We still have a LOT of oil. 1

[Ashereng]

It seems that not everyone believes we have a shortage of oil.

http://www.msnbc.msn.com/id/15715744/

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
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[KENAT]

It's not necessarily that there's a shortage of oil.

Part of a problem is where the 'easily accesible' oil is in relations to where wants/needs it.

 

[zdas04]

I did reserves estimates in another life (I still have nightmares) and the two assumptions that the regulatory agencies forced on us was the term "economicaly recoverable" and "recoverable using known technology". Well, the first thing that you do in determining "economicaly recoverable using known technology" is stick your hand way up inside your body and invent a price deck from what you find there. If the price deck says that oil price is constant at $19/bbl and your expense deck has 5% inflation in op costs then you plan to leave a bunch of oil in the ground at abandonment.

Now that people are loosening up on the price decks, the ultimate recovery fractions are moving upward. It was inevitable that the magical "peak oil" point will move out in time as people start beleiving that higher prices are here to stay. If prices plumet al la 1986 then a huge amount of oil and gas will be plugged to try to remain profitable.

Known technology is another big issue. Last week I was at the ASME annual meeting and sat through a couple of fluids presentations where people are successfully changing the wetability of rock on labratory scale. If you can change oil-wet rocks in a place like East Texas or Permian Basin or the shallow Gulf of Mexico (to say nothing of the North Sea and North Slope) to water-wet then you can increase your recovery from 20-30% to something closer to 50%. If this kind of technology ever gets out of the lab then Peak Oil is pushed back a few decades more.

I've seen so many articles that say "Oil is Gone" and just as many that say "Oil is Infinate" that I'm not buying into any of them.

David Simpson, PE
MuleShoe Engineering

http://www.muleshoe-eng.com

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[sms]

We still have a lot of oil.... but I think that technology will finally catch up and we will use less and less of it for personal transportation. Which shifts that peak out some more...

-The future's so bright I gotta wear shades!

 

[0707]

Yet, there is actually a lot of oil left in the abandoned wells reservoirs. How much? In many wells reservoirs, as many as 3 barrels can be left in the ground for every 1 barrel that is produced. In other words, if oil production stopped after "primary production," almost 3/4ths of the oil would be left behind!
That's why oil producers often turn to "secondary recovery" processes to squeeze some of this remaing oil out of the ground.

By the other side policies of oil savings and new energies will enlarge oil reserves life.

I suppose that we are still far from the “peak oil”. After this relive on oil prices to raise the demand the guys of OPEC will lower the production to raise the prices.

Cheers

Luis

 

[Dinosaur]

I seem to recall there is something called a minerals and natural resources tax where oil companies, coal mines, etc. have to pay taxes on the product they have yet to recover. Would this influence the amount of oil you were willing to admit you could get to?

 

[zdas04]

Taxes for mineral-recovery companies in the U.S. are based to a large extent on "Proven Reserves", but the math is really complex and at the end of the day increasing your reserves will lower your current-year taxes some. Purposely under-reporting or over-reporting reserves is a felony and the engineer signing the reserve-change form can go to jail. I don't think there is a conspiricy here.

David

 

[HVACctrl]

I believe there is plenty. Here is why:

Who benefits from falsely saying that it's long-lasting?

Who benefits from saying that it's running out?

To me, it seems there's only an answer to the second one, but maybe I'm wrong and painfully uninformed. Its happened before.

Ed

http://www.engineerboards.com

 

[DrillerNic]

I know the answer to your questions HVACctrl, but it points in the opposite way of a conspiracy theory. The people who benefit form saying oil is running out are the renewable energy lobby.

The value of an oil company is measured by its booked reverses (like zdas I have signed off reserves estimates, and that experience is why I moved from reservoir engineering to well engineering!!). If you underbook your reserves, you are devaluing your company, which is generally bad (it will adversely affect your share price, possibly make you a takeover target, affect your borrowing capabililty, and maybe make it harder to prequalify for liscense applications or large projects). It is also illegal under SECC and London Stock Exchange rules and the Sarbanes Oxely act. Also, for the big multinationals, the US is a small part of their global portfolios, and many places (the UK for example) tax production rather than reserves.

Look at what happened to Shell when it had to admit to deliberately underbooking it's reserves by as much as 25%- the shares took a big tumble, many of the board of directors were sacked, the Royal Dutch bit effectivley ceased to exist, and there was a massive crow eating session withte finacial markets to try and restore their confidence in Shell's management (and rest of us had a good laugh - as Shell do have a reputation for being an arrogant, impolite company).

What a lot of teh peak oil guys seem to forget is that as zdas says, reserves estimate have an explicit economic consideration in them. You can have a certain amount of reserves at $20/bbl and much more reserves at $50/bbl without doing any extra exploration, or using new technology or anything. I know my company is still basing all their economics and reserves on $25- $20 oil (everyone's been burnt before by the price cycle and no-one wants to f**k it up again). Also the API/SECC yellow book rules for reserves estimates are quite conservative in their definitions of proved, probable and possible reserves- probabilistic methods (ie Monte Carlo simulations) aren't allowed, so internal company reserves estimates can often be larger than the certified published reserves estimates.

 

[HVACctrl]

Wasn't trying to be negative, only logical. Your idea makes sense as well and I hadn't thought about it. Yours is no more a conspiracy theroy than mine was.

In either case, maybe we'll never get an accurate handle on what's really left.

Thanks for the insight.

http://www.engineerboards.com

 

[zdas04]

There is exactly one point in the life of a field when you have a chance of determining the recoverable reserves--the day you plug the last well in the field you can look at what you sold. Of course, what you sold is a percentage of what you produced and what you produced is a fraction of what was originally there so you never really know original oil (or gas) in place.

We should be able to determine when peak oil was a few years after the last oil is ever extracted from the world. Everything else is WAG's (certainly not SWAG's).

David

 

[Comcokid]

Zdas04 - But even when you plug all the wells in a field, even that may not be the end of the "recoverable reserves". In the late 70's, they redrilled wells that were plugged in the 50's because the increase in prices made unprofitable low volume fields profitable again. Today they are redrilling wells plugged in the 80's because of the same reason.

"One man's trash is another man's treasure".

 

[zdas04]

You got me there, the whole "economicly recoverable with known technologies" thing will always be biting us on the butt. The $3/bbl price in the '50's and 1950's technology both left a lot of oil behind. Maybe we'll never know how much oil was there and how much could have been recovered with sufficient economic incentives.

My gut feel is that the next 6-10 years are going to be very challenging for the industry as the world follows the new US government's irrational policies of "Windfall Profits Tax" and other techniques designed to kill the industry. Peak oil may be last year.

David

 

[HVACctrl]

I kind of see the meaning sort of, by th context, but can you guys define "peak oil" for me?

Thanks

http://www.engineerboards.com

 

[zdas04]

Peak oil is an MBA-term meaning the date where oil daily production rate (including gas as an oil energy equivelant) reaches its maximum value. The rate has been increasing since first production in Titusville, one day the rate will have to start decreasing. The MBA's think that that will be an important milestone.

David

 

[GregLocock]

As you may or may not know, Australia has a long history of gold mining. One incredibly profitable area is simply opening up old diggings and re-mining the tailings and so on. Modern technology, and modern gold prices, make this economically viable. In some cases this is the third time that a given area has been re-mined.

If you think about it even gold is not /that/ valuable. We still routinely throw it away (printer cartridges, PCs).

I'm sure the same will happen with oil.

Cheers

Greg Locock

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[GregLocock]

Also

http://www.cera.com/aspx/cda/public1/news/pressReleases/pressReleaseDetails.aspx?CID=8444

I would add that I can't figure out whetehr oil companies gain or lose by promoting or criticisng peak oil. If they encourage it then their current absurd profits are justified, as they won't last long, but then that will also encourage oil-from-coal, and other effective measures.



Cheers

Greg Locock

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[GregLocock]

and

http://www.thebulletin.org/article.php?art_ofn=mj05cavallo

for the other point of view. Note that Exxon is picking a peak in non-OPEC, not global, production, and the argument is that the oil producers are trying (sensibly) to maximise their returns, rather than just delivering cheap oil.

Let's just bear in mind, the cheapest feedstock for industrial ethanol production in some circumstances is ... oil. Oil is still ridiculously cheap.



Cheers

Greg Locock

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[Comcokid]

I think there has always been a prediction of an oil shortage "30 years in the future" since the modern oil era began in 1858 and 59 in Ontario and Pennsylvania. It would be interesting to see an article on the 'History of Oil Shortages in the Future'. It really makes any recent predictions of a future shortage hard to believe. Even when shortages seem more real, the increasing prices only serve to make the end uses more efficient and stir more research into alternative energy sources.

As for energy from oil, there always seems to be better methods of refining, exploring, drilling, discovery, and use of previously inaccessable oil. Even in the past few years, we have seen more development of non-oil, oil-like alternatives like ethanol and bio-diesel, in addition to new field discoveries and use of tar-sands in Canada.

 

[DrillerNic]

As you get a lot of production data, techniques like material balance allow you to get a beter handle on the amount of oil that was there before you started. And as zdas said, what you've sold when you P&A the last well is your ultimate recovery.

But even offshore, it's possible to go back to an abandoned field: just as Tuscan did with the Argyl field, 10 years after it was decommissioned.