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)

Fix energy, fix the economy

Recently there has been much discussion as to the outlook for oil and gas prices, given the credit crisis. Hundreds of millions have been invested in new drilling rigs, leases, personnel and other infrastructure. The concern in the oilpatch is that the increased shale gas deliverability and the credit crisis-induced demand destruction may create a sharp, disruptive, price decline. At the same time, Fortune recently published Matt Simmons' "$500 per barrel" article.

So, what's the answer? Is it going to be $50 oil, or $500 oil? As usual, there is no simple answer. There's just a lot going on. The following is an attempt to lay out some of the key factors.

Overarching theme: As previously published (and as paraphrased from the wise words of Tom Whipple of ASPO-USA), "Worldwide oil depletion is in a race with demand destruction." Curent oil prices would indicate that the credit crisis-induced demand destruction is currently winning. The recently published EIA demand data shows a 6.4% drop in July 2008 demand, versus that of July 2007.

What could affect/interrupt demand destruction over the next few years?

• some sort of military event, which you can probably imagine, which could close the Straits of Hormuz or damage other key chokepoints or installations. This scenario is likely the only one (save hyperinflation) which could deliver Matt Simmons' $500 pricing, over the next few years.
  
• Venezuela, Nigeria and Mexico are the 3rd, 4th and 5th largest suppliers of crude oil to the US. In late September, Chavez was in talks with the Chinese to ramp up exports from a current 250,000 BO/D to 1 MMBO/D by 2012. The US currently imports about 1.2 MMBO/D from Venezuela, so presumably the Chinese increase would come at the expense of the US. Meanwhile, Nigeria appears about to blow, literally, at any time. And Mexico is reeling from "Peak Oil Posterchild", Cantarell, which has recently declined 30 % year-over-year. My guess is that Mexico will have to cease all exports by about 2010!
• the BTC pipeline in/near Georgia is scheduled to transport some 840,000 BO/D for the rest of 2008, then 1 MMBO/D in 2009. Obviously, it is subject to further Russian mischief. This oil primarily supplies the EU.
  
• the "groupthink" at the recently held ASPO-USA conference seems to have been that natural gas may be in short supply within the next few years. Two reasons. First, it seems that due to the delay/retraction of proposed coal plants (due to all the protests), utilities are being forced to "pencil in" simple, combined cycle natural gas plants as their near term solution to meeting demand. Andy Weissmann and others believe that they all may be counting on the same gas, which may not be there. Secondly, others believe that production from shale gas is not sustainable in the near term. (This author believes that shale gas as well as other unconventional and conventional natural gas sources can, in fact, supply enough gas for incremental power generation as well as for the replacement of some portion of gasoline and diesel fuels in vehicles - over, say, a 10 to 20 year term.) Also realize that other groups believe that there may be a near term glut of natural gas, due to substantial shale gas drilling and new LNG landings.

In summary, it appears that demand destruction may mask the reality of Peak Oil for a time, perhaps for a few years. This "stay of execution" is an important opportunity that should not be wasted. Namely, the next 24 months should be utilized to rapidly implement:

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

The good news? It appears that both Presidential candidates agree on most of the above; in fact, one group refers to their energy solution as the "all of the above" solution.

Furthermore, at least one group has advanced, albeit not very articulately, that "energy is the solution to the economy".

What is meant by this?

Well, despite my personal aversion to additional government involvement, the fact of the matter is that we face both an economic abyss, and an energy abyss. Time is short, both for the economy and for oil. Rather than spending a trillion dollars on buying toxic derivatives, or on a war, these funds would be better spent in helping private enterprise jump-start the above referenced conservation techniques and alternate energy research and implementation. The use of our hard-earned tax dollars to help accelerate these initiatives would create jobs and new businesses. The bottom-line is that solving the energy problem - which must be dealt with anyway, and soon - is the perfect solution to solving the consumption- and credit-induced economic dislocation we are now beginning to experience. There would be a third, important benefit. Energy conservation, increased natural gas use and alternate energy implementation all help lower CO2 emissions.

Putting Cantarell's continued decline into perspective

PEMEX recently announced that Cantarell Field produced just 1,010,000 barrels of oil per day in July, versus 1,050,000 barrels per day in June. That's a drop of 40,000 barrels per day, in just one month. Now, an oilfield's production does fluctuate month-to-month, but to put this into perspective, a loss of 40,000 barrels per day is equal to 30% of the estimated peak production rate from Shell's Perdido project, which is being constructed in 8000' of water near the international boundary with Mexico!

The Perdido project (http://www.shell.com/home/content/aboutshell/our_strategy/major_projects_2/perdido/perdido_13032008.html) is a multi-billion dollar, multi-year project using state-of-the-art technology. Yet the world's second largest oilfield is capable of dropping 30% of the ultimate, maximum rate of this project - in just one month!

What will we do when Mexico, the 5th (was 4th) largest exporter of oil to the U.S., has no more oil for us? Good question. Unfortunately, we'll find out the answer before long.

This is what Peak Oil is all about. World-wide, there are many oil and gas projects that need to be pursued. But they just can't keep up with the depletion from the "Giant" oilfields that we've unconsciously relied upon for years!

So, what do we need to be doing? We need to increase the rate of implementation of the following efforts:

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

Oil Prices Versus Contracting Economies

Here is something to keep in mind as you try to make sense of what is going on in the world, in terms of geopolitics, oil prices and macroeconomics:

"There is a world wide race going to between contracting economies and world oil production, the score of which will be kept in the price of oil."

Tom Whipple, 8/28/08

Tom Whipple is the editor of the Falls Church News-Press, in Falls Church, Virginia

Whipple goes on to say that a wildcard could exist in terms of OPEC's willingness to accept less than "X" dollars for a barrel of oil. In other words, if and when demand destruction and economic contraction drop overall demand and thus the price for oil, OPEC could once again begin restricting production to increase prices.

In summary, a short term drop in oil prices (6 months? 2 years?) does not mean that the effects of worldwide giant oilfield depletion (aka Peak Oil) are over, only that other macroeconomic events have taken precedence, for a bit. Let's hope that the efforts being slowly set in motion (conservation, mass transportation retrofits, natural gas vehicles, expanded natural gas drilling, wind energy, battery/electrical storage research, design/production of more efficient cars, offshore drilling, biofuels research, nuclear plants, coal plants, solar thermal innovations) are not slowed as we enter a possible "eye" of the Peak Oil hurricane.