Technology and Petroleum Exhaustion: Evidence from Two Mega-Oilfields
John Malcolm Gowdy and Roxana Julia, Rensselaer Polytechnic Institute NY
Abstract: In this paper we use results from the Hotelling model of non-renewable resources to examine the hypothesis that technology may increase petroleum reserves. We present empirical evidence from two well-documented mega-oilfields: the Forties in the North Sea and the Yates in West Texas. Patterns of depletion in these two fields suggest that when a resource is finite, technological improvements do increase supply temporarily. But in these two fields, the effect of new technology was to increase the rate of depletion without altering the fields’ ultimate recovery – in line with Hotelling’s predictions. Our results imply that temporary low prices may be misleading indicators of future resource scarcity and call into question the future ability of current mega-oilfields to meet a sharp increase in oil demand.

…Evidence from two well-documented mega-fields, the Forties in the North Sea
and the Yates field in West Texas, calls into question the traditional economic view that technological improvements will increase proven reserves of petroleum. These two mega oilfields have been subject to enhanced oil recovery (EOR) technologies. EOR measures (also called secondary and tertiary measures) are often cited as a viable means of increasing future oil recovery rates by mobilizing resources and enhancing the recovery of oil and gas in place. This include the possibility of boosting the extraction rates by better drainage of the oil in place: when the pressure in the oil field has decreased to a level where the viscosity of oil dominates the production profile leading to lower extraction rates, pressure can be raised artificially by water or gas injection, or by reducing the viscosity with the injection of steam or a chemical surfactant [19]. EOR technologies are widely used and do have the potential to enhance oil production.

However, evidence shows that these measures increase the production rate for a short period of time, but enhance the decline in the long term – EOR makes it possible to extract temporarily the oil faster, but not to increase the total overall oil recovery – more today means less tomorrow. The subsequent decline rate is steeper. …
(December 2005)

For peat’s sake
A solution to Ontario’s energy crisis

Stan Sudol, Globe and Mail
A proven European energy source may be the solution to help Ontario reduce air pollution and secure its power supply. It’s much cleaner than coal and significantly cheaper than oil and gas. That source is peat fuel.

Canada has the biggest deposits in the world. In turn, Ontario has the largest accessible supplies, none of which have been developed. According to a provincial government report, Northern Ontario’s vast bogs have the energy equivalent of 72 billion barrels of oil – this province’s own version of the Alberta tar sands.

Long associated with horticultural use or premium whisky, most North Americans don’t realize that peat fuel has a long history in northern and eastern Europe as an economic source of energy. Brownish black in colour, peat is a material formed from the partial decomposition of plants under very wet, acidic conditions primarily found in bogs and fens.

Peat energy provides 13 per cent of power needs for Ireland. The corresponding figure for Finland is 7 per cent, as well as contributing 19 per cent of that country’s district heating requirements.
(21 December 2005)
This sounds like a public relations piece, in that a particular industry is pushed, without any critical analysis. A more balanced article on peat is: Warm glow of Irish peat takes edge off oil woes. A search on Google shows that several versions of this story by Sudol have appeared in Canadian publications. Sudol is “a Toronto-based communications consultant who writes extensively on mining and Ontario issues.” Nothing wrong with that, but if companies are paying him to get articles in the media, that point should be made clear. The Globe and Mail should have insisted on more background information before running this piece. If we are to make intelligent decisions about energy use, we need critical analysis and we need to know the source of the information that appears in the media. We look forward to more consideration of peat — but done with a more critical eye. For more of Sudol’s articles, see his page at the Institute for Northern Ontario Research and Development. -BA

Coal reversal

Amanda Griscom Little, Grist Magazine
Climate campaigners warm to “advanced coal” and sequestration, despite Bush backing
…Like it or not, a future without coal is politically implausible in the near term, says David Hawkins, director of the climate program at the Natural Resources Defense Council:”While as a technical matter we could run the world’s economy without coal, as a political matter it is not going to happen fast enough. The fuel’s abundance and low cost make it something that most political leaders are unwilling to give up.” About 50 percent of the electricity in the U.S. is coal-powered, and coal is the top power source in many fast-developing countries. “We must do everything we can to accelerate our use of renewables, but the renewable-energy future is far too slow in coming to put all our eggs in that basket,” Hawkins argues. “We have to start reducing greenhouse gases before we phase out fossil fuels.”

Coequyt of Greenpeace is far more critical. He’s concerned that unresolved questions about sequestration — including possible leakage from storage reservoirs and acidification of underground water supplies — are getting lost in all the boosterism.

There’s also the reality that coal — whether burned in dirty old plants or gasified in high-tech new ones — is generally extracted using environmentally harmful methods.

Oh, and it wasn’t a new idea either.
(16 December 2005)

Caution urged with green energy economics

Dee Anne Finken, Portland Oregonian
Alternatives – The governor’s budget proposes $18 million for bio-energy project loans
VANCOUVER — An energy proposal — unveiled last week and included Tuesday in Gov. Christine Gregoire’s budget — gets good grades from some experts for considering alternative sources of fuel, but others warn the solution might not be as green as it appears.

At the Washington State University Vancouver campus where he teaches environmental policy courses, political science Professor Paul Thiers said the issue of alternative fuel sources is a complex matter that requires a thoughtful look at the big picture.

Specifically, one concern is how much energy is required to grow and harvest alternative fuel sources — such as corn, grain and canola — to turn into bio-fuels.
(21 December 2005)
More on the biodiesel proposal at Gristmill. Related story in Grist: How South American biofuels are gaining steam, and why that freaks the U.S. out -BA

Aramco to expand by 61per cent

Khaleej Times (Dubai)
JEDDAH — Saudi Aramco, which has approved its operating plan for the next year, anticipates a 61 per cent increase in the number of development wells to be drilled in 2006 to support current production and future increase in demand, an official statement said on Wednesday. …

The statement said that due to an unprecedented corporate push to increase oil output to help meet burgeoning global demand, Saudi Aramco’s new plan anticipates that the company’s drilling-rig fleet will be more than doubled from year-end 2004 through 2006. …

Meanwhile, according to a statement issued by the Royal Commission for Jubail and Yanbu recently, Saudi Aramco has earmarked about SR18.75 billion to establish and operate an oil refinery in the Western region.
(18 December 2005)