When Will Peak Oil Actually Arrive? Costs Way Too High and Rising

When will Peak Oil actually arrive? There has been considerable debate on that point recently. Well if you are talking about “Conventional Crude Oil” it arrived in 2005. But in many cases unconventional crude oil works just as well so I think we must count that. I will comment on that at the end of this post below.

The chart below is kb/d with the last data point, 2013, is the average through October.

World Yearly

Averaging the first 10 months of 2013, World oil production was up only 66,000 barrels per day. And without the US LTO input, world production would have been down 807,000 barrels per day, lower than the 2005 level.

And it is all about LTO, primarily it is about three oil plays, the Bakken, Eagle Ford and the Permia.

Three Plays

The data for this chart was taken from the EIA’s Drilling Productivity Report. The data is through December 2013 but the last four months must be taken with a grain of salt. They are nothing but a wild guess from the EIA. For instance December production in the Bakken was down over 50,000 barrels per day but the this report has the Bakken up by over 20,000 bp/d. Not to worry however they will correct the data in three or four months.

I am not at all clear on what the Permian really is. That is, is it shale oil or is it a conventional field. The Permian Basin has been producing oil for 90 years. Now a lot of people are referring to it as “shale oil” But the Texas RRC does not use the word at all in their description of the Permian Basin. I think it is basically a conventional field. Perhaps there is a small part of it that is shale, after all, the Permian is many fields, not just one. But if some oil man could enlighten us on what the Permian really is, it would be greatly appreciated.

But many in the oil business are having second thoughts about shale oil.

Wells That Fizzle Are a ‘Potential Show Stopper’ for the Shale Boom

The average flow from a shale gas well drops by about 50 percent to 75 percent in the first year, and up to 78 percent for oil, said Pete Stark, senior research director at IHS Inc.

“The decline rate is a potential show stopper after a while,” said Stark, a geologist with almost six decades in the oil patch. “You just can’t keep up with it.”

Geologists Jeffrey Brown gives his take on all this:

The net increase in US  Crude + Condensate production  (C+C)  from 2008 to 2013 was about 2.5  million barrels per day (mbpd), i.e., from 5.0 to 7.5 mbpd. I’m assuming that the decline rate from existing production rose from about 5%/year in 2008 to 10%/year in 2013 (as an increasing percentage of production comes from high decline rate tight/shale plays).

Let’s assume that we see another 2.5 mbpd increase in net production by 2018 (to 10.0 mbpd in 2018), and let’s work backwards from there. Let’s assume that the decline rate from existing production continues to increase at 1%/year per year, hitting 15%/year in 2018.

So the projected volumetric declines from existing wells would look like this:

2013:     7.5  x  o.1 = 0.75
2014:    8.0 x 0.11 = 0.88
2015:    8.5 x 0.12 = 1.02
2016:    9.0 x 0.13 = 1.17
2017:    9.5 x 0.14 = 1.33
2018: 10.0 x 0.15 = 1.50

So, in round numbers and based on the above assumptions*, we would need about 7 mbpd of new production from 2013 to 2018, just to offset declines from existing wells. And we also need new production to show the net increase from 7.5 to 10.0 mbpd.

For example, the assumption is that we would need 0.75 mbpd from 2013 to 2014, to offset declines, plus another 0.50 for new production, for a required gross increase in production of about 1.25 mbpd from 2013 to 2014, to show a net increase of 0.50 mbpd.

So, based on all of the foregoing, in order to show a net increase of 2.5 mbpd from 2013 to 2018, I estimate that we would need on the order of 9.5 mbpd of new gross production through the end of 2018. Or, based on the foregoing, in five years we would need to basically do what it took the US oil industry decades to do, as we approached our 1970 peak rate of 9.6 mbpd.

And everyone is complaining that it costs way too much these days to produce oil. Even Oman is saying the costs are way too high.

Gail Tverberg has strong opinions on this subject and dedicated her latest post to explaining in:

Beginning of the End? Oil Companies Cut Back on Spending

She says capex is way too high and uses data from Goldman Sachs to prove it.

Capex

 

With that kind of capex required how can anyone make any money? In fact a lot of companies are losing money:
World’s largest drilling company posts huge loss

And if that isn’t enough the per barrel marginal cost of non Non-OPEC oil, last May, was $104.50. It is likely over $110 per barrel today.

Jean Laherrere has updated his projection for Bakken Production based on the latest December data. He sees the Bakken peaking toward the end of 2014.

Laherrere New3

But when will crude oil, or C+C peak. We can only guess. It is a little like predicting the weather, like saying there is a 50% chance of rain tomorrow. I will give my peak oil prediction in the same manner but with increasing probability as we move further along the calendar. My opinion is:
There is a 10% chance that the peak was in 2013
There is a 25% chance that oil will peak in 2014 or before.
There is a 40%  chance that oil will peak in 2015 or before.
There is a 70%  chance that oil will peak in 2016 or before.
There is a 90%  chance that oil will peak in 2017 or before.

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212 Responses to When Will Peak Oil Actually Arrive? Costs Way Too High and Rising

  1. Nony says:

    Whoever posted the New Yorker ITER link: great link. Total EU-like clusterf*#&. And then when he said it would have economics of wind? Sorry, we would do breeder reactors way way way before that.

    http://www.newyorker.com/reporting/2014/03/03/140303fa_fact_khatchadourian?currentPage=all

  2. Nawar Alsaadi says:

    Dream of U.S. Oil Independence Slams Against Shale Costs

    ….”Just a few of the roadblocks: Independent producers will spend $1.50 drilling this year for every dollar they get back. Shale output drops faster than production from conventional methods. It will take 2,500 new wells a year just to sustain output of 1 million barrels a day in North Dakota’s Bakken shale, according to the Paris-based International Energy Agency. Iraq could do the same with 60.”

    Consider Sanchez Energy Corp. (SN) The Houston-based company plans to spend as much as $600 million this year, almost double its estimated 2013 revenue, on the Eagle Ford shale formation in south Texas, which along with North Dakota is one of the hotbeds of a drilling frenzy that’s pushed U.S. crude output to the highest in almost 26 years. Its Sante North 1H oil well pumped five times more water than crude, Sanchez Energy said in a Feb. 17 regulatory filing. Shares sank 7 percent.

    “We are beginning to live in a different world where getting more oil takes more energy, more effort and will be more expensive,” said Tad Patzek, chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin.

    Drillers are pushing to maintain the pace of the unprecedented 39 percent gain in U.S. oil production since the end of 2011. Yet achieving U.S. energy self-sufficiency depends on easy credit and oil prices high enough to cover well costs. Even with crude above $100 a barrel, shale producers are spending money faster than they make it. …. rest of the article:

    http://www.bloomberg.com/news/2014-02-27/dream-of-u-s-oil-independence-slams-against-shale-costs.html

    Regards,
    Nawar

  3. Old farmer mac says:

    Anybody who thinks fusion power is going to come to our rescue should read this article and then contemplate a bit of basic math.

    There are literally thousands of problems that must be solved before a fusion reactor can be built and even then it would be only prototype and would need another couple of decades to become a practical reality.

    Now consider this. The odds of solving a string of problems that must be solved in order to reach a goal is the product of the odds of solving each individual problem all multipled together.

    So if the odds of solving ‘problem A” are ninety nine percent and ”problem B are ninety nine percent and ”problem C” are ninety nine percent then the chances of reaching the goal in this case is 0.99×0.99×0.99.

    Thats still pretty good but when there are thousands of problems some of them will not be solved at all until many different approaches have been tried and when a solution that works has finally been found then it may have to be discarded because it cannot be implemented due to being incompatible with the rest of the reactor machinery. So it will be back to the drawing board for new solutions for possibly dozens of problems and after the reactor is finally built lots of bugs will be found that will take more years to correct.

    There is a book or a play or maybe a movie called ”A Bridge Too Far ” . These four words say it all about practical fusion power.We will be bankrupt a long time before ALL the problems are solved.

    • Old farmer mac says:

      Sorry I forgot the link to the article I refer to in my 9:21 comment.

      http://www.newyorker.com/online/blogs/elements/2014/02/video-how-to-put-a-star-into-a-bottle.html

      • Nony says:

        The funny thing is how it is such a Frenchie, EU, UN, Japanese type gaggle. I think what really pisses them off is that if the USA got all thuggish Big Science manly and said “we did Manhattan Project, we did man on the Moon, STFB”, then they know that we would get it done. Boom! Just call up General Atomics and Bechtel, print another 30 billion and get the fooker done. Probably cost us less money than screwing up Iraq for 10 years.

        That’s what really pisses them off. That they’re going to fail and they know we could do it, with one hand behind our back. We’re the adapt and overcome Marines. Look at the Bakken, red meat gettirdone Americanism.

        Joking. Or am I? ;)

        • Old farmer mac says:

          I hope you’re joking because no we can’t giter done this time. The job is just too big.I know this is heresy according to the gospel of Yankee invincibility but it is never the less true.

          If business as usual were to last another fifty years then a fusion reactor just might be possible.

          But we are already broke and there isn’t a snowball’s chance on a red hot stove that we or anybody else will continue to fund such an expensive long shot project that won’t pay off in the lifetime of the people who have to appropriate the money for it.

          The money for fusion should be diverted immediately into research with a potential for paying off within the easily foreseeable future.

          Otherwise once overshoot really starts to bite and the entitlement checks don’t arrive on time, the public is apt to get tired of funding research altogether and then there won’t be any researchers at all excepting those funded by businesses.

          • Nony says:

            When they said the final price would be like wind, my brain turned off. Breeders make so much, much more sense.

            I do think we could get it done. Heck, look at the Manhattan Project.

            That fusion project story’s problems are much more around the organizational aspects than the engineering. Too much foofoo internationalism going on. Need centralized design without having 10 different countries with veto power.

  4. Andy Hamilton says:

    My understanding from comments made elsewhere is that Steven Kopits has lost his job? If so that is a very great shame as his analysis of the oil industry is fascinating.

  5. Political Economist says:

    The US crude oil production growth fell again last week. Defined as the 52-week average weekly production over the last 52 weeks less that in the previous 52 weeks, the 52-week growth in the US crude oil production declined from 1241 thousand barrels per day in the last week of 2013 to 1211 thousand barrels per day in the third week of February. After peaking during the last three weeks of 2013, the 52-week growth has declined for eight consecutive weeks, with an average decline rate of 3.75 thousadn barrel per day per week. At this rate, it would take approximately 320 weeks or more than six years for the US oil production to peak.

    For the week of February 21 itself, the weekly production was only 963 thousand barrels per day higher than 52 weeks ago.

    • Nony says:

      1. Took me a while to head scrunch through the difference of two trailing last year, weekly numbers. As said, it’s a measure of derivative of production. You could say we had past the inflection point (if that trend stays true).

      2. It was a pretty bad winter cold snap. YEah, you are doing trailing year which dilutes it and eliminates seasonality…but it was a harsher winter than last year and we know lots of wells in the Bakken are unfracked. And just a caution in reading into a couple data points. So…maybe it really is the inflection point. But…not sure.

      3. Only a million higher than last year. Only 14% growth. ;-)

      • Political Economist says:

        That’s correct. It’s derivative of production.

        It could be bad winter. We’ll find out. Note that the current trend points to a peak in level about 320 weeks from now. The implied peak year is 2020, more conservative than the current EIA projection. So the chance is that this is indeed an inflection point (a turning point for the derivative itself) and decelerating slope will become steeper.

        • Nony says:

          Also look at about SEP2010 to SEP2011. We’ve already had one turning of the derivative (and this was well after the 2008 price shock), but then it turned up again. So, gotta be wary of this thing not being a simple bell curve with an inflection point, but more variable.

    • Nony says:

      Oh…I forgot to say: attaboy. Seriously. Thank you for the good analysis.

    • Watcher says:

      Pretty sure the weekly numbers are from models, not measurements.

      • Political Economist says:

        This one compares the monthly oil production growth with rigs in operation. Rigs in operation are shown on left scale (updated to January 2014). Annual change in oil production is defined as the total oil production over the last 12 months less that in the previous 12 months (right scale, updated to November 2013).

        Annual change defined in this way peaked in September 2013, at 365 million barrels. It was down for both October and November. By November, it was down to 349 million barrels. It will take a few more months to decide if this has become a trend.

        The preivous downturn happened in February 2013, just for one month.

        • Nony says:

          Both of those downturn points might be the Bakken seasonal decline. It’s big enough that it is 1/8 of total production.

          Is rotary rigs in operation, all rigs (oil and gas) or just those drilling for oil. We’ve seen movement between the activities based on the price of gas.

          Looking at the about 2012-2014 time period, the rate of growth seems rather constant (linear growth) even though rigs drilling still went up. Could be Bakken and EF getting more efficient (number of wells/rig increasing from more pad drilling). And then the other rigs doing less successful holes (e.g. exploration in Utica, TMS). For the Bakken only, our charts have shown no downturn yet in average productivity of a well.

  6. Jeffrey J. Brown says:

    In response to some justified criticism that I need to simplify my net export presentations, I have been working on trying to do just that. Following is a short summary of the approach that I am working on.

    ELM & ECI Ratio

    First, based on a simple mathematical model for a hypothetical exporting country that I called “Export Land,” I observed that given an ongoing production decline in a net oil exporting country, unless they cut their domestic oil consumption at the same rate as, or at a rate faster than, the production decline rate, the resulting net export decline rate will exceed the production decline rate, and the net export decline rate will accelerate with time. Furthermore, if the rate of increase in consumption exceeds the rate of increase in production, a major net oil exporting country can become a major net oil importing country, prior to a production peak, e.g., the US & China. I call this the Export Land Model, or ELM

    I have labeled the ratio of production to consumption in a net oil exporting country the Export Capacity Index (ECI). If the ECI Ratio is declining then, by definition, a net oil exporting country is headed toward zero net oil exports (when they hit an ECI ratio of 1.0). Based on the following Six Country Case History, a declining ECI ratio predicted net export problems ahead, even as the Six Countries showed a slight increase in production from 1995 to 1999.

    Six Country Case History

    The Six Country Case History consists of the six major net oil exporters that hit or approached zero net oil exports from 1980 to 2010 (excluding China). As noted above, China & the US are special case histories, and if I had included China, the Six Country Case History (or more accurately the Seven Country Case History) would have looked even worse. The Six Countries are: Indonesia, UK, Egypt, Vietnam, Argentina, Malaysia.

    The Six Countries showed a definite inflection point in production in 1995, when production virtually stopped increasing. In 1999, their combined production was only 2% higher than their 1995 production. Because of rising consumption, their net exports fell by 6% from 1995 to 1999, and their ECI ratio fell by 5% from 1995 to 1999 (down from 1.71 in 1995 to 1.62 in 1999). The killer number was the decline in remaining post-1995 Cumulative Net Exports (CNE).

    Remaining Six Country post-1995 CNE fell by 54% from 1995 to 1999, as production increased by 2%. It took the Six Countries 12 years to go from peak net exports (1995) to zero net exports (2007). A rough, but consistent rule of thumb is that about half of post-peak CNE are shipped one-third of the way into the net export decline period. The four year Six Country decline in remaining post-1995 CNE (54%) is consistent with this rule of thumb.

    Following is a link to a graph showing the normalized production, net exports, ECI ratio and remaining post-1995 CNE by year for the Six Countries, with 1995 values set equal to 100%. My point is that the 1995 inflection point in production and net exports is analogous to the 2005 inflection point in production and net exports for the (2005) Top 33 net exporters.
    6 Country Corrected photo Slide2_zps55d9efa7.jpg

    Note that by the end of 2002, as production had only fallen by 7% from 1995, they had already shipped 84% of post-1995 CNE. As noted above, the early decline in the ECI ratio was a warning of what was going on regarding post-1995 CNE depletion, even as they showed a slight increase in production from 1995 to 1999.

    Note that based on the seven year 1995 to 2002 rate of decline in the Six Country ECI ratio, estimated post-1995 CNE were 9 Gb (billion barrels). Actual post-1995 CNE were 7.3 GB, so the estimate for post-1995 CNE, based on the seven year decline in the ECI ratio, was too optimistic (by 23%).

    (2005) Top 33 Net Oil Exporters

    I have labeled the combined output from the (2005) Top 33 Net Oil Exporters as Global Net Exports of oil (GNE). Note that Vietnam, Argentina and Malaysia are included in the Top 33 data base, although they don’t have a material impact on the data set.

    Normalized Top 33 photo Slide3_zpse00789d2.jpg
    The Top 33 data set is based on EIA data. As of 2012, production (relative to 2005) was up slightly, by 2%, net exports were down slightly, by 4%, the ECI ratio was down by 13% (from 3.75 in 2005 to 3.26 in 2012).

    Just as we saw with the Six Country Case History, the killer number is the decline in remaining post-2005 CNE, which is estimated to be down by 21% in only seven years. As noted above, this estimation technique, extrapolating a seven year ECI Ratio decline, was too optimistic for the Six Country Case History.

    Incidentally, by definition, the remaining supply of post-2005 Top 33 CNE is declining, the only question is what the depletion rate is. But whatever the depletion rate is, again by definition, the depletion rate is accelerating, i.e., it is not in dispute that we are burning through a falling volume of remaining post-2005 Top 33 CNE, the question is how fast are we burning through the remaining supply?

    Any comments?

    • Jeffrey J. Brown says:

      Let’s assume that you have $100,000 in the bank, and you withdraw $10,000 per year. You would take out 10% (10/100) of the balance the first year, 11.1% the second year (10/90), 12.5% the third year (10/80), and so on. So, the year over year simple percentage depletion in the remaining bank balance accelerates.

      In regard to net export declines, the biggest post-net export peak declines in post-peak CNE (Cumulative Net Exports) tend to be early in the decline phase.

      As noted below, in 1999 combined Six Country production was 2% higher than 1995, but in 1999 the Six Countries shipped 23% of remaining post-1995 CNE.

      In 2012, combined production from the (2005) Top 33 Net Exporters was 2% higher than 2005, but in 2012 I estimate that they shipped 3.7% of remaining post-2005 CNE.

      Observed Year Over Year Simple Percentage Depletion in the Remaining Volume of Post-1995 Six Country CNE (Cumulative Net Exports):

      1996 14.0%
      1997 15.1
      1998 17.8
      1999 23.3
      2000 23.9
      2001 28.6
      2002 36.0

      Year Over Year Estimated Simple Percentage Depletion in the  Remaining Volume of Post-2005 Top 33 CNE:

      2006  3.0%
      2007  3.1
      2008  3.2
      2009  3.4
      2010  3.5
      2011  3.6
      2012  3.7

    • Doug Leighton says:

      Jeff,

      Well I don’t know about this depletion stuff. Had coffee with my neighbor Roy yesterday, an old God fearing fellow, and he assured me that running out of oil is just a big lie, that the earth creates oil all by itself, that when a well runs out you just have to give it a few years to rest. Now old Roy has a lot of clout in our community and I haven’t heard anyone call him out on stuff very often so maybe you should rethink some of them ideas you’re bin spouting. Roy’s also pretty good at witchin for water — they say. So there’s your proof isn’t it?

      • SRSrocco says:

        Doug,

        I have the same sort of chat with many individuals in my neck of the woods. That seems to be the KNEE-JERK reaction — “there’s plenty of oil in the ground, we got a lot of cap wells.”

        Maybe Roy needs to look at some of the Shale Gas Financial Reports as well as some of the Majors. But of course, they are manipulating the data.

        It’s impossible to get people to think differently… that is until the day the EARTH IS PROVEN TO BE ROUND.

        steve

      • Jeffrey J. Brown says:

        Another Peak Oiler made some kind of comment a few weeks ago to the effect that he had moved from activism to something more akin to being an observer/commentator, which I guess is mostly my position too.  
         
        On some days, I think I would have more success trying to get my Yorkie to understand “Net Export Math,” than getting someone in a policy making position to accept the concept. 

        By the way, when asked about when Saudi Arabia might approach zero net exports, I point out that it’s pretty much irrelevant, because in my opinion the largest percentage depletion in post-2005 CNE (Saudi Arabia specifically and globally in general) is happening right now.  

        Here are the Six Country  post-1995 CNE (Cumulative Net Export) depletion percentages in four intervals of three years each (1995 to 1998, 1998 to 2001, 2001 to 2004, 2004 to 2007):

        First Quarter (of 12 year net export decline period):

        40% of post-1995 CNE shipped

        Second Quarter:

        35% of post-1995 CNE shipped
        (But 58% of remaining post-1995 CNE)

        Third Quarter:

        21.5% of post-1995 CNE shipped
        (But 86% of remaining post-1995 CNE)

        Fourth Quarter:

        3.5% of post-1995 CNE shipped
        (100% of remaining post-1995 CNE)

        Note that even as the volume of net exports shipped every quarterly time period dropped, the quarter over quarter depletion rate, in terms of remaining CNE, accelerated.

        Let’s assume that instead of hitting zero net exports in 2007, that the Six Countries were able to maintain the fourth quarter (2005 to 2007 inclusive) net export rate for 12 more years, so that instead of hitting zero net exports in 12 years, they hit zero net exports in 24 years.  Based on this premise, they would only boost their post-1995 CNE by 14%. 

        Note that the only way we will not see a similar pattern globally (in terms of depletion per quarter)  is if–when faced with inevitable production declines–that the net oil exporting countries cut their domestic consumption at the same rate as, or at a rate faster than, the production decline rate.  Of course, dramatic declines in exporting country consumption (given an overall production decline) would only slow the rate of decline in net exports, but in any case  so far, it does not look promising.  

        Here are the observed 2005 to 2012 rates of change in the (2005) Top 33 Net Exporter’s ECI* ratios, by country:

        http://i1095.photobucket.com/albums/i475/westexas/Slide1_zps5a656e89.jpg

        *Total petroleum liquids + other liquids production divided by liquids consumption, EIA

      • Jeffrey J. Brown says:

        To return to the $100,000 analogy, let’s assume that you had $100,000 in the bank on January 1st.

        In the first quarter of the year, you spend $40,000, 40% of balance at the beginning of first quarter.

        In the second quarter, you spend $35,000, 58% of balance at the beginning of second quarter.

        In the third quarter, you spend $21,500, 86% of balance at the beginning of third quarter.

        In the fourth quarter, you spend $3,500, 100% of balance at the beginning of fourth quarter.

        Based on a mathematical model and recent histories, this is what a net export decline period looks like.

        • Nony says:

          Sorry, what was your point? What’s the key insight? I honestly can’t follow (to agree or disagree).

          • Doug Leighton says:

            Nony,

            I think Jeff is trying to explain some basic PO arithmetic. In a country where 25% of the population don’t realize the earth goes around the sun you do expect this to be a challenge, perhaps an impossible undertaking in your case.

          • Jeffrey J. Brown says:

            Re: Nony

            Perhaps it might help if you start with my first post, which starts as follows:

            “In response to some justified criticism that I need to simplify my net export presentations, I have been working on trying to do just that. Following is a short summary of the approach that I am working on.”

            Following is al link to the paper that I am working on updating:

            http://www.resilience.org/stories/2013-02-18/commentary-the-export-capacity-index

            In any case, I suspect that you are not alone. Almost no one has any understanding of “Net Export Math,” or in the alternative, they choose not to understand it.

            • Techsan says:

              Okay, I understand your arguments and math, and I think ELM (Export Land Model) is a valuable insight and GNE (Global Net Exports) is important to track.

              What I fail to understand is why GNE/CNI (China+India Net Imports) is a good way to present the data.

              It seems clear that GNE will decrease and CNI will increase. But, GNE/CNI will not approach 1. Instead, the GNE will be divided somehow between the West and China+India — if we are lucky, divided by price and ability to pay, or if unlucky, by war. But, it will not happen that China+India gets it all and the West gets nothing, so the ratio will never approach 1.

              IMO, it would be more effective and valuable to simply show an extrapolation of GNE in million barrels/day together with projections of Western demand and China+India demand, with a gap between GNE and total demand, just as you show a gap between earlier rates of increase and actual. The gap would make it very clear that we are facing a clear and increasing problem, and how big the gap will be.

              • Jeffrey J. Brown says:

                I agree that the GNE/CNI ratio will not hit 1.0, but the fact remains that Available Net Exports (ANE), or GNE less CNI, fell from 41 mbpd in 2005 to 35 mbpd in 2012.

                It will be interesting to see what happens over the next 10 years, but following is a graph of normalized liquids consumption versus annual Brent crude oil prices from 2002 to 2012.

              • Jeffrey J. Brown says:

                And here is an ANE “Gap” Chart:

  7. Ronald Walter says:

    Pardon me for adding my 2 cents.

    You cannot continue to burn through 88 million barrels of oil each day and conduct BAU with no consequences. Depletion begins immediately and without any delay.

    The only way you can replenish the supply is to obtain more. Plenty of oil, just too much demand. No such thing as peak investment, if you want oil, you spend the money to find it, obtain it, and make sure it goes to a thirsty market. Money is no object, at all. If a new well blows off the top, shoots a 20 foot wide column of oil 200 feet high and gushes for 558 days straight in a row, I will become a believer in a new oil boom, until then, it is a downhill slope on the graph. The US exported 40 percent of its oil in the early years of oil development.

    In the early days of oil, an oil company official stated the he would drink every gallon of oil west of the Mississippi, such was the pessimism of oil abundance after Titusville went dry. Peak Oilers existed from the beginning. Indeed, John D. Rockefeller seriously considered abandoning the oil business and returning to the produce business, where he began business in the world of business. It was a grim outlook back then because supplies dwindled quickly and the grim outlook was the prevailing zeitgiest until more oil was discovered near Beaumont. Lucas No. 1 changed everything, Lakeview No. 1 made life even better, the mother of all oil spills. More oil west of the Mississippi was a blessing in disguise, to become an unwanted curse in today’s world.

    Rockefeller gambled, bought 40 million barrels of malodorous oil @ 15 cents per barrel, skunk oil, bad for kerosene, then hired Herman Frasch, who cracked the oil and removed the skunky odor, and the rest was history. Light bulbs replaced kerosene lamps and gasoline replaced kerosene. Nice to have some sulphur in large quantities. Nice to have a car and not a horse to get you there and nice to have a tractor to pull tons of equipment and do some heavy hauling. Train engines that burned fuel oil instead of coal and used ICE powerplants to power the electric drive allowed the railroads to print modern, streamlined engines photos on their calendars. Oil makes the world just a better world. Then along comes the jet engine and oil is even more desirable. Even greater demand on ever increasing supplies until the increasing supplies fall short again. Peak Oil for real this time around.

    Hard to stop oil when the demand outstrips the supply every single day.

    Gotta get more because you want more, not because you need more.

    Plenty of coal and coal gasification works too.

    The coal reserves are estimated to last 1500 years, so energy can be supplied into the future for quite some time. King Coal will remain King Coal. Natural Gas is probably inexhaustible. China used natural gas in 2000 BCE and had a distribution system using bamboo. Supply issues are the only roadblock.

    Hydro, solar, ocean currents to provide the energy to transform it into electricity, all . Golden eagles in California are on a steady decline because of wind towers, ergo, wind is environmentally hazardous to protected species. Forget wind, it won’t work. Solar will be a bright spot in the future of energy production.

    We are now forced to use nuclear and are forced to train people to be nuclear physicists to chair a committee to regulate nuclear power until the end of mankind.

    Oil can last, but strict controls on its use is a priority and the consumer will balk.

    A slow down in oil consumption will take place when supplies are dwindling and the demand is thwarted by drastic price increases.

    I don’t know if it is an insolvable problem; however, peak oil is real and a real problem.

    It’s Peak Oil Day today and every day, just like it was Ground Hog Day every day for Phil Connors in Ground Hog Day.

    • Doug Leighton says:

      Ronald,

      “You cannot continue to burn through 88 million barrels of oil each day and conduct BAU with no consequences.” Maybe when you throw all that coal and gas into the mix one of the consequences might be turning our planet into a desert — quickly!

  8. Watcher says:

    Ransquawk tidbit:

    e-data-show-oil-loading-rate-at-12-bakken-terminals-fell-to-345-000-bpd-over-past-two-days-vs-550-000-bpd-in-previous-two-weeks-28-02-2014

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  10. Pingback: Peak Oil Barrel posts | Peak Energy & Resources, Climate Change, and the Preservation of Knowledge

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