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Peak Oil Ideas and Consequences, 2009

Peak Oil Ideas and Consequences, 2009

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Published by SolarWind49
Production increases rapidly at first, as the cheapest and most readily accessible oil is recovered. As the difficulty of extracting the oil increases, it becomes more expensive and less competitive with other fuels. Production slows, levels off, and begins to fall. This can be observed in any sedimentary basin producing oil.
Up to 54 of the 65 largest oil producing countries have passed their peak of production and are now in decline, including the USA in 1970 and 1981, Indonesia in 1997, Australia in 2000, the UK in 1999, Norway in 2001, and Mexico in 2004.
The date for the Peak in global liquid hydrocarbon production can be extended, but only at a global cost, including finding and lifting costs and especially by crude oil price. The nearby Peak projected in 2006 has probably already been extended a few years by the oil price spike of 2005-08 and the accompanying surge in unconventional recovery, heavy oil and bitumen development, and exploration and development. Other extensions will be possible with future price increases.
The energy-intensive processes of E&P exploration activities, the law of diminishing returns, and principles of geology and engineering predict, however, that global oil production will ultimately reach a final Peak, however. All but our oldest citizens will live to see that Peak.
Production increases rapidly at first, as the cheapest and most readily accessible oil is recovered. As the difficulty of extracting the oil increases, it becomes more expensive and less competitive with other fuels. Production slows, levels off, and begins to fall. This can be observed in any sedimentary basin producing oil.
Up to 54 of the 65 largest oil producing countries have passed their peak of production and are now in decline, including the USA in 1970 and 1981, Indonesia in 1997, Australia in 2000, the UK in 1999, Norway in 2001, and Mexico in 2004.
The date for the Peak in global liquid hydrocarbon production can be extended, but only at a global cost, including finding and lifting costs and especially by crude oil price. The nearby Peak projected in 2006 has probably already been extended a few years by the oil price spike of 2005-08 and the accompanying surge in unconventional recovery, heavy oil and bitumen development, and exploration and development. Other extensions will be possible with future price increases.
The energy-intensive processes of E&P exploration activities, the law of diminishing returns, and principles of geology and engineering predict, however, that global oil production will ultimately reach a final Peak, however. All but our oldest citizens will live to see that Peak.

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Published by: SolarWind49 on Sep 02, 2009
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Jim Myers, MPE
Peak Oil Ideas and Consequences
,
September 2, 2009
Page 1 of 25
Peak Oil Ideas and Consequences
Table of Contents
H
UBBERT
S
“P
EAK
AND
B
ELL
C
URVES
.......................................................................1H
UBBERT
S
P
EAK
E
XAMPLES
.......................................................................................2P
EAK
O
IL IN THE
US.....................................................................................................3P
EAK
O
IL AND
P
RICING
................................................................................................4P
EAK
O
IL
D
ECLINE
R
ATE
.............................................................................................5H
UBBERT
S
P
EAK
& T
WILIGHT IN THE
D
ESERT
............................................................7E
STIMATED
U
LTIMATE
R
ECOVERY
(EUR)....................................................................8O
IL AND
G
AS
F
IELD
D
ISCOVERIES
..............................................................................10D
ECLINING
D
ISCOVERY
R
ATES
..................................................................................11US D
ISCOVERY
R
EVIEW
2009....................................................................................12EPRS O
IL
P
RICE
F
ORECAST
C
RITIQUE
.......................................................................13C
RUDE
O
IL
P
RODUCTION
C
OSTS
................................................................................13S
UMMARY
..................................................................................................................15R
EFERENCES
..............................................................................................................16A
PPENDIX
1. R
EVIEWS OF
 H 
UBBERT 
S
P
 EAK 
:
 HE 
 I 
 MPENDING
ORLD
O
 IL
S
 HORTAGE 
17A
PPENDIX
2. R
EVIEWS OF
M
ATTHEW
R. S
IMMONS
 
WILIGHT IN THE 
 D
 ESERT 
:
..........21A
PPENDIX
3: R
IG
C
OUNTS
.........................................................................................23A
PPENDIX
4: BTU C
ONVERSION OF
F
UELS
................................................................24
Hubbert’s “Peak” and Bell Curves
Figure 1.
Schematic view of Hubbert’s bell curve incorporating production from individual wellsand/or fields, estimate of recoverable reserves, and exploitation trends in oil recovery. Anidentical bell curve trend is observed in historic coal production.
M. King Hubbert was a Shell geologist who in 1956 predicted that US oil productionwould peak in the early 1970s and then begin to decline. Hubbert was dismissed bymany experts inside and outside the oil industry. Pro-Hubbert and anti-Hubbert factionsarose and persisted until 1970, when US oil production peaked and started its long
 
Jim Myers, MPE
Peak Oil Ideas and Consequences
,
September 2, 2009
Page 2 of 25
decline.The Hubbert method is based on the observation that oil production in any region followsa bell-shaped curve. Production increases rapidly at first, as the cheapest and mostreadily accessible oil is recovered. As the difficulty of extracting the oil increases, itbecomes more expensive and less competitive with other fuels. Production slows, levelsoff, and begins to fall. This can be observed in any sedimentary basin producing oil.Up to 54 of the 65 largest oil producing countries have passed their peak of productionand are now in decline, including the USA in 1970 and 1981, Indonesia in 1997,Australia in 2000, the UK in 1999, Norway in 2001, and Mexico in 2004.
Hubbert’s Peak Examples
Figure 2.
Graphical Peak-Oil summary of non-OPEC & non-former Soviet Union (non-FSU)national production rates illustrates obvious peak around the Year 2000.
www.energybulletin.net/node/2544
, October 2004.Of the 65 largest oil producing countries in the world, up to 54 have passed their peak of production and are now in decline, including the USA in 1970, Indonesia in 1997,Australia in 2000, the UK in 1999, Norway in 2001, and Mexico in 2004. Hubbert'smethods and newer more advanced methodologies have estimated the global oil peak,ranging from 'already peaked' to 2035 (very optimistic).International energy agencies rely upon many official data sources for predicting oilproduction, like
OPEC
figures, oil company reports, US DOE Geological Survey(
USGS)
discovery projections, the US DOE Energy Information Administration (
EIA
),The Oil & Gas Journal, American Petroleum Institute (
API
), International EnergyAgency (
IEA
), etc.Unfortunately, many of these data sources have been demonstrated impractical,inaccurate, unreliable, and/or unrealistic, some perhaps scandalously so. Several notable
 
Jim Myers, MPE
Peak Oil Ideas and Consequences
,
September 2, 2009
Page 3 of 25
scientists have attempted independent studies; perhaps most famously, the UK’s ColinCampbell of the Association for the Study of Peak Oil and Gas (
ASPO
). The “Critiqueof forecasts by USGS, US-EIA and IEA” is thorough and informative:www.energybulletin.net/node/2544
Figure 3.
Breakdown of fossil fuel production history and projection by fuel type: “Regular” oil,heavy oil, deepwater offshore production, polar, conventional and non-conventional natural gas.Note that heavy, deepwater, and polar oil are included, but are very expensive ventures.
Peak Oil in the US
The US serves as a laboratory for evaluating the prospects for delaying the global peak.After 1970, exploration efforts succeeded in identifying two enormous new American oilprovinces—the North Slope of Alaska and the Gulf of Mexico. During this period, otherkinds of liquid fuels (such as ethanol and gas condensates) began to supplement crude.Also, improvements in oil recovery technology helped to increase the proportion of theoil in existing fields able to be extracted, in some cases doubling it. These are preciselythe strategies (exploration, substitution, and technological improvements) that the oilproducers are relying on to delay the global production peak. In the US, each of thesestrategies made a difference—but not enough to reverse, for more than a year or two nowand then, the overall 37-year trend of declining production. To assume that the results forthe world as a whole will be much different is at best unwise.www.richardheinberg.comIn response to the oil price spike begun by the OPEC embargo of 1973, massiveinvestment occurred internationally to increase production in every oil producing nation.This culminated in an oil price collapse in the mid-1980’s which lasted until worlddemand caught up with production around 2000, when oil pricing began its gradual, then

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