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Peak Oil - 30 July, 2005

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Peak Oil

Significant 'Discovery' for Oil Companies -- Sustainability

Charles Burch, Common Dreams
Sustainability is big in corporate America today. The word, that is. Once an arcane term used chiefly by foresters and agricultural researchers, "sustainable" has become the label of choice that executives use to describe their businesses.

Perhaps the most laughable of the newly sustainable corporations are the oil companies. Although they laud the tax incentives to encourage oil and gas exploration in the energy bill that Congress is expected to pass this week, they are continuing to spin the idea that what they do is somehow sustainable. Pumping a finite resource like oil out of the ground must be one of the least sustainable endeavors on the planet. But this doesn't bother the oil industry, which knows a powerful public-relations word when it sees one.

The most recent ConocoPhillips annual report has a section titled "Technology Achieving Long-term Sustainability," and the CEO writes of the company's "sustainable growth plan." Annual reports from ChevronTexaco and ExxonMobil speak of "sustainable development." And BP and Shell issue reports on the sustainability of their operations. There are even auditors willing to vouch for the statements in these "sustainability" reports.

All this when Arthur R. Green, lecturer for the American Association of Petroleum Geologists and former chief geoscientist of ExxonMobil, says world oil production is nearing its peak.

Charles I. Burch was a senior staff scientist at Conoco until 2002 who now resides in Grand Junction, Colo. He wrote this for the Land Institute's Prairie Writers Circle in Salina, Kan.
(28 July 2005)


Past its Peak?
Cheap oil is probably gone forever

Jim Motavalli, Fairfield Weekly
Are you worried about "peak oil" yet? You should be. An ever-expanding cast of oil geologists, futurists, environmentalists and world leaders are very concerned indeed. Consider the message of books like Twilight in the Desert, The End of Oil , The Long Emergency: Surviving the End of the Oil Age... , Beyond Oil , Power Down and Party's Over: Oil, War and the Fate of Industrial Societies , a collection about an increasingly likely fate.

I interviewed Matthew Simmons, a respected oil analyst and sometime adviser to the Bush administration, about his theses in Twilight in the Desert . Simmons says Saudi Arabia is at or near oil peak, and that both Iran and Iraq are past peak. His conjecture about the Saudis is pretty sobering, considering that all of our energy projections are based on their ability to open the spigots wider and deliver 15 million barrels of oil per day.
(28 July 2005)
Jim Motavalli is the car columnist and environmental editor for the Fairfield Weekly. He also writes on music, as well as editor of E/The Environmental Magazine.


Systems and Interdependencies
And Their Effect on Peak Oil

Norman Church, Energy Roundtable via www.ezboard.com

“It has never happened!” cannot be construed to mean, “It can never happen!” – might as well say, “Because I have never broken my leg, my leg is unbreakable,” or “Because I’ve never died, I am immortal.” One thinks first of some great plague of insects – locusts or grasshoppers – when the species suddenly increases out of all proportion, and then just as dramatically sinks to a tiny fraction of what it has recently been. The higher animals also fluctuate. Some zoologists have even suggested a biological law; that the number of individuals in a species never remains constant, but always rises and falls – the higher the animal and the slower its breeding- rate, the longer its period of fluctuation.

As for man, there is little reason to think that he can, in the long run, escape the fate of other creatures, and if there is a biological law of flux and reflux, his situation is now a highly perilous one. During ten thousand years his numbers have been on the upgrade in spite of wars, pestilence, and famines. This increase in population has become more and more rapid. Biologically, man has for too long a time been rolling an uninterrupted run of sevens.

-George R Stewart, Earth Abides (1949)

Setting the Stage

The Worlds' population is now around 6.5 Billion. In order to grow the great quantities of food necessary to support this many people, large-scale distribution, automation, mechanization and co-ordination of countless systems is required. A reduction in the quantity of oil will severely disrupt our food growing capacity and means of distribution; we will be facing chaos and mass starvation of hundreds of millions worldwide.

Every major component of our modern infrastructure is supported by dense networks of systems and equipment, each of which relies on computers and/or computer systems to perform its functions. These computerized systems manage everything: transportation, power generation, manufacturing, telecommunications, finance, government, education, healthcare, defence.
Our reliance on technology has created a world whose efficient functioning is dependent on computer systems. Whatever happens in one part of the network has the potential to impact any other part of the network. We have created not only a computer-dependent society, but a planet whose interdependencies extend far beyond our imagination. The level of technological support and the interconnectedness of these systems are truly awesome.

The movement of food into our local supermarkets reveals a sequence of interdependent systems. As consumers, we demand delectable, fresh produce -- but few of us are aware of the intricate systems that make it possible for a mango from Peru to arrive on our tables in mid-winter. Most U.K. food markets get in fresh food shipments every two to three days. Whether it's brought in by truck, train, or ship, instantly we're back in the system networks, with the addition of new levels of complexity from the many systems that relate to food production, storage, and sales.

All of these systems rely directly or indirectly on fossil fuel energy............
(26 July 2005)
Originally posted at Energy Roundtable (requires membership). JCSamsara, who re-posted the article, said:

I am posting this here because it contains one of the best analysis of the 2000 UK Petro Strike I have seen. Even though it is long, I would highly recommend printing it off and reading it over coffee.

It is chilling how fast things collapse. For those who think a fast collapse is very unlikely, Take a look....

-BA


Strapped commuters seek fuel bargains
Jersey prices attract city residents

William Bunch, Philadelphia Daily News
The mother of nine, Stacy Moore of Hunting Park drives a big car - a Nissan Quest mini-van - with a big fuel tank. She also has a big commute between her two jobs - one in Northeast Philadelphia and the other in South Jersey - so it's important to her to buy gas in the Garden State, where it's cheaper than in her neighborhood.

Very important.

"I will drive on 'E' to get here," said the 37-year-old Philadelphian, as an attendant gave her $20 worth - only half a tank - at the Wawa gas station on Route 73, a mile or so east of the Tacony-Palmyra Bridge. One day last week, a majority of the customers at the pumps in Pennsauken were from Pennsylvania, lured by prices of $2.229 a gallon, or 18 cents less than the Philly average.

It's fairly common for motorists to drive out of their way to find the lowest gas prices, but Moore is also typical in that she hasn't made any major change in the number of miles she drives each week. She can't quit her jobs, although she conceded she's been less generous in offering rides to family members.

Experts say that high gasoline prices could ultimately reshape the Philadelphia economy - forcing more commuters onto mass transit and more development at rail and subway stops, crimping the city's surging airline traffic, and causing economic pain for small businesses.
(28 July 2005)
The end of the article devotes several paragraphs to Peak Oil.


Riots, power cuts and Colin Campbell...
(audio)
Oilcast #20
Power cuts are now happening around the world. Have you noticed? Oilcast.com has, in China, the UK, California, New Zealand plus fuel riots in Yemen.
Also the market trades lightly around $60, Colin Campbell on the quarterly results from the majors, Thunderhorse will not produce in 2005 and plenty more.
(29 July 2005)


It could be a close run year for demand and supply

Heading out, The Oil Drum
The tragic loss of the Indian oil platform is likely to have more of an impact on that country than a similar loss here (which in a sense has occurred with the delayed production from the Thunder Horse platform damaged in the recent hurricane). India, as noted in an earlier post, only produces around 700,000 bd of oil, so that the loss of 100,000 bd plus is bound to have an impact.

The impact may be doubly felt since the replacement oil must be bought at world market prices, and the Indian oil companies subsidize the price of the refined product on the Indian market. The total subsidy cost last year was apparently $1.8 bn of which the companies paid a third.

The people in those countries affected are rather sensitive to tampering with government and corporate subsidies for fuel, which is an interesting contrast with the behavior of those in countries where the fuel is, instead, heavily taxed. One wonders how the changing availability of oil and the prices that governments can afford to pay will have on the ultimate stability of their governments.

In response to a request that appeared in an earlier comment, regarding where we stand on overall production. The Oil and Gas Journal keeps a statistical table (unfortunately only available on subscription) that lists country production and changes over the past year. In trying to find this information I also stumbled across the CIA worldbook entry that gives its versions of the oil production of different countries. It was intriguing to see the differences between the two sets of numbers for last year, and to note that the CIA figures were generally higher than those of the industry.
(28 July 2005)
See original for embedded links in the text.


Huge oil profits go for exploration

Elliot Blair Smith, USA TODAY via Yahoo! News
With oil trading near $60 a barrel, U.S. energy companies are reporting huge profits this week and heralding global searches for new supplies after years of investing in stock buybacks rather than oil stocks.

But renewed exploration is tied to remote and risky areas of the world amid greater competition for those potential resources, energy analysts say. The upshot: High prices are probably here to stay for a while.
(28 July 2005)


Big oil's output is shaky, but not its profits

Associated Press via Seattle Times
Two of the world's largest oil companies, Exxon Mobil and Royal Dutch Shell, said yesterday that second-quarter profits rose by about one-third, buoyed by high energy prices and higher worldwide consumption. The companies improved their earnings despite rising costs and lower output of oil and natural gas.

"It was a good day for oil," said Fadel Gheit, an analyst at Oppenheimer.

However, the mammoth quarterly profits at Exxon Mobil and Royal Dutch Shell - more than $7 billion and $5 billion, respectively - fell short of analysts' expectations and there is some concern on Wall Street about the oil giants' flagging output.
(29 July 2005)


Wales: Fears over future energy sources

BBC
There are calls for the Welsh assembly and UK governments to start planning future energy needs now, or face power cuts and job losses.

Experts at the Wales TUC conference are expected to call for more balanced and sustainable energy sources.

An appeal not to rule out nuclear energy as an option is also expected to be made at the Llandudno event.

The conference is held as opponents to plans for 230 wind turbines off north Wales lobby Llandudno town council.

The UK will soon import more gas and oil than it exports and delegates at the TUC conference will be warned the UK could be at the mercy of international events unless other resources are established.

"The sources of gas and oil will be from some of the world's most unstable countries where security of supply and price will be out of our hands," said the union's Welsh general secretary Felicity Williams.

At the same time, she said demand for energy was "likely to double over the next 50 years".
(29 July 2005)


Oil Depletion?
It's All In The Assumptions

Ronald R. Cooke, Financial Sense Online (guest editorial)
Good News

In good news for the SUV set, Daniel Yergin's Cambridge Energy Research Associates (CERA), is predicting we will soon be awash in light, sweet crude - ideal for making gasoline.

CERA's Worldwide Liquids Capacity Outlook To 2010- Tight Supply Or Excess Of Riches predicts we humans will have 6 to 7.5 million barrels per day of excess capacity and we can expect an extended period of lower prices - perhaps by 2007. Petroleum production will be expanding faster than demand over the next 5 years. The report has tabulated 20 to 30 new projects with a capacity of over 75,000 barrels per day that will become available in each and every year until 2010. By then, worldwide production could increase by up to 16 million Bbl/day. However, most of the increased production will come from reworking existing fields, rather than new oil discoveries, and after 2010 the majority of new production will come from OPEC.

CERA doesn't believe in peak oil, at least not before 2010, and probably not before 2020. The report indicates that the “inflexion” point will come between 2030 and 2040. Moreover, rather than a “peak,” it will be an “undulating plateau” that will continue for several decades. OPEC, the company claims, will be able to add 8.8 Mbl/day by 2010 and can continue its expansion - at a somewhat slower rate - beyond 2010. Non-OPEC production will experience a robust increase through 2010, and then slow significantly thereafter. Unconventional oil production will increase throughout this period, supplying almost 35 percent of the world's oil by 2020.

Then Yergin adds a sobering caveat: "The main risks to our Supply Expansion scenario are above ground, not below ground - changes in the political and operating climate that could delay expansion.” In CERA’s downside “Delay and Disruption” scenario, capacity increases by only 11.5 million barrels between 2004 and 2010.

Whoops.

What is the implication? Will delayed projects and disruptions in the supply chain lead to temporary shortages before "Peak Oil" hits us? Perhaps we should review CERA's implied assumptions. They are, after all, the basis of CERA's optimistic conclusions.

Assumptions

Underlying every data analysis and series of conclusions is a collection of assumptions. In order to avoid oil shortages, temporary or longer term, for example, we have to make multiple assumptions about our ability to find, produce, transport, refine and distribute oil (the supply chain). At some point in our analysis, these assumptions have to be tested for credibility.

Will they hold up under careful examination?
Ronald R. Cooke, The Cultural Economist, author of "Oil, Jihad & Destiny."
(28 July 2005)
Detailed analysis of the CERA report.

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