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“Why the “Peak Oil” Theory Falls Down — Myths, Legends, and the Future of Oil Resources”

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  • Wed, Dec 17, 2008 - 03:12am

    #1
    r

    r

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    “Why the “Peak Oil” Theory Falls Down — Myths, Legends, and the Future of Oil Resources”

There is a link on the NPR article on Peak Oil to the CERA report: "Why the "Peak Oil" Theory Falls Down — Myths, Legends, and the Future of Oil Resources." The report claims that oil production will not peak before 2030 and will eventually follow an undulating plateau for decades. Further, Hubbert was wrong:

"Despite his valuable contribution, M. King Hubbert’s
methodology falls down because it does not consider likely resource
growth, application of new technology, basic commercial factors, or the
impact of geopolitics on production. His approach does not work in all
cases-including on the United States itself-and cannot reliably model a
global production outlook. Put more simply, the case for the imminent
peak is flawed. As it is, production in 2005 in the Lower 48 in the
United States was 66 percent higher than Hubbert projected."

Because the full report costs $499 I couldn’t read it. Here are my questions:

Based on the analysis that it doesn’t matter when peak oil will occur, could this report still provide an "outer bound" for the analysis that increased demand from within oil exporting countries produce a global shortage? Or is it possible that oil production can continue to satisfy demand, including within oil exporting countries, if this report is correct? Because there is no way of knowing whether production has peaked based on a drop in production from year to year? Was Hubbert’s methodology wrong and does it matter?

Thanks,

  • Wed, Dec 17, 2008 - 04:01am

    #2

    Ray Hewitt

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

The Peakers have in their mind that markets (people) are not sufficiently adaptive to environmental changs.
They assume population will continue to grow irregardless of the cost of energy resources.
They assume their numbers are the last count of all the available resources on earth.
They make straight line extrapolations.
They ignore the economic factors.
They ignore the political factors.

Once in a while, someone gets lucky. But on the whole, the record of predictions gets worse the farther into time they go.

  • Wed, Dec 17, 2008 - 05:21am

    #3
    pwoody82

    pwoody82

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

If the past foretells the future, then resource growth is going to continue to decline, and where there is growth the expense of extraction is going to continue to grow. Hence we cannot depend on enough growth to replace what is being lost. The oil companies have been experimenting with new technology to increase recovery since the US hit peak oil. I am doubtful that someone is going to come up with some kind of magic bullet to revive the old wells. There has been some increase in production of the old California wells, some of them producing hundreds or thousands of barrels a day but still a drop in the bucket. So I am not too hopeful that new technology in oil recovery is going to make much of a dent. I think that new discoveries of smaller fields may flatten out the decline to some extent but not enough to change the overall outcome. This means that some other source of energy must be found that has a production cost near that of crude oil and that is nowhere on the horizon at present.

 

Thinking that a decline in population growth is going to occur is also wishful thinking. The population decline is not going to happen until food shortages become so severe that starvation causes the decline. When that happens, we will probably have an accompanying series of wars that also contribute to the decline.

 

There is a lot of research on alternate oil sources going on, but here again progress is slow and what is on the horizon is a long way from meaningful production. There are some good possibilities like using alge to produce oil because it produces several crops a year unlike corn which produces only one.

 

As far as geopolitics are concerned, about the only contribution to the situation that can make is to decrease supply. I have never seen or heard of a political system that didn’t make the situation whatever it was worse. Is the UN going to increase production by setting itself up to assign shares on a global basis, or OPEC or any other organization? Before a political entity can affect energy it first has to be produced since politics is not in the energy production business.

 

The world is currently in infinite expansion mode where energy is concerned and, until shortage gets everyone’s attention, it is going to stay that way. The current recession/depression is going to cut demand in the short term, perhaps even for 5 to 10 years (I hope) but that is only going to flatten the curve of the decline, not stop it. As the price of fuel goes up, it will certainly have an effect in the business world, the effect will be to make everything more expensive and to increase shortage. This too will make the slope of the declining curve shallower, but it is still going to decline.

 

If peak oil does not occur until 2030 I would love it, but until China, India, Europe and the US cut consumption, or as long as consumption keeps increasing, the day is going to get here sooner than later. By 2030, I will be able to leave this all in someone elses’ hands (I will be 98 or dead) but for now I am planning on peak oil having already passed. If I am wrong great, but I won’t depend upon undiscovered technology, resources, science, and geopolitics to save my fanny.

 

As for Hubberts method, think about it. No oilfield can continue to produce forever since no field can contain infinite oil. The earth is finite, hence so is oil. If Hubbert had never existed and his method never espoused, the oil supply would still be finite. There will be oil produced for another hundred years or more, just not as much. Face it, there is no way to avoid it. As for a small jump in US production, that is to be expected. There are thousands of oil wells in the US that have been shut down because the expense of production exceeds the price in the market. When the price got up to where the owners could make a few bucks, they cranked them back up. With the price back down, they are shutting back down. For a while several years ago, foreign oil was selling at a premium over US production so US production shut down. US producers said that if outside oil was worth x dollars a barrel, so was internal oil. There is always some capacity which is off line for whatever reason. That is why production is never linear. A lot of US production was off line this year because of hurricanes, and I am not sure all of it is back even yet.

 

Just don’t assume that because extrapolations of science, politics, population, economics and so on could be wrong that it will necessarily be a help. They could underestimate as easily as overestimate, and then where would you be? Peak oil could be past, science might not find an answer, politics may make it worse, economic factors might improve, and population growth could speed up even more. We simply have to work with the best guestimates that we have and start planning for the worst. If it turns out better than that, great.

 

pwoody

  • Wed, Dec 17, 2008 - 06:27am

    #4
    mred

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

[quote=redpoe]

There is a link on the NPR article on Peak Oil to the CERA report: "Why the "Peak Oil" Theory Falls Down — Myths, Legends, and the Future of Oil Resources." The report claims that oil production will not peak before 2030 and will eventually follow an undulating plateau for decades. Further, Hubbert was wrong:

[/quote]

OK, so they are saying that oil would not peak for decades after 2030. Effectively they say that all the data we have is wrong. But unless new data is presented, you know what that means.

[quote]

"Despite his valuable contribution, M. King Hubbert’s
methodology falls down because it does not consider likely resource
growth,

[/quote]

likely resource growth? If that means that the amount of oil under ground actually increases with time, that is a preposterous claim. Effectively, peak production of oil happened about 150-500 million years ago (depending on how you count). What we are facing now is peak extraction. If what they mean is an increasing discovery rate of oil, then those discoveries peaked around 1965 if I remember correctly (that is in the CC). This is clearly considered in Hubbert’s analysis. So the first accusation is wrong. I’ll be glad to debate with anyone the issues of finiteness of oil resources, especially if the position espoused reflects J. Simon’s absurd claim.

[quote]

application of new technology,

[/quote]

Whatever rate of discovery and extraction we have today reflects the application of new technologies. In terms of discoveries, none has reverted the declining trend. In terms of extraction, better technologies have only meant that the resource will be extracted faster and thus that the resource will run out sooner. Inded the technology factor is not within Hubbert’s premises, but that doesn’t matter as long as this new technology is unable to manufacture oil.

[quote]

basic commercial factors,

[/quote]

like what? the oil embargo of the 70’s did affect consumption and may have postponed peak extraction for a couple of years, but that wasn’t quite "commercial". The short run on prices that we had this year could have had a similar effect if it had continued. Developing countries have continued to increase their demand regardless. The effect of the oil embargo on the peak extraction date has been estimated as a couple of years, not decades. A huge economic contraction or depression like the one we face will no doubt postpone a liquid fuels crisis. So even if the monetary mess we are in is fixed then that is the light at the end of the tunnel: an incoming train.

[quote]

or the
impact of geopolitics on production.

[/quote]

if anything, geopolitics has caused countries like Saudi Arabia to force their production to meet the insatiable demand of the west for cheap gasoline.  The embargo helped, but people didn’t like that solution.

[quote]

His approach does not work in all
cases-including on the United States itself-and cannot reliably model a
global production outlook.

[/quote]

It was precisely due to Hubbert’s success in the prediction of the American peak extraction that his thesis received recognition, even though it was on solid methodological grounds already. The model has obvious uncertainties, so what was shocking was that the prediction for the US was so accurate. Global data on discovery rates and depletion rates of existing fields (recently measured at over 9% per year), are perfectly consistent with the view of declining resources. These are not predictions or extrapolations, these are measurements.

[quote]

Put more simply, the case for the imminent
peak is flawed. As it is, production in 2005 in the Lower 48 in the
United States was 66 percent higher than Hubbert projected."

[/quote]

I feel weird offering a defense of a paper published in the 50’s when the data was much less than at present. The same methodology, perfected and with the newest data is what these guys ought to be attacking. But they want an easy target. In any case, I invite you to check for yourself the report by Hubbert that I mentioned above. Look at figure 21, where the US case is presented. Note the two scenarios, one with ultimate reserves of 150 billion barrels and the other of 200 billion barrels. The actual US production for 2005 was estimated at 2.8 billion barrels total. The figure suggests about 1.3 (eyeballed), for an error of a little over 50%. You can explain this in 3 ways: 1. the correct scenario had more than 200 billion barrels of ultimate reserves, 2. The extraction rates are higher in reality than in the figure. 3. A combination of 1 and 2. What the second reason would suggest, is that production can be forced, but then ultimate depletion would come in earlier. Just for kicks, one can calculate the error of this old paper not in 2005 but in 2008, for which there is data. For this year, the American production is estimated at 1.78 billion barrels. The high production scenario of Hubbert is at 1.2 (eyeballed again), for an error of a little over 30%. Not bad for a nonlinear extrapolation. So even the coarse estimate of over 50 years back is not too shabby and maybe even getting better if indeed the US is overproducing. 

But again, Hubbert was making an educated guess with the data he had at the time. The guy was not making a prophesy, so what should be appropriate would be a criticism of the methodology and not his old predictions. This is like criticising modern genetics by taking a stab at Mendel.

[quote]

Because the full report costs $499 I couldn’t read it. Here are my questions:

Based on the analysis that it doesn’t matter when peak oil will occur, could this report still provide an "outer bound" for the analysis that increased demand from within oil exporting countries produce a global shortage? Or is it possible that oil production can continue to satisfy demand, including within oil exporting countries, if this report is correct? Because there is no way of knowing whether production has peaked based on a drop in production from year to year? Was Hubbert’s methodology wrong and does it matter?

Thanks,

[/quote]

It is all-important when peak oil happens. If it is 30 years from now, there is time for some kind of technological transformation. Otherwise, there is trouble. It is hypothetically possible for oil production to satisfy demand, it is just not what the data for discovery of fields and depletion rates will allow you to think, if you are rational. What increasing demand from oil producing countries will do is what we saw with Indonesia earlier this year: a withdrawal from the OPEC. They become net importers of oil. This is in the CC, so I shouldn’t elaborate on this. Hubbert’s methodology is based on the fact that oil resources are finite, and the observation that discovery and extraction patterns are bell-shape-like. You can read the report yourself and judge it for yourself.

  • Wed, Dec 17, 2008 - 03:45pm

    #5
    switters

    switters

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

It’s becoming abundantly clear to me that no amount of rational argument or statistical data supporting peak oil will convince  peak oil skeptics, because their skepticism isn’t based on evidence.  It’s based on philosophical dogma and beliefs.  

You can’t fight faith with facts. 

That’s why I’ve (for the most part) stopped trying.  

There is more than enough information about peak oil already on this site, and in many other places, for those who are truly open-minded about the issue and able to resopnd in a rational way to the evidence.

For the rest, it won’t matter how many times we present this or that argument or scientific study.  They will be ignored if they don’t fit with the skeptic’s beliefs about the world and the way it works.

There’s so little time, and so much to do.  What’s the point of spending so much of our energy in a futile attempt to convince a few skeptics on this forum?  I think our resources would be so much better spent in other ways.

Just my 2 cents as a relative "veteran" of this forum.

  • Wed, Dec 17, 2008 - 04:34pm

    #6

    xpatUSA

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

I’m a Peaker, as testified to by my Jeep CRD and the mostly E85 sloshing around in the tank of my 1994 V8 Chevy pickup.

The heavyweight opinions from governments, oil-sponsored bodies and so forth have about the same value as promises by Obama to make us "energy-independent by" 20-something.

Recently, CLR (not the kitchen stuff) shot up by $20/share on the basis of bringing in a well in the Bakken field. Upon investigation I found that the rate was 450 bpd! Yep, 450 barrels per day folks. I poked fun at this, remembering commissioning gas turbines for the Endicott, Alaska project in 1987 with an intial, limited rate of 115 thousand barrels per day.  I was told that 450 bpd is pretty good for oil shale and that 50 bpd is considered quite acceptable! This from a company capitalized at about $8bn at the time.

 That, by itself, proves nothing but is an indication that we humans are down to scratching around to find more black gold. Up until1960 or so, oil shale and tar sands were not even worth messing with. Like PM’s we humans grab all the easy stuff first and then turn to creating giant open-cast mines – preferably in someone else’s country Wink

 Ted

 

 

 

 

  • Wed, Dec 17, 2008 - 04:46pm

    #7

    Pandabonium

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

A rebbutal to the CERA article appeared on The Oil Drum two years ago and was subsequently reposted.  It is lengthy, so I’ll just post the introduction here:

Does the Peak Oil "Myth" Just Fall Down? — Our Response to CERA

ED by PG: This article was originally posted
November 16th, 2006. Note that it has been resubmitted to reddit and
digg this morning, so do help spread the word and give Dave some more
readers if you are so inclined. Send the link to someone today.

With the release of Why the "Peak Oil" Theory Falls Down — Myths, Legends and the Future of Oil Resources
by Peter M. Jackson, Cambridge Energy Research Associates (CERA)
attempts to cast doubt on the credibility of those with imminent,
empirically-based concerns about our future oil supply.

CERA’s "Decision Brief" requires a response because since 1870,
the health of the world’s economies have hinged on a secure, dependable
and growing flow of "conventional" oil. Their forecast, shown in Figure 1, predicts that the oil supply will continue to grow and sustain economic growth.

 

Figure - 1

 

We shall have much more to say about CERA’s forecast later. For now, it
is sufficient to note that CERA’s analysis is lacking. The world’s oil
supply will not continue to grow to meet ever-rising global demand, and
worse, the consequences could irrevocably damage global economies. Such
an outcome would have harmful effects on people’s lives. So, this
debate is not "academic" — much depends on a correct analysis of the
future oil supply.

Article continues here: http://www.theoildrum.com/story/2006/11/15/83857/186

 

 

 

  • Wed, Dec 17, 2008 - 04:55pm

    #8
    switters

    switters

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

There you guys go, fighting faith with facts. Smile

Let’s see how the skeptics respond.

  • Wed, Dec 17, 2008 - 05:33pm

    #9

    Ray Hewitt

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

Get over it Chris. Facts need to be put in context, which is what my point was above. You’re looking at the data mechanically, you can’t be sure if there are facts you have missed and you’re making linear extrapolations in a non-linear world.

The fact is, because of the crashing economy, energy consumption has dropped everwhere and producers have had to cut back. You can’t put a timeline on Peak Oil. That’s a fact.

If you want to worry about it, be my guest. What good it will do you, is beyond my imagination. That’s all I wanted to say.

  • Wed, Dec 17, 2008 - 05:59pm

    #10
    switters

    switters

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    Re: “Why the “Peak Oil” Theory Falls Down — Myths, …

Ray,

Worrying about it PO and working to raise awareness of its reality and its consequence are two different things.  I know that you trust "the market" to take care of these problems, but I do not.  We don’t need to get into that again as we’ve already been through it ad nauseum.

But to answer your question about why it matters, I’ll quote the article on The Oil Drum:

"So, this
debate is not "academic" — much depends on a correct analysis of the
future oil supply."

One could argue that the future of human civilization depends to some degree on a correct analysis of the oil supply and how we respond to that analysis.

The fact that demand destruction is contributing to lower production now doesn’t take away from all of the data indicating we were headed for peak – or had reached it already – when oil was still at $140/barrell.  The facts have been put into context, analyzed by independent experts who don’t have the vested interests of government or industry, and conclusions have been reached. 

There are always "facts that may have been missed".  We can only operate from the facts we know and the facts that are knowable.  We live in a world with contraints and finite limits.  One of those constraints is information.  Right now, an overwhelmingly large and solid body of evidence suggests peak is imminent.  Whether it’s already happened or it happens in one, two or five years is immaterial in the long run.  We should have started adapting decades ago if we wanted to avoid energy shortages.

The CERA article was effectively rebutted and discredited after it was published.  If someone wants to throw that out as "evidence" that PO is 30 year away, they better be prepared to convince us that the data and arguments presented in the rebuttals aren’t as convincing as they appare to be.

But, as usual, when the data is presented the skeptics mysteriously disappear or rely on ambiguous theoretical statements like "you’re making linear extrapolations in a non-linear world" or "you can’t be sure there aren’t facts you have missed".  There is never any reliable evidence offered that contradicts the data supporting PO.  Just videos of preachers who believe it’s a conspiracy, old reports that no credible analysts take seriously, and unsupported statements of faith.

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