The Global Climate Change, Human Security & Democracy Project from the University of California (Santa Barbara) has issued a report (PDF here) discussing the problems awaiting us at the convergence of peak oil, energy decline, and global warming.
The report offered a concise summary of the current state of our oil supply considerations:
- Peak oil is happening now.
- The era of cheap and abundant oil is over.
- Global conventional oil production likely peaked around 2005 – 2008 or will peak by 2011.
- Global oil reserve discoveries peaked in the 1960’s.
- New oil discoveries have been declining since then, and the new discoveries have been smaller and in harder to access areas (e.g., smaller deepwater reserves).
- Huge investments are required to explore for and develop more reserves, mainly to offset decline at existing fields. [And it should be noted that given the world-wide recession, investments in oil exploration and production have been significantly curtailed in the last few years – my comment]
- An additional 64 mbpd of gross capacity – the equivalent of six times that of Saudi Arabia today – needs to be brought on stream between 2007 – 2030 to supply projected business as usual demand.
- Since mid-2004, the global oil production plateau has remained within a 4% fluctuation band, which indicates that new production has only been able to offset the decline in existing production.
- The global oil production rate will likely decline by 4 – 10.5% or more per year.
- Substantial shortfalls in the global oil supply will likely occur sometime between 2010 – 2015
Yet in the face of even more facts about the reality of declining oil production and availability, more nonsense—written by Clifford Krauss and published in the New York Times, no less!—denying the reality of our predicament has surfaced. (Stuart Staniford also had a very nice and well-reasoned article challenging the statements found in that NYT piece. I’m taking the opportunity to expand on his thoughts.) *
As I’ll demonstrate below, this at-best-misleading NYT article is yet another in a seemingly limitless supply of carefully-worded challenges to the facts and realities of our political, energy, and climate environments—challenges which upon even casual examination completely fall apart. Facts remain stubbornly annoying….
Regular readers of this blog may recall a post last month wherein I discussed the curious methods by which the factually-challenged attempt to persuade others. This New York Times article is a perfect Exhibit A. I’m not picking on Mr. Krauss for any personal reasons; it’s just that his article is such a perfect example of the peak oil-and-global-warming-denying-Obama-misrepresenting nonsense that litters public discourse. I remain ever-hopeful that at some point, the majority will begin to see that producing fact-free, one-sided arguments (or arguments laden with misrepresentations at the very least) are probably not as convincing as the authors might wish. As I’ve stated before, if you cannot rely on the truth and facts to make your case, what kind of a case do you have to begin with? (And what is one’s motivation in attempting to do so?)
I also recently explained my position (here) that it is important that we immediately challenge misrepresentations, lies, or disingenuous half-truths as and when they appear (a full-time job, to be sure). It’s my belief that much of the right-wing nonsense issuing from the media and politicians is done under the explicit assumption (hope?) that the readers/listeners have neither the time nor the inclination nor the means nor the ability to appreciate or learn the facts. Their reliance on “leaders” to provide information is thus an essential part of the strategy to hide the truth.
To what end?
After mentioning the state of oil supply back in 2008, author Krauss then states:
“But no sooner did the demand-and-supply equation shift out of kilter than it swung back into something more palatable and familiar. Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia.”
“Giant oil fields”? The world currently uses approximately 30 billion barrels of oil per year. The “giant” oil fields (and Krauss is not the first to offer this statement as the be-all and end-all of our oil supply worries) are estimated to contain, respectively 8 billion barrels and 40 billion barrels according to a 2007 source. Not much has been written about this larger field since then, although another decent-sized field of about 15 billion barrels may be in the works.) Of course, no mention is made of the feasibility of producing every last drop, the at least multi-year time frame, and/or the costs or efforts needed to produce these deep-water fields. Why explain when an impressive-sounding statement will hopefully be enough?
Deep-water fields aren’t like the truly giant fields of old: one does not dig a hole and wait for the hundreds of billions of barrels of oil to gush out as some did decades ago. Deep-water implies … well, deep water, as in beneath the deep water (deep as in many thousands of feet deep.) No engineering degree required to realize that just might pose a problem or two. As Mr. Krauss himself stated later in the article:
“Exploration and drilling below 10,000 feet of water and through miles of hard rock, thick salt and tightly packed sands required the development of supercomputers and three-dimensional imaging and equipment that could withstand the heat and pressures common at such depths, as well as submarine robots to make repairs.”
Sounds like just a wee bit of extra effort and cost. But let’s be optimistic! Perhaps we have discovered another 18 months or so worth of oil in Brazil—assuming of course demand does not increase. Ooops! Seems we have an issue with that. As Krauss then explained:
“The International Energy Agency, the Paris-based organization that advises industrialized countries, projected this month that global energy demand would increase by an astounding 36 percent between 2008 and 2035.”
A 36% increase in demand can certainly be fairly described as “astounding.” But in a world where supply is in fact declining, (or at best, has plateaued) “astounding” increases aren’t exactly a good thing. Increasing demand and declining (or flat) supply creates a second-grade level math problem. If you want more but keep getting less to provide that want, then … um, ah … how does that work? “Demand” something all you want, but if it’s not feasible to produce or supply then “demand” is gonna run into real-world problems. (I’d like to demand that our daughters’ college tuitions be eliminated, I’d like to demand a new BMW every couple of months, and I’d like to demand a million dollars to be deposited into my savings account by Christmas—and I’m going to continue to demand it. Not too difficult to see where that goes.)
As Stuart Saniford sagely pointed out in his critique of the one-sided Krauss article, Mr. Krauss relied on CERA and oil company executives as his sole sources. Now there’s a fine bit of objectivity! (CERA, an energy consulting firm, is routinely castigated by many peak oil proponents far more knowledgeable than me for their errant projections.) For example, Krauss quoted James Burkhard, a managing director of IHS CERA:
“The competitiveness of oil and gas and the scale at which they are produced mean that there are no readily available substitutes in either one year or 20 years.”
That’s quite true. The problem is that this is not a solution. It is instead a very clear statement about the problems we face in a world of declining fossil fuel supply: we do not have in place adequate substitutes. That’s more of the same kind of math problem I discussed above. The world wants more energy, we’re finding and producing less of what is needed, and the few substitutes in place aren’t anywhere near enough to make up the shortfall, so … what is the solution?
It’s not going to get any better. We’re simply not finding enough oil to make up the natural decline found in existing fields, let alone finding enough to match increasing demand. More bad math.
Krauss then adds:
“Yet, the outlook, based on long-term trends barely visible five years ago, now appears to promise large supplies of oil and gas from multiple new sources for decades into the future.”
Based on what information? No source is cited (damned facts just get in the way, anyhow). And “appears to promise” means what? A typical empty phrase that means absolutely nothing! Here are some more examples from this same article:
“The same high prices that inspired dire fear in the first place helped to resolve them. High oil and gas prices produced a wave of investment and drilling, and technological innovation has unlocked oceans of new resources. Oil and gas from ocean bottoms, the Arctic and shale rock fields are quickly replacing tired fields in places like Mexico, Alaska and the North Sea.”
“As IHS CERA and other oil analysts see it, new oil is going to come from both conventional and unconventional sources — from anticipated expansions of fields in Iraq and Saudi Arabia and from a continued expansion of deepwater drilling off Africa and Brazil, in the Gulf of Mexico and across the Arctic, where hopes are high in the oil world, although little exploration has yet been done.”
“Oceans of new resources” sounds impressive, except that it is impossible to measure, and as one might customarily think about the size of your run-of-the-mill “oceans”, that’s about as gigantic an exaggeration as the English language allows! And note the reference to finding these fossil fuels “from ocean bottoms” and in “the Arctic.” (Where, he adds, “little exploration has yet been done.” But then again, “hopes are high.” Hooray! That solves everything!)
Not a word about what all exploration or production involves, how long discovery and production might take, or how much it costs—among other annoying pieces of information that just might provide more clarity and perspective. And more aspects of Oil Production 101 that require very little engineering expertise. Getting anything from the bottom of the oceans or from the Arctic is not “easy” by any definition of easy. But why let an explanation get in the way? Let’s just hope that “oceans of new resources” is enough to satisfy the vast majority of casual readers.
And there’s more!
“No matter what finally plays out, energy experts expect there will be plenty, perhaps even an abundance, of oil and gas.”
How many new barrels of oil in a “plenty” and how many additional barrels than a “plenty” is a “perhaps even an abundance”?
“IHS CERA, which monitors oil and gas fields around the world, projects that productive capacity for liquid fuels could rise to [my emphasis] 112 million barrels a day in 2030 (including 2.75 million barrels in biofuels), from 92.6 million barrels a day this year.”
Pigs could fly, too, and perhaps we could find oil in every back yard in America. (My suggestion would be that no one actually relies on that, however, although you never know! It could be true!)
“‘The estimates for how much oil there is in the world continue to increase,’ said William M. Colton, Exxon Mobil’s vice president for corporate strategic planning. ‘There’s enough oil to supply the world’s needs as far as anyone can see.’”
“‘We’ve got a wealth of opportunities to address around the world,’ said [Robert N. Ryan Jr., Chevron’s vice president for global exploration.] ‘We have quite a few deepwater settings all over the world, some of them very new, like the Black Sea. There are Arctic settings. We have efforts under way re-exploring Nigeria, Angola, Australia. The easy stuff has been found, that’s true, but in the end, we still have many basins in the world to explore or to re-explore.’”
Nice objective quotes from major oil company officials as offered by Mr. Krauss, and for balance and objectivity countered by his quotes from ah … um … well, no one, actually. In about .4 seconds, Google could supply a few dozen experts who have a different view. Then again, perhaps Mr. Colton’s viewers can’t see very far….
And as for Chevron’s Mr. Ryan: how many barrels in “quite a few deepwater settings”? Is it more or less than a “plenty”? How many are “many basins” and exactly how barrels of oil in each of those “many basins”? Is a “setting” bigger than a “basin”? And let’s not focus at all on Mr. Ryan’s acknowledgement that “[t]he easy stuff has been found.” Can’t have a good argument of plenty if you have to deal with the truth.
And let’s not forget the magical and wondrous tar sands in Canada. Mr. Krauss didn’t!
“The vast oil sands fields in western Canada, deemed uneconomical by many oil companies as few as 15 years ago, are now as important to global supply growth as the continuing expansions of fields in Saudi Arabia, the current No. 1 producer.”
Unfortunately, this rosy scenario has to stop by and visit reality for a while, and those “vast” oil sands aren’t quite as efficient as this author seems to suggest. The following is one of many statements of fact that put just a slightly different spin on the availability of the “vast” resources in western Canada.
“The problem with unconventional resources seems to be that only a fraction of them are determined to be recoverable.
“Even though unconventional resources seem to be vast, they are estimated to add only approximately 10 million barrels per day to the supply side – in the best case – when taking into account all unconventional sources such as biofuels and oil from coal. For example, The National Energy Board of Canada estimated back in 2006 that the best case for oil sands production in 2015 would be 4.4 million barrels a day while the base case was 3.2 mb/d and the low case only 1.9 mb/d.
“The current production rate of oil is about 84 million barrels a day, so the unconventional resources will not have a major effect in the long run given depleting conventional sources. Also, a major problem with all sources is decreasing EROEI ratio (energy return on energy invested). For oil it used to be 100 a long time ago and now it is somewhere below 20. EROEI for biodiesel is roughly 3 and for ethanol it is not much more than 1. Depending who to believe, EROEI for oil sands is between 2 and 4. Basically anything above 1 makes sense, but because we are used to a high ratio (= cheap energy), we may have a serious problem when the average EROEI of all supplies of oil goes below 5.” 
This article also weighs in on the recent surge in production of natural gas from shale deposits (a completely separate discussion, but I couldn’t let this quote pass).
“Similar advances have made drilling gas and oil from shale possible on a large scale for the first time. Advances in so-called horizontal drilling allow well drillers to steer and carve through hard shale to expose more and hard-to-reach rock, and it also makes possible drilling under city neighborhoods, as in Fort Worth, which happens to sit atop a large gas field.”
Let’s think about this for just a moment: “drilling under city neighborhoods”?! Won’t the Fort Worth residents be delighted! No impact or consequences there, right? Right? Apparently unable to contain his enthusiasm, Mr. Krauss then goes on add:
“Shale drilling is also beginning to produce significant amounts of oil in the United States. The Bakken shale field centered in North Dakota has become the fastest-growing major oil field in the United States, with production rocketing to about 350,000 barrels a day, from 100,000 barrels a day a decade ago. In a recent report, the consultancy firm PFC Energy projected production would climb to 450,000 barrels a day by 2013.”
For a nation that imports close to three-fourths of the nearly 19 million barrels of oil per day, “rocketing” production all the way up to 450,000 barrels a day means we’ve got about ten days worth of oil demand covered each and every year. Fantastic! (And to hell with the rest of the world.) Of course, extracting oil from shale is a piece of cake … dig a few inches, spend a few bucks, coupla hours ‘a work, no environmental consequences, and we’re good!
At the risk of picking on this one author too much, let me close with another eye-opening quote from this fascinating NYT article, this time from Edward L. Morse, the head at commodity research at Credit Suisse, after Mr. Krauss posits the following:
“Add up the shale, the deepwater drilling and Canadian oil sands, says, and what you get is less dependency on OPEC and hostile countries like Venezuela.”
To which Mr. Morse adds:
“When you add it up, you get something that very closely approximates energy independence.”
Seriously? What kind of math is that? I’d like to use it for our investments.
For all those struggling in this economy, let me add this:
“When you add it up, your $400.00 per week salary very closely approximates $4000.00 per week and financial independence.”
Gee, that’s so easy! I love the fact-free world.
* Shortly before posting I came across this solid open letter to the New York Times from David Hughes, offering a very pointed and fact-filled (what a concept!) challenge to Clifford Krauss’s piece. A must read….[NOTE: With the holiday coming up, this will be my only post this week. Happy Thanksgiving!]
Sources: http://seekingalpha.com/article/231957-the-end-of-oil-s-golden-age; The End of Oil’s Golden Age