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Peak Oil
Peak Oil Principal Savages Oil Majors’ “Profits from Scarcity”
Adam Porter, Resource Investor
PARIS (ResourceInvestor.com) — Dr. Colin Campbell, founder of the Association for the Study of Peak Oil & Gas (ASPO), has criticised the amount of profits made by the oil majors. The mauling comes, as the majors look set to stun markets with record revenues.
“The oil majors are profiting from scarcity,” Campbell told Resource Investor. “They are raking in the profits because oil is at $60 a barrel and, materially, their costs have remained the same.”
…“It’s a windfall for the oil majors,” said Campbell. “An irony about the current situation is that in any normal market a price rise gets people producing more. In this case there is every incentive to do the opposite, so that the majors can make their reserves last longer. In the oil market we have now, high prices actually seem to dampen output.”
Campbell pointed out that the oil majors’ reserves “show no sign of increasing. In fact as they are raking in record profits…it becomes a golden moment to start up a lot of dubious projects, in exploration and drilling. So many of the holes being drilled now are dry ones. Yet so many of these dry holes being drilled mean a reduction in taxes paid by the oil companies. Of course they are offset as running costs against profits,” he claimed.
“As a result if you want to look for good places to invest then the companies that drill and explore are in a great position,” said Campbell. “Those companies profit on both success and failure. The contractors are in a fabulous position. But as far as finding more reserves go, it is not happening. The downward trend is relentless with no sign of it changing.”
(25 July 2005)
How Existing Energy Technologies Can Offset Peak Oil
David J. DesLauriers, Resource Investor
TORONTO (ResourceInvestor.com) — With all of the recent discussion about Peak Oil, and some debate about where exactly the world lies on King Hubbert’s oil production curve, it is important to undertake an examination of just where the world would meet and fulfill its energy needs in the face of declining production.
Resource Investor did just that through a bird’s eye view of the situation by way of an interview with Dr. Gal Luft, director of the Institute for the Analysis of Global Security, a nonprofit organization (with a very informative website) which directs attention to the strong link between energy and security, and makes detailed forward-looking blueprints about how to address the need to strengthen the world’s energy system.
…DR. GAL LUFT: My position on Peak Oil is that you know you’ve been there only a number of years after the fact. We are quite concerned about the fact that oil companies cannot ramp up production, but a lot of this is the fact that they don’t have access to reserves, more than the fact that the oil isn’t there. One of the other reasons that oil could reach $100 per barrel is the lack of spare capacity.
Either way, the solutions take a long time to implement and we are already late in our response. It is not really important how far we are from Peak Oil, we need to start working now because there are other reasons like National security and the rise of China that are going to cause problems. If there is a geological problem, it will only add to those existing problems.
DAVID J. DESLAURIERS: What are the main sources of alternative energy that can be implemented on a wide enough scale to make a difference?
DR. GAL LUFT: The most immediate solutions are in the transportation sector where most of the oil is being consumed in the industrialized world – and two thirds of the oil used in the U.S.
Electricity as fuel is one important solution, from nuclear power, coal, natural gas, anything that makes sense economically. One way that we can reduce our oil dependence is to begin to displace it with electricity made from other forms of energy. There are advances in battery technology, which can allow us to do just that.
Biofuels, particularly alcohol fuels like ethanol, and methanol can also significantly reduce the dependence on oil. The entire family of alcohol fuels can run on flexible fuel engines, which are similar to the combustion engines of today and cost an extra $150 to produce
(19 July 2005)
Dr. Gal Luft is director of the Institute for the Analysis of Global Security (IAGS), apparently a group of Reagan-era conservatives, according to The Left Coaster. The IAGS roster lists James Woolsey, former head of the CIA as a senior advisor. And yet the IAGS reading list includes Richard Heinberg and Michael Klare, who are not at all in the conservative camp. The articles on the IAGS website, while incomplete and superficial from a Peak Oil point of view, are nonetheless light years ahead of the Bush administration. The essays are skillfully written to appeal to the target audience of conservatives. All-in-all, the IAGS seems to be an effective and professionally run think tank/lobby. -BA
Kurt Cobb, Resource Insights
Recently, I watched a screening of “Enron: The Smartest Guys in the Room,” a documentary about the Enron scandal and collapse. But, having just completed Matthew Simmons’ “Twilight in the Desert,” I couldn’t help thinking about the world’s largest oil company, Saudi Aramco, the national oil company of Saudi Arabia. In the case of Enron Wall Street analysts were almost unanimously too polite to ask the company to show them one crucial thing: how the company made its money. The analysts admitted that Enron was a “black box” and that they just had to take company revenues and earnings on faith. As long as the stock was rising, few people questioned what was going on at Enron.
Like their Wall Street counterparts, energy analysts seem to regard Saudi Aramco as a “black box” whose claims must be taken on faith. The company frequently says it can reach 15 million barrels per day in oil production and maintain that level for 50 years. The proof they offer: “Trust us!” In fact, there has been virtually no independent information about oil in Saudi Arabia since the early 1980s with one important exception: technical papers on file with the Society of Petroleum Engineers. These papers form the basis of Simmons’ book, and they cast considerable doubt on claims by the Saudis that they will be able to sustain continuing high production levels for decades.
(25 July 2005)
Mark Morford, SF Gate
Are you prepared for the Big Collapse? Peak Oil? Rural life? Can you pickle meat and eat bark?
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Rare is the opportunity to use authentic, down ‘n’ dirty rural survival skills in the city. It’s true.
You don’t need to know, for example, how to skin a deer or pickle your own asparagus or nurture an understanding of which kind of deadwood is best for cookin’ pig snouts over the fire pit, or how to shingle your roof with rocks and clay, or how to dig really large holes in the backyard for long-term storage of winter wheat and dead chickens and hoary annoying relatives.
City-bred skills and intuitions are, to be sure, unique. But there will apparently be very little call, after the Bush-branded apocalypse rains down, for knowledge of which seat in the café gets the best Wi-Fi signal or where to find the finest burrito after midnight in the Mission when you are post-coitally blissed and in need of refueling.
Very little call, after the Big Ungodly Crash, for knowledge of where to get the most amazing cheap dim sum, how much the large bottle of Astroglide costs at the local Good Vibrations, or which tiny parking spaces in my girlfriend’s neighborhood I can sneak into for emergency booty calls without her uptight neighbors calling Bob’s Towing.
This all comes to mind as I realize, with increasing sense of dread and alarm and a weird sense of fatalistic ennui, that if any of the dire prognostications for the world soon comes to pass, if the oil crisis strikes as violently as predicted and/or if the eviscerated U.S. economy spirals us into a new and violent Great Depression 2.0 and/or if BushCo does indeed succeed in bringing the wrath of an angry spiteful homophobic God down upon the swarming gay-lovin’ tofu-sucking heathen masses, I might not be as well prepared as I’d like.
(15 July 2005)
Heading out, The Oil Drum
Today I thought I would again take a little time off from which country is producing what, and talk again about drilling oilwells. Last time , I wrote about physically breaking the rock. In most cases, this is carried by pressing a series of small teeth set in rings around the perimeter of three cones that rotate around the bottom of the borehole, and that are attached to the bottom of the drill string. (picture here and as a timeline development picture here).
The cones are mounted with their largest diameter running around the outside of the hole, and thus each cone will have the greatest number of teeth along that edge. We call the outside edge of the hole the gage, and the three cones, bearings and mounts combine to form the drill bit.
(23 July 2005)
Looking Back to the Peak: A Letter from the Future
Kurt Cobb, Resource Insights
The following is a letter written in 2024 to a writer seeking information on the unfolding energy crisis from a newly appointed U. S. member of the hastily formed International Committee on the Energy Emergency.
Dear Robert,
Your question about how the world reached such a crisis in energy is both easy and difficult to answer. The easy answer is that we have been in an energy emergency for more than a decade without even realizing it. We simply mislabeled it as solely an economic problem. The more difficult answer must trace the events of the last 20 years in order to provide the background you will need to understand our current predicament. To that end I decided to put my thoughts into writing since the explanation is a fairly lengthy one.
You will recall that at the beginning of this century a small, but well-informed group of petroleum geologists began to garner increasing public attention with their warnings about world peak oil production. They were aided by oil prices that rose from only $10 a barrel in 1999 to almost $75 at the beginning of 2006. Everyone wanted to know, “What’s causing these high prices?”
(18 July 2005)
End of Oil (750K PDF)
Dr Bob Lloyd, Physics Department, Otago University, New Zealand
…So what is the problem? The problem is that the world economic picture, painted by economists on a background of free trade and globalisation, has failed to take into account the physical reality of energy in general and fossil fuel resources in particular; especially in terms of the state of the world’s crude oil supplies. An examination of oil supplies will lead us to the conclusion that we have essentially been led up the garden path by a system of unrestricted marketing and growth dominated economics.
That there has been very little serious outcry or realisation of the situation, at least from the developed world, might be attributed to the fact that in general we are comfortable and have never had it so good. And that scientists have abdicated the operation of the global human situation to economists, due to the supposedly self evident success of this approach and the fact that contrary environmentalist meddling could be dismissed in the light of their obvious failures in the past.
(July 2005)
Long (18-page) but readable essay which summarizes the different techniques for predicting oil supplies and production.
Suggested by Graeme on a peakoil forum. He writes:
To summarise, [author Bob Lloyd] talks about oil depletion and oil reserves estimation. He states at the end that we have from zero to ten years to make the transition to sustainable energy and put in place energy conservation. He quotes Hubbert’s 1949 paper stating that if we do not move to renewable energy and conservation, world population would crash. But if we did, then our future would be sustainable (thousands of years).
Author Bob Lloyd has a PhD in physics and is director of the Energy Studies Program at Otago University, New Zealand. -BA
What happens if oil output ‘peaks’?
John W. Schoen (Senior Producer), MSNBC
With oil prices breaking $60 a barrel, our story last week on a new book questioning OPEC’s ability to keep the world supplied with crude drew a heavy response from Answer Desk readers.
…The relentless rise in oil prices is certainly worth worrying about. But before you stock up on canned goods and head for the hills, consider an alternative to the dire predictions of the coming collapse of a world civilization starved for oil.
There’s no doubt that the global economy runs on petroleum. If the gauge ever did suddenly hit “empty,” the world -– or more precisely, those countries like the U.S. that are heavy oil consumers –- would be in for a nasty shock. There are plenty of Web sites out there that offer up all manner of predictions about what such a world would look like.
But while there’s plenty of cause for concern, and the need for major changes in U.S energy policy, we don’t believe that the “gloom and doom” scenarios are inevitable. It’s easy to see what could go wrong; it’s more important to focus on what can go right. Replacing oil as an energy source very well could create “the end of life as we know it.” But that post-oil life could end up being a much better one.
…One way or the other, conservation will ultimately provide a major solution to the current problem of tightening oil supplies. The question is whether that means getting by with less or getting more out of the oil we consume.
Unfortunately, our elected representatives in Congress have done little to encourage conservation -– in large part because it’s not a politically popular thing to do. Every politician alive today remembers watching one-term President Jimmy Carter addressing the nation in a sweater telling Americans to turn down their thermostats. In a world of sprawling McMansions compete with central air, home entertainment suites and multiple SUVs in the garage, telling voters to consume less isn’t a great way to get elected.
…If oil prices continue to rise (as we believe they will), all that could change. But American consumer/voters first need to stop blaming “greedy” oil companies, OPEC, environmentalists, China, gasoline retailers, fanciful conspiracy theories about suppressed oil production, etc. (Our email Inbox is full of these.) If you really want to fix the problem, find out who is running for Congress in your district, Google their Web site, find out where they stand on energy policy. Write or email them and let them know what you think.
(21 July 2005)
Although the column is a little too cheery for us hardcore peakniks, at least the issue is being discussed by the mainstream media. Note that the author is Senior Producer at MSNBC. -BA
US Transportation Energy Data Book: A Bible for Oil Deception
Tom Whipple, Falls Church News-Press (Virginia)
Some 30 years ago, amidst the oil crises of the 1970’s, the United States Government began compiling information related to US oil consumption and published it annually in the “ Transportation Energy Data Book.” It is now being prepared by the Center for Transportation Analysis at the Oak Ridge National Laboratory and is available on line at www.cta.ornl.gov/data.
Until recently, the publication of 200+ charts and tables, which contain thousands of snippets of information relating to how America manages to consume 20 million barrels of oil each day, was only of interest to policy wonks into transportation. For the rest of us, so long as cheap gas was available at every station, hardly anybody cared where it came from and where it was going. This lack of interest is about to change. In the years following peak oil production, availability of gasoline and other fuels will shrink rapidly.
…Buried in the many tables … is much serious data such as the energy consumed per passenger or ton or mile by cars and trucks versus buses and trains. It is information such as this that can help congressional and legislative committees develop programs and policies to get us through the impending crisis.
(21 July 2005)
Alister Doyle, Reuters via MSNBC
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.
(19 July 2005)
Other Energy News
Shift on MTBE May Clear Way for Energy Bill
Richard Simon, LA Times
Negotiators decide not to shield the gasoline additive’s makers from lawsuits. The measure’s price tag has yet to be determined.
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WASHINGTON — Congressional negotiators said Sunday they had resolved a dispute over a controversial gasoline additive that had threatened passage of the first overhaul of national energy policy in more than a decade.
They said they did not expect the energy bill to include any legal protection for the manufacturers of methyl tertiary-butyl ether, or MTBE, which helps engines produce less smog but has been blamed for contaminating groundwater supplies across the country.
The decision not to shield MTBE manufacturers from environmental lawsuits should clear the way for negotiators to complete work on a final bill, perhaps as early as today, and send it to the House and the Senate for approval by the end of the week.
(25 July 2005)
Indonesia hit by petrol shortages
Rachel Harvey, BBC
The oil crisis is hitting Indonesia – one the world’s biggest oil producers – as it struggles to end subsidised prices for petrol.
…the government has less and less to spend on people’s needs, such as health care or education, because it’s spending so much on subsidising the cost of fuel. If international oil prices stay at current levels, the subsidy bill by the end of the year will be in the region of $11bn (£6bn). That’s almost twice the amount that experts say will be needed to rebuild the tsunami ravaged province of Aceh.
Indonesia simply can’t afford cheap fuel anymore, but it will take a lot of courage for the politicians to say that publicly.
(18 July 2005)
Anita Snow, AP via Houston Chronicle
HAVANA – Several dozen government employees arriving home from work milled for hours outside their 20-story apartment building, waiting for power to be restored so they could take the elevator up and cook dinner.
Across town in a tiny, dilapidated apartment, 76-year-old Angela Vargas gasped as the image of President Fidel Castro flickered out and back on again on the television screen — a sign of the continued instability in Cuba’s aging electrical system.
Sweltering summer heat in the 90s, blackouts of more than 12 hours and water shortages have increasingly frayed Cubans’ nerves, challenging Castro’s government as he prepares for Tuesday’s celebration marking the launch of the Cuban revolution.
(23 July 2005)
See also similar Newsday-Associated Press article with more information on statements and actions by the Cuban government.
Powering the Future
Where will the world get its next energy fix?
Michael Parfit, National Georgraphic
Freedom!
I stand in a cluttered room surrounded by the debris of electrical enthusiasm: wire peelings, snippets of copper, yellow connectors, insulated pliers. For me these are the tools of freedom. I have just installed a dozen solar panels on my roof, and they work. A meter shows that 1,285 watts of power are blasting straight from the sun into my system, charging my batteries, cooling my refrigerator, humming through my computer, liberating my life.
The euphoria of energy freedom is addictive. Don’t get me wrong; I love fossil fuels. I live on an island that happens to have no utilities, but otherwise my wife and I have a normal American life. We don’t want propane refrigerators, kerosene lamps, or composting toilets. We want a lot of electrical outlets and a cappuccino maker. But when I turn on those panels, wow!
Maybe that’s because for me, as for most Americans, one energy crisis or another has shadowed most of the past three decades. From the OPEC crunch of the 1970s to the skyrocketing cost of oil and gasoline today, the world’s concern over energy has haunted presidential speeches, congressional campaigns, disaster books, and my own sense of well-being with the same kind of gnawing unease that characterized the Cold War.
As National Geographic reported in June 2004, oil, no longer cheap, may soon decline. Instability where most oil is found, from the Persian Gulf to Nigeria to Venezuela, makes this lifeline fragile. Natural gas can be hard to transport and is prone to shortages. We won’t run out of coal anytime soon, or the largely untapped deposits of tar sands and oil shale. But it’s clear that the carbon dioxide spewed by coal and other fossil fuels is warming the planet, as this magazine reported last September.
(Augus 2005 edition)
Super G summarizes the National Georgraphic article at The Oil Drum .
Politics and Economics
US energy bill would nearly double ethanol output
Tom Doggett and Chris Baltimore, Reuters
WASHINGTON, July 25 (Reuters) – In an effort to stretch America’s gasoline supplies, a draft U.S. energy bill would almost double production of the motor fuel additive ethanol to 7.5 billion gallons a year by 2012.
House lawmakers, but smaller than the 8 billion gallons called for by the Senate.
…Ethanol, derived mostly from corn, is a popular political cause in farm country, where it is regarded as a homegrown answer to oil imports and a boon to farm income.
(25 July 2005)
See Kelpie Wilson’s recent essay: The Tragic Abuse of Corn.
Shankar Vedantam, Washington Post
When the nuclear industry looks at the Bush administration’s initiatives to promote a new generation of nuclear power plants, it sees a giant dollar sign. Critics see a giant mushroom cloud. For investors and taxpayers, who will have to pony up the cash, the sign may be a giant question mark.
No one has placed an order for a nuclear plant since 1973, but a House-Senate conference committee is weighing an energy bill that includes a clutch of proposals to revive the moribund industry. No matter what bill comes out, however, financial experts and the companies that would order such plants predict that regulatory hurdles and economic risks mean the launch of new plants is at least a decade away — if ever.
(24 July 2005)
Michael Bagley – From Capitol Hill
Michael Bagley, Global Public Media
House Energy and Commerce Chairman Joe Barton (R-TX) is looking to modify a renewable energy mandate to include all energy sources that lower emissions of air pollutants, including nuclear and hydroelectric power, even as conferees begin to grapple with White House concerns on the bill outlined in a letter from Energy Secretary Bodman.
(23 July 2005)
Update on the US energy bill. Writer Michael Bagley is Managing Director of the InterGov Group. According to the InterGov Group’s website, the group:
provides confidential and distinct economic analysis, international affairs and federal lobbying services for individulas, companies and foreign governments wishing to build support on particular issues.
To meet those goals, we encourage and support joint venture participation by partnering with individuals from the intelligence community and from corporate, military and government affairs organizations.
(23 July 2005)
Unocal Board Accepts Chevron’s Raised Bid
$17 Billion Offer Still Lower Than Chinese Firm’s
Ben White, Washington Post
NEW YORK, July 20 — The board of Unocal Corp. accepted a sweetened takeover offer from Chevron Corp. early Wednesday, dealing a setback to the politically sensitive, unsolicited bid for Unocal from Chinese oil company Cnooc Ltd.
…Unocal shareholders are scheduled to vote on Chevron’s bid on Aug. 10.
(21 July 2005)
