“At the world’s current rate of consumption — 30 billion barrels of liquid hydrocarbons a year — that’s enough to meet current global demand for another three centuries.”
And finally:
“we’re still burning it faster than we’re discovering it.”[/quote]
That is just irresponsible sloppy reporting. It infuriates me when I read articles like this because it’s so far removed from reality.
After watching the oil market for 4 years, it’s amazing how new discoveries get dramatically delayed and reduced, always. The big one in the late 90s was in the Caspian. It was supposed to be 300 billion barrels and turned into only 30 billion of harder to get and refine than anticipated.
First of all, we have had a recent market “systems” test in the price run up from 2005-2008. We increased price 3 fold and NO NEW ADDITIONAL OIL CAME TO MARKET. Why does everybody think that is? We maintained a consistent flow rate while prices skyrocketed until the banking collapse brought demand down. Theoretically, production should have increased but did not. This was a market theory put to an empirical test. We could observe what happened. There was pretty good price incentive for alternative companies above $100 but also by spring of 2008, there were food riots in the third world, fuel riots in europe, airlines going bankrupt, etc…
$35 oil collapsed a good portion of the new projects and alternative projects when demand fell. We actually need to maintain at least $70 to keep exploration viable. If oil goes above $120 we have other problems.
It’s all about the production level or flow rate. It does not matter how much is in the ground. That is completely irrelevant. Regardless of how tantalizing it is. Over the last 150 years we used up all the easy to get, cheap stuff. Now it’s all hard to get and expensive. We’ll probably never “run out”. We are running out of cheap, accessible oil, is better way to put it.
In that past 150 years we have acquired a tremendous amount of knowledge to the nature of oil deposits and regions. They follow a very well defined “bell curve”. So oil peaking, world wide, is an observation rather than a theory. Its only logical that the world will do the same as every well and every region does. Oil discoveries peaked world wide in the sixties and US discoveries in the 30s. So, this is not just a string of bad luck.
Another issue is refining capacity. The current infrastructure is structured to handle *mostly* light sweet crude and because of this high ratio of high quality to low refineries, new refineries need to be built, which are very expensive to make. Why has the industry not done this? When we peaked out the low quality was getting back up because of lack of refining capacity. Why did the logic of the market allow this to happen? I can see clearly that low quality refineries need to be made like yesterday?
And yet another way to look at it is energy per capita. With energy decreasing and population increasing the per capita ratios dramatically shift. Which would obviously induce another real world manifestation.
Shale is complicated. Besides the myriad of formations. It’s not quite as easy as a price point.. First, not all shale is created equal. Most only has the energy content of captain crunch and it just is not worth the effort. The additional dimension to price is EROEI(energy returned on energy invested) For example: Back in the 30s, in Saudi Arabia, a virgin “light sweet crude” field, by far the favorite of the industry, would take 1 barrel of oil to get 100 back. Today, it ranges from 1 to get 8-50 back, with the better return wells dwindling. When looking at ethanol you get back 1.3-2 for one barrel invested some less than 1 which is a waste. Another example is the oil sands up in Canada. It is a low eroei that can range from $15-70 to pull out, that is essentially a mining operation. It requires immense amounts of natural gas , so in a way we are turning gas into oil. Not to mention the water restrictions. Is this even a wise use of resources propping up an old infrastructure? *Good* shale has like a 7-8 EROEI which is quite different from oil that we are used to. how that manifests in the real world? Well energy is lost somewhere and subsequently *work*. The majors don’t even want to touch most of it. Shell spent like $100 million on one area to get like 1000 barrels before they gave up.
This is a good write up of Bakken, regarding the complexities of drilling and “realistic” projections of this particular shale formation. http://www.theoildrum.com/node/3868
The biggest new player in the oil discovery world, that could make a difference in the next few years, is Iraq. Seems, Saddam was not a very proficient at oil extraction.
As for EVs. There is a long laundry list of reasons that make it unfeasible. First, if they were to be scaled up the grid could not handle the load. In many places it is at mass capacity as it is and other countries are in much worse shape than the US. New power plants would be needed. Which take many years to build and are very energy intensive to make. Second, all resource extraction is the same. As well as in oil, all lithium is not the same. We pick the easy and cheap stuff first then it become very hard, energy intensive and expensive. If we started to scale up lithium would become very expensive quickly and change all other market dynamics. Third, there is no demand and the reasons for this are long as well.
