Dangers of peak oil

From: Glenn Morton <glennmorton@entouch.net>
Date: Tue May 18 2004 - 07:18:38 EDT

It seems that even dentists on this list know that there is little
danger from peaking out in oil production and that things are being
presented as overly gloomy. I hope so. I don't think people here
understand how rapidly decline can set in and how fast things can drop.I
ran into a couple of articles. Here is the UK annual production from
1996 on

Year thousand tonnes
1996 129,742
1997 128,234
1998 132,633
1999 137,099

No problem up to the year 1999. The only hint of a problem was not very
impressive. The December 1998 production was 700,000 tonnes larger than
the Dec 1999. But no one paid attention because that kind of fluctuation
is normal in oil production for a country the size and volume as the UK.
But then came 2000, the first year I was in the UK. And the rate of
decline is significant.

2000 126,029
2001 116,677
2002 115,944
2003 106,087

Source--Dept. Trade and Industry

In December of 1998, the UK produced 12.3 million tonnes. In February
of 2004 they produced 7.8 million tonnes. Do the math. The rate of
production has fallen 30% on a daily basis in only 4 years. If this
happens to world production, there won't be time, energy or money to
build all those nuclear plants that many on this forum sanguinely think
will magically appear. That is why my question. What if we have already
peaked in world oil production?

I asked that of an engineer yesterday. He said, We have peaked when it
comes to light non-viscous oils but he felt that we hadn't peaked in
heavy oil production. I asked him if he expected to get 80 million per
day from the heavey oil production? He said absolutely not! As you
will see below, we will need that much but it won't be there.

I expect 2004 to be in the range of 96,000 million tons. We are only
five years from peak in the UK. How many nuclear plants have been built
in the UK as a response to their catastrophic drop in production? Zero.
So those thinking we can build nukes to solve the problem don't realize
that when the peak happens, the rate of decline might be such that by
the time we realize we need to build nukes, the quantity of energy
available is much less and the cost for that energy has been bid up to
astronomical levels.

Take Oman as another example. This data comes from the BP Statistical
Review of World Energy and Nassir Shirkhani, Upstream, Dec. 19, 2003, p.
8
1996 897
1997 909
1998 905
1999 911
2000 959
2001 961

Everything looks rosy. Now look at the last 2 years and the expectation
for this year.

2002 902
2003 703
2004 650 estimate

How many nukes have been built?

Now lets go to Saudi Arabia. A News account in the London Sunday Times

        "Saudi oilmen are usually a taciturn bunc, guarding their data
like state secrets. But this was post September 11 and Riyadh was wooing
western journalists and trying to restore the Saudis' image as
dependable, long-term suppliers of energy--not suicidal fanatics nor
terrorist financiers. And it was working.
        "Then the illusion slipped. On a whim I asked my hosts about
another , older oilfield called Ghawar. It is the largest field ever
discovered, its deep sandstone reservoir at one time had held perhaps
one-seventh of the world's known oil reserves, and its well produced
roughly one of every 12 barrels of crude consumed on earth. In the
iconography of oi, Ghawar is the mythical giant that makes most other
fields look puny and mortal.
. . .
        "At Ghawar,' he said, 'they have to inject water into the field
to force the oil out,' by contrast, he continued, Shayba's oil contianed
only trace amounts of water. At Ghawar, the engineer said, the 'water
cut' was 30%."
        "The hairs on the back of my neck stood up. Ghawar's water
injections were hardly news, but a 30% water cut, if true, was
startling. Most new oilfields produce almost pure oil or oil mixed with
natural gas--with little water. Over time, however, as the oil is drawn
out, operators must replace it with water to keep te oil flowing --until
eventuallyw hat flows is almost pure water and the field is no longer
worth operating."
        "Ghawar will not run dry overnight, but the beginning of the end
of its oil is in sight." Paul Roberts, "New Tyrants for Old as the Oil
Starts to Run Out, " Sunday Times (News Review), May 16, 2004, p. 8

I have noted before that reservoir simulations show that Ghawar will
take a catastrophic decline in production before 2009. How many nukes
will we have built by then?

The best near term energy bridge is LNG terminals. But as was noted on
this forum a week ago, communities are declinging to be host to such
things. We will need to build over a 100 of those to replace oil, but
apparently none will be built. Not a single refinery has been built in
the US for over 15 years, yet we still want to drive our big cars--we
just don't want to refine the gasoline for them. Nor do we want to build
new energy infrastructure to take care of what is about to come upon the
world. (Dentists not excepted)

Now we come to today's news. In spite of OPEC saying that they would
raise the quotas, the markets yesterday shrugged it off and the oil
price went even higher--a record high in current dollars (no inflation).
Part of this price is terrorism fears, but part is reflecting the fact
that we have an oil hungry world. China's demand for energy went up 15%
from 1st quarter 2003 to first quarter 2004 (the Observer(business) UK,
May 16, 2004, p. 5). The markets are clearly saying that they don't
believe OPEC has the capacity to fuel the world's energy needs.

And if you will recall, I noted a couple of months ago about a reservoir
management forum I had attended. Today we produce about 80 million
bbl/day. The fields producing today will be producing only 40 million
bbl/day 16 years hence. Demand for oil is expected to be 120 million
bbl/day. We in the oil industry are thus required to put on production
in the next 16 years the same amount of oil we have on line today. No
one thinks we will be able to do that. Is 30 billion barrels per year
production. At the rate of current discovery rate, it will take ten
years to find that much RESERVES, but we won't save it all up to put it
on line in 2020. We will be producing much of that between now and 2016.
And even if we put it all on line in one year 30 billion barrels of oil
will not come out of these new fields in one year. And if we did get 30
billion barrels out of those fields in one year, we would then have to
find another 30 billion for the next year and recall that it takes ten
years to find the next 30 billion. We find oil at a rate today of 3
billion barrels per year. Do the math, it gets hard to get there from
here.

Sure this sounds gloomy. But false Rebecca-of-Sunnybrook-Farm optimism
by denstists won't get the alternative energy sources built. The rate
of decline in oil production which we might experience could be too fast
to react with long-term energy projects.
Received on Tue May 18 07:20:13 2004

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