Peak Oil at 2014?

Sam Kade

brendansmith wrote: »

This is quite worrying, a good documentary on this is 'A crude awakening'.

I still think that an alternative fuel will be invented before we get in trouble though. What o ye think on this subject?

I wouldn't worry too much about it, we were told back in the 70's that oil was running out fast lot's of it burnt since.

Capt'n Midnight

Sam Kade wrote: »

I wouldn't worry too much about it, we were told back in the 70's that oil was running out fast lot's of it burnt since.

Peak Oil is actually about Peak CHEAP Oil

there is plenty of oil, only a small fraction of it economically accessible

BTW there's loads of Coal in Antarctica

Waestrel

Capt'n Midnight wrote: »

Longer term the cost of renewables keep dropping. the long term trend is solar to drop by 7% a year and wind by 14% every time global capacity doubles.

electricity usage for lighting is dropping as we move to CFL's and LED's. The savings from them are greater than the electricity supplied by nuclear power.

That i think is important, highoil prices may not cause a transition to fracked oil, but rather to renewables. There is a price people will not pay for oil at the pump, and wil instead take publin transport,but an ecar, work from home, try to cycle, etc. May not be feasible for everyone, but it will be a trend. Oil demand is not infinity elastic.

celtic_oz

See this thread on Physics here

See latest (Sept 2014) third party results here , here and here

Then the analysis of the price of oil v tests, here.

http://www.businessinsider.com/one-of-the-worlds-biggest-oil-projects-is-a-total-fiasco-2014-10
WHEN it was discovered in 2000, the Kashagan oilfield in Kazakhstan’s waters in the northern Caspian Sea was the world’s biggest oil find in three decades. By now it was supposed to be pumping out 1.2m barrels a day (mbd), enough to meet Spain’s entire consumption.

But the project, whose name sounds unfortunately like “cash all gone”, went spectacularly awry. A year ago, when the first trickle of crude briefly flowed, it was already eight years behind schedule. Having cost $43 billion, it was $30 billion over budget. And production lasted only a few weeks before leaks of poisonous gas forced its suspension. Earlier this month a government minister admitted it would not restart until at least 2016.

Undeterred by the Kashagan fiasco, this week the government said it would approve a plan to expand the onshore Tengiz oilfield, another huge budget-buster. Tengiz was first expected to cost $23 billion but the government said this week that the bill had risen to $40 billion.

Each of the two oilfields is owned by a different consortium of foreign firms and the state oil company, KazMunaiGaz. In Kashagan’s case they include Exxon, Shell, Total and ENI. In part the project’s setbacks are due to unexpected technical problems. Corrosive and poisonous hydrogen sulphide gas, pumped up from the seabed along with the oil, has eaten through pipes bringing it onshore.

This was one of the fields that was expected to maintain production levels into the future, a few more failures like this and production could go into decline quicker than expected.

Capt'n Midnight

http://www.bbc.co.uk/news/business-29594761

Brent crude fell to a near four-year low of $87.74 a barrel earlier, before recovering some ground to $88.46.
...
Oil prices have fallen 20% since June.

Kuwait's oil minister, Ali al-Omair, was quoted by state news agency KUNA as saying over the weekend that a price of $76-$77 a barrel might be the floor price.

That is what it costs to produce a barrel of oil in Russia and the US, so any lower could mean producers mothballing production or running at a loss.

http://www.nrl.navy.mil/media/news-releases/2014/scale-model-wwii-craft-takes-flight-with-fuel-from-the-sea-concept

Navy researchers at the U.S. Naval Research Laboratory (NRL), Materials Science and Technology Division, demonstrate proof-of-concept of novel NRL technologies developed for the recovery of carbon dioxide (CO2) and hydrogen (H2) from seawater and conversion to a liquid hydrocarbon fuel.
...
The predicted cost of jet fuel using these technologies is in the range of $3-$6 per gallon, and with sufficient funding and partnerships, this approach could be commercially viable within the next seven to ten years.

A barrel of oil is about 31.5 us gallons. so synthetic fuel could cost as little as $95-$190 a barrel , take that with a pinch of salt, and add the cost of renewables to harvest the energy to make the fuel. But like I've said before synthetics means is a hard limit to the upper price of oil in the long term.

OK it's zerohedge, but lower prices do make the high priced extraction of shale oil uneconomic in the medium term and will bankrupt many producers in the longer term.

19 US Shale Areas That Are Suddenly Endangered, "The Shale Revolution Doesn't Work At $80´´


Despite the constant blather that lower oil prices are "unequivocally good" for America, we suspect companies working and people living these 19 Shale regions will have a different perspective...



Drilling for oil in 19 shale regions loses money at $75 a barrel, according to calculations by Bloomberg New Energy Finance. Those areas pumped about 413,000 barrels a day, according to the latest data available from Drillinginfo Inc. and company presentations.



"Everybody is trying to put a very happy spin on their ability to weather $80 oil, but a lot of that is just smoke," said Daniel Dicker, president of MercBloc Wealth Management Solutions with 25 years' experience trading crude on the New York Mercantile Exchange. "The shale revolution doesn't work at $80, period."

http://www.zerohedge.com/news/2014-11-26/19-us-shale-areas-are-suddenly-endangered-shale-revolution-doesnt-work-80

omicron

Brent is $77.60 at the moment. Amazing how quickly it fell when for a long time it looked like sub $90 would never happen again.

Capt'n Midnight

Deleted User wrote: »

OK it's zerohedge, but lower prices do make the high priced extraction of shale oil uneconomic in the medium term and will bankrupt many producers in the longer term.

Technology marches on.

There are costs to extract fuel.

With fossil fuels energy is probably the biggest and should be carbon taxed imho. But new tech will reduce the energy needs and paradoxically the more fuel costs the more fuel you can use to extract it because the margins are bigger

I can see renewable energy being used to harvest fossil fuel , those large Bagger bucket wheel excavators are hooked up to the electricity grid, so in effect it's acting like a kinda sorta battery in a usage displacement view ,harvesting fuel while the sun shines

one cost that will go up is the environmental ones as more laws are passed to control this aspect


Most of these points also apply to nuclear especially now most of the easy ores have been mined and while there is a lot of uranium in some granite it takes a lot of energy to process hard rocks

EROEI is an important metric, we've all heard of the bio-diesel analysis in Germany where they found that it took nearly a litre of fossil fuel to provide all the extra fertilizer, transport and processing to produce a litre of bio-diesel and was only financially economic because of rebates, subsidies and lower vat/excise duty.

Lucena

Sam Kade wrote: »

I wouldn't worry too much about it, we were told back in the 70's that oil was running out fast lot's of it burnt since.

So basically we're ok because somebody make a wrong prediction in the 70s??

By that reasoning, if I predict that I'll get cancer in the next five years, and that turns out to be false, I'll be sure I'll NEVER have cancer. Sounds good, sign me up!

Capt'n Midnight

Capt'n Midnight wrote: »

Technology marches on.

There are costs to extract fuel.

With fossil fuels energy is probably the biggest and should be carbon taxed imho. But new tech will reduce the energy needs and paradoxically the more fuel costs the more fuel you can use to extract it because the margins are bigger

I can see renewable energy being used to harvest fossil fuel , those large Bagger bucket wheel excavators are hooked up to the electricity grid, so in effect it's acting like a kinda sorta battery in a usage displacement view ,harvesting fuel while the sun shines

one cost that will go up is the environmental ones as more laws are passed to control this aspect


Most of these points also apply to nuclear especially now most of the easy ores have been mined and while there is a lot of uranium in some granite it takes a lot of energy to process hard rocks

EROEI is an important metric, we've all heard of the bio-diesel analysis in Germany where they found that it took nearly a litre of fossil fuel to provide all the extra fertilizer, transport and processing to produce a litre of bio-diesel and was only financially economic because of rebates, subsidies and lower vat/excise duty.

Yes, it's very important to remember that oil isn't the only fuel, it's just the best one for many of the tasks that it is used for, e.g. flight. It's use is also extremely wasteful in so many ways and it is this waste that the recent high prices have chipped away at.

The real fear is that with cheaper (less expensive) some of the more wasteful uses will return. In the US sales of larger vehicles that have higher fuel consumption have apparently started to increase relative to the more efficient vehicles.

Leave oil before oil leaves us should be the course of development because a lower flow rate of oil will be easier to maintain and will ultimately produce far more oil than fast extraction. Fracking produces a field extraction curve with a "long tail" so the oil will be around for a very long time and will remain relatively cheap to operate after the initial costs of starting the well are excluded. It is possible to manage the decline of supply without any drama, it just has to planned for.

Looks like my theory that low prices will kill projects and quickly causing a decline of new oil coming on stream is being played out.

http://uk.reuters.com/article/2014/12/05/uk-oil-investment-idUKKCN0JJ0D220141205
(Reuters) - Global oil and gas exploration projects worth more than $150 billion (£95.9 billion) are likely to be put on hold next year as plunging oil prices render them uneconomic, data shows, potentially curbing supplies by the end of the decade.

As big oil fields that were discovered decades ago begin to deplete, oil companies are trying to access more complex and hard to reach fields located in some cases deep under sea level. But at the same time, the cost of production has risen sharply given the rising cost of raw materials and the need for expensive new technology to reach the oil.

Now the outlook for onshore and offshore developments - from the Barents Sea to the Gulf of Mexico - looks as uncertain as the price of oil, which has plunged by 40 percent in the last five months to around $70 a barrel. [O/R]

Capt'n Midnight

Deleted User wrote: »

Looks like my theory that low prices will kill projects and quickly causing a decline of new oil coming on stream is being played out.

It won't kill them.

They will be put on hold until they become economic as new tech reduces costs or demand increases prices.

Markcheese

But it may well kill a lot of the alternative energy field - start ups with great ideas or new technology go bust- governments stop funding research - then economies pick up, demand starts to near supply and we're off again- then price kills economies demand and price slumps , the yoyo continues

Capt'n Midnight

Capt'n Midnight wrote: »

It won't kill them.

They will be put on hold until they become economic as new tech reduces costs or demand increases prices.

I don't hold out much hope for new tech making the extraction of hard to get oil any cheaper, it may make currently impossible fields possible but at an extremely high price. By the time the price has risen enough to restart many of the fracking sites, the companies running them will have already gone bust. Consistently high prices have proven to be a real drag on the economy, the lower prices now may kick-start things a bit.

So is it a yoyo or is it peak?

Deleted User

Deleted User wrote: »

So is it a yoyo or is it peak?

A yoyo, that never exceeds the heights of 2014

Markcheese

[Deleted User] wrote: »

I don't hold out much hope for new tech making the extraction of hard to get oil any cheaper, it may make currently impossible fields possible but at an extremely high price. By the time the price has risen enough to restart many of the fracking sites, the companies running them will have already gone bust. Consistently high prices have proven to be a real drag on the economy, the lower prices now may kick-start things a bit.

I was thinking more energy saving and renewable energy tech rather than oil industry tech -
Also with the fracking firms- even if they go bust a lot of the oil and gas will keep flowing - a huge amount of the cost of production per barrel would be start up cost and debt servicing- if a small(ish) fracking company goes bang,someone else will buy it for a song and keep the wells producing - of course no one will drill new wells till the price is steadily high enough -

Markcheese

Markcheese wrote: »

I was thinking more energy saving and renewable energy tech rather than oil industry tech -
Also with the fracking firms- even if they go bust a lot of the oil and gas will keep flowing - a huge amount of the cost of production per barrel would be start up cost and debt servicing- if a small(ish) fracking company goes bang,someone else will buy it for a song and keep the wells producing - of course no one will drill new wells till the price is steadily high enough -

Yes, I think there's plenty more to do on that front, plus a change of thinking when it comes to personal transport. Do you really need to drive to seven different shopping centres just for one dress!

Deleted User

Deleted User wrote: »

A yoyo, that never exceeds the heights of 2014

In terms of price? Or in terms of production? Or in terms of a vague "cheap supply" whose definition can be changed to be correct afterwards?
There's no sign of a big pick-up in demand soon so the peak of production can be explained by changes in demand and price as much as availability as it can by changes in actually availability.

Deleted User

Deleted User wrote: »

In terms of price? Or in terms of production? Or in terms of a vague "cheap supply" whose definition can be changed to be correct afterwards?
There's no sign of a big pick-up in demand soon so the peak of production can be explained by changes in demand and price as much as availability as it can by changes in actually availability.

In terms of production due to the "fracking frenzy" that has just happened, investors will be a bit more cautious about throwing money into high priced oil projects after the flaming they are now enduring. With the real risk of deflation, prices may also have peaked in 2008.

Capt'n Midnight

Deleted User wrote: »

I don't hold out much hope for new tech making the extraction of hard to get oil any cheaper, it may make currently impossible fields possible but at an extremely high price. By the time the price has risen enough to restart many of the fracking sites, the companies running them will have already gone bust. Consistently high prices have proven to be a real drag on the economy, the lower prices now may kick-start things a bit.

First of all Fracking itself was a new technology that proves that previously inaccessible resources could be utilised when the price / technology make it worth while.

Even if the companies go bust the fuel will still be down there.

In the future Microbes / enzymes / biotech may be use to break down long chain molecules into shorter ones. So the thick oil that's unrecoverable from existing fields might be broken down into lighter fractions or even gas.

And there's always methane cladates which the Japanese have started harvesting.


There is no shortage of fossil fuel.
liquid fractions suitable for transport uses are more expensive but could be made from gas/coal/etc. with higher energy and processing costs

but Peak Oil is not about lack of hydrocarbons, it's the peak of CHEAP OIL

If we went on a humungous recyclables / insulation / electrification / sequestration program we could sort out the carbon dioxide issue too. But it wouldn't be cheap.

Ron Patterson calls the peak! http://peakoilbarrel.com/peak-oil-right-now/

In this life nothing is certain. Therefore I am not declaring, absolutely, that we are at peak oil, only that it is a near certainty. But I am putting my reputation on the line in making the claim that the period, September 2014 through August 2015 will be the year of Peak Oil. Below are my reasons for making this claim.
First of all, Peak Oil is not a theory. The claim that Peak Oil is a theory is more than a little absurd. Fossil hydrocarbons were created from buried alga millions of years ago and they are finite in quantity. And as long as we keep extracting them in the millions of barrels per day, it is only common sense that one day we will reach a point where their extraction starts to decline. In fact most countries where oil is extracted are already in decline. So obviously if individual countries can experience peak oil then the world as a whole can also experience peak oil.

Waestrel

Deleted User wrote: »

Ron Patterson calls the peak! http://peakoilbarrel.com/peak-oil-right-now/

Oil companies will be laying off staff in thoudands over the next few weeksif they have not done so, including our own tullow oil. The days of the oil companies payingbig wages are over, and they have ****canned a lot of exploration - shareholders want cashflow. When oil prices return to the 8p-100$ mark in a year or so, oil companies will find themselves with a poor pipeline of prospects.

The oil age is in wind down.

Capt'n Midnight

Waestrel wrote: »

Oil companies will be laying off staff in thoudands over the next few weeksif they have not done so,

http://www.bbc.com/news/business-31087658

US union leaders have launched a large-scale strike at nine refineries after failing to agree on a new national contract with major oil companies.

It marks the first nationwide walkout since 1980 and impacts plants that together account for more than 10% of US refining capacity.

http://www.lancasterguardian.co.uk/news/heysham-1-on-shutdown-after-water-leak-1-7076174

The price of oil rallied on Monday as investors speculated that the falling cost of crude may have ended.
...
Monday's price rise extended the gains made last week, and boosted oil and gas share prices. Tullow Oil rose almost 7%, while BG Group climbed 5%.

The speculation in oil prices sounds like a bear trap where speculators buy in bulk only to sell as soon as the flock pile in!
Judging by the wild swings in the price today, someone's made a killing.

Oil price unlikely to rebound - Saudi official

http://www.bbc.com/news/business-32012062
The oil price is unlikely to reach again the record levels seen in the past few years, according to Saudi Arabia's representative at Opec.

Mohammed al-Madi, Saudi's Opec governor, told an energy conference that hitting the $100 to $120-a-barrel mark again would be "difficult".

Mr Madi also told the meeting in Riyadh that that his country's oil policy had no "political dimension".

Saudi is Opec's biggest producer and the dominant voice with the group.

On Friday, Brent crude closed at $55.2 a barrel, while US oil was $46.5.

Asked if the price could return to previous highs, Mr Madi said: "$100-$120 - I think it's difficult to reach $120 another time."

Meanwhile in Saudi America...

Watch Four Years of Oil Drilling Collapse in Seconds.

The crash in oil prices kicked off intense debate over when, and how, American producers would react. So far they’re still cranking out oil, but there are signs that a slowdown is looming. Chief among them: the record drop-off in drilling for new oil. The animation below shows the deployment of drilling rigs since 2011, culminating recently in a sudden collapse.

http://www.bloomberg.com/graphics/2015-oil-rigs/

robp

Waestrel wrote: »

Oil companies will be laying off staff in thoudands over the next few weeksif they have not done so, including our own tullow oil. The days of the oil companies payingbig wages are over, and they have ****canned a lot of exploration - shareholders want cashflow. When oil prices return to the 8p-100$ mark in a year or so, oil companies will find themselves with a poor pipeline of prospects.

The oil age is in wind down.

Time will tell, but how far it falls could just heighten how sharp the recovery is too.

Waestrel

On a related note - how likely is it that the irish offshore will ever yield oil? I would imagine that oil would need to be above 100$ to make exploration and production in the Rockall etc profitable?