ASPO Denver World Oil Conference Summary Report

[hatrack]

(Cross-posting from the Peak Oil Group - more traffic here).

Sorry it took me this long to get to it - enjoy!

ASPO USA DENVER WORLD OIL CONFERENCE
Summary Report
All presentation Powerpoints available at:
http://www.aspo-usa.org/proceedings /

Tom Petrie - Co-Founder, Petrie Parkman & Company –
http://www.petrieparkman.com/index.asp

• Petrie estimates global decline at 4-6% annually after peaking
• Non-OPEC will peak around 2010
• Global Peak will come sometime between 2010 and 2015 – however, he projects the decline process to have a “long tail” – that is, the right hand of the Hubbert curve will be somewhat fatter than an idealized Gaussian curve
• 75% of conventional production comes from fields which are at least 25 years old
• Petroleum Financial Corporation concedes global discovery peak came in 1964
• As LNG deployment picks up speed, Petrie assumes approx. 1.6 MBOE from the Atlantic Basin, slightly more from the Pacific Basin, but stresses LNG will not be a panacea
• Petrie himself spent the first 10 years of his career (1971-81) convinced that Hubbert was wrong

Chris Skrebowski – Editor, Petroleum Review
http://www.energyinst.org.uk/index.cfm?PageID=9

• Global production peak by early 2008
• Total, Exxon and Schlumberger estimates converge on annual decline rate of 5%
• Demand will not create supply – long-term time and capital demands of energy industry – i.e. 5-7 years to explore, discover and exploit resources – badly mismatched with an extremely short-term financial market focus
• The UK now hopes for decline from their North Sea fields of “only” 8% annually
• In the first half of 2005:
Oil production for the Big Five down 1.72% over 2004
Oil production for the Big Ten down 1.14% over 2004
Oil production for the 22 largest public companies down 0.92% over 2004
• “We are moving into a new world. It is a world without maps.”

Jeremy Gilbert – Chief Petroleum Engineer, BP (retired)–

• While reported reserves range from tight to bountiful, there is not that much in the way of generally agreed-to hard data
• Along with restrictions placed on reserve data by governments and private companies, SEC rules are hopelessly outdated –rules force companies to report as reserves what the companies themselves may not view as viable reserves
• OPEC revisions in the mid-to-late1980s are extremely suspect – especially when national reserves – SA, Kuwait, Oman, Iraq – are compared with those of the Neutral Zone
• Abu Dhabi has chosen to limit its depletion rate to 1% per year – having implicitly admitted peaking, they have no incentive to boost production for the sake of the West and a similar stance may be adopted by other Gulf states.

Henry Groppe – Founder, Groppe, Long & Littell –
http://www.groppelong.com /

• Total global conventional oil production will peak between 2008 and 2010
• Canada will surpass US production by 2015
• After the first oil shock, the US did not return to 1970 per capita oil consumption levels until 2003 – the EU has never returned to 1970 consumption levels
• FSU production figures do not match Hubbert projections for political and economic reasons – the post-Soviet oil boom was result of companies bringing production levels to what they would have been w/o economic collapse 1989-1991
• Oil at $100 per barrel will reduce demand growth to zero

John Barnes – Chairman, B & R Energy –

• We are very, very close to N. American natural gas peak
• Energy industry faces tremendous pressure for skilled personnel & equipment – average age of a petroleum geologist today is 50, there are only about 200 directional drilling crews and about 1,400 natural gas rigs in all of North America
• See Hubbert’s testimony to the US Senate in 1972 on oil & gas peaks

Matt Simmons – Chairman, Simmons & Company International –
http://www.simmonsco-intl.com /

• US conventional oil peaked in 1970, conventional natural gas peaked in 1973
• UK North Sea – high data transparency, best technology in the world, but 1995 industry projections put production peak in 2010 – peak came in 1999
• Saudi Arabia – 5 supergiants produce 90% of conventional oil – 3 giants make up another 8% - all are between 40 and 60 years old
• Reserve appreciation was huge (100 – 200%) between the 1940s and the 1960s – it’s now around 20%
• Between 1990 and 2005, only 15% of reserve additions came from newly discovered fields – everything else was paper revisions of reserve extent
• 35% of planetary conventional production comes from exactly 55 fields and 20% of planetary conventional production comes from 14 aging supergiants, the youngest of which is 30 years old
• The Burgan Complex in Kuwait, 2nd-largest field in the world, is now in decline
• Data/reporting reform is absolutely key

Mike Ashar – Executive Vice President, Suncor –
http://www.suncor.com/start.aspx

• Current Suncor production capacity of 260,000 bpd
• Total investment in the Athabascan all companies will top $50 billion in next 10 years
• If Athabascan included, Canada has world’s 2nd-largest oil reserves – 175 bbl
• Claims energy expenditure on one barrel of oil sands = 1/8th barrel (I really have my doubts on this)
• Estimates total Suncor production by 2010 at 500,000 b/d; total oil sands production, all companies by 2030 5 million b/d
• Extremely capital-intensive, extremely large environmental impacts, natural gas prices/supply major concern

Dennis Jacobson – CEO RenTech –
http://www.rentechinc.com

• Fischer-Tropsch conversion is proven and works, plays into American strength as world’s leader in coal stocks
• The fuels and feedstocks produced – FT diesel and naphta – can serve as precursors for other hydrocarbons, chemicals
• So far, Sasol and RenTech are the only two companies in the world investing in this technology, though growth potential remains huge, particularly in newly emerging Asian markets
• Capital-intensive, though not so much as oil sands operations

Michael Pacheco – Director, National Renewable Energy Laboratory –
http://www.nrel.gov/biomass


• NREL is concentrating on non-edible components - lignins and lignocellulosic biomass – far greater potential for fuel replacement
• While starches, oils and proteins are already easily reducible to fuel and feedstocks, non-edibles will demand considerable ingenuity to industrialize processing
• Corn & soy biomass have the potential to replace between 10-20% of gasoline and 5-10% of diesel respectively
• Other approaches – notably research on algae – are lagging


Jeff Probst – President & Chairman, Blue Sun Biodiesel –
http://www.gobluesun.com /

• Renewable clean fuel derived from a variety of sources – canola, mustard, soy, corn, waste grease & tallow
• Conventional feedstock breeding has improved cetane, burns cleaner and provides better compression and lubrication in biodiesels
• Biodiesel makes up an infinitesimal fraction of US gasoline used – by 2012, estimates are 24 mby biodiesel production - .003% of total

Roger Bezdek – President, Management Information Services, Inc. –
http://www.misi-net.com /

• Energy-related recessions in the past were brief, but peak oil economic impacts could last a decade
• Crash program to respond to likely shortfalls will “almost certainly” be delayed
• Energy sector reluctance to engage in such programs is profound after the price collapse of the 1980s
• Peak oil until recently viewed as fringe – how have the “realists” done w. their predictions? NPC in 1999, DOE & EIA in 1999 and CERA in 2001 all stated unequivocally in their forecasts that natural gas would be in plentiful supply – as recently as four years ago
• Technology will not save us – improved detection and recovery systems make depletion more efficient. In addition, slant- and directional-drilling, 3-D seismic imaging, etc. were developed in the 1970s. – there are no comparable research efforts now in the pipeline

Charles Maxwell – Weeden & Company –
http://www.weedenco.com /

• Non-OPEC peak in 2010 – at this point, OPEC will control all incremental oil
• 2000-era projects coming on line will give some temporary relief in 2006-07 – potential downside $45, but this will be ephemeral
• WTI costs/projections – 2003 - $31; 2004 - $41; 2005 - $57; 2006 - $54; 2007 - $56; 2008 - $62; 2009 - $68; 2010 - $75 – averages concealing substantial volatility of $12-15 per barrel in either direction
• We face a “pyramid of debt” for energy and there is no other option but to face high prices to begin the adjustment
• Geopolitics – assassination/coup on Chavez likely, civil war also likely – estimates oil cutoff within 2 days, with oil instantly hitting $80-100 – shipping times of 4-5 days to LOOP exert very different influences over supplies for Venezuelan oil than 45-50-day shipping times from Saudi Arabia, Oman, et. al.
• Capacity utilization now stands at about 98% worldwide – “tightness all around”
• LNG push will knock gas prices down to $6-7 in 2007 or 2008, exerting downward pressure on drillers and rig counts, who will likely face layoffs
• Substantial political risks attend facing these problems with as dysfunctional a political system as we now have




Steve Mut, CEO, Shell Unconventional Resources Unit –
http://www.shell.com – more precise URL coming later – site down

• Kerogen shales are less than 50% hydrocarbons by weight – 15 gallons of fuel per ton of source rock
• Prior methods of mining disastrously inefficient and destructive – new in situ method far better – 60-65% of original carbons in place converted, remainder sequestered
• EROEI of about 3.5 – 1 – comparable to EOR operations in conventional oil fields
• The thickest areas in the are capable of producing about 1 mb/acre – total recoverable might amount to 50-100 bb, but uncertainties large, new process experimental and to date extremely small-scale
• To produce 1 mbd would require 8-10 gigawatts of electricity – equivalent to the total generating capacity of Colorado

Peter Dea – CEO, Western Gas Resources –
http://www.westerngas.com /

• Excess gas capacity ended in 2000, will likely not return
• Since 1/03, rig counts have increased 63% and US gas production has declined by 2% - a slightly negative net production total is possible for 2005
• ½ of supply needed to meet projected demand in 2012 is undiscovered
• Between 2000 and 2004, per-rig productivity went from 22 mcf/day to 4 mcf/day on a per-well basis

[Dead_Parrot]

1. Thanks Hatrack!

It will take a while to assimilate that lot, but that's what bookmarks are for... :)

[hatrack]

2. Thanks, Dead Parrot - glad somebody can use it.

:toast:

[bemildred]

3. That was great.

:applause::applause:

[NNadir]

4. That Rentech stuff is scary.

When I dream of Fischer-Tropsch at night, I lurch awake shivering.

It's an awful thought.

[hatrack]

5. How does that work, anyway? "Coal liquefaction" is about all I know.

Thanks! :hi:

[NNadir]

7. When carbon or carbon compounds are heated in the presence of water

the following reaction takes place C + H20 -> CO + H2. A side reaction, known as the water shift reaction is CO + H20 -> CO2 + H2. A third reaction is CO2 + C -> 2 CO.

Depending on catalysts, pressure and temperature, CO and H2 can be combined to give water and alkanes of the general formula CnH(n+2) and water. (Water is thus partially catalytic in the conversion of coal to alkanes.) These latter reactions are collectively called Fischer-Tropsch syntheses. Alkanes, depending on the value of n and the degree of branching in the structures comprise gasoline and other mixtures such as diesel and jet fuel. Catalysts are also known that give other products including ethylene H2C=CH2 and other products, including ethers, my favorite being DME H3C-O-CH3.

The normal reaction for making hydrogen industrially today is a reverse of the Fischer-Tropsch reaction. Methane, the main component of natural gas, is the simplest alkane.

[hatrack]

6. Incidentally, if anyone has trouble with ASPO's site, let me know

PM me and I can email copies of the Powerpoint presentations to you, if you're interested.

[rfkrfk]

8. coal to methanol, is better than FT, in my opinion

methanol can be made from coal,
in endless amounts,
there are some difficulties, but they are not insurmountable.

[phantom power]

9. “We are moving into a new world. It is a world without maps.”

There be dragons.