Bulletin Of Atomic Scientists - Exxon Silently Admits Peak Oil Reality

[hatrack]

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"Also noteworthy is the manner in which the Outlook addresses so-called frontier resources, such as extra-heavy oil, "oil sands," and "oil shale." The report cites the existence of more than 4 trillion barrels of extra heavy oil and "oil sands"--producing potentially 800 billion barrels of oil, assuming a 20-25 percent extraction efficiency. The Outlook also cites an estimate of 3 trillion barrels of "oil shale." These numbers have figured prominently in advertisements that ExxonMobil and other petroleum companies have placed in newspapers and magazines, clearly in an attempt to reassure consumers (and perhaps stockholders) that there is no need to worry about resource constraints for many decades.

However, as with all advertisements, it's best to read the fine print. ExxonMobil's world oil production forecast shows no contribution from "oil shale" even by 2030. Only about 4 million barrels of oil per day from Canadian "oil sands" are projected by 2030, accounting for a mere 3.3 percent of the predicted total world demand of 120 million barrels per day. What explains this striking disconnection between the magnitude of the frontier resources and the minimal amount of projected oil production from them? Canadian "oil sands" are actually deposits of bitumen (tar), which are the result of conventional oil degradation by water and air. Tar sands are of a completely different character than conventional oil deposits; making tar sands usable is a capital-intensive venture that requires special procedures such as heating to separate the tar from the sand, mixing the tar with a diluting agent for pipeline transport, and constructing specially equipped refineries for processing. The most serious constraint, though, is natural gas supplies. Production of oil from tar sands requires between 400 and 1,000 cubic feet of natural gas per barrel of oil produced, depending on the extraction method used. Natural gas production, despite a near doubling of drilling activity, is flat or decreasing both in Canada and in the United States--which has prompted prices to triple over the past few years. Given these high gas prices, it almost makes more sense just to sell the natural gas directly rather than use it to produce oil from tar sands.

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With non-OPEC oil production reaching a plateau and frontier resources not viable, ExxonMobil proposes that increased demand be met in two ways. The first is greater fuel efficiency. (That alone should convey the seriousness of this report: When have you ever heard a petroleum company make a plea for vehicles that use less gas?) New cars in the United States are expected to go 38 miles on a gallon of gas in 2030, instead of the current value of 21 miles per gallon. This goal is actually quite modest, as new cars sold in Europe since 2003 already achieve 35 miles per gallon.

The other way ExxonMobil believes demand will be satisfied is from vastly and rapidly increased OPEC production: "After 2010, the call on OPEC increases quickly, requiring OPEC to add more than 1 MBD of capacity every year," notes the Outlook. "OPEC's resources are large enough to achieve this rate of expansion, and we expect that investments will be made in a timely manner." This assessment is somewhat ominous. OPEC has not expanded production capacity much at all recently. Moreover, such production increases are only possible from Iraq, Saudi Arabia, Kuwait, and the United Arab Emirates. For these countries, and indeed for most OPEC members, petroleum and petroleum products are their only significant export. As such, they have a vested interest in obtaining the best possible price for their non-renewable resources. OPEC nations would be quite unlikely to increase production as rapidly as needed unless compelled to do so. To put this shortfall in perspective, in 2003 Algeria produced 1.1 million barrels per day; a new Algeria would need to be brought on line in the Persian Gulf each and every year beyond 2010 just to keep up with the projected increase in demand. Consequently, once non-OPEC production reaches a peak, conventional world oil production could peak shortly thereafter, and prices (never explicitly mentioned in the Outlook) would rise in accordance with the laws of supply and demand."

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http://www.thebulletin.org/article.php?art_ofn=mj05cavallo

[rzemanfl]

1. Everyone who went to grade school in the 1950's and early 60's

saw the Bell Labs movie "Our Mr. Sun" and knew this was coming. We then promptly stuck our heads up our butts for forty plus years.

[oxbow]

2. I haven't seen any of these ads

then again, I never read the paper. If people don't want to read the fine print behind them though, then they can't blame anyone but themselves when prices continue going up. Hven't they learned by now to never trust ads?

[oscar111]

3. how will this affect Global Warming?

we need an Orbiting Sunshade for that.

a million miles sunward at the L5 point {you know what that is dont you? LOL} the shade will cool earth regardless of laggard nations slowing production or not.

in short, it is the only way sure to work. No cooperation needed. No slowdown of factories.

google for cbs news page on it.
Lawrence livermore labs looking at it IIRC.

[NNadir]

5. The depletion of oil is a good thing.

Fossil fuels are unacceptably dangerous, all of them.

The sooner humanity is forced into action, the sooner it will act.

Of course, most of this action will not take place in the United States, because Americans in the new theocracy seem to believe that energy comes from no where. The United States will deservedly become a third world back water.

In Asia and parts of Europe, action is being taken however.

[phantom power]

9. No worries, GE assures me that we have 250 years of coal left.

Of course, we may have to mine it out from under a glacier for the last 200. Nothing that we can't solve with a little "eco-magination"...

[NobleCynic]

4. No surprise

There is a reason that oil companies are issuing such large dividends currently. The amount of reinvestment being done by oil companies in exploration is shrinking every year. They know its ending, and they're getting their money out of oil gradually taking every dime they can and putting it elsewhere. From a business perspective it's brilliant, as they're doing it slowly enough not to generate a panic, but quickly enough to generate record profits and dividends.

From a societal perspective, it's foolish as the economic profit from oil is not being directed toward finding our next energy source. Wind and solar research is not well funded and not showing fast results, most likely we will end up with nuclear power as a primary source. Wind may also play a role, as its smaller marginal cost for installation (A billion a pop for reactors) and faster construction time (1-2 years vs. 2~10 years depending on reactor design) means that it will see use. Also, wind power can be leveraged as a political tool to bribe farmers (land rents and the like) in the midwest stop pushing ethanol, which is completely impractical. If these profits that the oil companies were taking were put towards energy research (nuclear, wind, solar, it doesn't matter),I would have no problem with this, but it doesn't seem that way.

[megatherium]

6. I have a suspicion that renewables will suddenly start looking pretty good

about the time the energy companies realized that they have reached the point of diminishing returns for petroleum and natural gas. I think they've been quietly investing in the technology to make sure they're ready. For example, the leading supplier of photovoltaic systems is BP (if memory serves). They have an attractive web page explaining why PV is such a good idea for all of you homeowners, especially if you live in California and get a good tax break. Also, GE is a a leading supplier of wind turbines; as you indicate, wind power is essentially already there in terms of price. Wind power is not suitable for baseline capacity but it certainly will help with peak power. Eventually it will be used to produce hydrogen, or some other energy storage system will be used.

[Coastie for Truth]

7. Shell also implicitly admitted oil has peaked

Part of the round of announcements and regulatory filings when their outgoing CEO, Sir Philip Wall, resigned - in the midst of a scandal about deliberately overstating reserves.

[Coastie for Truth]

8. Another equally bad alternative to oil sands - Fischer Tropsch gasoline

Fischer Tropsch gasoline is produced from coal. Germany used it in WW2.

Problems:

1. Today most coal is obtained by "strip mining" - an absolute environmental disaster.

2. If the process equipment is not in perfect shape - an environmental danger as bad as "coke ovens" - for coke oven hazards to see what coke ovens did in Donora PA.