How Technology Lets Us Push Back The Day We Run Out Of Oil
from the peak-what? dept
In recent years, a confluence of factors including environmental concerns, geopolitical issues and worries about the scarcity of oil have led to record investments in green technologies as well as ethanol, whose green credentials are up for some debate. But all the same factors have also prompted fresh investment into the traditional energy industry as well. Paul Kedrosky points to a great article in the New York Times exploring the way the oil industry has greatly increased production levels at aging oil fields. The results are rather dramatic. Using new imaging technology and other engineering techniques, fields that had been good for just 10,000 barrels per day a few decades ago are now yielding over 80,000. And it's not just a matter of sucking oil out of the ground at a faster rate; companies actually have access to more total oil than they thought they could get out of these fields. It's important to keep these things in mind whenever people talk about things like Peak Oil or other neo-Malthusian theories of resource depletion. Typically, they all fall into a common trap. They look at the supply of a certain resource (Malthus, of course, originally talked about food production), and then calculate how much longer we'll have it based on an estimate of future demand. But the consistent mistake is in holding supply constant. As demand (and price) grow, technology often allows for the creation of more supply, even for a "non-renewable" resource like oil.
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Maybe big oil needs to artifically reduce the supply to keep innovators on the track to producing new technologies. And if they are smart they can avoid cutting thier own throats.
But then again in the days of inflexible business models, they will probably just sue for stifeling thier business.
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Artificial Scarcity Won't Work
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Supply?
It seems pretty obvious that this is a good thing for big oil and consumers alike. But to say that it is going to make a notable increase in the total amount of oil on the market, near or long term, is naive. It's not some "common trap," obviously there is fluctuation of the amount of oil available at any time, but most of these fluctuations are artificial restrictions imposed by the oil producers. Don't get me wrong -- getting the most out of every oil field is a good thing. However, the almost glaring reason that this is a piece of news at the moment is because the rate of new oil discoveries is quite low. It seems you may have caught onto this with the last sentence but left out the underlying logic behind it. We must get the most out of every known oilfield because the situation is so critical. Estimating when "peak oil" will be reached (or was reached) is anyone's guess. Judging from what is known about the rate of discovery, it may not be off base to say we may be close. Technology may end up buying us a few days in the end, but we're still just as reliant upon oil with or without new tools and techniques for getting dinosaur sauce out of the ground.
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Technology stretching
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doesn't really matter
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oil reserves
Thus the 'proven ressources' in Iraq of several billion barrels cannot be enhanced to 8 times that amount, as the original figure is fictisious.
We are still consuming about 83 mill barrels a day, and production barely can keep up. Nothing is produced to reserves, as was customary a few years ago, as there is no room for surplus production.
The question is not only when peak oil occurs/occurred, but also when demand for oil exceeds production for oil, even if production of oil is still growing, but at a lower rate than the demand is. This will probably happen in 2009 at the latest, and perhaps a year later with this new technique.
When demand exceeds production, there will be some debate as to who should get oil, and who shouldn't, or if we all should use a little less.
I wonder if the US Army with its precense in Iraq, Afghanistan and elsewhere will be the first in line to voluntarily give up 10% of its oil consumption, or if I as a private person will have to give up 20% so that the US army can keep their 100%, or perhaps 120% if activities spread?
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Nothing new
CO2 injection and water injection are 1970s technology. http://www.fossil.energy.gov/news/techlines/2005/tl_kansas_co2.html
"DOE has been funding research into CO2 EOR since the late 1970s. The big commercial expansion of CO2 flooding in U.S. oilfields that began in the 1980s"
This is old news. CO2 isn't to flush out the oil it's to lower the viscosity of heavy oil. These old oil wells are already accounted for as estimated heavy oil reserves.
Saudi Arabia failed to fill it's contract with Japan last year.
http://www.iht.com/articles/2006/10/23/business/oilcut.php
"The state oil company, Saudi Aramco, notified Japanese refiners, including Cosmo Oil and Idemitsu Kosan, on Friday that it would cut supplies by as much 8 percent from contracted volumes, according to refinery executives who got notices from the company and asked not to be identified because of confidentiality agreements. Aramco had said before the OPEC meeting last week that it would supply all its contracted volumes in November."
They're investing in bring fields on tap sooner, and refining heavier oils to cover demand. These are known reserves, not increases due to technology advances or new discoveries.
If you follow the analysis, it looks like Saudi plans to gain enough slack to offset disruption of Iranian supplies (page 2):
http://www.csis.org/media/csis/events/061109_omsg_presentation1.pdf
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Good job your outboards run on petrol then
Seriously I think the rest of the world has caught onto the idea that the problem isn't really oil running out (i'd always thought this was just an ingenious way of pushing up prices anyway)
The problem is the emissions when you burn it
But since the US produces over 30% of the world man-made carbon emmissions maybe that sort of commie thinking hasn't trickled down yet
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Don't think for a second anyone in OPEC is even remotely interested in 'green' energy, lol.
I don't think running out anytime soon is an issue - they said that over and over through the 70's and 80's - and there are plenty of oil fields still untapped, not to mention the countless barrels caught in shale in the US, that we are just now developing mining technology to get to.
And I don't think it's all 'warming' up the atmosphere. If all this 'global warming' is man made - why do trees, layers or soil, rocks - all show quite clear signs of warming and cooling trends over the centuries.
And don't forget - in the 70's they were going on and on about how 'Global Cooling' was going to turn the world into a frozen plain - anyone recall that?
Just from one panic to the next - gives politicians a reason to exist huh? That seems to be the clearest reason for all of the above - politicians. (Not the left, not the right - all of the slimy bastards).
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Oil Is a Funny Thing
One thing the peak oilers hit on is low discovery of new oil, but of course there hasn't been much of a reason until very recently to go out and spend lots of money on discovering new oil or recovering additional oil from existing fields, given the low prices of oil that started to prevail early 1980s.
Just look at the inflation-adjusted prices of oil starting in 1980 here: http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp
If it hadn't been for the somewhat surprising economic growth in China and political instability in a large number of oil producing countries, oil prices would probably still be around the $20-$25 inflation adjusted mark.
The high oil prices we're seeing now will both a) encourage further exploration and reclamation efforts and b) further drive efforts to find cheaper oil substitutes.
But I suspect Pete is close to the mark -- new oil discoveries/reclamation efforts will drive down the price of oil again in a few years and the issue will be the effects of the massive CO2 byproduct from all of this cheap oil.
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The more we talk about alt energy sources the faster indonesia plants palm and destroys the rainforest sparking the burning peat fields. Oy it makes my head hurt.
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Rate of Change?
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impressive
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future demand
The same thing has been said about Saskatchewan (in Canada).
The biggest issue at hand is the cost associated with getting that oil.
Given these estimate and all the new finds off shore I doubt we will see an end to the oil industry in our life time. What industry that makes a min of 20% rate of return every year no matter the current economic situations has gone out of business?
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adaptation to demand
http://www.uic.com.au/nip75.htm
While it is not about oil the economic principles that apply to commodity resources are relevant and worth studying.
The interesting point is to study aluminium production. Several times throughout the 20th century, the naysayers were telling us that aluminium was going to run out (it's one of the most abundant elements on the planet after oxygen and silicon), that it would become too expensive to extract and refine the metal.
But history proved them wrong over and over. As markets expand and demand grows the technology improves in measure. Rising prices drive investment. The algorithm of "human industry" is basically a "lazy algorithm", we do just as much we need to in order to get what we need and no more.
There's probably enough oil to keep us happy for another two centuries, even if you account for increased demand.
But as Enrico says, the real issue is that it's an environmentally unsustainable model. Besides, using oil as a fuel is very wasteful now. What we need to do is conserve oil for those non-fuel uses, plastics, drugs and so on that cannot be replaced easily by other sources.
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Yeah - I agree there too, but the problem - like legalizing pot, is that you step on too many corporate toes in the process..
Can't have that now, can we?
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Re:
Funny you should say that cos on a semi-related vein, if you get really stuck without oil you can make plastics from pot (well hemp anyway)
Henry Ford experimented with it a fair bit but I remember reading somewhere that it all got a bit messy with DuPont (who had discovered plastic from oil) lobbying for the banning of all hemp, on the grounds that some of it could get you high, so Henry dropped it....
some things never change.... ;0)
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http://www.harpers.org/LastStopGas.html
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More info
http://www.ethanol-news.de
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