Article - Oil and the human factor
Daniel J. Lavigne
Folks, this is an important post. It tells us that Saudi Arabia has
probably already peaked. That is, Saudi has already pumped over half her
original reserves. The fact that Saudi Arabia has not yet started to
decline has been disguised by the fact that they have, not in the past
several years, pumped to their maximum capacity.
I know, this article only points out that Gahwar is past its peak. But if
Gahwar is past her peak then the rest of Saudi cannot be far behind. After
all, why would they be trying to increase extraction from one of the
Gahwar wells?
A side note; the author of this piece feels that peak oil is not a big
problem because the world’s scientists will simply figure out another
place to extract energy from. And even if they do not, still no big
problem, according to the author. We will simply return to life the way it
was during the time of Shakespeare or Lord Wellington. And he is probably
correct, we can, as soon as we return to the population levels of
Wellington’s day.
Ron Patterson
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Ilan Goldman posted:
Oil and the human factor
Author: Andrew Main
Date: 29/08/2003 17:20:00
Publication: Financial Review
Section: To be Frank he’s just being cautious
About three years ago, the Saudi national oil company, Saudia Aramco,
decided to crank up production from a well in the middle of the Ghawar
field, the biggest onshore oilfield in the world. The well, one of more
than 200 in the field, was turning out 20,000 barrels of oil a day and the
plan was to pump 40,000.
The wellhead pumps were quickly able to double their output, but engineers
were startled to discover they were now getting a 50-50 mix of oil and
water. So there was no increase in oil output at all.
Worse, the excess pumping caused the water table to rise and push the oil
to one side, a problem known as coning.
Result: one largely useless well in the biggest onshore field in the
world.
The news travelled fast even in Arabia Deserta, the Empty Quarter.
Although one cone of water does not a busted oilfield make, it showed that
water was rising more quickly to replace extracted oil than most experts
had expected.
Ghawar’s porosity will allow an eventual extraction of about 60 per cent,
or 69 billion barrels. Which means that with 45 billion extracted, the
field is long past its peak, and at present production will last only
another 16 to 17 years. But production in old wells is a bit like getting
the last out of the tomato sauce bottle: you never quite get there, and it
is bound to thin out.
So is the world running out of oil? Yes, although no one can accurately
predict when it will. Is it the end of the world? No. Or it won’t be if
the world’s scientists can arrange for us to switch our allegiance to
renewable forms of energy.
After all, William Shakespeare wrote Hamlet by candlelight; the Duke of
Wellington won the Battle of Waterloo in 1815 without the benefit of
anything fancier than saltpetre and whale oil.
The first major use of crude oil for anything more than liniment was in
the mid-19th century in Texas, and it was not even discovered in Saudi
Arabia until 1938.
On any long-term perspective, oil production is a very recent innovation,
but its life is expected to form a bell curve and we are very close to the
top. Geophysicist M. King Hubbert put forward the bell curve idea in 1956,
predicting that oil production in the main American states would peak
around 1969. It did, and today the United States imports more than 80 per
cent of its oil. In 1974, Hubbert predicted that worldwide oil production
would reach its maximum in 1995, based on his estimate that the amount of
ultimately recoverable oil was about 2000 billion barrels.
Oil industry futurologists are still divided over whether we have passed
the “roll over” point, mostly because the Western world sharply moderated
its oil consumption in the years following 1974.
There is a growing industry in discussing that issue, and two of the
best-known players are retired geophysicists Colin Campbell and Jean
Laherrere.
Campbell, who lives in Ireland, and his French colleague share the concern
that wherever we are on the curve, reserves are hard to calculate because
producing countries play political games.
Campbell has noted that between 1985 and 1990, six members of the
Organisation of Petroleum Exporting Countries increased their total
reserves by 300 billion barrels of oil without having found any
significant new oilfields, to ensure bigger production quotas for
themselves. That represents roughly 11 years’ global production
at present levels.
According to Campbell’s calculations, by 1997 the world had used more than
800 billion barrels of oil. Oil use today is on a “bumpy plateau” at 24
billion barrels a year, so cumulative consumption had probably taken that
number up to about 950 billion by late 2002.
So what about remaining reserves? They are somewhere between 1000 billion
and 2000 billion barrels, depending on a range of factors, including what
is classed as “regular oil”, rather than potential oil.
Industry bible the Oil & Gas Journal has calculated that at the end of
2002, global reserves of regular oil were 1212 billion barrels, which are
being used up at about 66 million barrels a day. BP’s equivalent numbers
are more pessimistic, seeing 1047 billion barrels of reserves and an
exploitation rate of just under 74 million barrels a day.
The major tar sand and shale oil deposits around the world are sometimes
classed as reserves but, as Campbell points out, “the cost of oil produced
by these as yet uninvented technologies is likely to be astronomical by
today’s standards”.
In other words, there are reserves between the two numbers, but their
extraction cost is going to push the oil price sharply higher, and the
safer number to go for is the lower one.
Laherrere told Weekend AFR from Paris last week that increases in non-oil
energy use had pushed the “peak” of the curve out past 2015, a more
optimistic picture than many recent estimates which put the top of the
curve at 2005. But that does not alter Laherrere’s long-term pessimism
about what he sees as a lack of desire among developed countries to
constrain demand.
“The hard part is to predict demand and I don’t think I’m qualified to say
what it will be, because it’s all about human behaviour, such as the love
of [four-wheel-drives],” he says. “It’s about man’s irrationality, his
egotism and his stupidity.”
The only policy that will prevent an early exhaustion of cheap oil is
energy saving, Laherrere says. “The US Department of Energy sings the
praises of improved technology to improve extraction rates from existing
fields. But the fishing industry used to sing the praises of their new
trawling methods, the result being that cod has all but disappeared from
the North Atlantic.”
Like most energy Cassandras, Laherrere finds himself pointing a finger at
the US, the biggest per capita oil user in the world. US citizens consume
24 barrels a year, compared with two in Asia (though the latter figure
looks set to soar).
However, Laherrere believes the US will get a jolt from diminishing
natural gas supply before oil becomes a serious worry. “Their problem will
not be the top of the oil curve but the top of the natural gas curve in
North America,” he says, referring to the fact that the US has to have
natural gas pumped in from Canada and Mexico. “That problem is purely
local and OPEC cannot be blamed, as it usually is, for oil problems.”
Coincidentally, a report from US energy commentator Tobin Smith last week
notes that heavy American gas usage in the early months of 2003 (the
northern winter) has left US underground storage levels 13 per cent below
the five-year average, and there isn’t time to replenish them before the
coming winter. (The US stores gas in old natural gas reservoir caverns.)
“For storage to reach the necessary 3 trillion cubic feet level by winter,
producers need to pump about 13 billion cubic feet of gas daily between
now and November,” Smith writes.
Even at peak times, he notes, the US can pump only 11 billion cubic feet a
day: “We’re 2 billion cubic feet of gas SHORT [Smith’s emphasis] per day
at least, with production at declining levels.”
Smith predicts that US natural gas prices will jump from about $US6 per
thousand cubic feet at present to between $US10 and $US15.
His report concludes that the national strategy for dealing with the
emergency appears to be “pray for a mild summer and a completely
abnormal winter”.
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- In an economic system that is predicated first and foremost
on perpetual growth, Matt Simmons' statement that we are no
longer ever going to grow took on a whole new meaning.
-- Mike Ruppert
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Daniel J. Lavigne
Ron Patterson wrote:
> A side note; the author of this piece feels that peak oil is not a big
> problem because the world's scientists will simply figure out another
> place to extract energy from. And even if they do not, still no big
> problem, according to the author. We will simply return to life the
> way it was during the time of Shakespeare or Lord Wellington. And he
> is probably correct, we can, as soon as we return to the population
> levels of Wellington's day.
________
Yes, it would mean the average family would work 60-70 hours a week,
live in a hovel with farm animals, farming or doing other support
labor for farms (blacksmith, miller, take care of horses, vet,
etc)...not too much need for lawyers and engineers and computer
geeks...hard to run computers off a wood fire. Lots and lots of
manual labor, animals for 'work' and transport, death at age 40 or
45. No industries other than 'cottage industries'.
It comes down to 'net energy'. If you got fuels with low net
energy, not much gets done, and lots of time is spent using
those low net energy fuels.
SO to get to the population levels of the 1600s, we go through
the 'die off' scenario, or make like the folks on Easter Island,
whose population declined by 90% through warfare and cannibalism?
Or do we do like the roman empire, and collapse, and then have a
1000 years of plagues and the 'dark ages'? (until new energy
sources and 'natural treasures' like gold and rubber and
slave labor were discovered?????
drT in Dallas
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