Remember peak oil?

October 10th, 2014 at 6:55 am by David Farrar

oil

This shows the known or proven level of oil reserves since 1980, from BPs annual oil report.

Do you recall how we were told for year after year we were at or about to hit peak oil, when production would reach a peak, and the associated oil depletion theory?

Well two things have happened. Production has not peaked and has increased every year, and the reserves are not getting smaller, but also are increasing.

 

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What happened to peak oil?

November 17th, 2013 at 9:26 am by David Farrar

Alexis Madrigal at The Atlantic asks why are gas prices falling?

The price Americans pay for fuel at the pump has fallen to its lowest in more than then two years. At $3.19 per gallon, you can fill up a 12-gallon tank for less than $40. 

So, what’s going on? And will prices keep going down?

None of the long or short-term factors affecting the price of gasoline seem likely to move quickly. Certainly none that would push the price down rapidly. The safest bet is that gas prices will remain in their new range, somewhere above $3 a gallon but under $4. 

The Energy Information Administration predicts an even tighter range over the next year. “The projected U.S. annual average regular gasoline retail price falls from $3.63 per gallon in 2012 to an average of $3.50 per gallon in 2013 and $3.39 per gallon in 2014,” the EIA forecasts.

But wasn’t peak oil meant to send gas prices ever-rising?

During the big run up in oil and gas prices that you can see in the charts above, some analysts contended that we were up against a geophysical limit on how much oil could be produced. It wasn’t that we were running out of oil, but that we wouldn’t be able to produce more, even if demand went up.

So far, however, that has not proven to be the case, as this International Energy Agency chart shows. 

oil

A funny sort of peak – that keeps growing.

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Fracking and shale gas

December 10th, 2012 at 12:00 pm by David Farrar

Baron Lawson of Blaby (father of Nigella) writes in the Daily Mail:

Thirty years ago, I was Secretary of State for Energy in Margaret Thatcher’s government, and one way and another I have been a close observer of the energy scene ever since. 

In all that time, I have never known a technological revolution as momentous as the breakthrough that has now made it economic to extract gas from shale.

Technology the Greens are trying to ban.

… shale gas is locked in dense rock. Energy companies must drill a well hundreds or thousands of feet deep to reach the layer of shale — which can be just 50ft thick — and then turn the drill sideways to bore horizontally.

Water, chemicals and sand are pumped into the hole under enormous pressure until the rock cracks, allowing gas locked up in the shale to escape and flow upwards into the well. 

This process is called hydraulic fracturing — or ‘fracking’ for short.

So how significant is this shale gas, that the Greens want left down there?

The consequences are difficult to exaggerate. Not just in terms of the economic benefit of a new and abundant source of relatively cheap energy, but in geopolitical terms, too.

Until now, the West has been heavily dependent for its supplies of oil and gas on an unstable Middle East and an unreliable Russia. Crucially, all that has changed because gas and oil-bearing shale is scattered throughout the world — including in Britain. …

The dramatic news emerged a few weeks ago that the U.S. will overtake Saudi Arabia as the world’s largest oil producer in 2017.

America is already the world’s largest natural gas producer, and it is estimated that, by 2035, almost 90 per cent of Middle East oil and gas exports will go to Asia, with the U.S. importing virtually none.

It is ironic that for decades the left have cried out that they want the US less dependent on middle eastern oil, and now that it can happen – they are fighting it.

For decades, the West in general, and the U.S. in particular, has had to shape, and sometimes arguably to misshape, its foreign policy in the light of its dependence on Middle East oil and gas. No longer: that era is now over.

For decades, too, Europe has been fearful of the threat that Russia might cut off the gas supplies on which it has relied so heavily.

No longer: that era will very soon be over, too. Thanks to the shale gas revolution, the newfound energy independence of the West is a beneficent game-changer in terms of world politics as much as it is in the field of energy economics.

When bullies lose their power, this is a good thing.

The company behind the exploration has announced that Blackpool is sitting on one of the biggest shale gas fields in the world — with a reserve of 200 trillion cubic feet lying under the Lancastrian countryside. 

To put that figure in perspective, it’s enough gas to keep the UK going for 50 years and create more than 5,000 jobs.

50 years of fuel in just one field. So what does this mean for peak oil?

For the world as a whole, technically recoverable gas resources are now conservatively reckoned to amount to around 16,000 trillion cubic feet. In short, as a result of the shale revolution, the Earth can now provide us with about 250 years’ worth of gas supplies.

The so-called ‘peak oil’ theory, which suggests that within the foreseeable future the world will run out of fossil fuels — coal, oil and gas — has never looked more absurd.

If you hear about peak oil again, laugh. And point out even George Monbiot has admitted peak oil has not occurred and will not occur for many decades or more.

While the world’s shale gas reserves appear to be massive, they could even be dwarfed by global oil shale reserves in sedimentary rock, which contains solid organic material that can be converted into an oil-like product when heated.

According to the U.S. government, oil shale deposits in an area called the Green River Formation in the western United States are estimated to contain up to 3 trillion barrels of oil — three times more than the whole world has consumed in the past 100 years.

And the Greens want us to stop building roads in New Zealand, because they say peak oil will lead to the death of the car.

We are living in an era when good news is thin on the ground. The shale gas revolution is the exception: a game-changing piece of good news, both economically and geo-politically, both for this country and for the world.

Hear hear.

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Monbiot says peak oil predictions wrong

July 4th, 2012 at 2:00 pm by David Farrar

Kudos to George Monbiot for telling the truth, as reported in the Guardian:

 The facts have changed, now we must change too. For the past 10 years an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil – the decline of global supplies – is just around the corner. …

Some of us made vague predictions, others were more specific. In all cases we were wrong. In 1975 MK Hubbert, a geoscientist working for Shell who had correctly predicted the decline in US oil production, suggested that global supplies could peak in 1995. In 1997 the petroleum geologist Colin Campbell estimated that it would happen before 2010. In 2003 the geophysicist Kenneth Deffeyes said he was “99% confident” that peak oil would occur in 2004. In 2004, the Texas tycoon T Boone Pickens predicted that “never again will we pump more than 82m barrels” per day of liquid fuels. (Average daily supply in May 2012 was 91m.) In 2005 the investment banker Matthew Simmons maintained that “Saudi Arabia … cannot materially grow its oil production”. (Since then its output has risen from 9m barrels a day to 10m, and it has another 1.5m in spare capacity.)

Peak oil hasn’t happened, and it’s unlikely to happen for a very long time.

report by the oil executive Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun. The constraints on oil supply over the past 10 years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

This is why it can be very dangerous to try and second guess these things. The environmental movement has a history of getting it wrong time after time, because they don’t understand how people respond to incentives.

Maugeri’s analysis of projects in 23 countries suggests that global oil supplies are likely to rise by a net 17m barrels per day (to 110m) by 2020. This, he says, is “the largest potential addition to the world’s oil supply capacity since the 1980s”. The investments required to make this boom happen depend on a long-term price of $70 a barrel – the current cost of Brent crude is $95. Money is now flooding into new oil: a trillion dollars has been spent in the past two years; a record $600bn is lined up for 2012.

As the price of oil and petrol rises, it will both lead to investment in alternative technologies and lead to greater drilling in previously unprofitable areas.

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