How Soon Will the World Oil Production Peak?: A Hubbert Linearization Analysis

This is a Guest Post By “Political Economist”

In this informal paper, I conduct Hubbert Linearization exercises on the world’s 11 topoil producers as well as the rest of the world. The results are used to project the world oilproduction in the future. The evidence presented in this exercise suggests that the world oil production may peakin 2018 or a few years later.

Hubbert Linearization

Hubbert Linearization (first developed by M. King Hubbert) is a statistical techniqueoften used in the peak oil literature. Hubbert Linearization assumes that oil production rises and falls following a pattern thatcan be described by a logistic function:

Q(t) = URR / [1 + EXP (a(Tpeak-t))]

Q(t) is the cumulative oil production up to year t, URR is the ultimately recoverable oil resources, EXP represents the natural exponential function with the Euler’s number “e” being the base, “a” indicates the intrinsic growth rate of the logistic function, Tpeak is the year of peak oil production, and “t” is the current year.

If one takes the derivative of the above equation with respect to “t”, the above equation can be reduced to: dQ/dt = aQ(1-Q/URR) Replace dQ/dt with P (current annual production) and divide both sides by Q:

P/Q = a – (a/URR) Q

If one uses historical data to conduct a linear regression of P/Q over Q, one can solve the two parameters: “a” and “a/URR”. URR (the ultimately recoverable resources) would be solved accordingly. The peak year could in turn be solved.

If one has historical data, Hubbert Linearization is relatively simple and straightforward. But the method has important limitations. Most importantly, it cannot predict future technical changes that will change the amount of recoverable resources. In many cases, the results of Hubbert Linearization are sensitive to the time period used for regressions. The selection of time period often depends on subjective interpretation of available data.

Nevertheless, Hubbert Linearization does reflect the outcomes of historical interactions of geological, economic, geopolitical, and technical factors as well as their evolving trends. When used carefully in combination with other available information, it can provide useful insights into the future trajectory of world oil production.

The World’s Largest Oil Producers

This paper uses BP’s definition of oil production, which defines “oil” as the sum of crude oil and natural gas liquids. The data are mostly from BP Statistical Review of World Energy, extended to 2013 using EIA’s International Energy Statistics.

By this measure, the world’s eleven largest oil producers in 2013 (ranked by their oil production) were Saudi Arabia, Russia, United States, China, Canada, Iran, Iraq, United Arab Emirates, Kuwait, Mexico, and Venezuela.

In this paper, all oil production statistics are stated in million tons. For a rough conversion, 50 million tons of annual oil production roughly equals 1 million barrels of daily production.

Figure 1
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Figure 1 shows the oil production of the eleven top producers as well as the rest of the world. From 2005 to 2013, the world’s total oil production increased by 192 million tons. Saudi Arabia’s oil production increased by 19 million tons, the Russian oil production increased by 57 million tons, the US oil production increased by 139 million tons, China’s oil production increased by 28 million tons, Canada’s oil production increased by 52 million tons, Iran’s oil production fell by 40 million tons, Iraq’s oil production increased by 66 million tons, the UAE oil production increased by 19 million tons, Kuwait’s oil production increased by 23 million tons, the Mexican oil production fell by 44 million tons, Venezuela’s oil production fell by 30 million tons, and the entire rest of the world’s oil production fell by 97 million tons.

Among the world’s eleven largest oil producers, three were decliners. Four saw small increases in production. Only the US, Iraq, Russia, and Canada saw large increases in production. If there had been no growth in the US and Iraq, the world total oil production would have fallen by 13 million tons. Alternatively, if there had been no growth in the US and Canada, the world total oil production would have risen by only 1 million tons.

Saudi Arabia

Figure 2
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Figure 2 shows Saudi Arabia’s cumulative oil production. Up to 2013, Saudi Arabia had produced 20 billion tons of oil. The vertical axis presents the current production to cumulative production ratios (the cumulative production growth rates). The linear trend using data from the period 1982-2013 indicates Saudi Arabia’s ultimately recoverable amount of oil to be 56 billion tons. Regression R-square is 0.239.

Figure 3
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Figure 3 compares Saudi Arabia’s historical and projected oil production. In 2013, Saudi Arabia’s oil production was 540 million tons. Based on the Hubbert Linearization results, Saudi Arabia’s oil production is projected to peak in 2028, with a peak production level of 619 million tons.

Russia

Figure 4
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Figure 4 shows Russia’s cumulative oil production. Up to 2013, Russia had produced 23 billion tons of oil. The linear trend using data from the period 2004-2013 indicates Russia’s ultimately recoverable amount of oil to be 68 billion tons. Regression R-square is 0.956.

Figure 5
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Figure 5 compares Russia’s historical and projected oil production. In 2013, Russia’s oil production was 531 million tons. Based on the Hubbert Linearization results, Russia’s oil production is projected to peak in 2033, with a peak production level of 596 million tons.

United States

Because of the shale oil boom, the US oil production has risen rapidly since 2008, making it difficult to apply the Hubbert Linearization analysis. I use the EIA projection of the US oil production from 2014 to 2040 and extend the trend to 2050.

Figure 6
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Figure 6 compares the US historical and projected oil production. In 2013, the US oil production was 444 million tons. Based on the EIA projection, the US oil production is projected to peak in 2019, with a peak production level of 553 million tons.

China

Figure 7
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Figure 7 shows China’s cumulative oil production. Up to 2013, China had produced about 6 billion tons of oil. The linear trend using data from the period 2003-2013 indicates China’s ultimately recoverable amount of oil to be 16 billion tons. Regression R-square is 0.952.

Figure 8
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Figure 8 compares China’s historical and projected oil production. In 2013, China’s oil production was 209 million tons. Based on the Hubbert Linearization results, China’s oil production is projected to peak in 2023, with a peak production level of 224 million tons.

Canada

Canada’s oil production has grown rapidly in recent years, making it difficult to apply the Hubbert Linearization analysis. Up to 2013, Canada had produced 5.5 billion tons of oil. As of 2012, Canada’s official proved oil reserves were 28 billion tons (including 27 billion tons of oil sands). I assume that Canada’s ultimately recoverable oil resources will be 33 billion tons.

Figure 9
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Figure 9 compares Canada’s historical and projected oil production. In 2013, Canada’s oil production was 194 million tons. Given the assumed ultimately recoverable oil resources, Canada’s oil production is projected to peak in 2051, with a peak production level of 352 million tons.

Iran

Figure 10
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Figure 10 shows Iran’s cumulative oil production. Up to 2013, Iran had produced about 10 billion tons of oil. Because of international sanctions, Iran’s oil production fell sharply in 2012 and 2013. Thus, data from 2012 and 2013 are excluded from the Hubbert Linearization analysis. The linear trend using data from the period 1990-2011 indicates Iran’s ultimately recoverable amount of oil to be 19 billion tons. Regression R-square is 0.898.

Figure 11
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Figure 11 compares Iran’s historical and projected oil production. Iran’s oil production peaked in 1974, when Iran produced 303 million tons. A recent local peak happened in 2008, when Iran produced 215 million tons.

In 2013, Iran’s oil production was 167 million tons (compared to the projected production level of 208 million tons). Iran’s oil production is projected to fall to 114 million tons by 2050.

Iraq

Because of political instability, there is large degree of uncertainty regarding the future trajectory of the Iraqi oil production. Up to 2013, Iraq had produced 5 billion tons of oil. As of 2012, Iraq’s official proved oil reserves were 20 billion tons. I assume that Iraq’s ultimately recoverable oil resources will be 25 billion tons.

Figure 12
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Figure 12 compares Iraq’s historical and projected oil production. In 2013, Iraq’s oil production was 156 million tons. Given the assumed ultimately recoverable oil resources, Iraq’s oil production is projected to peak in 2049, with a peak production level of 241 million tons.

United Arab Emerates

Figure 13
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Figure 13 shows UAE’s cumulative oil production. Up to 2013, UAE had produced about 5 billion tons of oil. The linear trend using data from the period 2001-2013 indicates UAE’s ultimately recoverable amount of oil to be 13 billion tons. Regression R-square is 0.567.

Figure 14
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Figure 14 compares UAE’s historical and projected oil production. In 2013, UAE’s oil production was 155 million tons. Based on the Hubbert Linearization results, UAE’s oil production is projected to peak in 2024, with a peak production level of 162 million tons.

Kuwait

Up to 2013, Kuwait had produced 6 billion tons of oil. As of 2012, Kuwait’s official proved oil reserves stood at 14 billion tons. I assume that Kuwait’s ultimately recoverable oil resources will be 20 billion tons.

Figure 15
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Figure 15 compares Kuwait’s historical and projected oil production. In 2013, Kuwait’s oil production was 153 million tons. Given the assumed ultimately recoverable oil resources, Kuwait’s oil production is projected to peak in 2036, with a peak production level of 184 million tons.

Mexico

Figure 16
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Figure 16 shows Mexico’s cumulative oil production. Up to 2013, Mexico had produced about 6 billion tons of oil. The linear trend using data from the period 2009-2013 indicates Mexico’s ultimately recoverable amount of oil to be 11 billion tons. Regression R-square is 0.999.

Figure 17
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Figure 17 compares Mexico’s historical and projected oil production. Mexico’s oil production peaked in 2004, with a production level of 190 million tons. In 2013, Mexico’s oil production was 142 million tons. The Mexican oil production is projected to fall to 45 million tons by 2050.

Venezuela

Figure 18
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Figure 18 shows Venezuela’s cumulative oil production. Up to 2013, Venezuela hadproduced about 10 billion tons of oil. The linear trend using data from the period 1975-2013indicates Venezuela’s ultimately recoverable amount of oil to be 24 billion tons. Regression R-square is 0.319.

Figure 19
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Figure 19 compares Venezuela’s historical and projected oil production. Venezuela’s oil production peaked in 1970, with a production level of 197 million tons. A more recent peak happened in 1998, when Venezuela produced 180 million tons.

In 2013, Venezuela’s oil production was 140 million tons (compared to the projected production level of 163 million tons). If political stability returns to Venezuela, Venezuela’s oil production is projected to stay above 150 million tons from 2014 through 2050.

World Total Less Top 11

Figure 20
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Figure 20 shows the rest of the world’s cumulative oil production. The “rest of the world” oil production is defined as the world total oil production less the oil production from the eleven largest oil producers. It includes oil production from the next 38 significant oil producers as well as all the smaller oil producers.

Up to 2013, the rest of the world had produced about 49 billion tons of oil. The linear trend using data from the period 1987-2013 indicates the ultimately recoverable amount of oil to be 86 billion tons. Regression R-square is 0.992.

Figure 21
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Figure 21 compares the rest of the world’s historical and projected oil production. The rest of the world’s oil production peaked in 2010, with a production level of 1418 million tons. In 2013, the rest of the world’s oil production was 1299 million tons. It is projected to fall to 341 million tons by 2050.

When Will World Oil Production Peak?

The total world oil production is estimated by summing up the national projections for the top 11 oil producers and the projection for the rest of the world. For the period 1965-2013, there is no projection of the US oil production. Thus, the actual US production levels were used in calculating the projected world oil production for the period.

Figure 22
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Figure 22 compares the historical and projected world oil production from 1965 to 2050.

Up to 2008, the projected world oil production (3987 million tons) matches the actual world production (3992 million tons) well. For 2012, the projected world oil production is 4204 million tons and the actual world oil production was 4109 million tons. There is a gap of 95 million tons. For 2013, the projected world oil production is 4278 million tons and the actual world oil production was 4135 million tons. The gap widened to 143 million tons (corresponding to approximately 3 million barrels per day).

The gap reflects the political instabilities that exist in various parts of the world. For Iran, the projected oil production is higher than the actual oil production by about 40 million tons. For Venezuela, the gap is about 20 million tons. For the rest of the world, the gap is about 70 million tons.

Regarding the future of the world oil production, the most important challenges seems to be that the entire rest of the world (the world total less the eleven top producers) has passed the peak and is currently in decline. The rest of the world still accounts for about 30 percent of the world total oil production. The decline has been accelerated by political instabilities that exist some parts of the world (Nigeria, Libya, and Syria etc.). The current tendency is for the rest of the world’s oil production to decline by 16 million tons per year. The declining pace may accelerate to 33 million tons per year for the decade 2021-2030.

Even though this paper projects that oil production in Saudi Arabia, Russia, China, Canada, Iraq, UAE, and Kuwait will continue to growth in the near future. Their combined growth is insufficient to offset the decline from the rest of the world. Only the US oil production growth can bring about rising world oil production in the next few years.

As a result of the current projections, world oil production is projected to peak in 2018, with a production level of 4.4 billion tons. But if political stability returns to some of the key oil producing countries, the gap between the actual oil production and the projected oil production may be closed. This may allow the world oil production to grow for three or four years after 2018.

The key question is whether the “rest of the world” will continue to decline and at what pace. Another important question is whether the EIA projection of the US oil production turns out to err on the optimistic or pessimistic side.

On the other hand, if Saudi Arabia, Russia, and Iraq fail to raise production in the future, the current projections may prove to be too optimistic and the world oil production peak could arrive sooner.

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260 Responses to How Soon Will the World Oil Production Peak?: A Hubbert Linearization Analysis

  1. Jeffrey J. Brown says:

    Of course, in my opinion actual global crude oil production (generally defined as 45 or lower API gravity crude oil, per RBN Energy) probably peaked in 2005, but global natural gas production–and associated liquids, natural gas liquids & condensates–have so far continued to increase.

    Following are two charts.

    The first chart shows normalized global dry (processed) natural gas production, natural gas liquids (NGL) and crude + condensate (C+C), from 2002 to 2012, with 2005 values = 100%. All data from the EIA.

    • Political Economist says:

      Jeffrey, that would probably depend on the definition of “crude oil”. I think you’d be right if we exclude heavy oil and shale oil from “crude oil”.

      • Jeffrey J. Brown says:

        The 45 and lower API gravity crude oil definition would count heavy oil and shale oil.

        As you noted, the BP data base is combining actual crude oil production plus byproducts of natural gas production–NGL’s and condensates.

        • KLR says:

          How much of a disconnect is there between the percentages of NGLs etc and C+C in All Liquids at this stage? There’s always been a gap of course and the secular trend has more and more of AL being lighter hydrocarbons; I’m wondering if they’ve really become prominent in the wake of the shale drilling boom.

          • Jeffrey J. Brown says:

            Some values for 2005 and 2012, rounding off to two significant figures (see chart down the way for assumptions regarding crude estimates):

            2005 (mbpd):

            Estimated Crude: 67
            EIA C+C: 74
            EIA Total petroleum liquids + other liquids: 82

            2012:

            Estimated Crude: 67
            EIA C+C: 76
            EIA Total petroleum liquids + other liquids: 87

            I estimate that condensate + NGL’s + other liquids increased from about 15 mbpd in 2005 to about 20 mbpd in 2012.

      • Old farmer mac says:

        PE,

        I think it is unfortunate in one respect that tight oil is even called oil because it is such a different animal in terms of getting it out of the ground.The situation would be more transparent to a passing layman if it were called something else.

        Since there is so little historical experience to go on so far I suppose a Hubbert analysis of tight oil alone is not yet useful.

        But maybe there IS enough data on hand already to do a rough Hubbert on tight oil.

        Have you done so or do you know of anybody who has done so for the world in general rather than just North Dakota ?

        The thing about all these analyses that bugs me is that the economy and nature are not predictable beyond a certain point. Things have a way of going non linear or off trend lines for unpredictable reasons.

        I for instance am willing to consider the possibility that we will be able to pay considerably higher prices for oil down the road than most other observers in this forum because I think energy efficiency will increase faster than expected.There is a possibility demand will fall faster than expected by the folks who expect high prices to result in demand destruction for the same reason.

        There is no real reason other than belief in people’s being unwilling to change their habits to believe that electrified cars won’t sell much faster than expected in a few years.The rapid adoption of cell phones comes to mind. At first not many people I know bought one even though they worked ok.

        Just about everybody I know waited to get one until they knew a couple of other people who were satisfied with the service and the price.I think the sales of electrified cars, meaning plug in hybrids and battery only cars will take off the same way in a few years.

        The sale of such cars might actually be mandated – instead of subsidized–in countries faced with importing oil but possessed of plenty of coal or hydro or wind or solar power.

        Then there are the physical realities of geology to consider.I think ( a gut feeling only ) we have already done a considerably better job of finding such good quality oil in the ground than most analysts think. This means a sharper potential drop off in production sometime down the road.

        So in the end- how big would be the error bars on such projections if it were possible to compute them according to the usual statistical practices- if such practices exist for this sort of work?

  2. Jeffrey J. Brown says:

    The second chart shows estimated normalized condensate and crude oil production values from 2002 to 2012, based on the assumptions shown on the chart.

    My “Peak Crude” analysis:

    Global Crude + Condensate (C+C) production increased at about the same rate as global dry processed gas production from 2002 to 2005, but then we saw a significant divergence between the rates of increase in global gas production and in global C+C production from 2005 to 2012, 2.8%/year versus 0.4%/year respectively. Crude oil is generally defined as 45 or lower API gravity oil.

    According to the EIA, global gas production increased by 22% from 2005 to 2012, and I think it’s a reasonable assumption that condensate–a byproduct of natural gas production–increased by about the same amount, especially given the large increase in condensate production in the US.

    The problem is that other than OPEC and Texas, no one appears to track crude versus condensate, but the Texas RRC shows that the Texas condensate to C+C ratio increased from 11% in 2005 to 15% in 2012. Note that OPEC, which accounted for 43% of global C+C production in 2012 showed no material increase in crude oil production from 2005 to 2012 (31 mbpd in both years).

    If we cross correlate the OPEC (Crude only) and EIA (C+C) data bases for the OPEC 12 countries for 2005 to 2012, their Condensate/(C+C) Ratio doubled–from 3% in 2005 to 6% in 2012. OPEC accounted for 43% of global C+C production in 2012, which is a pretty good (and conservative) sampling of global crude and condensate production, especially when one considers the fact that the large increase in US condensate production would be in the remaining 57% of global C+C production.

    In any case, the data bases that we have that track condensate versus crude, Texas RRC and OPEC/EIA, both show large increases in their Condensate/(C+C) Ratios from 2005 to 2012, 11% to 15% and 3% to 6% respectively.

    If we extrapolated the OPEC crude versus C+C data, and assumed that OPEC was a representative sampling of global data, it would imply that global condensate production increased by about 2.1 mbpd from 2005 to 2012, which would account for all of the EIA’s reported 2 mbpd increase in global C+C production from 2005 to 2012.

    My approach has been to assume that the global Condensate/(C+C) Ratio was about 10% in 2005 (partly based on an RBN Energy estimate that put the ratio at about 11% in 2010), and I assumed that global condensate production (a byproduct of natural gas production) increased at about the same rate as the rate of increase in global gas production, from 2005 to 2012. Based on these assumptions, global condensate production would have increased from about 7.4 mbpd in 2005 to about 9.0 mbpd in 2012, an increase of 1.6 mbpd, accounting for virtually all of the EIA’s reported increase in global C+C production from 2005 to 2012.

    Based on the foregoing, the global Condensate/(C+C) Ratio would have increased from about 10% in 2005 to 12% in 2012, versus 11% to 15% for Texas and versus 3% to 6% for OPEC.

    Link to Kurt Cobb’s article.
    http://www.resilience.org/stories/2014-04-13/did-crude-oil-production-actually-peak-in-2005

    • Jeffrey J. Brown says:

      Texas RRC Condensate and Crude + Condensate (C+C) Data

      2005:

      Condensate: 0.12 mbpd
      C+C: 1.08 mbpd
      Condensate/(C+C) Ratio: 11.1%

      2012:

      Condensate: 0.30 mbpd
      C+C: 1.95 mbpd
      Condensate/(C+C) Ratio: 15.4%

      The 2013 Ratio (more subject to revision than the 2012 data) shows that the ratio fell slightly, down to 14.7%, which probably reflects more focus on the crude oil prone areas in the Eagle Ford.

      The EIA shows that Texas marketed gas production increased at 5%/year from 2005 to 2012, versus a 13%/year rate of increase in Condensate production. So, Texas condensate production increased 2.6 times faster than Texas marketed gas production increased, from 2005 to 2012.

      The EIA shows that global dry gas production increased at 2.8%/year from 2005 to 2012 (up 22% in seven years). Global condensate . . . . ?

      • Watcher says:

        This definitional stuff just cries out to be tweaked to get attractive numbers.

        • Jeffrey J. Brown says:

          Actually, I think it’s pretty straight forward.

          Global crude oil production probably peaked in 2005, but global gas production–and associated liquids (condensates & NGL’s)–have so far continued to increase.

          • Watcher says:

            Misunderstood.

            I mean the official definitions will be changed to make the numbers attractive. This is esoteric stuff to the public. Nudging the API number definition of crude is an easy thing to do in order to report numbers that look better.

            • Old farmer mac says:

              Watcher is right. The media have already dutifully quit talking about actual nasty greasy stinky honest to Jesus OIL and accepted the cornucopian definition of total liquids and calling that OIL.

              I have already seen some commentary on the part of cornucopian economists that it will be perfectly ok-THE EXPECTED THING— to call the output of a coal to liquids plant oil.

              The first time I remember being aware of this actually happening personally in real time was back in the Nixon days. The administration wasn’t happy with the housing starts numbers so they just redefined houses to include ” house trailers”.

              Problem solved.

  3. coolreit says:

    Jeffrey:

    excellent points!

  4. SRSrocco says:

    Political Economist,

    Nice charts. While the plot of the graphs looks correct, it’s the data that I question. Dave Demshur, CEO of Core Labs, believes global peak oil hits 2014-2016. Of course, he is providing his own opinion, but Core Lab analyzes the top oil majors and 100’s of smaller companies throughout the world. If anyone has a good idea of what is going on.. I’d imagine Core Lab is more qualified than most.

    I believe the reserve figures you are using, especially from the Middle East are inflated. Furthermore, the remaining supposed oil reserves are more expensive to produce than the first half…. by a large degree.

    Again… I appreciate the work and the nice charts, however, I don’t know if they are a real reflection of future oil production.

    Lastly, has anyone seen the BIG DECLINE in U.S. natural gas production in Feb? Dry gas production fell from 2.098 Tcf in Jan, to 1.895 Tcf in Feb. That’s a 10% decline. While the extreme cold had something to do with the declines, it will be interesting to see what gas production will be for the remainder of 2014.

    steve

    • Jeffrey J. Brown says:

      Estimated daily production was flat (31 days in January, 28 days in February). My daughter, who has an override that I assigned her in oil properties, was just complaining to me about the decline in her royalty check from January runs to February runs. (I pointed out the same thing to her.)

      • SRSrocco says:

        Jeff,

        Good Point. I forgot that there are only 28 days in Feb.. so of course production will be less than Jan. Yeah, 2013 Feb dry gas production was 1.844 Tcf. A little increase in 2014, but as you say… nearly flat.

        steve

    • Political Economist says:

      As explained, my data are as “correct” as what BP provides. Some more detailed explanations are in previous comments listed under Ron’s last post.

      Some historical data are from Rutledge (the chair of division of engineering at CIT) and OPEC Annual Statistical Bulletin.

      Most of the above graphs are Hubbert Linearizaton exercises that use historical production data ONLY. There should be comparatively less government or corporate manipulation involved.

      For the US, it’s EIA projection. Only for Canada, Iraq, and Kuwait, I used official reserves. So if these reserves are inflated, the above projections may have an upward bias. On the other hand, Hubbert Linearization exercises sometimes tend to underestimate the ultimately recoverable resources.

      • Jeffrey J. Brown says:

        In my opinion, when we price an item, the price should directly relate to the supply of the item being priced.

        When we ask for the price of oil, we get the price of 45 or lower API gravity crude oil. However, when we ask about the supply of oil, we get some combination of crude oil + condensate + NGL + other liquids + refinery gains.

        As I have previously noted, it’s analogous to asking a butcher for the price of beef, and he gives you the price of steak, but if you ask him how much beef he has on hand, he gives you the total supply of steak + roast + ground beef.

        • Political Economist says:

          Interesting analogy

        • Doug Leighton says:

          Jeff,

          “When we ask for the price of oil, we get the price of 45 or lower API gravity crude oil. However, when we ask about the supply of oil, we get some combination of crude oil + condensate + NGL + other liquids + refinery gains.”

          That is an excellent (and pretty basic) point. I’d of thought the economists hereabouts would have been the ones hammering this into our conscience without respite. I’m assuming your not an economist?

          Doug

          • Jeffrey J. Brown says:

            I’m definitely not an economist, but speaking of economics, I don’t think any Peak Oilers have argued that substitution would not have an incremental impact, e.g., increased supplies of propane used as a transportation fuel.

            However, the claim has been that we are nowhere near a crude oil peak, and in my opinion, that assertion, at least based on data through 2013, is categorically wrong.

        • Old farmer mac says:

          Jeff you forgot to add in the chicken livers that are going to be sold for catfish bait only after today as well as the good chicken and pork and maybe the odd duck and haunch of wild venison.
          😉

  5. PE, your Hubbert Linearization for Russia and converting everything to barrels per day, the number that I work with, Russia produced 10,620,000 bp/d in 2013. (Using 7.3 barrels per ton.) Your chart has them peaking at 11,920,000 bp/d in 2033 or 1,300,000 bp/d more than they are producing today.

    To put it mildly, I really don’t think so. I think they are at peak right now and most Russian oil production followers agree with me.
    Russian oil output down for fourth month in a row

    Energy Minister Alexander Novak has forecast oil production will be flat or slightly higher this year…

    “Without new major greenfields coming online this year, Russian output lacks an engine of growth,” Vienna-based JBC Energy said last month.

    “However, the really worrying sign for the Russian output outlook stems from the fact that Russian majors (and in particular Rosneft) seem to have run into difficulties halting decline rates at mature West Siberian key assets,” it added.

    Over 60% of Russian production comes from their very old giants, giants that are now all in decline. In fact they have been in decline for years now but a massive infill drilling program, of 5,000 to 6,000 wells per month, has kept them almost flat while their new production has given them a small but gradual increase over the last few years.

    But now two things have happened, their new fields are approaching peak and they have done almost all the infill drilling they possibly can. Their decline starts this year, not in 2033 or 2034. They have nothing new of any size coming down the pike.

    I really don’t understand how Hubbert Linerization can give a peak so different from what almost everyone else in the world believes?

    • Watcher says:

      Well, let’s remember Russian output decline has been foretold for the last two years, too.

      But Putin agrees with you. He has said they aren’t going to increase any out to 2020, and they need big bucks to just hold flat.

      • Watcher says:

        Oh and

        “Over 60% of Russian production comes from their very old giants, giants that are now all in decline.”

        The US is getting 2 mbpd from shale, out of 8? So isn’t this also true of the US? Or worse?

    • Political Economist says:

      Hi Ron, if you’re correct, of course that would reinforce the case that the world oil production peak will come earlier rather than later.

      According to Aleklett, Russia’s cumulative oil production up to 2010 was 155 billion barrels, which equals 21.2 billion tons. Using that and the BP data for 1965-2010, it can be calculated that Russia’s cumulative oil production up to 1965 should be 1.9 billion tons. I have it rounded to 2 billion tons, assumed to be the cumulative production up to 1965.

      The rest is just to add up the annual production every year up to 2013. From the Russian graph, you can see clearly that the P/Q ratio (current production to cumulative production) fell consistently during the Soviet time. A linear trend from 1977 to 1989 would indicate the ultimately recoverable amount to be 20.5 billion tons. But that would clearly be an underestimate.

      After the post-Soviet collapse and recovery, a new linear trend emerged after 2004 and it has been very stable. So just by observing the evolution of the P/Q ratio, I’ve to do HL over the period 2004-2013. I see no other choice. And the linear trend clearly points to an ultimately recoverable amount of 68 billion tons. As Russia has so far produced only 23 billion tons, about one-third of the expected URR, the Hubbert model has to say that the expected peak year is some time in the future and the expected peak production level is somewhat higher than the current production level.

      OK, that’s about what the HL model has to day. I still tend to think or hope that you’ll be right on Russia. In that case, there will be several possibilities.

      First, it is possible that starting from this year, we are going to see a siginificant acceleration of the decline of the P/Q ratios, implying a imminent peak of the Russian oil production.

      Secondly, it is possible that even if the URR predicted by HL is roughly correct, the Russian oil production could peak early and then stay on a prolonged plateau before it declines at a later point.

      Thirdly, as you observed in an earlier post, if Russia keeps managing to increase the production just a litte bit every year, then we’re likely to see the linear trend for P/Q from 2004-2013 extended into the future. In that case, Russia may behave as the HL predicts.

      • Okay, something just occurred to me. Hubbert linerization was set up before the advent of horizontal producing laterals near the top of the reservoir. Also the Hubbert method tends to show the peak near the 50% point of URR. That was the case 40 years ago but is no longer the case. Infill drilling with horizontal wells, some of them MRC, (Multiple Reservoir Contact) wells has put the peak of any field way past the 50% of ultimate production point.

        I think we are near the peak of world crude oil production but well past the 50% point of ultimate production. That is a situation that I think Hubbert never anticipated.

        • Doug Leighton says:

          Ron,

          You are absolutely correct here. I’ve been trying to make exactly this argument for some time, obviously without success. As far as I’m concerned, the “math” is being misapplied.

          Doug

        • Political Economist says:

          That would be interesting. But given a certain amount of URR, and if the peak happens somewhat later than the 50% point, the decline past peak must be very precipitous.

          This may be true for some individual fields, but I have not yet seen any country/large region following this pattern of growth/peak/decline. Any example?

          Actually, I think Dennis might propose an opposite hypothesis. The various models Dennis work with seem to suggest a peak that happens when the cumulative production has not yet reached 50% URR and a more gradual, prolonged decline takes place after the peak.

          Dennis, any thought on this?

          • That would be interesting. But given a certain amount of URR, and if the peak happens somewhat later than the 50% point, the decline past peak must be very precipitous.

            Yeah, that’s what I have been saying all along.

            This may be true for some individual fields, but I have not yet seen any country/large region following this pattern of growth/peak/decline. Any example?

            Well Mexico comes to mind. Their production dropped like a rock until they hit the point where only a small portion came from Cantarell. But as far as “large region following this pattern”? How about Africa.

            • Doug Leighton says:

              Ron,

              “But as far as “large region following this pattern”? How about Africa.” I think the North Sea qualifies as a large region and it’s basically kaput. Maybe the North Slope doesn’t qualify but it is also kaput.

              But the thing nobody seems to get is the effect of massive infill drilling into giants and super-giants. Why? To me this is the whole story in a nutshell. Perhaps, as my wife is wont to say: for someone with all that schooling, sometimes you’re not very smart.

              Doug

            • Dennis Coyne says:

              Hi Ron,

              Do you think all of those changes in African output are due to depletion? I seem to remember a disruption of Libyan output along with ongoing political problems in Nigeria and South Sudan, so it does not seem that Africa really applies. How would that Africa chart look if Libya was excluded?

          • Doug Leighton says:

            PE,

            Unfortunately, we all suffer from the same problem — lack of reliable data. This is the reason I hate sounding like: I’m not Bossy, I just have better ideas guy. Probably the only place for which we have really good information is Norway’s section of the North Sea. Maybe the UK (sort of) comes next and the UK has certainly seen precipitous decline.

            Please remember that everything I say is an opinion based on little “real” information. It’s amazing that something so important is, to a very large degree, shrouded in fog. Perhaps Jeff’s analysis comes closest to reflecting reality? Perhaps there is really no way to have reasonable projections.

            Doug

            • Political Economist says:

              Yes, perhaps.

              But I think we all learn how to get things “right” by making mistakes.

              Only by making “wrong” projections, you can tell they are wrong by hindsight.

            • Dennis Coyne says:

              Doug,

              The UK and Norway are excellent examples of how quickly we can run out of oil if the depletion rate is very high, in both of these countries the depletion rate was probably over 10% when they were near their peak output levels.

              If we take the entire world and ignore extra heavy (XH) reserves we have about 1000 Gb of C+C left based on Mr Laherrere’s estimates of C+C less XH so the depletion rate for the World in 2013 was 28 Gb/1000 Gb or 2.8%.

              Note that (still ignoring extra heavy reserves) if output decreased from 28 BBO/ year by 2% each year, and the 1000 Gb estimate of remaining 2P reserves is correct, that the depletion rate would gradually rise to 3.8 % by 2040.

              We do have those 500 Gb of extra heavy 2P reserves, but it is not clear how quickly they can be developed.

              If anyone has looked at the Canadian Association of Petroleum Producers Forecast and has strong opinions on if they have over estimated, underestimated, or it looks good, I would be very interested. I would tend to trust their estimates, but as a marketing group the forecast might be a little on the optimistic side. Link to report below:

              http://www.capp.ca/forecast/Pages/default.aspx

          • I have not yet seen any country/large region following this pattern of growth/peak/decline. Any example?

            How about everywhere else in the world except the Middle East and North America?

            • Political Economist says:

              Ron, thanks for posting these graphs. These are consistent with what my graphs for the “rest of the world”.

              But for Africa and Mexico, do we have evidence that their production peaked happened at a point much later than 50% of the expected URR?

              For Mexico, the current expected URR from HL is 10.6 billion tons. The actual peak happened in 2004, when the cumulative production was 4.88 billion tons or 46% of the expected URR.

              • No, since I have no idea what their URR will actually turn out to be, I have no idea how far they are along. But I suspect that most are well past 50% URR. I have no doubt that Russia is, and I believe Saudi Arabia is as well.

                About Mexico, I think Cantarell was well past the 50% point when the field itself peaked.

                • Political Economist says:

                  Aleklett has a table listing the %URR for all the large oil fields when they passed the peak. I’ll locate it another day.

                  In the case of the US, the US cumulative oil production was 13.5 billion tons when it reached its first peak oil in 1970. Now the US cumulative oil production is already 31.3 billion tons.

                  Of course this has to do with Alaska and shale oil.

                  But if you look at Dennis’s models, basically all of his models predict peak production happening when cumulative production is significantly less than 50%URR. That’s especially true for his shale oil models.

                  So I’m still wondering what Dennis might say about this.

                  • Dennis Coyne says:

                    Hi PE,

                    I commented below about the World models,

                    note that the peak depends on extraction rate assumptions for the oil shock model.

                    I have presented scenarios in the past that have long plateaus or even those that follow the BP 2013 oil outlook. Below is a chart of an optimistic plateau scenario I did in July 2013, URR for crude is 2900 Gb and 50% of URR for C+C occurs in 2021 in the middle of a plateau that goes from 2008 to 2036. The LTO models are based on an assumed average well profile and the rate that new wells are added and the assumption that USGS estimates are roughly correct. A big problem with those models is that we don’t really know what the production profile of the average well will look like in the future, I have tried to use “reasonable” well profiles which match the estimated ultimate recovery (EUR) used by the USGS for the Bakken (about 350 kb over 30 years), to this point we have little data beyond about 5 years and we have the greatest amount of data for the first 3 years or so.

                    All of these scenarios are based on assumptions, any of them could be wrong.

                    Often when these wells are all added together over time the resulting Bakken output profile is not what people expect.

                    On the Bakken, there are at least two others Rune Likvern, and Webhubbletelescope that have gotten results similar to my own. In fact I should say that my work is similar to theirs because it was Rune and Paul who did the heavy lifting on the Bakken (and much else) and I have just attempted to move the ball forward.

            • Dennis Coyne says:

              Again Libya is the reason for the big moves, which is political not depletion, what would it look like if you do the same chart except take Libya out of the analysis.

          • Patrick says:

            Not sure that this is what you are talking about because I’m not a scientist… Hope it helps though. It comes from the Technical Report 4 of UKERC, in which there is also an interesting “Figure 5.1 Peak production, peak year and depletion rates of post-peak producers”:
            http://www.jklm.cc/9/176329428.php?pdf=ad125237

            • Dennis Coyne says:

              Patrick,

              That paper is excellent. I realize after reading it that the term “extraction rate” that is used by Paul Pukite (aka Webhubbletelescope) in his oil shock model is very similar to the depletion rate in the paper you linked above (pp. 27 to 30).

              The only difference is the denominator. For depletion rate is annual production divided by remaining 2P reserves, but extraction rate uses the same numerator and “mature reserves” in the denominator. Mature reserves are a subset of remaining 2P reserves that includes only producing reserves that have reached peak production (or plateau for giant fields) or are in the decline phase. Over time as more and more of 2P reserves are developed the “mature” reserve number begins to approach the 2P remaining reserves and depletion rate and “extraction rate” become nearly equal at that point.

          • Dennis Coyne says:

            Hi PE,

            The generalized oil shock model with dispersive discovery allows for the possibility that the rate of extraction could change over time, due to war, financial crisis, asteroid impact :), or technological change. If extraction rates increase enough then output could go up a little from where we are today, if they follow the linear trajectory established over the 1994 to 2013 period we will see a plateau for a 5 to 7 year period (this depends in part on how a plateau is defined) followed by a gradually increasing decline.

            We could also see extraction rates fall which would lead to a steeper decline. Most people on this blog think that the extraction rates will fall, perhaps to zero, but certainly to less than they are at present.

            Note that for the shark fin decline to occur, extraction rates must fall, for I have already presented scenarios where they remain at present levels and such scenarios have been declared “unrealistic” by many.

            Ron has commented that I assume things will remain linear. This is a fair criticism, but is actually a misunderstanding on his part. I have presented scenarios that show what production will look like if the economy does not fall apart and things proceed without major worldwars or severe financial crises. If any of these occur, demand for oil will decrease and supply will decrease as well.

            Others assume that such crises must occur (which is reasonable as they have happened in the past) and the economy will decline (also very common throughout history). The further assumption is that this decline will be catastrophic to the point that the economy will not rebound and that no transition to other forms of energy are possible, I disagree strongly with this proposition.

            The linear nature of my scenarios is simply because I cannot predict when or how large these future shocks to the system will be, but just as there will be times when output will be below the trajectory in the scenarios (due to recessions, wars, and or natural disasters), the economy will recover and oil output move back to the trend line.

            Another reason my scenarios tend to show a plateau is that we have two very different types of oil resources. The first I will call “conventional” crude where “non-conventional” is the extra heavy oil from Canadian oil sands and the Orinoco belt.

            We are already past 50% of the URR of 2200 Gb for the conventional (at year end 2013 about 55%). For the extra heavy oil (URR=500 Gb)the extraction rates are smaller and leads to a slower ramp up of output from these resources. I have presented a rough scenario for the 2200 Gb of conventional (chart below), but I overestimated extra heavy output a little so I plan a future revision, I am also working on a model for oil sands and Orinoco output so that I can get a better (more realistic) World model.

            Compare chart below with Mr.Laherrere’s scenario at link below (figure 10 on page 6): http://aspofrance.viabloga.com/files/JL_veryshort30May2013.pdf

            • Most people on this blog think that the extraction rates will fall,

              Extraction rates, when defined as production as a percentage of what recoverable oil is left in the ground, do not have to fall. For instance Prudhoe bay, every year, produces about 15% of the recoverable oil left in the reservoir. As the reservoir depletes then production falls but still remains at about 15% of remaining recoverable oil.

              It is when you increase extraction rates that you are courting disaster. If infill drilling in Ghawr, for instance, increased extraction rates from 8%, or whatever it was, to 16%, or double whatever it was, then they have doubled extraction rates but also doubled depletion rates.

              The further assumption is that this decline will be catastrophic to the point that the economy will not rebound and that no transition to other forms of energy are possible, I disagree strongly with this proposition.

              At some point, within this century, the economy must collapse. I am working on an essay that explains why this must be the case. However it may take me a few weeks to finish it. I keep having trouble composing exactly how I want to explain it.

              About those “other forms of energy”, I assume you are speaking of “other than fossil fuel” or so called “renewables”. You should read this essay, Eight Energy Myths Explained, especially Myth 3. We can easily transition to renewables.

              That is, in my opinion, one of the very best essays Gail ever wrote.

              • Dennis Coyne says:

                I never said it would be easy. There is also nuclear energy along with renewables, and energy efficiency, and transition to negative population growth, all fossil fuels will peak and decline, but oil will go first, followed by natural gas, and finally coal. After the oil peak is clear (hopefully your 2017 estimate is correct) by 2020, it is possible that humans will realize that natural gas and coal are not far behind. An increase in fossil fuel prices if kept to 4 or 5% in real terms might be managed by the World economy without a collapse. The price increases will lead to people using energy more efficiently.

                Recessions are certainly likely, the transition will not be easy, but there will be many years before there are no fossil fuels. I have read that essay, I find Ms. Tverberg’s point 3 not persuasive. The fossil fuels will be replaced gradually over time, population growth rates will fall, energy efficiency will increase. We do not need to go from fossil fuels to no fossil fuels. I imagine someone in 1860 would have said there is no way that oil will be able to compete with coal as an energy source.

                It is a Myth that anyone thinks such a transition will be easy or that it will happen without fossil fuels and it is also a Myth that fossil fuels will become unavailable over a very short time frame, they will become more expensive and alternatives will become more competitive and more and more of the alternatives will be produced.

                • There is also nuclear energy along with renewables, and energy efficiency, and transition to negative population growth,

                  Are you really serious? China initiated their one child policy in 1980. Since that date their birth rate has dropped from about 37 per thousand to about 20 per thousand. But still their population has grown by over 400,000,000. From about 981,000,000 to 1,383,000,000. That is a slowdown but far from negative population growth.

                  If China’s draconian policies cannot stop population growth then there is nothing that will stop population growth. I know, some say “but when we increase the standard of living then everyone will have fewer children”. That is debatable but we don’t have even a fraction of the energy to raise the world’s living standards to those of European nations.

                  The world’s population will decline but nature will be determiner of that, not governments or increased living standards.

                  • Dennis Coyne says:

                    In Japan they are worried about declining population, I know you think some things are not possible but EU population growth is getting close to zero, it takes time for the population trends to move.

                    “A global move to the fertility levels seen in a number of Chinese urban centres (around 0.75) over the coming 40 years would result in a peaking of global population before 2050 and a decline to only 3.6 billion in 2100 and 150 million people by 2200. But even the more realistic range of long term fertility levels of 1.5-1.75 (higher than it has been in much of Europe for the past decades) would lead to declines in global population size of 2.6-5.6 billion by 2200 and even 0.9-3.2 billion by 2300.”

                    Above quote from paper linked below by Basten et al, click on PDF download for full paper.

                    http://www.demographic-research.org/volumes/vol28/39/

              • Dennis Coyne says:

                Hi Ron,

                You said,
                “Extraction rates, when defined as production as a percentage of what recoverable oil is left in the ground, do not have to fall…”

                Depletion rates and extraction rates are pretty much the same thing (different denominator in extraction rate of “mature reserves”) especially in the long run where all reserves will become mature reserves.

                I presented a model earlier (and will repeat it below) where the depletion rate was kept constant at the 2013 level, many (maybe not you I forget) people complained that the model was not realistic and implied that the decline rate should be much steeper (we will ignore net energy for now as it is not well measured).
                The only way that a steeper decline will result is if the depletion (extraction) rate is reduced. That is why I concluded that some people must think that the depletion rate must fall. If you think A is true, then for logical consistency you must think B is true as well.

                In the Chart below Model B assumes extraction rates (depletion rates) remain at 2013 levels until 2070 and Model A assumes extraction rates (on right axis) rise at the trend set over the 1994 to 2013 period.

        • Doug Leighton says:

          Ron,

          OK, I did it, I bribed my wife (PhD, mathematical physics) for her opinion on the applicability of Hubbert linerization to the variables being discussed. This required tracking down Hubbert’s publications (bit of a pain though not as difficult as I expected) but here, in a nut shell, is the answer: As formulated (and published), Hubbert, (who was basically dealing with modified log normal distributions derived from theory and conventional production data), no, the original equations are not up to the current task.

          In fairness, she said the work could be extended to include the (any) new variable(s) but there are probably better approaches: My idea was nixed immediately (“Doug, that’s totally daft”). Of course, we don’t have any information on the actual mathematics currently being applied. So, you’re right, at least insofar as the way Hubbert’s original work was formulated.

          Now, if Noony were to chime in (Where the hell is Noony?) there would be accusations flying in every which direction and I’d become totally pissed off. Hopefully that won’t happen.

          Doug

        • Dennis Coyne says:

          Hi Ron,
          Jean Laherrere estimates total world crude plus condensate URR at 2700 Gb, we are currently at about 1230 Gb of cumulative world C+C production, so if Mr. Laherrere’s estimate is correct we are not quite at the 50% point.

          At 28 billion barrels per year (plateau at 2013 level of output) it would take 4 years to get to the 50% point or 2017 which matches your prediction, but if we go way past 50% before reaching peak (lets say to 60%) we would go all the way to 2026 on a plateau of 28 BBO per year from 2013 to 2026.

          I don’t think such a scenario likely, but I wonder if you think Jean Laherrere has overestimated the URR of crude, or perhaps you think none or very little oil sands or Orinoco extra heavy oil (500 Gb by Mr. Laherrere’s estimate) will be produced.

          If the extra heavy(XH) oil is ignored, then we are 4 years past the 50% point for the 2200 Gb of C+C-XH and are currently at the 56% point, perhaps that is what you mean.

        • Dennis Coyne says:

          Hi Ron,

          You said we are well past 50% of World URR. Would you care to venture a guess for World URR for C+C? Mr. Laherrere estimates 2700 Gb for C+C URR for the World. Currently World cumulative output (as of Dec 2013) is about 1200 Gb so as of year end 2013, by Mr. Laherrere’s estimate we are at 44% of the URR.

    • Doug Leighton says:

      Ron,

      Everyone (including Russians) seem to agree that even maintaining the status quo on production is going to require a huge amount of exploration/development spending. Is that likely? And, from my narrow perspective, MASSIVE infill drilling is going to play havoc with depletion: There’s not that much oil left in the old fields anyway. So, as far as I’m concerned, PE (and Dennis) are out in left field on this — as Mac might say.

      Doug

      • SRSrocco says:

        Doug,

        Spot on. Here is that famous graphic showing the decline in oil reserves (Red) and the increase in water-fill (Green). The difference with the Saudis, and maybe Ron can reply to this, is that their use of Horizontal drilling is the opposite of the U.S. Shale.

        As the water-line hits the horizontal well in a Saudi Field, the shut the well and drill one higher up… which is the opposite of U.S. Shale as they drill lower.

        steve

        • Doug Leighton says:

          Steve,

          Those are pretty cool images. The thing most people don’t seem to realize is that no matter how thin the red line becomes, if you have enough production holes, you can keep production rates more-or-less constant until all your getting is water. And, this is happening all over the world. To go Hollywood: What part of this don’t they get?

          Doug

          • SRSrocco says:

            Doug,

            The part they don’t get?? I guess when a cup of STARBUCKS goes from $4 bucks to $10, they might start filling in the blanks.

            steve

            • Old farmer mac says:

              I can remember paying a dime for my first cup of coffee purchased at counter sitting on a barstool in a cafe. I felt really grown up that day.

              If he had saids something about inflation the legendary Matt Simmons would probably have said that like rust and depletion inflation never sleeps.

              I don’ t see why anybody at all who has some age and experience doesn’t expect nominal energy prices to at least double over the next decade.

              In terms of real or constant money the increase may be a little less, or maybe not. The price may well double in terms of real money and triple or quadruple in terms of fiat money.

              RUST ,DEPLETION, AND INFLATION NEVER SLEEP-although in historical terms oil prices have been sneaking in a nap for the last couple or three years.

              Being an old fart used to thinking in terms of the long term a three year pause in price increases is nothing to pin one’s hopes on.

              If anybody here were a politically controlled banker-and in the end all bankers are politically controlled or politicians themselves- what would he do faced with the question of either instituting extreme austerity measures or inflating the currency a little more …. and a little more…….. and a little more?

          • Dennis Coyne says:

            Hi Doug,

            I know you think I don’t get it, but as long as they water out one at a time over many years, the decline in World output is gradual and these declines are offset to some degree by new wells coming online.

            A big problem I see with the crash scenario is it assumes what one is trying to prove. When one suggests that the decline may be gradual for the reasons I give above, I am told that the economy will go to hell in a handbasket and very few new wells will be drilled. Why does the economy go down the drain? Due to the rapid decline in output. Why the rapid decline? Due to economic death spiral.

            Now a lot of the reasons for problems, such as war or revolution in the Middle East are certainly a possibility, but I do not think a gradual decline in oil output will be the catastrophe that those in the other fields seem to assume(I guess I play left field, but I think center field is really my position) 🙂

            • Doug Leighton says:

              Dennis,

              “A big problem I see with the crash scenario is it assumes what one is trying to prove.” That is a very good point and there is no doubt that I’m susceptible to this tendency. However, I still think you’re wrong (in general). Only time will tell.

              Doug

              • Dave Ranning says:

                A new experience for homo sapiens!

                “For the first time in at least 800,000 years, the average level of carbon dioxide in Earth’s atmosphere exceeded 400 parts per million (ppm) for a full month in April.
                Measurements made at a National Oceanic and Atmospheric Administration (NOAA) observatory in Hawaii showed that the monthly average in April reached 401.33ppm.
                The Scripps Institution of Oceanography at the University of California – which runs the observatory – says it is the first time in human history that levels of the greenhouse gas topped 400ppm over such an extended period of time.”

              • Dennis Coyne says:

                Hi Doug,

                I was thinking of trying to create a scenario to illustrate the “creaming” effect that is at least one reason you are convinced that a shark fin decline is inevitable.

                The decline rate of the giant fields has been estimated at about 5% per year with continual investment to attempt to maintain output.

                Let us assume that when the wells in the giant fields begin to water out that not all wells water out at the same time so that field output falls rapidly but does not become zero overnight. What level of annual decline rate would you expect? Canterell had one of the worst declines to date and that was about a 40% annual decline rate at its worst point, would 40% be a fair number, in your opinion? (Clearly this would just be a guess, but I thought I would get your input on a reasonable worst case.)

                • Doug Leighton says:

                  Hi Dennis,

                  I don’t think Cantarell can realistically be used to support arguments, one way or the other. Firstly, the geology is unique: a meteorite impact site. Secondly, the Mexicans employed nitrogen injection on a totally unprecedented scale. Again unique.

                  My excessive use of the word “creaming” refers mainly but not exclusively to horizontal drilling in the “caps” of depleted deposits which maintain “last gasp” high production rates. There’s nothing wrong so long as the rates aren’t presented as: “this can go on indefinitely” hype. Of course we agree here.

                  Your argument that reserves aren’t going to expire simultaneously has (some) validity in terms of shark’s fin scenarios but I think simultaneous is a relative term because a lot of the giants are in that old life stage and they are being exploited as quickly as humanly possible.

                  I guess my main criticism of your viewpoint stems from the fact you (maybe it’s PE) seem to be fixated on a conventional log normal type life for oil deposits which was certainly true before. I think this will become distorted toward a shark’s fin shape over time (if not already); but not in an extreme way, necessarily.

                  In the past, conventional extraction was pretty well “log normal”. In my opinion, the pattern is now distorted to higher extraction rates across a shorter time. With respect, I don’t think your and PS’s analyses properly reflect this. And, I’m particularly convinced that linearized curves are NOT as appropriate as they certainly used to be. This is backed up by my wife who is a very smart girl but relying on my comments about the “new” factors coming into play.

                  Finally, I’m not qualified to express an opinion on average global decline rates. I probably don’t admit this often enough!

                  Finally, finally: I didn’t actually think you were paying any attention to my opinions.

                  Cheers,

                  Doug

                  • Dennis Coyne says:

                    Hi Doug,

                    The fact that I respond to your comments means I am interested in your opinion.

                    The oil shock model is an alternative to Hubbert Linearization which is based on the maximum entropy principle (first introduced by E.T Jayne) see
                    http://en.wikipedia.org/wiki/Principle_of_maximum_entropy

                    My guess is that your wife is very familiar with this (and you may be as well).

                    A search on the Oil Conundrum will get you to the very long PDF where the oil shock model is presented, it is very different from the Hubbert Linearization(HL).

                    So while I agree with your criticisms of HL.
                    It is not quite clear that you understand that that is not what I am doing.

              • Dennis Coyne says:

                Hi Doug,

                Do you think Jean Laherrere is wrong as well?

                At least one of my scenarios is pretty close to his forecast from Jan 2013 see chart.

                • Doug Leighton says:

                  Dennis,

                  Further to my comments above, I’m not saying you’re wrong. What I’m TRYING to say is that the dynamics of extraction have shifted and analysts should try to reflect these changes in their work and not rely totally on history or historical procedures, as effective as they were. And, that’s something easier to say that than do because the math potentially becomes messy and may not be following a proven path.

                  Actually I’m surprised you give a dam about what I think and for what it’s worth, I admire you for sticking to your guns (right or wrong).

                  Doug

                  • Dennis Coyne says:

                    Hi Doug,

                    As I said above I agree that the HL analysis is not ideal.

                    Mr. Laherrere uses several different methods to come to his conclusions on URR (he uses HL, but confirms it with other types of analysis). He looks very carefully at World discoveries and that is really the bedrock of his analysis and it is what is used as an input to the oil shock model as well, the production data (for the World model) is only used to determine depletion rates (which I have called extraction rates in the past, there is a subtle distinction which is not terribly important in the long run).

                    The model I use fully accounts for the fact that an increase in the rate of depletion will result in a steeper decline at a later date. So in very simple terms lets say we increase the depletion rate from 2.8% to 5.6% gradually so that output can remain at 27.5 Gb per year for 15 years (I am making this up), my model does not assume that this increases the amount of reserves, it means there are fewer reserves that can be produced in the future. In the simplest terms the URR remains fixed.

                    It may be that you think that the high depletion rates will decrease the URR, if so we are not in agreement and as you said before time will tell.

        • Political Economist says:

          What’s the difference between the graphs on the left side and those on the right?

          • SRSrocco says:

            Political Economist,

            Two cross sections of a reservoir simulation of the northern portion of the ‘Ain Dar region of Ghawar at various years. Color represents volumetric water saturation in the rock pores. Source: TheOilDrum.

            This was a graphic and article by Stuart Staniford. Here is the rest of his explanation:

            Stuart argues that once production gets into the green regions, the oil yield will start to fall significantly. Extrapolating the rate of loss of the red area from the time-series trend, Stuart calculates that the red would have been all gone by the second half of 2005, exactly when the production declines began.

            http://econbrowser.com/archives/2007/04/more_speculatio-2

            This is another graphic by Staniford showing the depletion at Ghawar from a different perspective:

            Modeled distribution of original reserves in ‘Ain Dar/Shedgum area of Ghawar (left), oil water contact offset by 511’ vertically upward (center) and the same with the effect of gas caps (right).

            http://www.321energy.com/editorials/staniford/staniford051807.html

            graphic below

            steve

            • Political Economist says:

              Steve, this is very interesting.

              What’s your take on Saudi Arabia? Will it peak and decline soon? That will certainly have global consequences.

              • SRSrocco says:

                From what I understand, they continue to shut in horizontal wells when the water cut gets to high and then they drill additional wells at a higher location… rinse and repeat.

                Furthermore, BP counts the inflated Middle East reserve figures in their calculations which makes the situation look much more optimistic than it is.. in my opinion.

                Here is the chart showing the increase in oil reserves by the Middle East countries during the early 1980’s when they were jockeying for export quotas. As you can see, Saudi Arabia increased their reserves from 170 Gb to over 260 Gb with no apparent real drilling activity to back it up. This goes for the rest of the middle east countries.

                As George Carlin wisely said it…”Folks, there’s a lot of BS out there.. and it ain’t good for you.”

                steve

        • TechGuy says:

          Steve, See my earlier post from the Godot article, I think you will find these SA articles from 2010 very enlightening:

          http://www.saudiaramco.com/content/dam/Publications/Journal%20of%20Technology/Spring2010/JOT_Spring2010.pdf

          “Water production began in 1998, and it reached 50% water cut by the end of 2007; consequently, the well was plugged back to within 20 ft from the top of the reservoir to minimize water production, with limited success. Due to continued water production, the well was worked over in 2008 and converted to a trilateral well with 37⁄8” short radius horizontal laterals to access the top 20 ft of the reservoir, allowing continued recovery of dry oil.”

          “The initial test rate resulted in 3 thousand barrels oil per day (MBOD) with 44% water cut compared to 1.5 MBOD with 48% water cut before sidetrack.”

          [I know this is only one well but it apparent the SA oil is going to extremes to produce oil. It appears that at least portions of the Ghawar are already watered out and they are targeting the bit of trapped oil with horizontal drilling.]

          http://www.saudiaramco.com/content/dam/Publications/Journal%20of%20Technology/Fall2010/JOT_fall2010.pdf

          This article discussed the “remaining 35ft” of Oil column in Arab-D. Which was back in 2010. My understanding is that the Arab-D formation was the bulk of production from Ghawar.

          • Watcher says:

            FYI water cuts of 90+% are not unusual and not a horrible thing. Separation is pretty easy and as long as oil is coming up, you don’t care if water comes with it.

            The water is washing the oil out of the pores in the rock. That’s the process.

            • Watcher says:

              haha Of course, there are ways 90% would be very bad, depending on drive and hell, all sorts of things, but there’s a lot of water down there. It’s supposed to come up.

  6. VK says:

    Hello Political Economist,

    Official numbers from the Russian government: 17.8 billion tonnes (proven) as of 2012.
    http://en.wikipedia.org/wiki/Oil_reserves_in_Russia

    Also, here’s an article in the russian media about HSBC forecast:
    http://www.finmarket.ru/main/article/3469367
    (in Russian, can be translated with Google)
    It basically predicts the peak at 550 million tonnes / year around 2018-19.

    Quite far from what HL calculations give you for Russia.

    And actually quite consistent with conclusions from the following TOD article:
    http://www.theoildrum.com/node/2389

    VK

    • Political Economist says:

      Hi VK, thanks for the link. I’m observing this with as much interest as everyone else. I’m actually quite looking forward to a Russian oil peak. That would have dramatic impact on world energy, economy, and geopolitics.

      But I’ve to work the numbers I have and the number currently does not tell otherwise. You can see from the Russian graph above. Is there another legitimate way to identify the linear trend?

    • It basically predicts the peak at 550 million tonnes / year around 2018-19.

      That works out to be 11,000,000 barrels per day. They are not going to make it.

    • Political Economist says:

      Hi VK, those graphs and tables are very interesting. But just realize they are in Russian.

      I am actually from China. Back to the good old days of China’s First Five-Year Plan, every Chinese college graduate knew Russian. But not any more.

      Is it possible to copy some of those interesting graphs here and provide some simple English explanations?

    • Phil Harris says:

      VK
      Ronald Rapier (your Oil Drum link for 2007) just about destroyed the Hubbert heuristic as a tool (at least the theoretical basis). I re-read his TOD post and comments.
      So what are we all doing in 2014?
      best
      Phil

      • Jeffrey J. Brown says:

        Deffeyes, using HL, predicted a global Crude + Condensate peak between 2004 and 2008, most likely in 2005.

        Based on OPEC data and based on my analysis at the top of the thread, it would appear that he was right about the oil reservoir component, but not the gas sourced (condensate) component, although the C+C average production rate for 2006 to 2012 was the same as 2005 (74 mbpd). In any case, at a minimum, HL was useful in accurately picking a major inflection point in global crude oil production.

        And using HL, following is my January, 2006 prediction:

        http://www.theoildrum.com/story/2006/1/27/14471/5832

        “As predicted by Hubbert Linearization, two of the three top net oil exporters are producing below their peak production level.   The third country, Saudi Arabia, is probably on the verge of a permanent and irreversible decline.   Both Russia and Saudi Arabia are probably going to show significant increases in consumption going forward.  It would seem from this case that these factors could interact this year produce to an unprecedented–and probably permanent–net oil export crisis.”

        Saudi production was below their 2005 production rate for five years (2006 to 2010 inclusive), before showing an uptick in 2011 to 2013 (and average Saudi production through 2013 remains below their 2005 rate), and Russian production continued to slowly increase after 2007. However, Saudi net exports have been below their 2005 rate for seven, and probably eight straight years, and Russian net exports have been at or below their 2007 rate since 2007.

        Following is the Global Net Exports (GNE) “Gap Chart” for 2002 to 2012.

        As shown on the graph, GNE was increasing at 5.4%/year from 2002 to 2005, versus a 0.6%/year rate of decline from 2005 to 2012.

        As these two examples show, HL, at a minimum, was very useful in picking major inflection points in global crude oil production in global net exports of oil.

      • Jeffrey J. Brown says:

        GNE Chart:

      • clifman says:

        Wondered when someone would mention RoBERT Rapier’s critique of HL (might’ve been me if not yet), or he would show up here himself…

      • Dennis Coyne says:

        Hi Phil,

        Note that I am using Paul Pukite’s (aka Webhubbletelescope) Oil Shock Model, I agree the HL analysis is not very reliable, but I think Political Economist’s presentation is interesting and shows some of the limitations of HL analysis.

  7. Paulo says:

    Quick questions:

    What is the price assumption for the 2018 date of decline? Did I miss this? Does it require more expensive oil in constant dollars or will it blunder along at current price until it peaks?

    Also, if Russia is in such dire need of investment, would a price drop immediately produce production decline?

    I get the idea of extrapolating production forward provided data is accurate and apples remain apples, but it seems to me one economic hiccup creates an entire new scenario.

    Thanks….Paulo

    • Political Economist says:

      There is no price assumption used by HL analysis.

      Yes, as I explained in the main post, for the HL analysis to work, you need to identify a linear trend (which reflects the past economic, geological, tehchnical, and sometimes geopolitical trends). But sometimes it can be tricky and requires a lot of subjective interpretation to decide what linear trend you want to work on.

      Nevertheless, in the Russian case, it should be quite uncontroverial that those dark spots (2004-2013) have been the prevailing linear trend in recent years.

      If there is a large drop of price (or as exploration costs rise), I suspect what will happen is that there will be a sudden downward shift of the linear trend or the downward slop would become somewhat steeper. That is in fact what Ron’s prediction would imply.

  8. Political Economist says:

    Ron, these graphs now look much better. Thanks for working this.

    • I did not do that. I think Dennis did. He had your original post. All I had was a Word document.

    • Dennis Coyne says:

      Your welcome. I also corrected a couple of typos, if I changed anything inappropriately just shoot me an e-mail, and thank you for the great post.

      Now for some gentle criticism:

      I wonder if for those countries where HL looks kind of shaky, Kuwait, Canada, US, Mexico, Venezuela, Russia and perhaps others, it might be better to roll those together with the “rest of the world”.

      There are a few countries where you don’t really use HL but just assume a URR and then assume output follows a logistic function. On the Saudi HL it looks like the data used for the HL should start at 10 billion metric tons, for Russia I believe the number of data points is too small to give a reliable result, for US and Canada HL does not really apply, Mexico also has too short a period to be reliable. There really are not many of the top 11 producers where HL gives a very reliable result.

      You could use Iran, UAE, China, and Saudi Arabia (with the change I suggested above), and then do a “rest of the world” analysis on all except these 4 countries. Also of interest would be a comparison with a “World HL” which I believe pointed to 3000 Gb, but I am not sure what year it points to.

      For those who have great faith in the HL method (which I do not), why is it that the lack of correlation between the output data and a logistic model before the peak does not result in a lack of confidence in the model beyond the peak? The logistic is just one possible scenario, there are many others.

      • Political Economist says:

        Dennis, many thanks for the editing and your suggestions.

        For the world total HL, the estimated URR is about 390 billion tons or 2.9 trillion barrels. The peak year is ALSO 2018, but the peak production is 4.1 billion tons compared to 4.4 billion tons in the current exercise. There is a gap of 300 million tons or about 6 million barrels per day.

        For Russia and Mexico, yes, the number of data points is small. Though for Russia now we’ve got 10 years. That’s the shortcoming for HL. There is not much you can do when a new trend emerges.

        For Saudi Arabia, I’ll show the results using your suggestion later.

        I think it is possible to combine most countries with the rest of the world. But I cannot put the US in. Because the US will drive up the P/Q ratios, making it impossible to do the HL analysis, which depends on a downward linear trend.

        Partly for this reason, I am experimenting with applying HL to what I call “the excess production”, the difference between actual production and the historial “normal” production. But this would be another topic.

        Let me first do world excluding the US, and see if we have some interesting results.

        • Political Economist says:

          Well, just realized that the world total of course has already included the US. Let me work on Saudi Arabia first and think about the strategy for the rest later.

  9. Old farmer mac says:

    I just ran across this link. It’s a really good one for anybody interested in Mexico and the Mexican energy industry.

    http://energypolicy.columbia.edu/on-the-record/mexican-energy-reform-prospects-and-challenges

    They have some Kopit video at this site too.

    The former CEO of PEMEX was the principal speaker and said the best case for Mexican oil production for the next few years is to hold at current levels.

    That is probably a rather optimistic assessment but if the country moves faster than expected in allowing some competition into the oil industry maybe they can manage it.

  10. Political Economist says:

    I’ve got some interesting results. Based on Dennis’s suggestion, I re-did HL regression for Saudi Arabia over the period 1999-2013. The graph below shows the results.

    Here are the main findings. Compared to the pevious regression, Saudi Arabia’s URR is reduced from 56 billion tons to 45 billion tons. R-square is improved from 0.239 to 0.675.

    • Political Economist says:

      Now the comparison between historical and projected oil production.

      The theoretical peak year moves from 2028 to 2019. But most interestingly, look at the peak production level.

      Compared to the previous regression, the peak production level is reduced from 619 million tons to 538 million tons. In barrel term, it is reduced from 13.1 million barrels per day to 11.4 million barrels per day.

      By comparison, in 2013, Saudi Arabia actually produced 540 million tons (11.5 million barrels per day).

      This means Saudi Arabia may have already peaked. So far the actual peak was in 2012, when Saudi Arabia produced 547 million tons. The current plateau may come to an end around 2019, followed by irreversible decline.

  11. Political Economist says:

    Suppose we can agree that HL yields reasonably reliable results for Saudi Arabia, China, Iran, and UAE.

    For Russia, I don’t see another way to do the HL analysis. On the other hand, I think Russia’s official reserves are too conservative (only 12 billion tons, the cumulative production up to 2013 was 23 billion tons).

    US has shale oil and Canada has oil sands. Iraq has political instabilities and there is debate on how much of Iraq’s oil resources is really recoverable.

    Saudi Arabia, Russia, US, China, Canada, Iran, Iraq, and UAE constitute the world’s eight largest oil producers.

    Let me do a HL analysis of the world total less top 8. And if we also accept HL analysis for Saudi Arabia, China, Iran, and UAE. We can focus our debate on the remaining 4: Russia, US, Canada, and Iraq.

  12. Political Economist says:

    More interesting results. Excluding Saudi Arabia, Russia, US, China, Canada, Iran, Iraq, and UAE, the World Total Less 8 produced 1734 million tons (35.5 million barrels per day) in 2013, accounting for 42 percent of the world total oil production.

    The following graphs shows the World Total Less Top 8’s cumulative production. The linear trend from 1998 to 2013 indicates the ultimately recoverable oil resources to be 120 billion tons. The cumulative oil production up to 2013 was 71 billion tons. The World Total Less Top 8 has peaked!

    • Political Economist says:

      The following graph compares the historical and projected oil production for the World Total Less Top 8.

      Based on the Hubbert Linearization model (the R-square for the above regression is 0.984), the World Total Less Top 8 is projected to peak in 2007, with a theoretical peak production level of 1835 million tons. The actual peak took place in 2005, with a production level of 1882 million tons. Under the current trend, oil production from the World Total Less Top 8 is projected to 473 million tons by 2050.

      This represents a net decline of 1261 million tons or 26 million barrels per day from 2013 to 2050. The average annual reduction will be 700,000 barrels per day.

      If the HL analysis for Saudi Arabia, China, Iran, and UAE are reasonably reliable, then Saudi Arabia and Iran may have peaked. China and UAE will peak in the near future.

      There is disagreement over Russia. But at best, Russia’s scope of growth will be limited. If Iraq’s situation does not improve or if other factors (infrastructure/lack of investment) prevent Iraq from utilizing its oil resources, only the US and Canada can grow significantly in the near future.

      Roughly speaking, as soon as the growth from US and Canada falls below 700,000 barrels per day, no longer sufficient to offset the decline from the World Total Less Top 8, we will see peak oil for the WORLD TOTAL.

      • Political Economist says:

        In light of that, it would be interesting to note that right now, EIA’s simplified statistical reporting procedure would make sure that Texas alone will grow by 50,000 barrels per day per month and therefore 600,000 barrels per day per year.

        EIA and Texas is saving the world!

      • Dennis Coyne says:

        I wonder if just taking countries like Russia, US, and the other two from the top 8 (can’t remember which those are (Mexico and Iraq?) and lumping them with the rest of the World would yield a different result, your new Saudi HL looks much more reasonable than the initial attempt. It is still likely that the World overall HL will point to 2018.

        The question remains, “How quickly will Canada and eventually Venezuela(a delay of 10 to 20 years is my guess) ramp up their extra heavy oil output?” I am using Mr Laherrere’s work as the basis for my estimates, I think his estimates are much more likely to be correct than my own. There are estimates out there (by the USGS)that the extra heavy technically recoverable resources(TRR) in the Orinoco are about 500 Gb (twice the estimate of Mr. Laherrere) and I have read that the oil sands TRR might be as much as 400 Gb, so Mr. Laherrere’s estimate may be on the conservative side.

      • clifman says:

        :…only the US and Canada can grow significantly in the near future.

        Roughly speaking, as soon as the growth from US and Canada falls below 700,000 barrels per day, no longer sufficient to offset the decline from the World Total Less Top 8, we will see peak oil for the WORLD TOTAL.”

        NOW your method is coming into agreement with other projections and the simple observation of recent data…

  13. Carbatom says:

    And speaking of Russian production depletion, this latest article was posted at RigZone:

    http://www.rigzone.com/news/oil_gas/a/132886/Russian_Oil_Output_Down_for_Fourth_Month_in_a_Row

    From the article, it’s starting to look like they’ve already peaked in crude production.

    • Watcher says:

      When the slope is not steep, you can always drill more to stop a decline.

      A lot of this is attitude. The theory “With oil at $100, producers should be going flat out to capture that money and drill and output every drop they can.”

      Well, that only matters if dollars matter, or any other medium of exchange. If you can ship food to your people and persuade them they don’t need plasma TVs, then you shut down production and stretch it for your own citizens.

      You can offer it to other countries, but they will have to meet your price. It won’t be a monetary price. It will be . . . behavioral.

  14. Loving the math PE. Gripping.

    And on a related note; seen how Detroit has made a bit of a comeback with new car sales? Turns out they’re to people that can’t really afford them, according the the FT:

    http://www.ft.com/intl/cms/s/0/e396809e-a4aa-11e3-9313-00144feab7de.html#axzz30ozcD27k

    Yup Subprime Auto is the new craze with those genius kids in finance. And how do you suppose this plays out with any kind of rise in the price of gas? So I figure these cars ain’t gonna be gettin’ driven much, except to the repossessors. And, you know, cars aren’t an appreciating asset; fingers, burning….

    “Automakers “need to keep pumping products to keep the factories humming”, Gagan Singh, chief investment officer of PNC Financial Services, said at a recent securitisation industry conference in Las Vegas. “One way they’ve traditionally done that is to start providing financing for people who really can’t afford a car and that’s where you have the troubles in subprime auto, and subprime anything.”

    • Fred Magyar says:

      “One way they’ve traditionally done that is to start providing financing for people who really can’t afford a car and that’s where you have the troubles in subprime auto, and subprime anything.”

      It all seems to fit the trend… We now have people living in houses they could never afford, with cars in the garage they can’t afford fueled by gas they can’t afford! All purchased on credit which requires a growing economy to be able to be repaid. The economy was built on cheap access to fossil fuel which apparently is no longer available so the economy can no longer grow, ergo the current model/system is no longer viable. Anyone out there have an idea as to what plan B might be?

      • Watcher says:

        This is somewhat the horror of QE.

        Dollars used to mean something. When the public saw they can be created at whim, money loses its yardstick status of more or less everything. How do you tell someone he is immoral in some fashion if he overborrows and doesn’t pay it back? Overborrows what? Something created effortlessly from thin air? How is that a morality yardstick?

      • SRSrocco says:

        Fred,

        Excellent summation. The only PLAN B I see is moving towards a more local and sustainable economy. We don’t have anything like that currently. What we have is a term I call, THE LEECH AND SPEND ECONOMY. As you stated in your comment, the only way we can give the ILLUSION that we can afford a House, Car and whatever is due to the Printing of Dollars & U.S. Treasuries.. and then exporting them overseas to POOR UNWORTHLY SLOBS so they work while we play.

        If Americans thought the 2008-2009 Financial-Housing crisis was bad… wait until the BIG ONE COMES. This one we don’t get a GET OUT OF JAIL free card.

        Then you add the ramifications of a possible runaway Climate Change Event.. you have the working of a GREAT BLOCKBUSTER MOVIE.

        steve

      • clifman says:

        Thought I recognized a certain way with words there. Good to see you commenting here, Fred. And as far as plan B, I plan on test-driving one of these today: http://organictransit.com/

        • Old farmer mac says:

          I wonder how much such an enclosed electric bike will sell for in a few years if they become very popular.

          Five grand is a lot of money for what you are getting in terms of materials and technology.

          If this sort of thing had really caught on like computers or cell phones a few years back I will hazard a guess that you could buy one today for a couple of thousand bucks.

          That would make it cheap enough that a whole lot of people would consider one as a replacement for a second car who would otherwise even think about buying one.

          What will the deal be on insurance and tags?

          I have been told that Virginian has put in new regs requiring tags and liability insurance for all gasoline powered scooters starting next month.

          These regs have increased the price of operating such a scooter the the extent that I will not be buying one since I would not be using it very much.

          • clifman says:

            No registration or insurance required (by most states, anyway) as it’s considered to be a bicycle. To qualify as such, speed is limited to 22 mph on straight electric. Rep tells me 30 is generally the top in combo mode, though powerful riders and/or on downslopes 45 is achievable.

            But after riding/driving it, I can say that the fuel/tax/insurance/maint savings alone would cause me to get one rather than a 2nd car if I had the appropriate commute on surface streets, to say nothing of the health benefits of riding x miles everyday instead of sitting on one’s butt. Great niche commuter option right between a bicycle and a car.

  15. Pingback: How Soon Will the World Oil Production Peak?: A Hubbert Linearization Analysis » Peak Oil BarrelPeak Oil Barrel | Olduvaiblog

  16. I just had to post this:

    Renewable Energy in Decline, Less than 1% of Global Energy

    Europeans discovered that subsidy support for renewables was unsustainable. Subsidy obligations soared in Germany to over $140 billion and in Spain to over $34 billion by 2013. Renewable subsidies produced the world’s highest electricity rates in Denmark and Germany. Electricity and natural gas prices in Europe rose to double those of the United States.

    Worried about bloated budgets, declining industrial competitiveness, and citizen backlash, European nations have been retreating from green energy for the last four years. Spain slashed solar subsidies in 2009 and photovoltaic sales fell 80 percent in a single year. Germany cut subsidies in 2011 and 2012 and the number of jobs in the German solar industry dropped by 50 percent. Renewable subsidy cuts in the Czech Republic, Greece, Italy, Netherlands, and the United Kingdom added to the cascade. The RENIXX Renewable Energy Index fell below 200 in 2012, down 90 percent from the 2008 peak.

    Once a climate change leader, Germany turned to coal after the 2012 decision to close nuclear power plants. Coal now provides more than 50 percent of Germany’s electricity and 23 new coal-fired power plants are planned. Global energy from coal has grown by 4.4 percent per year over the last ten years.

    To those who think we are really doing something to mitigate the effects of peak oil and to slow climate change, think again.

    • Dennis Coyne says:

      Hi Ron,

      Clearly we are not doing enough. The increase in coal use in Germany is primarily because they have chosen to shut down nuclear power plants. The financial crisis and ensuing great recession has clearly led to cutbacks in the support for renewable energy.

      You also have to consider the source of the article, “The Heartland Institute” is not really my go to source for reliable information.

      Amongst the clues that the article may not be particularly believable,

      “In 2009, the ideology of Climatism, the belief that humans were causing dangerous global warming, came under serious attack.” Really?

      • Dennis I understand that they are a right wing web site. However facts are facts.

        Coal now provides more than 50 percent of Germany’s electricity and 23 new coal-fired power plants are planned. Global energy from coal has grown by 4.4 percent per year over the last ten years.

        Perhaps we should find a left wing site that says coal only provides 25 percent of Germany’s electricity and only 10 new coal-fired power plants are planned. And they should say that global energy from coal has declined by 1 percent per year over the last 10 years.

        Hey, as I have stated many times in the past I am a card carrying left wing liberal so I am all for finding that site somewhere. (The card is a library card. I don’t think right wingers ever visit the library.) 😉

        • Karen Allen says:

          Maybe this data might help. In the first four months of 2014, coal made up 46% of Germany’s electricity generation. Wind + solar made up 16.5%. Comparing first four months of 2014 to the first four months of 2013, brown coal electricity generation in Germany is down 4.4%, hard coal electricity is down 17.4%, wind generation is up 26.5% and solar is up 44.9%. (This in a country that has about the same solar insolation levels of Alaska.) Germany was also a net exporter of electricity in 2013, exporting 32.3 twh.

          • notanoilman says:

            You state that Germany has the same insolation levels as Alaska. I find this surprising as the north of Germany is further south than the south of Alaska. Can you clarify this?

            NAOM

            • Tom schülke says:

              Thats right. Germanys insulation rules are of the most straight forward in the world. (I live in north germany) . And its a moderate climate. 20 degree in the summer and two to 6 weeks in thewinter below 0 degree celsius. Reffering to our energiewende.still the biggest problem is that energy of the renuable sources is very much fluktuating and there is no sign ahead we will soon have any storrage, so the problem is, we still need spare capacity which translates to coal. I hope we would try to install power to gas technology, because this woud set up a system wich from the start would be useful for heating cooking and also for small scale transportation. And there allready exists a thre month repository for methane gas all over germany. But the eroi woud be questionable and its by far not competitive enough untill now.

            • Karen Allen says:

              See below. Actually, it looks like Germany is *worse* than Alaska. (I would guess because of propensity for cloud cover?) It makes their solar achievement even more impressive.

        • Karen Allen says:

          Percent change in German electricity production

        • Karen Allen says:

          Here’s an example of what their electricity production looks like for a given week (April 14 – April 20, 2014). When they have a lot of solar in the middle of the day, they often export electricity to other countries and then import electricity during off-solar-peak times to load balance.

          • Doug Leighton says:

            Karen,

            Thanks for your input and insights. Perhaps you might comment on the following?:

            “Worried about bloated budgets, declining industrial competitiveness, and citizen backlash, European nations have been retreating from green energy for the last four years.”

            Doug

            • Karen Allen says:

              Again, I just look at the data.
              European Union electricity produced by non-large hydro renewables (terrawatt-hours/year), cumulative solar capacity installed (megawatts), cumulative wind capacity installed(megawatts)
              2002–87.2, 421, 23696
              2003–102.0, 617, 28953
              2004–128.3, 1336, 34816
              2005–150.8, 2344, 40897
              2006–174.0, 3325, 48408
              2007–205.7, 5311, 57100
              2008–232.9, 10696, 66077
              2009–261.0, 17190, 76911
              2010–302, 30183, 86233
              2011–364.4, 51865, 96345
              2012–419.9, 68467, 109553

              Looks to me like between 2008 and 2012 Europe increased solar capacity 6 fold, and increased wind capacity by 66%. Or, another way to look at it, they added more wind capacity in the four years between 2008 and 2012 than they did in the seven years previously.

              I guess the question is can “retreat” mean adding more capacity at a higher rate per year? We will have to see how the 2013 numbers shape up, but from estimates I’ve seen, Germany added 10% more wind and 14% more solar in 2013.

            • Dennis Coyne says:

              Hi Doug,

              As I said to Ron, the “facts” on right wing web sites are spun a little faster than in most places. An article that includes references to the “Climate myth” gets ignored by me.

            • Techsan says:

              It’s my understanding that the real story (as opposed to Heartland’s spin) is that the cost of solar has been declining rapidly, and the original subsidies were so generous that one could make a big profit by cashing in on them, at government expense. So, sensibly, Europe has been cutting the subsidies back.

              Austin has had solar subsidies for a decade now, and they have steadily reduced them as the cost of solar has dropped. Austin has tried to set the subsidies so that the break-even point is around 12 years; as the price of solar drops, the subsidy drops to match.

          • Karen, thanks a million. So it’s 46% instead of 50%. Can you reply to any of the other claims the article made, like:

            Germany cut subsidies to the solar industry and solar jobs dropped 50%.
            23 new coal-fired power plants are planned for Germany.

            But the most important question of all, and one that applies to the whole world and not just Germany is this one:

            Global energy from coal has grown by 4.4 percent per year over the last ten years.

            I did the math. That is an increase of 53.8% in 10 years. That is incredible! If that claim cannot be supported then I must agree with Dennis, that web site is totally unreliable.

            • Doug Leighton says:

              Ron,

              “That is an increase of 53.8% in 10 years. That is incredible!” It’s also incredibly depressing. Hope its not true.

              Doug

              • Hey I found it, from none other than the IEA
                Coal

                Fast facts
                60% growth
                Global coal consumption grew from 4,762 million tonnes in 2000 up to 7,697 million tonnes in 2012. This is 60% growth, or 4% average growth per year.
                +150 MW/day
                In the period from 2005 to 2012, China installed more than 150 MW of coal power generation capacity every day.

                We are doing a lot to slow global warming. Yeah right!

                • Doug Leighton says:

                  Great. I can remained depressed then. My wife say’s I waste way to much time “playing” on your Blog; maybe she’s right.

                  • Synapsid says:

                    Doug,

                    Please tell your wife that she’s overlooking the entertainment value to us readers.

                    Also: What was the bribe?

                  • Doug Leighton says:

                    Synapsid,

                    Yes the Bribe: I promise, cross my heart, hope to die, that I’ll stop wasting so bloody much time on Ron’s Blog and do some of the stuff that need to be done around the house. Was really hoping for something involving a bottle of wine, etc.

                    Doug

                  • aws. says:

                    My wife feels the same way about my “blogging”, as she calls it.

                    Personally, my energy education here and at TOD and Resilience has been extremely valuable. It has profoundly changed how I view the world.

              • Kam says:

                Between 2002, and 2012 worldwide coal consumption grew by 60%. That’s what “BP statistical review of world energy 2013” says. That is why countries like Germany can play renewable. Other countries burn more coal, and Germany can export their products there, so they have money for renewables. Whole world can’t go to currently known renewables.

            • Karen Allen says:

              I don’t track German energy policy, I just watch the output data. (I can hardly follow California’s energy policies, much less figure out what the heck politicians in other countries are conniving.)

              The only data source I have on coal is BP’s data and they haven’t released 2013 numbers yet. (I am looking forward to the release date!) But looking at the data between 2002 and 2012, the OECD as a whole dropped coal use by 7%, the EU countries dropped coal use by 7%, the US dropped coal by 21%. The big coal kahuna, as I think everyone who comes to this site knows, is China.

              Of the 1319 MTOE (million tonnes of oil equivalent–gosh, it’s so annoying BP uses this as their go-to unit of energy) of increase in world consumption of coal, 1145 was due to China. And yes, according to BP this did result in a 55% increase in world coal consumption between 2002 and 2012. However, it all depends on how you pick your time frames as to what kind of increase you get, which allows you to spin one particular narrative or another.
              World increase in coal 2002–2007=789 MTOE, 33% increase
              World increase in coal 2007-2012=530 MTOE, 17% increase
              Increase in coal use, by year
              2003=8.3%
              2004=7.1%
              2005=4.6%
              2006=5.2%
              2007=4.1%
              2008=1.8%
              2009=-0.5%
              2010=7%
              2011=4.8%
              2012=2.8%
              2013=?
              In 2002, OECD countries were responsible for 47% of coal consumption. In 2012 OECD accounted for 28%. (Of this, the US was 12% and Germany was 2%.) China accounted for 50% of world coal consumption in 2012. They have empty cities and a poisoned population to show for it. I would say what Germany does in terms of coal use isn’t a cause for joy or despair (although how they figure out how to integrate fluctuating renewables into their energy grid will be very helpful to everyone else doing the same going forward.) Germans are already highly energy efficient and use 53% of total per capita energy that the US does and produce 55% of the CO2 emissions per capita compared to the US. (They are 1.1% of the world’s population and produce 2.4% of world CO2 emissions while the US is 4.4% of the world’s populations and produces 16.8% of its CO2 emissions.)

              In terms of coal, China is the country to watch and despair or not despair over, as the case may be. The main bright side is that China’s rate of increase in coal use over the decade 2002-2012 appears to have slowed somewhat.
              China % increase in coal consumption over previous year:
              2003–19%
              2004–18%
              2005–11%
              2006–11%
              2007–6%
              2008–4%
              2009–7%
              2010–10%
              2011–9%
              2012–6%
              Even with all this coal, in 2012 China emitted roughly 1/3 the CO2 emissions per capita that the US did. However, since China makes up 19% of the world’s population, it produced 27% of world CO2 emissions.

              • Synapsid says:

                Karen,

                I’d say that China is a, not the, country to watch. China uses five times as much coal as India does but India has almost as many people, a growing population and no functional population policy (that I know of), and is looking to expand its coal consumption by more every year. Thailand has declared coal its main energy source, SE Asia in general is following the same path, and Vietnam, formerly a coal exporter, has begun importing it to meet her own demand. The IEA predicted that 70% of the increase in coal use will be in Eastern, SE and South Asia.

                The US has seen decreasing use of coal but it will remain the source of more than 30% of energy here for the foreseeable future. And the US is the fourth largest exporter of coal in the world–what we aren’t using is still getting burned–and we have lots of coal.

                Time for tea.

                • Karen Allen says:

                  In 2012, China consumed 1873 MTOE of coal.
                  In 2012, Vietnam consumed 14.9 MTOE of coal. Thailand consumed 16 MTOE of coal. These countries may indeed ramp up, but in terms of coal use they are like fleas dancing around a dog.

                  In 2012, coal made up 19.8% of US primary energy consumption, not anywhere close to 30, and it’s been dropping steadily over time. In 2012 the US produced 78 MTOE more coal than it used, so I imagine that’s what was exported. This amounts to 2% of all the coal used on the planet. I doubt the US ships much coal to Asia since, in 2012, China produced 97% of the coal it consumed, and in 2012 the Asia Pacific region consumed pretty much exactly as much coal as the Asia Pacific region produced that year.

                  As to US coal production, according to the EIA it has dropped significantly since 2008, with 2013 a new low, which surprised me to learn since coal used for electricity generation in the US in 2013 did go up. The answer is we exported less than half the coal in 2013 than we did in 2012.
                  US Coal production, thousand short tons
                  2007–1,146,635
                  2008–1,171,809
                  2009–1,074,923
                  2010–1,084,368
                  2011–1,095,628
                  2012–1,016,458
                  2013–983,964

                  In 2012 India consumed 298 MTOE of coal, 1/6th of China’s consumption. India is so poor and its per capita CO2 emissions are so low (1.5 tonnes/person), high per capita emissions countries like the US (18.3 tonnes/person) need to start dropping emissions in a serious way long before we can expect India to make sacrifices to reduce world CO2 levels.

                  • Synapsid says:

                    I botched that. I’d say maybe 30% global, not 30% here, and that’s including metallurgical coal, roughly a third again the amount used for energy last time I looked.

                    Note to self: no post when in hurry (like now)

            • Dennis Coyne says:

              Hi Ron,

              Read Heritage all you like.

          • Watcher says:

            So wait.
            In that week, coal and nat gas and uranium were 6.08 TWh. Wind and solar were 2.33 TWh.

            Why is hydro down 20% seasonally adjusted Y/Y?

            • Doug Leighton says:

              Watcher,

              I have a Daughter who lives in Italy. She says there has been unusually dry weather in much of Europe for awhile. Maybe it’s affecting hydro power? As usual, no facts, just a comment.

              Doug

        • Dennis Coyne says:

          Ron,

          It is a matter of spin. The 50% coal, is that a big increase, what was it before?

          Could it be explained perhaps by the shut down of nuclear power plants.

          Are the new coal fired plants perhaps much more efficient than the older coal fired plants that they are replacing so that co2 emissions will be reduced?

          Have the coal plants that are planned received approval? Often facts can be twisted.

          For a left wing perspective on Germany see

          http://climatecrocks.com/2013/05/15/no-more-coal-plants-in-germany/

          Chart on German outlook for coal below.

          • Dennis, did you miss my post on Coal?

            The numbers were from the IEA, not Heritage. And they were on worldwide use of coal, not just Germany. And the numbers were an increase of 4% per year for 12 years or an increase in coal use of 60% in 12 years. But since you missed that post let me give you the numbers again:

            Fast facts
            60% growth
            Global coal consumption grew from 4,762 million tonnes in 2000 up to 7,697 million tonnes in 2012. This is 60% growth, or 4% average growth per year.
            +150 MW/day
            In the period from 2005 to 2012, China installed more than 150 MW of coal power generation capacity every day.

            Also from that same site:

            Coal use has never stopped increasing and the forecasts indicate that, unless a dramatic policy action occurs, this trend will continue in the future. If this happens, then the IEA believes greater efforts are needed by governments and industry to embrace cleaner and more efficient technologies to ensure that coal becomes a much cleaner source of energy in the decades to come.

            Gail needs to add Myth #9 to her list: Dirty coal can be turned into clean coal.

            • Dennis Coyne says:

              Yes Ron,

              I saw the data on coal, and that fact was correct, the problem with citing poorly written articles that have a mix of truth and fiction is most people are not aware of which is which. The increased use of coal in China is not news to me and it is a problem.

              Can it be solved overnight? No.

              Is Germany moving things in the right direction? I think so, and based on the comments by PE, China has been expanding renewables quite rapidly. Looking at BP data, wind output in China (in TWh so output rather than capacity) increased at about 58% per year from 2006 to 2012, and solar output in TWh increased at a 73% rate from 2007 to 2012.

              The absolute amounts of output are small through 2012 relative to total electricity generation and it is doubtful that this rate of increase can be maintained, but as coal and natural gas prices increase the Chinese and Indians will begin to move to wind, solar and nuclear, hopefully the US, Canada, and Australia will follow as so far the US has not been a leader.

        • Old farmer mac says:

          If you really want to be well informed it is essential that you read both left and right wing oriented news and web sites.

          Genuine intellectual honesty is so close to non existent in the press mainstream and other media or alternative that I can’t actually remember the last time I encountered it.

          We all have an overwhelming desire to minimize the arguments against our own desires and positions and the best way to do that is often to simply not mention them at all.

          But you can bet that somebody in an opposing camp is pointing out your own camp’s omissions and blind spots and errors large and small.

          Rush Limbaugh may be a big fat idiot but he still has a few facts on his side occasionally. Ditto everybody else.Even a stopped clock is right twice a day.

          The people of the Tea Party are mostly ill-informed to put it as mildly as possible. Most of the people in this forum are at least moderately liberal by any reasonably standard.

          But how many of us would flat out deny that the Tea Party is right in argueing that if we don’t get our finances in order we are in dire danger of economic collapse ?

          Ron who describes himself as a card carrying left liberal has an amazingly hard headed -meaning this case realistic rather than soft headed or stupid- understanding of human nature.

          But the majority of people who describe themselves as left wing liberals have an admirable but unfortunately way too idealistic view of human nature as I see things. Ron just pointed out somebody saying we could all live like Eskimos a few days back. THIS guy is a REAL left wing ecoliberal and actually proposed doing away with coal at and other fossil fuels at a twenty percent annual rate. He seems to think such a thing is actually possible.

          Only an idiot or a person with absolutely no grasp of the realities of industrial civilization would make such a proposal.IF such a plan could be put into effect the architects and managers of it would all be lynched or assassinated within the second year and that is about as good an outcome as could be hoped for.

          My point is that every camp is well supplied with idiots and that all camps are well supplied with skilled public relations aka propaganda people.

          Just about every body believes in a few things that are impossible.

          I am sure I do myself but just not which things for sure.

          Put your full trust and faith in any camp and sooner or later you will find yourself looking like a fool.

          • Dennis Coyne says:

            Hi OFM,

            I agree on the reading of right and left, it just seems that putting it up on a blog is a little more than that especially without at least mentioning the source(many people don’t bother to click the link, they often will only see what someone chooses to quote from the piece). I would choose articles that are a little more mainstream, but I guess that is just me. There is a lot of right and left spin, I just try to look for articles where the spin is does not break any physical laws. 🙂

            Did you read the article that Ron linked?

            After all we want to be “fair and balanced”.

            • Old farmer mac says:

              As a practical matter we all have to trust somebody for reasons of time constraints alone. I have been reading Ron long enough that I trust him to make sure of his facts.

              And facts are where you find them.

              Now here is a link – with embedded links- that I strongly urge anybody and every body here to read.

              WHY?

              Because in my own modest opinion there aren’t any problems without solutions except for one. That one is human tribalism.

              IF we could all agree on things we could solve damn near ANY problem whatsoever.

              The trouble with reaching agreement is that we all tend to join one ” tribe ” or another and once we are a member in good standing we accept as gospel the dogmas of that tribe.

              Facts have almost nothing to do with what we believe about a problem believe it or not – if that problem ever once becomes associated with any given cultural group.

              Global warming is closely associated with left liberal politicians and citizens and therefore the vast majority of conservatives will never accept the evidence no matter how clear it may be.

              Left liberals criticize the lifestyles, ethics, and general values every time they open their mouths as a rule.

              The result is so predictable it is about as sure as sunrise tomorrow. Conservative folks develop a deep seated revulsion trending to contempt and hatred for liberals.But guess what?

              The tone adopted never changes.It does not bother me personally because I have been all over the political map several times in the course of my own life and intellectual journey.

              But let us take a single example. Sometime back a woman enrolled in law school at Georgetown insisted she was shortchanged in life because conservatives don’t want to pay for her birth control. The average starting salary of a Georgetown law grad is said to be well over a hundred grand.It costs an arm and a leg to live and attend there.

              So far as I am concerned damned right she is a thoughtless spoiled brat who thinks the world owes her a living with all the trimmings served up on a silver platter and white linen.

              Get the picture from MY point of view as a conservative?

              Of course since I support so many things mostly only supported by liberals I am considered a lame brain liberal in conservative circles.I only think of myself as a conservative out of habit and contempt for most liberals lack of understanding of the realities of human nature.

              A belief in the abuse of welfare is closely associated with conservative politicians and citizens and therefore no matter the evidence a liberal cannot be expected to take it seriously.

              It all comes down to the ultimate question of us and them.

              We will not admit the other camp is right about anything because doing so is viewed as injurious to our own welfare.

              Here is the link.

              http://www.theamericanconservative.com/how-culture-wars-hijack-science-discussions/

              I will post an excerpt from it in a minute.

              • Old farmer mac says:

                Here is the excerpt.

                As Kahan takes pains to emphasize, then, arguments over evolution and climate change are absolutely not matters of scientific education, or knowledge vs. ignorance. They’re culture wars. One can obtain an “impeccable” Ph.D. studying paleontology, or practice neurosurgery at Johns Hopkins, and still answer an evolution true/false question in the negative. Likewise, one can enthusiastically and indignantly affirm evolution’s truth while not having the first idea of how to explain genetic mutations.

                Kahan emphasizes that “we must disentangle competing positions on climate change from opposing cultural identities, so that culturally pluralistic citizens aren’t put in the position of having to choose between knowing what’s known to science and being who they are.” And, “you must take pains not to confuse understanding evolutionary science with the ‘pledge of cultural allegiance’ that ‘I believe in evolution’ has become.” Rod Dreher recently made a similar point regarding conservatives and environmentalism.

                • Old farmer mac says:

                  Denial of climate change, human biological overshoot , and lesser issues such as peak oil have become cultural pledges of allegiance among conservatives.

                  Denial of Second Amendment rights and the value of ideas such as busting up the education monopoly enjoyed by the public schools are left wing cultural pledges.

                  • Dennis Coyne says:

                    I think I understand you better now. In a nutshell, do not dismiss some information because I don’t agree with some of the ideas.

                    I just find that some issues are pretty clear cut, and don’t waste my time trying to convince others of the facts. On some issues the evidence is overwhelming, for example would you take seriously an article that stated that the earth is the center of the universe, that lead in gasoline posed no public health risk, or that cigarette smoking was good for you?

                    The last two were widely believed within my lifetime and perhaps all three are still believed in some circles, but I stop reading an article when the “facts” become too far fetched.

                    I can tolerate any point of view that remains reality based whether it is right or left, there are crazies on both ends of the spectrum.

                    Doesn’t it seem that the right wing views have gone further to the right?

                    Take George H W Bush or even Ronald Reagan, I am not sure they could win a Republican primary in 2016.

        • coolreit says:

          Right wingers don’t visit the library?

  17. Political Economist says:

    Dennis, it’s not a good idea to lump US with other countries together.

    The following graph shows the US cumulative oil production, with the P/Q ratio on the vertical axis. Because the US oil production has grown so rapidly since 2008, it drives up the P/Q ratio (those white circles) making it impossible to do HL analysis.

    Those dark spots are calculated based on EIA projection for 2014-2040. Only after the US oil production peaks again based on the EIA projection, the P/Q ratios move downward again and HL analysis can be applied.

    • Political Economist says:

      When you lump the US with other countries together, it would tend to drive up the P/Q ratios as well. Even for the world total, the inclusion of the US making the declining P/Q ratios after 2009 less steep, creating difficulties in interpretation.

    • Dennis Coyne says:

      Hi PE,

      Yes putting the US with the other counties would change the analysis, but last I checked the US is still considered a part of the “world” 🙂 . When you did the all world analysis you seemed to get a sensible result and because a proper HL analysis cannot be done on the US you are a little stuck.

      One approach might be to assume a reserve number for the US. There are about 33 Gb of proved reserves and another 80 Gb of undiscovered technically recoverable resources[UTRR] (40 Gb in Gulf of Mexico see http://www.boem.gov/Oil-and-Gas-Energy-Program/Resource-Evaluation/Resource-Assessment/2011_National_Assessment_Factsheet-pdf.aspx and 40 Gb of UTRR onshore see http://energy.usgs.gov/OilGas/AssessmentsData/NationalOilGasAssessment/AssessmentUpdates.aspx ) so this could be added to the oil already produced to get a URR for the US. See
      http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS1&f=A

      I did a quick check and cumulative production through 2013 is 208 Gb and URR would be 321 Gb if the USGS and BOEM estimates of onshore and Gulf of Mexico(GOM) UTRR are correct (note that I have reduced the BOEM mean estimate from 89 to 40 Gb by using the F95 case for the GOM and excluding Atlantic, Pacific, and Alaskan offshore UTRR). If you wanted to use the F95 BOEM offshore estimate it is 66 Gb and would raise the URR to 347 Gb.

      • Dennis Coyne says:

        Hi PE,

        I realized this does not include NGL output. Maybe you could look at the ratio of NGL to C+C for the US using EIA data for the last 10 years and than assume this ratio remains the same for future US C+C+NGL to find an appropriate URR. Are you using consumption or production data from BP? The production data is C+C+NGL but consumption is all liquids (includes biofuels and other liquids). Note that C+C output for the US through 1964 is 75 Gb, this should be pretty close because there was not a lot of NGL (or biofuels, etc) produced in the US before 1965.

  18. B says:

    Fracking Insiders See No End To Boom

    “It’s amazing how much [oil] is out there, and we have very high confidence on most of these plays that they’re going to be very long lived,” said Robert Beck, who explores for Anadarko Petroleum Corp.

    Most shale oil wells today start strong but taper off quickly compared to conventional wells, and some cease production in 7.5 to 8 years. But drilling technologies are evolving quickly to change that, said James King, vice president for unconventional multi-stage completions with Baker Hughes, an oilfield services company.

    “There are a lot of bright minds working today to make the wells have higher rates of production, slower decline curves, better terminal production and at less cost,” King said. “In the long term I think there will be technological solutions to fast decline curves and short-life wells.”

    The U.S. will set records for oil production this year, King said. ”I would expect it’s sustainable. The technology didn’t just happen, it wasn’t just switched on, it evolved over time, and we’ll have better technologies than we did before.”

    New technologies are likely to be employed re-fracking wells that seem depleted to current technologies.

    There’s nothing to keep you from fracking the same well a second time or a third time. As we go back to fracking these existing wells, what we might find is that we’ll have more patience and spend a little more money on the science up front to determine where to stimulate an existing well, and so we’ll be able to bring wells back on at least as strong as they were originally.”

    There is an estimated 5 to 6 trillion barrels of oil locked up in shale, said Vance L. Scott of the management consulting firm A.T. Kearney—resources up to 15 times the size of the largest oil field in Saudi Arabia, he said. “To date we’ve used as a species, depending on the source, 700 billion to a trillion in oil.”

    • Watcher says:

      I’m gonna have to save links. I know I read an academic study examining refracking wells. It doesn’t work.

      Now, let’s be sure there is no redefinition here. Refracking CAN mean drilling down to TF vs Bakken to frack a different depth. But that’s not the same “well”. Same hole, but not the same well.

      • Watcher says:

        Blurbs.

        2007 Halliburton — 10% of available gas is secured with the first completion. Successive completions can obtain 6-8% more, but water requirements increase 25% for each frack event. (weird, but that will be 1,250,000 pounds of water for frack 2). Pressure for 2nd and 3rd frack must be higher. Risks casing.

  19. Political Economist says:

    Now let’s take a look at the world total again. World total is the sum of Saudi Arabia, Russia, US, China, Canada, Iran, Iraq, UAE, and World Total Less Top 8

    For Russia, China, Iran, and UAE, I used HL analysis. For US, I relied upon EIA projections. For Canada, I used the official reserves. These are the same as in the main post.

    For Saudi Arabia, I revised the HL analysis based on Dennis’s suggestion. For World Total Less Top 8, I did a new HL analysis. These are shown on page 1.

    The following graph shows the results. The new projection matches the historical production levels from 1985 to 2012 well. For 2013, the gap between the projected production level and the actual is reduced to about 60 million tons (4.2 billion tons projected less the actual 4.14 billion tons) or about 1.2 million barrels per day.

    Based on the new projection, world total oil production is expected to peak in 2016 with a production level of 4.3 billion tons, which is 160 million tons or about 3.2 million barrels per day higher than the actual produciton level of 2013.

    • dolph says:

      Thank you for an interesting analysis.

      The take home message is that we were right all along but a little early. Better to be early than late. We approach the single biggest transition in recorded history. I wish everyone the best of luck.

  20. Political Economist says:

    In relation to the discussion between Ron and Karen, now let’s consider electricity. In the electric power sector, just like in other energy sectors, the elephant in the room is China.

    In 2012, China’s electricity generation was 4938 terawatt-hours (TWH), followed by 4256 TWH in the US, 1102 TWH in Japan, 1066 TWH in Russia, and 1054 TWH in India. Germany was a distant sixth with 618 TWH.

    As of March 2014, China had a total installed generating capacity of 1224 Gigawatts (GW), including 866 GW of conventional thermal power (almost all coal-fired), 246 GW of hydro power, 79 GW of wind power, 16 GW of nuclear power, and 17 GW of solar and other renewable power.

    For January to March 2014, China’s total electricity generation was 1272 TWH, 5.8% higher than the same period in 2013. Conventional thermal generation was 1061 TWH, or 83% of total. Hydro generation was 145 TWH, or 11% of total. Wind generation was 37 TWH, or 3% of total. Nuclear generation was 27 TWH, or 2% of total. Other renewable generation was 2 TWH, or 0.2% of total.

    In term of new installation of generating capacity, from January to March, China installed a total of 13 GW of new generating capacity, including 6 GW of conventional thermal power, 4 GW of hydro power, 2 GW of wind power, 1 GW of nuclear power, and 0.35 GW of solar power.

    By comparison, over the same period in 2013, China installed 14 GW of new generating capacity, including 9 GW of conventional thermal power, 3 GW of hydro power, 2 GW of wind power, 0.65 GW of solar power, and 0 GW of nuclear power (the above numbers involve some rounding errors).

    The above statistics refer to power plants with a generating capacity of 6,000 KW or greater. Some small-scale solar generating equipment may have been excluded.

    According to a separate report http://mp.weixin.qq.com/s?__biz=MjM5NDM5OTkxNQ==&mid=10012116&idx=1&sn=fbb9d025e31600962cd67914f15de36b (in Chinese), in 2013, China installed 11 GW of new solar photovoltaic capacity and China’s cumulative installation of solar PV reached 17 GW. By comparion, Japan installed 6 GW (cumulative capacity 13 GW) in 2013. The US installed 4 GW (cumulative capacity 12 GW) in 2013. Germany installed 3 GW (cumulative capacity 36 GW) in 2013. Italy installed 2 GW (cumulative capacity 18 GW) in 2013. UK installed 1.5 GW (cumulative capacity 3 GW) in 2013. Other countries have installed less than 1 GW.

    To move towards climate stabilization, renewable electric power needs to account for more than 100% of the total new installation of electric power generating capaicty (in addition to peak oil). We are now far away from that objective. So long as new conventional thermal power plants continue to be installed, new renewable power plants essentially make zero contribution to emission reduction.

    They do contribute to economic growth (on top of the new conventional thermal power plants). But emissions are not reduced so long as conventional thermal power generation is expanding (rather than shrinking) and oil consumption is rising. This simplified picture has not yet taken into account emissions from steel and cement production.

    • Karen Allen says:

      I entirely agree that for climate stabilization all new electricity generation worldwide needs to be renewable and also current fossil fuels plants need to be gradually retired and replace by renewables. And that much depends on China.

      In terms of utility scale electricity generating units planned in the US, see the map below for what’s on deck for March 2014–Feb 2015 (source: EIA). In California and Nevada, almost all new units are wind, solar or landfill gas. Idaho has some hydroelectric. North Carolina is all solar except for some landfill gas units. Not the whole country, by any means, but you have to start somewhere.

      As I look at the natural gas plants scheduled to come on line, I wonder if the increases in natural gas prices we’ve already experienced will affect those openings. In January and February of this year (according to the EIA) of the 921.1 MW of electrical generation capacity installed in the US, 430.5 was solar, 387.8 was wind, 14.8 was landfill gas, 80 was natural gas, and 8 was conventional hydro. So for two months, anyway, renewables were looking pretty good.

      • Political Economist says:

        So the US only installed less than 1 GW of new generating capacity this winter, compared to a power sector with about 1,000 GW.

        No wonder the first quarter economic growth rate is only 0.1%

        • notanoilman says:

          You could equally say that only 1GW was installed as the first quarter economic growth rate is only 0.1%.

          NAOM

      • Dennis Coyne says:

        To Karen and PE,

        I think it would be better to focus on actual output of electricity in TW-h rather than capacity because the wind does not always blow (or output is curtailed in some cases because there is “too much” output) and the sun does not always shine.

        BP has good wind and solar “consumption” data in TWh and so far the numbers are quite tiny, but they are increasing quite rapidly a 25% growth rate for wind output in TWh from 1993 to 2012 and a 45% growth rate for solar output in TWh from 2004 to 2012 (regression on BP data R squared 0.997 for wind and 0.986 for solar).

  21. Beware intense anti-renewable activism by entrenched powerful interests, and also beware extrapolating trends like coal use. It seems that many trends in the developing powerhouses of China and India are changing right now. Among the changes are a levelling off of energy consumption [a lower rate of growth] and a shift from coal to renewables in new builds. This is having profound effects on the supply chain and those gambling big on biz as usual are fighting hard and nasty to discredit the very idea of change being desirable, necessary, or indeed possible:

    http://www.theguardian.com/world/2014/may/05/australian-coal-mining-is-entering-structural-decline-reports-claims

    • Political Economist says:

      Patrick, thanks for the comments.

      A slower pace of growth is still growth. A slower pace of emissions growth will not save the world.

      I am not against renewables. But I confess that I am against growth and I do think that a renewable-based economy oriented towards infinite growth is impossible.

      In this sense, the efforts of those who support renewables without questioning the growth regime may turn out to be counter-productive.

      Again, the basic fact is that to have emission reduction in the electric power sector (ignore the liquid fuels for the moment), you need to have renewables or nuclear accounting for more than 100% of the new (net) installation of generating capacity. In other words, it is not enough just to have the new installation of renewable power plants being greater than the new installation of fossil fuel plants. We need to have negative net installation of fossil fuel plants. Unfortunately, right now we’re still installing more fossil fuel plants than renewable plants. This has not yet taken into account the far higher capacity utilization rates of fossil fuel plants.

      EIA has updated their international electricity data up to 2011. I’ll post some graphs later.

      • Dennis Coyne says:

        Hi PE,

        Yes the growth is a problem on that I agree. It is pretty unrealistic to expect that we will go from positive growth to a reduction in emissions overnight. First you slow down the growth in CO2 emissions to zero, then you attempt to eliminate them. Carbon taxes worldwide are the simple answer to that problem, unfortunately there are many who do not agree that global warming is even an issue.

        I like the idea of tackling both the peak fossil fuel issue and global warming issue together and maybe if we changed the name to an “energy independence” tax in the United States we could get some more people on board 🙂

      • clifman says:

        “I confess that I am against growth and I do think that a renewable-based economy oriented towards infinite growth is possible.”

        Presume a NOT was left out that sentence…

        • Dennis Coyne says:

          Yes Clifman I wondered that as well I thought he meant “impossible” rather than possible, but a “not possible” works just as well.

          Hey PE, if that was a typo I will correct it for you, but I don’t want to do it unless you approve.

          • Political Economist says:

            Oh yes. That’s a fatal typo. Help to correct it if you see this reply. Thanks.

            • Dennis Coyne says:

              Ok I changed possible to impossible.

              I was re-reading and you said slower emissions growth will not save the world.
              I agree, but it is better than increasing emissions, it is better than the emissions growth rate remaining the same, but it is not as good as zero growth in the rate of emissions which is not as good as negative emissions growth, which is not as good as no fossil fuel emissions at all.

              Is your point that the world cannot be saved? You are preaching to the choir at this blog if that is your view (I and possibly Patrick Reynolds are the notable exceptions). If that was your view (and you have never said as much), then you would not be concerned about emissions as there would be no point in worrying because we are in a predicament.

              It is possible that you are just pointing out that the task will be difficult, I agree. You may not think it is possible to reduce emissions or for the economy to transition to a steady state as population stabilizes and then decreases, and that view may well be correct. If that view is correct, then there would be little point in worrying about any of this.

  22. For an image that sums up exactly where the world is at and how confused the conversation is see this screen shot from the Guardian article linked to above. Bit of a disconnect between content and advertising. To me these kinds of equally certain but diametrically opposed views are exactly what should be expected in periods of profound change. Like now:

    • Political Economist says:

      Good news. I am all for peak coal.

      • Doug Leighton says:

        PE,

        I second that.

        Doug

      • Dennis Coyne says:

        Hi PE

        As your Chinese is probably a little better than my own, are there decent estimates of the Chinese and Mongolian coal resources that you are aware of?

        And I agree with PE and Doug, peak coal would be nice, but wishing will not make it so. Hopefully prices will rise and we will start moving away from fossil fuels as they become more costly to extract.

        • Political Economist says:

          China’s cumulative coal production up to 2013 was 66 billion tons (for the Chinese coal, it is generally assumed that 2 tons of coal = 1 ton of oil equivalent).

          BP is still reporting China’s coal reserves to be 114 billion tons, a number that is widely cited but has not been updated since 1992.

          The Chinese government reports China’s coal “reserve base” to be 230 billion tons, which represents a significant downward adjustment from 326 billion tons reported in 2008 and 337 billion tons reported in 2004.

          Out of the 230 billion tons, about 60% is believed to be actually recoverable after mining losses have been subtracted.

          So the current estimate of China’s coal URR is about 200 billion tons.

    • Political Economist says:

      Some news about China’s coal industry.

      During the first quarter of 2014, China produced 850 million tons of coal, a decrease by 0.1% compared to the same period in 2013.

      China’s coal consumption increased by 0.9% from a year ago. The quarterly coal consumption was 940 million tons.

      The electric power sector consumed 530 millon tons (grew by 2.1% from a year ago); the steel industry consumed 150 million tons (declined by 1.5% from a year ago); the building materials industry consumed 100 million tons (declined by 3.4% from a year ago); the chemical industry consumed 50 million tons (grew by 10.5% from a year ago).

      During the first quarter, China imported about 84 million tons of coal and exported 2 million tons. China’s net coal imports rose by 5.3% from a year ago.

  23. Political Economist says:

    The following graphs shows the structure of the world’s electric power generating capacity.

    The renewables have grown strongly in recent years. In 2011, the hydroelectric power accounted for 20% of the world’s total generating capacity and the non-hydro renewables accounted for 7%. The total renewable share (including both hydro and non-hydro) in 2011 was only 3 percentage points higher than it was in 1980.

    However the growth of the renewables has been mainly at the expense of nuclear power. Nuclear power as a share of the world’s total generating capacity peaked in 1988 at 12%. By 2011, it declined to less than 7%.

    EIA has renamed the “conventional thermal” as “total fossil fuels.” Total fossil fuels had consistently accounted for about two-thirds of the world’s total generating capacity. In 2011, total fossil fuesl accounted for 65.6% of the world’s total generating capacity. This was higher than the fossil fuels share in every year from 1985 to 2000 and was only about 3 percentage points lower than it was in 1980.

  24. Below is an excerpt from my review of “Wheel of Fortune. The Battle for Oil and Power in Russia”, by Thane Gustafson. 2012
    http://energyskeptic.com/2013/book-review-of-wheel-of-fortune-the-battle-for-oil-and-power-in-russia/

    The main thesis of is that: Russia will collapse again. Soon. Unless Russia drills offshore and in the Arctic with Western oil company help. Western Siberian oil is declining. Eastern Siberia doesn’t have much oil – just 800,000 barrels per day at most –and doesn’t have the required infrastructure of roads, pipelines, cities, towns, etc.

    Gustafson is aware of how hard drilling in the arctic will be (though not the ecological consequences). An ExxonMobil engineer he interviews about the issues of the Sakhalin Island area said that the “biggest challenge was moving ice. The whole ice pack drifts along, and if you haven’t built for it, it will drag your whole platform away”. Also, it gets to minus 60 degrees Fahrenheit, storms create waves over 30 feet high, there are frequent earthquakes, and most difficult of all is managing the thousands of skilled specialists from hundreds of contractors and subcontractors from all over the world.

    Gustafson ultimately sees a new round of conflict for control and distribution of the oil revenue spoils, resulting in renationalization, sinking oil returns, and Russia sliding deeper and deeper into debt. The only way he sees out of this is Arctic & offshore drilling, reducing welfare payments to citizens, more privatization, encouraging innovation and entrepreneurship, and other Capitalistic ideas. Surely he realizes this isn’t likely given that he says the current Russian culture and political system “is based largely on a rejection of the 1990s, nostalgia for the Soviet empire, and resentment of the West”.
    Why Russian Oil Production Will Decline in the Future

    Vladimir Bogdanov, CEO of Surgutneftegaz speaking about his company (p 449)

    60% of reserves have been produced already
    75% of oil is from low-grade reserves
    90% of what we produce is water
    Costs are rising twice as fast as world oil prices
    West Siberia, where two-thirds of Russian oil is produced, is declining

    Energy Minister Shmatko (late 2010): By 2020 oil production likely to be down to 7.7 million barrels per day (10.1 million in 2010).

    Mature fields are 80% of total oil production now (8 million barrels per day). To offset 2% of decline in these large fields, the oil industry must add 160,000 barrels per day of new production to maintain current levels, or 1.6 million barrels per day by 2020 from poor quality, undeveloped fields at a cost of over $5 billion per year. Another $20 billion per year is needed to keep the decline of the existing large oil fields from declining even more precipitously. Over time, the absolute volume of decline will grow, and every new barrel will be more difficult and expensive. In other words, by 2020 it would take $50 billion a year to produce the same amount of oil as now.

    • Watcher says:

      Wait, what?

      “To offset 2% of decline in these large fields, the oil industry must add 160,000 barrels per day of new production to maintain current levels, or 1.6 million barrels per day by 2020 from poor quality, undeveloped fields at a cost of over $5 billion per year.”

      Why do they have to add 160K bpd to offset decline? They only burn about half of what they produce now. The export revenue funds . . . what? No doubt all sorts of government activity. Cut it.

      So what? They have no obligation to produce oil for other countries. Save it for themselves.

      • Doug Leighton says:

        Watcher,

        “So what? They have no obligation to produce oil for other countries. Save it for themselves.”

        That’s dumb. It assumes planning years ahead. It assumes concern for future generations. It assumes…..It’s time you were committed man: ‘Way past time. Unbelievable!

        Doug

        • Watcher says:

          I’ve always presumed the Saudis think like this.

          Even if they were going empty, the last thing they could do is say so. No way in hell anyone would accept someone else’s decision of “fair share” of what’s left.

          So they will have 260 billion barrels of reserves right up to the day they say thank you for 70 years of great loyalty from their customers, but now they are going out of business. Best of luck to all.

          • Old farmer mac says:

            Reporters in Washington used to count on pizza delivery guys for early tips on breaking news. If there were a lot of extra cars in the parking lots and they were staying past normal office hours at any agency dealing with intelligence or security there would inevitably be big orders for take out food.

            Some day somebody who is very carefully watching the House of Saud is going to uncover a very quiet mass migration of the thousands of princes and princesses out of their paradise of sand dunes.

            When that happens we will know that the oil revenues are about to collapse and that the ordinary people are going to be in uncontrollable rebellion very soon after.

            Of course the ones who choose to stay may be able to keep themselves in power for a long time if they can just hold on. It won’t take the commoners long to starve and or die of thirst once the oil starts seriously tapering off.

            If I lived in that part of the world my absolute highest priority would be to move elsewhere.Things are going to be very very bad there within a generation or two at the most barring a few miracles.

            • Watcher says:

              No.

              Not far off, and that’s how things would unfold conceptually, but no, they won’t leave.

              The problem is the workforce is not Saudi. It’s Bangladeshi. They will go crazy if mass deportation starts. The Saudi leadership has a lot of Sunnis there to look out for, meaning defend them from the rioters.

              The Shiite majority would have to get marching orders from Tehran as to what they would do. If there is no oil left, the Iranians might not bother.

              Mostly my scenario focuses on the foreign workforce being told their remittance flow now ends. That’s the source of big tension.

    • Jeffrey J. Brown says:

      Russian net oil exports (so far, through 2012) stopped increasing in 2007. Here are 2002 to 2012 Russian net oil exports and their ECI ratios (ratio of total petroleum liquids production + other liquids to liquids consumption). At an ECI of 1.0 a country is no longer a net exporter.

      Russian Net Exports & ECI Ratios (Total petroleum liquids + other liquids, EIA):

      2002: 5.0 mbpd & 2.9
      2003: 5.8 & 3.2
      2004: 6.5 & 3.4
      2005: 6.7 & 3.4
      2006: 6.9 & 3.5
      2007: 7.2 & 3.7
      2008: 6.9 & 3.4
      2009: 7.0 & 3.4
      2010: 7.1 & 3.4
      2011: 7.2 & 3.3

      Based on a simple mathematical model and based on the empirical Six Country Case History*, a declining ECI ratio correlated with a rapid rate of depletion in remaining CNE (Cumulative Net Exports).

      Based on the 2007 to 2012 rate of decline in the Russian ECI ratio, I estimate that post-2007 Russian CNE are about 72 Gb (billion barrels), with 13 Gb having been shipped from 2008 to 2012 inclusive, implying that Russia shipped about 18% of post-2007 CNE in only five years (through 2012).

      *The six major net oil exporters that hit or approached zero net oil exports from 1980 to 2010, excluding China

      • Jeffrey J. Brown says:

        Slight correction (and adding 2012 data):

        Russian Net Exports & ECI Ratios (EIA):

        2002: 5.0 mbpd & 2.9
        2003: 5.8 & 3.2
        2004: 6.5 & 3.4
        2005: 6.7 & 3.4
        2006: 6.9 & 3.5
        2007: 7.2 & 3.7
        2008: 6.9 & 3.4
        2009: 7.0 & 3.4
        2010: 7.1 & 3.4
        2011: 7.1 & 3.3
        2012: 7.2 & 3.3

  25. Political Economist says:

    In the analysis of electric power sector, it is very important to distinguish between the electricity generation and the generating capacity. The following graph illustrates that.

    When the composition of world electricity generation is concerned, the progress of renewables has been far less impressive than what they appear in the composition of world generating capacity.

    In 2011, non-hydro renewables accounted for 4.4% of the world electricity generation. Not bad. But the progress of non-hydro renewables has been mainly at the expense of hydro and nuclear. The total share of hydro and non-hydro renewables in 2011 was 21%. This was even lower than their share in 1980, which was 22%.

    In 2011, fossil fuels still accounted for 67.3% of world electricity generation. This was the second highest fossil fuels share since 1982 (the fossil fuels share reached 67.6% in 2007). From 1995 to 2011, the fossil fuesl share increased by 5.5%.

    Where is the de-carbonization? Not yet in the electric power sector.

    • Political Economist says:

      Sorry, the graph above did not show the data point for 2011.

      The graph below makes it obvious the fossil fuels revival since the mid-1990s.

      • So, were there to be an ‘energy transition’ isn’t this be what its beginnings would look like?

        Although on the evidence above it appears we are transitioning away from nuclear more than FF….

  26. aws. says:

    The year Solar rides to the rescue? Maintaining power this summer in California will be all about solar. It will be worth paying attention to.

    California Drought Update-May 2014

    By: Christopher C. Burt, Wunderground, 7:36 PM GMT on May 02, 2014

    The water season (July 1-June 30) has, for all practical purposes, come to an end for California. Although May and June may see some additional precipitation (especially in the far north) it is unlikely that anything will happen to improve the prospect of a catastrophic drought this year for the state.

    State reservoir capacities as of May 1st. Overall, the total capacity of all the water in all the reservoirs is currently about 50% of normal for this time of year. California Department of Water Resources.

  27. Political Economist says:

    The differences between the shares of world electricity generation and the shares of world generating capacity are caused by differences in capacity utlization rates.

    The graph below shows the observed capacity utilization rates for different sources of generation.

    • Political Economist says:

      In the graph above, 1 means 100%.

      Nuclear electricity has the highest capacity utilization rates, about 80%. Fossil fuels in average have capacity utilization rates between 45% and 50%. Hydroelectric capacity utilization rates are just below 40%.

      The very high capacity utilization rates for non-hydro renewables in the early years are partly due to the fact that they were dominated by geothermal and biomass and partly just statistical errors (there were some years of more than 100% capacity utilization rates). As solar and wind accounted for a bigger and bigger share of the non-hydro renewables, the average capacity utilization rates had declined steadily. Now is about 30%.

  28. Political Economist says:

    Lastly (with respect to world electric power sector), let’s consider world net installation of generating capacity by type of generation.

    • Political Economist says:

      World annual net installations surged from about 50 GW a year in the 1990s to almost 250 GW by 2011.

      From the 1990s to about 2005, the surge mostly involved building fossil fuels power plants. Since then, it has been dominated by non-hydro renewables.

      In 2011, the world installed 123 GW of new fossil fuels generating capacity, 32 GW of hydro electricity, 99 GW of non-hydro renewable electricity, and de-installed 8 GW of nuclear electricity.

      The total net installation of hydro and non-hydro renewable electricity is now greater than the net installation of fossil fuels electricity. However, as fossil fuels power plants have higher capacity utilization rates, fossil fuels continue to contribute more to electricity generation growth than the renewables.

      • clifman says:

        “From the 1990s to about 2005, the surge mostly involved building fossil fuels power plants. Since then, it has been dominated by non-hydro renewables.”

        Both looks and sounds to me that while the trend is good re: renewables, that new capacity installation is still dominated by FF:

        “In 2011, the world installed 123 GW of new fossil fuels generating capacity, 32 GW of hydro electricity, 99 GW of non-hydro renewable electricity, and de-installed 8 GW of nuclear electricity.”

        Thanks for all the great info you’ve posted here! Very helpful.

  29. Political Economist says:

    EIA’s Annual Energy Outlook includes a highly optimistic “high oil and gas resources” scenario, under which the US oil production (including natural gas liquids) will reach 16 million barrels per day by the 2040s.

    This is shown below

    • There are two common colloquialisms in Kiwi-English that can baffle people from other places that consider themselves native speakers of the English language. They are kind of similar but have opposite meanings: ‘yeah right’ and ‘nah yeah’. The former, the double positive; is scornful, doubting, cynical, the later, the negative positive; affirmative, confirming, encouraging.

      To the EIA’s High Oil and Gas model I say: ‘yeah, right’.

  30. Political Economist says:

    To test the robustness of the peak oil analysis, I replaced US projection based on the EIA reference case with the above high oil and gas resources case and keep the projections for all other countries unchanged.

    The projection for the world total looks surprisingly similar to the previous analysis. The peak year for the world oil production is postponed by only two years to 2018. The peak production level is increased to 4.36 billion tons, only about 60 million tons (1.2 million barrels per day) higher than the previous peak oil scenario (the one shown on page 2).

    The most significant difference happens after the peak. By 2050, under the previous scenario, world oil production is projected to decline to 2.7 billion tons. Under the high resources scenario, it is projected to be 3.1 billion tons.

  31. Jeffrey J. Brown says:

    CNE (Cumulative Net Exports) Depletion Marches On

    The following chart shows the normalized values for Six Country* Production, ECI Ratio, Net Exports and post-1995 CNE by year, from 1995 to 2002. Note that as production increased from 1995 to 1999, remaining post-1995 CNE fell by more than half.

    The key metric, which correlated strongly with post-1995 CNE depletion, was the declining ECI ratio.

    *The six major net oil exporters that hit or approached zero net oil exports from 1980 to 2010, excluding China.

  32. Jeffrey J. Brown says:

    The following chart shows the normalized Production, ECI Ratio, Net Exports and Estimated post-2005 CNE values by year, from 2005 to 2012, for the (2005) Top 33 net oil exporters, what I call Global Net Exports of oil (GNE). Post-2005 Global CNE were estimated using the seven year (2005 to 2012) rate of decline in the Top 33 ECI Ratio.

    Note the slight increase in production versus the significant decline in the ECI ratio, corresponding to high rate of depletion in remaining estimated Global post-2005 CNE.

    A similar estimate for Six Country post-1995 CNE, using the seven year (1995 to 2002) rate of decline in the Six Country ECI Ratio resulted in a estimate for post-1995 CNE for the Six Countries that was too optimistic.

  33. Mongolia generates its electricity from coal and the amount of electricity generated from coal is 98 percent.

    The increased coal production does move the peak oil timetable a little bit longer and the price of oil does not increase.

    Bottom line, oil is too expensive, renewables are boondoggles, nonpareil, require fossil fuels to be operational, renewables provide no initial or long term gain.

    Coal does fill the need for electricity to be provided for those who benefit from electricity and that is everybody.

    Inexpensive energy is better, renewables are too energy intensive to have any real benefit, they need lots of resources with little benefit.

    The capital expenditures and resource base needed are wasted with vain, feckless attempts at renewable energy fiascoes.

    There is a better way.

    California is a net oil importer, the oil must flow to California.

    They export their pollution with renewables.

    There is no free lunch.

    • Techsan says:

      This is nonsense. These assertions are not facts.

      Fact: Renewables are very valuable for providing electricity to poor people at a low cost. For example, in Africa families have been spending a significant fraction of family income on oil for oil-burning lamps, which are not only expensive, but cause lung disease by indoor pollution. Solar flashlights, charged during the day, provide light at night with no pollution. In India, entrepreneurs install small solar to provide lights and cellphone charging to their village, at much lower cost than the cost of extending grid power lines to the village.

  34. Dennis Coyne says:

    Hi all,

    Using Data from the Statistical Review of World Energy, 2013 by BP

    http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy-2013.html

    I looked at the World trend of Electricity Generation in TWh see chart below, it has been growing at about 3% per year since 1985 (up to 2012) and if the trend continues will reach 40,000 TWh in 2032 (20 years forward from 2012).

    • Dennis Coyne says:

      What does electricity consumption provided by wind look like, based on BP data (also in TWh as in the chart above)? Wind electricity output that is consumed (not just the wind power produced which is sometimes curtailed) has been growing at 24% over the 1993 to 2012 period and if this rate of growth continues for 20 years output would reach more than 60,000 TWh by 2032. See chart below.
      Note that this growth will not continue due to insufficient demand for electicity (only 40,000 TWh in 2032). 🙂 Prices of fossil fuels will continue to rise, natural gas first and then coal and the switch to wind is possible, if solar grows at the rate that wind has grown (so far it has been a 44% annual growth rate for solar) this only makes the transition to renewables easier. Then add in improvements in energy efficiency as the price of electricity rises, more recycling so less mining is necessary, changes in design standards so that products can be more easily recycled (cradle to grave requirements on manufacturers so that a penalty applies to throwaway products). There are a lot of solutions to reducing growth, raising living standards so that birthrates decline is probably the most important solution.

      • Enno says:

        Excellent points Dennis. Despite the obvious challenges and abundance of short-sighted irrational behavior of world leaders, I am also hopeful for this scenario. Now let’s get to it.

      • Ert says:

        As a side-note: The global wind potential may be limited to 1TW/h…. nothing can go exponential for ever on a limited world…

        Source: Global wind power potential: Physical and technological limits, Carlos de Castro, Energy Policy, Volume 39, Issue 10, October 2011, Pages 6677–6682. Summary at: http://www.theoildrum.com/node/8322

        • Political Economist says:

          Good side-note. I like what Carlos de Castro wrote. He also had a very interesting article on the limits to solar.

          Renewables do not promise unlimited growth.

          • Dennis Coyne says:

            Hi PE,

            Another interesting take is by Tom Murphy of “Do the Math”

            http://physics.ucsd.edu/do-the-math/2011/12/wind-fights-solar/

            I agree that growth cannot be unlimited, the question is where the limits are?

            Murphy agrees that DiCastro’s analysis is valid, though I think he implies that it may be a bit conservative, based on the Murphy post I think maybe 5 to 10 TW makes sense. Note that even 1 TW translates to 8766 TWh per year, if we assume its 5 TW that would be about 40 TWh, and in 2012 total World electric consumption was 22,000 TWh.

            Wind cannot replace all of this, but it could replace a significant chunk.
            Solar is a much more abundant resource, and as it is scaled up costs (relative to fossil fuel electric power generation) will decrease due to the increase in fossil fuel costs.

  35. Dennis Coyne says:

    On Growth and population consider this,

    “A global move to the fertility levels seen in a number of Chinese urban centres (around 0.75) over the coming 40 years would result in a peaking of global population before 2050 and a decline to only 3.6 billion in 2100 and 150 million people by 2200. But even the more realistic range of long term fertility levels of 1.5-1.75 (higher than it has been in much of Europe for the past decades) would lead to declines in global population size of 2.6-5.6 billion by 2200 and even 0.9-3.2 billion by 2300.”

    Above quote from paper linked below by Basten et al, click on PDF download for full paper.

    http://www.demographic-research.org/volumes/vol28/39/

    Figure 1: Global population size from 2000 to 2300 resulting from alternative global fertility levels as indicated (TFR to be reached by 2030-2050 and then kept constant) combined with a maximum life expectancy of (a) 90, (b) 100 and (c) 120 years [chart for case (a) is below]

    • Doug Leighton says:

      Dennis,

      You said (away above): “It may be that you think that the high depletion rates will decrease the URR, if so we are not in agreement and as you said before time will tell.”

      No, that URR would be a function of depletion rates, would be an absurd supposition: I’ve never suggested that. Then you said: “So while I agree with your criticisms of HL. It is not quite clear that you understand that that is not what I am doing.”

      In truth, originally I assumed (not sure how far back) you were playing with HL or some permutation of HL but not for awhile now. Your oil shock model is not something I’m familiar with even though I “grew up” with Information Theory. Obviously all this stuff is familiar to my wife because, basically, it’s tied up with Statistical Mechanics, a branch of mathematical physics. To be clear, I ONLY discussed Linearizations with her, and then relative to relatively recent changes in oil extraction dynamics: After getting her to (reluctantly) read Hubbert’s stuff.

      I don’t know enough (anything really!) about what you’re actually doing so cannot possibly be criticizing it or even offering a semi-intelligent comment: And I’m not. I’m not saying that linearizations have outlived their usefulness. What I am saying is that linearizations being employed without taking a changed situation into account is a mistake, a mistake that bugs me because I really hate it when “math” is used to give an argument the appearance as science.

      Morever, it is my OPINION that linearizations, as frequently employed, are skewing data in the opposite direction to reality: That they are making it seem as though depletions will have “a long fat tail” as opposed to a (more) shark’s fin shape.

      Finally: I moved down here because columns were becoming too narrow above, and. let’s just move on. I’m starting to feel like we’re wasting too much of Ron’s Blog space and we’re going around in circles.

      Cheers,

      Doug

      • Dennis Coyne says:

        Hi Doug,

        I am pretty sure Ron doesn’t mind, and generally he tends to share his thoughts when he feels strongly about something.

        I did not mean to imply that you said that URR might change in response to an increase in depletion rates, it occurred to me that you might have had that in the back of your mind so I just wanted to get it out there explicitly.

        At some point I may try to cover the oil shock model, but as I have mentioned before, I do not think I could improve upon Sam Foucher’s excellent summary at the oil drum, see link below,

        http://www.theoildrum.com/node/2376

        Also note that I do not use the modifications proposed by Mr. Foucher, but his review of Paul Pukite’s original model is well written. Also there is a lot of information in the comments which shed a little light.

        A long post on dispersive discovery by Webhubbletelescope is at the link below:

        http://www.theoildrum.com/node/3287

        • Old farmer mac says:

          I am sure I am not alone in that I am not well trained in either advanced mathematics or statistics. Whatever I once knew of both fields is long forgotten.

          Does any body know of a description of WHT’s shock model written in terms accessible to laymen who lack a good background in statistics and calculus?

          To be truthful I have never been able to make heads nor tails of it because any explanations of it I have seen started in the middle assuming you already had the basics down pat.

          • Dennis Coyne says:

            Hi OFM,

            The post by Sam Foucher was pretty heavy math, I may try to present something that uses more charts and fewer equations to try and get the idea across. It is difficult to describe the model with words alone, but if anyone is interested I will make the attempt.

            It will take me a while to put it together.

            • Doug Leighton says:

              Mac,

              In spite of what Dennis says, I expect you could get a lot out of the Sam Foucher stuff. Don’t worry about the math, there is a lot, and I mean a lot, of discussion presenting the core issues of various arguments: Many intelligent viewpoints. Give it a shot and I doubt you will be disappointed. Here is the reference once again: http://www.theoildrum.com/node/2376

              Doug

          • Doug Leighton says:

            Mac & Dennis,

            It took awhile to get through but I found the post by Sam Foucher enlightening in the extremely. Every question about HL and the Shock Model (I have) was addressed, and more. There was an especially cool discussion on the analogy to signal processing: “EE can solve the convolutions by applying a Laplace or Fourier transform in the analog realm multiply the transforms all together, and then do the inverse transform to get the temporal response to the Dirac delta function.” This is something I can relate to given my geophysics background. (I expect you refer to the Fourier transform as a characteristic function Dennis?).

            Mainly I was impressed by the discussion of strengths/weaknesses of different approaches: VERY impressive indeed.

            Thank you Dennis. Thank you so much!

            Doug

            • Doug Leighton says:

              Dennis, Mac,

              Oops, “by the discussion of strengths/weaknesses”. That should have said discussions (plural) which, in this case, is an important distinction.

              • Dennis Coyne says:

                Doug,

                Thanks for taking the time to look it over. Now you can correct me when I make mistakes (never gonna happen 🙂 )

                • Doug Leighton says:

                  Dennis,

                  I don’t have time to correct your mistakes: would take me all day and half the night. 🙂

          • Does any body know of a description of WHT’s shock model written in terms accessible to laymen who lack a good background in statistics and calculus?

            No.

            Aren’t we really stupid asses not to understand differential calculus? And aren’t those guys who do understand it really geniuses whom we should admire as godlike figures? Take the following equation:

            Alggebra photo Algebra_zpsab9c606b.png

            I don’t understand a damn word of that. But the guy who thought it up must have been a real genius. Well, that’s not the opinion Richard Dawkins had of him. And Dawkins is a true genius.
            Postmodernism disrobed

            • Doug Leighton says:

              Ron,

              It’s not math, its crap. There’s endless examples of people writing garbage formulas, implying, look how great I am, or worse, look at the science. It’s EVERYWHERE and I hate it. It’s here, it’s there, it’s everywhere.

              Doug

            • Doug Leighton says:

              Ron,

              You could say the same about statistics which are often analogous to putting perfume and lipstick on a tart. The number of times I’ve been told: that’s great but throw in some stats, dress it up abit. More crap to humble the unwashed. I hate it.

              Doug

              • Synapsid says:

                Doug,

                Similar but not the same: Back in the 1970s I noticed that papers in peer-reviewed biology journals seemed all to have chi-square tests in them. I didn’t always see how the test related to the paper itself; I wondered if it was something that had somehow got established in editors’ minds–“Good paper, we’d like to publish it, but where’s the chi-square test?”

                I wish I’d asked researchers at the time. Ah, the pangs of hindsight.

            • cytochromec3 says:

              Our postmodernist and post structuralist friends took bullshit to a new height.
              And Derrida and Foucault have that unpleasant smell of charlatans.

            • Dennis Coyne says:

              Hi Ron,

              Edited (Sorry Ron I misread you)
              I think of mathematics as a convenient shorthand, nothing more. When someone has a better understanding of advanced mathematics than me, I do not assume that they are trying to show off, they are just expressing themselves in a language they are familiar with.

              In Sam Foucher’s post there is very little in the way of calculus, the one exception is where he refers to dR/dt, this can simply be thought of as delta R divided by delta t or because Greek letters are “Greek” to most people we can call it the change in R divided by the change in t.

              There is quite a bit of statistics and the introduction of the convolution function. The convolution operation essentially smooths the discovery curve so that the curve of mature discoveries becomes more bell shaped and is shifted in time by “b”(I am substituting “b” for lambda) times 3 years (in Foucher’s formulation), so if b=8 years, the “mature” discoveriess curve shifts by 24 years on average from the “discovery curve” in Figure 3 (reproduced below). The exponential functions (the “h” functions) are simply probability distributions that reflect the highest degree of uncertainty about the length of time a discovery spends in the fallow, build or mature stage (the so called maximum entropy probability distribution).

              That’s all for now I will try to write this up with words, pictures and maybe a little algebra and maybe try get Paul Pukite to help me answer any tough mathematics questions because to be honest I have a rough understanding of Calculus and an even rougher understanding of statistics.

              Note in figure 3 below the build curve should be labelled as fallow and the fallow curve should be labelled as build

              Note also that Foucher mistakenly changed the order of the fallow and build cycles in Pukite’s (aka Webhubbletelescope’s) analysis. Figure 3 of the Oil Shock Model post the build curve should be labelled fallow and vice versa.

  36. Political Economist says:

    Dennis, thanks for the suggestion for the US URR on the previous page.

    What I am currently doing is to assume that the EIA’s projections are correct and then conduct HL analysis using the projected future annual production and future cumulative production.

    The EIA reference case essetinally implies an URR of 68 billion tons. 1 US ton of oil and NGL = about 8 barrels. So that correponds to 560 billion barrels. By comparion, the US cumulative production up to 2013 was 31 billion tons and under the EIA reference case will be 45 billion tons by 2040.

    Under the EIA high oil and gas resources scenario, the implied URR will be 126 billion tons or about 1 trillion barrels. The cumulative production up to 2040 will be 50 billion tons.

    • Dennis Coyne says:

      Hi PE,

      I am well aware of how you are doing the analysis, I guess I am just pointing out that any URR estimates for the US above 350 Gb or 44 B Metric Tonnes may be wishful thinking. If we up the URR to the Mean BOEM and USGS estimates we get 373 Gb, we get 47 billion metric tons (using 8 barrels per metric ton). Anyway the estimates that your methods point to lead to URR estimates that do not match well with already optimistic estimates by the BOEM and the USGS, especially the high oil and gas resource case seems pretty wide of the mark.

      As I said before, lumping countries that do not fit the HL analysis in with the rest of the world or just doing the whole world together may give a more sensible result. I would ignore the EIA scenarios and use the USGS and BOEM estimates to generate a URR and then play with the omega parameter to see what might work.

      • Political Economist says:

        I’ve love to see those.

        But, if, even with the optismistic projections by EIA included, we’re still having results pointing to world peak 2016-2018, that will reinforce the case for imminent world peak oil.

        I myself actually has less confidence in the HL exercise over the whole world. Past experience suggests that it tend to underestimate URR. US shale oil boom is probably the major factor.

        • Political Economist says:

          Too many typos. I meant:

          I would love to see those (your model using USGS and BOEM estimates).

          By the way, what’s BOEM?

          • Dennis Coyne says:

            Bureau of Ocean Energy Management.

            I am not going to do the HL analysis. And I agree the HL analysis can underestimate and overestimate the URR, in fact Paul Pukite has shown that the logistic is just a special case of the more general shock model, which is why I prefer to use that. I spent a lot of time in the past doing the type of analysis you have just done and decided I did not trust the results.

          • Dennis Coyne says:

            Also on your rationale for not lumping the US with the “rest of the world” I believe it was because it would make the URR “too high”. Wouldn’t this tend to counteract the tendency for the “whole world” analysis to tend to underestimate URR?

  37. Political Economist says:

    Dennis, of course wind electricity will not be able to maintain the 24% annual growth rate forever. It has been growing rapidly partly because it starts from a small base.

    If you look at the net installation graph on the previous page, in 2011, the net installation of fossil fuels plants was 123 GW, and the net installation of all non-hydro renewable electricity was 99 GW.

    The fossil fuel plants in average had a capacity utilziation rate of 46 percent and the renewables had an average capacity utilization rate of 31 percent.

    1 GW capacity generates 8.76 TWH if it operates all year round.

    So 123 GW of fossil fuels plants generate 123 * 8.76 * 0.46 = 496 TWH. 99 GW of renewables generate 99 * 8.76 * 0.31 = 269 TWH.

    The annual growth of world electricity generation (from EIA) in 2011 was 827 TWH. So for the year, fossil fuels accounted for 60% of the growth, renewables accounted for 33%, the rest was from hydro (and nuclear had negative contribution).

    These are marginal ratios. So if you hold those ratios indefinitely, fossil fuels will eventually account for 60% of the total electricity generation and renewables and hydro will account for 40%.

    Of course the renewable share of net installation will keep rising. But against this, the average ratio of renewable capacity utilziation has been falling exactly because wind and solar are accounting for a big share.

    Let’s do a thought experiment. In 2011, fossil fuels accounted for 67 percent of world electricity generation, nuclear accounted for 12 percent, and renewables (hydro and non-hydro) accounted for 21 percent. Let’s assume these ratio were still true in 2013.

    Then assume starting from 2014, 100% of new growth comes from renewables and world electricity will keep growing by 3% a year from 2014 to 2050. For this to happen, ALL new net installations need to be renewables.

    Then by 2050, fossil fuels will still acount for 22 percent of electricity generation, nuclear will be 4 percent, and renewables will be 74 percent.

    • Dennis Coyne says:

      Hi PE,

      It will not happen overnight, I was just doing a thought experiment of “if wind keeps growing at its current rate” what happens? Not likely to happen, nor is all net new generation likely to be renewables (which is part of your point). At some point, prices of fossil fuels will rise enough that all new generation will in fact be renewables (with maybe some nat. gas backup) and as prices rise further or the world gets serious about climate change (or both), fossil fuel generation may be retired early because they are no longer competitive with renewables as the costs of these sources fall due to economies of scale and technological improvements. Note that your scenario leaves out the retirement of aging fossil fuel generation and the possibility that a decision will be made to shut down fossil fuel plants early (maybe due to high “energy independence” taxes, aka carbon taxes). I am realizing the “energy independence” idea doesn’t work for coal in the US and Australia or for oil in Canada, oh well.

      • Political Economist says:

        Dennis, price is not the only constraint on renewables. Intermittency is another issue.

        Personally, I suspect the current downward trend for renewable prices/costs is likely to be short-lived. Part of the post-2008 cheapening has to do with relocation to China taking advantage of the Chinese cheap labor, just like many other manufactured goods.

        The manufacturing of solar/wind equipment and their construction consumes fossil fuels as well as other nonrenewable resources (steel and various precious metals). As fossil fuels and other non-renewable resources start to be depleted, I suspect the costs for renewables will start to rise.

        • Political Economist says:

          Just a clarification, the graph shown in the previous page is about “net installations”. I think it means total new installations less retirement.

          So before the renewables can start to replace retired fossil fuels plants, net installation for fossil fuels need to become zero and then negative.

          • Perk Earl says:

            “So before the renewables can start to replace retired fossil fuels plants, net installation for fossil fuels need to become zero and then negative.”

            This is why I’ve concluded renewables is just being tacked on as additional energy sources to drive GDP higher. Did we burn less wood when we started burning coal? No. Did we burn less coal when we started burning oil? No. Are we burning less FF as more renewables are deployed? No. Why? Because of the insistence on growth. It’s like we are chasing our tails to replace FF before economic dislocation or runaway GW, whichever comes first.

            • Political Economist says:

              Exactly!

              • Dennis Coyne says:

                Hi PE,

                The important variable is the cost of producing the electricity, as the price of fossil fuel rises and especially if carbon taxes are implemented, the cost of producing electricity over the life of the plant will be much lower for renewables, if you doubt this I am surprised.

                For intermittency issue see paper from U Delaware link below PDF link at upper left corner:

                http://www.sciencedirect.com/science/article/pii/S0378775312014759

                From the abstract:
                “At 2030 technology costs and with excess electricity displacing natural gas, we find that the electric system can be powered 90%–99.9% of hours entirely on renewable electricity, at costs comparable to today’s—but only if we optimize the mix of generation and storage technologies.”

        • Old farmer mac says:

          I will hazard a guess that since the manufacturing costs of photovoltaic equipment will continue to fall for a good long while assuming the industry continues to grow.

          I know people who work in furniture manufacture and costs are still falling in that industry even after well over a hundred years of highly mechanized production.

          There must be thousands of patents involved and there will be countless ways discovered to trim costs a little here and a little there as the industry scales up.

          Wind energy manufacturing costs are not likely to fall so much due to scaling up since the manufacture of steel towers, concrete, gearboxes, large generators and so forth are all mature industries.

          Solar power farms will eventually be more or less standardized and only modified in minor ways to suit particular sites unless I miss my guess. And about all the preparation a good site is apt to need is some grading of the ground best suit the panel or mirrors layout.

          The potential cost savings involved in engineering and permitting alone are enormous.

          Small scale pv will eventually be plug and play in terms of installing it unless I am way off base.

          Every thing will be sold and delivered as a package with the only real differences being the mounting racks selected to match the site and the length of the conductors tieing the system to the residence.

          Any good handyman or small contractor should be able to do a creditable installation job with an electrician making the final tie in to the house and one trip out by the building inspector.

          I routinely do things myself that are supposedly the province of professionals only and so far have always gotten good results and saved a substantial portion of the estimates made by contractors.

          Most small scale construction work is actually pretty simple.

    • Old farmer mac says:

      ”These are marginal ratios. So if you hold those ratios indefinitely, fossil fuels will eventually account for 60% of the total electricity generation and renewables and hydro will account for 40%.”

      True enough on paper.For some finite number of years that could be easily calculated this is a great observation.

      But in the real world…..fossil fuels are getting a little harder to come by every year.

      At one time about forty or more years ago I could probably have computed the answer but I have long since forgotten the small dose of calculus and statistics I got at U.

      BUT my gut tells me that either we substantially curtail our use of juice or else we go nuclear and or renewable well within the lifetimes of any kids reading this comment.

      It is not just climate or depletion in the purely physical sense.

      Within a few decades resource nationalism is going to be as big a deal as territorial nationalism. Countries with limited and decreasing supplies of gas and coal are going to begin to hoard rather than sell to the extent they can survive without selling.

      Most of the importers are going to have a very hard time producing something in exchange for imported energy given that in a globalized world capital can chase the lowest cost of production from one country to another.

      The Germans are probably on average the worlds best at manufacturing top quality goods with lots of high tech and super highly skilled workers.

      But any country actually able to manufacture fine automobiles for instance can probably under cut Germany by simply paying substantially lower wages sooner or later.

      I believe that when all is said and done in smoky conferences between politicians, bankers, manufacturers, and economists- conferences that are not formally organized and not much discussed in the media- the Germans concluded long ago that sooner or later they must become energy independent or perish as a prosperous manufacturing nation.

      So the cost of their renewables program is something they will simply have to bear just as they bear the cost of maintaining armed forces.

      Of course speaking such truths in plain language is politically inadvisable in the extreme so the program has to be justified using other less threatening language.

      • José de freitas says:

        That is indeed one of the most astute observations to be made, and a HUGE blind spot for people too obfuscated by “economics”. Renewables will indeed be like armed forces, something you simply will have to have, and all the countries that “wasted” enormous amounts of money and “imposed crippling costs on the growth of their economies” to create a renewables base will be REALLY happy they have it in 20,30 years down the line. Assuming the infrastructure survives, of course. Solar PV sometimes bothers me, simply because it is so easy to steal.

  38. Patrick R says:

    Tom Murphy has collated various renewable possibilities into a convenient Matrix for y’all, here:

    http://physics.ucsd.edu/do-the-math/2012/02/the-alternative-energy-matrix/

    • Watcher says:

      Went through it.

      Here’s my matrix criteria:

      If someone thought of it 40 years ago and it still hasn’t replaced oil in a pervasive and overwhelming way, it’s not going to. So spend on some other research.

      • Doug Leighton says:

        Watcher,

        “Went through it.” You must be a masochist, I fell asleep about half way. Patrick must be desperate for attention.

        Doug

      • Techsan says:

        Nonsense. 400 years elapsed between Leonardo’s drawing of a helicopter and a working one.

        • Watcher says:

          How much research funding went on EVERY SINGLE YEAR of the 400?

        • TechGuy says:

          “Nonsense. 400 years elapsed between Leonardo’s drawing of a helicopter and a working one.”

          How many billions and decades spent on Fusion research with no progress?

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