Pontiac Solstice Forum banner
1 - 11 of 11 Posts

·
Mod Emeritus
Joined
·
7,468 Posts
Discussion Starter · #1 ·
An interesting link to an article in today's USA Today about the debate surrounding just how much oil is left for us to tap into and use.

http://www.usatoday.com/money/industries/energy/2005-10-16-oil-1a-cover-usat_x.htm

USA Today said:
Debate brews: Has oil production peaked?

By David J. Lynch, USA TODAY

Almost since the dawn of the oil age, people have worried about the taps running dry. So far, the worrywarts have been wrong. Oil men from John D. Rockefeller to T. Boone Pickens always manage to find new gushers.

But now, a vocal minority of experts says world oil production is at or near its peak. Existing wells are tiring. New discoveries have disappointed for a decade. And standard assessments of what remains in the biggest reservoirs in the Middle East, they argue, are little more than guesses.

"There isn't a middle argument. It's a finite resource. The only debate should be over when we peak," says Matthew Simmons, a Houston investment banker and author of a new book that questions Saudi Arabia's oil reserves.

Today's gasoline prices are high because Hurricanes Katrina and Rita disrupted oil production in the Gulf of Mexico. But emergency supplies from strategic oil reserves in the United States and abroad can largely compensate for that temporary shortfall. If the "peak oil" advocates are correct, however, today's transient shortages and high prices will soon become a permanent way of life. Just as individual oil fields inevitably reach a point at which it gets harder and more expensive to extract the oil before output declines, global oil production is about to crest, they say. Since 2000, the cost of finding and developing new sources of oil has risen about 15% annually, according to the John S. Herold consulting firm.

As global demand rises, American consumers will find themselves in a bidding war with others around the world for scarce oil supplies. That will send prices of gasoline, heating oil and all petroleum-related products soaring.

"The least-bad scenario is a hard landing, global recession worse than the 1930s," says Kenneth Deffeyes, a Princeton University professor emeritus of geosciences. "The worst-case borrows from the Four Horsemen of the Apocalypse: war, famine, pestilence and death."

He's not kidding: Production of pesticides and fertilizers needed to sustain crop yields rely on large quantities of chemicals derived from petroleum. And Stanford University's Amos Nur says China and the United States could "slide into a military conflict" over oil.

Rising global demand for oil

There's no question that demand is rising. Last year, global oil consumption jumped 3.5%, or 2.8 million barrels a day. The U.S. Energy Information Administration projects demand rising from the current 84 million barrels a day to 103 million barrels by 2015. If China and India — where cars and factories are proliferating madly — start consuming oil at just one-half of current U.S. per-capita levels, global demand would jump 96%, according to Nur.

Such forecasts put the doom in doomsday. Many in the industry reject the notion that global oil production can't keep up. "This is the fifth time we've run out of oil since the 1880s," scoffs Daniel Yergin, who won a Pulitzer Prize for his 1991 oil industry history The Prize.

In June, Yergin's consulting firm, Cambridge Energy Research Associates (CERA) in Cambridge, Mass., concluded oil supplies would exceed demand through 2010. Plenty of new oil is likely to be found in the Middle East and off the coasts of Brazil and Nigeria, Yergin says.

"There's a lot more oil out there still to find," says Peter Jackson, a veteran geologist who co-authored the CERA study.

Based on current technology, peak oil production won't occur before 2020, Yergin says. And even if it does, oil production volumes won't plummet immediately; they'll coast for years on an "undulating plateau," he says.

Debate growing sharper

Both sides in the peak oil controversy agree that oil is a finite resource and that every year, the world consumes more oil than it discovers. But those are about the only things they agree upon.

As the debate has persisted, it's grown personal. "Peak oil" believers disparage those who disagree as mere "economists" in thrall to the magic of the marketplace or simple-minded "optimists" who assume every new well will score.

Yergin emphasizes that the CERA study was developed by geologists and petroleum engineers, not social scientists. Of Simmons, Yergin says: "He's wonderful at stirring up an argument and slinging around rhetoric. ... For some of these people, it seems to be a theological issue. For us, it's an analytic issue."

When they're not trading insults, the two sides disagree fiercely over the likelihood of future technology breakthroughs, prospects for so-called unconventional fuel sources such as oil sands and even the state of Saudi Arabia's reserves.

The world's No. 1 oil exporter, in fact, is at the center of Simmons' new book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, which has reinvigorated the peak oil argument.

Simmons says it's impossible for global production to keep up with surging demand unless the Saudis can increase daily production beyond today's 9.5 million barrels and continue pumping comfortably for decades. And, indeed, Yergin is counting on the Saudis to reach 13 million barrels a day by 2015.

Yet while the oil reserves of U.S. firms are verified by the U.S. Geological Survey, the Saudis — like other OPEC countries — don't allow independent audits of their reservoirs. So when Riyadh says it has 263 billion barrels locked up beneath the desert, the world has to take it at its word.

Simmons didn't. Instead, two years ago, he pulled about 200 technical papers from the files of the Society of Petroleum Engineers and performed his own assessment. His conclusion: The Saudis are increasingly straining to drag oil out of aging fields and could suffer a "production collapse" at any time.

Yergin is more optimistic both about the Saudis and the industry's prospects in general. If the past is any guide, technological breakthroughs will reshape both demand and supply, he says. In the 1970s, for example, the deepest offshore wells were drilled in 600 feet of water. Today, a Chevron well in the Gulf of Mexico draws oil from 10,011 feet below the surface.

Widespread use of technologies such as remote sensing and automation in "digital oil fields" could boost global oil reserves by 125 billion barrels, CERA says. Already, advanced software and "down hole measurement" devices to track what's happening in the well have elevated recovery rates in some North Sea fields to 60% from the industry average of 35%, Jackson says.

Technology also won't stand still on the consumption side of the equation, Yergin says. "By 2025 or 2030, we'll probably be moving around in vehicles quite different from the ones we drive today. Maybe we'll be driving around in vehicles that get 110 miles to the gallon," he says.

That's more than a guess. Toyota's 2001-model Prius hybrid got 48 miles per gallon; the 2005 model was up to 55 mpg. If automakers focused solely on energy efficiency, 110 mpg isn't out of the question.

Still, breakthroughs don't just happen, and in the late 1990s, after oil prices fell as low as $12 a barrel, major oil companies slashed research spending. Some who previously doubted the peak oil claims now wonder whether the industry is equipped to develop the necessary innovations.

"Before 1998, I was on the side that said, 'Technology solves all problems,' " says Roger Anderson of Lamont-Doherty Earth Observatory of Columbia University. "The problem is, after $12 oil, oil companies responded by merging and firing large portions of their technical staff."

Now, the International Energy Agency in Paris estimates that $5 trillion in new spending is needed over the next 30 years to improve exploration and production.

The limits of technology

As oil prices — now about $63 a barrel — stay elevated, so-called unconventional supplies of oil become economically feasible. Exhibit one: enormous deposits of Canadian oil sands, which could eventually yield more than 170 billion barrels of oil. On the list of the world's biggest oil countries, that total puts the USA's northern neighbor behind only Saudi Arabia.

That's the good news. The bad news is that wringing oil from the sludge-like tar sands is difficult and costly, and requires enormous quantities of water and natural gas — itself an ever-pricier fuel.

Deffeyes calls talk of substantial tar sands production "the fantasy of economists," adding: "They believe if you show up at the cashier's window with enough money, God will put more oil in the ground."

In recent months, the peak oil camp has received support from some fairly sober quarters, including the U.S. government. A 91-page study prepared in February for the Energy Department concluded: "The world is fast approaching the inevitable peaking of conventional world oil production ... (a problem) unlike any yet faced by modern industrial society."

So far, almost no one in government is calling for immediate action because of the peak oil argument. But in a recent interview with USA TODAY, Energy Secretary Samuel Bodman sounded less than sanguine about the future.

"There's plenty of oil to deal with this over the near term, five years. But if you look out over the next 20, 25 years, we expect demand to grow 50% to 120 million barrels a day. I wouldn't want to opine that's available," says Bodman, a former professor of chemical engineering at Massachusetts Institute of Technology. "It could be, but I don't know."
 

·
LOST SOL
Joined
·
4,675 Posts
On average, they produce less oil per day here ... than when the sanctions were in place. It is not a supply issue here (yet) but mostly sabotage. :( This is a hot topic, when America has 5% of the worlds population and consumes over 20% of the crude oil. :willy:
 

·
Registered
Joined
·
14 Posts
I hate idiot reporters that swallow the line any willing scientist gives them without examining the facts. In addition to the Canadian oil shales, we have an amount here in the US in Colorado well over Saudia Arabia's amount, and Shell Corporation has demonstrated a way to separate the oil in the ground, making it economically feasible at a little over $20-25 a barrel, instead of the prior method of digging it up and having to separate it, which would have cost much more. And of course, anyone who disagrees with this guy is in a fantasyland or something, you can't just disagree with the purported facts without being personally attacked. /rant
 

·
Read Only
Joined
·
3,468 Posts
MSG_McKee said:
On average, they produce less oil per day here ... than when the sanctions were in place. It is not a supply issue here (yet) but mostly sabotage. :( This is a hot topic, when America has 5% of the worlds population and consumes over 20% of the crude oil. :willy:
... and provides (latest figures I could squeeze out of the net) ~50% of the rest of the worlds cereal grain imports with a portion of that fuel. :yesnod: The question of resources is one of responsible use.

BTW, my continuing gratitude to MSG_McKee and his fellow servicemen and servicewomen for their actions on behalf of my safety and freedom and that of my family and friends! :patriot:

--Chemist
 

·
Registered
Joined
·
275 Posts
"That's the good news. The bad news is that wringing oil from the sludge-like tar sands is difficult and costly, and requires enormous quantities of water and natural gas — itself an ever-pricier fuel.

Deffeyes calls talk of substantial tar sands production "the fantasy of economists," adding: "They believe if you show up at the cashier's window with enough money, God will put more oil in the ground."
That's an odd statement, since tar sand oil extraction is already beyond
the planning stage. All it ever needed was oil that would be expected to remain above $30/barrel.
The biggest potential source of petro products, with no need for
refining crude, is coal gasification, a process that is currently being used
here and in foreign countries and is completely developed and efficient.
The US coal reserves that are assumed to exist (proven plus estimated) contain enough coal to provide all of the US current petrochemical needs for perhaps the next 800 years. The price of gasoline produced by gasification would be around $1 / gallon.
 

·
Premium Member
Joined
·
2,887 Posts
The problem has been, and will continue to be, that of a refining capacity and not an oil supply issue.

Remember.. oil wells and fields are investigated by companies such as Halliburton and Schlumberger everyday. The issue we suffer from currently is the lack of available capacity for oil refinement to gasoline and other useable fuels. Capital has not been invested to provide for increased capacity, and has led to the current issues at hand.

Besides the method that RobRoy mentions, there are other currently untapped wellls around the world. Why are they not being used currently, because cost states it's cheaper to operate different wells. If the wells which are currently operated run dry, we will move onto the next most cost efficient well (and prices will most likely rise too).

It's a problem of capitalism at this point. Laws prohibit wells in certain areas of the world, capitalistic forces haven't driven alternatives to the point of making marketing sense (to mass consumers). No doubt fuel economy will get better, and no doubt that at some point we will be out of oil... not going to speculate as to when. Question is does the market forces put enough pressure to drive consumers (worldwide) to use other fuel sources for their transportation needs. Until it's economically feasible, it won't happen.

Sure we have Hybrid cars and such that get better gas milage... they sell, but do they do much. I say at this time they don't do much and if you want to move away from oil it will have to be worldwide... otherwise people will continue to use oil for fuel and the alternatives will be higher costs. Some people will pay the higher costs (becase they can afford it, want to move away from oil, host of other reasons), but a majority of the world will still gravitate to the cheapest means of transportation.

Think about it... a new Cobalt gets 35 mpg on the highway. A new Civic hybrid gets 50 mpg on the highway (and city). Huge difference it seems. Similarly equiped the Cobalt is a tad cheaper (a few thousand) than the Civic. I drive ~ 36,000 miles / year. The Cobalt will require 308 gallons more gas than the Civic. At current prices of $2.57 where I'm at in Michigan... that's a cost difference of less than $800 / year for the gas. I drive a LOT of miles... if you drive ~30,000 miles / year it's a savings of ~$660, if you drive ~20,000 miles / year it's a savings of ~$440 per year. Even looking at higher fuel efficiency cars doesn't make up for the cost difference currently.
 

·
Registered
Joined
·
14 Posts
Yeah, I didn't even mention coal! I would say the problem with refining capacity is not a capitalism problem, but anti-capitalism (excessive regulation) and the NIMBY effect (Not In My Back Yard). With the Hybrids, it has been reliably shown (in Consumer Reports, for just one source) that they do not really get close to the EPA estimates. Figure an average car uses about 20-25 percent more fuel than estimates, and a hybrid used 35-40 percent more than estimate. Plus, given the unknown reliability at this point, and the extra cost of the extra equipment and dealer markup (we know about that, eh?), it works out very even in the end.
 

·
Mod Emeritus
Joined
·
7,468 Posts
Discussion Starter · #8 ·
rlhammon said:
Think about it... a new Cobalt gets 35 mpg on the highway. A new Civic hybrid gets 50 mpg on the highway (and city). Huge difference it seems. Similarly equiped the Cobalt is a tad cheaper (a few thousand) than the Civic. I drive ~ 36,000 miles / year. The Cobalt will require 308 gallons more gas than the Civic. At current prices of $2.57 where I'm at in Michigan... that's a cost difference of less than $800 / year for the gas. I drive a LOT of miles... if you drive ~30,000 miles / year it's a savings of ~$660, if you drive ~20,000 miles / year it's a savings of ~$440 per year. Even looking at higher fuel efficiency cars doesn't make up for the cost difference currently.
Hybrids certainly are not what they have been made out to be. They are a nice technological achievement, but are certainly not cost effective. Beyond the savings vs purchase price differences, there is also the potential added costs down the road of maintenance items. Such as replacing the battery pack, which runs about $6000 in a Prius hybrid. Other questions that have not really been asked yet either is what to do with all those bad hybrid battery packs once they are bad. If they are just trashed they could easily turn into an ecological hazard, raising either disposal cost or risking environmental damage.

The Cobalt may be a good point of comparison, because GM most likely could use a more fuel efficient ecotec in it too, which would raise it's MPG rating and close the gap on the hybrids, making it even more cost effective. GM's Opel unit has developed a new version of the 1.8L ecotec, which nearly matches the Cobalt's for power (140 for the 1.8L vs 145 for the 2.2L) while improving on the outgoing 1.8L's fuel mileage. GM might be able to play with the gearing on the 2.2L in the Cobalt too, extracting an extra MPG or two.
 

·
Registered
Joined
·
1,147 Posts
RobRoy said:
With the Hybrids...given the unknown reliability at this point, and the extra cost of the extra equipment and dealer markup it works out very even in the end.
Even :willy: ? I don't think so - not even close, unless you disregard the gov't incentives (they are a cost to somebody - maybe not you) and place a value on how you're 'saving the Earth'.
Don't forget, within a few years that great big lead-acid battery will have to be replaced ($$$), not to mention how damaging batteries are to the environment.

Deffeyes calls talk of substantial tar sands production "the fantasy of economists," adding: "They believe if you show up at the cashier's window with enough money, God will put more oil in the ground."
People like this kill me - this is so typical of L******s (this is a family forum ;) ) anyone who doesn't agree with them is imeadiately, condecendingly dismissed. I've got news for this pompus jackass - the Alberta Tar Sands are about to start large scale production of crude.

A project that, I might add, has produced thousands of good-paying jobs - sounds like the type of investment this country needs.

The market may not be perfect - but if oil production ever does truly dry up, I'd sure feel better about the transition being market-driven than government-directed. :yesnod:
 

·
Registered
Joined
·
145 Posts
Article said:
Today's gasoline prices are high because Hurricanes Katrina and Rita disrupted oil production in the Gulf of Mexico. But emergency supplies from strategic oil reserves in the United States and abroad can largely compensate for that temporary shortfall.
Incorrect. The increase in gas prices wasn't because of the lost of oil production (in fact, I think oil prices tanked after damage to oil rigs was assessed to be relatively mild) but the lost of refinery capacity. Currently the US is using all the gas that the refineries can refine. There's no spare capacity left. I believe that a new refinery hasn't been built since the 70's. Rita damaged some refineries, but more "damaging" was the lost of power to the refineries. You need energy to refine energy. It took a couple days for the companies to get the refineries which weren't damaged back up and running. It's not like you can just push a button and everything is back up and running.

Yeh and the "Not in My Backyard" is in full effect. People complain that the oil companies are the problem, but whenever a company wants to put up a refinery in their backyard, it's a big fat NO WAY. So NOT ONLY are we part of the problem (many of us comsume more gas than we do water), but we don't allow solutions (in this case more refineries to pick up the slack when something like this happens) to be made.

A few years ago, some refineries were shut down in California for maintenance, repairs, and upgrades. This was planned by the individual companies months or a year in advance, and it was public knowledge. Due to the shutdowns, gas prices spiked (although prices, back then were still a heck of a lot cheaper than it is now). Californians were OUTRAGED that the oil companies would temporarily shut down the refineries to do maintenance.
Charges of collusion and price fixing were brought up and investigated.

(Dumass Californians. I guess they figure you can change the oil in a car while its running too)

The oil companies pointed out that 1) They scheduled this way in advance and made it public knowledge 2) If California had let any of the companies build JUST ONE new refinery, there would have been more than enough extra capacity to pick up the slack. Also it cost more to upgrade a refinery than it does to build a new one with the latest and greatest cost saving technology. So the oil companies pass on the extra cost to us. Don't get me wrong, I'm not crying for the oil companies as they make record Billion dollar profits. But they aren't the ones to blame. It's us for not changing our habits.

BTW, one of the rationalizations to getting a Solstice to my wife was that it got twice the MPG as my SUV.
 

·
Mod Emeritus
Joined
·
7,468 Posts
Discussion Starter · #11 ·
Sol2, you will see at the bottom of your post that I edited your thread. What I edited was the "quote" to show you were quoting the article, since it was the quote was part of the article and not my own comments. I just wanted it attributed to the right source. I made no changes to the text of your response. Hope you don't mind. :)

That said, you are absolutely right. Lost refining capacity is what hurt gasoline prices. Also hurting them initially was Americans who immediately stormed gas stations and drained them dry fearing shortages, greatly increasing short term demand while short term supply was lower, and skyrocketing costs.
 
1 - 11 of 11 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top