RE: Dangers of peak oil

From: Glenn Morton <glennmorton@entouch.net>
Date: Fri May 21 2004 - 21:42:17 EDT

I was notified by David Tyler, a friend and YEC with whom I argue all
the time, that the science paper was coming out. I will order it on
Monday. Of the following article, I wll make comments interspersed.

> -----Original Message-----
> From: asa-owner@lists.calvin.edu
> [mailto:asa-owner@lists.calvin.edu] On Behalf Of Duff,Robert Joel
> Sent: Friday, May 21, 2004 6:41 PM

> " According to a paper in the latest edition of Science
> magazine, proven world oil reserves exceed one trillion
> barrels. Overall, the paper reckons that the world retains
> more than three trillion barrels of recoverable oil resources.

What I have observed in this great debate is that those like this guy
who say there is no problem always talk about reserves. I will give
them the reserves, There are 3 billion barrels of reserves and counting.
Each year more is added to the reserves. Big deal. Reserves don't
necessarily translate into PRODUCTION. The world needs PRODUCTION, not
reserves. There are an estimated 4 trillion barrels of hydrocarbons in
the Orinoco Tar Belts, but no one can get much of it out of the ground
because it is extremely viscous--more viscous than road asphalt. So
when people are looking at articles like this, ask yourself the
following question. If I put a trillion dollars in your bank account
(which are monetary RESERVES), but only allowed you to get it out at
$10/week(which are monetary PRODUCTION), are you rich?

>
> Far from oil "running out" as some might have it, the big
> story of the oil industry over the past 50 years has been the
> way in which technological change has continuously worked,
> not only to yield up new discoveries but also to upgrade the
> size and extent of existing fields.

This is pure BS IF one talks about the total quantity of oil discovered.
If one counts the number of tiny fields discovered by these new methods
(like 3D seismic, 3D-4 component seismic, then we have probably found
more fields. But that is not what is important. We need to find more
oil. For the past 24 years the world has been finding less oil. Take a
look at the global oil discoveries averaged over 5 year intervals and
think about the fact that we use about 27 billion barrels per year. In
1990-95 we found about 10 billion bbl/year, but pumped 25 billion.
Today we find 3 billion per year and pump 27. Not really good economics
heres!

Take a look at http://home.entouch.net/dmd/globaloildiscoveries.jpg

>
> The paper, Never Cry Wolf - Why the Petroleum Age is Far from
> Over, cites the example of the Kern River field in
> California, first discovered in 1899. Calculations in 1942
> suggested that 54 million barrels remained. In fact, over the
> next 44 years the field produced 736 million barrels and in
> 1986 was reckoned to have another 970 million barrels remaining.

The Kern River field is a heavy oil field. Yeah, if they had not
started steam flooding it in 1962 it would have been abandoned. But
there are two things about steam flooding one must know. Steam flooding
is very expensive, requires much energy and lots of water. This
technique won't work in areas without lots of water and ultimately you
get less energy per dollar invested.
>
> >From 1981 to 1996, the estimated volume of oil in 186
> well-known giant
> fields across the world discovered before 1981 rose from 617
> to 777 billion barrels - and this without new discoveries.

Once again, these are reserves, not production. When discovered, all
fields are under-reported for size. This is due to the SEC regulations
which require a division of proved, probable and possible reserves.
Unless you can move reserves to the proven category, you can't report
them. These stringent requirements for reporting only proven oil, gives
a false sense that suddenly there is more oil in the world. That isn't
true at all. Oil companies know the 3P numbers but are only allowed to
report the 1P. Probable and Possible reserves don't get reported until
they move to the 1p category.

So, when people say such nonsense as above, they show they don't
understand the reservoir reporting requirments at all. That is not to
say that we don't occasionally find extra oil in a field, but it also
happens occasionally that we find less oil than we had proven at which
point a company must write the reserves down.

>
> This trend, the paper argues, is likely to continue. For
> example, the Kashagan field in Kazakhstan was deemed in the
> second half of the 1990s to hold between two and four billion
> barrels. In 2002 , after completion of only two exploration
> and two appraisal wells, estimates were officially raised to
> between seven and nine billion barrels. In February this
> year, after four more exploration wells in the area, they
> were raised again to 13 billion barrels.

BS. When first discovered, Kashagan was claimed to be a 50 billion
barrel field!

" Although first touted as a 10-50 billion bbl structure, current
estimates put its reserves at the lowest level of this range. " Roger
Knight and John Westwood, "Special Report: Looking at Offshore Europe
prospects in a global context", Oil and Gas Journal, Aug 19, 2002,
http://ogj.pennnet.com/Articles/Article_Display.cfm?Section=Articles&ART
ICLE_ID=152257&x=y
>
> Recovery rates from fields worldwide have also increased,
> from about 22 per cent in 1980 to 35 per cent today.

This is true, but we have recovered most of the oil via drilling more
wells, drilling horizontal wells and sucking on those straws like crazy!
Today we do what has been termed a bottle-brush well which kind of looks
like a christmas tree. It is called a multilateral. In this way we
reach out and get more contact with the reservoir. This increases the
recovery factor but it also accelerates the future decline in the oil
field.

>
> So why the panic? The real issue, says the article, is that
> neither major producing countries nor the big oil companies
> have been keen to invest money in substantial exploration
> campaigns. One reason has been the fear of creating permanent
> excess capacity such as in the mid-1980s,
> when the oil price tumbled to just $10 a barrel."

There is no doubt that low price has restricted production, and there is
no doubt in my mind that the very high prices today won't last for a
year--the price will drop for a while, unless, we have already peaked in
production.

And I would like to ask this great Scotsman who wrote this article, why,
if all this technology is going to keep the world safe from depletionist
wackos like me, this technology hasn't worked to maintain the production
rate in the UK (down 30% in 4 years, Oman down 30% in 3 years, the US
down 50% in 33 years etc etc. When will we see this technology actually
increase the rate of production in some post-peak country???? Everyone
should ask themselves that when they read articles like this.
Received on Fri May 21 21:43:00 2004

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