Posts Tagged ‘peak oil’
Tuesday, November 17, 2009 | Written by Jim Beach
Posted under: Energy and Oil |
Tags: abiotic oil, hubbert's peak, oil forever, peak oil, scarcity myth |
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This lecture is entitled “The Scarcity Myth.” Today, we’re going to do Part Five, which is our final piece, discussing the thesis, “How we will never run out of oil.”
We’re on agenda item 9 today, which is “Proven Resources Are Undercounted.” Proven Resources is a phrase that has a definition, which is “oil deposits that there are current plans to extract.” In other words, if we know of oil, but have no plans to extract it at that time, if no oil company has announced that they are going to go drill and get that oil right now, that oil does not count as part of our proven reserves. This gives us billions and billions of barrels of oil that are not counted. Roger Bentley from the Association for the Study of Peak Oil and Gas said, “Proved reserves (43 years worth) have been very conservative (counted) indeed. They do not reflect the total oil that has been discovered, but only that small portion for which definite plans are in place for current access.” The SEC, the Securities Exchange Commission, which is part of the United States government, has very strict rules about what type of oil can be counted as part of your reserves. Of course, a company like Exxon is worth more the more reserves that they have. But the SEC does not allow you to count tar sand, polar oil, coastal oil, ANWR or deep-sea oil. Some of our best resources are not counted by the SEC, which severely limits how much proven reserves the U.S. has. Our proven reserves are vastly undercounted.
Remember, that Canada has three times as much oil as Saudi Arabia and none of that is counted! The United States has even more oil than Canada and of course it’s not counted, because most of it falls into the categories that are not counted, such as coastal oil and tar sands. The G7, the group of economic superpowers in the world, has pushed for greater transparency and has requested that the oil-producing super nations like Saudi Arabia be more open in their actual reserves. The Saudi response was very predictable; they said, “Western nations are not dealing with the oil producers as partners why should they have the advantage of knowing details of oil producers reserves data on reserves is information and information is power.” It makes sense that the Saudi’s would not want us to know how much oil they have. If we knew how much oil was really available, the price would fall dramatically.
Let’s look at undercounting of proven reserves on a country-by-country basis, Saudi first. One of the huge advantages that Saudi Arabia has is that oil only cost one or two dollars per barrel to produce. It’s almost like you could stick a straw in the ground and have oil come out. They have 80 known reservoirs with about 261 billion barrels, but that data is over 40 years old, which makes me wonder two things. Remember yesterday when we discussed how reserves are almost always undercounted at first? And secondly how the technological factor surely would allow us to find more oil than the 261 billion barrels that they quote? Currently Saudi Arabia is just using 11 of their 80 known reservoirs. Why would they use all of their reservoirs? The market would literally be flooded with oil and the price would plummet. In December of 2004, the Minister of Petroleum and Natural Resources announced that in fact that the 261 billion barrels was really 461 billion barrels! Even Saudi Arabia has been dramatically underestimating the amount of oil that they have. And the final kicker: there has been no exploration in Saudi Arabia for the last 35 years, because they don’t need to find any more oil. Why spend the money to find it when that would suppress the market price?
Other countries are also dramatically underestimating how much oil they have. Iran claims to have about 125 billion barrels, but outsiders believe that it is actually closer to 500 billion barrels. Iraq was thought to have 115 billion barrels in reserve and after the United States oil companies entered after the war that number was determined to be 467 billion barrels. The Gulf of Mexico was originally estimated to have around 6 billion barrels, and it’s already produced 13 billion barrels, and it’s still going. Yesterday we said that it may have as many as 1 trillion barrels of oil, but again they’ll were not counted because of the regulations of the United States government. Prudhoe Bay in Alaska originally was estimated at 9 billion barrels, but so far it’s produced over 15 billion barrels and is still going.
Tupi field in Brazil was originally estimated at 5 billion barrels (in 2007) and when drilling began they discovered that it really had closer to 30 billion barrels. The same is true in Italy where they underestimated by 400%, and the United States Geological Service estimated that in North and South Dakota there were 151 million barrels of oil. They changed their estimate to over 3 billion barrels of oil.
Agenda item number 10: proven reserves are uncounted. We just gave you a definition of what proven reserves are and obviously we’re not counting a lot of things. We’re not counting the 1.6 trillion barrels of Canadian oil shale. We’re not counting any of Venezuela’s heavy oil, because it falls outside of the definition the United States rules. Western states oil shale of several trillion dollar barrels is not being counted. Trillions of barrels that are not counted.
Agenda item number 11: oil is being priced in the depreciating commodity, the dollar. For every barrel of oil that you sell today you get less dollars than you did say 2001. As the dollar continues to weaken, the cost of oil goes up and it becomes more expensive, in dollars, to buy a barrel of oil. So when people say that the price of gas is going up, it is not because of Saudi Arabia, it is not because of the war in Iraq. The price of oil is going up is because President Bush and Pres. Obama, both Democrat and Republican, have let the dollar become so weak, which makes our gas more expensive. If you’re at the pump and you’re upset about the cost of gas, get mad at both political parties.
Finally, I want to sum up with a discussion of in whose interest it is to tell us the truth. This is agenda item number 12. Who has a reason to tell us how much oil that we have? If it were common knowledge that there were trillions of barrels of oil, we wouldn’t pay four dollars a gallon. Europeans wouldn’t pay seven dollars a gallon. The price would plummet. Governments also make a tremendous amount of their revenue based on taxing gasoline, and it is usually based on a percentage of the sales price. The governments of the world like it when the price of oil goes up, as they make more money. Pres. Obama has even announced that he hopes that the price of gasoline doubles. This is for environmental reasons, but is also for tax reasons.
Interestingly, OPEC doesn’t want the price to get too high, because if the price of oil gets too high, then the Western industrialist entrepreneurs are encouraged to start looking at other energy alternatives. So Saudi Arabia and OPEC will work very hard to keep oil somewhere within the $50 to $100 per barrel range. This brings up one of the most interesting points, that the oil industry’s biggest worry is over abundance, not scarcity. In the 1980s, oil prices plummeted. One of the reasons is because for the first time ever we instituted conservation programs. As I said at the very beginning of this, five days ago, I am an environmentalist. I’m in favor of conservation. I’m in favor of cars having high miles per gallon. Conservation makes oil prices plummet.
Our final vested player is the oil industry. Judging from their profits, it is clear they are doing well. There’s no incentive for them to do anything except to support high cost of gas. They also generally make a percentage of sales price, meaning high prices help them as well.
OPEC wants the price to be high. Governments want the price to be high. Oil companies want the price to be high. Everyone makes more profit because of the supposed looming shortage. It justifies high prices. High prices will only be paid if you think you’re going to run out of oil.
We have come along way in the last five days. The number one thing that I hope I’ve opened your eyes or is a possibility that we may never run out of gasoline. Clearly, we are playing games when it comes to counting the amount of gas that’s available, but more importantly I think it’s safe to say that my grandchildren’s grandchildren’s grandchildren’s grandchildren will have plenty of oil to run their cars and they heat their houses.
In about an other month, I’m going to have another lecture series, this one on global warming, which I’m sure will be just as controversial as this oil scarcity myth lecture series.
Have a great day.
Tags: abiotic oil, hubbert's peak, oil forever, peak oil, scarcity myth | Posted under Energy and Oil | No Comments
Monday, November 16, 2009 | Written by Jim Beach
Posted under: Energy and Oil |
Tags: abiotic oil, oil scarcity, peak oil, refilling oil fields |
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This is part four of our lecture series, “The Scarcity Myth.” Last time we were together, we were speaking about abiotic oil, and the possibility that oil is not a fossil fuel. Today, I’ll present some of the most exciting evidence that supports this theory.
We’re on agenda item 6 if you’re following along on the slides. Oil fields are renewable! One of the most interesting things that I’ve learned in my study of oil is that oil fields that are declared empty frequently all of a sudden full again. Of course, this doesn’t make much sense, especially if we believe in a fossil fuel theory, where old swamps and dinosaurs are compressed over time and turn into gas. But if we believe the abiotic oil theory, that oil is simply seeping out of the middle of the earth, this theory becomes much more believable. Take for example the Eugene Field in the Gulf. It began production in September of 1972, but by 1989, production had fallen to about 4000 barrels per day. Suddenly without any explanation that jumped to 13,000 barrels per day and scientists were called in to re-measure the field. It was estimated to have 400 million barrels of oil left, up from only 60 million barrels a year earlier. The Wall Street Journal reported that Eugene “is rapidly refilling itself.” Since then, the field has produced over 1 billion barrels of oil, all from an oilfield that at one time was almost empty.
This was confirmed by the Woods Hole Oceanographic Institute (WHOI). For those of you who do not know about WHOI, it is the organization that discovered the Titanic (Dr. James Ballard). Of course, they’re one of the preeminent geological and oceanographic groups in the world, and one of their scientist Dr. Whalen declared, “I believe that there is a huge system of oil migrating deep underground” that explains how these types of fields could refill themselves. This phenomenon is not limited to the Eugene Field, as it has been seen all around the world, in the North Sea, in the Niger Delta, in Indonesia, in the Trinidad basin, the Taiwanese basin, and in the Alaskan North Shore. Amazingly fields that are declared empty are refilling and of course this only goes to support they abiotic theory. Nothing else could explain how this could happen.
Moving onto agenda item number seven, depleted fields. We have many examples of fields that are declared empty, and all of a sudden have oil. My favorite example is the Kern River, California example. That field was discovered in 1899 and in 1942 it was declared empty with 54 million barrels remaining. Sometimes, technology does not permit a field to be entirely drained and that’s what happened with the Kern River field. Since 1942, 736 million barrels, that’s three quarters of a billion barrels of oil, have been pumped out, and now they estimate that there are 970 million barrels left. How can this be possible? The only way that makes sense is if the field is refilling itself from underneath! This is also happening in the South China Sea off of Vietnam. The field was declared empty their 1981 and it is still producing. The White Tiger field off the continental shelf, where they dug a little bit deeper and went down to 2.5 miles, is now producing 280,000 barrels per day. The Black Island field was producing 80,000 barrels per day, but that recently increased to 200,000 barrels per day. In all of these fields, they are drilling in a granite base, not in sedimentary rock. How do we explain this? Well, the only explanation of course is that the oil is coming from someplace other than fossil remains.
Agenda item number eight; the fields that we have are also growing in size. This is an incredibly unintuitive thing to realize and to discuss, but it’s true. For example, we have the Kashagan field in Afghanistan, which was discovered in 1996. At that time, it was estimated to have 2 to 3,000,000,000 barrels of oil. Wells were dug. They discovered that it actually had 13 billion barrels and now they estimate that it has 38 billion barrels. In other words the amount of oil in a given field is increasing as we technologically learn how to extract it.
From 1981 to 1996, the volume of the largest 180 oilfields of the world went from 617 billion barrels to 777 billion barrels, and this does not count any of the new discoveries that we were talking about couple of days ago. For 15 years, while we were taking oil out of these fields as fast as we possibly could, the amount of oil in those fields increased by over 150 billion barrels! Again, I ask how is this possible? The only possible way is that oil is coming from the center of the earth, and somehow being released to the surface areas.
The recovery rate 20 years ago was around 20 or 30%. Today, we’re getting closer to 40% of the available oil out of each field. A good question is, “How much higher will that go in 30 years? Is it safe to say that we’ll be able to get 50%?”
In the 1990s, we were starting to believe that the Gulf of Mexico oilfields were drying, but in 2006 geologists announced that there were 1.5 trillion barrels of oil left in the Gulf of Mexico. The Wall Street Journal reported on April 30, 2009 that the northern Louisiana fields, also declared empty at one point, now had about 200,000,000,000,000 ft.³ of natural gas, which is the equivalent of 33 billion barrels of oil!
Tomorrow, we’re going to finish up in this talk with a little bit about the political reasons for all this. I hope that at this point you’re fairly convinced that the abiotic oil is at least a possibility. Have a good day.
Tags: abiotic oil, oil scarcity, peak oil, refilling oil fields | Posted under Energy and Oil | No Comments
Thursday, November 12, 2009 | Written by Jim Beach
Posted under: Energy and Oil |
Tags: abiotic oil, energy, oil myth, oil scarcity, oil shortage, peak oil, running out of oil |
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Welcome to Part Two of our lecture called “The Scarcity Myth.” Yesterday, we talked a lot about
some introductory ideas, the idea that we have a long history of predicting the end of oil and we talked a little bit about how much energy we already have here in the U.S. If you refer to our podcast or the posting from yesterday, you’ll see that in fact the United States, and indeed the world, has hundreds, if not thousands, of years of oil left. This leads to a really interesting question “How does oil get created and how could we have so much of it?” How is it possible that we have an infinite supply of oil? I will discuss that tomorrow.
Today, I wanted to talk about points three and four of our agenda (please refer to the slides for the agenda). What do Americans want? We are told by our politicians that Americans do not want us to go and get the oil that we have, that Americans are happy with the situation the way it is. Drilling in the U.S. is out of favor. In fact, 71% of Americans are in favor of increased energy supplies and 75% believe that we should increase our drilling here in the United States immediately. These numbers are contrary to what you hear on the TV or see in the newspaper. Most people here in America believe that we should go and get the oil that we have. 71% of Americans support drilling in coastal areas, even with the threat that there could be a spill. However, let me remind you that in the Prince William Sound in Alaska when the Exxon Valdez crashed, we cleaned it up, and now it is as beautiful as it ever was. And after Hurricane Katrina went through the Gulf of Mexico, not one of those oil rigs had any spills. It seems quite clear that coastal drilling is safe.
59% of all Americans support drilling in Alaska’s ANWR region. We talked yesterday about ANWR. It’s a small tract of 2000 acres in Alaska that would produce years of gasoline for us and with the Prudhoe Bay experience and the Alaska pipeline experience of the 1970s, we have proven that we can very safely get oil out of Alaska. 75% of Alaskans support drilling in ANWR, which is really a quite overwhelming number.
Moving along to other forms of energy, just to get some perspective. 65% of Americans support building more nuclear power plants. As we talked about yesterday, not a single person in the Western world, and I’m including Japan, because they use a lot of nuclear power, not a single person has ever died from nuclear power. Coal causes lots of asthma related deaths or lung. We certainly have gasoline related deaths every year, but not a single person has died from nuclear power, and 65% of all Americans support building more nuclear plants. The question is again, “Why do we not do it then?” Because of the environmentalists, who fight every new plant. There’s that famous expression NIMBY, which stands for “not in my backyard.” Everyone would support a nuclear power plant as long as it’s thousands of miles away from their home.
71% of Americans support more clean coal power plants right now. Coal supplies a huge part of our electrical supplies. The new technologies for clean coal, when waste is trapped the emissions buried in the ground, is a really exciting prospect. The possibility of having super clean coal power plants that provide us the electricity for homes and pretty soon will provide the electricity for our electric cars, such as the Tesla and of course the Chevrolet Volt that are coming out in 2010.
Listen to the Podcast for a long discussion of my views on the environment, and the history of environmental protection. Also, I allude to my next lecture series, which examines global warming.
Agenda point number 4: a word about the environment. Can we drill safely? Yes, offshore drilling is done safely. We have had no major spills since 1980. From offshore drilling there is a .0001% chance of a spill for every well that we have. For every billion barrels of oil that is transported there are just .73 spills, an infinitesimally small percentage. And they’re really good at cleaning those up the few spills. Just remember hurricanes Katrina and Rita that ravaging through the Gulf of Mexico. Two category five hurricanes, back to back, and not a single oil well spill as a result.
Alaska and the ground-based drilling are also done safely. In 1980 Prudhoe Bay had 5000 caribou. Today there are 30,000 caribou. As I said yesterday, I have personally stood on the Alaska pipeline and the animals love it. It does not harm the animals. The animals like it because they can scrape up against it and sometimes when it’s really cold they stand underneath it for protection. Alaskan drilling has been done safely now for the last 30 years and there has only been one major catastrophe and we cleaned it up pretty well.
Here’s the big question: this is what it really comes down to, would you rather have China or the United States drill for oil? If you want to do something interesting, Google Beijing Air and see what you come up with. Or Beijing pollution. You will see that the air in Beijing is some of the worst in the world. The Chinese government has not yet endorsed any sort of environmentalism or any sort of environmental protection. They would drill for oil in a way that would be bad for the environment, but with American safeguards and American technology, we can drill for oil safely and cleanly. So not only is there the terrorist question, the issue of the tax dollars, the issue of us exporting all of our money overseas to governments and religions that hate us, there’s also the idea that if we were to become energy independent and drill for oil right here in the United States, the world would be a cleaner place. The environmentalists don’t go to Saudi Arabia and try to get them to stop drilling for oil. Only here in the United States, which really makes me wonder what their motives are.
Of course, the answer is we should drill for oil here in the United States, where we can do it in an environmentally friendly way.
We are now ready for agenda item 5, and this is probably the most exciting part of this lecture series, but unfortunately we’re going to do it tomorrow. Agenda item 5 asks if oil really is a fossil fuel or not. I will summarize some of the scientific research that says in fact oil is not a fossil fuel. It does not come from decaying dinosaurs and I will explain to you how we actually get it.
Tags: abiotic oil, energy, oil myth, oil scarcity, oil shortage, peak oil, running out of oil | Posted under Energy and Oil | 7 Comments
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