Peak Oil: What do you think? (winter, vegetables, cheap, 2011)

[Coaster]

I have to apologize for the Wall Street Journal link in the long post above. I was able to access it easily from the Google search page (and still can, oddly enough), but using the link in my post takes you to a paywall. The pertinent paragraphs are below. Fowler is well known for his cornucopian energy articles, so take some of his enthusiasm with a grain of salt.

By TOM FOWLER

U.S. oil production grew more in 2012 than in any year in the history of the domestic industry, which began in 1859, and is set to surge even more in 2013.

Daily crude output averaged 6.4 million barrels a day last year, up a record 779,000 barrels a day from 2011 and hitting a 15-year high, according to the American Petroleum Institute, a trade group.

[Mircea]

Originally Posted by Coaster

If you look at a chart of "proven reserve" claims, you'll see that all of their reserve claims jumped significantly in the mid-late 1980s, when OPEC adopted a quota system for its members based on their proven reserves. And those numbers have changed very little ever since, despite decades of constant pumping.

That's exactly right.

And why did they do that? I have no idea.

If I had to speculate, I'd say it was purely political, probably to appease some elements in the Saudi Government, or elements in OPEC member-States.

Anyway, after the Quota System was established, an OPEC oil member required an increase in reserves to increase oil production/output, and that's when you magically saw "proven reserves" start increasing.

Nice going...

Mircea

Originally Posted by Prairieparson

Coaster. Proven reserves is not a static number. For example, in the USA, proven reserves have gone up significantly the last few years because of new discoveries: Bakken, Eagle-Ford, Cline shale, Permian basin, and Marcellus shale play.

None of that matters, since extracting 100% of proven reserves is not possible.

There's also the issue of static pressure. Illinois Intermediate is a classic example of that. 4,000+ oil wells pumping away and you're barely getting 25,000 barrels per day. Once pressure starts dropping, you have to inject water (seawater in the Middle East and elsewhere) to maintain pumping pressure and at some point, it no longer is cost effective to pump oil, due to the cost of removing the water at the processing facility (not the same thing as a refinery).

A lot of wells in the US that were shut down in the 70s and 80s are pumping again, because the price of oil per barrel makes it profitable to do so, but if oil prices were to drop, those wells would be shut down --- decreasing production/supply.

Originally Posted by Prairieparson

Someone who has studied oil supply so much I thought would know that even government agencies are predicting the end of being a net importer.

Why are you exporting oil?

Two reasons:

1] You're exporting heavy and very heavy oils which are worthless to the you, but of value to other countries; and

2] You're exporting refined diesel and gasoline (and bunker fuel) that is worthless to you due to the high Sulfur content.

With the exception of West Texas Intermediate, the oil in the US is garbage oil.

Oklahoma Heavy, California Heavy, Prudhoe Bay Heavy, Louisiana Heavy, Uinta Basin Black Wax, East Texas Sour, West Texas Sour and Louisiana Sour (a borderline light oil) are too high in Sulfur content.

It is cost prohibitive to use those oils in the US, mostly due to EPA regulations. Under Tier 2, gasoline was limited to 30 ppm Sulfur, but under Tier 3 it is 10 ppm Sulfur. The US can take East Texas Sour -- an Intermediate Oil -- refine it into gasoline with spending money or wasting time on the Sulfur Redux process, and then export that gasoline to other countries who do not have restrictive limitations on Sulfur content. Same story with diesel.

But what happens when other countries start enacting "Clean Air Laws?"

It's only a matter of time.

Originally Posted by Prairieparson

Our net imports have dropped about 1,000.000 barrels a day each of the last 2 years.

That's meaningless unless you know which oils are not being imported.

The American life-style requires low-Sulfur light oil, and the only place you can find it is the Middle East, Central Asia and Russia, and then some places in Africa.

Sure, the tiny Bakken Field is very light oil, but that's of little consequence.

You can get organic alcohols like Neodol-65 and Neodol-67 out of very light oils, probably on the first pass without having to either recombine or split, but very light oil is not very good for gasoline or triethanolomine (which you need for liquid laundry detergents).

Originally Posted by Prairieparson

At this rate, its quite possible for the US to become energy self sufficient by 2020, as some are predicting. I live in west Texas. They are punching holes just as fast as they can right now. They are putting in a couple of pipelines to bring the oil to the gulf of mexico. Things are changing big in the US oil industry.

Don't count on it.

Like a lot of people, you don't understand that oils are not created equally.

No such thing as Peak Oil, but there is such a thing as Peak Oils.

There's a reason why you import oil.

Heavy oils produce 6 gallons of gasoline per 42 gallon barrel. Using a recombination process, you can squeeze another 3 gallons of gasoline out, for a total of 9 gallons of gasoline.

Compare that with an intermediate grade oil like Illinois Intermediate that yields 13-16 gallons of gasoline, or West Texas Intermediate that produces 19 gallons of gasoline or light oils from Nigeria, Saudi Arabia or Iraq that give 21-24 gallons of gasoline per barrel.

If your refinery capacity is 1 Million barrels per day heavy oil, then how much gasoline do you get?

900,000 Million gallons per day.

But if you're refining 30% WTI and 70% imported light oils (like Tijuana Light from Venezuela at Citgo refineries) then....

300,000 barrels WTI yields 5,700,000 gallons of gasoline
700,000 barrels light yields 14,700,000 gallons of gasoline.

Heavy = 900,000 gallons gasoline per day
WTI/Light = 20.4 Million gallons gasoline per day

As you can easily see.....it's a simple matter of Supply & Demand. Where Demand is static/constant -- pretty much the case for gasoline --- then increasing the supply of gasoline lowers the price, while decreasing the supply of gasoline increases price.

That's why in the late 1960s and 1970s you started building refineries to refine imported light oil, instead of heavy oils, because imported light oils could meet consumer demand, and heavy oils could not.

Build more heavy oil refineries to increase supply? There's no cost-savings for you as a consumer. The added cost of running more refineries would result in paying more, not less.

Even if the US does produce more, if Global Demand increases, then you don't win.

And producing more of what? Garbage oils? You don't need garbage oils. You need sweet/low-Sulfur oils.

Petro-chemically...

Mircea

[itsMeFred]

THIS was your entry into the conversation:

Originally Posted by Coaster

Whatever you're smoking, please share!

The U.S. will never, ever be a net oil exporter. We still import half of the oil we consume -- 303 million barrels last November alone -- and there is no chance that we can produce enough to erase that deficit, much less begin exporting it. Even now production and drill rig numbers are declining in the tight oil plays that have given us this temporary boost in national production. I'm doubtful that we'll even reach Saudi Arabia's production level. The most recent numbers I can find still rank the U.S. third behind SA and Russia.

I repeat: What in my statement was even remotely snarky??

You quoted me, made a jerk comment, and I with a little less than phenomenal patience (having already been told I was on something) suggested you need to read the rest of the thread, because I'd already modified that first comment.



Then you tell me you already HAD, which means you already KNEW I'd already modified my statement, which also means you made that snide comment just to be a jackass, apparently.

[itsMeFred]

Sure, the tiny Bakken Field is very light oil, but that's of little consequence.

The "tiny Bakken??"
At 800,000 b/d, the "tiny Bakken" has moved North Dakota into the number two oil producing state in the US. Though you are correct that it's a very light oil. It looks like corn syrup.

Another interesting read on the topic:
http://www.platts.com/newsfeature/20...ulfcrude/index

[arctichomesteader]

Originally Posted by itsMeFred

The "tiny Bakken??"
At 800,000 b/d, the "tiny Bakken" has moved North Dakota into the number two oil producing state in the US. Though you are correct that it's a very light oil. It looks like corn syrup.

Another interesting read on the topic:
Oil producers focus on Bakken and Eagle Ford as they hunt for crude potential and keep an eye on emerging shales | Oil | Platts

When we're consuming over 6 billion barrels a year, the Bakken oil is insignificant. The top estimates for the Bakken formation are between 18 and 24 billion barrels. Do the math on that.

[itsMeFred]

What are you reading in MY comments to make you think I said we have an unending supply?


The point has been that "peak" keeps moving back. In addition to OPEC's mysteriously stable "remaining supply," new reserves in the US keep going on line.
Ten years ago we had barely even touched shale supplies like the Bakken. But because of new methods, as well as the increasing value of oil, it's now one of the leading producers in the US.

[Coaster]

Originally Posted by itsMeFred

THIS was your entry into the conversation:



I repeat: What in my statement was even remotely snarky??

You quoted me, made a jerk comment, and I with a little less than phenomenal patience (having already been told I was on something) suggested you need to read the rest of the thread, because I'd already modified that first comment.

Then you tell me you already HAD, which means you already KNEW I'd already modified my statement, which also means you made that snide comment just to be a jackass, apparently.

Fred, I wasn't responding to the comment cited above, and you know it, because I did quote the comment I considered snarky and which you are ignoring completely. As for the "smoking" comment, you will notice in the original that I posted a smiley next to it, indicating that I was joking. If you can't take a joke, that's your problem, not mine. And please stop calling me a jackass. I believe that's against the rules here.

Your MO seems to be to complain about something the commenter didn't say (forex, the "unending supply" claim in your response to arctichomesteader, who made no such claim) when the argument is going against you. That's rather sad.

As I've said before, when you want to have a serious discussion abut Peak Oil, I'm here. Since your comments so far seem to be attacks on people who disagree with you rather than substantive discussion, I have little hope you'll take me up on my offer.

[Coaster]

Originally Posted by itsMeFred

The point has been that "peak" keeps moving back. In addition to OPEC's mysteriously stable "remaining supply," new reserves in the US keep going on line.
Ten years ago we had barely even touched shale supplies like the Bakken. But because of new methods, as well as the increasing value of oil, it's now one of the leading producers in the US.

Ten years ago, though, we knew about the Bakken -- it was first discovered back in the 1960s or so -- and it was already being figured into plans for the future. The peak is not moving back -- we are at peak right now on a global measure and have been for a number of years. That's the "bumpy plateau" that I and others keep referring to. The Bakken and other new discoveries are barely keeping up with the decline in production in other fields, and more importantly they aren't keeping up with the amount of oil available for export. That's where the real crunch in going to come -- when an economic recovery increases petroleum demand, it will bump up against declining export oil supplies, which will increase oil prices and stifle the recovery.

[itsMeFred]

As for the "smoking" comment, you will notice in the original that I posted a smiley next to it, indicating that I was joking.

I couldn't care less if you were joking or not. If you had already gotten yourself up to speed by reading the entire thread, you already knew I had changed my statement.
In which case, what would be the purpose of arguing it?

Your MO seems to be..

Wow. You've read my nearly 1700 posts?
For that matter, you've gotten that out of just the handful I have in this thread??

I think you might need to re-read the thread (again) before you toss out any more judgements.

The peak is not moving back

Back in the 70s, the peak was predicted for the 90s. We're well past that and still going strong.
Ie, it would seem it is moving back.

[Coaster]

Originally Posted by itsMeFred

Back in the 70s, the peak was predicted for the 90s. We're well past that and still going strong.
Ie, it would seem it is moving back.

Not sure who you're referring to about the peak being predicted in the '90s back in the '70s, but that wasn't the case by anyone I'm familiar with in the Peak Oil movement. There was some less-than-informed talk during the energy crisis in the 1970s about oil running out, by people who didn't realize the shortages then were political, not geological.

The end of cheap oil was declared in the late 1990s, early Oughts. Perhaps that's what you're referring to? In 1956 King Hubbert of Hubbert Curve fame predicted Peak Oil in "about half a century," which was pretty near dead on for a prediction made 50 years in advance.