RE: Matthew Simmons on Oil

From: janice matchett <>
Date: Wed Aug 24 2005 - 17:11:17 EDT

At 07:29 AM 8/24/2005, Glenn Morton wrote:

>janice matchett <> wrote:
>At 11:08 PM 8/23/2005, Glenn Morton wrote:
>>Might I suggest that multiplying a list of people who don't know what
>>they are talking about is no substitute for being correct?
>GRM: You didn't actually answer the question. You provided one person who

     ### JM: Who what? Knew what he was talking about? Hummmmm.

>Scientific American, March 1998
>the 21st Century
>Recent innovations in undergroundimaging, steerable drilling and deep
>water oil production could recover more of what lies below. By Roger N.
>(Roger N. Anderson is director of petroleum technology research at the
>Energy Center of Columbia University. After growing up with a father in
>the oil industry, Anderson completed his Ph.D. in earth sciences at the
>Scripps Institution of Oceanography at the University of California, San
>Diego. He sits on the board of directors of Bell Geospace and 4-D Systems
>and spends his summers consulting consulting for oil and service
>companies. Anderson has published more than 150 peer-reviewed scientific
>papers and holds seven U.S. patents.)
>GRM: First off, of course steerable technology recovers more. I have used
>it. We have drilled wells 15,000 feet away from the platforms in the
>North Sea and elsewhere. But recovering more means that when we abandon
>the platform we won't leave that oil behind. It doesn't mean that there
>are gazillions of barrels out there that this technology is suddenly
>finding. If there were a billion barrels of oil 3 miles from an offshore
>platform, I can assure you that the industry wouldn't use steerable
>technology to go get it. They would build several new platforms. This
>technology is used to extract the remaining small quantities of oil left
>behind in an oil field.
>BTW, this guy is on the board of Bell Geospace. I was one of the earlier
>customers of theirs. I have known everyone of their CEOs and presidents
>since they opened. They have some good people, a great product and I can
>tell you, in discussions with many of their people after work at
>conventions (over a beer), many of them share my views of the problems
>about to come upon the world. I don't know the guy listed above, but I
>doubt seriously that he expected his article to be misused as you are doing.

### JM: "Misusing" it, because why? ---- Because you think he's
not "optimistic" like me ??? :)

>The New Pessimism about Petroleum Resources: Debunking the Hubbert
>Model (and Hubbert Modelers)
>Michael C. Lynch
>(Michael Lynch serves as President of Strategic Energy and Economic
>Research and a research affiliate at the Massachusetts Institute of
>Technology's Center for International Studies. He previously served as
>Chief Energy Economist at DRI-WEFA, Inc., a leading economic consulting
>firm, and is a Past-President of the United States Association for Energy
>Economics. He currently is working on a book, The Fog of Commerce: Oil
>Crises and Economic Security, to be published within the next year. He has
>combined SB-SM degrees in political science from M.I.T. and has performed
>a variety of studies related to international energy matters, including
>forecasting of the world oil market, energy and security and corporate
>strategy in the energy industries, as well as analysis of oil and gas supply.)
>GRM: I know Michael Lynch. I have reviewed his articles prior to
>publication in the Oil and Gas Journal. I have little respect for Michael
>actually. I watched his presentation at the 2004 Offshore Technology
>Conference. He stilted his data. He claimed (boldly before a packed
>audience) that there was no problem in the UK production. I had just
>returned from the UK having been for 3 years the geophysical manager for
>the UK for an oil company. This was, remember, 2004. But he only showed
>the data up to 1999. Since then, the production in the UK has plummeted
>by almost 30%. The fact that he had to cook the data to support his claim
>made me sick. He only showed the data which supported his position and
>ignored the data which didn't, which is what I see in your Janice. As Matt
>Simmons said to me at that same convention: He will have a huge apology to
>give to the people of the United States when it does become clear that
>production has peaked. I agree.
>GRM: Sometimes I think what Lynch is trying to say is that the production
>curves don't match exactly the Hubbert curve (gaussian distribution), and
>thus Hubbert theory is wrong. Ok, so what if that is correct? No
>real-life data matches perfectly a theoretical curve. So what if
>production is a wee bit above or below the theoretical prediction? It
>still in general follows Hubbert's curve.
>GRM: I will challenge something Michael says:
>"And two recent discoveries, Kashagan in Kazakhstan and Azedagan in Iran,
>reportedly would together equal over ten percent of Campbell and
>Laherrere’s estimated remaining undiscovered oil. Statistically speaking,
>this is unlikely. Laherrere’s argument that the Middle East is near the
>end of its undiscovered oil is entirely based on the assumption that the
>observed fall-off in discoveries was due to a lack of geological
>opportunities, rather than government decision-making. (Laherrere
>2001b) To an economist, the drop in exploration reflects optimal
>behavior: they do not waste money exploring for something they will not
>use for decades. "
>Saudi Arabia has been thoroughly explored and there are no biggies left to
>be found. They have 90 some odd fields in that country which is probably
>about the right number given the area of the basin they have. Secondly,
>Kashagan was originally touted as a 50 billion barrel oil field. Yet BP
>sold it. Today it is touted as only a 12 billion barrel oil field, one
>that is very very far from the markets. Even Prudhoe bay, which was about
>the same size was almost too far from the markets to be able to produce
>it. Kashagan has not shown that there are vast quantities of oil left to
>be found to fuel the world. What it has shown is the opposite. BP didn't
>think it was worthwhile to stay with that field.
>GRM: Janice, you seem not to understand the role of pressure in an oil
>field (and neither does Michale Lynch). When one first puts a field on
>production, the pressure in the reservoir is high. Oil gushes out
>often. But as matter is removed from the void space in the rock, the
>pressure drops. Eventually the pressure drops to the point where one must
>put a pump down the hole. At that point you will never again see the flow
>rates you used to see. A field can putter along for years in this state,
>producing small quantities of oil. Generally this is 2-10% of the original
>flow. Believe it or not, that same phenomenon will apply to the aggregate
>production of the world. There will come a time (mid-century) when the
>world produces about 10% of what it does today and it will do that for a
>really long time so long as we continue to drill new wells.

### JM: I'm from western Pennsylvania. My family were among some of the
earliest settlers in America. They have been in all aspects of the oil and
gas well drilling business almost from the word go (Drake, and all that)
all the way from PA. to TX. to OK, to everywhere inbetween. We still have
wells pumping daily on family property there - the oil is still being
marketed. I've been present when plenty of wells came in and also when we
had to call in Red Adair to cap them. Point being:

[1] I do understand the role of pressure in an oil field.

[2] I am a "can-do" optimist. I will quote those I consider to be
realistic optimists in the energy field to counter the "can't do"
pessimists who are a dime a dozen. Roger N. Anderson is a realistic
optimist in my estimation - that's why I posted his article. Take note:
"....Though they receive little attention in institutional publications,
there are major controver-sies over the estimates of the ultimate reserves
of recoverable oil.

• The greatest optimists 1* base themselves on the fact that the total of
proven reserves has grown continually over the last 50 years. That growth
has been fuelled both by technological progress which has improved the rate
of recovery of oil from wells (30% on average in the 1960s, 40-50% today)
and by the recent addition of deepwater fields (> 1,000 m), which were seen
as impossible to exploit 15 years ago. They estimate, therefore, that in
the future three factors will make it possible to increase oil reserves:
­ the continuing improvement of recovery rates;
­ the discovery of oil in as yet unexplored zones (polar regions and deep
­ the exploitation of oil of a non-conventional nature, such as the
extra-heavy oils of the
Orinoco or the tarsands in Canada.
Projecting forward the past trend for proven oil reserves to increase, they
estimate that the world does not need to fear a shortage for 40, if not
indeed 80, years.

*1. This group includes the US Geological Survey (USGS); Roger N.
Anderson, Adjunct Professor at the University
of Columbia, a specialist in marine geology and geophysics; Michael C.
Lynch, Chief Energy Economist at DRI-
WEFA and an economist at the Center for International Studies,
Massachusetts Institute of Technology (MIT); and
Morry A. Adelman, economist at MIT.

• For the pessimists, 2* oil is a finite resource and its main areas of
exploitation were discovered long ago. Only small quantities of oil remain
to be found. In fact, the last discovery of a field containing more than
two years’ worth of global consumption (50 gigabarrels) goes back 30 years.
That was in the North Sea. Since the early 1980s, consumption exceeds
discoveries. In the 1990s, discoveries were running at less than half the
level of global consumption. They assert that the recovery rates of oil
wells depend more on the form and geology of the deposits than on
technology (the rate can vary between 3% and 80% depending on the nature of
the well). Recent technological progress has, in particular, enabled
better-targeted explo- ration of the areas likely to yield hydrocarbons,
and less costly exploitation. That progress will not, however, compensate
by better recovery rates for less productive finds, except in the case of
oils of a non-conventional
type (i.e. heavy oils, tarsands).

* 2. Including Walter Youngquist, retired Professor of Geology at the
University of Oregon, former geologist at Exxon
and author of Geodestinies: The Inevitable Control of Earth Resources over
Nations and Individuals (Portland:
National Book Company, 1997); L. F. Ivanhoe, former Senior Adviser of
Worldwide Evaluations of Petroleum
Basins to Occidental Petroleum and subsequently founder of the King Hubbert
Centre at the Colorado School of
Mines; Kenneth S. Deffeyes, head of the Shell Oil laboratory at Houston,
before becoming Professor of Geology
at the University of Princeton; Colin Campbell consultant, geologist with
Texaco and Amoco, and executive vice-
president of Fina-Norway; Jean Laherrère, consultant, geologist and
geophysicist, head of exploration techniques
at Total for almost 30 years. ~ [snip]

Another item:

<>Roger N. Anderson,
<>Lamont-Doherty Earth Observatory of
<>Columbia <>University

The naysayers:
Re: Eugene Island, Gulf of Mexico, US Territorial Waters

Eugene Island is one of the darlings of abiotic theorists. Cornucopians
point to Eugene Island as proof that oil reserves are mysteriously
refilling. There have been many bold and unreliable claims about the amount
of oil held in these reserves, and the rate of recharge. These claims fall
flat upon examination. Here we will stick to reserve data as reported by
the Oil & Gas Journal (OGJ) and the Minerals Management Service (MMS), two
reliable sources of information.

In 1978, the OGJ reported estimated reserves of 325 million barrels (Mb).
The figure was increased to 388 Mb by 1998, due to the standard US practice
of initially only reporting proven reserves and neglecting the probable
reserves. This practice evolved due to Security and Exchange Commission
rules on the reporting of oil reserves, but is a boon to US company
profiles because it allows them to regularly add to their reserve numbers
over time, making it appear that they are discovering more oil. Jean
Laherrere has said that the noted explorer Klemme estimated 500 Mb in
1977.16 The MMS estimated reserves at 464 Mb in 1986, and at 416 Mb in
1998, which would mean that reserves declined. Production peaked in 1996 at
around 30,000 barrels/day (b/d)-28,000 b/d reported in OGJ, and 33,000 b/d
reported by MMS.

Jean Laherrere created the following graph. It shows monthly production in
relation to total production, and demonstrates quite clearly that Eugene
Island is in decline. It also shows two distinct periods of recharge, both
of them minor in relation to the overall graph. [click link to see it]

That some recharge of the reservoir is occurring is not to be denied. 4D
seismic studies suggest migration along Red Fault (one of the best studied
faults in the world).17 But refilling is considered to be minor, reflected
in a strong decline, then a slight rebound due to refilling followed by a
new decline.

In the early 1990's an ambitious investigation of Eugene Island was
undertaken through the joint auspices of the Global Basins Research
Network, the Department of Energy and the oil industry.18 The purpose of
the project was to develop new technologies to extract hydrocarbons from
the streams which feed reservoirs instead of merely draining the reservoirs
themselves, or to enhance the streams so that they will better feed the
reservoirs. The study focused on Eugene Island and on the Gulf of Mexico in
general because newly migrating hydrocarbons were well documented in this
region, and migration approached rates of extraction. The project first had
to determine the pathway of the migrating hydrocarbons and their origin.

The study determined that hydrocarbons were indeed migrating along the Red
Fault. They concluded that as oils at depth are over-cooked and cracked
into gas, this results in an increase of pressure. This is due to the
expanding volume of gas produced from the more compacted volume of oil.
When the pressure grows to hydraulic fracturing stress, the faults open and
release a stream of oil and gas upward toward the surface. The migration
pathways seem to branch from what appear to be three primary source areas
at depth.19

The migrating hydrocarbons contain biomarkers, heavy metals, and sulfur
isotopes which indicate a carbonate marine source of Cretaceous age. The
three sourcing depobasins are believed to be turbidite sands: organic
detritus rich sands stirred up and deposited by deep sea turbidity
currents. These turbidites were capped by a salt sheet and then buried
beneath 3 million years of deltaic sands, resulting in the geopressures and
temperatures necessary to transform the organic detritus into oil and gas.20

Anderson, et al., [see article below] concludes that a conservative
estimate might place undiscovered hydrocarbons in the Northern Gulf at 20
billion barrels. The report suggests that a concerted effort to explore the
entire U.S. Gulf of Mexico for similarly situated reserves might result in
the discovery of greater than 50 billion barrels of unrecovered hydrocarbons.

There is no doubt that the hydrocarbons of Eugene Island are of organic
origin. The recharging of Eugene Island reserves is simply the result of
complicated geological structure. ..... Excerpted from:

No Free Lunch, Part 2: If abiotic oil exists, where is it? by Dale Allen
© Copyright 2005, From The Wilderness Publications,
<> All Rights
Reserved. May be

Received on Wed Aug 24 17:12:40 2005

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