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Deffeyes on the NPC report
Kenneth S. Deffeyes, Beyond Oil
On July 18, 2007, the National Petroleum Council posted a major report on the Internet with the title “Facing the Hard Truths about Energy.” The NPC report, two years in preparation, is in response to a request from the US Secretary of Energy. The report is posted at www.npc.org/Facing_Hard_Tru
ths-71087.pdf.
…Many of the NPC report’s authors are from the major oil companies. In one sense, that’s an advantage. The majors are big powerful organizations and it would help all of us to know what they are thinking. (I realize the possibility that they have written what they hope we will think.) The overall chairman of the study is Lee Raymond, former chairman of ExxonMobil. The chairman of the oil supply subcommittee is David O’Reilly, CEO and Chairman of the Board of Chevron. They don’t get any bigger. In addition to the major companies, the NPC sought a wide range of other opinions.
Of course, my first action was to do a Washington (DC) read: Did my name appear in the report? Yes, I’m credited with dot #99 on Figure S2-2, page 139. My estimate of the world oil endowment, two trillion barrels, is the lowest of the recent estimates. The graph doesn’t point out that one trillion barrels have already been produced and burned. In my view, the halftime show is over, we’re now into the second half.
…I have not done a Talmudic read of the report. A first rapid scan of the oil supply section turned up some problems. I’m afraid that the NPC is “Facing Softened Truths.” Here’s their take on the North Sea…
A truly deep misunderstanding comes up on page 178, in connection with figure S3A-26. The authors seem to think that the US and global Hubbert curves are simply enlarged versions of the production history of a typical single oilfield. A single oilfield has a production history that is asymmetric in time. It usually takes only a few years to drill up the horizontal and vertical extent of the oilfield. After the initial drilling, the time to produce the oil is measured in decades. The result is a rapid initial rise and a long slow decline.
In contrast, the Hubbert theory is basically a statement about the statistics of finding oil. The idea being tested is whether the odds on finding oil depend on the fraction of the total oil that remains undiscovered. Obviously, after you have caught almost all the fish in the pond, the fishing isn’t very good. Or, in the old joke, the fishing is fine but the catching is terrible. The math behind the Hubbert theory is contained in the now-infamous three lines of high school algebra on page 38 of Beyond Oil.
…The NPC has promised to release next September a revised version of the report and the supporting data. They might want to remove their sunset picture on page 262. “Sunset” has become a metaphor for declining oil production. Both of my books have sunset covers; Matt Simmons uses the title “Twilight in the Desert.”
It wasn’t all quibbling. There are points in the NPC report that have my wholehearted agreement.
(4 August 2007)
Get ready for oil supplies to dwindle, experts warn
Scott Simpson, Vancouver Sun
Some observers predict a social and economic meltdown as severe as the Great Depression
—
Crude oil makes Kjell Aleklett think about wild strawberries.
Aleklett, a Swedish professor of physics, sees inescapable similarities between the steady depletion of the world’s most coveted energy source and the foraging habits of berry afficionados.
“In Sweden we have strawberry fields where you can go out and pick for yourself. If you go out there in the morning there is a possibility that you can pick a big volume of strawberries. But the first picker picks the big ones. The last one is left with the small ones. It’s very much the same thing when it comes to the production of gas and oil.
“The goodies, the big ones, have been picked. It’s true all over the world. Now we have to stick to the small ones. That means it’s harder to fill the basket.”
Aleklett made his comments during an interview in Vancouver, where he recently gave a speech on the future of global crude oil supply to the annual conference of the international Pulp and Paper Products Council.
Aleklett is a sought-after speaker on this topic — he is founding president of an ad hoc group of academics, geologists and politicians who have formed the Association for the Study of Peak Oil (ASPO for short).
…Aleklett says those efforts [to expand supply] may serve only to maintain existing production — and cannot meet exploding demand growth in the developing world, including an expected five-fold increase in oil consumption by China and India.
China has 21 per cent of the world’s population but at present consumes only eight per cent of its annual production of crude oil.
“Should they be allowed to use 21 per cent of the oil produced in the world since they have 21 per cent of the global population?” Aleklett asks.
“They will do whatever they can to make it happen. I have had discussions with leaders in China, with advisers to the president, about peak oil and they said they know about peak oil and they will act accordingly.”
…A scenario that is potentially more ominous for Canadians and Americans, who are the world’s largest per-capita consumers of oil, is a new paradigm in which 80 per cent of the world’s future supply is in the hands of nationalist-minded governments — rather than multinational oil companies who could finesse it back into the automobiles of North American motorists.
Some expert sources are suggesting that a global recession could turn out, in relative terms, to be the best-case outcome. They are urging governments to act immediately to ensure an orderly transition to other kinds of fuel.
(5 August 2007)
Long article… surprsing to see such forthright reporting in a mainstream newspaper.
The World Energy Modeling Project
Dick Lawrence, The Oil Drum
Nate Hagins of The Oil Drum writes:
The following is a guest post about the need for global energy systems modeling, by ASPO-USA co-founder Dick Lawrence. Mr. Lawrence has a degree in Physics from Rensselaer Polytechnic Institute. After a career at Digital Equipment and Intel he is focusing on the world energy model and starting a solar hot-water business in Massachusetts. In 1986 he read “Beyond Oil” (the original) which was his introduction to resource depletion, Hubbert’s peak, and the power of computers to model the behavior of complex systems. In May 2004 he proposed a project to model global energy flow at the ASPO meeting in Berlin.
Energy is at the foundation of every aspect of our present globalized economy. Without adequate energy, the well-being of our still-growing world population, increasingly urbanized and industrialized, faces the prospect of reduced standards of living, declining access to food and clean water supplies, and contraction of global trade and GDP.
In the next decade and beyond, decisions will be made at national-policy (and, possibly, global) levels that have consequences to large segments of the Earth’s human population and to the world environment. These decisions will directly and indirectly impact energy and resource availability, human well-being, and the sustainability of the environment on which all economies ultimately depend.
Understanding the complex relationships between energy, the economy, human living standards, and national policy decisions is a difficult task. Well-informed observers often arrive at opposite conclusions, even when in possession of the same collection of facts. How can we cut through the morass of conflicting opinions and develop a better understanding of the consequences of policy decisions?
Increasingly, researchers turn to computer-based dynamic-systems modeling techniques when they are trying to understand complicated systems. 35 years ago, colleagues of Jay Forrester at MIT published the results of a study 35 years ago called Limits to Growth, which attempted to look at the global human population and its relationships to resources, food supply, pollution, and more.
In the 1980s, Robert Kaufmann co-authored, with 3 others, a study of energy flow through the U.S. economy in Beyond Oil (last updated in 1992). That study was the inspiration for our proposal to model energy flow at the global level, first shown to ASPO members and attendees at the 2004 Berlin conference.
After several years of presentations and proposal refinement, a project to model world energy flow is now underway. Following our presentation at ASPO-USA’s Boston conference in October 2006, we developed a Request for Proposals and distributed this to organizations and academic groups considered to have the resources and skill sets to implement such a model. After reviewing the proposals, ASPO-USA decided to merge the capabilities of two responders into a combined project team. ASPO-USA brought the two groups together in mid-May of 2007 and officially launched the project.
(5 August 2007)
UPDATE: Also posted at ASPO-USA.
Book Review: A Thousand Barrels a Second
Justice Litle, Seeking Alpha
A Thousand Barrels a Second: The Coming Oil Break Point and the Challenges Facing an Energy Dependent World
by Peter Tertzakian
It feels appropriate to review this book as crude oil futures hit all-time contract highs, in the vicinity of $79 a barrel. The 1980 inflation-adjusted highs for crude (roughly $100 per barrel in today’s money) are just around the corner in geopolitical terms.
In the book’s title, “A Thousand Barrels a Second” refers to the point at which world oil demand exceeds 86 million barrels per day. (86.4 to be exact — there are 86,400 seconds in one day). The International Energy Agency [IEA] believes the 86 million threshold could be crossed this year.
The “Coming Oil Break Point” refers to the aftermath of crisis and inevitable forced change.
… read the entire book on one leg of a coast-to-coast plane trip, a feat made possible by the clarity and lucidity of Tertzakian’s writing. He excels at laying out detailed concepts in ways that are easy for the reader to grasp and understand, and paints a convincing picture of the significant challenges we face.
Tertzakian firmly grounds his argument in history, explaining what he calls the “evolutionary energy cycle” through the lens of past transitions. At one point we journeyed to the ends of the earth for whale oil, just as we do for “rock oil” (the literal meaning of petroleum) today. In the switch from wood to coal, tallow to whale oil, whale oil to kerosene, and so on, predictable aspects of the evolutionary energy cycle begin to emerge.
(August 2007)
Oil sector’s big issue now delivery, not discovery
Carl Mortished, UK Times
So, what happened to $100-per-barrel oil? On Wednesday, the price of US light crude reached $78.77, briefly topping last summer’s record and then subsided. A few dreary bulletins about the US economy and signs that American petrol stocks were rising were enough to kill the excitement and stall the rally.
Those investors who are obsessed with the notion of the end of oil tend to forget that the price fluctuates on short-term supply considerations and signals from the underlying economy about energy demand. The oil market is not driven by guesses about how large are the Saudi Arabian reserves.
These are irrelevant on any short term or medium-term view. In the short term, the bears can point to ample oil stocks in OECD countries and economic risk on the downside. The extent of the US credit crunch and some weak jobs data together suggest a slowing American economy, which, in turn, implies less demand for oil. On the bullish side, however, Opec is asserting its discipline and, in any case, crude output from several leading Opec members is stymied by civil disturbance (Nigeria and Iraq) or lack of investment (Iran and Venezuela).
Still, the Gulf states have been investing heavily in new production and these have every interest in ensuring that the US and Chinese economies are both well supplied and continuing to depend on the dripfeed of Middle Eastern crude oil. Over the next few years, Opec will seek to keep prices strong, but not dangerously high.
(4 August 2007)
