July 12, 2008
Saudi Arabia Will Not Achieve Oil Production Goal
Will Saudi Arabia manage to raise their production to 12.5 million barrels per day? BusinessWeek has a reliable source that says the Saudis can not ramp up their production nearly as much as they claim they will.
But the detailed document, obtained from a person with access to Saudi oil officials, suggests that Saudi Aramco will be limited to sustained production of just 12 million barrels a day in 2010, and will be able to maintain that volume only for short, temporary periods such as emergencies. Then it will scale back to a sustainable production level of about 10.4 million barrels a day, according to the data. BusinessWeek obtained a field-by-field breakdown of estimated Saudi oil production from 2009 through 2013. It was provided by an oil industry executive who said he had confirmed it with a ranking Saudi energy official who has access to the field data. The executive, who has proven reliable over several years of reporting interaction, provided the data on condition of anonymity to protect his access to the kingdom and the identity of the inside contact who confirmed the information.
Among those who dismiss Peak Oil fears oil reserves in Saudi Arabia were supposed to provide so much increased production that world oil consumption could continue to rise along with economic growth and increasing demand. But the great Saudi hope is a dud.
Meanwhile some other major oil producers are in decline.
Mexico's average crude exports plummeted 17.3% to 1.46 million barrels a day during the first five months of the year compared to the year-ago period, contributing to record oil prices.
In spite of record high oil prices and a big push to drill in the United States oil production in the US declined in May and June of 2008. The surge in oil prices over the last few years caused a temporary halt and small reversal of the long term declining trend of oil extraction in the US. Is that long term trend now going to resume?
My advice: make lifestyle and career adjustments to reduce your dependence on oil before rising oil prices force you to make changes. It is easier to make changes from a position of relative strength than from a position of relative weakness. If you are going to move then consider moving closer to work. When buying a car go for more fuel efficiency. For some types of occupations telecommuting might be a possibility. Organize a car pool or ride a bicycle or take a bus..
The western worlds oil consumption is already in decline while the eastern world consumption is slowly but steadily increasing.
And here comes a thought experiment:
lets assume the current world oil production will remain constant for the next decade or so. Lets also assume that the per capita oil consumption worldwide will tend to level out meaning we'll be using just as much oil per capita as our friends in the east. Because the eastern population figures dwarf the west's, the per capita consumption in the east will only have to rise marginally while the west's per capita will fall significantly until equilibrium is reached.
Due to our insignificant population numbers, our actions to curb oil demand and price are also relatively insignificant.
.....If you are going to move then consider moving closer to work. When buying a car go for more fuel efficiency......
But what if food prices rise overproportionally compared to petrol?
I have the feeling many job locations will change, so why move if I don't know where to? And, moving closer to work (the CBD?) will send rents in the inner suburbs through the roof, making the move less attractive. Why not move away from population centres and work on the countryside, where the food is being grown?
Buying a more fuel efficient car is a no brainer though, for people who need, and still can afford one.
Get a motorcycle and ride to work. Wednesday is national Ride to Work day. For most of the world motorcycles, bicycles and scooters are seen as reliable transportation. In the USA they have been viewed as recreational vehicles. Expect to see a large increase in the sales of electrically heated clothing (Gerbing, Widder, etc. ) this fall. (ridetowork.org)
Electrically heated clothing like the above mentioned Gerbing company (http://www.gerbing.com/Technology/powerSource.html), would be a great way of reducing your gas and electric bill by 90 %. In fact, some of the new electrically heated clothing seems to have plug-in hybrid power sources, so that although the batteries of such clothing last only a few hours, you can plug these to the 12 Volt DC power adapter when you are sitting at your desk.
HOWEVER, many years ago, I actually got rid of my electrically heated blanket because I have read that such things actually generate a lot of electromagnetic fields near the body, possibly causing a major health hazard in the long run, and possibly even cancer. During the good old days, when I was in college, I imagined that the electrically heated blankets were the greatest invention since Edison, but when I have read these articles about the danger of electric fields in such blankets, I got rid of that blanket.
Here are some articles about this subject of electric appliances representing a danger. Even cancer is attributed to electric blankets.
And for the software designers and others who are always in front of the computer, let me say that the Electric Fields from the computers, also represent a danger. I am now considering using laptop computers for most of my work, if necessary attaching a mouse and a large keyboard, because these generate a lot less fields due to their low power requirements. There are certainly laptops that have high resolution screens well over 1600 X 1200. In fact, there are even some laptops that have dual RAID hard disks to make it more secure.
I would suggest a serious look at who you will be voting for this election. I would given serious consideration to candidates who understand life depends on energy. Less energy less life.
Off topic - electrically heated clothing from a DC current will only produce a static magnetic field - if you're worried about that, you probably also should worry about the earth's magnetic field. As far as EMF goes, you might want to worry more about the high voltage ignition coil/alternator between your legs when you're on a motorcycle.
I've seen the "gas prices are going to rise so move closer to work" idea in several posts here and I'm a little skeptical. Unless you're talking about someone with a extreme commute - i.e. > 40 miles, is the commute to work (assuming 30+ mpg vehicle) really going to take that high a percentage of a a typical workers income?
I currently live around 20 miles from work I've looked at if moving would make sense & it simply doesn't, even if gas doubles to $8/gal or quadruples to $16/gal Using a Prius, it currently costs me around $1000/yr in gas to commute, so $16/gal gas would mean an additional $3000/year. Planning my commute for $16/gal or higher seems pointless, since I'll likely no longer have a job (along with almost everyone else).
K. Odell, this is not off-topic because the above commentator Ray was talking about the electrically heated clothing becoming a valuable solution to rising heating bills. But the following web site says that the magnetic fields from blankets can cause cancer due to their proximity to the body:
If only there were no danger in electrically heated clothes, then this solution would cut the heating bills by much more than 75 %, possibly 90 %.
Moving to be near jobs:
1) Move to be near concentrations of jobs. That way if you lose your job you have a better chance of getting other jobs.
2) The cost of food delivery will not go up even as fast as the price of oil. Less food will be imported and exported and less will be eaten out of season. Food will not travel as far. Though it will not just get eaten locally because the major populations are far from where the food gets grown. The US and Canadian plains ship their food eastward and westward.
3) The cost of food might go up faster than the price of oil. But if it does that might be because more land gets used to grow biomass energy sources. That's partly behind the big rise in grain prices. Will that trend continue? Or have we hit the point where food prices will track with oil prices? Or will oil prices start rising faster than food prices and farmers shift toward using more electricity to power things? I'm not sure.
4) Trains are much more efficient than trucks. So shipping costs will be lower near rail yards. My guess is we will see more side tracks added in cities and towns for freight unloading as more shipments shift from trucks to trains.
5) If you are worried about food delivery costs then Iowa makes a lot of sense. It has lots of farms. but it also has major cities for jobs and it has trains and a major river going thru it. The ideal place is probably a small city surrounded by farms and with industries that will do well post-peak. But you also need to consider heating and cooling costs.
6) Maybe farmers will use more labor as energy costs rise. But I think most work will get done in and around cities because farm work will remain a very small slice of total economic activity.
7) Rents might go up in cities. But that would be a reason to buy a small apartment building (perhaps in an Iowa city that did not flood in the recent rains) to turn that to your advantage.
A couple of thoughts.
First, when I look at the IEA monthly US oil production data that you linked to, I see an upward trend: 2008 YTD June production is up 2% year over year; May & June 2008 are 1.5% higher than 2007; and a linear regression of monthly data from Jan 2007 to June 2008 gives a line with a monthly increase of 15K bpd and an r-squared of 47% (which is high).
2nd, this certainly doesn't support the Export Land Model idea that Saudi Arabia's production is plummeting: it's consistent with perfectly level production for 5 years, which IMHO is what KSA has been signaling to the world to expect, for a while now.
Yes, same month year-to-year there is an increase. But the trend this year looks like a peak. Mind you, this is only 2 months of decreases. But this is happening while oil prices have been surging for years running. If ever we were going to see a big US increase in production due to prices now would be the time. Well, not happening.
We might still get an increase if we opened up outer continental shelf (OCS) and ANWR. But that would require years before it took effect. By the time OCS and ANWR come on line the rest of US production will be much lower than it is now.
Saudis and Export Land Model: The Saudis claimed they were going to achieve a much bigger increase. Flat production actually means falling exports. Production that rises as fast as internal demand means flat exports in the face of rising demand.
Maybe SA will keep production flat or bring it up a bit. But that means higher oil prices unless some other country can step up to the plate and export a lot more oil.
From what I have read (it has been a while) the fastest way to get more domestic oil is to build refineries able to process the very heavy oils.
It wouldn't be cheap. Besides being difficult to extract and crack they tend to contain a lot of sulfur which must be removed. The oils are not in short supply but like any other oil there will be only so much.
Whatever the facts about peak oil it is better to know them.
Are we looking at the same data? Here is what I'm looking at:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
8.53 8.35 8.46 8.51 8.57 8.52 8.53 8.36 8.32 8.47 8.54 8.67
Jan Feb Mar Apr May Jun
8.62 8.62 8.66 8.72 8.7 8.65
Again, I see an upward trend: 2008 YTD June production is up 2% year over year; May & June 2008 are 1.5% higher than 2007; and a linear regression of monthly data from Jan 2007 to June 2008 gives a line with a monthly increase of 15K bpd and an r-squared of 47% (which is high).
There's no sign of any kind of a decrease here, except from a relative peak in April 2008, but monthly data is far too noisy for that to be meaningful.
"If ever we were going to see a big US increase in production due to prices now would be the time. Well, not happening."
High prices are very recent, and there's a big time-lag for expansion of drilling: rigs, labor, pipelines, etc, etc. This is a very good response. AFAIK it still doesn't include Thunderhorse, which will add about 250K bpd.
"Saudis and Export Land Model: The Saudis claimed they were going to achieve a much bigger increase. "
No, they never promised it. They said it was theoretically possible - that's different.
"Saudi Arabia Will Not Achieve Oil Production Goal"
And a spokesperson for the rainforests and the the ozone layer said, "Gee, that's too bad."
Seriously... this is actually pretty good news. It means the pace of consumption has outpaced the pace of supply. It's a good sign because it gives people an opportunity to see how expensive the daily action of going to the pump is... and will cause some (hopefully many) to look into other options.
That's the hope anyway.
"Maybe SA will keep production flat or bring it up a bit. But that means higher oil prices "
Absolutely - we need to replace oil ASAP. We're losing a great deal of wealth (many Chrysler buildings), and we're risking a lot of unnecessary pain, but we're not going to see the economic apocalypse.
RE the EIA US monthly oil production data: it helps enormously to chart it. Put the data into a spreadsheet, set the y-axis scale to fit the minimum and maximum of the data (to exaggerate trends & variation, and make them visible). You'll see the random variation, and the underlying trend.
Oil is not going to melt the polar ice caps because there is not enough oil left. But the future of coal is less clear.
High energy prices are certainly spurring the development of wind, solar, nuclear, and other non-fossil fuel sources of energy. I expect falling prices of wind and solar especially to cut into demand growth of coal. But we are going to experience declining living standards and a lot of economic dislocation during the transition.
Trends: They continue on until they change. I am watching for the resumption of the longer term trend of declining production due to declining reserves.
This is an important thing to watch for. If we can pull in a lot of future production with high oil prices now then that means eventually when the downward trend resumes it will be sharper. This especially matters on a global level.
What is not clear to me: Is it better to accelerate depletion since substitutes will be available in the future? Or will the substitutes come too slowly and will the higher rate of consumption now make the coming decline even more painful? It depends on how fast batteries, wind, solar, nuclear fall in price.
"the future of coal is less clear."
For better or worse, we have plenty of coal - see http://energyfaq.blogspot.com/2008/06/are-we-running-out-of-coal.html
"I am watching for the resumption of the longer term trend of declining production due to declining reserves."
This increase is something that Jeffrey Brown specifically said would not happen. He's too wedded to his HL curves. Reserves depend on technology. For instance, the Bakken has 200-400 Billion barrels waiting for the right tech: that's a $30TB incentive.
"Is it better to accelerate depletion since substitutes will be available in the future?"
Yes. Substitutes are growing exponentially, which means they look like they're starting slow, but when they arrive it's overwhelming.
"It depends on how fast batteries, wind, solar, nuclear fall in price."
It all depends on how quickly they can grow, and the balance between supply and demand. Except for batteries, all of these are high-priced because of a scarcity premium. Batteries need very high volume production to cut costs, and that's coming very soon - it's a virtuous cycle.
"Reserves depend on technology." isn't quite right. Let's say: "Reserves depend not only on geology, but on price and technology."
There's no question we're working within geological limits: increasing production is getting harder and more expensive, and it's a race with depletion. OTOH, those HL curves are far, far too simplistic.
There are energy cost problems with reaching small pockets of reserves such as in Bakken Shale. You have to drill thru a lot of rock to reach small pockets. Bakken is getting cherry picked now. I'm not sure that tech advances will greatly increase the accessible fraction of the oil.
Mexico's exports are down because their domestic consumption is up. If consumption trends continue, they will be net importers in a few more years.
This is less about peak oil than it is about good governance. Both Saudi Arabia and Mexico oil fields are government owned and run. The governments running them are corrupt, slow, and ideologically disinclined to change. Sadly, for them, Keeping oil fields at top production requires sophisticated use of cutting edge technology. Political mismanagement also explains why Iran is importing gasoline. Add to this war related damage to Iraq's oil production and I would argue that there is plenty of additional capacity to be had. Just not by the clown posse currently in charge.
Build nuclear plants.
Develop advanced cycle enrichment techniques to breed more fissile material for future use.
Yucca mountain won't be needed if we keep fueling the plants with fuel developed from advanced fuel cycle technology.
It is the cleanest, most mature system of energy production available.
Wind and solar would require huge land areas to be meaningful, and this is not necessary, as fission is already developed.
And who, exactly, opposes drilling for new sources of oil within the U.S.? Sen. Obama (D-Pivot!), you say? Give that man a cardigan! 'Cause that's what you're gonna need to stay warm, if The Messiah is elected.
I'm surprised nobody has mentioned goal gassification to produce motor fuel. Electricity is all well and good, but unless mobile alternative fuel/energy storage gets a lot better, we will still be using the internal combustion. Coal can be converted into gasoline at well below the current price. The Nazi's did this during WWII when their petrol supplies were interdicted.
Another important issue is the global warming madness (now called "climate change" since the earth hasn't warmed in ten years). It is really pointless to hobble our economy to CO2 reductions when that will only drive a whole bunch of CO2 emissions overseas. We are taking the costliest approach to remediate an uncertain problem 50 years or more in the future, at the cost of solving very real problems today. It is pure folly! It is also immoral, as the economc consequences will lead to millions of excess deaths in marginal economies (even though those economies will not be cuttiing emissions - they will be cutting forests).
If the enviromentalist movement has its way, peak oil or not, we'll all be making these and more life[death]-style changes. For them the quantity of available energy is irrelevant; so long as we're choked back to some level of suffering.
geo said it best.
Problems with oil are above the ground, not under it.
Too bad for the contractors who NEED a god damn TRUCK!
You try to Bike to work with an air compressor and 1500lbs of tools on your back. Or telecommute that new drywall into a house. If you want it to cost $1000 to install a sink then you can just sit back and take the new high oil prices. OR we can drill for more!!!!!! There is trillions of barrels out there, we just need to get them. Mexico is not producing enough because they are a government owned monopoly and have never had to compete, old and weak they are using the same equipment they where using in the 1970's. The whole CO2 thing looks to me like a red herring, C02 is a trace gas and has very little green house effect (atmospheric green house effect is much smaller then most people think, ie: it still gets cold at night because the atmosphere doesn't trap energy very well), it is also a very good fertilizer and makes stuff grow VERY nicely. Without knowing much my BS alarm goes off whenever someone is talking about reducing CO2.
We have not yet even BEGUN to tap the total petro-fuel on the planet. We may be getting to the point where it is harder to get to by using 1950's technology but that doesn't mean it will be hard or even expensive to get to when we invest a bit of engineering into new ways of extraction. There is lots of energy out there (oil, nuke, tides, geo, coal, ng, microbio, shale, wind, solar, singularity...) we just need to keep the politicians out of the way of the engineers and business investors. I figure the first line of action should be to vote every incumbent out of office regardless of party. If they have been in congress longer then 10 years you can safely assume they are corrupt.
"There are energy cost problems with reaching small pockets of reserves such as in Bakken Shale.
Well, there are cost problems. I've seen some macroeconomic info on oil's E-ROI, and a lot of speculation about the E-ROI of drilling, but no detailed, quantitative info. Have you seen any?
"Bakken is getting cherry picked now. I'm not sure that tech advances will greatly increase the accessible fraction of the oil."
Sure, but a $30T incentive is pretty compelling. Keep in mind that there's a severe shortage of rigs & manpower, so only a small % of possible sites are currently being drilled. The oil-services industry will ramp up, and new techniques and millions of tiny refinements of existing techniques will be developed: more sophisticated seismic tech, drill-head sharing, drill speed acceleration, new methods of fracturing, etc, etc.
Ursus: "Mexico's exports are down because their domestic consumption is up."
Mexico's domestic consumption is pretty flat, due to fairly realistic domestic pricing - the problem is their production. Mexico has a lot of promising places to drill, but Pemex is diverting their revenue to fund the government, and their constitution and history makes foreign investment very, very difficult. All in all, I do think their exports will fall fairly quickly, though they will get creative to slow the rate of decline a bit.
Geo:"I would argue that there is plenty of additional capacity to be had"
Yes, though developing it will be slow.
j.pickens: "Wind and solar would require huge land areas to be meaningful, and this is not necessary, as fission is already developed."
Wind and solar need very little land. Wind needs to be spaced over a wide area, but the land between the turbines is used quite happily by cows, crops, fishermen, etc Solar fits quite nicely on rooftops and deserts. Fission takes a long time to ramp up, much longer than wind & solar. We probably need all sources of low-CO2 power, but fission can't take the lead.
John: "I'm surprised nobody has mentioned goal gassification to produce motor fuel. "
It has very high capital costs, and a long lead time. Developers are still terrified of an oil price collapse.
Fine ...you want to live like a mass of Russian peasants then go ahead. I want someone to grab the bull by the horns and get this energy sutuation solved. Moving closer to work is a pansy ass mentality. You are a bunch of victims and you will all fold when the going gets tough...why the most of you have no idea how to collect food or have a place to do it or much less defend yourselves when the the urban wolves come prowling for you...Haha Bunch of weenies...We have enough fuel resources in natural gas and tar sands to go for years...Bunch of Obama whimps...Change we can believe in...Yeah Right!I spit on my generation of baby boomer losers and their pathetic offspring...
It's possible to hedge your personal oil consumption by just buying shares in an oil company. Like the Canadian Oil Sands Trust - this is a company that mines oil sand and makes it into oil. Buying it is like buying oil in the ground. And it pays a nifty dividend too ... The advantage to doing this is that no lifestyle modification is necessary on financial grounds.