What is Peak oil?
"The term Peak Oil refers to the maximum rate of the production of oil in any area under consideration, recognising that it is a finite natural resource, subject to depletion."
Comments on Wood Mackenzie’s report “China on Track to spend US$500bn on Crude Oil Imports by 2020, Surpassing US Import RequireSubmitted by Kjell Aleklett on Fri, 2013-08-23 18:06.
On 20 August Wood Mackenzie (WoodMac) released a report on China and the USA’s future imports of oil. WoodMac regards itself as one of the world’s leading companies producing energy analyses. The title of the report is “Heading in Opposite Directions: China and US Reliance on Oil”, but I chose to use the report’s subtitle as part of this blog, “China on Track to spend US$500bn on Crude Oil Imports by 2020, Surpassing US Import Requirements”.
In recent days WoodMac’s report has been cited by a large number of news outlets around the world and in Sweden. As an example I can cite Reuters’ article “China oil imports to overtake U.S. by 2017”. According to WoodMac, China will surpass the USA as the world’s largest importer of oil in 2017 and by 2020 it is estimated to be importing 9.2 Mb/d per day. Per year this would amount to 3.36 billion barrels of oil.
Submitted by Kjell Aleklett on Tue, 2013-08-20 06:19.
Southwest of Texas’ capital city Austin and towards the Mexican border there is a large area of shale called the "Eagle Ford Shale”, EFS. For those interested I can mention that there is a good website “Eagle Ford Shale” where one can find all sorts of information on Eagle Ford. Figures in this report are from that website.
Eagle Ford is considered one of world’s largest oil- and gas-investments in terms of costs. During 2013 it is estimated that the volume of investment will be on the order of $30 billion. They calculate that all the investments in EFS have in 2012 generated over 116,000 jobs just in the provinces covering EFS geographically and many more jobs in peripheral areas. In purely economic terms the investments have meant twice as much for the region.
The thing that distinguishes shale oil production is that it involves drilling of many wells that, in comparison with the traditional wells of conventional oilfields, give a relatively low production.
Submitted by Kjell Aleklett on Sat, 2013-08-17 10:04.
Last Sunday The Guardian newspaper published an article illustrating one of the negatives of fracking, "Fracking boom sucks away precious water from beneath the ground, leaving cattle dead, farms bone-dry and people thirsty". The title of the article was “A Texan tragedy: ample oil, no water”. It is good that they are beginning to realise that fracking has its problems.
As an introduction to the article online, they show a video with the following explanatory text, "In Mertzon and Barnhart in western Texas, the worst drought in two generations is choking the water supply. Water shortages are raising tensions between locals and the fracking industry. Drilling for shale gas uses up to 8m gallons of water each time a well is fracked" (8 million gallons is the same as 30 million litres, or 30 thousand cubic metres).
Submitted by Kjell Aleklett on Tue, 2013-08-06 19:09.
The title, “New data show record growth in U.S. crude oil reserves” might lead most readers to believe that fantastic developments are afoot in the USA. However, if we study the report in detail we can see that large question marks exist over future oil production. The US Energy Information Agency, EIA, has now reported changes in proven reserves during 2011. Recently I discussed how different types of oil reserves are reported and I can suggest that readers might like to look at that blog again. For proven reserves the EIA states the following criteria: “Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions”.
Submitted by Kjell Aleklett on Fri, 2013-08-02 14:46.
The next issue of The Economist has a front cover that says, “The future of oil – Yesterday’s fuel".
14 years ago, on 4 March 1999, the front cover had a completely different message. Then, the editors of the Economist published an article titled, “Drowning in Oil”. They wrote that “The world is awash with the stuff, and it is likely to remain so”. They thought that cheap oil from the Middle East would reduce the then price of $10 down to $5 per barrel.
One year earlier Colin Campbell and Jean Laherrere wrote in an article in Scientific American that cheap oil would reach peak production in around 2004 (read the article). It was the flow of this cheap oil that, according to The Economist, would force the price down to $5 per barrel.
Submitted by Kjell Aleklett on Mon, 2013-07-22 22:13.
The discussion of Israel’s oil reserves gives me reason to discuss the rules that exist for reporting of resources and reserves of conventional oil. It is this oil that still dominates world production and it is production of this oil that has now reached peak oil and has slowly begun to decline. A bright future for increased production requires that we address production of unconventional oils and for those there are not yet any firm rules about how resources and reserves should be reported. As an example I can point to how the kerogen oil in Israel was compared with Saudi Arabia’s conventional oil without mentioning that the “tap” (flow) of kerogen oil could only be opened to a far lesser extent.
Oil & Gas Journal is an industry news journal on oil that I keep an eye on and on 18 July they published an article with the title, “Resource estimate hiked for Israel nearshore license”.
Submitted by Kjell Aleklett on Tue, 2013-07-09 20:19.
On the ASPO Sweden website Martin Saar has written a good article on Egypt and how declining income from oil production is a source of that nation’s current problems. It is definitely a problem for their future. (The text is translated to English by Michael Lardelli).
Egypt condemned to continued chaos without its earnings from oil!
Written by Martin Saar, 8 July 2013, 10:23 PM
Egypt has fallen into chaos again and our traditional mainstream media once again have succeeded in missing the fundamental causes of that nation’s problems – runaway population growth, declining natural resources and a continuously worsening trade balance. Unfortunately, those factors were already obvious several years ago and are now even more severe.
According to Egypt’s central bank, for the first time the nation has become a net importer or oil. It is now dependent on its current $2 billion worth of annual natural gas exports to purchase the difference.
Submitted by Kjell Aleklett on Mon, 2013-07-08 16:35.
Colin Campbell and I first changed the order of the words “Oil Peak” to “Peak Oil” when we thought it would give a better acronym for the name of the NGO we were considering forming. When we did that we had no idea that the “Peak-” descriptor would one day have the impact it has demonstrated. The NGO we were discussing had the working title of “The Association for the Study of the Oil Peak”, ASOP. That acronym jarred a little and thus “Oil Peak” was swapped around to “Peak Oil” so that ASOP would be “ASPO”. Since then many “peaks” have been discussed. Indeed, Richard Heinberg has written a book titled ”Peak Everything”.
My reason for taking up the “peak” term again is an article in The Guardian where they discuss “Peak Water”: Grain harvests are already shrinking as US, India and China come close to ‘peak water’. They assert that there are already nations that have passed “peak water”:
“Among the countries whose water supply has peaked and begun to decline are Saudi Arabia, Syria, Iraq and Yemen.
Submitted by Kjell Aleklett on Fri, 2013-07-05 10:44.
The conference, “Global Energy Systems 2013” in Edinburgh, UK, has now concluded with great success. The initiative to hold a conference in Scotland was taken when ASPO International met in Vienna in 2012 after the successful conference there. According to our regulations a meeting of ASPO International members should occur when an ASPO conference is held and in 2012 we decided to try to organise a conference in the UK. Euan Mearns from Aberdeen, the prolific writer for The Oil Drum website, took upon himself the task of assembling a group to organise a UK conference and report back to the ASPO International. We decided that Uppsala would be the backup destination for the next ASPO conference if the UK idea failed.
ASPO International is an entirely non-profit organisation without a budget and so the financing of a conference by a national ASPO organisation can be a difficult issue. During the organisational work it became evident that a conference on Global Energy Systems would find sponsors while a traditional Peak Oil conference would have difficulties.
Submitted by Kjell Aleklett on Mon, 2013-06-10 13:03.
In the journal, Science Omega, James Morgan has published an interview with me where we discuss how we can prepare for "the second half of the age of oil". In light of the fact that so many articles in the last half year have tried to convince us that we do not need to worry about Peak Oil, it was a pleasure to discuss how Peak Oil will affect us in future. The title of the article, "Peak oil: preparing for the extinction of 'petroleum man' ", indicates that it is taking a very long term view but before he becomes extinct 'petroleum man' will contract and the hope is that 'the alternative man' will, instead, grow forth.