Category: Peak Oil

STAVANGER, NORWAY—The chief executive officer of Saudi Aramco, the world’s biggest oil producer, said Monday that worries such as rising oil-sector costs and global turmoil could lead to a lack of oil supplies down the line, if oil companies fail to make sufficient investments. "The factors I just highlighted are likely to put downward pressure on supplies over the longer term, if the industry fails to make prudent and timely investments," Khalid A. Al-Falih said at the Offshore Northern Seas energy conference. The factors that could threaten global oil supply include rising costs and cost overruns on oil mega projects, Mr. Al-Falih said. He also pointed to manpower shortages, climate change issues, low oil demand growth amid global economic weakness in the short term, and turmoil in oil-producing regions such as Africa, the Middle East and the former Soviet Union. "For now, however, the market is shrugging them off, […]

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The idea that we’re running out of oil may have faded slightly from the list of concerns, but that’s just one of any number of precious natural resources we’re using up far too quickly. Peak oil is the concept that new discoveries of commercially exploitable oil resources do not keep pace with growing demand. By extrapolating the data, you can estimate when we will run out of it for all practical purposes. There are a lot of disagreements about whether we have reached peak oil or when the downhill slope will hit a point that brings a significant percentage of our vehicles to a grinding halt, but the concept has made scientists and policy makers ask the question: What other critical resources may be peaking? Asia Pulp & Paper Company, one of the world’s largest, announced last month that it will no longer use wood from natural forests for […]

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The Medium Term Oil Market Report of the International Energy Agency (IEA, Paris),  published in June 2014,  contains a graph which implies that US crude production will start to peak in 2016. Few took notice although the world is continuously occupied with oil and energy related conflicts and wars in Ukraine, Libya and Iraq. So far, oil prices increased only shortly when fights flared up. Apparently oil markets are at ease while the US tight oil “revolution” is underway. But for how long? Global situation Fig 1: US tight oil and crude oil in rest of world vs oil prices The graph shows that US tight (shale) oil sits on top of a bumpy crude production plateau in the rest of the world which clearly started in 2005 (average of  73.4 mb/d since Jan 2005).  Despite increasing tight oil production oil prices did not go down but stayed at […]

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Not too long, another in the endless procession of skate-past-facts-we-don’t like articles made its way into publication via a piece entitled “Here’s The Statistic That Will Be Written On The Tombstones Of Peak Energy Believers” Those concerned about the peak in oil production have apparently earned themselves a promotion! Now we are peak “energy” advocates. Who knew? Seriously … who knew? A nice little attempt to distract from the facts, but use whatcha got! ‘Peak oil’ proponents – the guys and gals who believe overconsumption combined with scarce resources will lead to stratospheric energy prices – are now clinging* to the hope that the shale oil and gas boom will fizzle out as the cost of drilling climbs. For the most part, the boom has held up, though no one believes it will last forever. But there is a fifth-column phenomenon this group has completely overlooked that will once-and-for-all […]

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The debate over whether we are running out of oil sometimes resembles the medieval controversy over how many angels could dance on the head of a pin. By redefining the size of the pin and the agility of the angels, today’s “peak oil” proponents have managed to continue the argument. The characters have changed though. Matthew Simmons, author of Twilight in the Desert, casting doubt on Saudi oil production, died in August 2010, and the Oil Drum website closed down last September. New disputants, including economist James Hamilton from the University of California, and Stephen Kopits, the managing director of the consultancy Douglas-Westwood, argue that oil production is limited by geology and is a severe drag on economic growth. These factors will ultimately drive up the oil price if they are right. On the other side of the argument, voices such as the Reuters columnist John Kemp, who states […]

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In his 2005 New York Times best-selling book  Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy , renowned oil analyst Matthew Simmons outlined his belief that Saudi Arabia’s giant Ghawar oil field would soon begin a terminal decline that would result in permanently falling global oil production. Indeed, from the post-recession lows of 2003 until peaking in 2008, oil prices seemed to prove peak oil proponents correct — with prices seemingly on a long-term exponential increase. However, what Mr. Simmons and other peak oil theorists failed to consider is that America’s shale oil revolution could not only make up for Ghawar’s production fall, but even replace the field entirely. Permian Basin: dethroning the Saudis According to Pioneer Natural Resources , the Permian Basin of West Texas and New Mexico holds an estimated 75 billion barrels of recoverable oil, an estimate that is up 50% in […]

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We frequently see stories telling us how well the United States is doing at oil extraction. The fact that there are stories in the press about the US wanting to export crude oil adds to the hype. How much of these stories are really true? If we believe the stories, the US is now the largest producer of oil liquids in the world. In fact, it has been the largest producer since the fourth quarter of 2012. Figure 1. US Total Liquids production, including crude and condensate, natural gas plant liquids, "other liquids," and refinery expansion. Oil “Extenders” One of the issues is that a few years ago, the US created a new oil-related grouping, combining valuable products with much less valuable (lower energy content, less dense) products. Using this new grouping, the US was able to show much improved growth in total “oil” supply. The US EIA now […]

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Remember the population explosion? When population was growing at its fastest rate in human history in the decades after World War II, the sense that overpopulation was stunting economic development and stoking political instability took hold from New Delhi to the United Nations’ headquarters in New York, sending policy makers on an urgent quest to stop it. In the 1970s the Indian government forcibly sterilized millions of women. Families in Bangladesh, Indonesia and elsewhere were forced to have fewer children. In 1974, the United Nations organized its first World Population Conference to debate population control. China rolled out its one-child policy in 1980. Then, almost as suddenly as it had begun, the demographic “crisis” was over. As fertility rates in most of the world dropped to around the replacement rate of 2.1 children per woman — with the one major exception of sub-Saharan Africa — population specialists and politicians […]

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Why are  oil prices so high, after inflation above 1980 record highes? Peak oil enthusiasts have explanations (usually wrong, like their forecasts). There are many factors at work, including one simple but hidden reason: American foreign policy. The USA has played a large role in the suppression of oil production in three major oil producers, including two nations with some of the world’s largest petroleum reserves — and having the greatest potential for increased production. Perhaps it’s a coincidence that we’ve intervened in three oil producing nations, and high oil prices are an accidental by-product of our good intentions. Contents Iran Iraq Libya Another perspective For More Information (1)  Iran After a long history of interference in Iran’s government, we initiated an ever-tightening and broadening array of sanctions on Iran after the 1979 revolution — continuing until today. See a list here ; Wikipedia has details on US sanctions […]

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President Richard Nixon of the United States of America is probably the most infamous of all the American presidents to ever hold office. His involvement in the Watergate scandal and the Vietnam War are all that’s left of him in the memory of most Americans today. However in 1973, at the peak of the oil crisis, when national oil reserves were depleting and oil prices per barrel had increased by more than 300%, he made his famous address to the people in November, where he said “ Restating our overall objective. It can be summed up in one word that best characterizes this nation and its essential nature. That word is ‘ independence ’.” Today, nearly 40 years after the oil crisis crippled America, they are one step closer to Nixon’s ambitious plan of full energy independence. On July 31st, 2014; an oil tanker, the BW Zambesi , set […]

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