Investing in Precious Metals 101 Ad

Peak oil is a hoax according to this email I received.

Login or register to post comments Last Post 10880 reads   21 posts
Viewing 10 posts - 1 through 10 (of 21 total)
  • Thu, Jan 29, 2009 - 04:08am

    #1

    Set

    Status Bronze Member (Offline)

    Joined: Sep 26 2008

    Posts: 45

    count placeholder

    Peak oil is a hoax according to this email I received.

The following was emailed to me and it contradicts the peak oil claim.  I am searching for the credible sources (in addition to this site) to refute the claims made in this letter.  It was sent to me by the president of the company I work for and I am skeptical about introducing him to the Crash Course as I’m already known as the doom and gloom guy around the office, but I still have a good working relationship with this man and don’t want to compromise that.  I would greatly appreciate a thoughtful and intelligently written rebuttal to this information.  It might serve as an inroad to me introducing him to the “Crash Course” and he has a lot of influential friends and business associates that could help promote the “Crash Course” if the rebuttal is strong enough.  

 

Thanks in advance.

Does this give you cause for concern?

I wonder if this will ever see the light of day, and if so, what Al Gore and the left would have to say about it?

The U.S. Geological Service issued a report in April (’08) that only scientists and oilmen knew was coming, but man was it big. It was a revised report (hadn’t been updated since ’95) on how much oil was in this area of the western 2/3 of North Dakota; western South Dakota; and extreme eastern Montana … check THIS out:

The Bakken is the largest domestic oil discovery since Alaska’s Prudhoe Bay, and has the potential to eliminate all American dependence on foreign oil. The Energy Information Administration (EIA) estimates it at 503 billion barrels. Even if just 10% of the oil is recoverable… at $107 a barrel, we’re looking at a resource base worth more than $5.3 trillion.

Imagine the hostile oil-producing nations we could give the finger to….

‘When I first briefed legislators on this, you could practically see their jaws hit the floor. They had no idea.’ says Terry Johnson, the Montana Legislature’s financial analyst.

‘This sizable find is now the highest-producing onshore oil field found in the past 56 years,’ reports The Pittsburgh Post Gazette. It’s a formation known as the Williston Basin, but is more commonly referred to as the ‘Bakken.’ And it stretches from Northern Montana, through North Dakota and into Canada. For years, U.S. oil exploration has been considered a dead end. Even the ‘Big Oil’ companies gave up searching for major oil wells decades ago. However, a recent technological breakthrough has opened up the Bakken’s massive reserves… and we now have access of up to 500 billion barrels. And because this is light, sweet oil, those billions of barrels will cost Americans just $16 PER BARREL!

That’s enough crude to fully fuel the American economy for 41 years straight.

And if THAT didn’t throw you on the floor, then this next one should – because it’s from TWO YEARS AGO, people!

U.S. Oil Discovery- Largest Reserve in the World!
Stansberry Report Online – 4/20/2006 Hidden 1,000 feet beneath the surface of the Rocky Mountains lies the largest untapped oil reserve in the world is more than 2 TRILLION barrels. On August 8, 2005 President Bush mandated its extraction.

They reported this stunning news: We have more oil inside our borders, than all the other proven reserves on earth.

Here are the official estimates:
8-times as much oil as Saudi Arabia
18-times as much oil as Iraq
21-times as much oil as Kuwait
22-times as much oil as Iran
500-times as much oil as Yemen- and it’s all right here in the Western United States.

HOW can this BE? HOW can we NOT BE extracting this!? Because the democrats, environmentalists and left wing republicans have blocked all efforts to help America become independent of foreign oil.

James Bartis, lead researcher with the study says we’ve got more oil in this very compact area than the entire Middle East -more than 2 TRILLION barrels. Untapped. That’s more than all the proven oil reserves of crude oil in the world today, reports The Denver Post.

Don’t think ‘OPEC’ will drop its price – even with this find?
Think again! It’s all about the competitive marketplace, – it has to.

See: US Geological Survey: 3 to 4.3 Billion Barrels of Technically Recoverable Oil Assessed in North Dakota and Montana’s Bakken Formation—25 Times More Than 1995 Estimate

If true, especially after the last summer of headache, there are many people who need be impeached for their obstruction of what is clearly a national security-energy independence dropped ball."

 

 

  • Thu, Jan 29, 2009 - 04:43am

    #2

    Mike Pilat

    Status Silver Member (Offline)

    Joined: Sep 09 2008

    Posts: 155

    count placeholder

    Re: Peak oil is a hoax according to this email I received.

here’s some detailed info on this formation. I haven’t had a chance to review it yet: http://www.theoildrum.com/node/3868

 

  • Thu, Jan 29, 2009 - 04:46am

    #3
    drb

    drb

    Status Bronze Member (Offline)

    Joined: Oct 11 2008

    Posts: 65

    count placeholder

    Re: Grasping at straws (or sucking oil through them)

The Oil Drum had a good breakdown on the Bakken field.  The overall ‘volume’ numbers match well with email you attached – but while there may be a ‘lot’ of oil – it is not very amenable to extraction and the key factor to consider seems to be the ratio of extraction rate to consumption rate.  This is a good example of Mark Twain’s famous quotation, "Figures don’t lie, but liars figure," (In this case, the lying may not be intentional, but possibly reflective of a inclination towards self-deception on the part of the author of the email)

link:

[quote]…Bakken production is trending upward and should continue for some time.
The October 2007 production of 75,000 BOPD equates to 27 million
barrels per year, a substantial amount by most measures for the US
onshore sector. This only amounts to about 0.4% of US consumption 
(using a base of 20,700 BOBP, based on EIA data), or 0.6% of US imports…[/quote]

What I take away from this is that we will have ‘some’ oil available (for uses other than internal combustion engine) much much longer than the 41 year number cited in the email (i.e., keep those fingers in your fist for now).

  • Thu, Jan 29, 2009 - 05:49am

    #4

    Arthur Vibert

    Status Bronze Member (Offline)

    Joined: May 16 2008

    Posts: 54

    count placeholder

    Re: Peak oil is a hoax according to this email I received.

These are the conclusions from the article cited by Mike:

Conclusions

1. The Bakken shale has produced about 111 million barrels of oil during the last 50+ years in Montana and North Dakota.

2. Total Bakken production is still rising, and producing at the rate of 75,000 BOPD in October 2007.

3. Because of the highly variable nature of shale reservoirs, the
characteristics of the historical Bakken production, and the fact that
per-well rates seem to have peaked, it seems unlikely that total Bakken
production will exceed 2x to 3x current rate of 75,000 BOPD.

4. The latest boom in Bakken production is driven by the application
of horizontal wells and hydraulic fracturing technology, which has
added about 70 million barrels of production in 7 years. Ultimate
recovery of the already-drilled wells should be at least double this
volume.

5. The USGS estimates the mean volume of technically recoverable
hydrocarbons to be 3,649 million barrels of oil. This is roughly 7 to
12 times the size of already known resources.

6. Based on current production and areas likely to be drilled, the
USGS estimate of technically recovery resources seems optimistic.

7. The Bakken potential resource, while large by US onshore field
standards, will have only a minor effect on US production or imports.
Using 2006 US imports and consumption for comparison, the Bakken
undiscovered resource of 3,649 million barrels of oil, if subsequently
discovered and fully developed, would provide us with the equivalent of
six months of oil consumption or 10 months of imports, spread over 20
or more years. In reality, the reserves developed are likely to be many
times smaller than this value.

8. The October 2007 production rate of 75,000 BOPD amounts only 0.4% of US oil consumption, or 0.6% of imports.

9. Per-well Bakken production peaked in August 2005 at 116 barrels a
day, and was down to 79 barrels a day in October 2007. If the Bakken
production history in the 1990s can be used as a guide, the peaking of
per-well production may portend a peak in total Bakken production.

Recovering this oil is expensive. With oil at its current cost of less than $40 a barrel I doubt it’s economical to do so. There was a lot of excitement when oil was over $100 a barrel, but that has abated. The interesting fact about this formation is that it is not a recent discovery–people have known about it for decades. Sadly, it is unlikely that it will suddenly turn into a source of oil that will allow us to become "energy independent" any time soon.

The article is excellent, by the way. It’s written by "Gail the Actuary" who is always a great source of well researched information.

Arthur 

 

  • Thu, Jan 29, 2009 - 05:58am

    #5
    csstudent

    csstudent

    Status Member (Offline)

    Joined: Dec 22 2008

    Posts: 24

    count placeholder

    Re: Peak oil is a hoax according to this email I received.

Here’s what snopes has to say about it.  This is generally the site I go to when I get emails like this.

http://www.snopes.com/politics/gasoline/bakken.asp 

  • Thu, Jan 29, 2009 - 06:18am

    #6

    Tom Page

    Status Silver Member (Offline)

    Joined: Sep 26 2008

    Posts: 266

    count placeholder

    Re: Grasping at straws (or sucking oil through them)

The Oil Drum article is a solid rebuttal, but not worth your time forwarding it to this person if they’ve already made up their mind or if  you might endanger your job.  This is a classic misunderstanding between volume in the ground and actual rate of production that can be achieved.  Plus, how much energy is invested vs. energy returned to produce oil from here?  Even if you could remove it all in a short time, 41 years supply is only half a lifetime, not the 1000’s of years humans have been around and 1000’s more we hopefully will be. 

  • Thu, Jan 29, 2009 - 09:01am

    #7
    cedar

    cedar

    Status Bronze Member (Offline)

    Joined: Oct 07 2008

    Posts: 65

    count placeholder

    Re: Peak oil is a hoax according to this email I received.

I suggest you point your boss to the latest report from the International Energy Agency (IEA). They are the official world authority on oil.

Prior to 2008 their reports said everything was rosy. In late 2008 they took an astonishingly abrupt turn and now confirm that we have a huge problem.

Specifically, if we invest the usual amount in new oil development our available oil will decline at 9% per year. If we super-size our investment, available oil will decline at 6.7% per year.

Suggest you create a little spreadsheet for yourself to see what this means. My spreadsheet says that in 10 years we will have 50% of what we have today in the best case, and 39% in the worst case. Let us know if your spreadsheet says something different.

Worldwide demand for oil will resume increasing when our economies start to grow again. 

You do not need to be a rocket scientist to figure out the staggering implications of the IEA report.

It is also worth noting that the IEA forecast is probably optimistic because they have political masters that must be kept happy so the true picture is probably worse.

I am truly bewildered by how little press was given to the IEA report.

  • Thu, Jan 29, 2009 - 09:17am

    #8
    RussB

    RussB

    Status Member (Offline)

    Joined: Dec 09 2008

    Posts: 24

    count placeholder

    Re: Peak oil is a hoax according to this email I received.

Another thing to take into account when you hear how this and that unconventional resource will become economically viable at x price for conventional crude is what they call "receding horizons".

Boosters for things like oil shale often pretend that the cost of developing their preferred project exists in a vacuum and remains immovable while every other cost and price keeps changing.

In reality, when the price of conventional crude goes up, this ends up increasing the development costs and prices for every other resource. For example, there’s a truism in the industry that (in a truly free market) the viable price for tar sands syncrude would always be $10-20 above whatever the price for conventional oil is.

I imagine the effect would be even more pronounced for oil shale.

The fact is, unconventional oil development has never been and probably never will be profitable for society at large. Tar sands, for example, are tremendously profitable for a handful of companies and politicians, but are heavily subsidized by Canadian society, which has the losses socialized upon it.

The same is true for US deepwater and putative polar and shale development.

They try to pretend that society benefits through lower gas prices, but study after study shows the effects of such development on price and imports to be negligible. For example, Bush’s own DOE projected that the result at the pump of drilling ANWAR would be around 2 cents/gallon, around 20 years from now. They have similar projections for offshore drilling.

So the takeaway point regarding unconventional oil is that it’s a prime example of privatizing profits for a wealthy handful while society heavily subsidizes the costs and takes the economic and environmental losses, and also sustains the opportunity costs of not using those public resources to scale up renewable energy infrastructure*. Those who try to obfuscate this are trying to be among the profiteering handful. That’s why they focus on these (probably trumped up) raw reserve numbers without any reference to the actual economics of the resource.

(*Receding horizons does apply with renewables as well, but that’s because, even though the technology is mature, it has faced such socioeconomic and political barriers to deployment that it’s still de facto immature and needs subsidies to level the playing field. Once it has been significantly built out this resource will be economically competitive on its own, unlike unconventional oil, whose fundamentals dictate its uncompetitiveness, except where the costs are heaped on the shoulders of the public.)    

  • Thu, Jan 29, 2009 - 10:46am

    #9

    Mike Pilat

    Status Silver Member (Offline)

    Joined: Sep 09 2008

    Posts: 155

    count placeholder

    Re: Peak oil is a hoax according to this email I received.

I think there’s a good chance that we are basically at peak now. The lack of investment seems to make this inevitable.

But I do honestly not think that we are likely to see sustained 6.9% global decline rates from the peak that culminate in 50% less oil per year in 10 years. From what I’ve read and what I can gather, this recession has destroyed new projects to bring new oil onstream…but: it is probably giving a lot of the bigger, older reservoirs a bit of a "rest." This will probably help to extend their lives a little longer with high rates or even increase the cumulative production slightly. Only time will tell, and I don’t pretend to be an authority on this, but all I can say is that 6.9% and certainly 9.0% on a sustained basis and at the global level seems a bit too dramatic for me. We will see.

  • Thu, Jan 29, 2009 - 10:48am

    #10
    Burke

    Burke

    Status Member (Offline)

    Joined: Jan 10 2009

    Posts: 3

    count placeholder

    Re: Peak oil is a hoax according to this email I received.

Great Points RussB.

I would further point out (and what many have mentioned) the horrible environmental cost of non-traditional oil extraction. I don’t know if many readers have been to the oil sands and I can tell you its a sobering experience. The by-product of separating the bitumen oil from the tar sands are enormous "lakes" full of sludge. These are all over what was once beautiful wilderness in Canada’s Athabasca region. This is home to millions of birds who live in the boreal forest that runs through this entire area. The Tar Sands are actually found BELOW the boreal forest so in reality they are deforesting one of the last and most complex forest ecosystems on the planet to get to this oil. In addition, the energy required in the separation process (natural gas, huge machines in open pit mines moving millions of tons of dirt) is very high – estimated at one barrel of oil to extract three. This is a classic example of  a resource that is well down the "highgrading" ladder that chris illustrated in the CC on natural resources.

B

Viewing 10 posts - 1 through 10 (of 21 total)

Login or Register to post comments