Peak Oil: Get Ready for the Oil-Supply Crunch, IEA Says
Lower oil prices these days are both a result of the economic slowdown and a possible cushion. But they could be a very mixed blessing. The Paris based International Energy Agency is worried about an oil supply crunch in coming years. It’s not due to geology—the IEA says the world has plenty of oil, in one form or another. But trying to match oil supplies to growing oil demand in coming years is a Herculean task made all the harder by cheapish crude prices which make oil companies think twice about new investments.
The biggest challenge will come between 2010 and 2015, the IEA says in its 2008 World Energy Outlook. For the next couple of years, the oil pipeline is well supplied. But that trails off after 2010. By 2015, the world needs to find an additional 7 million barrels per day of oil above and beyond the projects currently in the pipeline. And to get that oil to market those projects need to get started now. But now’s not a good time . . .
Unfortunately, recent market events, only indirectly related to oil, will now likely set July 2008 in stone as the date of maximum world oil production, despite the 'best-best case' scenario portrayed in the IEA report. Up against near double digit depletion rates and higher cost (lower energy gain) prospects, the oil industry now also faces a growing lack of confidence in the international financial system where near herculean investment is needed ($26 trillion = 37 times the recent controversial $700 billion bailout package in US), and credit, especially when the price of oil is well below the marginal cost of extraction (at 86mbpd) makes approving new projects, let along continuing existing production, problematic. Though not explicitly stated, one may infer that there is now increased risk that these investments will not be made.And where are we going to get $26 Trillion to eke out a peak in 2030 when our economy is being killed by a credit crunch that itself is being caused by the just-barely-beginning-of-the-unwinding of over ONE QUADRILLION DOLLARS IN DERIVATIVES?!?! Even more so, when the price in oil is being hammered daily by the collapse of the commodities bubble, which so recently caused great inflation in consumables (food, fuel, etc)?
What the key statistics are telling us is that we are so severely screwed. And the recent July 1008 of an all-time high (so far) of oil production shows us that politics have more to do oil production than anything else. Whether another all-time high can be achieved two or three decades from now remains to be seen.
" 'It has also been proven that the maximum amount discovered in any one year, globally, was in 1964. In the US that event was in the 1930s and peak oil production in the US was in 1971 and has declined ever since. The key is not the actual amount of proven reserves but the actual production! And since 2005, oil production has been on an irregular, bumpy plateau.'
"As shown above, the is 180 degrees backwards. 2008 might top 1964 with the huge strike off the coast of Brazil."
And as shown above, even if "the is 180 degrees backwards," we are still not out of the woods, and likely never will, so long as we, the world, remain oil-dependent. And the "huge strike off the coat of Brazil" wasn't that big to begin with. And the amount of reserves that hit was reported to contain was, from what I remember, reduced.
I will have choice words to say about 'proven reserves' a little further down in this post. But first...
" ' "These are both based on data from the American Society of Petroleum Engineers."
" 'It would be nice of you to provide a link.'
" It doesn't take too much effort on your part to google up that group. They are the source for oil statistics, just like NEMA is the standard for electrical codes and electrical safety."
Well I did google that group up, and guess what: it doesn't show up. Which probably means, it doesn't exist, PERIOD. HAHAHA. The closest relatives that do exist are the Society of Professional Engineers and the American Society of Petroleum Operation Engineers.
So I looked for petroleum statistics and guess what I found: Statistics on proven reserves by the USGS. Source: http://http://www.spe.org/spc-site/spe/spc/industry/reserves/OGR_Mapping_Final_Report.pdf Scroll down to page 21.
Quote: "Users should be aware of the 'reserves' terminology used in current USGS reports as illustrated in this chart based on results information in the USGS World Petroleum Assessment 2000."
The chart that follows:
World Excluding United States (conventional)
Oil - billion barrels
F95 F50 F05 Mean
1 - Cumulative Production 539
2 - Remaining Reserves 859
3 - Known Reserves (1+2) 1398
4 - Reserves Growth 192 612 1031 612
5 - Undiscovered 334 607 1107 649
6 - Future Volumes (2+5) 1508
7 - Future Grown Volumes (2+4+5) 2120
8 - Total Endowment (1+2+4+5) 2659
The USGS defines "reserves" as cumulative production plus remaining reserves that are still in ground. HAHAHA. These clowns actually include the amount that has already been extracted, shipped or piped, refined, shipped or piped again, SOLD, and BURNT or otherwise CONSUMED by the end user! If you or I went into a bank to get a loan, and the banker asks us how much savings we have, would we include the amount we have already withdrawn from our various savings accounts and SPENT? HAHAHA. Yet that is the logic the USGS uses here. No wonder the amount of "reserves" have been at an all time high this year in 2008, and have been higher each decade than the decade before going back to 1890!
If I include the amount of money I have spent since finishing college as 'wealth,' I, an ordinary middle-class citizen, would be fabulously wealthy!
And note how the USGS gets at the 'proven' numbers: by obtaining the mean, not by 95% probability (F95) of attainment! For clearly the future volumes will be dependent on politics and finance, assuming the Total Endowment is the amount that's already hit upon. If we are talking about future hits in this Endowment, then good luck with the hits, given the current credit crunch and geopolitical climate! HAHAHA.
So, let us get a more realistic set of numbers, given the current financial and political issues that are out and about:
World Excluding United States (conventional) (2000)
Oil - billion barrels
F95 F50 F05 Mean
1 - Cumulative Production 539
2 - Remaining Reserves 859
3 - Known Reserves (1+2) 1398
4 - Reserves Growth 192 612 1031 612
5 - Undiscovered 334 607 1107 649
6 - Future Volumes (2+5) 1192 1466 1966 1508
7 - Future Grown Volumes (2+4+5) 1385 2078 2997 2120
8 - Total Endowment (1+2+4+5) 1924 2617 3536 2659
And one can add to these numbers 228 billion barrels for Total Endowment per M. King Hubbert or 362 billion barrels per USGS for the United States to obtain global totals. So for Total Endowment, 95% probability, we get 1924 Gb plus (assumed) 228 Gb for a conservative planetary Total Endowment of 2.152 trillion barrels. Much closer to M. King Hubbert's estimated planetary Global Endowment than the USGS's mean of 3.021 trillion! THESE ARE NOT COMFORTING DATA, PEOPLE!
And Mr. Deffeyes shows that by data he is privy to that in 2005 the cumulative production (and consumption) was about 1 trillion barrels. Just less than half of 2.152 trillion. And peak oil is likely to happen when about half the oil endowment is consumed!
" ' "If the amount of proven reserves keeps going up, and we are not even actively exploring many promising areas, then how can one state that peak oil is even in the near future, let alone happening now?" '
"We are not exploring at rates that we have in the past because we have such high proven reserves. We don't need to find more oil, we need to pump the oil that we already know about. Oil wells are expensive to drill and operate. You maximize your profits by using existing wells more rather than drilling new wells.
" 'Define "many promising areas." Sometimes those areas prove not to hold as much oil as promised, or have potential extraction costs that make exploitation uneconomical or even unfeasible, even with environmental regulations waived."
Of these three paragraphs, the last is mine. The second appears to be Mr. Weeks' response to it.
We are also not exploring at rates that we have in the past because we have a shortage of exploratory drilling rigs - all such rigs are spoken for by exploration commitments for the next five years! And it is not likely that exploration will expand due to the credit crunch. And 'wildcat' wells will be few and far between, for not only being obviously expensive to drill and operate, they are also chancy. Even with the perquisite non-drilling exploration (seismic survey, remote sensing, etc.) that is likely to precede them -- even more so, now that that credit is so much tighter than ever since the Great Depression. So of course the oil producers are going to maximize their profits by using their present wells, as much as they can. That is stating the obvious.
The Bank of International Settlements recently reported that the amount of
outstanding derivatives has now reached the $1.14 quadrillion mark ($548
Trillion in listed credit derivatives plus $596 trillion in notional [or face
value] OTC derivatives)....Derivatives, as you may know, are essentially unregulated, high-risk credit bets. Unlike the earnest farmer who might employ a futures contract to hedge the price of the beans he’s worked so hard to grow, many of today’s institutions use futures, forwards, options, swaps, swaptions, caps, collars and floors—any kind of leverage device they can cook up—to bet the hell out of virtually anything.
What drives derivatives, at their very roots (if you can somehow get back that far), are base assets that get leveraged to a demented degree. Martin Mayer writing for the Brookings Institute, said, “the receiver of the payments on these loans or securities has bought the securities for the duration of the swap on 95% margin, even though the law says nobody can buy securities without putting up half the price.”
Extrapolated, $1.14 quadrillion in assets “owned” on something like 95% margin has to be one of the scariest phenomena in economic history....Eventually, shockingly, something will happen. Some bank will slip up, some mathematician will miscalculate or the Fed just won’t react fast enough, and the whole [$1.14] quadrillion derivative complex will come tumbling down around our feet. Only it might not be [$1.14] quadrillion by then. It might be a whole lot more.
To begin with Hank Paulson, Ben Bernanke and Alan Greenspan among countless other criminals. Once Goldman Sachs was threatened, Hank pulled out the big bazooka, aimed it at the American taxpayer and pulled the trigger. These glorified captains of free market capitalism took every bit of risk and moral hazard inherent in the unregulated derivative minefield and jammed them right up our ass. I think George Bush, Barney Frank and Chuck Shumer got a few calls from their "base", demanding protection of their mansions, villas, Bentley's and cocaine. The CONSEQUENCES for this economic rape? None. AIG's Willumstad walks away with $7 million among numerous others. Like I said, right up the ass. We are on the hook for these losses to the tune of a minimum $500 billion. Remember when they told us the genocide in Iraq would only cost $50 million? $10 billion a month, $555 billion to date. It boggles the mind. On top of socializing the consequences, these corporate fascists changed as many of the "rules of the game" as they felt necessary to prevent the further loss of their own capital. Stock shorting was suspended on a triple witching hour day, read: drop dead to hedge funds and their short traders. When you make us rich we love ya, nothing more than a convenient scapegoat when losses mount. The SEC (Socializing Economic Crashes) suspended a bunch of other RULES to grease the wheels that is creating the Dow surge and corporate warm and fuzzies this morning. The numbers being thrown around are astounding, numbers that don't matter anymore.If these "people" think that they will be able to live happily ever after destroying our lives they are mistaken. As millions of Americans are thrown under the bus, losing jobs, homes, life savings and begin to starve, our violent human nature will take over. This violence will be directed at the people responsible, regardless of the number of Blackwater type folks they handsomely pay to protect them. There have been many prior posts here referring to ammo purchases at WalMart ect. in preparation for TLE, presumably for hunting and self defense. I humbly suggest a significant portion of these ammo purchases will be used for revenge and the ultimate settling of accounts. When TLE eventually does come to pass, there will be no mistaking the true baser instincts of human beings. Here on this blog we discuss all of the possible effects of the crashing oil economy and how we will grow basil, transform front yards into gardens and barter for survival. The FBI estimates(1997 data) that there are over 200 million privately-owned firearms in the US, 12 guns for every man, woman, and child in the country, millions of rounds of ammo, back in 1997. We've stocked up a bit since then to a tune of 4.5 million guns a year. That's a minimum of 250 million weapons, including almost anything the military has in the hands of Joe Six Pack. When you look at America's history it is painfully obvious that when push comes to shove, we have absolutely no qualms about taking what we need to survive and bombing, shooting and killing anyone in the way. We have all referred generically to the fact "millions will suffer during TLE." A clearer, more concise description would be that we will first kill the people most responsible for our situation and then kill each other to survive, our history and human nature being what they are. It will take years and decades if ever, to reach the point where we are singing Kumbaya, churning butter, dancing in barns and living in the world JHK envisions in World made by Hand. The Treasury Sec. may have taken the first shot. The people, as they did in the American Revolution, will have the last. Catch ya later, there's a hunting sale at Big 5. Sorry folks, anyone who shops at WalMart REALLY doesn't give a fuck about this country. America's biggest corporation creates its wealth exactly like the rest of Wall Street. WalMart xternalizes and socializes their expenses and produces everything they sell on the backs of the poor and powerless. Period. When you shop at WalMart, you directly support the ass fucking we are taking at this very moment. Nuff said...
Posted by: djcrow22 September 19, 2008 at 12:54 PM
GALVESTON, Texas - Hurricane Ike's winds left behind a barrier island city more than three-quarters submerged in water and riddled with house fires that were still spreading in late morning.
A vast western stretch of the island outside of the thick concrete seawall remained completely impassable, and many interior subdivisions experienced flooding. But as winds and surges died down, waters were receding noticeably.
At the height of the storm, residents of the city's downtown and "Strand" district, reported flooding reaching the second floors of some buildings.
Ike's strongest storm surges forced the Rushing family out their first-story window and onto their 17-foot speedboat. The family of six dodged submerged dump trucks on a 20-block odyssey to the San Luis Resort, a safe haven where media and city officials were riding out the storm.Submerged dump trucks, eh? Those things are about 12 feet high. Add 2 or 3 feet for the typical barrier island roadway elevation and you get 14 to 15 feet.
City Manager Steve LeBlanc said helicopter fly-overs by state officials have been the only source of information about the island's west end, home to a slew of raised beach houses and subdivisions that make up 47 percent of the city's tax base.
"We can see there are rooftops," LeBlanc said. "As far as getting there and getting to them, there's just no way to do it."
Debris covers the I-45 Causeway Southbound.
Here's an overview of the damage. The surge still didn't overtop the seawall (except maybe at low spots), which saved all the resort hotels and luxury sea view condminiums that were on land.
And the oil companies are at their wit's end, due in no small part to the quieting down of war talk against Iran and the cracking down on speculators, both of which have pushed the price of oil down.Oil production has begun falling at all of the major Western oil companies, and they are finding it harder than ever to find new prospects even though they are awash in profits and eager to expand.
Part of the reason is political. From the Caspian Sea to South America, Western oil companies are being squeezed out of resource-rich provinces. They are being forced to renegotiate contracts on less-favorable terms and are fighting losing battles with assertive state-owned oil companies.
And much of their production is in mature regions that are declining, like the North Sea.
The reality, experts say, is that the oil giants that once dominated the global market have lost much of their influence — and with it, their ability to increase supplies.
“This is an industry in crisis,” said Amy Myers Jaffe, the associate director of Rice University’s energy program in Houston. “It’s a crisis of leadership, a crisis of strategy and a crisis of what the future looks like for the supermajors,” a term often applied to the biggest oil companies. “They are like a deer caught in headlights. They know they have to move, but they can’t decide where to go.”
Asia Seen Digging Into Middle East
Lionel Laurent, 08.19.08, 12:50 PM ET
LONDON - The Asian energy invasion of the Middle East looked set to deepen on Tuesday, with China's state-owned oil company reportedly close to an oil-service deal in Iraq--the first of its kind since the American invasion--while construction firms from Japan and Korea also hoped to get a slice of two big export refinery projects in Saudi Arabia.
China in particular has proven particularly eager to strike deals in the Middle East, at a time when it is looking to feed its booming domestic appetite for energy. Iraq could be its next destination, according to published reports, which said Oil Minister Hussain al-Shahristani as saying that he would fly to China at the end of August to discuss a $1.2 billion oil-service deal with China National Petroleum Co.
The deal would replace a production-sharing agreement signed under the former Iraqi leader Saddam Hussein and would be the first oil-service arrangement since the 2003 invasion. Shahristani was cited as saying that discussions with China have been taking place for a year.
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And there are rumors afoot that the Feds want to replace the familiar shield with a square to cut down on wastage of resources. If that is true, I believe they would pick a truely ugly design like this:
I would rather they choose a better, more colorful design. Here are two examples:
Defnitely easy to understand and a classier design than the hideous shield-in-a-square design that would be similar to the one the FHWA mandated for our US Highways’ signs, including Florida, which used to have a wonderful kaleidescopic array of such signs!
And with my design, something could be done about the two obnoxiusly out-of-place road numbers!
California’s I-238:
And of course, Pennsylvania’s notorious Bud Shuster Freeway!
I hope you like it -- enjoy!