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“Peak Oil” – Why Smart Folks Disagree – Part II
Nate Hagens, The Oil Drum
There continues to be considerable disagreement on both the timing and the magnitude of Peak Oil, though last week’s GAO report(pdf) should be helpful in shrinking that gap. Part I of this 3 part series summarized some of the recent discussion of why some are very concerned about Peak Oil and others are relatively unconcerned. We also discussed why there needs to be a clear definition of Peak Oil so that policymakers discuss ‘apples and apples’. This post will continue to examine areas of disagreement between the two camps, and will particularly focus on what I perceive to be the largest disconnect in energy, financial and government circles – that of the difference between gross and net production of finite sources.
If you ask 100 people about Peak Oil, you will get a few shrugs of disdain, a few vehement diatribes and about 90 blank stares. Its not a subject easily talked about, easily understood, or easily internalized. This post points out some major areas of why people either disagree about or don’t comprehend the magnitude of this human problem. These issues have been thoroughly discussed on this site for the past 2 years, but for new readers I will attempt to briefly summarize some of these major areas of disagreement – for old readers (err..seasoned readers), please jump down to Reason #6, where begins some new analysis. This post will be followed by Part III, which will discuss the more interesting and controversial social and psychological reasons why there exists such a polarization of opinion on this important topic.
…THE BOTTOM LINE
1. Flow rates of liquid fuels available to non-energy society matter. Productive capacity means little.
2. Better technology is in a race with depletion, and so far is losing (declining net energy).
3. Focusing on energy return (gross minus net) bypasses many of the moving pieces in project decision criteria inherent in financial analysis.
4. Modern society has been built around high energy density infrastructure. Declines in net energy, if not replaced, will have serious economic implications.
5. Declines in net energy, if replaced, must adhere to increasing limitations on other resources, particularly water, food, and waste absorption.
6. During the last 150 years, the market treated oil as a ‘near infinite resource’. Increasing awareness of many of the issues raised above means classic Hotelling analysis of resource owners acting to maximize rents may soon become a reality (e.g. Opec permanently restraining production, knowing they will get higher prices in the future)
7. The window to address these issues at a societal level is before net energy declines so much that half of us are working for Exxon.
(2 April 2007)
Peak oil: The end of the modeling phase
A.M. Samsam Bakhtiari
Paper presented at a lecture given at the Università di Firenze, Italy, March 8, 2007
Modeling for ‘Peak Oil’ began seriously in the mid-1990s as the question of worldwide oil production reaching a maximum became a matter of widespread concern in some petroleum circles and academic centers. Among a score of other models, the ‘World Oil Production Capacity’ [WOCAP] model was developed over the years 1997-2000 . And, even in those early days, the model — based on ‘Ultimate Recoverable Reserves’ [URR] of 1,900 billion barrels estimated by Dr. Colin Campbell — did point towards a ‘Peak’ within the first decade of the 21st century.
2. The WOCAP model
Further design developments and dozens of simulations over the years 2001-2003 resulted in WOCAP’s final ‘Base Case’ scenario that predicted a ‘Peak’ of 81-82 million barrels per day [mb/d] over the years 2006-2007…
…Then, in 2004, Prof. Renato Guseo of the University of Padova entered the world of ‘Peak’ modeling with his ‘Generalized Bass Model’ [GBM] based on the ‘Diffusion Method’  and making use of the powerful ‘Non-Linear Least Squares’ algorithm. The major results obtained by the GBM were for a ‘Peak Oil’ in 2007 (see Figure 2) and a 2020
production of 55 mb/d.
…Now, two very different models — WOCAP and GBM — had arrived at the very same conclusion, and that could not be pure coincidence. To the contrary, it was a proof (if proof need be) that the ‘Peak’ was for either 2006 or 2007. In addition, the similar 2020 production level of some 55 mb/d not only confirmed the models’ parallelism but also came to stand as the best prediction available presently worldwide for future oil output. Having seen the results of Prof. Guseo’s GBM model, it became clear that the modeling phase of ‘Peak Oil’ had come to an abrupt close and that henceforward ‘Peak Modeling’
should be shelved once and for all. Some experts still seem unconvinced as they continue to compare and weigh results generated by all types of available models — as, for example, ‘The Oil Drum’  and ‘TrendLines’  websites.
The similarity of the results obtained by two very different models — the WOCAP and the GBM — should help bring ‘Peak Oil’ modeling to a close, as according to these models the peak of global oil production has now been reached. Furthermore, the two models’ similar forecast for a global oil supply of 55 mb/d by 2020 can now be considered as being the most accurate and reliable forecast for the future production of the international oil industry.
(8 March 2007)
The implications of peak oil and the shortcomings of alternatives
Kéllia Ramares, Online Journal
Review of Crude: The Story of Oil By Sonia Shah
Crude is the tenth book related to oil that I’ve read and reviewed. As you can expect, a certain amount of material in these books is old hat to me by now; the names of some of the experts cited, and indeed the authors themselves, have become quite familiar; I’ve interviewed some of them myself. But each book has a “personality” of its own, so I keep reading.
I’m always hoping to find books that I think will speak in an engaging way to people who would not be drawn to the subject of oil: the people who are not activists, scientists or business people in the energy field, the people who think about oil only when they fill up their cars, pay their heating bills, or happen across a rare reference to oil in the corporate news on Middle East war.
For that audience, Crude is the best of the lot I’ve read. It is comprehensive without being overwhelming. Shah covers the geology of oil, the history, ecology, politics, economics and technology of oil exploration, the implications of peak oil, and alternative energy sources in 191 pages.
…Readers will find that Crude is well rounded, with the voices of the oil industry and its commonly-recognized political opponents represented. But there are additional perspectives here that make Crude particularly compelling, such as that of Ken Wiwa, son of Ken Saro-Wiwa, the Ogoni activist whose efforts to gain for his people royalties and compensation for damage to their land from oil exploration got him a hangman’s noose. We also hear from Jake Malloy, who began working in the oil industry as a plumber on North Sea oilrigs, and eventually became the head of an offshore workers’ union.
(2 April 2007)