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The Lost Decade – a retrospect on “Oil Production in the 21st Century,” Scientific American magazine
Roger Anderson, ASPO-USA
Back in 1998, when I wrote the above article for SciAm, I was feeling optimistic about the prospects for production growth in the oil industry. The drop-header read: “Recent innovations in underground imaging, steerable drilling, and deepwater oil production could recover more of what lies below.” There is certainly plenty of room for improving the percent of discovered oil that can be brought to the surface, and indeed, the impressive technologies I discussed in SciAm have improved that recovery efficiency by more that 10% since 1998. However, average recovery still languishes between 35% and 40% of the original oil in plac in the majority of the world’s oil fields. Two unfortunate and short-sighted management trends have affected my optimism, and in my view, prevented discovery and production technologies from keeping up with increased demand in what I think of as the “Lost Decade” since I wrote that article.
First, when the oil price collapsed from $25 to $12 per barrel (in 2005 dollars) at the end of the 1990’s (see figure 1), both national and international oil industry management slashed their technical and scientific staffs.
… Second, oil industry management became near-term-profit focused during the booming markets of the early to mid 2000’s, as did most other international businesses. This led to massive, industry failure to invest for sustainable profitability in the long haul. Energy is not an easy business to manage well. Whether it is oil, gas, electricity, or renewables, the energy industry requires long-term, massive investments in not only people, but also in inter-dependent, heavyweight infrastructure.
(7 April 2008)
The Gas Storage Cycle
Peter McKenzie-Brown, Language Matters
Last fall, the amount of natural gas in storage in the United States set a new five-year record. Since then it has plummeted, and it has dropped more dramatically than at any other time in the last 15 years. The severity of the drop is obscured by the impact of Hurricane Katrina, which distorted the cycle several years ago.
Even so, as chart #1 illustrates, the trend over three winters has been for progressively lower supplies as the winter ended. This post suggests that less gas in storage this year is likely to combine with other factors to drive natural gas prices much, much higher than you might expect.
The volumes of gas in storage vary every year. During warm winters we consume less, for example, and during cold winters, more. Sometimes gas production surges, as it has in the south-central United States (Texas, Oklahoma, Louisiana and Arkansas) for the last few years.
… Before I summarize the case for natural gas prices continuing to rise, a comment on one likely cause of this commodity bull. Harvard economics professor Jeffrey Frankel suggested in his blog that a decrease in real interest rates (“real” rates exclude inflation) increases the demand for storable commodities. In his thought-provoking comment, he writes,
… Taking all these factors into account, it does seem as though the upturn in natural gas prices will continue for at least the next few months. We’ll see.
(4 April 2008)
Depletion of oil reserves outpaces new production
Platts
Though the Organization of the Petroleum Exporting Countries (OPEC) tries mightily to suggest a disconnect exists between the current price and supply of oil — pegging crude’s strength mostly to geopolitics, US refinery woes and speculators while insisting the market is adequately supplied — the numbers, as it is said, do not lie.
And those numbers show that while world oil demand is on the rise, production from across the globe, be it from OPEC, Organisation for Economic Co-operation and Development (OECD) states, or non-OECD sources, was lower in 2007 than it was the previous year.
Indeed, $100/barrel oil has only served to highlight just how tight the global supply/demand balance is at present. The mythic dollar figure, begs the question: If oil is so valuable, why isn’t more of it being pulled from the ground?
(3 April 2008)
First page is free. Stuart Staniford of TOD is quoted.
Contributor driller writes:
Part 1 of 4 in Platt’s feature series “CRUDE OIL CHALLENGES”
Noblis’ Banks discusses biofuels lifecycle assessment, impacts of new mandates (video; transcript to come)
Monica Trauzzi, E&E TV
With last year’s energy law mandating the use of 36 billion gallons of biofuels by 2022 questions remain as to how the U.S. is going to meet these new standards, and whether a surge in biofuels production will actually yield environmental benefits.
During today’s OnPoint, Noblis chemical engineer Darryl Banks details the findings of the first phase of his organization’s biofuels lifecycle assessment. Noblis is a non-profit science, technology, and strategy organization.
Banks explains how deforestation and the development of cellulosic technologies play into the overall risk/benefit analysis of biofuels. He also comments on recent reports highlighting the negative impacts of biofuels on the environment.
(3 April 2008)
Heavy with “techie-talk” and light on bottom-line sound-bytes.
Couldn’t find the biofuels life-cyle report on the Noblis site. However, there was a special report on the Noblis Corporate Energy Initiative (PDF) -BA
