Janes: "World Oil Crisis Looms"

[Minstrel Boy]

The oil industry has been gripped by scandal since Royal Dutch/Shell twice this year downgraded its proven oil reserves by 20 per cent, or nearly 4bn barrels. Shell may not be alone.

Other companies and even governments have hyped up the estimates of how much oil they have, which is a vital factor in measuring their economic health. If exaggeration proves to be widespread, it would have an immense impact on the Middle East, whose economic weight is almost totally dependent on oil and natural gas.

Geologists and analysts have been saying for some time that estimates of global oil reserves may be dangerously exaggerated. If you take oil prices currently at around US$37 a barrel, the highest for nearly 15 years, US petrol prices at record levels and you add terrorist attacks and diminishing supplies, you have a recipe for inflation and economic slowdown. The question of reserves becomes a much more important factor.

...

As the world's natural resources shrink and global warming changes the environment, competition for unimpeded access to them has intensified and will continue to do so. About four-fifths of the world's known oil reserves lie in politically unstable or contested regions.

http://www.janes.com/business/news/fr/fr040421_1_n.shtml

[DoktorGreg]

1. OPEC ties production to amount in reserves.

Boy I sure wish I could remember where I read that. My gut feeling is, SA and that Prince lied to Bush that he would be able to increase production this fall.

Anyhow I bet just about every member of OPEC has fudged the numbers on their amounts in reserves. Welcome to the Thunder dome.

[JohnyCanuck]

50. hubbertpeak.com discusses possible bogus reserve figures

Now comes the interesting part. Many estimates been have made of the world Ultimate for oil, a recent example being the 1995 USGS global survey. The value they published was 2275 Billion Barrels (or Giga - barrels, Gb). These studies are always based on estimates of reserves taken directly from producing countries themselves. Therein lies the problem. Many OPEC countries have been announcing reserve numbers which are frankly very strange. Either their reported reserves remain the same year after year - suggesting that new discoveries exactly match production, or they have suddenly increased their reported reserves by unfeasibly large amounts. This is clearly shown in the following table:

<snip>

In the above table, the red boldface numbers are considered spurious reserve claims. Also curious are the instances of reserves remaining identical over a period of years, despite intensive production. It can be seen that fully 45% of all the above reserve claims are questionable - even neglecting repeatedly unchanged reserve data.

These data are less odd when one realises that OPEC takes into account a country’s reserves when fixing production quotas: the more oil you say you have, the more you’re allowed to sell. Additionally, oil reserves can be used as collateral for loans - an example of this is the $50 Billion loan from the USA to Mexico: in December 1994, the Mexican Peso fell by around 35%. As a result, the Mexican Central Bank's international reserves fell from $29 billion to $5 billion. To stave off a collapse of the Mexican economy, President Clinton signed a $50 billion "Emergency Stabilization Package" loan to the Mexican government on 31 January 1995. The collateral for the loan was Mexico's pledge of revenues from its future petroleum exports.

http://www.hubbertpeak.com/summary.htm

[Fovea]

2. Ok welcome back to 1973 --

God I hope disco doesn't come back...

I have been predicting $3/gal as the national average this summer since
last fall. I may be wrong. It may be $3.25 / gal.

This news is the ultimate poison pill for a September OPEC oil-orgy.
It doesn't matter how wide Bandar opens the spigot, if everyone knows what comes after.

[Minstrel Boy]

3. More like 1873.

Clean out the coal shute, pa.

[worldgonekrazy]

30. We've known this would come for 50 years and haven't done a thing

Pathetic. I know there isn't much room for foresight in politics, but this is absolutely ridiculous. If somebody actually bothered to put together a comprehensive plan for developing alternative energy we might not have to bomb our way into some more oil.

[whistle]

4. Shell is not alone and this will be the next crisis to rock...

...the world's economy. They may have overstated their reserves by more than 20%, but I think that is a pattern among the big oil producing companies, not an exception. We can not count on oil much longer as the primary energy fuel source. Our technology, creativity and inventiveness will have to come up with feasible alternatives and we must begin now. An oil president will not move us in that direction. Turns out freeing hydrogen as a fuel requires more energy than it can produce and it creates way more pollution than anything we now have. That's correct, Bush has proposed a straw-man that would not be considered. Oh, hydrogen burns clean alright, but the process to create it as a fuel is much dirtier than any energy extraction process we now know. So these guys, Bush Cheney and all of the oil cabal are just blowing smoke the American voter's asses. Oh, electric cars are also energy polluters when you work back through the chain to get there. Conservation is the only answer to keep fuel consumption under control and prices moderate, while our best minds work through the alternatives that will work best for us over the long run.

[mulethree]

11. electrolysis ?

electrolysis separates water into hydrogen and oxygen. Pretty simple process, no pollution. Some tracking mirror type steam generators out in a desert, zap the water, store the hydrogen?

Maybe theres cheaper extraction processes you're talking about but a solar/steam setup can be pretty cheap.

[Frodo]

14. Hydrogen costs a ton more than oil.

There's lots of oil that is currently not counted as "reserves" because it is too expensive to extract. But the economy of removing it will suddenly make sense if the final product can be sold at $4/gal.

This will become economical long before the cost of producing hydrogen for energy becomes viable. Unfortunately, even if you could buy a hydrogen powered car... the overall cost of producing the hydrogen necessary to replace one tank of gas would cost quite a bit more than the cost of producing that gas.

[ze_dscherman]

16. Problem is not only the cost of extraction

It's the overall energy cost of exploration, extration, transport and refining. If you need a gallon to extract a gallon, these reserves are pretty useless.

[Frodo]

18. But the other costs are not related to supply.

Transport and refining are not affected by "peak oil" and exploration is for finding NEW reserves, not getting to reserves you know are there but can't afford to tap.

I've read that even a "tapped out" well probably has more oil under it that was ever taken out, it's just way too costly to remove it. It would cost several times as much in some cases...

But, the Saudi's cost is something like 50 cents per barrel. If it cost five or six times as much per barrel to extract, they wouldn't consider it now... but guarantee $35-40/brl at the market? It becomes more than worth it. At $3/gal at the pump, shale oil is likely to be reasonable to extract and there's more of that out there than all the oil ever pumped in the middle east.

[hatrack]

20. Huge thermodynamic & resource problems with shale oil

Or kerogen, to be more specific - "shale oil" sounds much better on a prospectus - hence the name.

The process of extraction for kerogen is extremely energy intensive. Crushed rock is heated to about 900F to drive off the kerogen, which is then condensed and collected.

Unfortunately, it takes several tons of rock to get even one barrel of kerogen. The process also requires huge amounts of water (the biggest US deposits are in arid regions of Colorado, Wyoming and Utah, where water supplies are extremely tight) and needs huge amounts of feedstock (typically natural gas for the pilot projects built so far) for the extraction process.

Finally the shale waste triples or quadruples in volume once processed. Assuming huge quantities of oil shale, you also end up three or four times as huge a quantity of toxic oil shale waste, which has to go somewhere.

[davekriss]

29. Frodo, you missed the point

ZD's point is that if it requires the equivalent in energy of a barrel of oil to extract a barrel of oil, then what's the point? No net energy is available to do other kinds of work. It won't matter if the price of oil rises to $100,000 per barrel, it ceases to be the primary "captured energy" that drives our urban-industrial machines of manufacture and distribution.

Without an alternative energy source, one that yields multiples of energy above the energy expended to extract it, our busy modern life freezes into inaction. Note that global carrying capacity sans oil is substantially less than the 6.5 billion alive now.

You mention shale oil, Frodo. Shale oil, I think, is a source of net energy, but only slightly so; and as someone mentions it creates an enourmous amount of toxic waste (Richard Heinberg, in The Party's Over, says a slurry pond the size of Lake Ontario would be required if shale oil is to substitute for conventional oil). But there will be some yield from other renewable and non-renewable non-traditional fuels (e.g., wind, solar, nuclear, bio-mass, etc.).

But all these "alternatives" will do is soften the negative slope of the downward tail of Hubbert's Peak. The fact is, as it looks now, we will have increasingly less net energy to ration across the global population, this at a time when some groups (e.g., China) are rapidly increasing their demand for energy. Will the rationing be done cooperatively or competitively? Obvious answer, of course.

Fun times ahead, IMO. ...sigh...

[chasqui]

37. The old thermodynamic truth hits us.

Civilization can be construed to be just an organized effort to defeat entropy. It isn't coincidental that technology has taken such a jump in the oil age, since oil gives us such an energetic payoff, we can use that extra energy to obtain some kind of a technological advantage over nature.

[74dodgedart]

32. "if the final product can be sold at $4/gal."

Gee, wonder what that will do to inflation(trade deficits,etc), considering the fact that petroleum is used in just about everything.

Why not be proactive and move to hybrids, bio-fuels etc rather than abdicating to the market.

If we had waited on the market, we would have never gone to the moon.

[Frodo]

36. It wouldn't do much to inflation if it happened over 20 years

And it would have a positive impact on the trade deficit (since things produced here would become reletively cheaper to produce since the cost of shipping it across the ocean would have doubled)

[74dodgedart]

42. Quadruple the price of oil

And you will have economic problems. It would hurt the trade deficit because that would be more money going overseas to oil producing countries.

Petroleum is used for a variety of things besides fuel -plastics, textiles, etc, etc increase the price of oil and the price of everything increases. If the price of transportation goes up, the money is still going back to the oil producers.

If you wait for the market to tell you what to do, you will always be behind the curve. The people who make money are the innovators who beat the market. If the USA wants to remain on top economically, they have to stay ahead of the curve.

[Frodo]

45. Ok, that last sentence was a semantic null.

As well as being off topic.

And I do't know where you live, but "quadruple the price of oil" HERE would be more like $7/gal, not $4.

Yes, the money spent on overseas oil would impact the trade balance, but the balance would be affected more in the other direction by the rise in trasport price of overseas goods.

[74dodgedart]

46. You can nitpick but,

if the average price of oil\energy increases at a rate faster than the average income we will have problems, regardles of the time frame.

If we depend on market forces to make more oil available (shale oil, other oil reserves that are difficult to extract) we will be behind
the curve and at the mercy of high energy prices. If we are proactive, and don't wait on energy prices to guide us, we will be ahead of the curve and have moer available options.

The cost of transporting goods probably will impact overseas trade. Will it overcome the increased price of imported oil ? Maybe, maybe not.

[74dodgedart]

47. Ahead of the curve

http://www.cbc.ca/stories/2004/04/22/biofuel040422

Too bad they are Canadian..

[NickB79]

22. We don't have widespread solar/steam set up yet

And even using solar, wind or steam power, it would be impossible to obtain enough energy to produce enough hydrogen to replace oil and gasoline. Our oil demands in the US are huge; you would have to blanket massive amounts of land in nothing but solar cells to obtain the electricity needed just to replace gasoline use in cars. I don't know how you can say that solar/steam setups are cheap; the going rate for a household PV setup is in the tens of thousands of dollars. Plus, you aren't factoring in the fact that you need to use petroleum to produce a lot of the components of the very solar panels you want to use. If oil prices spike, PV cells will increase in price accordingly as their components become more expensive to produce. That means that, to produce sufficient hydrogen, you will most likely need to start burning more coal, or building more nuclear reactors. There are much better alternative energy sources than hydrogen.

[mulethree]

40. solar/steam isn't PV

you set up a bunch of mirrors in a sunny place, and aim them so they reflect the sunlight onto a boiler. Pass the steam through a normal steam turbine connected to a generator like most fossil fuel power plants use.

http://www.solarpaces.org/technology/tower.html
or
http://www4.tpgi.com.au/adslmtv6/CLFR.pdf

Then use the electricity to separate hydrogen out of water.

Or, forget the turbine, generator, electrolysis and hydrogen and use the steam to power stills to make an alcohol fuel.

[sandnsea]

5. Janes, hmmm

That's not exactly the same as an article in Mother Jones, is it? Wonder if THIS will get some attention.

[Merlin]

6. Like this is news to the movers & shakers in the Oil Bidness.

This is the clue to the importance of Iraq in the minds of the current Bush oil industry regime.

[roguevalley]

7. Industrial countries are toast. Welcome to super power status Sri Lanka

[fearnobush]

8. Makes one wonder why the Bushies are pumping a greater percentage

of oil in to the national reserve then any other time that I can remember?

[narcjen]

9. Garbage as an energy source?

http://abcnews.go.com/sections/SciTech/FutureTech/garbage_zappers_040329-1.html

[JohnyCanuck]

10. News appears to be starting to leak out.

I just came across and account in a Barbados newspaper of an upcoming energy meeting in the Caribbean to discuss regional energy security and energy investments. The article briefly mentioned a possible oil production peak within 20 years (almost in passing and as if it was of no momentous significance). However, I take it as just one more sign that people are sitting up and starting to take notice.

BARBADIAN officials are scheduled to join counterparts from the Caribbean, North, Central and South American in Tobago for a major energy meeting next week.

<snip>

Noting that the energy ministers would hold discussions in Tobago with several executives of private companies, Williams explained that there would be “a closed door ministerial meeting” during which focus will be placed on how to deal with energy disruptions, energy diversification and how to correct imbalances that currently exist in some areas of the energy sector.

<snip>

Looking into the future of the world energy industry, Williams noted that “there is a prediction that there will be a peak in oil production somewhere between now and 2020.” (my emphasis /jc)

<snip>

Addressing the issue of developing sufficient supplies to meet demand, Williams said that “when you are on the upswing, oil is easier to find and it is less expensive to find. When you are on the downswing, it is harder to find and more expensive to find. And there is a prediction that globally that is what we are going to experience”.

Tobago Energy Meeting from The Barbados Advocate, Friday April 16.

[mhr]

12. Peak Oil Links Here

Websites of interest include:

http://www.lifeaftertheoilcrash.net/Home.html
http://globalpublicmedia.com/
http://www.oilcrash.com/running.htm
http://www.wolfatthedoor.org.uk/
http://www.durangobill.com/Rollover.html
http://www.asponews.org
http://www.gulland.ca/depletion/depletion.htm
http://www.dieoff.org/
http://www.oilanalytics.org/
http://www.greatchange.org/
http://www.oilcrisis.com/
http://www.after-oil.co.uk/
http://www.hubbertpeak.com/
http://hubbert.mines.edu
http://www.museletter.com/archive/cia-oil.html

Books:

Out of Gas: The End of the Age of Oil
by David Goodstein

The Party's Over: Oil, War and the Fate of Industrial Societies
by Richard Heinberg

Hubbert's Peak : The Impending World Oil Shortage
by Kenneth S. Deffeyes

The Last Hours of Ancient Sunlight : Waking Up to Personal and Global Transformation
by Thom Hartmann

The Oil Factor: How Oil Controls the Economy and Your Financial Future
by Stephen Leeb, Donna Leeb

News Groups:

Energy Resources
http://groups.yahoo.com/group/energyresources/

Alas Babylon
http://groups.yahoo.com/group/AlasBabylon/

Running on Empty
http://groups.yahoo.com/group/RunningOnEmpty2/

[nolabels]

13. Thanks

:-)

[NashVegas]

31. Recent Stephen Leeb Interview

He said - and this was two months ago - that reserves were being overstated.

[evworldeditor]

34. Matthew Simmons has said the same about Saudi oil reserves...

I talked with Simmons a couple weeks ago in Chicago at Global Windpower 2004. I asked him about his February 24 presentation at CSIS conference where he debated two Saudi Aramco executives.

My comments and Simmons are available online at EVWorld.Com

[0007]

15. Oh Shit!! Here we go again

Exactly the same thing was being said in the early 70's

[hatrack]

19. Yes, but that was only a few years after the global discovery peak

We're now a full 40 years on and this may be it.

The UK peaked in 1999, Norway last year, Oman in 1997, the (former) USSR in 1987, Brunei in 1979, Iran in 1973, the US in 1970, Libya in 1969, etc.; note - this is only for conventional oil, w/o heavy oil, tar sands and so forth.

The only truly huge global swing producers yet to roll over are Saudi Arabia, Kuwait and Iraq, and the Caspian basin discoveries have turned out to be something of a high-sulfur bust.

[emad]

17. About 40 years' worth left, max:

There might be a choice: continue flying using aviation-fuel jets, or continue driving using motor vehicle gasoline. Unless there's a real alternative developed, it will have to be cars that are phased out. Can't see air travel industry caving in to the motoring lobby.

[Solon]

21. And that would be assuming that demand would be flat.

Which makes it worse. Demand is increasing at like 1.5-3% a year, it may be a choice between India and China developing or the U.S. maintaining its economy.

[hunter]

24. One very serious epidemic would quickly kill the airline industry.

You think airports are bad now, just wait 'til you have to be certified "disease free..."

But I think air travel would be discarded before cars. With very expensive oil the economy would slow down so much there won't be any great value getting someplace in a hurry. The same forces that killed the Concorde would increase until all air travel is a luxury beyond most people's reach.

[Solon]

25. Have a running bet with my dad...

I said that airlines will be simply too expensive to be usable anymore by 2010, looks like I'm going to win the bet, was hoping to lose it.

[74dodgedart]

33. Of course Bush\Cheney will happily subsidize the airlines

with our tax dollars. Especially if all the money goes to their friends in the oil business.

Don't you just love those "free-market" capitlists.

[mulethree]

41. sure, just let them know

so they can sell their stocks before the subsidy cuts off.

[JohnyCanuck]

23. New documentary on Peak Oil available on DVD

I recently had a chance to view a new Canadian made Documentary on Peak Oil and the effects it's going to have on our energy dependent North American lifestyles. "The End of Suburbia" is the title and it starts off by describing the different stages urban development has gone through over the last 100 years and shows how cheap energy led us into developing our typical car dependent and energy dependent sprawling North American suburbs. It contain some really interesting films footage probably made in the 50s and early 60s when suburbia was just starting to really take off and a house in the suburbs was becoming the housing of choice for Joe Blow factory worker and the Ward and June Cleaver types. The EoS explains the peak oil theory and contains interviews with some of the major figures behind the movement to publicize peak oil, e.g. Colin Campbell, Matthew Simmons, Mike Ruppert.

The documentary also contains interviews with academics and experts in urban design and planning who explain how rising oil prices and increased competition for oil supplies is going to have negative effects on our society unless we start planning for it right now and in a very major way. While not skirting around the issues or trying to hide the severe impact this is going to us on our lifestyles, it does not leave the viewer with a total sense of hopelessness that we've already lost the battle as it closes by explaining some of the changes that can be made to lessen our dependence on increasing expensive energy and to perhaps actually make our lives more fulfilling and well rounded than we might expect.

The documentary is available on DVD for $24US or $30CDN from the web site at www.endofsuburbia.com . For the record, I'll just state the usual disclaimer: I have no financial interest in the End of Suburbia and do not stand to profit in any way from any sales. However I do believe it is well worth the money and would be an excellent way to broach the subject to family and friends who are not yet up to speed on the subject and/or not heavy net users.

[Frangible]

26. ah, brings up a quote

"This time, the spoils of war were also its weapons; petroleum and uranium..." -Fallout

[sadiesworld]

27. Helium 3.

Is president Kerry going to look foolish when he proposes going to the moon? The ONLY decent idea the monkey ever had and we chortled.

[KansDem]

28. "Enron Oil"???

companies and even governments have hyped up the estimates of how much oil they have, which is a vital factor in measuring their economic health. If exaggeration proves to be widespread, it would have an immense impact on the Middle East, whose economic weight is almost totally dependent on oil and natural gas.

And we all know what happened to Enron...:crazy:

[sjgman9]

35. Is this related to the Peak Oil theorem?

If so, the Kerry presidency should spend a lot of money on a hydrogen engine with India and China, sort of a multi-national Manhattan project

[evworldeditor]

39. Chinese Training Thousands of EV engineers

On my last trip to China in 2002, I met with a Polish professor who was teaching at Beijing University. He is one of Europe's leading electric vehicle experts. He showed me a book he'd written on hybrid-electric vehicle design. It sold about 500 copies in Europe. It was translated into Chinese and at the time I talked to him, he has already sold 10,000 copies in China.

He also told me that there are something like 100,000 graduate students in China studying electric vehicle technology, which includes hybrids and fuel cells.

It would appear that the Chinese are serious about this technology.

They need to be, beause last year they became the world's second largest oil importer after the USA.





-----------------------
http://www.evworld.com

[Leados]

43. Exactly!

That's what it'll take.

I think the human race has the intelligence and knowledge to find a solution, both in a) increasing efficiency of use of oil greatly, b) finding new sources, c) recycling of waste, d) not using so damn much.

But the question is...

Do we have the depth of wisdom to go as far as is needed?

[stepnw1f]

38. Maybe This Is A Natural Cycle of Extinction

You see, we are the boil on earth's ass. Somehow we need to be exterminated, remedied. Our sickness and overpopulation has ramped us up to the inevitable.

I think I'll just go roll a blunt, sit back and watch the paranoid rush everybody into oblivion. On that note Peace!

[truthspeaker]

44. But when environmentalists said this 15 years ago they were wackos.

[blindpig]

48. denial

Amazing the degree of straw grasping folks will entertain in order to maintain their accustom lifestyle. The favorite "savior technologies" that I've most often seen mentioned on these boards, hydrogen, shale, biodesiel, are all net losers in terms of cost and pollution. Conservation is only true bolt in our quiver and most people refuse to consider actually making changes in their lifestyle. Some combination of current clean technologies, conservation and considered use of traditional practices might get us through. Or 90% of us might return to the 18th century, but not the ruling class.

[revcarol]

49. Knew I'd been saving that antique washboard for something.

Seriously, we are going to have to have insulated doors between rooms, so that parts of a house can be closed off during the winter or summer. We are going to have to have zone heaters and air conditioners(air conditioning will probably be a non-necessity in most places).Dishwashers will be passe.Houses over a certain square footage, Hummers and SUV's will have special wealth taxes applied.

We are definitely going to be reducing our profligate way of living.

[KamaAina]

51. Fischer-Tropsch (fuel from coal) technology?

Yes, I do feel a little queasy touting something that was used to prop up the South African apartheid regime -- but if it's that or the New Stone Age, well...

http://216.109.117.135/search/cache?p=fischer+tropsch&ei=UTF-8&cop=mss&u=www.epa.gov/otaq/consumer/fuels/altfuels/fischer.pdf&w=fischer+tropsch&d=BA1406DAC7&c=482&yc=24119&icp=1

For the past 50 years,Fischer-Tropsch fuels have powered all of South Africa’s vehicles—from buses to trucks to taxicabs.The fuel is primarily supplied by Sasol, a world leader in Fischer-Tropsch technologies. Sasol’s South African facility produces more than 150,000 barrels of high-quality fuel from domestic low-grade coal daily. The popular fuel is cost-competitive with crude oil-based petroleum products in South Africa. During the next several years, experts predict use of Fischer-Tropsch fuels will grow as a high-end blend stock in California

Full .pdf at
http://www.epa.gov/otaq/consumer/fuels/altfuels/fischer.pdf