World oil production capacity model suggests output peak by 2006-07

[4dsc]

Its closer than we think??

http://64.233.161.104/search?q=cache:FW60NIoeqcIJ:www.aspo-australia.org.au/References/Bakhtiari-O%26GJ-April%25202004.doc+peak+oil+production+wocap+saudi+arabia+russia&hl=en&gl=us&ct=clnk&cd=3&ie=UTF-8

Most of OPEC's stars (e.g., Iran, Kuwait) are not faring well: They clearly have reached the end of their oil capacity tether (a fact readily confirmed by the respective Wocap simulations).7 OPEC's brightest hope, Iraq, is now still in the grip of vicious terrorist attacks—with the development of the supergiant fields of Majnoon, West Qurna II, and Nahr Umar having to wait for calmer days.

But, far more ominous than all these developments, is that OPEC's main pillar, Saudi Arabia, has been the subject of serious doubts.

Saudi Arabia always has stood as the oil industry's symbol: "a supplier for all seasons" and the "producer of last resort," which produced an average of 8,672,000 b/d in 2003 (32.3% of OPEC's total output.)8 Naturally, the Saudi oil miracle was expected to last forever. No one ever dared think the unthinkable.

But, then, on Feb. 24, in a presentation at a conference held by Washington, DC-based Center for Strategic & International Studies, Matthew Simmons, chairman and CEO of Houston-based Simmons & Co. International, predicted that the Saudi oil miracle "would soon come to an end."

And his arguments were built around an ironclad thesis based upon extensive scientific research (and, among many others, some 200 Society of Petroleum Engineers technical papers).

Simmons even questioned the potential of the world's largest oil field and the Saudis' major producer, the awesome Ghawar: "Aramco estimated Ghawar's reserves to be 60 billion bbl in 1975 on the basis of 400 wells and a very clear mapping of the oil-water contact...and with 55 billion bbl now produced, Ghawar is about to become another Brent, Prudhoe Bay, Samotlor, or Yibal.U"9

Now, the terminal decline of Ghawar would signal the beginning of the end for Saudi Arabia's oil. This should trigger alarm bells all over the petroleum industry and even in the general public (who should realize that global oil supplies are not "forever," not even in Saudi Arabia).

[lala_rawraw]

1. my question

has always been regarding the 30 year advantage anyone who developed alt energy would have... that is, imagine being the patent holder or the company who came up with an alternative... why the oil companies did not think of this or move in that direction is beyond me.

[megatherium]

2. I think patents last only 17 years, and all the alternative

energy we've heard of consists of much older technology (e.g., photovoltaic solar cells were invented in 1954, if memory serves). So the trick, if you're an energy company, is to exploit the hydrocarbons while they last, before going to alternatives. We might have used up half of the world's oil, but there is still half of it left, and that represents a mind-blowing amount of wealth.

[Boomer]

3. It's not the same half

"We might have used up half of the world's oil, but there is still half of it left..."

Unfortunately, we've used up the "easy" half of that supply. The other half is harder -- and much more expensive -- to exploit. Either it's the oil at the bottom of wells, which requires significantly more energy to recover, or it's in areas of the world which are not easily accessible, either due to political turmoil, climate change or rough, isolated terrain.

For example, if hurricane activity continues to escalate in frequency and violence, the Gulf will become economically unfeasible as a source of oil. Damage to the rigs from the 2005 hurricane season has just recently been repaired; if rigs are destroyed every season, there won't be enough time or money to continue maintenance.

The repercussions of Peak Oil are that the increased COST of oil will begin to undermine our oil-driven culture and financial markets, not that we won't have any oil at all.

[shugh514]

4. Exactly

The era of cheap oil/energy is ending. There will still be oil/energy supplies for those who can afford it. The ones who can't will be forced to make radical changes in lifestyle as a result.

[lindisfarne]

5. Additionally, world demand is going up. What's relevant is not really

how much is left, but what the world production capacity is vs. what the world demand is (not that I disagree with anything said in previous message). That's what drives the price; it also means the oil industry will enjoy record profits for a while. Higher oil prices make alternative sources of energy cheaper and will drive research in making them more efficient.

[megatherium]

6. Reduced availability of oil will at the same time make it

more valuable; you are of course correct that it's the difficult half of the original oil in the ground that's left. The industry seems to think peak oil isn't for three decades (this figure requires exploitation of nonconventional sources of petroleum, such as tar sands). That's plenty of time to make money; but even if they're wrong, oil production will plateau for one or two decades before it really begins to drop. And again, that's plenty of profit to be made (oil will be more expensive to produce but given a rather inelastic demand curve, we can count on the price of oil to go further upwards).

Eventually, alternatives will become economic. It will take a while because the type of energy we are short of is liquid hydrocarbons used in transportation, and these are the most difficult to replace. The complicating factor is global warming, which even certain petroleum companies now acknowledge is a grave and growing danger. This will (I hope) steer us away from coal, the most available alternative to oil.

[Boomer]

8. I don't share your optimism

>> Eventually, alternatives will become economic. <<

It's that "eventually" which you toss out so confidently that will be so very, very painful. This country does not have the individual financial resources or the social infrastructure to convert to an entirely different form of energy in a short span of time (ie, less than a few decades). In my neighborhood, no one can afford a new car; they can barely afford to buy a new major appliance like a refrigerator or AC. Unless you're handing out a FREE alternative energy source, the vast majority of my neighbors will simply have to do without. People on fixed income or making minimum wage can't spend tens of thousands of dollars on solar energy installation.

Even assuming they did have the resources to purchase a new energy delivery method, who would install it? Right now, the nearest solar companies are in the next state, and that isn't a business that can suddenly ramp up to serve every household in the nation. It will takes decades for suppliers to grow enough to meet demand, and the elite residents of dense urban centers are going to suck up those resources first, leaving the poorer rural areas last in line.

The biggest challenge in this hypothetical transition will be containing social unrest, if not complete chaos, as the existing energy infrastructure crumbles and before a new one is in place.

>> The complicating factor is global warming, which even certain petroleum companies now acknowledge is a grave and growing danger. This will (I hope) steer us away from coal, the most available alternative to oil. <<

And what makes you think that coal reserves will be ignored? People who are suffering today aren't going to pass up a usable energy source, even if it is a major contributor to their current state of misery. Just try telling someone that their sacrifice will save humanity from more suffering in a few decades, which is the soonest we would see any effect. The average person who is freezing in their home will choose to burn coal NOW for heat, the future be damned.

[megatherium]

9. I'm not always optimistic either.

I think the primary thing that's going to happen is we're going to get a hell of a lot more efficient in using energy, particularly petroleum. Hybrids then plug-in hybrids and probably all-electric cars. Our vehicle fleet gets 21 mpg, if memory serves -- this can be improved in a 15-year time frame rather drastically. Short-term energy crises will be met by rationing, which will force people to carpool, use public transportation, or bicycles; rationing can be accomplished as in WWII by gas coupons, or simply by allowing the price of gas to zoom upwards. Only some cities now have good bike paths and light rail. This will change.

But you are probably right about coal. It will be difficult to expect people to refrain from exploiting this energy source. If the climatologists are correct, this will rip apart global ecosystems in the 2050-2100 time frame. Serious damage is already occuring (e.g., to tropical reefs and to arctic tundra and ice). The planet will be unable to support 6.5 billion people; huge loss of life will happen. If we can use nuclear instead of coal (to generate electricity to power electric vehicles and trains), this would be a much better option than coal, even given the problems of nuclear. I am praying that by midcentury renewables will be economic (competitive with coal without subsidies. Otherwise we are done.

[robertpaulsen]

10. Just curious, why do you think the plateau will be sustained for so long?

You said:

That's plenty of time to make money; but even if they're wrong, oil production will plateau for one or two decades before it really begins to drop.

I'm curious how you came up with that estimate. I've read a lot of researchers give their estimates on oil production peaking, but I've never seen an estimate for a peak that lasts a decade or more. I've seen researchers say that the United States peaked between the years 1970-1971. So I can understand a plateau lasting for a couple years, but a decade? Please tell me where you heard that.

[megatherium]

11. By plateau, I mean oil production will stay within 10% or so of current,

peak levels, for that length of time. This is based on the expectation that the peak will be more-or-less symmetric. I think I formed this impression reading the Deffeyes books.

[robertpaulsen]

12. I understand what you mean now.

I must confess, while I've read a lot of books on Peak Oil, I haven't read Hubbert's Peak or Beyond Oil. I've read many of Deffeyes articles though and have seen interviews with him. He seems like a funny guy, but is very serious in his research.

I do worry, if the decline is gradual, that our government will react with denial, saying 'no, world production has not peaked, there's still a trillion barrels of oil out there left to discover, our technology for locating and obtaining it is improving every day, blah blah blah' until the situation is beyond repair once production starts declining 10% per year.

What I have read though, is that even a modest decline, say 3% per year, would still send the price of oil through the roof since demand increases exponentially. To quote Matt Savinar:

The effects of even a small drop in production can be devastating. For instance, during the 1970s oil shocks, shortfalls in production as small as 5% caused the price of oil to nearly quadruple. The same thing happened in California a few years ago with natural gas: a production drop of less than 5% caused prices to skyrocket by 400%.

http://www.lifeaftertheoilcrash.net/

[Strelnikov_]

7. The Declining EROEI Of The 2nd Half Is Going To Result In The Smash

coming harder and faster than most everyone can imagine.