peak oil production in 2009? - what next? 18

[davefitz]

There are rumblings that the peak in world oil production may occur in 2009, and that the demand for oil is increasing very rapidly in developing countries ( China , INdia) .

There does not seem to be any effort being made in the USA to reduce the rate of consumption or to reduce demand. Simple efforts such as the following are not being used :
a) increase CAFE ( auto gas mileage )
b) improve mass transit in major cities ( Seatle, Houston, LA, etc)
c) propaganda which is aimed at changing attitudes toward energy consumption.

What is the most likely end result in 2009 if noone takes steps to prepare for this event?

 

[davefitz]

for an opposing opinion, see some of the information being presented today and tomorrow ( 25-26 may) at an int'l conference on peak oil production at <

http://www.peakoil.net/uhdsg/Default.htm>

 

[jmw]

Campbell does appear to be the guru in this area.
I guess he is getting a little impatient of the detractors and is presenting a forcast (continually revised) that is accurate within the terms of reference.

The problem being that different groups chose to speculate on alternative scenarios with different terms of reference and hence try to suggest that their forecast is more accurate or probable.

The issue isn't that oil is going to run out nor when it will run out but how we use the oil that is accessible and how we shape our future.

My own view is that we will not exhaust the oil reserves even though they are finite. We didn't exhaust coal, we still have trees. What we will do is change to a new source of energy. Hopefully the way we use oil as a tool to develop an economy that will sustain the investment in new energy sources as anything. The emergent phase of any new technology is expensive. If we frighten ourselves too much we may cut our oil use to the point where a limited sustainable renewable energy resource will replace it but, due to its limitations, will impede our future progress. A more agressive approach may give us a global economy which will finance a more ambitious energy scheme that may give us an unlimited energy future.

For example, we may end up with wind farms all over the place; affordable but limited and somewhat damaging. Or we may find we have a financially realisable potential in orbiting mirror reflecting solar energy into collectors.

I don't say either is the solution, I'd like to think the promise of fusion power is realisable in small flexible power units.

When we moved from coal to oil the economy grew. Gas is even more liberating. Beacuse of costs we still find coal being used and we even see some projections of increased useage, it is the cheapest fuel I believe. Reduction in oil avails may see a resurgence as prices make recovery and exhaust gas processing more viable but in large power stations. Oil and gas make smaller power stations viable.

We just need to know what it is we want and then set our development on that path. It is encouraging to see that there is widespread recognition of the potentials but concern that the short term thinking of politicians may lead us down a false path.

JMW

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[zdas04]

Ghamish,
This is a hot topic, sorry so many posts intervened after your question to me.

The U.S. Oil & Gas industry has been in "Starvest" mode since 1986. When I retired from a major oil company last year, all the engineers in the company either had gray hair or rode skateboards. There was basically zero hiring for almost 20 years. Consequently, the Petroleum Engineering departments of some great universities had a very difficult time placing good graduates. Research facilites at all the majors were shut down or significantly curtailed. The only research into the basic physics of petroleum production is happening at a few universities and the translation from universities to industry has had pretty poor success. So you have an industry with very low risk tollerance, no new blood, low product prices, and a very low standing with the financial markets (therefore a difficult time raising capital). Is there more U.S. Oil and Gas to be discovered? Without a doubt. Will it be cheap and easy to get? No. What will it take to get it? Multi-year returns consistant with the risk so that the siege mentality can leave the industry. I'm not sure that $35-40/bbl is enough, but I do think that sustained prices in that range will make many of the small producers take notice. The majors are all so grid-locked and focused on the multi-billion dollar, multi-decade activities that very little will cause them to behave rationally.

In addition to new-field wildcats, there is a lot of petroleum left in depleted fields. "Depleted" gas and oil fields always have some amount of product that is just too expensive to recover and is abandonded in place. I get calls every day from folks who say "we booked reserves to 350 psig abandonment pressure, we're there, we're still making a lot of gas. What do we need to do differently to revise our abandonment pressure downward to 100 psig?". The stuff I tell them about is fairly expensive. Way too expensive for $1.50/MCF gas or $15/bbl oil. At $6.00/MCF and $40/bbl it is acceptably cheap.

The point of this ramble is that when the easy stuff is depleted (and it will be unless we stop using fluid hydrocarbons), there is still a bunch of products that will be available at a new price point.


David Simpson, PE
MuleShoe Engineering

http://www.muleshoe-eng.com

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[funnelguy]

This article provides some interesting info on gasoline prices, crude prices, supply and profitability. I certainly found it interesting. Oil company profitability goes up with increasing costs of crude and overall consumption stays about even?

http://news.ft.com/servlet/ContentS...y&c=StoryFT&cid=1085944410599&p=1012571727108

Zdas04,
Several posts up you made mention of the strategic oil reserve. Specifically, you stated, "The saddest thing about it is that government energy policy is still operating on the principle that drilling in a couple of sensitive locations and using the laughable "strategic energy reserve" (2-3 days worth of consumption) will fix the mess as soon as they can get the Democrats out of the way.

I agree that using the strategic oil reserve is just a political gimmick and will not have any real impact on supply or consumer prices. In fact, this was proven to be the case when Bill Clinton tapped into the reserve during his tenure in office. I believe Bush's administration has refused to use the reserve even when pressured by John Kerry publicly. Just wanted to correct that point. The "Dems" are, in fact, the party that plays silly games with the reserve. The Republicans have their faults, but this isn't one of them.

 

[jmw]

One thing to recognise is the impact of environmental concerns on fuel prices.
We no longer use leaded fuels but the latest round of low sulphur iniatives is going impact on refinery prices. The routes to low suplphur are various but include producing gasolene from crude already low in sulphur for which competition will drive up the price.

It will also impact in other ways such as in consumer goods and especially imports.
Marine Heavy fuel oil prices have been climbing steadily and stand at very high levels today.

At US$187 (typical) per ton low sulphur fuel is expected to add US$65 a ton to the price initially but as low sulphur fuel becomes more readily available the premium will probably drop to around US$30-35 per ton.

You may think that $187 per ton isn't much for 380cSt fuel but fuel costs are around 70-75% of the operating cost of ships and, at the current high prices, represent the biggest or second biggest single cost to many companies. Low suplphur will push fuel to the top of the list.

Add in all the initiatives for other environmental concerns which are now impacting and you know that someone, the consumer, will be paying through increased freight costs.

Hence, again, we should all remember that what we pay at the pumps for gasolene isn't the only part of outr paycheck that goes into the hydrocarbon economy.

JMW

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[zdas04]

Funnelguy,
Thanks for the clarification. I got this week's Oil & Gas Journal this weekend and found that my "estimate" that the SER would last 2-3 days was a bit of hyperbole. At April, 2004 consumption rates the SER is almost 30 days supply. Of course if we had to rely on it, unit costs would go through the roof, many people would sharply curtail usage, and many others would attempt to hoard personal supplies--so who knows how long it would really last. The Journal also had an interesting statistic about gasoline prices--if you carry the previous peak gasoline price forward from 1981 to 2004 dollars, the pump price was $2.99/gallon. In constant dollars today's prices are 2/3 the record.

I found your article interesting, my experience with one of the majors listed in the last paragraph is exactly in line with the price forecast mentioned. While actual price decks are confidential, they don't swing with the NYMEX and it can take years for a sustained price change to be reflected in an economic analysis. Target rates of return have also not followed a reduced tollerance for risk.

We've had at least 50 years of short-sighted (never farther than the next election) and generally bad energy policy under both Democrats and Republicans. I don't see that changing. If ANWR, the Pacific Shelf, the Eastern Gulf, and the Western Atlantic are all opened up for exploration today we'll see production starting in 2008 and ramping up to maximum in around 2012 or so. The net result of this drilling will be less than decline rates between now and then. Demand will increase at projected prices and total imports will make up the slack. Balance of payments just keeps getting farther out of whack. The only viable "solution" is the reduction in demand for oil and gas either through higher consumer prices or finding an alternative. If higher pump prices result in better margins, then some un-economic projects will become economic which will help the trade deficit as well.

David Simpson, PE
MuleShoe Engineering

http://www.muleshoe-eng.com

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[funnelguy]

zdas04,
The part I find most disturbing and short-sighted is that the USA is currently in a situation where our oil supply from OPEC could very well be interrupted or slowed by terrorist actions. The SER should be reserved for interruptions such as that. Possibly the reserve should be expanded given the unrest at present. Instead, we have these twits lining up at microphones to demand that we dump the reserve onto the market to drive down consumer prices, a gambit that didn't work the last time it was tried. What about refining capacity? End of mini rant. I'm off to find the decaf...

 

[ghamish]

Thanks for your response zdas04,(I'll stop worrying so much now) being an aussie I was thinking more in terms of whole world supplies, but I imagine what you have said about US exploration would still apply, nobody will go after the more difficult (expensive) stuff until they are sure they can get a return on it & this wont happen untill the easily obtained reserves start to decline.

When you say alternative products, are you reffering to things like the Canadian tar sands & gas to liquids technology? which seem to be waiting in the wings, but haven't been competitive on price up till now.

 

[zdas04]

I think that the real alternative energy source is yet to be discovered. New sources of old stuff, new ways of processing old stuff, and conservation will just delay the inevitable switch to something else.

Maybe it is the firefly derivative that Heinlein talked about in The Roads Must Roll or something equally as far out there. It is unlikely to be either a Hydrogen or a Carbon chemical reaction (the first due to the transportation problems, the second due to environmental concerns). Maybe fusion. Maybe we pull our heads out and re-embrace pressurized water fission reactors. Maybe we discover a way to drill for geothermal energy cheaply enough to make it viable for large populations. Hydrates may play a part in the transition.

The only thing that I'm certain of is that the "answer" will be a significant departure from our current thinking and that cheep fuel reduces the impetus for the unnamed genius to come to market.

David

 

[moltenmetal]

As the famous pop TV psychologist says, "The best predictor of future behaviour is past behaviour". What will we be doing in the future? Burning fossil fuels, that's what we'll be doing. As the low lift-cost sources dry up, we'll move to higher lift-cost sources. As those dry up, we'll exploit dirtier and more energy-intensive forms like oil sands, oil shale and coal. And we'll be drowning in our own filth, basically.

There is NO technological fix to this problem. Fuelcells and hydrogen won't save us- they CAN'T- there's no technological basis to suggest otherwise if the source of the hydrogen remains fossil fuels. What we need is wholesale changes to people's consumption behaviours driven by LEADERSHIP. We need taxation of consumption with the funds dedicated to weening us from our fossil-fuel addiction by promoting and subsidizing energy conservation measures like co-generation, public transit etc., and renewable sources of energy generation (particularly wind). And we need it now, not later.

Will it happen? Not as long as charlatans keep giving people false hope of global survival in the face of geometrically increasing fossil-fuel consumption. Leadership against the wants of a population is difficult business and beyond the skill of most modern democratic politicians. But we have to keep trying- the planet's future is in the balance.

 

[Lorentz]

Hi moltenmetal!

I have no knowledge of fuelcells/hydrogen aside of what appears on TV every now and then. Hydrogen is usually presented as the perfect solution, so your post shook me up.

I never considered that fossil fuels would be required in the production of hydrogen. I assumed (perhaps naively) that nice clean Hydro-Electric power could be used to produce the required amount of hydrogen to power the super clean cars of the future. Is there some difficulty doing this, or is the hydro capacity simply insufficient?

 

[jmw]

Hydro electric isn't that popular because of the huge environmental impact. Witness the major schemes in Turkey and China and the uproar they cause (apart from the above mentioned Canadian hydro-electric schemes)

This is why Europe is pushing for off-shore wind farms (out of sght, out of mind) as the last remaining "green" fuel. Even so many woind farm speculators keep trying for on-shore wind farms and they keep getting shot down.


JMW

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Eng-Tips: Pro bono publico, by engineers, for engineers.

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[zdas04]

Moltenmetal,
I gave you the star because of your comment on political leadership. If those individuals (spelled M-O-R-O-N-S) don't pull their heads out and start leading, we have the potential to be in a deep mess one day soon.

I'm not sure I buy the TV psycobabble quote. A hundred years ago a fairly well-informed engineer would have had a hard time predicting fission, but it happened. The only reason it hasn't made a bigger impact is poor political leadership, stupid media, and a bad job of PR by the industry.

I'm not at all confident that there isn't something equally as far out there just waiting for the right person to find the right shoulders to stand on to discover. If that person doesn't come forward, then you hit the nail right on the head - the "clean"er fuels get used up and the nasty ones get used and the muck gets thicker and we have to abandon any city suseptible to inversions.

David

 

[jmw]

The great hype surrounding many alternative power sources has always left more questions unasked.

Take electric cars. Always a great hope of the very green (double meaning intended) I always wondered where many of the enthusiasts thought their electricity was coming from. Since most of these people seemed anti-nuclear clearly fossil fuels would be the primary fuel source.

So how does this stack up?
Is an electric car greener?
Well, one might suppose that producing power centrally allows for all sorts of sophisticated controls on emmissions based on the economies of scale. Of course they can be gas as well as oil fired which might gain some advantage.

But now consider, with the unbundling of national power generators and the Third party access deals than seem to be virtually global, auot-generators contribute more and more to the national power grids in many countries.
So consider, a typical autogenerator is maybe a textile factory where they use a lot of steam and electricity. They install their own power plant and sell surplus electricity to the grid and which is used to charge up electric car batteries. TA proprotion of that power is coming from large diesel engines. OK, by generating steam they are much more efficient. But how much better is the emmissions control than in a diesel car? The fuel they burn is heavy fuel oil; refinery wastes blended with low quality cutter stocks.

Now ask also how the energy equation balances if the fuel is burnt, converted to electricity and then stored and used?

Is this approach ccheaper?
Is it more efficient?
Is it more environmantally friendly?

How much energy is consumed in producing electric cars? Is it more or less than an IC engined car?

Does anyone know?


JMW

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[moltenmetal]

Lorentz:

We've had little luck in shifting even our EXISTING electrical generation infrastructure toward renewables, much less generating all our transporation energy needs via renewables. In Ontario, Canada (my province, for which I have the statistics), we have a crisis on our hands trying to replace the ~ 21% of our electrical demand that is currently satisfied by coal- and that represents only 21% of the 18% of our net energy that we use in the form of electricity- only a mere 3.8% of our overall energy needs! We currently generate ~44% of that 18% by means of nuclear plants, and the majority of those plants are nearing the end of their cost-effective life-cycle.

We're unlikely to build new nuclear plants to replace our coal-fired electrical supply, much less to build huge hydrogen-generating electrolysis centres to fuel our vehicles. Fission nuclear is no panacea either- the overall environmental impact may be lower than that of fossil fuel use, but nuclear power is centralized, complex and very, very expensive from a capital and maintenance perspective, even if you manage to get the political will to find a place to store the radioactive waste. In vast Canada with all its essentially unoccupied land mass and vast tracts of Shield granite, we've had nuclear power for over 45 years and STILL have no permanent nuclear waste storage facilities.

If you get real for a second, you'll realize that fossil fuels, more specifically natural gas, will be the source of any hydrogen you may plan to use to run your magic fuelcell hydrogen vehicle. Every atom of carbon in that natural gas will end up as a molecule of CO2 in the atmosphere as a result of the reforming process- if you do anything to reduce that amount, it will come at a very significant energy efficiency hit, which means you'll consume eveny MORE fossil fuel per pound of hydrogen you use. And despite the huge infrastructure costs and dramatically higher vehicle cost, there is virtually no net energy efficiency benefit of running a fossil-source hydrogen fuelcell hybrid vehicle when compared to running a fossil-fuel driven internal combustion hybrid vehicle once you take all the various efficiencies into account.

Will we dream up something as revolutionary as fission to replace our current sources of energy? I doubt it. Fusion is pretty well studied and I doubt we'll have pocket fusion generators any time soon. The other fundamental sources of energy on the planet are pretty well understood, which we couldn't have said a century ago.

Until we DO discover that magic bullet, we should work to reform our consumption patterns as if this magic bullet isn't likely to EVER be found. That's the only way our species will be truly viable long term. This addictive, mindless, needless, wasteful consumption has to be curbed, and the only way it's going to happen is if we stop holding out hope for magic technological fixes like the "hydrogen economy".

 

[zdas04]

Moltenmetal,
Another great post. I think that the nuclear "waste" issue is also one of leadership and focus.

Remember when sawmills were difficult to see from within the cloud of smoke generated from burning the sawdust and "unusable" slabs? Now many of the mills make nearly as much from these "waste" products as they do from lumber (not really, but they've turned a liability into a non-trivial asset).

Had we approached nuclear waste from the engineering viewpoint of maximizing total value, we would have been looking at refining the junk into unique materials that have the potential of solving other unrelated issues. Instead, governments and industry leaders have argued about how deep to bury the junk. Tritium is the most expensive material on earth (by unit mass), how much of it is buried in drums?

When I worked in nuclear power, we had to package every single thing that had had the potential to have touched a radioactive source for disposal (double bagged and taped). How many thousands of tons of recoverable stuff could have been safely recovered had we allowed a nuclear "waste recycling" industry to develop? I don't know, but it is a large number.

The Pressurized Water Reactor Plant (PWRP) technology is capital intensive. The last numbers I saw had an average PWRP return on capital under 10%. Had the industry been able to be built a plant in less than a decade without protracted legal battles, the return would have been better - again leadership and public relations.

In terms of being a large, centralized target for attack, they are actually less attractive a target (in terms of population impact) than a dam. Were the new Three Rivers Dam in China to fail catastrophically, the loss of life would be in the millions of people. There is nothing you could do to a PWRP that would approach that sort of impact.

I don't think that fission is the silver bullet to get us out of the muck that we find ourselves in. I do feel confident that a sensible approach to it would have reduced the garbage we've put into the air in the last half century. Maybe that would have further delayed the inevitable crises and made it even worse when it does come.

One thing that you are dead right about is that sitting here thinking that the next big invention to get us out of the mess is "right around the corner" is a really bad thing. Conservation is the only rational path. Not that conservation will prevent the inevitable exhaustion of fossil fuels, but that it will reduce trade deficits and keep some of our trash out of the air.


David

 

[2dye4]

A whole bucket of stars for moltenmetel.

If only our polital leadership would pay just a little
attention to what the technical community had to say and
take it seriously I would feel a lot safer.

As it is they ignore what doesn't further their cause and
embrace as gospel what does help their cause.

If I were Prezindete tomarrow I would add a US $2.00 a
gallon tax to gasoline and use that money 25% for
education, 25% enviromental research and and 50% for
long term energy research. None of this money would
go to any beaurocrats. Teachers, Scientist, Engineers
would get it. Sure there would be waste but I would
rather have the grass roots people wasting a little instead
of big business.

 

[moltenmetal]

zdas04:

We agree that a rational approach to fission power could probably have reduced the atmospheric emissions load on the planet considerably. In fact, it could most probably have reduced even the radioactive emissions load to the environment by displacing fossil fuel combustion. Remember that the heavy fossil fuels (coal and heavy oils) contain trace amounts of radioisotopes which used to be safely locked below the earth, and are now (mostly) happily floating around in our environment thanks to fossil fuel combustion! Taking Chernobyl out of the equation, the radioactive fallout from fossil fuel consumption is probably larger than the fallout from the entire peaceful use of nuclear energy to date. But there's the problem- you can't take Chernobyl out of the equation, can you?!

The problem with taking a rational approach to fission power is the sheer impossibility of human beings remaining rational when thinking about and discussing something that has such a catastrophic downside should it fail. The result is the regulatory "overkill" (a word resulting from that other, kaboom-oriented field of the nuclear "industry") that ham-strings fission power in terms of capital cost, waste disposal etc. The public know just enough about fission power to not trust anything any technical person says about how safe it is- especially if that person derives all or part of his/her income from it.

That would be OK in and of itself, except that the public in their ignorance assume that the "do nothing", or more properly, "do what we're already doing" option is zero risk. It isn't! Thousands of people die prematurely and indeed needlessly in my province every year because of bad air quality resulting primarily from WASTED and NEEDLESS fossil fuel consumption. More nuclear power (in the form of relatively safer CANDU heavy water reactors in our case) isn't either the saviour or the bogeyman in this case- it's just one option for solving some problems while creating others. The only option which has nothing but net benefits in terms of people's health is CONSERVATION- not wasting the energy in the first place- because all forms of energy generation have environmental impacts, they only differ in nature, likelhood and degree of severity. The trouble is, people's attitudes and behaviours have to change, and that's tough stuff for politicians to sell- even when the plain truth is in front of their own eyes.

Exactly the same phenomena are observed in regard to hazardous chemical waste disposal problems. The public know enough about PCBs to be afraid of them, so they prevent the implementation of basically any new technology to destroy them because of "not in my backyard" concerns. As a consequence, occasionally the storage locations of these materials catch fire (as they did at a little town in Quebec called Ste. Basile de Grande), consequentially exposing the public to orders of magnitude more PCBs than if 1950s incineration technology had been used to dispose of them in the first place. The "do nothing" option is not necessarily lower risk!

We technical people have the responsibility to step up to the microphone, tell the public that we're sorry but there IS no technological fix in this case- the only route to energy consumption which is actually lower in harm is to conserve energy and use it more wisely. We technical people have LOTS of tools in our technological toolbox to improve energy efficiency- but people's behaviours and consumption patterns will need to change if we're going to have the desired effect. The only way that will happen, realistically, is if wasteful consumption hits people in the pocketbook.

 

[friartuck]

The main powers have a huge responsibility to the world as it is now and to our children.

We are screwing the planet in a 'don't give a damn' attitude which amazes me.

We need to:

a. Take responsibility for our own waste.
b. Stop creating polution or take every step reasonable to reduce it.

This begins at home as well as the workplace.

A few examples:-

In the UK we use vehicles with efficient engines to reduce running costs. Fuel is expensive so we take extra care in choosing efficient cars. We don't generally drive fuel guzzlers.


Building Regulations are tightening. Building insulation values are improving, regulations restrict energy use and try to limit air-conditioning etc.

Plant has to be more efficient. There are minimum limits on domestic and industrial boiler efficiencies with a trend to use condensing boilers etc.

On the down side there is a trend to use more air-conditioning- when we could design this out by careful building design and coordination between the architects and building services designers.(some education needed)

Our company discusses the advantages of energy efficient design with the client in an endeavour to convince them to spend a few pounds more which will give long term gain, though this is an uphill struggle sometimes.

Global warming is upon us and we (the high energy users) must take account of this and stop hoping that others will compensate for their dangerous apathy.

Ther are already signs that sea levels are rising. Scientists argue that this could be a natural phenomena and that reducing energy use will make little or no difference. Can we afford to wait until we really know the truth.

Friar Tuck of Sherwood

 

[davefitz]

friartuck:
You are right, but the main point is that the responsibility is not primarily with the gov't leaders, but with ourselves and our own energy consuming practices. To soften the shock, the immediate concerns should be with educating the public on methods to reduce energy consumption, and planning now for the changtes ahead.

More bikeways, having a 4 day workweek, increased bus coverage, and perhaps an internet based bulletin board for rideshare information updated daily would be a move in the right direction for the average worker. Large houses may need to be redesigned in a zoned manner to allow heating only a central core portion of the house in the winter.

Structurally, a major concern is that the means of agriculture might need to change. Current practices of using mega-farms with few workers and large combines for ploughing, harvesting and processing the profduce, using petrochemical based fertilizers and insecticides, and long distance trucking would probably need to be re-examined to determine if they need to be modified if the present cost of the oil were to increase by a factor of 2-3 .

I would have thought that the likely population shift woudl be from suburbs and rural areas to urban areas, due to the improved efficiencies of trnasport and distribution, but I understand that studies in Europe on the likley way to adjust to an oil shock would be to relocate from urban areas to rural areas. Similarly, the saem shift fromurban to rural occurred when Cuba recently reacted to the artifical oil shock imposed by the collapse of the soviet union . Perhaps the risk of social unrest is a higher risk factor than distribtuion costs.