Peak Oil 3

[indy1687]

Hi

I am not in the petrochemical industry, but have read from a this website that oil willbe in short supply by 2010 or sooner. That we (world) are running out of oil and our econimies will collaspe because of it. Is their truth if any to this?

http://www.lifeaftertheoilcrash.net/

 

[25362]

Would control of world's population growth help in delaying the catastrophe, that is until viable alternatives are found ?

 

[zdas04]

The date of the "peak oil production" has been moving farther out with every study for the last 50 years. For the last decade it has tended to always be 3-10 years in the future. There are an amazing number of assumptions in all of these estimates.

It has been estimated that the typical oil field recovers something like 30-40% of the original oil in place before further efforts become uneconomical (not impossible, just too expensive for the price of sales). If the price goes from $67/bbl to $670/bbl then many activities that have been uneconomical become very feasibile. I think that there will be a peak sometime in the future, followed by rapidly increasing prices (how does $50/gallon for gasoline at the pump sound?), followed by sharply reduced demand, followed by rapidly increasing development activity, followed by declining prices. That yo-yo will go on for many years as some businesses wail and cry for price controls and other businesses work on alternatives. When the government eventually gives in and instituets price controls, development will stop and we'll be recovering 40-50% of the oil in place and we will have a new crises a few years after that.

Eventually the fossil fuels will run out (50 years, 500 years, 5000 years, who knows?). At that time there will either be a viable alternative (with national economies restructured around the new alternative) or enough people will die (billions) be able to sustain what is left of society with less effective fuels.

Right now hydrocarbon-based fuels are so inexpensive that there just isn't a payout to large-scale research into alternatives and the research that is currently underway is poorly funded, not attracting the best minds, and horribly directed. That isn't going to change until fuel costs are a much larger portion of a country's GNP.

David

 

[mbeychok]

The term "Peak Oil" is relatively new and it has become one of the myriad of trendy "buzz words" with which we are afflicted. In particular, it has become a favorite buzz word of the "conspiracy theorists", the environmental activists of the "tree hugging" variety, and all sorts of "doom sayers".

The Btus of energy (or kiloJoules, if you prefer) available in the proven reserves of surface-mineable coal in the Western sections of the USA, Canada and Mexico has been estimated to be ten times the Btus in the crude oil reserves of all of the MidEast.

About 30-35 years ago, South Africa proved that coal can be gasified and, when needed, converted into liquid fuels. They have been doing just that for many years now. Even we in the USA have had a very large coal gasification plant operating successfully in Buelah, North Dakota since 1984. So, it can be done ... and done at a reasonable cost. It sure as heck wont cost $600 a barrel!! All it takes is the national will to do it ... and national will is something we in the USA seemed to have lost somewhere.

So, Indy1687, not to worry. We have a vast amount of fossil fuel still available in our surface-mineable coal and shale oil deposits.

Milton Beychok
(Visit me at www.air-dispersion.com)
.

 

[zdas04]

Mbeychok,
The first time I heard the "Peak Oil" discussion was at the Schulmberger annual State of the Industry presentation in the spring of 1981. I suppose that 25 years is "relatively new" in geologic time, but it doesn't seem like that recently in economic time. It may currently be a "buzz term", but within the industry it is a concept on which people are basing capital-spending decisions.

According to the DOE (

http://www.fossil.energy.gov/programs/powersystems/gasification/gasificationpioneer.html

) people have been getting gas from coal since the early 1800's. No news there. The same article states

In the 1970s, interest in coal gasification revived, due largely to concerns that the U.S.'s supply of natural gas was waning. The massive Great Plains Coal Gasification Plant in Beulah, North Dakota, was built with federal government support to use coal gasification to produce methane, the chief constituent of natural gas, that could be fed into nearby commercial gas pipelines. When government price controls on natural gas were lifted, however, large quantities of natural gas became available, and no other coal-to-methane gasification plants have been built to date in the United States.

(emphasis added). The only way the plant is still operating is the capital was subsidized. Another link (

http://edj.net/sinor/sfr7-01a21.html

) shows that the original owners of the plant didn't find it to be economic in the 1990's and abandoned it, the current operators purchased it from the Federal Government, the implication is that they purchased it at a substantial discount. The plant lost money in 1999 and only made a small (less than 8% of revenues) profit in 2000 because burner-tip prices went from $8/decatherm to over $20. Today the plant is primarily making money on a fertilizer byproduct.


There are several coal-gasification combined/cycle power plants in operation or under construction in the U.S. today. Typically they tout 40-45% thermal efficiency (as opposed to the low 30's typical in coal plants), and make the argument that a 30% reduction in fuel consumed results in "cheap power". The only way the power can be considered "cheap" is comparing a combined cycle plant to a plant that sends all the waste heat to the atmosphere. If you compare a coal-gasification combined-cycle plant to a coal-fired combined cycle or a methane-fired combined cycle the coal-gasification power is far from inexpensive.

And so-what if there is 10 times as much stored energy in surface-mineable coal in the U.S., Canada, and Mexico as oil reserves in the Middle East? My argument is that it will eventually be consumed, it doesn't matter how much there is. When it runs out, people will freeze in the dark unless someone comes up with an alternative energy source that can be had for a reasonable cost in sufficient quantity.

Ten years ago wholesale prices for natural gas were around $1.50/MCF. Today first of month wholesale prices are hovering between $8-10/MCF with spot prices over $30/MCF. That is more than a 20 fold increase in wholesale prices in a decade. $600/bbl oil would be less than a 10 fold increase from today's price and a 30 fold increase from 1996 prices. In spite of your exclamation point, $600/bbl oil is far from out of the question. Some analysts claim that prices consistently over $100/bbl would be required to cause any new refinery's to be funded. For the next few years the only thing I see that would cause that sort of increase would be a disruption in Middle East oil (maybe a couple of the recent terrorist attacks in Saudi succeeding?), but long term it is inevitable.

David

 

[joerd]

An interesting article in the April 3 issue of Oil&Gas Journal in this respect: HUBBERT’S UNRELIABILITY-1: Two basins show Hubbert’s method underestimates future oil production
The author contends that (like in the previous posts) increasing cost of crude helps to develop less economical fields, and the prediction methods of proven reserves also have a lot of assumptions (like zdas04 said).
The link is

http://ogj.pennnet.com/articles/article_display.cfm?Section=ARCHI&C=Explo&ARTICLE_ID=251691

Cheers,
Joerd

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

 

[indy1687]

so is their any chance of oil prices exploding by 2010? what would your percentage guess of that happening be?

 

[zdas04]

The two scenarios that make the most sense are (1) a coordinated terrorist attack in the Middle East (e.g., sink a super tanker in the narrow part of the entrance to the Persian Gulf and blow up a Saudi terminal) or (2) the U.S. Congress showing some gumption and adding a $5/gallon surcharge on motor fuel.

The second one has approximately zero chance of happening. Had they done that during the 20 years that prices at the pump were outrageously low it would have reduced imports and fostered conservation--today it would cause riots.

You can assess the risk of the first one as well as anyone.

David

 

[mbeychok]

zdaso4:

The fact remains that the gasification plant in Beulah, Dakota works and works well. So the technology is there. And the fact remains that they are now privately owned and making a profit.

The fact remains that we have vast supplies of surface-mineable coal available and that South Africa has shown us how a nation, when forced to do so, can use coal to satisfy their energy needs.

About 3-4 years before the Beuhlah plant was built, there were a number of coal gasification plants in various stages of design by the major engineering and construction companies. One of those was the plant to be built on the Navajo reservation near Farmington, New Mexico. At about that time, OPEC lowered the price of oil significantly. Shortly after that oil price reduction all of the gasification plants being designed were abandoned. After they were abandoned, the DOE stepped in to finance the Beulah plant to demonstrate the technology. In my opinion, OPEC deliberately lowered the price of oil so as to stop the emerging gasification usage in the US ... and that had more to do with stopping coal gasification in the US than did the lifting of government price controls on gas.

When you say that Congress doesn't have the gumption to slap a high surcharge on gasoline, you are somewhat agreeing with me that our nation has lost its will to do anything about the situation. We keep electing Senators and Congressmen who are more concerned with getting re-elected than with solving any problems.


Milton Beychok
(Visit me at www.air-dispersion.com)
.

 

[Ashereng]

... oil willbe in short supply by 2010 or sooner. That we (world) are running out of oil and our econimies will collaspe because of it. Is their truth if any to this?

It is true that we are constantly depleting our oil resources.

No. We won't run out of oil by 2010. I don't think we will have short supply problems either by 2010. That's only 4 years away.

I think it is more likely that we have a gasoline/diesel/jet fuel supply problem by 2010 before crude oil. Why? There hasn't been a new refinery built in NA in over 40 years. If another major hurricane hits the gulf coast refineries, that can put a major squeeze on distilled products in North America.

By the way, Canada has a proven oil reserve equal to that of Saudi Arabia in their tar sands. So, given that we've been taking oil out of Saudi Arabia for the last 50 years, I think we are good for a while anyways - until the major oils find the next "mother lode".

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

 

[zdas04]

Last night I had the opportunity to see a presentation by the current head of SPE. He put up a graph that had peak supply in 2050, then showed another that had different peaks for different Original Oil in Place estimates. The most pessimistic was 2010, the most optimistic was two centuries hence. The things I took away from the presentation were:
1. We will only know when Peak Oil happed 30-40 years after it happens
2. You can find a set of data to support any conclusion that you want to draw on any subject.
3. The unconventional resources (primarily Hydrates) will fill a very large energy gap for a very long time after the conventional stuff runs out. The Hydrates are there, everyone acknowledges that. They are mostly in fairly deep water and will gasify when they reach atmospheric pressure so recovering them is difficult and expensive today. This is an engineering problem that will be solved long before people start dieing from lack of energy. The only thing that is delaying development is the availability of very cheap natural gas.
4. The rapidly declining exploration success that has been the bane of the industry since 1980 has been largely due to excess production capacity in the regions where most of the undiscovered hydrocarbons are--if Saudi Arabia has 6 million bbls/day of capacity shut in due to lack of market, what incentive do they have to explore? Now that there are few countries with excess capacity, it is inevitable that exploration capital will move toward these places (Saudi, China, and Siberia head the list) and successes are nearly inevitible.

He didn't paint a picture of cheap resources or resources that are trivial to access, but the picture that he painted did not require a fundemental breakthrough in man's knowledge. Just good engineering in a price environment that will allow funding a few technological failures.

He also said that there are 17,000 petroleum engineering University seniors graduating this year, the industry wants to hire 35,000 entry-level engineers this year. Most of the seniors have had multiple job offers since their junior year. He talked about one senior that was starting at $85k, but he said that guy really stood out from the pack.

David

 

[bonzoboy]

My observation is that we are running out of the cheap stuff (low hanging fruit) and the good stuff (low sulfur, light). The API gravity of the US imports is getting heavier, and with higher sulfur. If there was better oil out there, I think we'd be getting now, because it is easier to process. But overall there is a lot of oil, and its not running out, but getting harder to find.

 

[DrillerNic]

Picking up of zdas's point about using statisitcs to proove whatever you want, on the Peak Oil webiste, they lump all of the Middle East into one lump (that's Saudi, Kuwait, Iran, Iraq, but also Turkey, Syria, Jordan and Yemen). Then they draw a graph showing bbls of oil found per well up to 1960 and bbls of oil found after 1960 and as the more recent number is much lower, stand back and say "see? we're all doomed! doomed!".

Conveininetly fogetting that the majority of teh wells post 1960 were drilled in places like Turkey and Yemen etc, which have had some sucess (in Yemen for example). There's been very little exploration done in Saudi etc since the 1970's why bother? In the late 1990's I was involved in the development of the Shaybah field for Saudi Aramco- a few hundred million barrels prooved reserves (ie pretty big) discovered in the early 70's; Saudi Aramco has no need to explore for 20 years or so!

There's enough oil for me to work as a drilling engineer until my retirement, and probably enough for my child to retire in the oil patch too!