You know, we can go back and forth on this all day, but you’ve yet to explain how the futures market could be predicting $80 oil by 2021 then. And there’s no ambiguity there either. It’s a steady decline from now right through the next seven years.
So how exactly is that possible eh? I mean if demand is increasing, as you say and production is so constrained as you say, then the futures market should be predicting, at the very least, a steadily increasing price - but it’s not - is it?
And I guarantee you that when people are betting 10’s of millions on the outcome of the direction of a commodity like oil, they have much better information and research than either of us do.
No. The abiotic fraction of hydrocarbons in the crust remains a very small fraction. Gold was wrong.
However the biological fraction of hydrocarbons in the crust is very large indeed; the recoverable fraction of oil is a tiny fraction of all the kerogen in the crust, which is roughly equal to all the biological material which has been buried over the billions of years of life on Earth.
As recovery technology improves a larger fraction of this material will be recoverable, but it will never be economic to recover it all. Most of this kerogen exists as tiny traces in other rocks and could only be extracted through a vast expenditure of energy.
The Monterey shale would run out in 2.5 years, and all estimated shale in the continental US in 5, if those deposits were supplying 100% of the nation’s oil needs. They’re not. Most of our oil still comes from conventional wells, and much of it from abroad, and so the shales are being depleted more slowly. They will still eventually be depleted to the point of impracticality, but until that happens, they’ll push the price down.
How do you expect an explanation without a data source? The “prediction” looks exactly like a straight trendline based on two reference points, perhaps it was laid out by the smartest guys in the room. Check back with us next year to see if the line has moved.
Simple. Suddenly, in the last few years, fracking technology has become possible, and mainstream. A whole lot of oil is suddenly a lot more easily acessible. There will be a rush of new frackin’ fields coming online at once. As these do, the flood of oil means excess supply and reduced price. Once all the available fields are online, producing, getting close to exhausted, and more extreme measures are needed to pump out the oil - then the price will start to go up. Not in 8 years, but maybe in 20.
Like I said, we’ve bought some time with these new technologies. Will we use it to develop new tech, or simply keep driving Ford Expeditions and then panic in 30 years?
So how widespread is the geology for shale oil? Most of northern Canada and Siberia, IIRC, is Pre-Cambrian; the periphery has oil - Alberta, Montana,North Dakota - and probably the same applies to the already oil-rich areas around Siberia - middle Russia, Khazakistan, Uzbekistan, Azerbaijan… I assume the Himilayas and the Tibetan plateau are not oil-rich, but maybe I’m wrong. haven’t heard anything about the Indian subcontinet or China. I presume the coal deposits in Northeast China are indicators that shale oil may also be available… South America? Africa?
I assume shale oil has to be a residue of a specific geological era that is still buried and sealed. The approximate geological history of th world is pretty well known.
My point being, we’ve known about the US shale and other formations for decades, just could not get them out until now. It’s not like it’s a surprise new find. The question is - how many more around the world?
Even so, it just buys us a few decades untilwe’'re back to the same problem.
Right. The thing is that in 30 years your car will be driving itself and probably won’t use hydrocarbons. The issue will be how the electricity it uses will be generated and that certainly won’t come from oil. It doesn’t now and it won’t in the future.
This is the heart of the whole “Oil Is Bad” mantra. If gas continues to be as realtively cheap as it is now and looks to be for 8 years or more, who is going to develop these magical batteries and electrical sources?
The Chevy Volt, IIRC was a gamble that by the time the car was in serious production the battery tech would be available (barely) to give it adequate performance… but it was still not necessarily a break-even.
Well you can’t have it both ways dude. Either oil will gradually get more expensive and force these changes or it won’t. The only way the peakers are distinguished is they think there will be some cataclysmic shift from cheap oil to hideously expensive oil and I don’t think that’s what you’ve been arguing.
It is certain that oil supplies will dwindle and become more expensive. It remains to be seen how quickly this happens, and how quickly replacements are developed.
IMHO, The problem here is this, we are likely to understand that we have hit Peak Oil after the fact. Production and Proven Reserves are estimates and vary wildly by source and by the time consensus is reached(there will still be naysayers), will we be prepared? Once the tipping point is reached Oil prices are likely to shoot through the roof because of market forces and speculation. So you wake up one morning and find that your cost at the pump has doubled and is never going back down, then you go to the grocery store and find prices have gone up by a third, the pharmacy ditto, etc, what are you going to do then? Our modern lives are powered by petroleum to a large extent, there is a finite amount of oil in the ground, does it not seem prudent to prepare for the day when there is less oil available than there is today?
I am by no means saying we should trash our economy because oil is running out tomorrow but doing things like developing mass transit, using and developing fuel saving tech and developing alternate sources seems prudent to me.
There are some signs that the oil market is not quite right
The Saudis are developing offshore oil platforms. Why would they do this if they have a Metric A** Ton of oil still in the ground? This is very much more expensive than drilling on land.
Argentina is making noise about the Falklands/Malvinas again, turns out there may be oil off the islands. Oil War anyone?
China in the South China Sea, same thing
The Middle East, take away the buying power of the Saudi’s and what happens to that whole mess. I will bet you a dollar it won’t be better than it is right now.
All I am saying is that I would rather us be prepared for what is coming, because it will happen, than be blindsided by it.
Wiki says it’s Tar Sands, like Alberta. (Trivia note - Alberta would like you to call them “Oil Sands” since tar has a more negative, less useful connotation) Tar sands are very thick, and the chief problem is efficient extraction.
The current Alberta Tar Sands are booming but the extraction involves huge equipment and processes like steaming or cracking the tar out of the sand. Needless to say, if you’ve heard any environmental screamers over the last decade, they want you to know how horrible the Alberta whatever sands are for the environment, as waste water from the process contaminated with interesting hydrocarbons oozes downriver. Didn’t need those pesky migratory birds anyway. Plus you’re basically stripping off the surface cover to get at the lower deposits.
It’s one of the booming areas of the Canadian economy, and a pipeline to China (well, to the west coast) is competing with the proposed pipeline to Texas; and the Chinese keep wanting to buy into the operations.
Just look at the equipment and you know that by the time you use this much hardware, it’s a helluva lot more energy, labour and infrastructure intensive than pumping a liquid out of the ground. That’s what we’ll be burning when oil is $200-plus a barrel.
Right. Speaking to the OP’s question of how the companies are still making a profit, the answer is that, for some of them anyway, their profit margins are shrinking. Here’s an article about shrinking margins at Exxon and Chevron:
It is a little ironic- I thought The Oil Drum webpage was basically admitting defeat and preparing to stop beating the Peak Oil drum. Meanwhile, signs from the financial pages seem to point to a peak oil scenario playing out.
The cost of producing nat gas is NOT going up. Maybe it is for individual companies like Chevron but hundreds of nat gas rigs have been SHUT DOWN in recent years because they haven’t been profitable to keep in operation.
That’s a rather irrelevant citation for non-rising production costs.
If you had actually read your article, you’d see natural gas production is falling because natural gas prices are falling. The cost of production could rise, stay the same, or fall, which would all be largely irrelevant to the current low cost of natural gas.
And certainly, we observe our oil/gas clients spend more or less on exploration depending based mostly on the cost of the product itself, as other costs are vastly more consistent on a year to year or even month to month basis.
Sort of a hijack, but please fight my ignorance on something; where does the carbon come from if it’s not biological?
I could probably google the answer but it will be buried in other verbiage, and I’m sure one of you know the answer.
Please and thank you.
