There Will Be Oil

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There Will Be Oil

online.wsj.com/article/SB10001424053111904060604576572552998674340.html

Rebuttals?   I think the important question is: there will be oil but at what price?   It is hard to tell what a true price for oil is since the FED is busy devaluing the dollar, but what about $2.80 - $3.00?

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Re: There will be oil

I think this topic has been beat to death here at CM.

This article provides no proof just belief.

I hope he's right and everything will be just fine but I don't "believe" so.

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Can we split the belief portion?

Johnny Oxygen wrote:

I think this topic has been beat to death here at CM.

This article provides no proof just belief.

I hope he's right and everything will be just fine but I don't "believe" so.

I'm not sure where is the belief portion of the article. Could you point to where he is simply basing his statements on faith? There are a lot of facts (such as oil added from existing reserves through improved technologies) and opinions (Hubbert having a static view of the world for example). 

Now - I'm not saying that we should continue our way of 'exorbitant privilege' and I'm all for sustainable and 'scaled-down' living. But it helps to keep these facts and opinions in perspective towards future planning.

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Cambridge Energy Associates

Cambridge Energy Associates -  It seems like these guys are often behind the No Peak Oil Puff pieces.

These guys dont understand the relentless nature of exponential growth. The last paragraph of the article mentions Hubards receding oil plateau ... Yet we are living right in the middle of the plateau .. since 2006.

John

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Johnny, I have to agree.  I

Johnny, I have to agree.  I wrote a letter to my local paper a while back about the end of cheap oil.  They printed it, as they have done on several about the current situation.  The response on my cheap oil I received from one person was that they expected their President to make sure they had enough cheap gas.  Needless to say I had to respond with more facts.  People just don't or don't want to believe it.

I watch the political and business discussions and look in disbelief.  I have this surreal feeling as to why am I one of the few who at least understtand a good bit of it.

Ernest

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There Will Be Oil

The Distressing thing about a  Peak Oil piece like this in the WSJ is that it will be read and interpreted as the solution in readers minds.  When they next come up against Peak Oil, they will already thave some basic perception that it is bunk.

This article bothers me because they cleverly do a hit piece on Hubbard by painting him into the Planned Economy mould.... Scientists should run the economy.  Which points him as anti-free market.  For most this then means that we can start to hate and fear him.  He is anti-american.

Then we dredge up the big oil finds and new technologies that will expand production in a manner that seems impressive.  Ignoring the massive investments that are going to be hard to justify in a shaky financial situation and also ignoring the declining quality (and EROEI) of the resource.

The general reader does not understand that a million barrels of Tar Sands or Oil Shale is in no way as easy or energy rich as a million barrels of the conventional oil that we grew up on.  They will surely get the message that technology will once again save us.

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sundarb wrote:Johnny Oxygen

sundarb wrote:

Johnny Oxygen wrote:

I think this topic has been beat to death here at CM.

This article provides no proof just belief.

I hope he's right and everything will be just fine but I don't "believe" so.

I'm not sure where is the belief portion of the article. Could you point to where he is simply basing his statements on faith? There are a lot of facts (such as oil added from existing reserves through improved technologies) and opinions (Hubbert having a static view of the world for example). 

Now - I'm not saying that we should continue our way of 'exorbitant privilege' and I'm all for sustainable and 'scaled-down' living. But it helps to keep these facts and opinions in perspective towards future planning.

If we can increase existing reserves by so much then why isn't it being done?  "Improved technologies" implies faith in future technologies that will boost exisiting 'reserves'. But the additional 125 billion barrels he mentions is nothing compared to world consumption.

I hear this a lot from the non-peak oil folks that there is so many million or billion barrels here or there but its always on the horizon or just around the corner. When you look at what IS being pulled out of the ground annually it is a different story.

The more people there are on the planet the more oil you will need. The beer analogy is a good one. Hey if you think we have plenty of oil until some new wonder energy source is found then more power to you. I know you will probably sleep better at night than I do but it doesn't make it fact.

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Johnny Oxygen wrote: sundarb

Johnny Oxygen wrote:

sundarb wrote:

Johnny Oxygen wrote:

I think this topic has been beat to death here at CM.

This article provides no proof just belief.

I hope he's right and everything will be just fine but I don't "believe" so.

I'm not sure where is the belief portion of the article. Could you point to where he is simply basing his statements on faith? There are a lot of facts (such as oil added from existing reserves through improved technologies) and opinions (Hubbert having a static view of the world for example). 

Now - I'm not saying that we should continue our way of 'exorbitant privilege' and I'm all for sustainable and 'scaled-down' living. But it helps to keep these facts and opinions in perspective towards future planning.

If we can increase existing reserves by so much then why isn't it being done?  "Improved technologies" implies faith in future technologies that will boost exisiting 'reserves'. But the additional 125 billion barrels he mentions is nothing compared to world consumption.

I hear this a lot from the non-peak oil folks that there is so many million or billion barrels here or there but its always on the horizon or just around the corner. When you look at what IS being pulled out of the ground annually it is a different story.

The more people there are on the planet the more oil you will need. The beer analogy is a good one. Hey if you think we have plenty of oil until some new wonder energy source is found then more power to you. I know you will probably sleep better at night than I do but it doesn't make it fact.

It is being done, but it is more expensive to process shale and drill in a mile of water.   That is why There Will Be Oil but at what price?   If the FED would just work on stable inflation maybe one could see where prices are going.   We need stable prices to understand oil prices in order to provide incentives to reform regulations for more Nuke power as no other power form can support this many people according the lifestyle commonly accepted.

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scraping the bottom of the barrel....

"Improved Technology" = scraping the bottom of the barrel....

The important thing to understand about PO, and clearly whoever wrote this piece of crap doesn't, is the the green and blue chart in Chris' Chapter 17 piece in the CC.

Energy Return on Energy Invested.........  NOTHING else matters.

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Ah I see it.

Johnny Oxygen wrote:

If we can increase existing reserves by so much then why isn't it being done? 

There could be lots of reasons including but not limited to - geopolitical conflict, demand being met at today's rate of pumping oil out of the ground, price manipulation to keep oil high in USD, recessionary fears which will kill demand etc. Note: I'm not saying Peak Oil is false, just saying that there could be other good enough reasons that don't require the increasing of existing reserves. 

Johnny Oxygen wrote:

"Improved technologies" implies faith in future technologies that will boost exisiting 'reserves'. But the additional 125 billion barrels he mentions is nothing compared to world consumption.

Demand is right now around 86-87 million barrels a day and projected to increase up to 107 million barrels by 2030. 125 billion translates to 125 * 1000 million, with 107 million a day - that translates to just 3.2 yrs of supply! Certainly not enough. I see the faith point now.

Thanks Johnny.

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Certainly Yergin is in a

Certainly Yergin is in a position to recall the history of past "running outs" or "peak oils" than nearly anyone else, and certainly such historical fact has nothing to do with belief. The reviews which show the resource numbers he mentions are from knowledgable individuals who have calculated those volumes without allowing belief to enter into the calculations. As to whether or not his historical knowledge lends credibility to his forecasts, which arguably are no better than peak oilers, is a different question altogether. 

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Johnny Oxygen wrote: If we

Johnny Oxygen wrote:

If we can increase existing reserves by so much then why isn't it being done? 

It is. Hubbert himself was quantifying reserve growth of fields back in the late 60's. Yergin mentions the amounts of new additions in relation to consumption in the article. 

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it's all beside the point..

RGR wrote:

Johnny Oxygen wrote:

If we can increase existing reserves by so much then why isn't it being done? 

It is. Hubbert himself was quantifying reserve growth of fields back in the late 60's. Yergin mentions the amounts of new additions in relation to consumption in the article. 

Peak Oil is NOT about reserves, it's about production rate, it's about the rising energetic cost of producing the second half of the total reserve, and about the rising cost of producing it.

There is about as much oil left as we have used so far in some 150 years.  So what?  We are still at Peak Oil.

Even if an entire Saudi Arabia was discovered today (~260 billion bbls) it would only postpone the inevitable by:

((260,000,000,000/2)/85,000,000)/365 = 8.3 years.

IF we could find the dough to finance it with........

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Damnthematrix wrote: Peak

Damnthematrix wrote:

Peak Oil is NOT about reserves, it's about production rate, it's about the rising energetic cost of producing the second half of the total reserve, and about the rising cost of producing it.

Is there any chance you could reference a Hubbert publication talking about the rising energetic cost of producing the second half of the total reserve? Certainly I don't recall any offhand, and most information on this topic not generated by Hubbert is of dubious value.

I would also point out that "total reserve" is a term not usually employed correctly, or even understood, by most outside the industry who haven't spent some portion of their life quantifying such things to the satisfaction of auditing firms like Ryder Scott, banks, the IRS or SEC. Considering that the world's "total reserve" was once 600 billion barrels...and we have since used ALL of that reserve...and find ourselves with nearly twice the "total reserve" remaining, it is a tricky concept for the uninitiated.

Damnthematrix wrote:
There is about as much oil left as we have used so far in some 150 years.  So what?  We are still at Peak Oil.

We have been at peak oil before. And you are incorrect in your volume estimates. There is somewhere between 14 trillion barrels and  4 or 5 trillion barrels of total endowment, according to Dr. Saleri or Richard Nehring. This isn't including undiscovered oil of course, which the USGS has quantified in the 1 or 2 trillion barrel range (from memory, but good for an approximation). We have used slightly more than a trillion perhaps?

So conservatively we have used perhaps 25% of the global known endowment, or 10% if you want to be more liberal with the amount available. And we have been at peak oil perhaps 3 or 4 times since Jimmy Carter proclaimed we were "running out" back in 1977, so we are now in another one? If you say so, myself I don't think the value of this metric is worth much. The question now being, how many of them might there be waiting in the wings yet?

Damnthematrix wrote:

Even if an entire Saudi Arabia was discovered today (~260 billion bbls) it would only postpone the inevitable by:

((260,000,000,000/2)/85,000,000)/365 = 8.3 years.

IF we could find the dough to finance it with........

Peak oil happened in 2005, according to retired Princeton professor Deffeyes. Would you like to bet that since that point in time, we have added more than 260 billion barrels to the "total reserve" of the planet?

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RGR, If there is so much

RGR,

If there is so much easy oil out there, why are we not putting more holes in easy areas than spending $300 million on a deep sea well?  We've been on this plateau of from between 72-74m b/day for around seven years now.  Most new oil projects take around seven years to bring to market.  Where is it when prices even make Canadian Tar Sands profitable?  The easy oil is gone.  The Saudis can't raise production by any great amount for any real length of time.  Their easy oil is gone, plenty of saur oil left, and Gawahr is almost certainly in decline.  They have even admitted it in private conversations.

Cheers,

Ernest

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ewilkerson wrote: RGR, If

ewilkerson wrote:

RGR,

If there is so much easy oil out there, why are we not putting more holes in easy areas than spending $300 million on a deep sea well? 

I never said a word about easy oil. If I were, I would venture that the first "easy oil is gone" evolution was complete by 1901. That was the year that new technology was required to reach "less easy to get" oil. Counting the new technologies required to reach ever more difficult oil, I estimate we are approximately 5 generations away from "easy oil". You and I, everyone posting on this board has grown up in varying ages of "more difficult oil". We drill $300 million dollar wells because we can, and someone believes they can make an excellent rate of return on such a project. 

ewilkerson wrote:
We've been on this plateau of from between 72-74m b/day for around seven years now.  Most new oil projects take around seven years to bring to market.  Where is it when prices even make Canadian Tar Sands profitable?  The easy oil is gone.  The Saudis can't raise production by any great amount for any real length of time.  Their easy oil is gone, plenty of saur oil left, and Gawahr is almost certainly in decline.  They have even admitted it in private conversations.

Cheers,

Ernest

Of course we are past easy oil. That was gone before you were born. Hubbert didn't write about "plateau oil", some peak oil revisionist did that when it turned out that the most recent peak...wasn't a peak. The Canadian tar sands were profitable and producing whem oil was $10/bbl, so them producing at $100 isn't a surprise, and Ghawar had better be in decline, according to estimates of the oil it had in 1975 or so, it should now be empty! How is that for unexpected optimism, fields which should be EMPTY are still producing millions of barrels a day! Yergin has noticed this of course, as have others, but it appears to be more popular to cast it as a pessimistic event, rather than an optimistic one. 

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ooops..

double post..

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Rebuttal to Daniel Yergin

Rebuttal to Daniel Yergin

By Jeffrey J. Brown

Jeffrey J. Brown is an independent petroleum geologist in the Dallas, Texas area. He has just been named to the ASPO-USA board of directors and has been a frequent contributor to Energy Bulletin and The Oil Drum. His website is GraphOilogy.

He submitted a letter to the Wall Street Journal in response to Daniel Yergin's article. The letter has not yet been published by the WSJ.

-BA

To the Editor:

Contrary to Mr. Yergin's assertion that advocates of Peak Oil have been wrong at every turn, six years of annual global production data show flat to declining crude oil and total petroleum liquids production data.

The EIA shows that global annual crude + condensate production (C+C) has been between 73 and 74 mbpd (million barrels per day) since 2005, except for 2009, and BP shows that global annual total petroleum liquids production has been between 81 and 82 mbpd since 2005, except for 2009. In both cases, this was in marked contrast to the rapid increase in production that we saw from 2002 to 2005. Some people might call this "Peak Oil," and we appear to have hit the plateau in 2005, not some time around mid-century.

Only if we include biofuels have seen a material increase in global total liquids production.

In the US, there are some good stories about rising Mid-continent production, and US (C+C) production has rebounded from the hurricane related decline that started in 2005, but 2010 production was only very slightly above the pre-hurricane level that we saw in 2004, and monthly US production has been between 5.4 and 5.6 mbpd since the fourth quarter of 2009, versus the 1970 peak of 9.6 mbpd. Incidentally, US net oil imports of crude oil plus products have fallen since 2005, primarily as a result of a large reduction in demand, because of rising oil prices (which Mr. Yergin predicted would not happen), but EIA data show that the US is still reliant on crude oil imports for two out of every three barrels of oil that we process in US refineries.

However, the real story is Global Net Oil Exports (GNE), which have shown a measurable multimillion barrel per day decline since 2005, and which are measured in terms of total petroleum liquids, with 21 of the top 33 net oil exporters showing lower net oil exports in 2010, versus 2005. An additional metric is Available Net Exports (ANE), which we define as GNE less Chindia's (China + India's) combined net oil imports. ANE have fallen at an average volumetric rate of about one mbpd per year from 2005 to 2010, from about 40 mbpd in 2005 to about 35 mbpd in 2010 (BP + Minor EIA data, total petroleum liquids).

At the current rate of increase in the ratio of Chindia's net imports to GNE, Chindia would consume 100% of GNE in about 20 years. Contrary to Mr. Yergin's sunny pronouncements, what the data show is that developed countries like the US are being forced to take a declining share of a falling volume of GNE. In fact, our work suggests that the US is well on its way to "freedom" from its reliance on foreign sources of oil, just not in the way that most people hoped.

In a November, 2004 interview in Forbes, Mr. Yergin asserted that oil prices would be back to a long term price ceiling of $38 by late 2005--because of a steady increase in global crude oil production. It turned out that Mr. Yergin's predicted price ceiling has so far been the price floor. The lowest monthly spot crude oil price that the EIA shows for post-November, 2004 is $39.

I suspect that just as Mr. Yergin was perfectly wrong about oil prices, he may be confidently calling for decades of rising production, just as we come off the current production plateau and just as an accelerating decline in Global Net Exports kicks in.

Sincerely,
Jeffrey J. Brown

http://www.energybulletin.net/stories/2011-09-18/daniel-yergins-letter-peak-oil-community-and-rebuttal

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Gotta love Kunsler......

The Rainmakers

      This much can be stated categorically about the USA these days: the more distressed our economy gets, the more delusional thinking you will encounter. People want to assign the cause of their misery to this or that (socialism, abortion, Jews, the New World Order). People want to believe that their world is a safe place with bright prospects (climate change is a myth, we have a hundred years of shale oil). The realm of oil is especially ripe for misunderstanding, since we depend on the stuff so desperately, and the world's geology is complex indeed, and then you have to bring math and money into the picture. But it's another thing when professional propagandists take the stage and attempt to systematically mislead the public.

Such is the case with two ersatz bombshells zinging across the web-waves this past week, fired off by two of the foremost professional liars on the scene. The first comes from the oil industry's leading prostitute, Daniel Yergin of Cambridge Energy Research Associates (CERA), owned by the mammoth HIS consulting company. CERA is the main public relations shop for the oil industry. Its mission is to blow smoke up America's ass in order to keep investment dollars flowing into oil companies because oil companies prefer to use other people's money to perform their risky operations. They make a lot of money themselves, and accumulate it diligently, but they are not so foolish as to squander it on dry holes and adventures in alchemy.

So, last week Daniel Yergin came out with a blast in the Wall Street Journal affecting to debunk peak oil. His own theory is much like Irving Fisher's economic theory set out October 21, 1929 that "stock prices have reached what looks like a permanently high plateau."  Three days later, the markets crashed and the Great Depression commenced. Yergin says we've hit a permanent plateau for oil production. He is pimping for a bonanza in shale oil, tar sands, and other innovative ventures in picking "fruit" that is not hanging so low anymore. He says:

"Meeting future demand will require innovation, investment and the development of more challenging resources. A major reason for continuing growth in petroleum supplies is that oil previously regarded as inaccessible or uneconomical is now part of the mix, such as the "presalt" resources off the coast of Brazil, the vast oil sands of Canada, and the oil locked in shale and other rocks in the U.S."

Spoken like a true PR whore. Translation: give us money. Calling all investors. Give your dollars to the folks working the Bakken play, or Eagle Ford down in Texas. These shale plays represent oil that is trapped in "tight," low-permeability rock that has to undergo fracturing operations ("fracking") before you can drain it out. It costs a lot more to get oil this way than by sticking a pipe in the ground and running a pump-jack to get it out the old-fashioned way.

There are more than a few dirty secrets about the shale oil plays, but the biggest one is that you have to throw a huge amount of capital and steel at it to keep it running as an ongoing enterprise, and that money - other people's money - will be in shockingly short supply in the years head. Those troubles you hear distant rumblings about in places like Greece, Portugal, Italy, Spain - that's the sound of the world's money whooshing into a black hole, which is what happens when debts are not repaid. Something very similar is happening in the USA, where all the unresolved mega-borrowing of the past thirty years is whirling down the drain, never to be seen again, and a craven corporate oligarchy (there, I said it) is working tirelessly to hoard the last remaining vestiges of money before it either deflates across that event horizon, or inflates away to nothing by digital multiplication.

In either case the result is the same: you're broke Here's the truth about the US shale plays: they will never amount to more than about one million barrels-a-day (m/b/d) in production under any circumstances (the nation uses 19 m/b/d); and even more probably the money will not be there to keep the shale oil coming very many years into the future. You can take that to the bank (if your money has any value when you get there, and if the bank has not cratered). In our fugue of techno-narcissism, America wants to believe that we can just keep on being what we used to be, pizza, DisneyWorld, WalMart, and all.

So, the second big buzz of the week came courtesy of Goldman Sachs, in a sloppy press release saying America would be the world's top oil producer in 2017, at 10.9 m/b/d. The effrontery of these thieving pricks! They apparently pulled the information out of chief Goldman flack Lucas Van Praag's ass. One might infer that Goldman Sachs is campaigning to raise money for the oil industry by suggesting a bonanza is underway. It's a crude ruse. The actual "confidential" report - as opposed to the brief summary in the media - shows that Goldman Sachs arrives at this position by referring to non-oil substances as oil. Neat trick. Be sure to call Goldman Sachs to invest your remaining savings in algae secretions and ethanol.

No doubt, though, that these two PR offensives will accomplish their secondary mission: to gird the hopes and wishes of the political right-wing, who are hell-bent on keeping this country from entering a plausible future. Watch these ideas take flight and wonder that you live in such credulous nation.

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Yergin Schmergin ...

Mike,

You know, when you post items such as these as a reply to someone, it would be a really humbling experience if they were to reply to them stating something along the lines of : -

A Somebody Who Just Woke Up wrote:

"Wow, I had no idea!"

I just  Wised Up wrote:

"I was under the weight of a fatuous illusion, and you've put me straight".

It Just Piled On In Spades wrote:

"Please accept my apology". 

Severe Enlightenement wrote:

"Accept my appreciation in waking me up to this serious issue, and in giving me a time-frame to act in supporting my friends and family!"

Seriously Angry B*st*rd!!! wrote:

That Daniel Yergin needs C******ing with a blunt *****!

But no ...

There'll be a blank space beneath these kind of posts, 99 times out of a 100 ...

Maybe this post will make the difference this time, but who could tell ...

Paul

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HMMMMMMMMMMMMM, I think TV

HMMMMMMMMMMMMM, I think TV is a better use of my time than this.  Chris's articles seem to be the best use on here.

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ewilkerson

ewilkerson wrote:

HMMMMMMMMMMMMM, I think TV is a better use of my time than this.  Chris's articles seem to be the best use on here.

And isn't it! Hopefully with Chris spending a tad more time on the forums over these next months, it'll save you going square-eyed watching the tube ...

Paul

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..OK

..OK

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Rebuttal

Dmitry Orlov just published a rebuttal by Jean Laherrere on his blog.

http://cluborlov.blogspot.com/2011/09/peak-oil-laherrere-responds-to-yergin.html

In 2005, Daniel Yergin published an editorial in the Washington Post in which he was already mocking the pessimists, and in which he predicted that by 2010 global oil production capacity could increase by 16 million barrels per day (Mb/d) from from 85 to 101 Mb/d. Since then, global production capacity remained on a plateau of about 86 Mb/d... You ought to go back and re-read yourself, Mr. Yergin. 

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  Great find sundarb.

Great find sundarb. Thanks.

Daniel Yergin: “Example [of revolutionary technology]: the 'digital oil field', which makes use of sensors distributed throughout the oil field, to improve the data and the communications between it and the technology centers of companies. If it came into widespread use, this technology can could help exploit an enormous quantity of additional oil everywhere across the world—according to one estimate, this represents 125 billion barrels of additional reserves, equal to the actual estimated reserves of Iraq. 

Jean Laherrère: It is at present quite fashionable to talk of the “digital oil field” to impress investors. But to this day I have not come across any mature field that has significantly increased its reserves by the use of this technology. To pretend to be able to grow reserves by 125 Mb [sic] thanks to this technology amounts to nothing more than wishful thinking, and does not stand up to any serious study. 

How does one increase the size of recoverable reserves of oil fields? Well, first of all, there are secondary recovery techniques: the use of water or gas injection to maintain field pressure. This is a practice that is in actual use from the very begginning on all new oil fields.

...Technology can do nothing to modify the geology of an oil reservoir! It just allows it to be produced faster, thereby accelerating the decline of mature fields... Here's an example: the very pronounced production declines at the giant Mexican Cantarell field, which made use of massive nitrogen injections.

The rate of recovery of a feld depends above all on the properties of the field and the liquid it contains. This rate can be as high as 80% for sandstone or very porous limestone, and might not exceed 1% for a tight reservoir with isolated pockets.

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Another rebuttal

Here's another rebuttal published by Gail Tverberg.

http://ourfiniteworld.com/2011/09/29/is-yergin-correct-about-oil-supply-an-opinion-the-wsj-did-not-run/ 

Quote:

The big issues with world oil supply now are (1) it is not clear that it can rise fast enough to meet the world’s needs and (2) the price is already so high that it is causing economic distress to oil importers. With the ‘easy oil’ already being exploited and oil exporting nations needing high revenues fund government programs, the cost of oil can only rise higher.

What happens if oil is in such short supply that it needs to be rationed by high price?  We know in agriculture what happens when a crop is short of a vital nutrient. Liebig’s Law of the Minimum says that crop output will be reduced, and in fact, will be proportional to the limiting nutrient. We know that a similar relationship holds with chemistry experiments. If a laboratory can afford only a small amount of a high-priced reagent, then the size of the “batch” that can be created will need to be scaled back by the limiting reagent.

Economists tell us that substitution can be expected if oil is in short supply. In the short term, though, how likely is this to actually happen? We have millions of cars and trucks in operation that use oil products and thousands of factories using oil products as inputs to manufacturing processes. Many years of research and huge investment will be required to create substitutes in adequate quantities. In the meantime, the expected reaction to limited oil supply (expressed as high-priced oil supply) would seem to be economic contraction. If the economy is thought of a system which depends on inputs of various types, this outcome would be analogous to what happens when crops have an inadequate amount of a particular type of nutrient.

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