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Did an oil-company CEO just endorse peak-oil theory?
Jai Singh, Foreign Policy (blog)
On Tuesday, CNBC’s popular stock-picker Jim Cramer discussed oil supply constraints at length, explaining why he likes ConocoPhillips because it’s one of the few firms that really thinks oil prices are staying high and is investing accordingly. Most companies tend to evaluate projects for viability at around $40 per barrel of crude. That’s mainly because the rise in oil prices has been moving higher than the supply-demand fundamentals suggest they should, which we have discussed recently (here and here). Cramer thinks ConocoPhillips is “ahead of the curve” and is well-positioned to take advantage of the current market.
In making his case, Cramer read a quote from a recent presentation by ConocoPhillips CEO Jim Mulva that I think is significant coming from an industry leader, given that is sounds a lot like a measured endorsement of peak-oil theory:
Talking a little bit about the supply challenge. This is a slide that’s been prepared by International Energy Agency and it just shows if you take all of the oil production around the world today, say, 86 million barrels a day, the natural decline on average is about 8% a year.
“So, if we’re going to stay with 86 million barrels a day, we’ve got to be out there adding 6 or 7 million just to stay flat. So the question is, where is that all going to come from when you see Saudi, Arabia saying they’re going to go to 12 million to 12.5 million and maybe up to 15 million barrels a day? How is this going to happen? It’s not so important just what I think or say, but I know we’ve been saying for the better part of nearly 12 months. Personally, I don’t think we’re going to see — for three reasons, I don’t think we’re going to see the supply go over 100 million barrels a day. The reason for that is, where is it all going to come from?
“Second, it’s going to be from a climate change greenhouse gas emission? I’m not so sure that the world, even if you could get up to those levels, would allow us it be done. So we have — Demand maybe going up, but it’s going to be constrained by supply.”
The transcript of the presentation is unfortunately not available online, as it comes from the November 2007 Merrill Lynch Global Energy Conference.
(6 December 2007)
Satellite images contradict Saudi peak oil theory says Bernstein Research
Business Intelligence – Middle East
Satellite images may scuttle theories that the world’s biggest oil field in Saudi Arabia is in decline, Bernstein Research said on Wednesday.
A jump in drilling activity in recent years at the giant Ghawar oil field has raised concerns Saudi Arabia is struggling to maintain oil output and has fueled “peak oil” theories that global production is poised for a collapse.
But satellite images show that much of the rise in drilling activity has centered on two major expansion developments by state oil firm Saudi Aramco, instead of on keeping older parts of the field producing with enhanced recovery techniques, Bernstein said in a research note.
“The majority of the increased activity in the Ghawar field can be explained by the Haradh-III, and the Hawiyah natural gas liquids recovery mega-projects which were not designed as a quick fix to Ghawar’s supposed rapid decline,” the note said.
Bernstein said the report was an initial analysis of satellite data from 2004-2007, with a final conclusion expected in the coming months.
(6 December 2007)
Washington County Peak Oil Reading Group
Paige Richmond, Willamette Week
A bunch of neighbors in the ’burbs have the peak-oil book market cornered.
When the global oil supply dries up, Donna Maebori, 56, and Peter Lunsford, 49, will be ready. Or, at least they’ll be well-read.
This pair of suburbanites are the founders of the Washington County Peak Oil Reading Group, a collection of citizens who, since April, have been meeting monthly at the Cedar Hills Crossing Mall. While the owners of compacts, hybrids and SUVs shop and Beaverton traffic moves steadily on nearby Sunset Highway, the Peak Oil group’s 10-plus members—including a few twentysomethings but mostly middle-agers—are inside the mall’s Powell’s Books outpost reading in preparation for what they call “life after the oil crash,” or what’s commonly known as the peak oil crisis. In simplest terms, it’s when the global demand for oil exceeds the rate of oil production, and the price and scarcity of oil will increase dramatically.
Maebori and Lunsford agree that books are one of the most effective ways to educate their unprepared neighbors.
Maebori, a physical therapist at Providence St. Vincent, starting reading up on oil when her daughter left for college a few years ago. Lunsford, who moved to Portland last year because he feels “it’s the most sustainable city in the country,” first learned about peak oil by reading When Technology Fails by Matthew Stein. The pair sat down with WW to explain what the suburbs can do to power down.
(5 December 2007)
In 2008, Investors Should Expect to be Buffeted by Oil Price Uncertainty – But One Fact Can’t be Denied
Energy Tech Stocks
When world famous commodities trader Jim Rogers appeared last Monday night on a U.S. cable TV program, he hammered home the point that most oilfields in Russia, one of the world’s two biggest oil producers, are at or past “peak” production.
Two days later, Peter Jackson of Cambridge Energy Research Associates, the noted energy consultancy, told the Financial Times newspaper that Saudi Arabia, the world’s other biggest producer, looks more than capable of significantly raising its annual output.
And so it goes in the now almost daily battle between peak-oil believers and deniers, a battle likely to be even more in the news in 2008 as rising demand puts increasing strain on the world’s major oil producing countries, all of which need to fire on all cylinders to keep the global economy well-supplied with oil.
…As energy investors look ahead to 2008, they should expect a lot of price uncertainty, as peak-oil believers and deniers take turns holding forth in the media and the oil trading pits. One day it could be Matt Simmons vs. Daniel Yergin, the next T. Boone Pickens vs. the CEO of ExxonMobil. Happily holding coats will be TV anchors and an army of global traders, private equity firms and mutual funds – all of which love market volatility because it can boost their profits if they are ahead of the wave.
As much as the financial professionals may profit, however, the consumer-driven U.S. economy may suffer, as Americans go through bouts of depression and elation as they pass their corner gas station, and as corporate budgeters struggle to get a handle on their spending plans.
(6 December 2007)
Nate Hagens: Fantasies for replacing fossil fuels
KMO, C-Realm Podcast (Audio)
In this installment of the C-Realm Podcast, KMO speaks with Nate Hagens of theOilDrum.com about the various fantasies for replacing fossil fuels with bio-fuels, synthetic fuels, or anything else that will supposedly take up the slack when global oil production peaks and keep our first world of happy motorists shuttling great distances
everyday in their shiny metal boxes.
Show notes: kmo.livejournal.com/325265.html
(5 December 2007)
Panelists discuss climate changes, peak oil
Jake Palmateer, Daily Star (New York state)
“Kill your lawn.”
That was one of the recommendations from a panel discussion based around peak oil and climate change held Wednesday night at the First United Methodist Church.
Angelika St. Laurent of Cornell University promoted growing more vegetables and fruits locally _ including on lawns _ as a way to mitigate food-supply problems related to peak oil and climate change.
St. Laurent, a researcher at Cornell, Mark Davies of Hartwick College and Jay Fleisher of the State University College at Oneonta were the panelists at the discussion sponsored by the Environmental Work Group of Central New York. The event attracted more than 70 area residents who filled nearly every seat in an upstairs meeting hall at the church.
Fleisher, an earth sciences professor, outlined the concept of peak oil first put forth by M. King Hubbert in the 1950s. Hubbert accurately predicted that American petroleum production would peak in less than two decades.
Today, peak oil generally refers to a global peak, which Fleisher said is on the verge of being reached.
The best-case scenario is that the point at which global oil production reaches terminal decline is a decade or two away, he said.
Fleisher also outlined climate change and what the possible impacts could be on the environment, which include more severe weather, droughts and rising sea levels.
“We’ve had climate change long before we’ve had human influence,” Fleisher said. “The critical thing is … we may not be causing the climate change, but we are accelerating that change.”
What does all this mean?
“A lot of folks don’t grasp how this will impact them,” Davies said.
Davies used the example of how an increase in petroleum prices affects the food people eat.
(6 December 2007)
Peak Oil And Global Warming: Inextricably Linked
Robert Holson, Mountain Mail
Sixth in a seven-part series about global warming and peak oil.
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SOCORRO, New Mexico (STPNS) — In the preceding articles we have seen that the burning of fossil hydrocarbons (oil, coal and natural gas) increases atmospheric carbon dioxide, triggering potentially catastrophic global warming. In previous articles we have also seen that these hydrocarbons, and particularly oil, are at or very near a global peak in production, to be followed by a rapid and economically disastrous decline. Readers can be excused some confusion regarding the interaction of these two phenomena.
… Conclusion
Peaking of oil will not produce a sufficiently rapid decline in the rise rate of atmospheric carbon dioxide, especially if alternative fossil hydrocarbons such as coal or oil shale are used as replacements.
- Rapid replacement of existing fossil fuel use is a necessity, to deal with the twin challenges of peak oil and global warming.
- Such replacement is also highly advisable in order to save vital raw materials for our children, to retain an adequate oil supply for possible military purposes, and to reduce our current dependence on foreign oil supplies.
- Meeting these challenges will require immediate implementation of a huge remediation effort, larger by far than either the Manhattan or Apollo programs.
- Such a program is possible only if the American voter demands it. It will not come about as a painless gift from our current corporate-dominated power structure.
(6 December 2007)
