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Peak Oil

Worldwide energy crunch
Power to the people — and how to keep it coming

Steve Chu, SF Chronicle

…The worldwide consumption of energy has nearly doubled between 1970 and 2001. By 2025, it is expected to triple. The extraction of oil, our most precious energy source, is predicted to peak sometime in 10 to 30 years, and most of it will be gone by the end of this century. What took hundreds of millions of years for nature to make will have been consumed in 200 years. Natural gas will follow a similar fate. Other forms of fossil fuel (coal, shale oil, tar sands and methane hydrides) could last for another several hundreds of years.

There is, however, a catch. The cost of keeping the equivalent of a billion horses working for the world 365 days a year has a modern-day equivalent of cleaning the stables. The overwhelming consensus among scientists is that the Earth is warming, and the mostly likely cause is our emission of greenhouse gases such as carbon dioxide. Global warming has thus made new investments in conventional coal-burning plants questionable.

There appear to be no magic bullets to solve the energy problem. While efficiencies play a huge role in defining how much energy we consume, we must also have a diversified portfolio of investments to develop sustainable sources of energy that, in their creation and use, will result in no net emission of carbon dioxide.

… For billions of years, photosynthesis has turned the sun’s energy into chemical energy. Learning to mimic biological systems may provide an eventual solution, while advances in molecular biology may offer a shorter-term answer. We should develop rapidly growing, self- fertilizing plants that convert carbon dioxide, sunlight, water and modest amounts of nutrients into biomass, such as cellulose, and more efficient means to convert the bio-mass and bio-waste into usable forms of energy. Nature has found ways to convert cellulose within the stomach of a termite and at the bottom of a swamp. A promising avenue of research is to improve these microorganism communities or develop biology-inspired enzymes that can replace existing, less efficient processes.
At Berkeley Lab, this energy challenge has captured the imagination of some of our very best scientists. We are mounting a major, multidisciplinary initiative to create sustainable, carbon-neutral sources of energy. One of my hopes is that some of the most rapidly advancing areas in science, such as nanotechnology and synthetic biology, will transform industries, enabled by world-class facilities like Berkeley Lab’s Molecular Foundry, now under construction, and the new West Berkeley Biocenter, a partnership with the University of California at Berkeley. I urge government and industry to more heavily invest in this nationwide quest to secure our energy future

Steve Chu is director of Lawrence Berkeley National Laboratory and 1997 recipient of the Nobel Prize in Physics..
(17 July 2005)
I’m not sure why conservation, energy efficiency and direct solar are seldom mentioned as solutions to the energy problem.

US Congressman Bartlett speaks out again on Peak Oil

Roscoe Bartlett (Rep-Maryland), transcript via GT’s personal website
PEAK OIL — (House of Representatives – July 19, 2005) [Page: H6097]

The SPEAKER pro tempore: ‘Under the Speaker’s announced policy of January 4, 2005, the gentleman from Maryland (Mr. Bartlett) is recognized for 60 minutes.’

Mr. BARTLETT of Maryland. ‘Mr. Speaker, if you go to your computer this evening and do a Google search for peak oil, you will find there a large assortment of articles and comments. Like every issue, you will find a few people who are on the extreme, but there will be a lot of mainstream observations there.

One of the articles that you will find there was written by Matt Savinar. Matt Savinar is not a technical person. He is a lawyer, a good one, and he does what lawyers do. He goes to the sources and builds his case.

I remember in another life I was involved in morphing some of my knowledge of human physiology into the practical world, and I was awarded 20 patents. For every one of those I had a lawyer. I knew that he knew absolutely nothing about the subject that he was helping me on before he came to work with me. By the way, Mr. Speaker, the 20 patents I had, 19 were military patents so these were military lawyers. I was really impressed with how quickly they caught on and knew what was going on and were able to contribute.

I think that Matt Savinar has done that, and I wanted to begin this discussion this evening with a quote from Matt Savinar because it kind of grabs your attention and makes you either want to put down his article with the statement that gee, this guy cannot be for real, or you want to finish it to see the basis for his statement because he begins his article by saying, “Dear Reader, Civilization as we know it is coming to an end soon.”

When my wife read that she had the first reaction that I mentioned, Gee, this guy is a nut. I am not going to read any further.

I said, Please read on and reserve judgment until you have finished reading his thesis.

She read on and at the end was genuinely frightened by what she read. I do not believe Matt Savinar has to be correct, but he could be correct. I am going to spend a few minutes this evening talking about the subject that caused Matt Savinar to make his prediction: “Dear Reader, Civilization as we know it is coming to an end soon.” ‘
(19 July 2005)
For more presentations by Congressman Bartlett, search the Energy Bulletin website. Some posters on said that this was Bartlett’s best talk yet. -BA

[Denial:] No, It Really Isn’t Just a River in Egypt, Part 2

Prof. Goose, The Oil Drum

…In his book, States of Denial, Knowing About Atrocities and Suffering, Stanley Cohen argues that the capacity to deny a level of awareness is the normal state of affairs for people in an information-saturated society.

Cohen argues that ‘far from being pushed into accepting reality, people have to be dragged out of reality.’ As I have stated many times, I believe that’s what this community needs to do: giving people a nudge, but in a gentle fashion edified by empirical evidence.

According to Cohen’s definition, denial involves a fundamental paradox – that in order to deny something it is necessary at some level to recognize its existence and its moral implications. It is, he says, a state of simultaneously ‘knowing and not-knowing’ something.

This description is well suited to the current social response to peak oil…
(20 July 2005)

Listening to the experts

Heading out, The Oil Drum

As we move through this period of grace before the tightening oil supply situation becomes more clearly evident to more people, there are increasing numbers of statistics appearing that seem to confuse the issue. For example there was the recent revision upward of the US demand growth last year by 213,000 bd. Then there are also some conflicting views on what China plans on doing, some of which discussion is given in our earlier posts of this past week. There are questions about the state of Russian production, and exactly how much oil is coming, and from where in the Middle East. In addition there is the conflict over the actual amount that the British part of the North Sea oil is declining, is it the 17% that has been noted as occurring monthly for the past quarter by the Scotsman, or is it the 5.6% that the latest UKOOA report would have it.

Some of these issues can be explained.
(19 July 2005)
It’s hard to keep up with all the good posts at The Oil Drum, so you might want to check them directly. -BA


Turning tar sands into oil – Potential sources in North America

Thomas J. Quinn, Cleveland Plain Dealer (US)

Thick as tar, loaded with sand, some of the world’s future sources of oil are so heavy they can be more easily mined than pumped.

Huge, tarlike deposits in Canada and Venezuela will be critical over the next 50 years to the supply of liquid fuels as the world’s production of easily pumped oil plummets. Yet, turning this nonconventional oil source into synthetic oil is not likely to be the solution to our energy crisis, as some claim. Canada is no Saudi Arabia.

Still, such synthetic oil, which also can be made from coal and natural gas, could provide a critical bridge to an era of new technologies, cleaner fuels and lower-energy lifestyles. …

Eddy Isaacs, managing director of the Alberta Energy Research Institute, a provincial government agency, estimates that the oil sands and other nonconventional sources around the world will provide only 10 to 15 percent of the additional oil needed over the next 20 years.
“We need to go on many fronts,” Isaacs said. “There is not one silver bullet out there that is going to do it all.” …

“The tar sands are clearly the worst type of oil for the atmosphere,” says Steven Hazell of the Sierra Club of Canada. …

“Prudent risk management dictates serious attention and massive action soon, which is difficult for most people and many decision-makers, who tend to wait until a problem is obvious before taking action,” Hirsch wrote.
(17 July 2005)
Decent roundup of current activity and future prospects for oil sands in North America, includes a number of evenly-treated oil peak scenarios (IEA, ASPO, Hirsch) as uncontrovertial references – nice.

Norway’s oil output at 11-year low, 2.29 mln bpd

Alister Doyle, Reuters
OSLO – Norway’s monthly oil production fell to an 11-year low of 2.29 million barrels per day (bpd) in June, hit by halts of many offshore fields for maintenance, the Norwegian Petroleum Directorate (NPD) said on Tuesday.

Production was down from 2.65 million bpd in May and 2.88 million in June 2004.

“A preliminary overview shows this is the lowest monthly production since August 1994, when output was two million barrels a day,” Rune Hult, an official at the state-run NPD, told Reuters. …

The NPD also said production of natural gas liquids and condensate fell to 289,000 bpd in June from 385,000 bpd in May, according to the preliminary figures. …

The total was 0.1 million standard cubic metres of oil equivalents less than in May 2004.
(19 July 2005)

UK Energy Demand to Outstrip Supply

Ben Griffiths, The Herald (UK)via Rigzone

UK oil and gas production is set to fall this year, even as the national economy becomes increasingly reliant on the industry to meet its primary energy needs over the next decade. That is the message from industry body the UK Offshore Operators Association, which yesterday published its annual study of the economic outlook for the North Sea’s exploration and production companies.

The UKOOA has slashed forecasts for 2005 production by 5.6% to the equivalent of 3.4 million barrels per day, down from 3.6 million last year.

Estimates for this year have been trimmed by 200,000 barrels a day since January after production failed to meet expectations in 2004. North Sea production peaked in 1999 and has been in decline ever since. The association believes that maximising the recovery of indigenous hydrocarbon reserves will help to cushion the UK from the full impact of energy price volatility. …
(15 July 2005)

Liquefied gas fills gap left by North Sea decline

Carl Mortished, Times (UK)

THE first cargo of liquefied natural gas (LNG) arrives in the Thames Estuary this morning and will be the start of many shipments of gas from Algeria that will help to replace Britain’s declining North Sea gas reserves. The Berge Arzew, a third of a kilometre long, will moor at the Isle of Grain, Kent, and begin to pump 138,000 cubic metres of LNG into National Grid Transco’s new LNG terminal.

Imports of LNG into Britain were due to start late last year, but construction delays and the high price of gas delayed the start-up amid rumours of a dispute between BP and National Grid Transco.

BP is believed recently to have diverted cargoes of Algerian LNG earmarked for the Isle of Grain to the United States, where gas sells at a much higher price.

The sudden and unexpected development of a transatlantic short-term market in LNG has excited gas traders, who predict that a price arbitrage will develop between the American and British gas markets. Once isolated, Britain’s gas market is influenced now by continental gas prices as a result of linkage to Europe’s gas grid via a pipeline between Bacton, Norfolk, and Zeebrugge, Belgium.
(4 July 2005)

Why US is shifting nuclear stand with India
A bargain on nuclear technology may signal view of India as counterbalance to China

Howard LaFranchi, Christian Science Monitor

WASHINGTON – US plans to broaden India’s access to nuclear technology, announced this week during an enthusiastic visit to Washington by Indian Prime Minister Manmohan Singh, have their roots in designs from the earliest days of the Bush administration to build India’s stature as a counterbalance to a rising and problematic China.

The proposed extension of nuclear access to what the White House likes to call “the world’s largest democracy” raises questions about potential impact on other countries with nuclear ambitions and designs for international status. That is especially true as the announcement comes just days before the European Union is to return to negotiations with Iran to end its nuclear-weapons programs and six-party talks are to take up again in Beijing on North Korea’s nuclear program.

But perhaps the greatest significance of the plan is what it says about 21st- century geopolitics and in particular about a Bush administration vision for dealing with China, some analysts say.
(20 July 2005)

Politics and Economics

Fuel’s forbidden fruit

Josh Massoud, Daily Telegraph

GREENGROCERS have spilled the beans about upping their prices in response to the soaring cost of petrol. Fruit shop owners like Dave Polistina are trapped in a spiralling price cycle that grows more vicious each time fuel breaches $1.20 a litre, as was the case across NSW yesterday.

“Whatever fruit is available, the price is double because the cost of bringing it from one place to another goes up,” said Mr Polistina, who runs the family-owned Northmead Growers Market.

“Obviously with petrol prices going up you can see a lot of other things going up with them. It’s a vicious cycle.”
(15 July 2005)

Bid by Chevron in oil deal to thwart China

A.Sorkin and J.Mouawad, NY Times

Chevron sweetened its offer for Unocal late yesterday in an 11th-hour move to thwart a rival offer from Cnooc, a government backed Chinese oil company, executives close to the negotiations said.

A Unocal drilling platform in Thailand. At the heart of the battle for the company lie Unocal’s oil and gas fields in Asia, mainly in Indonesia, Thailand, Myanmar and Bangladesh.

Unocal’s board voted to accept Chevron’s increased offer worth $17 billion, or $63 a share in cash and stock, and rejected a still higher all-cash offer from Cnooc worth $67 a share as too politically risky, the executives said.

The decision by Unocal’s board could end the takeover battle that has stirred significant debate in Washington about national security concerns and trade policies with China. Still, it is possible that Cnooc could return to the negotiating table with a higher bid.
(20 July 2005)

Letter From Ecuador: The High Cost of Oil

Daphne Eviatar, The Nation

When Renee Arevalo purchased a small plot of land just off the main road to Shushifindi several years ago, it seemed like a great opportunity. A rectangular block of freshly plowed dirt off the well-traveled route toward one of Ecuador’s oldest oilfields, the sizable lot looked like the perfect spot to build a small house for his family that would double as a tire repair shop.

But then the rains came. The hard, driving rains of Ecuador’s Amazon basin have made this rainforest region one of the most ecologically spectacular places on the planet. But at Arevalo’s new home, the rains brought only a foul smell, sort of like a gas station. Then Arevalo noticed that the puddles of water that blotched his dirt yard had thick, multicolored swirls on top. When he poked a wooden stick a few feet down, thick black sludge bubbled to the surface.

Arevalo has a wide, square face that looks permanently creased from worry. He’s lived here with his family for five years now, he told me when I met him outside his home recently. They drink from a nearby well. But the family is always sick, he said. His children have constant stomachaches. And recently, his mother-in-law died of liver cancer. I asked him what he thought was the cause. “Of course it’s from the oil,” he said. A bony white cow curled up in the mud flicked away the circling flies with his tail. “But what can I do? Who can I complain to?”

Arevalo is just one of thousands of Ecuadorians left angry in the wake of decades of oil exploration that began in the 1960s and continues, albeit in a more modern form, today. He’s also part of a growing force of poor and indigenous people across the country, from the peaks of the Andes to the lowlands of the Oriente, who have grown suspicious of Ecuador’s government. Famous for its backroom dealings with oil companies and international financial institutions, the national leadership is widely seen as having enriched the elite at the expense of more than half the population, which struggles to get by on less than a dollar a day. In fact, among the indigenous, poverty is far worse–87 percent, according to the World Bank. And since 2000, when the country adopted the American dollar as its official currency to curb runaway inflation, that dollar has bought them a lot less than it used to.
(August 2005 issue)
Good analysis of an explosive issue in Latin America, as well as weighty evidence of oil being too cheap, at least at the extraction end.

Chavez denounces Venezuelan cardinal as coup-mongering “bandit”

Staff, Xinhua News Agency

CARACAS – Venezuelan President Hugo Chavez called a Roman Catholic cardinal a coup-mongering “bandit” on Sunday after the church leader urged Venezuelans to oppose the president on the grounds he was not ruling the country like a democrat.

“I am convinced that what we have here is a dictatorship,” El Universal newspaper quoted Cardinal Rosalio Castillo as saying.

At a live state television broadcast, waving a copy of Castillo’s newspaper interview, Chavez angrily retorted the church leader, saying “He has the devil inside him … (he’s an) immoral bandit and coup-mongerer”. …
(18 July 2005)

Oil Fuels Suriname-Guyana Border Clash

Anton Foek, Guerilla News Network

… A few decades later, the discovery of vast off-shore oil reserves in the contested territorial waters has fulfilled Lachmon’s warning. International corporations-lured by the prospect of an estimated 15 billion barrels of oil-are vying for drilling rights and pushing a centuries’ old simmer to the boiling point of open war. …

The line between friend and foe runs down the Corantijn River which divides the countries and extends into the sea. The dispute “has spiraled the people of these two countries into an unnecessary conflict and waste of costly time,” says Brian Johnson in Guyana who collects taxes and tolls in the Iwokrama nature reservation on one side of the river. On the other bank, customs officer Frank Bruining agrees: “A complete waste of time; these politicians should know better. Instead of cooperating, they fight for political gains at the expense of the common people.” …

The international corporations first raised the stakes in 1998 when Guyana granted CGX a concession to drill for oil in the coastal areas it claimed as its own. By 2000 a platform rested over one of Guyana’s two promising oil fields. But before drilling started, a Surinamese air force plane spotted the rig and Suriname ordered the it out of what it claims was its territory. Then, in the middle of the night, Surinamese gunboats towed off the Guyana’s oil rig and launched a full-scale international crisis. …
(13 July 2005)

Already tight, oil supply is vulnerable to disruption

Jad Mouawad, New York Times

Global oil markets are expected to remain under intense pricing pressure as demand picks up next year, an indication that even at $60 a barrel, oil prices are doing little to slow consumption, the International Energy Agency said Wednesday. …

Thunder Horse, which was expected to start pumping oil in October, is crucial to deep-sea production in the Gulf of Mexico. BP expects the unit’s maximum output to reach 250,000 barrels a day, or 16 percent of the gulf’s current total output of 1.5 million barrels a day. …

In its report, the energy agency also lowered its forecast for oil demand in 2005 by 200,000 barrels a day, mainly because of a sudden drop in Chinese consumption, and also because of revisions to past data from the United States. It now expects oil use in 2005 to grow by 1.6 million barrels a day.

The forecasts for growth in 2005 and 2006 are lower than 2004, when the jump in oil use surprised most analysts — including those at the International Energy Agency — with consumption growing 3.6 percent, or 2.9 million barrels. …
(17 July 2005)

Oil companies add value and increase danger

Staff, Financial Times via MSNBC

The world’s largest oil companies face increased dangers as they push the existing boundaries of technology into ever more unforgiving environments, as setbacks for two of the industry’s “supermajors” demonstrated last week. …

“The large, frontier projects are the most difficult to estimate well,” said Jeroen van der Veer, Shell’s chief executive. “If you go to the very frontier areas of this world and then you get new facts, for instance about whales, which have to be taken into account, or all kinds of climate problems, then [the] scope [of the project] changes.”

Major oil companies are having to turn to large and difficult projects in challenging environments because they lack access to the countries where oil is easily accessible.

Major oil companies are having to turn to large and difficult projects in challenging environments because they lack access to the countries where oil is easily accessible.

The countries that own accessible resources no longer need their expertise to extract the oil or gas or sell them in foreign markets. So to add value, companies must undertake projects that would be too technically challenging, too complex or too expensive for governments to do by themselves.
(18 July 2005)

Greenspan warns on fuel, housing
Outlook on fuel prices and consumer inflation risk a “lose, lose scenario,” says analyst

Aaron Smith, CNN/Money

NEW YORK (CNN/Money) – Alan Greenspan, chairman of the Federal Reserve, spoke favorably of the overall economy in Congressional testimony Wednesday, but warned investors about the risks of a housing bubble and fuel prices that are likely to keep rising for years.

“A further rise [in fuel prices] could cut materially into private spending and thus damp the rate of economic expansion,” said Greenspan.

The chairman said that many oil-producing nations are politically unstable and that some of those countries are increasing their own needs for oil consumption, putting further pressure on export prices.

Rising oil prices are “likely to place some upward pressure on consumer prices, at least in the near term,” said Greenspan.
(20 July 2005)
There’s already a comment on Greenspan’s speech on The Oil Drum.

A shrinking crop of young farmers

Carolyn Jung, San Jose Mercury News

Young farmer? Nationwide — and statewide — that’s an oxymoron if there ever was one.

At all of 32 years of age, Watsonville strawberry farmer Rob Rodriguez stands out. Most other farmers he knows are of his father’s generation, not his.

According to census data, the number of farmers under 35 fell 44 percent in California and 18 percent nationwide from 1997 to 2002. As a result, in 2002, only 5.8 percent of all farmers nationwide could count themselves in Rodriguez’s age group.

The high price of land, the scarcity of farmland near urban centers, as well as more lucrative job opportunities in other less physically taxing industries, have increasingly made farming a hard sell to a new generation.

Just consider: The average age of a principal farm operator in the United States in 2002 was 55.3, according to the U.S. Census of Agriculture; in California, the average age was slightly higher at 56.8. And those averages have been steadily climbing since 1978.
(13 July 2005)
An ominous trend if energy prices go up, making a local agriculture necessary.

Japan’s move in East China Sea makes conflict “invevitable”: report

Staff, Xinhuanetvia ChinaView

BEIJING — Japan is stamping on China’s maritime rights by granting Japanese firm Teikoku Oil Co the right to test drill for gas and oil in a part of the East China Sea disputed by the two countries and muddying the waters of the East China Sea, the China Daily said in an editorial Saturday. Japan’s move could lead to confrontation with China, it warned, citing that the Chinese government’s calls to solve the dispute through negotiation have fallen on deaf ears in Japan . …
(16 July 2005)
Predictable rhetoric from Chinese government news agency

Oil manoeuvres by China, India, challenge US

Press Trust of India/Associated Pressvia Express India

Vienna, July 20: Iran, Sudan, Venezuela, Syria – nations shunned by America as nuclear threats, insurgent havens or human rights violators are increasingly being wooed by China and India in a race for oil and influence that is challenging Washington on the energy and security fronts. …

Most of the oil still is pumped by the Organisation of Petroleum Exporting Countries, based in Vienna, Austria, whose powerhouse is Saudi Arabia. “These countries are a magnet for oil-hungry countries,” says Michael Klare, author of Blood and oil: The dangers and consequences of America’s growing petroleum dependency. India’s oil consumption over the same period is expected to double to a daily 5.3 million barrels – also mostly imported. …

Chinese and Indian investments in countries and regions of US concern include India’s multi billion dollar project to pipe in Iranian gas via Pakistan – a plan criticised this month by US Secretary of State Condoleezza Rice; billion-dollar investments by India’s main oil and gas enterprise in far-flung projects that include Syria – accused by Washington of failing to prevent insurgents from crossing its border into Iraq and of suppressing democracy in Lebanon. India has also signed a pipeline deal with gas-rich Myanmar’s hard-line military junta.

Chinese and Indian interest in Venezuela, the fourth largest US oil supplier, whose President, Hugo Chavez, is a fierce critic of US foreign policy. Chavez is trying to rewrite concessions to US oil companies and has invited China and India to participate in oil exploration.
(20 July 2005)
Nothing new here for regular readers, but its interesting to see authors like Michael Klare getting an ever wider hearing.

Opec Loses Its Grip on World Oil Prices

Sunday Business (UK)via Rednova
IT all seemed rather pointless. Eleven of the world’s most powerful energy ministers made their way to Vienna’s most expensive hotels from every corner of the earth, trailed by large entourages, every nuance of every word and every gesture scrutinised by a legion of international press.

And what for? Even Sheikh Ahmad al-Fahd al-Sabah, president of the Opec cartel, admitted the 500,000 extra barrels per day added to Opec’s quota on Wednesday was pure symbolism. All the cartel did was bring the official target in line with the 28m bpd being pumped anyway in May.

John Van Schaik at Energy Intelligence in New York said: “Opec effectively lost control more than a year ago. As a force able to micro-manage markets, Opec is done for.”

The cartel is pumping flat out. Only Saudi Arabia has meaningful amounts of extra oil to put on the market, and that’s the wrong sort of oil. …
(19 July 2005)