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Oil prices will rise as supplies tighten? Hardly.
A. Gary Shilling, Christian Science Monitor
… Some of the recent increase [in oil prices] may stem from tensions with Iran. But much of it seems to be a general view that crude oil is a different kind of commodity that is in perpetual danger of being in short supply, given its essential nature in modern economies; the chronic instability of oil-producing countries in the Middle East, Africa, and South America; and the peak-oil thesis, first predicted by M. King Hubbert in 1956, that global oil production inevitably will dwindle.
I don’t buy it. In fact, I think that human ingenuity, constantly improving recovery technology, and higher prices (if needed) probably make any current estimate of recoverable oil far too low – and too static. Actually, global production capacity will rise from 92 million barrels a day in 2010 to 110 million in 2030, forecasts Daniel Yergin of IHS CERA, a forecasting firm in Cambridge, Mass.
(6 February 2012)
Energy policy and the Madness of Crowds
Steve LeVine, The Oil and the Glory (blog), Foreign Policy
Are smart meters a plot to overthrow the United States?
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… In 1995, Charles Mackay wrote a gem called Extraordinary Popular Delusions and the Madness of Crowds, a history of market bubbles based on misperceptions of reality. Call it what you will, but we are in a period of unusually high erroneousness when it comes to energy and the places it’s produced.
… we have the recent case of much of the U.S. energy establishment abruptly reversing itself 180 degrees, and asserting that the U.S. is on the verge of long-term self-sufficiency in oil, and creating an alternate center of energy gravity to the Middle East.
This collective assessment bears a striking resemblance to the claims of peak oil theorists — super-smart people creating impressive, number-filled projections that omit critical data. Interestingly, these opposing groups disregard some of the same data, and that is the role of pricing.
Peak oil theory ignores that, at higher prices, hard-to-access hydrocarbons become producible. In a mirror image, the U.S. energy independence crowd says nothing about the price at which the hydrocarbon bonanza they see will be cost-effective to extract. Mackay writes that popular delusions will always be with us, and the noise surrounding energy suggests he is right.
(6 February 2012)
Steve Levine is a regular contributor to Energy Bulletin.
Debate rages on when oil will peak
Saadallah Al Fathi – Former head of the Energy Studies Department in Opec Secretariat in Vienna, Gulf News
…Optimism is important for human progress but that does not mean we should ignore what the numbers are telling us.
Mature oil fields are declining at an average rate of 4.5 per cent a year, according to Cambridge Energy Research Associates, and 6.7 per cent a year rising to 8.6 per cent in 2030 according to the International Energy Agency (IEA). The IEA suggests that current production capacity will fall from 80 million bpd now to 15 million by 2035 and that conventional oil production may be sustained from “fields yet to be developed” and others “yet to be found”. IEA statements have given indirect support to the peak oil theory recently.
Even Opec, in its last World Oil Outlook published in 2011, forecast that conventional oil supplies would increase from 69.8 million bpd in 2010 to 74.1 million in 2035 and that the rest of the world’s oil demand would be met by non-conventional oil, natural gas liquids (NGL), biofuels and, finally, by gas and coal to liquid products. At least in direction, the Opec forecast points to the validity of the peak oil theory. Of course, no one denies the abundant reserves of non-conventional oil, where estimates in Canada have ranged from 1-1.7 trillion barrels, and around one trillion barrels in the United States — with more to come from Venezuela and other countries.
Untested figures
But these numbers have not really been tested and they may be revised downwards when further production is made. Even conventional reserves of between 1.15 and 1.35 trillion barrels are doubted and because of “misinformation, withheld information, and misleading reserve calculations, it has been reported that reserves are likely nearer to 850-900 billion barrels.”…
(6 February 2012)
Too Much Energy Used to Mine, Move Bitumen Says BC Firm
Geoff Dembicki, The Tyee
A B.C. engineering consulting firm claims it has hard numerical proof that Enbridge’s Northern Gateway proposal augurs poorly for the future of modern society.
The Prince George-based C.J. Peter Associates Engineering came to this conclusion after performing an EROI analysis on the $5.5-billion project.
That acronym stands for Energy Return On Investment, a little-known but potentially revolutionary concept with direct implications for Alberta’s oil sands.
It refers to the amount of energy that must be expended in order to produce more energy. (Think, for instance, of all the heavy machinery, pipelines and refineries needed to produce gasoline.)
What C.J. Peter Associates found when it analyzed each stage of Northern Gateway’s global supply chain, is that getting oil sands bitumen from Alberta to China requires so much energy it might not be worth the effort.
“When animals expend more energy foraging than they obtain from plant food sources, they die,” the firm’s Norman Jacob said at public hearings on the project in Prince George last month. He added: “Societies that ignore EROI necessarily fail.”
Energy in, energy out
To understand the firm’s analysis, you must first know that Enbridge’s proposal is about much more than a steel pipeline across northern B.C…
(6 February 2012)
Saudi Oil Minister Calls Global Warming “Humanity’s Most Pressing Concern”
Stephen Lacey, Think Progress
In a speech at the Middle East and North Africa energy conference in London yesterday, Al-Naimi — who once called renewable energy a “nightmare” — hailed energy efficiency and solar as important investments, global warming “real” and “pressing,” and explained that drilling for oil “does not create many jobs.”
“We know that pumping oil out of the ground does not create many jobs. It does not foster an entrepreneurial spirit, nor does it sharpen critical faculties.”
In the U.S., which is definitely not the Saudi Arabia of oil (that would be Saudi Arabia), there is a major industry campaign underway to convince Americans that drilling for fossil fuels will create over a million jobs in the country. However, assuming we drill virtually everywhere possible in America, credible analysis puts the real figure at a small fraction of that claim.
Even the Saudis, who pump out 12% of the world’s oil, understand that simply drilling for more oil isn’t a long-term economic strategy.
A business-as-usual path also puts us deeper into environmental debt, a point that the Saudi oil minister seems to understand as well. While Al-Naimi said he believes that oil production “will continue to play a major role in the overall energy mix for many decades,” he also made some very explicit statements about carbon emissions:
“Greenhouse gas emissions and global warming are among humanity’s most pressing concerns. Societal expectations on climate change are real, and our industry is expected to take a leadership role.”
(1 February 2012)
