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Comments on "Squeezing more oil from the ground" by L. Maugeri in Scientific American October 2009.

It is fascinating to watch the behaviour of our political and business leaders as they attempt to cope with the world’s deepening financial crisis. It is becoming clear that they don’t have a clue what is actually going on. Their blindness is explained by confusion about what actually enables economic growth. The shared delusion is that money makes the world go round.

As share and asset values crash we hear talk of deflation. Many nations are trying to counter this by expanding their money supply. However, they seem to have forgotten the most basic fact about money that we are taught in school - that it is a medium of exchange. Money allows agreements on relative “value” (how much of one thing will be exchanged for another) but it has no intrinsic value itself. It is simply a mechanism that allows the distribution of real “stuff”. So if the economy is crashing what is this “stuff” that is disappearing? It can be summed up in one word - energy.

Published in: Online Opinion, 23 April 2009
Available from: Online Opinion

This paper develops further a a model of the economic process concerning the application of thermodynamic laws to economics. The paper sets out relationships between economic output and capital, labour, resource and waste stocks, with specific reference to energy, and is backed up by analysis of data of world energy resources and climate change. the paper concludes that both energy resource availability and climate change will have significant, limiting effects on the forward path of economic development.

Published in: Vocat International Ltd
Available from: Vocat International Ltd

Because oil is a depleting, finite natural resource, world conventional oil production will reach a maximum, called “the peak,” after which production will decline. Using differing methodologies and information of widely varying quality, experts and organizations have attempted to forecast the likely year of conventional oil production peaking. Their range of estimates extends from late last year to an apparent denial that it will ever happen. Almost all forecasts are based on differing, often dramatically differing geological assumptions. Explicit account of investment rates in new and expanded production has been relatively rare.

Because of the large uncertainties, it is difficult to define an overriding geological basis for accepting or rejecting any of the forecasts. However, the IEA recently warned that worldwide investment in expanded oil production has been considerably less than needed to continue world oil production that is adequate to meet expected world demand. Thus, geological limits may be yielding to investment limitations.

As noted in previous literature, peak oil presents the world with a risk management problem of tremendous complexity and enormity. Prudent risk minimization requires the implementation of mitigation measures roughly 20 years before peaking to avoid a very damaging world liquid fuels shortfall. Since it is uncertain when peaking will occur or whether it will be due to geological or investment limitations, the challenge is indeed vexing.

Published in: US DOE/NETL-2007/1263
Available from: Global Oilwatch

The US consumed approximately 7.5 billion barrels of oil in 2007. Approximately 2.5 billion barrels were produced in the US and another 5 billion barrels of oil were imported. See reference 1. The ability of the US to import oil will decrease sharply and the cost per barrel will increase significantly in the next few years after oil has peaked and world oil production starts declining. A major goal of the Energy Independence and Security Act of 2007 is to reduce US dependence on imported oil.

In 2007 ninety-six percent of US transportation fuels were derived from oil and sixty-nine percent of US oil was used to make transportation fuels. See reference 1. US gasoline consumption increased steadily at a rate of about 2 billion gallons per year during the period from 1986 through 2006, reaching almost 143 billion gallons in 2007. This is the equivalent of about 3.12 billion barrels of oil. US distillate fuel oil (diesel) consumption was about 65 billion gallons in 2007. This is the equivalent of 1.6 about billion barrels of oil.

Two popular biofuels are ethanol and biodiesel. In 2007 the US produced approximately 6.5 billion gallons of ethanol and 500 million gallons of biodiesel. Increased production of these fuels to 36 billion gallons per year by 2022 is a key aspect of the US Biofuels program defined in the 2007 Energy Act.

Published in: www.peakoil.net
Available from: See attachment

Current industry data suggest that the total initial quantity of crude oil (whether producible or not) accumulated in reservoirs in the United States, excluding Alaska, was of the order of 350-500 billion barrels, and that the initial reserves of natural gas were about 800-1,200 trillion cubic feet. American Petroleum Institute data indicate that since 1925 production of crude oil in the United States has lagged discovery and development by the nearly constant amount of 10-11 years. Discovery is thus a preview of production by approximately this period. The peak of discovery and development of crude oil occurred about 1952-1953, which suggests that the peak of production should occur 10-11 years later. The peak of estimated proved reserves, which should occur about halfway between the peaks of discovery and production, actually was reached late in 1957.

Comparable data for natural gas suggest that the peak of production should not be reached before 1970, or shortly thereafter.

Published in: 44th Annual Meeting of the American Association of Petroleum Geologists. Shell Development Company, Dallas, TX, p. 43.
Available from: AAPG

The earth and its biological inhabitants comprise an evolving system in which various of its components change in magnitude with time. To describe these changes we may use the term ``growth'' in a generic sense as being synonymous with change. Thus a given quantity may be said to exhibit positive growth if its magnitude increases with time, negative growth if it decreases with time, and zero growth if it remains constant.

Two terms applicable to an evolving system are of fundamental importance. These are steady (or stationary) state and transient state. A system is said to be in a steady state when its various components either do not change with time, or else vary cyclically with the repetitive cycles not changing with time. A system in a transient state is one whose various components are undergoing noncyclical changes in magnitude, either of increase or decrease...

Published in: National Energy Conservation Policy Act of 1974, Hearings before the Subcommittee on the Environment of the committee on Interior and Insular Affairs House of Representatives. June 6, 1974.
Available from: www.mkinghubbert.com

The main conclusions of the Taskforce are:

1. The effects of peak oil will be felt in the next five years - during the next term of government

· High oil prices combined with the credit crunch had a profound effect on the UK economy this year. The UK needs to plan for the impact of this scenario in the longer term.

· In the absence of strong proactive action the Taskforce anticipate oil prices much higher than the existing record of $147 by 2013.

2. The risks to UK society from peak oil are far greater than those that tend to occupy the Government’s risk-thinking, including terrorism

· As easily and cheaply available oil supplies fall off, high oil prices will become a long-term trend having profound direct and indirect economic impacts:

· Increased oil-based input costs for manufacturing and agriculture

· Increased transport costs throughout the supply chain

· Wider macro-economic shocks via higher inflation, balance of payments deficit and reduction of consumer demand.

3. The UK Government needs to re-prioritise peak oil - as the impacts are more likely to arrive first – before climate change

· Currently the Government places climate change as the first priority for policymaking, followed by energy security, with peak oil in last place.

· In contrast, the Taskforce analysis is that peak oil is more of an immediate threat to the economy and people’s lives than climate change, grave as that threat is too. A rapidly falling supply of oil is likely to hit us before the worst impacts of the greenhouse effect. The Government needs urgently to reflect this threat in their analysis and planning.

At this critical turning point the Taskforce now urgently calls on the Government to:

1. Prioritise the peak oil threat and develop a strategy to address it

· Ed Miliband’s new department needs to develop a national energy plan that acknowledges the imminent threat of peak oil and addresses the entire energy sector.

2. Dramatically and rapidly increase investment in clean energy and renewables

· Policies in the UK Renewable Energy Strategy must go well beyond the EU targets for renewable energy (currently 20% of the energy mix by 2020).

3. Develop and implement a long term sustainable transport policy, with renewable energy sources at its heart

· Increase transport fuelled by sustainable bio-liquids and electricity and escalate measures to reduce the amount of fossil-fuel-based road transport.

Published in: http://www.peakoiltaskforce.net/ 29 october 2008
Available from: Peak Oil Task Force

Despite there being no 'supply side solutions' able to replace or substitute current rates of world oil and gas demand, and cover coming physical supply shortages, near-term for oil and probable by 2010-11 for Eurasian pipeline gas, this fact is apparently contradicted by oil market operators. A myriad of players in the „paper oil‟ market, from the now mostly bankrupt or part-nationalized big private banks eg. Lehman Bros, Goldman Sachs, Merrill Lynch, to the smaller players notably including the hedge funds, can each day „talk down‟ and „talk up‟ oil prices.
Apart from providing large trading profits on unstable, volatile prices, and the values of related and derived assets, such as CDOs (commodity linked debt instruments) this market-based control of about 51 mln barrels/day (Mbd) of world traded oil supply is perceived as reassuring by the media and public opinion. The key slogan is :« if its traded it has to exist ». Anchoring this childish belief in the minds of consumers is very important to those who have no plan, model, programme or solution for the coming global reduction in oil and natural gas supplies, after their respective peak supply levels are attained...

The presentation is the powerpoint presentation that were displayed during the conference.

Published in: Paper presented at the ASPO 7 Conference in Barcelona, Spain, 2008
Available from below: