Sunday, June 1, 2008

It's A Myth The World Is Running Out

Irwin Stelzer: It’s a myth that the world’s oil is running out (Hat tip: stretched)

Another myth: we are running out of oil. According to WorldPublic Opinion.org, “majorities in 15 of the 16 nations surveyed around the world think that oil is running out . . . only 22% on average believe that ‘enough oil will be found so that it can remain a primary source of energy for the foreseeable future’ ”. Those majorities who think we are running out of oil include 85% of the British and 76% of the American citizens polled. Luckily, they are wrong.

Production of oil is being constrained by several forces, none of them due to God’s failure to put enough of the black gold under our feet. Several countries that are important sources of supply are in political turmoil, and unable to bring to market the oil they are capable of producing. Think Nigeria, where security problems have shut down about 20% of the nation’s capacity of 2.5m barrels a day and discouraged new investment, and Iraq, where political paralysis and terrorists have kept production at less than half its potential.

Other countries will not develop the reserves of oil known to lie under their territories.

Russia has made it clear that foreigners who invest in its oil industry might be playing a game with Vladimir Putin known as heads I win, tails you lose. Find nothing and you lose your money; find substantial reserves and the state squeezes you until your shareholders’ pips squeak. Only companies at least 51% owned by Russians – read FOPs, Friends of Putin – are allowed to look for oil in the new, difficult areas in which it is to be found. Little surprise that oil output dropped in the first quarter of this year.

Mexico’s president, Felipe Calderon, wants to revive Petroleos de Mexico (Pemex), the world’s third-largest oil producer, by contracting with foreign companies to introduce modern methods of extracting more from existing fields and finding new ones. But legislation is stalled by left-wingers who have seized and are sleeping at podiums in both houses of congress.

Saudi Arabia’s royal family has announced that it will not expand capacity. Abdallah Jum’ah, chief executive of the kingdom’s oil company, said high prices didn’t mean the world needs more oil because such market signals were “imperfect”, and energy minister Ali al-Naimi has announced that there are no plans to embark on a new round of expansion. The oil is there, but with current production yielding about $120 a barrel, there is no incentive to find more, especially since new production might drive down prices as demand from the slowing American economy falls.

Venezuela’s oil industry can only be described as a mess. President Hugo Chavez’s cronies are inadequate substitutes for the technicians they have replaced, so production is falling, while foreign investors are reluctant to trust hundreds of millions in exploration dollars to a regime that treats contracts as the first step in a negotiation.

In America, Congress alternates between calls for “energy independence” and refusals to allow drilling in what it considers environmentally sensitive areas in Alaska and offshore California and Florida.

There’s more, but you get the idea. There is a lot of oil out there to be found and produced, not even including the vast reserves in Canada’s tar sands. We might have reached the age of peak panic about oil supplies, but not of peak oil. ...

These $100+ prices have led to a massive flow of wealth, and hence power, from consuming to producing countries. If oil were still $20 or even $40 a barrel Russia would not have the wherewithal to revert to its bullying foreign policy, and America’s banks would not be going hats-in-hand to Arab capitals in search of new capital.

7 comments:

Anaconda said...

THE POLLS REFLECT SENTIMENT: PEAK OIL THEORY IS HAVING A VINTAGE YEAR

When 76% of Americans think the Earth is running out of oil, you know Peak oil theory is mainstream.

Because people don't think in terms of 200 years from now, they think short-term.

Sad.

Because that allows for all kinds of manipulation and demagoguery.

And, it's unnecessary.

The online comments are also instructive. Why are people so attracted to "Doom"? Might as well relabel Peak oil, Doom oil.

The author was right about politics having an impact on oil availability. And while not as detailed and specific as possible, on these political realities, a large number of commenters swept right past that to insist Peak oil is real.

"Doom is coming, I swear it!"

Not all commenters, by any means, but enough to make you shake your head.

Anaconda said...

INDROCTRINATING OUR KIDS IN PEAK OIL

I was talking to my brother the other day, he lives in a small town, preumably fairly conservative, as most small towns tend to be.

And during the course of the conversation, the price of gas came up, and the availability of oil generally. My brother has a son in high school, a sophomore, after asking about his son, the conversation turned to oil availability as previously stated, and the topic of Peak oil came up. My brother mentioned world oil production figures, Peak oil pushers recite to make their case, but what surprised me was that my brother got the figures from his son, who had learned them at school: They were teaching Peak oil at his school, specifically calling it Peak oil: Indoctrinating Peak oil to sophomores in a small town high school.

No wonder so many Americans believe in Peak oil, their kids come home and indoctrinate their parents.

So, Peak oil has gone from a fringe theory to being widely indoctrinated in our society.

I say this because if Peak oil is being taught in a small town high school, you can bet it's being taught in all the bigger schools, too.

Do Americans want their children indoctrinated in Peak oil theory?

Like everybody was indoctrinated in "fossil" fuel theory.

Ug.

Anaconda said...

THE MYTH OF PEAK OIL AND TALES FROM THE OILPATCH

Refernce,
(OIM) Post, Fossil Fuel Cultists In their Native Habitat, May 30, 2008, Comment #4, Postscript: A Voice from the Oilpatch, 6/2/08.

Intrigue in the oil industry is nothing new. Questions linger over issues revolving around the depletion of oil wells.

Another reason nobody wants to talk about abiotic oil.

Nothing can be proved and nobody is talking.

Anaconda said...

DOES ABIOTIC OIL REGENERATE?

Does abiotic oil regenerate is the 64 trillion Dollar question everybody wants to know. This writer doesn't know the answer to that question. And it follows, that if oil does regenerate, this writer doesn't know at what rate.

What this writer can say with unqualified confidence is that supplies of petroleum are much larger than generally known or acknowledged. On an order of magnitude larger because oil is abiotic.

Should abiotic oil not regenerate at all, there is still supplies to last 200 years. Until 2208 if man can still survive.

That's 200 years with continued growth in production and consumption at current rates of increase in both.

No small amount.

"Where's your backup?" An objection could be made. The smart aleck answer is the whole blog.

But more specifically, the answer is first, Kudryavtsev's Rule: Where there's oil, there's more oil. Second, subsalt oil is a huge new virgin territory, and part of that is the concept of "oil domes" in the salt, by way of the law of fluid dynamics. Third, the incredible depth of the system of faults and fissures all over the world. Forth, the fact that even in areas that have been explored and produced like Texas, most of this was shallower than 8,000 feet. Between 8,000 feet and bedrock is a lot of territory for further exploration.

Why does this writer state not to know if petroleum regenerates?

There are "tales" of oil wells maintaining flow rates longer than projected and keep producing after anticipated depletion. There are documented stories like the Eugene Island well in the Gulf of Mexico, which started to deplete, but then saw production jump back up. And the entire Gulf of Mexico basin "leaks" oil on a coninual basis, as well as undersea seeps off the coast of California.

But it's possible that because of the massive amounts of oil in the abiotic facture network in the crust down to the bedrock and beyond that it gives the impression that oil wells "top up" from below.

There is speculation that earthquakes are not only just the result of tectonic plate movements, but are also pressure releases for abiotic oil buildups. There have been Calculations of oil seepage rates world-wide, which project that petroleum would have depleted long ago, if it had been seeping for hundreds of millions years, and was finite as "fossil" theory claims.

So, does this writer think it's possible that crude oil regenerates?

Yes. It is quite possible. This writer just hasn't seen clear and convincing evidence to make that scientific conclusion, while there is overwhelming evidence for the abiotic origin of petroleum.

Some object and say, "If oil doesn't regenerate, it's irrelevant whether it's abiotic or not, it will run out eventually.

Wrong!

Oil's origin is important in terms of pure science -- truth for its own sake -- but the amounts of oil in the ground that can be recovered and produced would be orders of magnitude different between the two different theories.

200 years is a longtime to develop 'alternative' energy.

And if you pressed this writer real hard on the regeneration question, this writer would lean in regeneration's direction because there is no theoretical reason for abiotic processes to "stop" in the mantel at some arbitrary point in time.

This writer just isn't ready to declare oil regenerates, yet.

Anaconda said...

PEAK OIL IS PURE BUNK

Peak oil is pure bunk -- always has been. Let's look at the U.S. in 1970 when Hubbert predicted his peak in U.S. production.

The price of oil was regulated -- some oil was mandated, as cheap as three dollars a barrel. Much of it was mandated at $11 a barrel -- all this was mandated on a complicated formula based on the age of the oil well, and other factors -- America did not have a free market for oil until after 1980. Guess what? production hit a plateau or slightly declined in the 1970's. It doesn't take a rocket scientist to figure out why.

Oil companies could make more money on foreign oil -- so they did.

Today, politics controls oil production -- over 75% of oil in the world market is controlled by nationalized oil companies.

There is a long lead time from planning, exploration, production, and finally to market for oil. Many projects are years in the making. What was happening eight or nine years ago? World oil prices dipped briefly under $10 a barrel. What do you get when it costs more to produce oil than you can sell it for? That's right, limited exploration for oil.

This current plateau is the direct consequence of that period when little or no exploration for oil was being conducted.

T. Boone Pickens is a shill for higher prices -- it helps his investments, it's his prerogative. But keep in mind his sel-interested motives, too.

And, there are dozens of other shills for Peak oil with the same self-interested motives. And, there are others, who have a political agenda for higher oil prices for a myriad of reasons.

The oil geology is not exhausted (reached its half-way point, definition of Peak).

Offshore, continental shelf oil is untapped in many parts of the world, even, here, in the U.S. the entire East coast and West coast, and Eastern Gulf of Mexico is off-limits. The continental margin (slightly beyond the continental shelf) is just beginning to be explored. Not to mention ANWAR --politics, again. The Carolina Trough is a virgin territory, and has excellent geological indicators of huge potential oil finds.

Today, oil is being found deeper and deeper in the geological strata -- that's a fact. And, there are projects underway, which will give a very clear idea of how deep oil discovery can go, if not down to the bedrock and beyond.

Massive investment in ultra-deepwater, deep-drilling ships is taking place. These rigs can drill 40,000 feet TVD. Somebody thinks there is oil down there and are willing to spend $750 million a ship to find it.

Will the oil be expensive? Yes. $70 a barrel to "lift" the oil on average. Energy wil never be "cheap" again, absent a world-wide depression.

And, make no mistake, there are those who bad-mouth ultra-deep drilling, whether on land or sea, because it goes against their deepest held beliefs (the "oil window"). Even when the list is long, and growing longer, of successful ultra-deep drilling over 20,000 feet deep, all over the world, not just in the Gulf of Mexico.

ExxonMobil announced this year they are concentrating on makeing existing assets more productive: Translation: Drill deeper into existing fields, primarily in Texas, but in other places as well.

Those with a poltical agenda will continue their yabbering on Peak oil, no matter what -- the most radical want to de-industrialize America.

But those that are shills for Peak oil, wanting higher prices, based on geology, have nothing to fear from debunking Peak oil, and subsequent expanded exploration and production -- there is too much pent up demand in the world, and the oil is too expensive to "lift," to sell it "cheap."

Solid, high profits will be returned in a world free of the fear of Peak oil.

And the general world economy will be better off, helping other investments in your portfolio.

So, stop blabbering about Peak oil, before events (oil discoveries) overtake you -- and your beliefs are exposed as being false, and your services are worthless.

Zachary said...

I've long expected that the peak oil theory was created by those who had the most to gain from the belief that oil was scarce.

Some will say that this is a conspiracy theory and should not be given credance.

I say that it's not a conspiracy it is simply the way that any person who has any type of product to sell will behave.

If your product is wanted and you can convince people that it is scarce then you can get more for it.

Anaconda said...

Zachary:
In a way, it pains this writer to point out T. Boone Pickens as a shill for Peak oil because, as you correctly point out, it's natural to want to 'pump up' the prices on your assets and investments.

But Pickens is one of the most flagrant examples, with his constant harping on Peak oil.

This writer also has tried to stick to the science, but with oil, it's almost impossible to stay clear of politics, entirely.

One countervailing benefit of higher prices, which can't be denied, though, is that it has spurred exploration and production -- more specifically, high prices have made ultra-deepwater, deep-drilling economically feasible (read profitable).

As this writer has said before, the deepwater sector of the oil industry, specifcally its exploration and discoveries, is the most promising for revealing the truth about abiotic oil.

And abiotic oil's acceptance as scientific truth -- this writer's interest -- will only come on the back of economic investment.

The investment adage: "Know the product," is key to unlocking the truth.

Investors needing, demanding to know the truth to gauge their investments, is the best bet to force the oil geologists out into the sunlight of the truth.

Yes, this mission is analogous to Plato's Socratic metaphor of the cave.

The science of oil geology is dominated by economics like no other branch of the physical sciences.

To the point that oil geology almost isn't a science anymore. It's more like a cult as OilIsMastery has stated.

The soft underbelly of oil geologists is the money. That's one reason they have steadfastly stayed with "fossil" theory, in the teeth of overwhelming scientific evidence for abiotic oil.

So, it only makes sense that money will be the leverage that finally opens their eyes to the science.

Right now, the money is on the side of abiotic theory. That gives this mission a chance.