Sunday, July 15, 2007

Peak Oil for Dummies

Over at Kiwiblog, one of the themes of resident freak commenter, Roger Gnome (a Political Science honours student at Otago who normally runs the theory that New Zealand would be much better off if all employers were exterminated, and everybody was unionised), is peak oil. Along with the apparently looming global warming crisis, the world as we know it is reaching the end of “cheap oil”. According to the theory, new oil discoveries are in decline; production from currently exploited oil fields is at its highest point, and as demand for oil increases as the global economy grows, the price of oil will massively skyrocket.

There are two general theories around peak oil: the first that an imminent crisis is upon us, that by 2010 oil demand will outstrip production and prices will increase to a point that will cause global recession. The second, less gloomy theory, is that oil production will plateau, prices will increase gradually over time, and oil and energy uses will change to divert the gloomy outlook that the peak oil theorists advance.


The major problem with the peak oil theory is that the economic assumptions that they have been stunning in their flaws. In 1974, Marion Hubbert developed the “Hubbert Peak Theory", and applied it to a range of mineral resources: natural gas, coal, and metals. His predictions have had a mixed reception: he suggested coal reserves would last another couple of centuries. His natural gas claims relied on what was initially fairly scant knowledge of natural gas reserves.


Initially the alarmists claimed oil production would peak in 1989. Hubbert calculated that oil production would reach its peak in 1995. Later, he revised his predictions to 2005. The current consensus from peak oil alarmists is that 2010 is the year when oil prices will rise so dramatically as to cause global crisis.


The reasons for the changing predictions are much more broad than the environmentalists who advocate the theory want you to know. To make accurate forecasts about oil production on the one hand, and oil consumption on the other, you need to have a clear picture of the variables. The variables include the use of technology (which determines how easily you can drill the oil out of the ground), the accuracy of estimates of oil reserves, the alternative uses of oil and its substitutes in energy production, and geopolitical factors, in both OPEC and non-OPEC countries, which have major effects on the production of oil.


Suffice to say, for the last twenty years, peak oil enthusiasts have systematically taken a pessimistic view of oil production in their estimates, for both OPEC and non-OPEC countries. While proven middle eastern reserves are generally overestimated to gain better production rights within OPEC, knowledge of existing reserves in non-OPEC countries is fairly well documented. Yet peak oil proponents using the hubbert forecasting theory have monumentally failed to accurately estimate production and reserve levels even where there is good knowledge about oil reserve levels.

The reality is that oil production is determined by demand for oil, and geopolitical factors, rather than the status of reserves. Proven oil reserves are not running out anytime soon. Production technology is improving, making it less expensive to exploit existing proven reserves. Relatively high levels of oil now have nothing to do with oil supply, but everything to do with geopolitical tensions, and OPEC’s ability to exploit those tensions to maximise their oil returns
And, as we have seen in New Zealand’s Great South Basin this week, as oil prices increase, it becomes more economically viable to exploit other oil resources at current prices. This is consistent with a global trend of additional oil supplies coming onstream, outstripping demand for oil.

So here we have a pattern over the last twenty years: peak oil enthusiasts denying the data, making henny penny predictions about oil production which never eventuate, and continuing to extend the crisis date outwards to suit their analysis. Recent peak oil alarmists have claimed variously that “peak oil” will result in energy wars, recession, starvation, and worldwide devastation.

The predictions just don’t stack up with the facts. Existing oil reserves are in a very slow decline. That goes without saying. But existing oil reserves do not equate to total reserves, particularly as prices encourage new reserves to come onstream.

There is a common theme among those who advance peak oil theory. They are almost invariably from the environmental lobby. They are not in the business of making accurate economic forecasts. If they were, their predictions of peak oil prices would have led them to invest in oil companies, and made them very wealthy if their theory panned out.

The environmentalists' solutions for this supposed peak oil cataclysm aren't based in reality, either. As with the Kyoto Protocol, the rising demand for oil isn't coming from the Western society that the green lobbies want to punish in their great leap backwards, but from China and India. The US, and the OECD generally, is consistently investing in less oil-dependent technologies anyway. Meanwhile, as the ever-choking smog clouds rise over Mumbai and Shanghai, their increasing consumption of oil been an even greater contributor to rising prices than instability in Iraq and Iran.

There is no need for panic. The environmentalists’ will to transform people’s views through scare-mongering has little to do with oil production and supply, and everything to do with their desire to punish oil companies and reducing human dependency on oil. It’s an environmental argument, and trying to produce fringe pseudo-economic petrification theories as an excuse is as dishonest as their data.

50 comments:

Roger Nome said...

Oh, IP, good to see that you continue to live up to your name.

"The major problem with the peak oil theory is that the economic assumptions that they have been stunning in their flaws. In 1974, Marion Hubbert developed the “Hubbert Peak Theory"

Actually there have been many different studies carried out using different methodologies that predict a peak in oil production within the next 10-12 years.

i.e.

"The domination of giant fields in global oil production confirms a concept where they govern future production. A model, based on past annual production and Ultiamate Recoverable Reserves , has been developed to forecast future production from giant fields. The results, in combination with forecasts on new field developments, heavy oil and oil sand, are used to predict future oil production.

In all scenarios, peak oil occurs at about the same time as the giant fields peak. The worst-case scenario sees a peak in 2008 and the best-case scenario, following a 1.4 % demand growth, peaks in 2018."

http://publications.uu.se/abstract.xsql?dbid=7625

Or alternatively there is Chris Skrebowski, the editor of the UK Petroleum Review

His methodology uses:

• Analysis of the Megaprojects database (the database he has developed detailing the new capacity that will add new production flows in each year up to 2012. It is published at intervals in Petroleum Review).
• Analysis of production data (allowing him to identify those countries where total production is currently declining).
• A combined analysis of production trends and Megaprojects data (allowing him to identify those countries that will start to experience depletion in the period to 2012).

Skrebowski's analysis has provided one of the most important independent methodologies supporting the 'imminent peak oil' hypothesis proposed by Hubbert inspired modelers such as Colin Campbell, Jean Lahererre, Ken Deffeyes, Stuart Staniford and GraphOilogy. His most recent studies conclude that, should no major disruptions take place, global peak oil should be delayed until at least 2010, ?but shortly thereafter production is more likely to decrease than increase.?

http://www.energybulletin.net/17422

Roger Nome said...

"While proven middle eastern reserves are generally overestimated to gain better production rights within OPEC, knowledge of existing reserves in non-OPEC countries is fairly well documented."

The OPEC countries decided in 1985 to link their production quotas to their reserves. What then seemed wise provoked important increases of the estimates; in order to increase their production rights. This also permits the ability to obtain bigger loans at lesser interest rates. Consequently the “proven reserves” of many OPEC countries sky-rocketed in the years 1985-1989 - this is clear evidence of manipulation. So people who trusts these figures are just naive.

In fact, Dr. Ali Samsam Bakhtiari, a former senior executive of the National Iranian Oil Company, has stated unequivocally that OPEC's oil reserves (notably Iran's) are grossly overstated

http://en.wikipedia.org/wiki/Oil_reserves#Middle_Eastern_reserves

Adolf Fiinkensein said...

Roger nome seems to have much to say. So he's a student, you say? You mean not yet a graduate even? Still wet behind the ears? I thought so. What credibilty. What gravitas. And such a serious student. Would that he was studying economics or business or geology or how to copulate with spiders or something useful. But no, he's just another wasted corpse, chewing up my money studying POLITICAL SCIENCE for fuck's sake!

There's nothing scientific about political 'science.' Just a load of leftie wankers indulging in mutual self congratulation that they have found a way for being paid to be completely unproductive.

Do they realise that when the Caliphate gets here, they'll be the first to be shot? After the homosexuals, that is.

Dead shits, the lot of them.

peterquixote said...

it donts matter what you say insolent one, the worls has accepted co2 climate change, you bets to jsu lie down and die,
peterquixote

Roger Nome said...

“And, as we have seen in New Zealand’s Great South Basin this week, as oil prices increase, it becomes more economically viable to exploit other oil resources at current prices. This is consistent with a global trend of additional oil supplies coming onstream, outstripping demand for oil.”

You’re assuming that the Cambridge Energy Research institute’s findings are correct. Unfortunately they refuse to explain their methodology, so their research can’t be scrutinised.

Conversely, research like Fredrik Robelius’ PHD Thesis is methodologically transparent, and so it can be assessed, and it has been assessed by the best in the business.

“The university had appointed Dr. Robert Hirsch to be the official opponent in the oral defence of the thesis”
In the final remarks Dr Hirsch of the US departmet of energy (Author of the famous “Hirsh Report”) concluded that the peak oil debate now reached a new level. The fact that the forecast openly can be studied in detail and that limits are given it’s now up to CERA and other to explain in details why they end up in other forecasts. If not, the forecast from Uppsala Hydrocarbon Depletion Study Group is the on that the world should use for future planning.
http://www.peakoil.net/GiantOilFields.html

Roger Nome said...

"The reality is that oil production is determined by demand for oil, and geopolitical factors, rather than the status of reserves."

Oh this one is just priceless IP - Oil is a non-renewable resource fella, once you burn it, it's gone. People can demand it all they want, but you can't produce what isn't there, silly boy :-D

Roger Nome said...

“Proven oil reserves are not running out anytime soon”

This just keeps on getting better and better :-D Who has said anything about “proven oil reserves” running out any time in the next 100 years? Go and find one peak oil theorist who says proven reserves are going to be gone soon, you bloody munter!

Roger Nome said...

“Recent peak oil alarmists have claimed variously that “peak oil” will result in energy wars, recession, starvation, and worldwide devastation.”

Some have said what you claim. Others say that it will result in recession and then we’ll switch to a less energy-intensive society. Actually it’s really difficult to predict what will happen, but if the effects of the 1970s oil shocks are anything to go by, there will be tears before bedtime.

Roger Nome said...

“The predictions just don’t stack up with the facts. Existing oil reserves are in a very slow decline. That goes without saying. But existing oil reserves do not equate to total reserves, particularly as prices encourage new reserves to come onstream.”

True, technology is the unknown factor. However, historical analysis shows that once a country passes approximately 50% of Ultimate Recoverable Reserves production begins to decline. Why, well firstly, better technology has tended to pump the oil out faster but hasn’t increased URR very much. Secondly, the “low hanging fruit” are picked first. That is, the giant fields are usually amongst the first fields to be produced, and they will hold most o the oil in any given region. So once they start to decline the region begins to decline. This has happened consistently in ever single country where oil production has already peaked. Read Fredrik Robelius’ PHD Thesis for proof of this. It can be found here

http://www.peakoil.net/GiantOilFields.html

Roger Nome said...

"There is a common theme among those who advance peak oil theory. They are almost invariably from the environmental lobby."

Oh what a load of nonsense IP. Colin Campbell is a top oil geologist with decades of experience, Matt Simmons is an energy investment broker, Kenneth Deffeys is another top Geologist, Dr. Ali Samsam Bakhtiari is a former senior executive of the National Iranian Oil Company, Chris Skrebowski, is the editor of the UK Petroleum Review, a commercial petrolium journal, and it just goes on and on ....

Roger Nome said...

Oh and my apologies IP, I almost forgot to hand your arse back so here it is .... B

Helmet said...

Dodgy Roger. Hate to interrupt, you seem to be having such fun. But I like this quote from your blog.
"up to 54 have past their peak of production and are now in decline"

Quite the academic.

You will have a hard time proving that peak oil scientists are full of crap simply by quoting peak oil scientists. Your attempt to rebut is flawed because of this. You cannot convince anyone further by quoting fellow "believers".
The peak oil principle appeals in theory on it's simplest level, because the resource is non renewable and therefore must eventually run out. But efforts to develop the theory any further than this have been speculative and ultimately incorrect. That suggests that the theorists are full of shit. You are well on your way yourself. Peak Oil is more of a strange apocalyptic religion than a science, and a strange one for you to buy into.

Roger Nome said...

Shorter helmet:

You will have a hard time proving that peak oil scientists are full of crap simply by quoting peak oil scientists

You can't trust the adherents of a theory because they believe in their theory ... nice logic buddy.

Oh and by the way ever reputable oil industry commentator believes that peak oil is a reality. They just differ on when it is due to occur, but most estimates range from 2010-2035.

Don't believe me? Ok find one serious and respected commentator that dismisses peak oil outright.

Insolent Prick said...

PhillipjohnC/Roger Gnome,

I'm not sure why you dispute that Hubbert was the originator of peak oil theory, since you then quote Hubbert as being the inspiring force behind the models of five other peak oilers.

Colin Campbell has consistently revised his predictions of the peak oil upwards, as the dates of his predictions passes. He has claimed that peak oil would be upon us in 1995; when that passed he moved his prediction to 2000. When that passed, he moved his prediction to 2005. Then to 2007. Now it is 2010. I'm prepared to bet you your distinguished scholarship for 2007, Phillipjohn, that before the end of 2010, Colin Campbell will revise his peak oil impact moment to 2015.

I've already pointed to OPEC reserves being inaccurate. Non-OPEC oil production--the kind that Peak Oilists consistently underestimate, has been increasing rapidly. Canada alone will soon become one of the world's largest producer of oil.

Recent price changes are not reflected by present supplies, Phillipjohn. You've admitted that proven reserves are not running out anytime soon. What influences prices are the production restrictions that OPEC puts on themselves to bolster the short-term price, and politics in the Middle East.

None of the historical peak oil predictions have come true, PJ. You are asking the world to dramatically change its lifestyle based on false analysis and wrong data. Don't expect the rest of us to be sucked in.

Insolent Prick said...

No, phillipjohn/roger, you're again being dismissive with the facts.

Peak oilists believe that oil production will rapidly decline by 2010 (having revised their predictions multiple times), while oil demand will increase staggeringly, to the point that the price of oil increases so staggeringly as to create cataclysmic economic consequences.

Nobody is debating that oil will eventually run out. The issue is whether it will be a sudden crisis event, or a long-term plateau of production allowing an easing of demand by pursuit of alternate energy sources and efficiency gains.

You cannot be a peak oilist and claim that we must make dramatic changes immediately on the basis of predictions that oil production may peak in thirty years' time.

Roger Nome said...

"I'm not sure why you dispute that Hubbert was the originator of peak oil theory"

I never did dispute that though.

"Colin Campbell has consistently revised his predictions of the peak oil upwards, as the dates of his predictions passes."

Colin Campbell has been consistently wrong, yes, but fortunately we have more than on expert in the world to provide us with estimates of when peak oil will be. The US department of energy's Dr Robert Hirsh was commisioned to carry out an assesment of when peak oil might be. He colated the various predictions and found that all but 3 of the serious studies predicted a peak between 2006-2030.

The US government accountability office issued a simialar report and found that ... Most studies estimate that oil production will peak sometime between now and 2040, although many of these projections cover a wide range of time, including two studies for which the range extends into the next century.

Roger Nome said...

"Non-OPEC oil production--the kind that Peak Oilists consistently underestimate, has been increasing rapidly."

Not really. Anyway, even the ultra-optimistic International energy agency says that Non-Opec production of conventional oil-excluding heavy oil and bitumens-will reach a ceiling soon after 2010.

more recently the IEA has said that "The gap between supply and demand would require further Opec production increases." non-Opec countries simply can't keep up with demand, we are at the mercy of the despots.

http://www.ft.com/cms/s/46120380-3115-11dc-891f-0000779fd2ac.html

Insolent Prick said...

And there lies your problem, Phillipjohn. The only sensible data you can point to has a 30-year range of when oil production will peak. All these estimates make assumptions that no new discoveries will be made within that time, that technology will have no impact on oil exploration or consumption through alternate uses, and that geopolitical issues underpinning OPEC will remain constant.

A thirty-year outlook based on those assumptions is absurd.

The crux of your theory--and that of Peak Oilists--is not simply that oil will run out at some point in the future. Your theory assumes that oil will run out very soon, and that a global calamity will result. That conclusion is overwhelmingly not sustained by the data.

A thirty-year timeframe for coping with a need to make some minor changes to present oil consumption is not a time to panic.

Roger Nome said...

"Canada alone will soon become one of the world's largest producer of oil."

Can you please show us a reputable source that claims this?

"You've admitted that proven reserves are not running out anytime soon"

"None of the historical peak oil predictions have come true"

So reject all the studies that are being carried out now? Sounds like a foolish recipy for disaster IP.

Yes but production will likely start declining soon, that's the point.

"What influences prices are the production restrictions that OPEC puts on themselves to bolster the short-term price, and politics in the Middle East."

We agree that OPEC reserves are an unknown quantity. So what makes you so sure that they can just keep on merrily increasing production? As for politcs in the middle East, well they definately have some effect, though you will note that after the 1991 gulf war prices were extremely low. That is there was a lot of spare capacity in the market. That spare capacity just doesn't exist any more, that's despite high prices for the last 4 years.

Roger Nome said...

"But efforts to develop the theory any further than this have been speculative and ultimately incorrect. That suggests that the theorists are full of shit."

well you're asserting that all the serious oil industry commentators are full of shit. Because of this I suggest that you are.

"You are asking the world to dramatically change its lifestyle"

I don't see rebuilding our rail network, investing heavily in public transport and taxing vehicles for their petrol mileage as being very drastic. In fact given the circumstances they are very mild changes.

Insolent Prick said...

The tar sands of Alberta have been known for some time to have the second largest proven reserves in the world. See http://en.wikipedia.org/wiki/Athabasca_Oil_Sands#Estimated_oil_reserves

You keep saying, phillip john, that production will "likely" start declining soon. This is exactly what the Peak Oilists have been claiming for twenty years. None of their predictions have ever been accurate. The same people making the claims before are making the claims now. The only thing that ever changes is the date of the impact of peak oil.

OPEC will not necessarily increase production, but you cannot predict what kind of geopolitical, economic, technological or discovery-related incidents will occur in the next thirty years. You also can't assume that OPEC will exist as it is now, or have the same impact in thirty years as it has now.

Certainly, what can be done reasonably accurately is to assess likely demand, exploit oil production as much as possible while it is here, and explore other alternative energy resources. That's exactly what the world is doing now. Far more productive than to go into a flying panic about the sky falling in tomorrow when there's no evidence that's happening.

Roger Nome said...

"The only sensible data you can point to has a 30-year range of when oil production will peak. All these estimates make assumptions that no new discoveries will be made within that time"

No, infact none of them do that.

"A thirty-year outlook based on those assumptions is absurd."

No, what's absurd is that you fail to comprehend the problem. There rock solid evidence to suggest that oil production will peak in the next 30 years, and very possibly the next 10 years. Go and do some bloody reading for fucks sake. Here's some US government sources for you, because I know how much you trust that particular institution.

http://en.wikipedia.org/wiki/Hirsch_report

www.gao.gov/new.items/d07283.pdf

"The crux of your theory--and that of Peak Oilists--is not simply that oil will run out at some point in the future. Your theory assumes that oil will run out very soon"

This portrays perfectly your misunderstanding of the issue. None of the peakists believe that oil will run out soon, they believe that oil production will begin an inorexable decline some time soon.

And it's not my theory, it's the theory of virtually every serious oil industry commentator.

Insolent Prick said...

Phillip John,

You have claimed that peak oil will be reached in 2010, and that a worldwide recession will result in 2011. That is "very soon".

The theories are mixed. One side says that oil production will drop dramatically in a couple of years' time. This is the same group that has been making the same prediction for the last twenty years, and with time has been proven wrong on each occasion.

The second side of the argument says that oil production will reach a peak at some point in about thirty to forty years' time, and will plateau for a good length of time after that.

The Peak Oilists position assumes global catastrophe in a short period of time. The non-PO position is that with thirty or forty years to adjust to alternative energy uses, we're not exactly facing the horrid outcomes that you are calling.

Roger Nome said...

"Peak oilists believe that oil production will rapidly decline by 2010"

Once again your ignorance betrays you. Some peakists predict a 5% decline rate, and others predict a 1-2% decline rate while a few predict plateau lasting for a decide, followed by a sharp decline.

"The issue is whether it will be a sudden crisis event, or a long-term plateau of production allowing an easing of demand by pursuit of alternate energy sources and efficiency gains."

There will be nothing easy about a long plateau, that will severely restrict economic growth, particularly in the developing world which depends on industrial growth.


"The issue is whether it will be a sudden crisis event, or a long-term plateau of production allowing an easing of demand by pursuit of alternate energy sources and efficiency gains."

There will be nothing easy about a long platue, that will severely restrict economic growth, particularly in the developing world which depends on industry.

Insolent Prick said...

Wrong again, Phillip John.

You cannot say whether, in thirty years, a plateau cannot be accommodated with different technology, different geopolitical approaches, different efficiency levels, different exploration, extraction and mining techniques, and potentially a very different economic distribution. You are making assumptions that there will be a catastrophe, with nothing more than a hunch that we will know nothing more about alternative energy uses in 30 years than we know now.

The Peak Oilists have not been accurate in the last twenty years about oil production with five-year outlooks. What makes you think they can be relied upon to predict energy consumption in thirty years' time?

Roger Nome said...

"The tar sands of Alberta have been known for some time to have the second largest proven reserves in the world"

oh, the oil sands. Sorry, just a few problems there ..

" only 20% of the sand is shallow enough to enable current mining to be considered economic, while the rest of the oil will be recovered by more conventional petroleum extraction techniques. Thus of the projects for oil recovery 40 deal with this in-situ recovery (because it removes the oil from the sand in place). The sand can contain up to 20% of bitumen, with a barrel of oil requiring about 1.16 barrels of bitumen. (The bitumen is sufficiently robust that the streets in Edmonton were been paved with it in 1915, and having lasted 50 years). After the sand is mined, then the bitumen can be removed by being mixed with hot water and air which creates a froth.

Because the bitumen is very thick and does not flow very easily towards the well it has to be both softened and made to flow more easily. The simplest way to achieve this is to heat the bitumen. And the best candidate to do the heating is steam.

The relatively new and more promising technology is called Steam Assisted Gravity Drainage, or SAGD. This requires that two horizontal wells are driven, one above the other. When steam is pumped into the upper well it heats the surrounding sand, and the bitumen softens and drains into the lower well, so that it can be recovered. At present the technique is simple but could be improved. But it is this process, increasingly planned for the future, that uses the greater amounts of water, and the natural gas that is required to convert it to steam.

According to the NEB's [National Energy Board of Canada] 2006 oil sands Energy Market Assessment, the amount of gas used in oil sands production will be 2.1 billion cubic feet a day in 2015 from about 700 million cubic feet last year. However. The profile for Canadian natural gas production appears to have flattened and is expected to remain around 476.0 million m3/d (16.80 Bcf/d) through 2006. By 2006, natural gas demand is expected to grow in Canada and the U.S. to approximately 1 980.7 million m3/d (69.92 Bcf/d) from approximately 1 950.7 million m3/d (68.86 Bcf/d) in 2004, an increase of 1.5 percent.

So it isn't cheep stuff to produce and it's going to get ever more expensive to produce.

It's also very slow to scale up.
In fact production is expected to be 3.5/mbd by 2015 and 4.0/mbd by 2020 (or about 5% of current world production).

http://www.theoildrum.com/story/2006/6/19/1571/97105

Roger Nome said...

"You keep saying, phillip john, that production will "likely" start declining soon. This is exactly what the Peak Oilists have been claiming for twenty years. None of their predictions have ever been accurate. The same people making the claims before are making the claims now. "

Actually, there are very few serious commentators that aren't predicting peak oil quite soon. Again, go and do some reading.

Roger Nome said...

IP a simple question. Have you read any of the peak oil studies byt hte US government? Actually, have you read any peak oil study at all?

Roger Nome said...

You cannot say whether, in thirty years, a plateau cannot be accommodated with different technology, different geopolitical approaches, different efficiency levels, different exploration, extraction and mining techniques ...

No, I go with what the experts say. And the vast majority of them are say, cut back your oil use now! Go and do some reading.

Roger Nome said...

oh, in case you need reminding here are those reports official reports again.

http://en.wikipedia.org/wiki/Hirsch_report

www.gao.gov/new.items/d07283.pdf

I'll come back tomorrow and hopefully you would have done some reading by then. Goodnight, and thank you for the open and robust discussion.

Helmet said...

Roger
"Don't believe me? Ok find one serious and respected commentator that dismisses peak oil outright"

If this is an attempt to establish some kind of point, it is totally redundant. I have not dismissed peak oil outright, and nor has IP as far as I can tell. I think you'll find that I agreed that at its most basic level, supply and demand means that with a non renewable resource you will experience an increase in price as the resource gets scarcer. So what.

You're saying that it will peak in 2010, permanently. You make this assertion based on a methodology which has been proven wrong, wrong and wrong. This means that you are coming from a position of *no* credibility.

I think you have been mislead. It is very easy for someone who only has a graduate qualification in political science to get confused by scientific information and economic theory. You are out of your depth and probably incapable of understanding complex geological information, and the many factors affecting petroleum economies.
The best thing you have in your arsenal is a weak methodology that has been consistently incorrect. All you have are predictions. You cannot prove them of course, and I cannot disprove them, (until 2010 when I will chuckle at this memory) but you have to accept that because the peak oil kids have been wrong over and over again, you have no credibility any more.

Roger Nome said...

"You're saying that it will peak in 2010, permanently. You make this assertion based on a methodology which has been proven wrong, wrong and wrong."

Helmet, you just have no idea of what you're talking about. Name one instance of when Chris Skrebowski's, or Fredrik Robelius’ methodology has been proven wrong? As I have already mentioned in this thread, their methodology is available for everyone to assess, and no one has faulted it yet (you probably don't know that they don't use Hubert Linearization). They both predict that oil production will peak within the next 10 years. Conversely, people who predict that peak oil will be about 2035 or later (i.e. Michael Lynch/CERA) are not making their methodology available for their counterparts to assess. Also, CERA is owned and operated by IHS energy, so they are severely compromised.

Also, people who use Hubert linearization have been wrong some of the time, but have been right many more times. For instance it has been bang on for the United States, Romania, Norway, and Iran

http://www.theoildrum.com/story/2005/9/29/3234/46878

The most famous example is Hubert’s prediction of a peak in US production 20 years before it happened (1970-71)

http://www.energybulletin.net/13575.html

Hubert originally predicted a world-wide peak for some time in the mid 1990s, and he quite possibly would have been correct if wasn't for the OPEC oil shocks of the 1970 and 1980s. Another reason that he and others have been off is due to the mis-reporting of reserves by OPEC countries. Essentially they only have the data from the mid 1980s to go on - past 1985 the data is unreliable. So they can only really make approximations based on ultimate recoverable reserve (URR) estimates carried out at this time. It should be noted however, that where reserve data is transparent (OPEC), linearization has nearly always been bang on. The exception of course is Russia, where the collapse of the soviet union has caused a kind of double hump to occur.

http://www.energytribune.com/live_images/russia_graph.gif

Anonymous said...

Actually they have been talking about peak oil for much longer than 20 years - more like 150.

Oil has been running out in 40 years for all that time.

What the peakies tend to forget is that it is not a one dimensional geological issue (and this is where the hubbertian analysis tends to fail) but a nexus of supply, demand, technology and economics. Change one and you change the day. For example, if efficiency outstrips demand growth, your peak gets pushed back.

Peakies also tend to have a very fixed view of the resource, whereas non peakies know that our knowledge is limited and that exploration and development technologies, and economics can significantly change our view of what is profitably there. Recent redeterminations, both down and up, of Maui are an example. There are plenty of others where fields particularly in the US have kept on giving long beyond original estimates.

kiwi in america said...

It is always interesting to get to the bottom of the ideology behind "peak oil" messiahs like Roger Nome and Philipjohn. This is because its not the peak oil theory per se that is the issue but the solutions the environmental true believers promulgate. PJ has revealed himself (at least on kiwiblog) as true lefty on a number of issues. So for starters let's hear their real solutions for solving peak oil.

As IP and others have said, no one disputes that oil will run out; where there is intense debate is when. It is significant that all previous doom and gloom predictions have been spectacularly wrong so it is natural for casual observers to be skeptical. There are any number of true believing scientists the messiah's will trot out and then it becomes my scientist is better than your scientist.

My 2c worth and it comes from the real world of modern oil/gas discovery is that there are vast undiscovered reserves and vast existing reserves that are unexploited (eg the 8 billion barrels lying under the Alaskan National Wildlife Reserve that Congress won't allow to be touched because a caribou might get offended by having to walk under a pipeline). In my business here in the US I was introduced to oil men who, thanks to modern 3D seismic testing capabilities, have discovered 5 large oil reservoirs in Oklahoma in a region condemned by oil companies and academics as solid granite rock. If their preliminary testing proves to be right, this single field will be the largest find of oil in the lower 48 States in 80 years. The guys on the board are involved with other oil plays in Utah and New York, each non-traditional oil regions and each find came as a consequence of the use of modern technology.

I am also involved with a Canadian gas company who use a newly patented chemical treatment to recover oil and gas from water contaminated wells. There is no other technology that can resuscitate a watered-out gas well and there are estimated 65,000 suspended gas wells globally that meet the geological criteria for this treatment and each gas well that is suspended has an average of $10million worth of gas left that can now be recovered - this is one new treatment method that could increase the recoverable gas reserves by trillions of cubic feet!

So this is in my rather minor sphere of influence - multiply such stories across the US and Canada and yes, eventually the oil will run out but I do not believe before technology reduces or eventually eliminates our depedence on fossil fuels. So peak oil guys lets have your socialist solutions to this 'crisis' so we can see your real agenda.

Insolent Prick said...

There is no shortage of oil. There are limits on "cheap oil", as the peakists correctly claim. But "cheap oil" is only a relative term.

While it may cost only $6 a barrel to extract and refine the oil under Saudi Arabia, it costs $40 per barrel to extract and refine the massive quantities of oil in Alberta and Oklahoma. That is not a crisis point, as there are vast reserves of oil that suddenly become economically viable to exploit when oil is priced at $70 a barrel.

It is true that we are almost certainly not ever again to be paying 80 cents a litre at the pump for petrol in New Zealand. But nor will we be paying the $5 a litre that Phillipjohn and other peakists claim.

Already there is a massive influx of money from India and China in particular, and in former Soviet states, to explore and refine oil that previously wasn't economically viable when the OPEC was extracting oil at $6 a barrel.

We've got at least thirty years of oil at $70 a barrel up our sleeve.

I agree, Phillip John, that your two favoured peak oilists have not yet been proven wrong in their predictions. That's because their predictions haven't yet been tested. They have set the deadlines for massive oil production reductions from 2010 onwards. They certainly haven't been proven correct.

What is also true is that all of the Peakists who have predicted an oil doomsday prior to this year--and they have been making predictions for forty years--have been proven monumentally wrong.

Kimble said...

Don't you just love sitting at the traffic lights and saying,

"The lights will go green NOW!, now.... nnnnn-now!... now, now, now, now, now! HA! I predicted it!!"

I am sure PJ does.

Kent Parker said...

Here's a good description of the alternate argument supported by IP that is contrary to that supplied by Roger Nome:

http://www.feasta.org/documents/energy/oil_peak_opinions.htm

Heine said...

They taught him this at Otago? Good god the standards down there are slipping. :>

peterquixote said...

it donts matter what you say insolent one, the world has accepted co2 climate change, you best to juat lie down.
peterquixote

Roger Nome said...

"They taught him this at Otago?"

Um, no - it's just knowledge I've accrued over several years of reading on the subject.

"Don't you just love sitting at the traffic lights and saying,

"The lights will go green NOW!, now.... nnnnn-now!... now, now, now, now, now! HA! I predicted it!!"

and that was supposed to add to the discussion how?

"There is no shortage of oil. There are limits on "cheap oil", as the peakists correctly claim. But "cheap oil" is only a relative term."

If oil production starts declining at 4%-8% as we've seen in many of the giant fields - i.e. Cantarell, Yibal North sea etc it won't just be the end of cheap oil, but the end of non-super expensive oil. However a depletion rate of 2% per annum (as has been experienced in the US for the last 40 years) is more likely - so it's hard to say how expensive this would make oil -certainly $100 a barrel plus though.

Kimble said...

blah blah blah blah, predicting oil prices in excess of $100 is a no-brainer. All you have to do is sit around and wait.

But when you want to sound extra super smart you say, it will be THIS amount THEN. Of course, if you are constantly having to adjust the prediction you are doing no better than the retard sitting at the lights and predicting inevitable change to green.

For the record, we will NEVER tap the earth dry of oil.

Roger Nome said...

Kimble, do you ever make a substantive contribution to any discussion or just sit there and make stupid "observations". From what I've seen the later tends to be true.

I'm usually reticent to crystal-ball gaze, but it could be fun anyway eh?

OK, how's this for you? Global crude oil production will peak before 2015 is over (for convenience's let’s say this means that production will decline for 3 years running before 2016). From now until that point average oil price will continue a general upward trend (during each two year period nominal price per barrel will increase). In one of the 5 years following peak oil New Zealand will experience recession.

What are your calls Kimble, IP?

Kimble said...

My call is that you wont put your money where your mouth is and invest based on your very specific predictions. If you are right, you get lots of money and can ride out the recession (which, if National is in government, you will no doubt blame on them).

Other people are risking their treasure on their forecasts which probably differ from your hysterical screechings, so why dont you do the same?

Borrow money from your parents to invest. Are you THAT confident in your forecasts? If you arent confident enough in your forecasts to risk any of YOUR money, why should anyone else change their lives (and take on risk) based upon them?

Seriously, if you arent willing to put something on the line, ask yourself why not. And be honest.

Go on, get in the game. Or is it time to admit that ain't no playa.

Anonymous said...

I am hoping and praying the enviros get this one right. Running out of oil is the only thing that is going to dent Al Qaeda, but you are probably right and we have another 30 - 40 of this.

Guber said...

Will we finally know if demand has outstripped supply when (if) prices keep rising?

Is it true that nobody knows for sure how much opec produces????
jh

Roger Nome said...

"Will we finally know if demand has outstripped supply when (if) prices keep rising?"

Yes, but the right will ignore it. The problem is that peak oil will demand collective action, and further government intervention in the economy. Also the problem of peak oil underlines a fundamental flaw in their ideology. That is, free-market ideology is predicated on perpetual economic growth, yet perpetual economic growth of 3-5% is only possible as long as energy use also continues to increase. So when the production of our primary energy sources (oil, coal, natural gas) peaks and begins to decline the free-market paradigm will be redundant.

Seamonkey Madness said...

Just as matter of interest, did you know that underneath central Paris there is a very large reserve of oil?

Pity about the city on top of it.

Wonder when the call will come to tap that?

=)

Anonymous said...

Gnome - you lost man, get over it. You're an idiot, and I feel sorry for the people you tutor and lead up the garden path in Otago.

Roger Nome said...

"Gnome - you lost man, get over it. You're an idiot"

Well that's done it form. I mean how can you argue with such an intelligent and well thought-out post?

No in fact, I have yet to face a serious challenge to my position in this thread. This is a shame because I really was hoping to learn something from this, but alas it's just been a case of me trying to explain a very serious issue to a bunch of screaming toddlers with their fingers in their ears. The above post is perhaps the prime example of this.

OK guys, listen said...

Peak oil is coming! 2010? 2035? who knows? The question is, do we just carry on burning the stuff, business-as-usual, until a crunch comes? How smart is that?

Or should we admit the inevitable - even if we can't be sure of the timescale - and start weaning ourselves off the stuff NOW?

A look at the countries of Continental Europe is instructive: Switzerland, Germany, Austria, France, Netherlands, Belgium, Italy, Spain and Scandinavia are all investing heavily in rail transport as the way of the future. As are Japan, and even China. This gives them a credible alternative to current patterns of over-dependence on motor-vehicles and short-haul flying. However Britain, the USA, and all other Westernized English-speaking countries including New Zealand are doing the exact opposite: Allowing their railways to atrophy at the whims of the so-called free-market, at the same time as committing huge sums to building more roads.

Why the disparity? What can the continentals see that the Anglo-Saxons can't? Are they actually on the same planet?

Consider now that oil has a great many uses other than just for transport-fuel. A great many manufactured goods use oil as a vital ingredient in some form. These uses are arguably far less easy to replace than oil-based transport. Should we not be carefully husbanding the oil we have left for those more critical needs, rather than mindlessly continuing to prop up "business-as-usual", because for the moment we can still get away with it?

Supposing for argument's sake that the peak-oil-in-2010 scenario was validated - i.e. proved incontrovertibly? Would the peak-oil nay-sayers and the she'll-be-righters suddenly change their tune? Or would it still be business-as-usual? What if it were "proved" for 2035? What then? "She'll-be-right" for another 25 years, then worry about it when it's almost on us? Most of us pay significant sums to insure and secure our homes and property. We do this without "proof" of when (or whether) the fire will come, the earthquake will strike, or the thieves will rob. Why is the societal response so different - at least in the English-speaking West? And before anyone bangs on about China and India, the per-capita consumption of those countries is a fraction of the West's. All they are doing is seeking to emulate the style of development which the West has paraded before them. Their governments are well aware of the looming disaster which is likely to unfold, and are probably desperate for some responsible developed-world role-models. Unfortunately they won't find any among the English-speaking nations.

70-odd years ago humanity realised it had been gifted with a seemingly endless reserve of a very valuable substance. Over the course of the following century, it appears we will have burned and squandered our way through it, like there's no tomorrow. Idiots.