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Peak Oil By Any Other Name
Chris Nelder, Energy and Capital
This week, the National Petroleum Council (NPC) finally coughed up a report that we’ve been awaiting for two years, ever since U.S. Energy Secretary Samuel Bodman asked them to determine “what the future holds for global oil and gas supply” and whether “incremental supplies can be brought on-line, on-time and at a reasonable price that does not jeopardize economic growth.”
Translation: the Energy Secretary was wise to peak oil, and asked the oil industry to tell him where we really stand. After all, if it goes down on his watch, he’s going to have one of the worst jobs on earth.
… The report was titled “Facing the Hard Truths about Energy,” but it could just as easily have been called “Dodging the Hard Truths about Energy.”
ASPO’s Randy Udall hit the nail on the head: “Charging the NPC with analyzing oil and gas is akin to asking the tobacco industry to forecast lung cancer.”
…The 422-page report claimed to be “a comprehensive study considering the future of oil and natural gas to 2030 in the context of the global energy system” and in fact, contained some good work. It’s worth a read and available on their Web site. And in all fairness, it did concede a couple of key points:
…It’s a start. At least they admitted that there are serious supply challenges between now and 2030. The report also addressed the need for reducing demand, carbon capture and sequestration, and expanded production of renewables and other energy alternatives, as well as the demand-side challenges such as population growth and the red-hot economies of Asia.
It also mentions “The Peak Oil Debate,” and for once, it represents the peaker case fairly accurately. The authors reviewed a range of global production forecasts, and noted that there was a significant gap between the ASPO forecast on the low side, the EIA reference case on the high side, and the forecasts of the international oil companies in between.
But like the IEA, the NPC seems to be bending over backwards in order to avoid saying “peak oil,” by trying to couch it in terms of “accumulating risks” and “challenges” and parsing out the factors that are “conventional” or “above-ground.”
Can we cut the crap?
When we reach the point where production stops increasing-as appears to be the case somewhere between last year and 2012-it’s the peak. They can call it Ray, they can call it Jay, but it’s still the peak.
Their belief that the many “challenges” can be overcome is based in the same old dogma, and is utterly unsupported by the facts on the ground. Factors pointing to an imminent peak, they say, “are countered by expectations for new discoveries, enhanced recovery techniques, advancing technology for producing oil from unconventional sources, and reassessments and revisions of know[n] resources.”
(20 July 2007)
A Natural Gas Crisis Coming?
Dave Russum, Language Matters
The final years of the 20th century saw a rapid escalation in natural gas drilling in Western Canada. For the first time, however, the rate of production growth began to falter.
In early 2000, as Murphy Oil, Apache and Beau Canada announced their discovery of the Ladyfern Slave Point gas field in a remote area of Northeastern British Columbia, their achievement seemed to herald a new era of successful wildcat exploration.
…Rather than representing a new era of large discoveries, Ladyfern appears to have been just another increasingly-rare large gas find. During boom periods in the 1950s, for example, gas exploration yielded large new gas fields almost every year, and many discoveries waited for years to be tied into the pipeline network. As the industry matured, such discoveries became unusual. Prior to Ladyfern, the last large gas discovery had been at Caroline, more than ten years earlier.
Unconventional gas: In any given area, free-flowing, buoyancy-driven conventional gas represents a very small fraction of the natural gas resources present. Unconventional gas represents possibly hundreds of times more natural gas resource than there is for conventional gas. It comes from five major sources: …
Complacency: The existence of these resources has led to complacency among consumers, who still assume they will always be supplied with gas at “reasonable” rates. Developing these resources can have substantial impacts on the environment through closer well spacing, more intensive infrastructure, additional noise from compression, the challenges of water disposal, NIMBY issues, and other factors. More to the point, most people do not understand that little unconventional gas is extractable in large volumes at lower prices.
Forecasters now commonly suggest that western Canada’s conventional gas production has peaked and will continue to decline. Gaps between traditional supply and growing demand are already being filled with gas from such diverse sources as tight sands; coalbed methane; and since January 2000, frontier gas and liquids from Nova Scotia’s Sable Offshore Energy Project. Other possible future sources include Mackenzie delta gas and liquefied natural gas from abroad. This suggests higher future costs and risks, and that suggests higher-priced future energy.
(21 July 2007)
The original article has an excellent graphic (“Resource Triangle”) depicting the relationship between conventional and unconventional resources. -BA
Sector Glance: Oil Tanker Stocks Fall
Associated Press
Stocks of companies that own and operate crude oil tankers finished lower Monday after rates for the vessels plunged more than 20 percent on supply concerns.
In a client note, Jefferies & Co. analyst Douglas J. Mavrinac said rates for crude oil tankers took a hit last week when OPEC said crude exports would not increase in August as expected, and maintenance in some Asian refineries lowered demand and led to a tanker surplus.
Mavrinac said tanker rates should remain weak until a possible rebound in fall or winter, when OPEC is expected to increase production to satisfy fourth-quarter demand.
(16 July 2007)
Mexico, Venezuela oil slumps could hit U.S. supply
Brian Ellsworth and Catherine Bremer, Reuters
Falling oil production in Venezuela and Mexico, Latin America’s biggest suppliers of crude to the United States, could deepen U.S. reliance on shipments from the Middle East and Africa.
The outlook comes as a setback to the White House, which is hoping to reduce U.S. oil dependence on unstable regions.
“The best Mexico and Venezuela can hope for right now is to keep their production flat, but the more likely scenario is that we will see a decline,” said Fadel Gheit, an analyst with Oppenheimer and Co. “Someone has to fill that gap, whether it is Russia, the Middle East or West Africa.”
The two countries currently provide some 25 percent of U.S. oil imports, but analysts say the region will be unlikely to boost exports to meet growing U.S. energy demand.
(20 July 2007)
Norway’s trade surplus down
Statistics Norway
Exports of goods came to NOK 64.3 billion in June 2007, and imports to NOK 39 billion. The Norwegian trade surplus was NOK 25.3 billion, a decrease of 11.9 per cent compared with June last year. The decline was mainly due to a substantial fall in exports of crude oil and natural gas.
In June 2007, the total export value of crude oil, natural gas and condensates amounted to NOK 32.4 billion, a decrease of NOK 6 billion compared with June last year. The export value of crude oil came to NOK 21 billion, a decrease of 24.5 per cent. The crude oil price averaged NOK 434 per barrel, compared with NOK 425 per barrel in June last year.
…Adjusted for seasonality, the export value of crude oil, natural gas and condensates showed an increase of 1.9 per cent from the first quarter to the second quarter 2007.
(16 July 2007)
Contributor David Liontooth writes:
Norway has X% [being clarified] of the world’s petroleum reserves, uses only 5% of this itself, and exports more than Iran, Iraq, or Venezuela. Oil reserves are rapidly depleting, and extraction is shifting to natural gas, with exploration focused on the sub-polar sea north of Norway. This snapshot from the Norwegian Bureau of Statistics shows the total value of petroleum exports is still rising, due to higher prices, even as the peak of production has passed.
This Week in Petroleum 7-18-07
Robert Rapier, The Oil Drum
It’s been a while since I updated one of these, but this seems like a good time for an inventory review. Crude inventories are very high, distillate inventories are about normal, and gasoline inventories were gradually clawing their way back, but are still very low for this time of year. But in a big surprise this week, gasoline inventories sharply reversed direction from their recent trend. (However, falling inventories are the norm for this time of year).
(20 July 2007)
The Round-Up: July 20th 2007
Stoneleigh, The Oil Drum: Canada
Ontario has nuclear ambitions, the first of which is being thwarted by a lack of transmission capacity. If the power can’t be transmitted once the deadline arrives, Ontario will have to pay for it anyway under the terms of their agreement with Bruce Power. Meanwhile, Quebec has difficulties with transport infrastructure, Alberta is losing it’s skilled workforce in the oilpatch to early retirement, and Danny Williams may (or may not) be talking to the oil companies in Newfoundland.
CIBC, pondering its exposure to the subprime mess south of the border, is concerned about the prospect of $100 oil, and that risk may be becoming a four-letter word. The M&A juggernaut may be coming to an end, as Canada worries about the knock-on effect of a US recession. The subprime nosedive gets dramatically worse, with some investors threatening to sue Bear Stearns over a total loss. Desperate optimism continues, despite the subprime problems being “safely contained to all 15 ABX indexes”. Meanwhile the Mortgage Lender Implode-O-Meter reaches 100.
Water quantity is a problem for both California and London, England, whereas water quality is the issue in Alberta, Ottawa, China and the Gulf of Mexico. China in particular is paying the price for being “filthy rich”.
(20 July 2007)
