[QUOTE=eschereal]
Do you understand the peak oil concept?
[/QUOTE]
Why yes, actually, I do. But thanks for asking
I’m not the one claiming definitively that it happened in 2005. That post was aimed at that person. Note the evasive replies in his previous post to my questions.
[QUOTE=ralfy]
I did. See my first post in this thread.
[/QUOTE]
Here is your first post in this thread. Note…it’s a bunch of drive by links with zero content…
I post in these thread to DEBATE the subject, not dig through someones google vomit to try and figure out what the fuck their point is. Why do YOU participate in these threads when all you do is drive by links…or posts referring people back to your wall of links pages? Did you know that the rest of us can google too? If I wanted a wall of links I could easily get them myself. What I’m looking for is WHY you posted those links, why you think they are important, with quotes of the relevant parts to backup your assertions. Instead, you either give more drive by links or refer me back to previous links. In short, you aren’t debating this subject, you are merely tossing out links. The ones I’ve followed up on checking out seem to be predominantly Peak Oil Chicken Little type cites, or they are to cites to legitimate sources where I have to dig through pages to try and figure out what your point might have been or why you linked to it.
Ok then, you have nothing to bring to the debate from my perspective so I’ll just move on. Thanks for playing.
Zero content? The points I raised are very clear! What else do you want?
Crude oil production peaked in 2005, at an average of 73.4 Mb/d. That’s peak oil.
Hubbert predicted in 1976 predicted that crude oil production would peak in 1995+10 years, and he nailed it.
The IEA confirmed that in 2010.
Therefore, the claim that peak oil has not taken place is questioned.
We are now using shale oil because crude oil production cannot catch up with demand. However, the EIA acknowledged that shale oil will not last because it has high depletion rates.
Some argue that this should not be a problem because oil demand is peaking. That’s true only for the U.S., EU, and Japan, and primarily because of financial crisis. For the rest of the world, oil demand is rising. The net result is global oil demand is rising.
Why is it rising? Because there is a growing global middle class in BRIC and dozens of emerging markets. More people in these countries want more oil and many other resources to make more cars, appliances, houses, roads, etc.
How do we meet that increasing demand. Shale oil has to meet that PLUS an inevitable decline in crude oil production.
Why will crude oil production decline? Because capital expenditures are rising, which means less new oil is being put online at higher prices. Can the global economy absorb higher prices? No, which is why we are still in a global recession, as the IMF acknowledged recently.
Will oil prices go down? Only if new oil put online has high energy returns. That means more oil at lower capital expenditures, which means oil dropping to $30-$40 a barrel and crude oil meeting demand easily.
Why is new oil more difficult to extract? Because of peak oil, which isn’t about running out of oil but running out of “easy” oil. The new oil that has to be put online is heavy-sour or unconventional, which means it requires more energy to process. That results in lower net energy available.
Therefore, unconventional oil will not last, either, and might not meet growing demand and a decrease in crude oil production.
How is that a problem for us? The global economy requires high energy returns, and those returns have to go up even more as more people join the middle class.
Why can’t we just not allow more people to join the middle class? Because we work in a global capitalist economy, which means we have to sell more cars, club memberships, etc., each time. That’s the only way we get our returns on investment, pay raises, various benefits, and more. The same goes for the global financial elite which has over a quadrillion dollars (notional value) in unregulated derivatives at stake. The only way to cover all of that credit and to let income increase is to produce and consume more resources and energy.
How much do we need? For the present middle class, we will need the equivalent of one Saudi Arabia every seven years, according to the IEA. To meet a growing global middle class, we will need even more.
Finally, all of these points were mentioned to you and others many times in this forum, and all of them have been documented with references. Please do not ask me to give relevant points because I’ve done that many times, both in this message and in previous ones. And I do not think it is fair to be asked to give page and paragraph numbers of the articles I just presented because I think if anyone wants to engage in this debate seriously, then one has to do what I did, which is go over the data and arguments carefully.
No it isn’t. One can say that the move to more expensive shale oil is consistent with peak oil theory, to a point, but the downward trend in EROI didn’t continue with the advent of horizontal drilling. It may cost more, but oil from this and other unconventional sources continue to drive global oil output upwards.
You can say that the IEA says that this is not going to continue, but as long as it does we have not really reached ‘peak oil’.
see Exxon report , see word energy demand vs world energy source section and oil ( what oil are you your so called very specific ‘crude’ or any oil?) usage. As you will not the majority of oil is destined for transportation, where they are expecting significant efficiencies. Oil is not the only source of the world energy source.
Do you understand that the lift cost of oil has very little direct impact to the price of oil? I could produce oil for $18/bbl or $50/bbl, that will not affect my sale price. The demand for my oil will dictate the sale price. If it is stranded with very few places to sell to ( eg Canada oil sands) or is sour and heavy, I won’t get paid a lot for it, regardless of how much it cost me to produce. If it is light , and I have many places to sell to , then I may well get a higher price, regardless of what it cost me to produce.
The difference in lift cost to sell price dictates how profitable my business is and directs the markets to invest or not in my business.
Capital expenditure, the amount of oil I use to produce one barrel of oil, the amount of water I use etc, are all nicely wrapped up in the lift cost. If lift cost is less than sale price ( with margin etc) then all is good.
As you have pointed out capital expenditure is rising, however as has been pointed out on numerous times to you, oil production is rising, not falling. Your insistence that we need to ignore unconventional ignores a significant growth in oil production and a significant chunk of the capital expenditure.
Would you take the unconventional capex out of the total capex and then do the comparison, or do you keep the unconventional capex in the total and just use your narrow ‘crude’ definition for production?
If you actually look at what the capex was ( new rigs, pressure pumping equipment ect) you will of course see that those are long term assets that have help provide a correction in spiraling 3rd party services costs due to limited capacity. net effect - the increase in equipment and services actually results in lower lift costs. yes spending money makes things cheaper per barrel, particularly as we have rising production to spread those dollars over.
So we have more money being spent and more oil being produced. Apparently the current price of oil vs the lift cost is driving sufficient investment to keep oil production on the up
Again, you don’t seam to understand the connection between production cost and sale price and sale price and supply and demand. Production cost does not impact sale price, it does impact future expenditure to produce.
If oil dropped to 30-40/bbl then sale and lift cost would be about the same for unconventional and deepwater, making those unprofitable, so we would see a drop in drilling ( probably not shut ins as the sunk cost needs to be dealt with) and supply would drop. That supply drop would have a price impact.
Does $80-100bbl oil affect world growth, yes somewhat, but the world growth forecasts take that into account, you have been given price predictions going forward and total oil production forecast showing oil production increasing.
The whole 'it takes 5 bbls to produce 1bbl) of oilsands oil is either a question about reserves or lift cost.
To back up you point, horizontal drilling is an excellent example of technology getting to reserves and increasing production that was not previously though possible.
The Austin chalk in Texas was through to be un-producible due to poor permeability. Horizontal drilling technology that had been started in the later 80/early 90 was though to be too expensive to employ. However a few pioneer companies tried horizontally drilling through the natural fractures and thus began a huge boom, with technology drivers to produce more durable drilling motors and MWD systems and a huge uptake in topdrives for land drilling rigs. Big expenditures and crazy prices during the beginning, but they were prolific producers. As more people entered the market technology improved and prices dropped.
Horionta drilling alos opened up extended reach drilling which resulted in eupors largest onshore field ( BP Wytch Farm) at the time being developed, massive drop in lift costs in Qatar ( they drill horizontal sections 40,000 feet long, yep one well with a 40,000 ft horizontal hole) due to wells that produce more per dollar spent. Exxon even got in on it and runs the massive Sakhalin island program , accessing reserves and producing oil that was previously though inaccessible.
Similar stories in Saudi, offshore Canada , north sea to access smaller pockets from existing platforms ( the death of the North sea production has been predicted since 1980, still going) 17inch horizontal production holes for the Gorgon gas project off west coast Australia, the list goes on, from a technology though too expensive to have any real applications in cost challenged markets.
So big capex, cost per well up, but more prolific wells and access to increased reserves.
[QUOTE=ralfy]
Zero content? The points I raised are very clear! What else do you want?
[/QUOTE]
The points you raised were a bunch of drive by links with a quick blurb associated with each. Zero content. I’ve explained this already, so don’t want to go into it again.
As I see that Precambrianmollusc and Try2B Comprehensive have answered what looks like the key points to your latest post, and better than I would have, I’ll just leave it there.
No, you didn’t. But you obviously don’t see it so there is no point continuing with this. To me, you aren’t debating, you are tossing out links and expecting the reader to pour through your ‘evidence’ to see if your bald claims are backed up somewhere in there. As both Precambrianmollusc and Try2B Comprehensive seem content to engage you on that basis I’ll bow out unless something more interesting comes up. For my part, I remain unconvinced that we have reached peak oil production at this time, let alone in 2005, unless one plays semantic games. I don’t see Peak Oil™ or the Fall of Civilization(arr) as being in the cards either, so ‘just a bump in the road’ seems more likely, though it might be a fairly big bump once we start the transition to whatever we go to next.
Yes, it’s peak oil. Even with a tripling of oil prices, crude oil production has remained in such a plateau. Another evidence involves rising capital expenditures:
with related details in the lecture shared earlier.
Also, there is a downward trend in EROI. More details in the first EROI article shared earlier.
The fact that unconventional production cannot continue does not negate the point that crude oil production has peaked. Also, the fact that we are now resorting to shale oil is further proof of peak oil.
What efficiencies are referred to in terms of overseas shipping, and what other energy sources are being used for that?
How are these efficiencies compared to demand, which involves bringing in the equivalent of one Saudi Arabia every seven years, or one every three to four years to meet a growing global middle class?
The fact that oil is not the only source of energy is obvious, and the IEA makes that clear. The problem is that in order to meet energy demands worldwide, the IEA argues that crude oil producers will have to go for maximum depletion rates, at least 70 pct of oil demand per year has to be replaced by renewable energy, and economies have to engage in very strong coordination and cooperation.
We have not seen any of these taking place the last few years, and it is very doubtful that they will.
I understand that, and it supports my argument even more. The price of oil is going up because of increasing capital expenditures. The price cannot follow suit because the global economy cannot handle high prices. See the Kopits lecture shared earlier for details.
Crude oil production is not rising; it has been in a 73.4 Mb/d plateau since 2005, according to the EIA. That’s why we are now using shale oil.
Overall, oil production is not rising as fast compared to capital expenditures. That means the marginal production cost is rising:
That’s peak oil. The situation is just as pronounced for shale oil:
This has nothing to do with ignoring unconventional production. If any, it has everything to do with acknowledging that we are now resorting to unconventional production.
Again, capital expenditures are rising, leading to higher production cost. Put simply, we have to spend more dollars to get less oil each time.
That’s peak oil.
The price of oil is not determined by oil producers but by the market, and that’s a major problem given higher capex. More details are given in the Kopits lecture.
I gave multiple links and lots of content. I even replied to your first post in this thread. I explained this to you very clearly, and even my previous post contains lots of content.
In fact, I’m still waiting for your points to my first response to you in this thread.
And not only did I respond to every point made, I continue to do so right now.
I am debating and backing up all of my points with evidence, which are the links I shared.
I responded to every point made by almost all forum members in this thread, including your claim that my posts contain zero content.
Now, I will focus on on the new points that you raise, as seen in the last few sentences of your post.
The point that this is part of semantics is highly illogical, as the EIA has a clear definition of crude oil.
To recap:
EIA data shows that crude oil production peaked in 2005, as seen in crude oil production in a 73.4 Mb/d plateau. Hubbert predicted this accurately in 1976 and the IEA confirmed it in 2010.
We are now using shale oil to meet demand.
The EIA argues that shale oil will not last as well.
Meanwhile, EROI for crude oil has been dropping for several decades. EROI for unconventional production remains low, and definitely not enough to meet increasing energy demands by a global population and increasing energy returns from a growing global middle class.
Finally, in terms of oil production per capita, which is more logical as oil is needed by a growing global population and increasing demand per capita needed to sustain middle class conveniences (e.g., passenger vehicles, appliances, building materials, etc.), particularly in a global capitalist system that continuous economic growth, that peaked back in 1979.
Therefore, what you don’t see has already taken place, and has been acknowledged by the IEA and revealed in data from the EIA. That’s it.
As for your last point, I don’t understand why you don’t see peak oil and yet assume that a transition has to take place. Perhaps it has to do with global warming, but even the IEA acknowledged both predicaments in the report and article I shared earlier. In order to deal with both peak oil and the long-term effects of global warming, we will need to switch significantly to renewable energy.
Read the link. the world shipping fleet has been undergoing a significant upgrade, driven heavily from expected price rises and also the price rise we saw in 05-08. Ships are getting better.
read the link - read my summary of it posted above , about 500 quintillion btus of energy savings over the forcast period.
gosh this is easy
see prior notes pointing out you are running of old data
To quote from IEA 2012
“Growth in North American light, tight oil and non-conventional supply has reached game-changing levels”
“developments have challenged earlier assumptions and significantly changed the oil market outlook for the next five years”
Quote:
Originally Posted by IEA
By the end of the forecast period (2017) , OPEC effective spare capacity is projected to more than double from 2.8 mb/d to somewhere between 5 mb/d and 7 mb/d, a level unseen since before the 2003-2008 rally, except briefly after the financial crisis of 2008-2009
Your old data is wrong . very wrong
I can solve the peak oil problem by classifying unconventional as crude, and we are good to go. More expense, les profit for the oil companies, but peak oil solved as we have rising production. Just by changing a word.
This should indicate to you your problem is not a real one.
This exactly proves you do not understand.
“The price of oil is going up because of increasing capital expenditures”
no , the lift cost may rise, the price of oil will do whatever the demand and supply and opec say it should be. Minimal influence form the lift cost and capex, other than if it becomes unprofitable then people wont drill.
so? still same stuff, refined by the same refiners and ends up as the same end products. All that happens is the oil company drilling and exploration divisions make a bit less money and NOCs may contribute less to national budgets.
yes lift cost rise. To this point at OTC this week ( big oil conference in Houston) there was panel discussion with several higher ups in oil companies bemoaning capex
"Oil and gas industry expenditures grew due to demand for products and services outpacing supply, increasing technical challenges associated with deepwater and shale resources, over engineering of projects, project management issues, skills shortages and local content pressures. "
Subsea equipment is backlogged a few years, deepwater drilling rigs also backlogged. However all solvable via technology and preferable a few more players in the market who can build decent rig equipment. You also see in there local content (big issue related to cost in Brazil) project management skils shortages. All solvable and nothing really due to some underlying problem with unconventionals and deepwater.
this is the opposite of what you said
“The price of oil is going up because of increasing capital expenditures”
If the price of oil is going up due to capex, then the price of oil is determined by the producers indicating the price of oil is somehow linked to the cost basis of the oil., yet you say here it is determined by the markets? Which is it? Then you go back to say it due to capex
Price of oil is determined by world supply, world demand and OPEC swing production.
That is, even with a best-case scenario (i.e., crude oil producers going for maximum depletion rates), we will be able to increase total oil and gas production worldwide by only 9 pct during the next twenty years.
However, we have been increasing demand by up to 2 pct during the last few years, and we need that to maintain economic growth. That is, we have a global capitalist economy where businesses, the present middle class, governments, and a growing global middle class need ever-increasing resources and energy for consumer goods and services.
Obviously, production will not be able to meet demand.
At the same, we face problems concerning environmental damage and global warming as we use various sources of unconventional production. These will have an economic impact that is the same or even greater than the effects of lack of oil and gas.
Thus, in order to deal with these two problems (peak oil and global warming) the IEA argues that we will have to switch significantly to renewable energy as fast as possible. One reason is that the transition process for replacing oil can be difficult and require strong government regulation and cooperation between countries. Another is that in terms of global warming we may be very close to tipping point (if not too late) in maintaining, if not lowering, GHG emissions.
What’s the catch? For the past few decades, countries have hardly cooperated when it comes to dealing with pollution, environmental damage, and global warming. They need to consume more oil, gas, and other material resources because their citizens want middle class conveniences. Thus, we can only assume that not only will oil and material resource demand keep rising, but so will GHG emissions.
Also, conflict on several levels have become prominent, as military powers use various means to control various regions and people in different countries protest (if not riot) over high oil prices, high food prices, lack of employment, and austerity measures. And all of these are taking place amidst global warming affecting food crops, oil prices still high, and a continued global economic crisis.
Upgrade? The BDI shows a major crash, as we still have not recovered from that. I also remember issues with world trade volume. My understanding is that the world is still in recession, and will continue to remain so for several years.
Focus on production rate vs. demand.
The information I shared concerning unconventional production was given last January. For spare capacity, late last year:
“Oil Supply Outages Leave Spare Capacity Tightest Since 2008”
Actually, you’re not solving peak oil but dealing with it. That is, making up for a lack of crude oil production with shale oil.
Also, don’t forget to look at energy returns.
Finally, if we want to argue that this problem is not “real,” then we should be able to show crude oil production rising and oil prices dropping to $30-$40 per barrel. How does one do that with higher marginal production costs?
Sorry, what I mean is that the cost of oil production goes up. The price is determined by the market.
And that’s the problem. See the Kopits lecture to see why.
Bit less? Please explain. Also, consider
“Total Production by the Top Five Oil Majors Has Fallen by a Quarter Since 2004”
What technology? Is it being implemented? Results? Any reports showing expected revenues from such? And how does one see that in relation to the 25-pct drop in production?
Sorry, I meant oil production cost.
The problem is precisely that: capex is rising but the market cannot handle high prices.
More details are given here:
“Global Oil Market Forecasting: Main Approaches & Key Drivers”
I never ignored unconventional production. In fact, I did the opposite. Here’s a repost of the link:
That is not old data from 2010 but information until October 2013.
Look at the second graph, which contains data from the EIA.
The blue region refers to crude oil production. The red region refers to shale oil.
Crude oil production peaked in 2005. The average production rate remained at 73.4 Mb/d.
That’s peak oil. Hubbert predicted that in 1976, when he said that crude oil production would peak in 1995 + 10 years:
That is, crude oil production would peak after 2005.
The IEA acknowledged this in 2010:
That is, crude oil production peaked in 2006.
Finally, how will unconventional production fare? According to the IEA (Feb. 2014), it will last for a few more years:
“IEA chief: Only a decade left in US shale oil boom”
Acccording to the source, it will be difficult for other countries to replicate what the U.S. did.
Meanwhile, we should expect energy and material resource demands to increase readily worldwide, due to
“The rise of the global middle class”
Imagine the amount of energy and resources needed to meet that demand level. According to the IEA, in terms of new oil we will need the equivalent of one Saudi Arabia every seven years to maintain economic growth equivalent to that of the last few years. To meet a growing global middle class, we will certainly need more.
Rising CapEx and tripling oil prices do not indicate peak oil. Steady, irreversible declines in oil production indicate peak oil has occurred. And we’ve seen steady, continued increases in production, if small ones.
I like those kind of links. But guess what? You are pointing at an economic issue, not an oil production issue. People want more oil, and it is most certainly in the ground. If oil companies can’t make a profit, the world isn’t going to come to a stop. No, either prices go up or alternatives will take over. Yes, ‘neither’ is possible but I don’t see it taking place (unless you’re poor. Don’t be poor is perennially good advice.)
Ralfy, you really need to keep up with the latest information. Yes, EROI is not what it was during the ‘golden age’ of oil production. And for some time there, it displayed a steady decline. But horizontal drilling introduced a new variable into the equation. EROI took a stairstep jump up. EROI from fracking still isn’t all that great compared to, say, 1930s gusher drilling, but apparently it is increasing. It seems there is an architecture to these underground shale deposits, such that strategic drilling of them can induce them to drain enormous recoverable amounts of oil. Amounts that actually exceed proven worldwide crude reserves, even if they are a bigger pain in the keester to extract.
Well… if we wait long enough, yes, I am entirely confident that we will see peak oil. I do expect to see it in my lifetime, but I’m not really sure. But we are not there now. Good thing too, and we ought to take the opportunity to really press alternatives.
They indicate peak oil because they show that new oil is becoming more expensive to extract. Remember that peak oil does not refer only to a decline in oil production but production reaching a peak.
In addition, keep in mind that the effects of peak oil can take place even before oil production peaks. That is why oil price has tripled.
I am pointing to both. Take a look at the Outlook 2010 report, the Kopits lecture, the articles about shale oil, and more. All of these indicate that new oil is becoming more expensive to access.
The EIA data says it all: crude oil production has peaked at 73.4 Mb/d since 2005, as predicted by Hubbert and confirmed by the IEA in 2010. We are now using shale oil to meet increasing demand.
All of the data I am sharing with you is the latest. Even the EIA data showing that crude oil production has peaked comes from only a few months ago.
Horizontal drilling is neither new nor a new variable. As the EIA acknowledged, and as shown in the IEA report, shale oil will not last, and total oil and gas worldwide will not meet oil demand. That’s why the IEA argues that we have to switch to renewable energy as soon as possible.
Finally, as explained many times, peak oil is not about reserves but about production rate. Read my previous messages about that.
Global oil production per capita peaked back in 1979. Oil discoveries peaked in 1964. Crude oil production peaked in 2005. Two-thirds of oil-producing countries have reached or gone beyond peak. Shale oil is expected to last until the end of the decade, and it is expected that other countries will not be able to replicate what the U.S. did. Morgan Stanley data shows a declining trend for spare capacity. Oil price has tripled.
All of the evidence for these points were presented in previous messages.
Finally, we expect growing oil and resource demand from BRIC and emerging markets. These have far larger populations than the U.S., EU, and Japan, where demand destruction is taking place due to financial crises.
My sources say that shale oil drilling, if not every method of extracting unconventional oil, is becoming more efficient all the time. It is still more expensive than conventional crude extraction, but they are perfecting the process and actually moving toward higher EROIs. We ought to compartmentalize this part of the debate, gather all the relevant facts, and try to settle this particular issue.
Yes, among other things.
Are we talking about the same thing? AFAIK, ‘horizontal drilling’ dates back to not long before 2007.
I think this is the biggest point of disagreement between you and your critics. Shale reserves are large- again, they are larger that proven global crude reserves, which amounts to enough oil for a whole 'nother generation at least. I know, reserves aren’t production, but…
America, for one, is projected to surpass its former peak and reach new highs, beyond even Saudi Arabia’s production. At least a few other countries are expected to be able to replicate this, amounting to a new, stable center of gravity in the oil supply world even if you are worried about a fading OPEC. China has the world’s largest shale reserves. Do you really think the Chinese will never be able to figure out how to extract the world’s largest oil reserves, under their own territory, with technology currently in use elsewhere today?
That is interesting. Still, you must admit that fuel efficiency has increased dramatically since 1979. And renewable generation per capita (a variable that didn’t exist in 1979) is increasing all the time. A new middle class is going to consume differently than the old middle class.
I don’t think that is true anymore. If recoverable shale reserves exceed 1.5 trillion barrels, and they weren’t recoverable at all until the last 7 years or so, I’d say we are currently in the era of the largest discoveries in history.
I just don’t have time to address everything, and it isn’t like you’re entirely wrong. I think shale reserves ought to last decades at least- why not? With a little added frenzied effort, they are turning America literally into the next Saudi Arabia. Saudia Arabia has extensive shale reserves themselves. So does Russia. Poland. Australia, I think. All over the globe. We want to really get on the ball with renewables because we are going to ruin this planet if we frack the entire surface of it.
