Peak oil - Oct 16
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Peak Oil Update - October 2006:
Production Forecasts and EIA Oil Production
Khebab, The Oil Drum
(16 Oct 2006)
Submitter Prof. Goose writes:
This post is an update on the last production numbers from the EIA along with graphs and charts of different oil production forecasts and other trends in the oil industry.
Overall, the picture that is painted in the piece is worrisome. Much of the evidence points to a plateau in oil production, no matter how it is measured.
Fear and Money in Dubai
Mike Davis, New Left Review
...Welcome to a strange paradise. But where are you? Is this a new Margaret Atwood novel, Philip K. Dick’s unpublished sequel to Blade Runner or Donald Trump on acid? No. It is the Persian Gulf city-state of Dubai in 2010. After Shanghai (current population 15 million), Dubai (current population 1.5 million) is the planet’s biggest building site: an emerging dreamworld of conspicuous consumption and what the locals boast as ‘supreme lifestyles’. Despite its blast-furnace climate (on typical 120° summer days, the swankier hotels refrigerate their swimming pools) and edge-of-the-war-zone location, Dubai confidently predicts that its enchanted forest of 600 skyscrapers and malls will attract 15 million overseas visitors a year by 2010, three times as many as New York City. Emirates Airlines has placed a staggering $37-billion order for new Boeings and Airbuses to fly these tourists in and out of Dubai’s new global air hub, the vast Jebel Ali airport.  Indeed, thanks to a dying planet’s terminal addiction to Arabian oil, this former fishing village and smugglers’ cove proposes to become one of the world capitals of the 21st century. Favouring diamonds over rhinestones, Dubai has already surpassed that other desert arcade of capitalist desire, Las Vegas, both in sheer scale of spectacle and the profligate consumption of water and power. 
...The lodestone of Dubai, of course, is ‘peak oil’ and each time you spend $50 to fill your tank, you are helping to irrigate al-Maktoum’s oasis. Fuel prices are currently inflated by industrial China’s soaring demand as well as growing fears of war and terrorism in the global oil patch. According to the Wall Street Journal, ‘consumers will [have paid] $1.2 trillion more in 2004 and 2005 together for oil products than they did in 2003’.  As in the 1970s, a huge and disruptive transfer of wealth is taking place between oil-consuming and oil-producing nations. Already visible on the horizon, moreover, is Hubbert’s Peak, the tipping point when new petroleum reserves will no longer offset global demand, and thereafter oil prices will become truly stratospheric. In some utopian economic model, perhaps, this windfall would become an investment fund for shifting the global economy to renewable energy while reducing greenhouse gas output and raising the environmental efficiency of urban systems. In the real world of capitalism, however, it has become a subsidy for the apocalyptic luxuries that Dubai is coming to epitomize.
Oil Prices: a Pause, Then Up
Sandra Ward, Barrons via SeekingAlpha
Summary: Barron's interviews Charley Maxwell, a 50-year veteran of the oil and gas industry, and presents his thoughts on the energy scene. Key points:
* Previous shortages (1973-74, 1979-86, Iraq wars) were man-made; present shortages are due to a true lack of oil. Hubbert's Peak, the theory that says global oil production will peak, will dominate our attitude by 2015-2020.
* National oil companies [NOCs] account for 3/4 of global production. They face structural challenges: (1) Poor political influence; their profits are going to support local issues such as the military. (2) NOCs failed to react to a reduction in global surplus (it fell from 20% in 86-87 to the current 2-3%) due to lack of money and a lack of skilled management. "I don't know how we get around the problem of the NOCs. They control so much of the world's production and they are bloody helpless. They don't have enough money and they don't have prestige and they don't have professionalism."
* Multinationals such as ExxonMobil Corp. (XOM) lack vision; they have failed to recognize/react to the production problem. They are underspending on exploration and development and under-leasing deep-water projects.
(Oct 15 2006)
The entire summary appears one-third of the way down the original article at SeekingAlpha. This is the summary only. Full article at Barrons requires a paid subscription.
Contributor Ed O'Shea writes:
This Barrons article is an interview of a mainstream energy. Maxwell states "Hubbert's Peak, the theory that says oil production will peak on a global basis, is a natural impediment. It is not yet the predominant factor but as these crises continue it is the one growing exponentially and by, say, 2015 or 2020 I expect it will dominate the outlook."
Unholy trinity set to drag us into the abyss
Ian Dunlop, Sydney Morning Herald
We are about to experience the convergence of three of the great issues confronting humanity. Climate change, the peaking of oil supply and water shortage are coming together in a manner which will profoundly alter our way of life, our institutions and our ability to prosper on this planet. Each is a major issue, but their convergence has received minimal attention.
Population is the main driver. In the 60 years since World War II, the world population has grown at an unprecedented rate, from 2.5 billion to 6.5billion today, with 9 billion forecast by 2050. That growth has triggered insatiable demand for natural resources, notably water, oil and other fossil fuels. Exponential economic growth in a finite world hitting physical limits is not a new idea; we have experienced limits at a local level, but we have either side-stepped them or found short-term solutions, becoming overly confident that any global limits could be similarly circumvented.
Today, just as the bulk of the world's population is about to step on to the growth escalator, global limits emerge that are real and imminent. The weight of scientific evidence points to the fact the globe cannot support its present population, let alone an additional 2.5 billion, unless we embrace change.
Climate change, peak oil, water shortage and population are contributing to a "tragedy of the commons", whereby free access and unrestricted demand for a finite resource doom the resource through over-exploitation. The benefits of exploitation accrue to individuals, whereas the costs are borne by all.
Formerly an oil, gas and coal industry executive, Ian Dunlop chaired the Australian Coal Association in 1987-88 and chaired the Experts Group on Emissions Trading of the Australian Greenhouse Office in 1999-2000.
(16 Oct 2006)
The environmental anxieties about growth that have lain dormant for decades now are appearing in mainstream newspapers. -BA
European Union addresses Peak Oil
Colin Campbell, ASPO Newsletter #70
The European Union held a workshop on September 6th and 7th in Brussels to consider wide-ranging strategies in response to Peak Oil. The importance of the event was primarily in that it should have been held at all, marking a certain turning point when the unmentionable became mentionable. In the past, Governments have tended to hide behind the silken scenarios of the International Energy Agency, which, as now recognised in Brussels, are based solely on short-term economic and political considerations without addressing the impact of depletion.
The hope is that the European Union will now make a concerted systematic effort to grasp the obvious reality and collect valid information on the remaining oil and gas resources of the world, possibly using the Foreign Services of member countries to do so. Such a study would provide a clear unequivocal overall result within a matter of months, to be followed by filling in all the details which will take some more time. That in turn could provide a clear mandate for a wide range of new far-reaching policies with which to face the Second Half of the Age of Oil. It is really so simple. The European Union might be surprised at the high level of popular support it would receive for new initiatives, once people were properly informed of the situation.
An assessment of the Workshop is to be placed on the EU website. (www.ec.euiropa.eu/research/energy) Perhaps the most important policy issue for the EU to address is to provide a framework to encourage towns and communities to power down their energy consumption. An excellent publication on this subject is Energy Descent Pathways by Rob Hopkins (www.transitionculture.org)
(14 Oct 2006)
From the ASPO October 2006 Newsletter, more below.
Oil Depletion Protocol
Colin Campbell, ASPO Newsletter #70
As is well known, world oil statistics are seriously unreliable in many countries, being subject to ambiguous definitions and misunderstood reporting practices. If we identify, for example, what has been called Regular Conventional Oil, we might conclude that in 2005 the World produced 24.2 Gb (billion barrels) and that at the end of 2004 there were about 933 Gb left to produce (788 Gb in known fields and 145 Gb yet-to-be found), giving a Depletion Rate was 2.5% (annual production as a percent of what is left.)
An alternative estimate, taking for example the estimate of 1200 Gb in known fields (as reported in the BP Statistical Review and, say, 200 Yet-to-Find based on the USGS High Probability Case of 1995) delivers a Depletion Rate of 1.7%.
If the world leaders were to sit around a table and negotiate a compromise they might agree a rounded 2%. If meanwhile they had read Richard Heinberg’s new book The Oil Depletion Protocol – A Plan to avert oil wars, terrorism and economic collapse (ISBN-10 0-86571-563-7) they might see merit in agreeing a Protocol whereby importers would cut imports of oil by 2% a year. Naturally the calculations could be reviewed each year, hopefully as better information permeates through the barriers of the sundry vested interests seeking to obscure the reality.
Further details could of course be negotiated whereby for example the indigenous production of an importing country would be deducted from its import allowance, because at the end of the day it is consumption that matters. Adopting the Protocol would put world demand roughly in balance with supply, which would presumably reduce the world price of oil, preventing profiteering from shortage and the massive flood of false petrodollar liquidity, which undermines financial stability. The Middle East countries would benefit because no one would have a motive to invade and interfere, and the poor countries of the world would find it easier to afford their minimal needs.
The importing countries could manage their allowance as they wished. Those with a market mentality could sell it to the highest bidder, further impoverishing the poor; others might introduce a ration; and some might find a happy compromise. But however they did it, they would be moving in the right direction, preparing for the inevitable decline in oil supply as imposed by Nature. The main thrust would have to be a turn to the full spectrum of renewable energies, cutting waste and improving efficiency, with a revival of coal mining and nuclear energy to ease the transition despite associated environmental risks. Clearly there would be huge social and political implications, and some political parties would find themselves ahead or behind the evolving new priorities. Not all countries would co-operate, but it would not matter because those that adopted such policies would soon find themselves better prepared and enjoying competitive advantage.
While the chance of world leaders actually adopting such a simple and workable solution is probably negligible, the idea remains a valid one worthy of consideration by those having an interest in the future.
(14 Oct 2006)
Full contents of the ASPO Newsletter #70:
751. European Union addresses Peak Oil
752. Regional Assessment - EUROPE
753. Oil Depletion Protocol
754. Oil Price
755. Discovery so far in 2006
756. Russia puts pressure on foreign companies
757. Worries in the Tar-belt
758. Mr Blair Speaks of an Energy Crisis
759. ASPO Canada
760. Life after Oil
Another indespensible ASPO newsletter, well worth checking out in full.