|
The United States remains the world's largest energy consumer. The U.S. represents 5% of the world's population, yet we consume more than 25% of the world's oil production. Our neighbor to the north, Canada, is next most wasteful energy consumer. It is estimated that the U.S. will consume 7.5 billion barrels of oil in 2004.
However, U.S. oil U.S. oil production is currently at its lowest level since the early 1950s and is declining by more than 2% per year. U.S. oil production peaked in 1971, and U.S. oil reserves have fallen from 50 billion to 20 billion barrels. It is projected that by 2010 that the United States will have less than 15 billion barrels of domestic oil reserves.
The 2001 energy plan headed by Vice President Cheney projects global oil demand by 2020 will be 100 million barrels of oil per day, up from 75 million barrels as of 2001. However, even the most optimistic scenarios by veteran geologist project that $1 trillion in new infrastructure investment may only result in an additional output of 15 million barrels per day.183 Given that aggregate demand will increase to 25 million barrels a day, the US remains in a dilemma.
The analysis suggests that the world oil production will fall 10% short of projected demand. A few former government officials such as former U.K. environment minister from 1997-2003, Micheal Meacher are now speaking publicly about the imminent reality of Peak Oil.
“This extra demand simply cannot be met. We would have to find and develop the equivalent of 10 new North Sea oilfields in just a decade. Even if Iraq's oilfields are fully developed, with almost unlimited new investment and new technology, it could only produce an extra 6 million barrels, or a mere one-tenth of the amount needed.”
“…Today we enjoy a daily production of 75m bpd. But to meet projected demand in 2015, we would need to open new oilfields that can give an additional 60m bpd. This is frankly impossible. It would require the equivalent of more than 10 new regions, each the size of the North Sea. Maybe Iraq with enormous new investments will increase production by 6m bpd, and the rest of the Middle East might be able to do the same. But to suggest that the rest of the world could produce an extra 40m barrels daily is just moonshine.”
To understand US Geostrategy one needs to have a realistic appreciation of the importance of hydrocarbons, the phenomenon referred to as Peak Oil, and the importance of Iraq’s oil reserves with respect to these issues. Unfortunately, and perhaps due to the confusion surrounding the two types of data exist regarding the world’s oil reserves, “political data” and “technical data.”
Politicians, the media, and economists use political data, whereas governments, their intelligence agencies, and geologist use the much more accurate, and much more guarded, technical data. One important issue not understood by the general population is the impending geological phenomenon known as “Peak Oil.” It is rather unfortunate our corporate-controlled media conglomerates have failed to adequately report on the significance of global Peak Oil. In contrast, it appears the European community is openly discussing this issue, and trying to make preparations to reduce their overall energy consumption.
The crucial concept of Peak Oil was first illustrated in bell-shaped curves by U.S. geophysicist M. King Hubbert, who in 1956 correctly predicted U.S. oil production would peak between 1966 and 1972. 187 U.S. oil production in the lower 48 states peaked in 1970. Many oil experts disagreed with Dr. Hubbert’s analysis, and even the U.S. government did not realize domestic Peak Oil has occurred until 1971, as which point Congress requested hearings from to explain why this event surprised the USGS. Similarly, determining when global Peak oil occurs will be determined in the subsequent year or two after the actual Peak in oil production.
Each oil field in the world follows a more or less bell-shaped curve, and the composite view of the world’s thousands of oil fields is one gigantic, ragged edged looking bell-shaped curve. There are two crucial concepts to understand regarding global Peak Oil. First and foremost, once the peak is reached, the second half of the oil remaining is more difficult and expensive to extract. This is due to both physics and economic related factors. Oil companies always extract the easiest oil first, to recoup the capital intensive investment costs of oil extraction, but eventually all oil fields mature and the pressure decreases. This producing a decline in oil production, and increases the energy requirements to extract an equal amount of oil compared to the earlier phases of an oil field.
On the downside side of the ‘Hubbert’s Curve,’ a critical point is reached when it requires more energy to extract a given unit of oil than what that oil would produce from an energy perspective. This is why the world will never technically run out of oil, as it ultimately becomes too energy intensive to extract low-quality oil or oil located in certain areas of the Earth’s crust. To reiterate, the concept of EROEI occurs completely outside the construct of money/economy. The amount of “money” invested in a mature oil field is completely irrelevant if the energy required to extract the oil is greater than the energy that would be derived from recovering the oil. In such a scenario, the EROEI for that oil field becomes negative, or an “energy sink.”
Recently even Canada engaged in deceptive “reserve data” reporting practices by listing their heavy oil sands as “proven oil reserves.” 220 Canada is now listed as having more oil reserves than Iraq, and the second largest oil reserves, only behind Saudi Arabia. While Canada does have billions of barrels of oil trapped in sand, removing the sand from this heavy oil requires huge amounts of energy, mainly tremendous volumes of high pressure water. It should be noted this process creates a tremendous amount of wastewater as well. The energy returned on this process is hardly greater than the energy extracted (ERORI of 0.7), and as such its limitations must be accounted for. These and other issues illustrate the difficulty in accurately predicting Peak Oil, as the reported reserve numbers are indicative of fraudulent accounting practices.
ANWAR – False Panacea
A brief discussion of oil exploration prospects in ANWR (Alaska National Wildlife Refuge) is warranted at this point. Despite the ongoing political debate between the Republicans and Democrats over possible oil exploration in ANWR, the fact is this area is of little importance with regard to the U.S.’s energy needs. In fact, it is not helpful to frame this debate as oil and energy lobbyists vs. environmentalists, which is based on the false panacea attributed to this issue.
It is perhaps more useful to analyze other Alaskan oil fields to place this debate into the proper context. The Badami oil field between Prudhoe Bay and ANWR is about to be shut-down according to BP.239 The cumulative production of this field was 4 million barrels, but at the time of development it was reported to have 120 million barrels. Likewise, it was forecasted that its peak production would rate would reach 35,000 barrels per day (b/d). However, the actual peak oil production was only a fraction of the original projections, reaching only 3200 b/d.
The USGS (Open file 98-34) estimated in 1999 that technically recoverable oil for ANWR would range from 5.7 to 16 billion barrels, with a mean of 10.3 billion barrels. 241 The US Department of Energy (SR/O1G/2000-02) forecasted that ANWR would achieve peak output between 1.0 and 1.3 million barrels per day (mb/d) 20 years from start.
In other words, from an objective perspective ANWR’s production would be too little and too late, or a “very quick and negligible blip in the production curve.”243 If oil exploration and drilling were to take place in ANWR, we must be realistic that it will unfortunately not provide a panacea for US energy needs by any stretch of the imagination. Hence, the author is rather ambivalent about the inappropriate political issues surrounding ANWAR, as its potential contribution to US energy needs and national security is negligible when viewed from a macro perspective.
EROEI and Alternative Energy Technology
A thorough analysis of the various alternative energy sources and energy polices exceeds the scope of this book, but a short discussion of alternative energy is warranted in any discussion regarding the challenges that will be imposed by global Peak Oil. For those who wish to undertake and more through analysis of Peak Oil, the end of this chapter will include a partial listing of books the author has reviewed with respect to energy and related examination of alternative energy options. One of crucial concepts required to understand the importance of Peak Oil relates to a concept in physics commonly described as Energy Return on Energy Invested, or EROEI. Unlike the traditional financial metric referred to as Return on Investment (ROI), EROEI refers to the amount of energy spent compared to the amount of energy extracted. EROEI is illustrated as ratio between energy expended to extract a barrel of oil, versus the energy that barrel of oil will provide. From a physics perspective the amount of energy required to extract the oil after peak begins to increase irreversibly, resulting in a decrease of Energy Return on Energy Invested (EROEI), which under a certain value means the remaining oil will not be viable for transportation. Below are useful definitions of ROI and EROEI:
Economics, ROI and EROEI
ROI (Return on Investment) means the accounting is done in dollars. If an oil well produces enough oil to cover expenses with some left over, then the ROI is positive. Some oil is too expensive to produce at the current price of oil. An economist would say that that oil would be produced if the price of oil rises sufficiently.
EROEI (Energy Return on Energy Invested) means that the accounting is done in energy units. It is possible to calculate the energy cost of an oil well. Energy is required to make the steel, to run the drill, to pump the oil, etc. This energy is subtracted from the energy in the produced oil. If the result is positive, the energy return on energy invested (EROEI) is positive. Drilling for oil to get energy becomes pointless if the EROEI goes negative. That does not mean that oil wells will not be drilled. It means that oil will be used for fertilizers or plastics, but not for transport or heating.
Fifty years ago when some of the super giant oil fields were be still being discovered, an EROEI from one the oil wells of these super giants could sometimes produce an EROEI of 200. In contrast, oil wells in deep water currently achieve an EROEI of less than 5. Oil removed form tar sands have a very low EROEI of 0.7.
Once global peak oil is reached and exceeded, at some point on the downward side of the slope, the remaining oil in the ground or at the bottom of the ocean will not provide a positive EROEI. Once the energy required to extract such oil is equal or greater than the energy that would be provided by that new barrel of oil, it will no longer be logical to extract the oil. At that point the oil will simply remain in the ground.
Unfortunately politicians on the right and the left are either in to be in deep denial about this, or they dare not speak about it. Regardless, but the technical analysis is available and relatively easy to understand. Although various environmental groups advocate alternative energies, an objective analysis of the data suggests that alternatives technologies will simply not save us from a net reduction in global energy capacity in the near term. None of the alternatives in their present implementations can begin to provide the energy base currently provided by oil. This makes it more than a resource, and the drive to control what's left is more than an economic competition. Oil is not a mere commodity, as no viable substance is in place that can support the energy consumption of the industrialized economies, with the U.S. the most as risk.
(FWIW, most of that was is excerpt from my upcoming book...
FYI: The US oil *discovery* peaked in the mid-1930s, while peak oil *production* occured in 1970. So, we are well down on the Hubbert Curve, and the EROEI on oil in lower 48 states will soon hit a negative EROEI, so, most of it stays in the ground. For example, if you use expend 5,000 k/joules of power to extract a barrel of oil that produces 10,000 k/joules of power, you have a net postive gain, a 2.0 ratio on EROEI, so you keep drilling that oil well. However, after a while the oil pressure drops, the oil gets harder to extract, and once you if you expend 10,000 k/joules of energy to drill and extract 10,000 k/joules of energy, you have a zero sum situation. You simply leave whatever's oil is left in that resevious in the ground, and it does *NOT* matter how much or how litle money it takes at that point. Its a matter of *physics* - not economics. That my friend is why lots of oil here in the US is still in the ground. We won two World Wars with our lopsided oil supply relative to our enemies and our allies, but we ain't got much left....BTW, the *global* peak discovery of oil occured in 1964, and just as in the U.S. adn other oil fields, peak oil *production* typically falls about 40 years later, which is 2004...and the Bush/Cheney admin along with many of the neocons know all about this at a *deeper level* than most folks...but so does the Saudis/OPEC and the rest of the industrialized nations. That's why the never-ending, good for all occasions and locations, universal "war on terror" is such a handy thing to the neocons. Next stop...Iran)
)
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(89 posts)
Send PM |
Profile |
Ignore
