al-Naimi, April 18, 2011

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?

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.

You've got to ask yourself, why would Saudi oil minister al-Naimi issue this seemingly nonsensical press release?

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.)

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.

One other thing:  Why would President Obama, in his "energy policy speech" of March 30, 2011, 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 "all-of-the-above solution".  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.

Full press release here:   Saudi's slash output

Wayne 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 Escape from Berkeley alternate fuel race.

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!


Wayne Keith's unofficial woodgas world speed record video:

More on Woodgas



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.

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.



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.

Video of the pre-startup flare from a Power Pallet, at the October 2010 All Power Labs workshop:

 
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.


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).  



We have referred to woodgas in a few prior posts:

 The coming liquid fuels crisis: the natural gas partial solution.

Oilpatch engineer replies to peak oil activist.

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: 
http://www.gekgasifier.com/

Dr. Hirsch's new book: The Impending World Energy Mess

Several folks have asked, "What's up with Peak Oil?".

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.

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 "Peaking of World Oil Production: Impacts, Mitigation, & Risk Managment". 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).

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).

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.

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.

Dr. Hirsch, Dr. Bezdek and Mr. Wendling have now written The Impending World Energy Mess, which was released around October 1, 2010.

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.

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.

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.

The Impending World Energy Mess should create additional awareness of Peak Oil - we will see what the reaction/consequences are.

Shown below are a two interviews with Dr. Hirsch, regarding the book, and a book review:


Steve Andrews of ASPO-USA interviews Dr. Hirsch regarding his book

Matthew Auzanneau interviews Dr. Hirsch regarding his book

Tom Whipple reviews Dr. Hirsch's book

The Coming Liquid Fuels Crisis: the Natural Gas (partial) Solution

Recently, Dr. Robert Hirsch wrote an article titled "Peak oil - what do we do now?". This brief but content-laden article opined that Peak Oil was essentially past tense, and it correctly implied that little mitigation has taken place, to date. The last paragraph included some mitigation action ideas, but notably missing was any mention of natural gas. Perhaps it was simply an oversight; but with a future liquid fuels/transportation fuels crisis in the works due to Peak Oil, citizens of the United States of America - and their leaders - need clarification.

The truth is, current natural gas prices confirm that there is a substantial surplus of natural gas deliverability in the United States. This surplus is largely due to a rapid development of several huge gas fields which were only discovered in the last several years. These new fields are often referred to as "resource plays", or "shale gas", or "unconventional gas". They are termed "unconventional" because they produce from rock that was formerly not believed capable of being a reservoir, and also due to the fact that this rock forms both the source and the trap for the natural gas.

The two largest of these plays are the Haynesville Shale, located in East Texas and Northwest Louisiana, and the Marcellus Shale, located primarily in Pennsylvania, New York, Ohio and West Virginia. The Haynesville might cover around 3.8 million acres and, according to Chesapeake Energy's Aubrey McClendon, it might become the world's largest gas field, with 1500 trillion cubic feet (TCF) of reserves in place. The Marcellus, according to Penn State's Terry Engelder, encompasses 31 million acres, and contain 363 TCF of gas in place. These two plays are only about 2 years old - essentially old enough to have a rough idea of their potential, but brand new from a depletion standpoint. Both of these plays are excellent from both the deliverability and reserves standpoint.

To put that combined 1863 TCF into perspective, the total annual consumption in the US is under 25 TCF. So, with a recovery factor of 50 %, these two fields alone could supply the US with gas at the current rate, for about 40 years. But wait, there are lots of other fields in the US, both conventional and unconventional. And, there are even two more large shale plays, the Fayetteville Shale and the Barnett Shale. In addition to these "Big 4" shale plays there are others which are in the early phases of exploration and development.

So now you are starting to understand why this author is perplexed when folks say that natural gas may be in short supply.

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:

* "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."

* "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."

* "Waiting until world oil production peaks before taking crash program action leaves the world with a significant fuel deficit for more than two decades." (emphasis added) Additionally, he went on to say, "Late initiation of mitigation may result in severe consequences."

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.

So, given:

* our status regarding preparation for/mitigation of Peak Oil (or
lack thereof).
* the current and near term surplus of natural gas, and the
intermediate and longer term "sufficient" supplies.
* the ease of converting existing vehicles to natural gas.
* the ease of delivering new, dual fuel NG/gasoline vehicles.
(aftermarket conversions, if necessary)
* the existing natural gas infrastructure in terms of transmission
and distribution lines.
* the current availability of small gas compressors for home use.
(yes, they are expensive for one user, but there could be
work-arounds)
* the immediate "commuter solution" (fuel at home, drive 40 miles, return) provided by natural gas vehicles using current, off-the-shelf parts versus the still-being-developed vehicular electrical storage solutions.
* the carbon advantage of natural gas versus coal. (half our
electrical production is from coal, and natural gas produces half
the carbon when burned, in comparison to coal)
* the efficiency losses of converting coal to electricity and
delivering it for use as a car fuel.
* the badly needed jobs provided by the exploration for and the production of natural gas, the conversion of existing vehicles, the production of new dual fuel vehicles and the construction of fueling infrastructure.

... this author doesn't understand why our "policy" does not include natural gas vehicles (NGV's), as at least a partial mitigation to the coming liquid fuels crisis?

One idea, in order to solve the commercial fueling station/NGV availability "Catch-22", would be to subsidize fleets - such as school districts - to immediately incorporate NGV's into some portion of their fleet, while making the resulting fueling infrastructure available to the public. In other words, don't do a full conversion of all gasoline and diesel fleet vehicles to natural gas; rather, let's hedge our bets and get some infrastructure going by converting some of our fleet vehicles to NGV's.

In summary, given the abundance of low carbon emitting, domestic natural gas, the likelyhood for future oil supply shortages and the easy conversion technology and the need for domestic jobs, it is difficult to understand why action is not being taken to promote NGV's as a partial solution.

Endnote: Natural gas should not be counted on for a total replacement of liquid fuels. As James Kunstler would say, we need to re-think "Happy Motoring". With respect to transportation, we need to implement conservation, carpooling and mass transit retrofits, and we need to re-design where/how we work and live. In addition, we need to push the development of algal and biomass fuels, but with consideration of their total environmental costs. We should be accelerating research on electrical storage devices for vehicles so that the plug-in hybrid and full electric car can become reality. In all of the above there are wonderful opportunities for good jobs and a great economy. Natural gas can serve as a clean, convenient, low carbon transition fuel while all of the above are being rapidly implemented. Finally, a natural gas vehicle can become a renewable fuel vehicle. Yes, the same engine that runs on methane produced from a gas well will also run on methane produced from cow manure or sewage sludge, or gas that is pyrolyzed from wood or biomass (1800's technology).

My belief is not that natural gas vehicles will reduce oil imports; rather, oil imports will be reduced by physics, namely "Peak Oil". Natural gas vehicles are simply a very effective tool to help mitigate the effects of the coming liquid fuels crisis - to help get our kids get to school, to help keep our country running - while we develop alternative transportation methods and lifestyles over a twenty year period.

We need to get rid of the divisiveness of, "fossil fuels bad, alternate energy good". Likewise, we need to avoid the reverse. For the next twenty years, we need BOTH fossil fuels and alternate energy.

Cantarell Field at 862,060 barrels per day

NOTE: See our postings of March 19, June 21 and August 31, 2008.

Cantarell Field,which first produced in 1979, is the second or third largest oil field in the world.
Cantarell's production rate was 2,100,000 barrels per day in 2004.
In 2005, production began to decline, for the first time.
As shown in the title, production has declined from 2,100,000 barrels per day to 862,060 barrels per day, in just 4 years.

This is why we call Cantarell Field the "Peak Oil Poster Child".

Pemex Oil Production Drops 6.5% on Cantarell Field (Update2)
By Andres R. Martinez

Dec. 22 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, said crude oil output fell 6.5 percent in November from the year-earlier period as production at its Cantarell field declined at a faster-than-expected rate.

Production dropped to 2.711 million barrels a day, from 2.901 million barrels a day a year earlier, the company known as Pemex said today on its Web site. In an e-mail, Pemex cited Cantarell, its largest field, as the reason for the drop.

The Mexico City-based company in October lowered its 2008 output forecast by 3.6 percent to as low as 2.7 million barrels a day after interruptions from hurricanes. It was the third time Pemex reduced its forecast this year, after a faster-than- expected decline at Cantarell, the world’s third-largest field.

Cantarell’s output fell 33 percent, more than twice as fast as government estimates, to 862,060 barrels a day from a year earlier. Declining pressure at Cantarell has made it more expensive and harder to continue pumping oil from the offshore deposit.

Cantarell accounted for 32 percent of Pemex’s total output, half of the 65 percent it once represented at its peak.

Oil exports fell 20 percent to 1.511 million barrels a day, according to a chart on Pemex’s Web site.

Mexico is the third-largest supplier of crude to the U.S. Canada and Saudi Arabia are the first- and second-largest suppliers.

Crude oil for February delivery fell $2.45, or 5.8 percent, to settle at $39.91 a barrel at 2:43 p.m. on the New York Mercantile Exchange. Oil has tumbled about 72 percent from a record $147.27 a barrel on July 11.

Natural-gas production jumped 19 percent to a record high of 7.239 billion cubic feet a day in November.

To contact the reporter on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net

Selected slides from the 2008 ASPO-USA Conference

The 2008 ASPO-USA Conference held September 21-23, 2008, in Sacramento, California, featured excellent speakers and significant content. Several nice versions of notes from the Conference have now been published. Further, essentially all of the presentations from the Conference are available in PDF form on the ASPO-USA site at:

http://www.aspo-usa.org/aspousa4/proceedings/

However, if you are like many of us, you may feel as though you don't have the time to download and view all of these presentations, as good as they may be. So, in an effort demonstrate the quality of the content in these presentations, and also as a convenient reference, a selection of slides from a number of the presentations is posted below. The captions shown above each slide indicate this author's comments; the author of the presentation is shown in parentheses, if not on the slide.

Specifically, below you'll find a map showing the locations of that offshore oil which we all keep talking about; the location of ANWR and the relative size of the portion they wish to develop in comparison to the wilderness area; a neat graphic which makes each country's geography proportional to its oil endowment; interesting insights into China's oil and coal consumption; coal reserve info; coal plant efficiency, clean coal and sequestration efficiencies; carbon emissions of coal v. natural gas and much more.

Note: Only a portion of the presentations are represented here; by no means is that reflective of the quality of the presentations not represented here. It is well worth viewing each of the presentations at the ASPO link shown above.

Clean bar graphs showing world importers, and exporters.



Graphical explanation of how much needs to be found, just to "break even".



Big map of N Alaska - where ANWAR, Prudehoe are located.
(Gill Mull)

The "1002 Area", less than 10% of ANWR, where the oil is.
(Gill Mull)


Estimates of "undiscovered" oil in each of the N. Alaska areas.
(Gill Mull)


Simple graph showing US oil production decline, and that of Alaska.
(Gill Mull)

But: diminishing returns from areas added in Alaska, to date.
(Gill Mull)



A startling conclusion.
(Gill Mull)


Neat graphic showing oil producing countries, with their geography proportionately scaled to reflect their oil endowment.
(Jeremy Gilbert)


Excellent - here is how much oil is theoretically available
in each of the prohibited access, offshore areas.
(Jeremy Gilbert)


Ranking of world's largest oilfields.
(Jim Buckee)


Composite map identifying major fields in the Middle East.
(Jim Buckee)



Various named portions of Ghawar, the world's largest oilfield.
Note: Best quality reservoir is in the North, quality gets progressively poorer going South.
(Jim Buckee)

Macro diagram of Middle East deposition and "goodosity".
(Jim Buckee)



Ghawar basics. Has produced 59 - 66 % of what it will ultimately produce.
Note: "Peak Oil" peak rate usually occurs near 50 % depletion, due to physics.
(Jim Buckee)


Mexico's Cantarell - the significant decline is a relatively new phenomenon.
(Jim Buckee)


World Ethanol & "XTL" production and forecast.
Yes, we need it. No, it won't get us out of bind, alone.
(Jim Buckee)




Who, really, is "Big Oil". Hint: Not ExxonMobil, BP or Chevron.
(Jim Buckee)



Lots of estimates on the total endowment of recoverable oil,
but they seem to average around 2 trillion barrels; we've produced about 1 trillion.
(Jim Buckee)



Energy Conservation is first!
(Andy Weissman)

Plan is needed, use the "ripest" options, must begin immediately!
(Andy Weissman)

Thinks gas demand is being underestimated, with grave consequences.
In the end, gas & electricity will likely trade near BTU par with oil.
(Andy Weissman)

Not just an oil/liquid fuels problem - electricity & gas, too.
(Andy Weissman)

Economic effects of natural gas price parity.
Note: this conference was about 3 weeks ago; since that time
our economy has already become crippled! Wow.
(Andy Weissman)


But oil dependence is still the biggest issue. Mr. Weissman seems to understand the seriousness of the situation.
(Andy Weissman)

Potential economic effects.
Note: This conference was about 3 weeks ago; since
that time, California has gone into crisis again - to the tune
of $7 billion.
(Andy Weissman)

This was fresh information for me. But not surprising.
LNG near parity with oil in some markets.
(Andy Weissman)


Five Essential Steps (1-3 shown)
(Andy Weissman)


Five Essential Steps (4-5 shown)
(Andy Weissman)

New approach is needed.
(Andy Weissman)


Action needed now!
(Andy Weissman)


Differences in product costs due to shipping, with higher oil prices.
(Jim Puplava)



Where China get's it electricity. Coal.
(David Fridley)


China's oil is largely for "non-discretionary" uses. In other words,
it is more painful for them to do without. Think about it.
(David Fridley)


Trouble: They will even have a problem with coal.
Exports are going down, imports are going up.
Imports only started a few years ago ...
(David Fridley)



Energy used by the world, by region and by fuel.
(David Hughes)


How many more years of coal do we have in the US?
(David Hughes)


Type of hydrocarbons used by world, versus left in the world.
(David Hughes)




When coal production may "peak", and each country's contribution.
(David Hughes)


How clean can you get "clean coal", what does it do to the plant efficiency?
(David Hughes)


Comparison of Carbon Capture and Storage systems (CCS),
efficiencies of various plant technologies, with and without CCS.
(David Hughes)


Comparison of Carbon Capture and Storage systems (CCS),
capital costs of various plant technologies, with and without CCS.
(David Hughes)



Efficiencies: Heat Capture v. IGCC with CCS
(David Hughes)


An important, big picture message from Mr. Hughes.
Conservation should be first and foremost.
Further plant complexity is only a stopgap.
(David Hughes)



Complexity v. Simplicity: Sustainability is found at the balance point.
(David Hughes)


A bigger, big picture.
(David Hughes)


Power Down - or Collapse. That is the question.
Note: Mr. Hughes is quite cognizant of the other forms
or alternate and conventional energy.
(David Hughes)


Coal reserves by country.
(Michael Webber)


How much coal is left in the US?
(Michael Webber)


Coal plant efficiencies.
(Michael Webber)


Coal to liquids (CTL) economics.
(Michael Webber)


How do coal, oil and natural gas compare, carbon-emission wise?
(Michael Webber)


Diagram of carbon capture at a coal plant.
(Michael Webber)


US Air Force is the world's largest energy consumer! Wow!
They are evidently concerned about their liquid fuel sources.
(Michael Webber)


Truth about Brazil's reported energy independence!
Hint: It takes a lot of oil for them to be independent.
(Robert Rapier)


Brazil v. US - oil consumption & production, per capita.
(Robert Rapier)


Proposed solutions.
(Robert Rapier)


Additional recommendations.
(Robert Rapier)