Monday, August 31, 2009

Peak Earl

Peak Oil (Peak Earl as the people from down in the parish would say) was the
topic of a NY times opinion piece and several blog posts last week (on coyote blog and
lou minatti). I was traveling and only had time to comment on Lou Minatti's site, and only that because there was a comparison between peak oil and AGW.

The peak oil opinion piece was a good example of freshman rhetoric, lots of straw
men and hazy mentioning of peak oilers and their anecdotal data. If I knew just
what the average person does about the oil industry I'd probably be convinced and
go back to driving my SUV like nothing is happening.

Here's the most annoying 'graf:

Like many Malthusian beliefs, peak oil theory has been promoted by a motivated group of scientists and laymen who base their conclusions on poor analyses of data and misinterpretations of technical material. But because the news media and prominent figures like James Schlesinger, a former secretary of energy, and the oilman T. Boone Pickens have taken peak oil seriously, the public is understandably alarmed.
I have several problems with that, he doesn't cite any of the poor analyses of data, he doesn't
name names and he uses malthus as a dirty word. For me the most important analysis of
data was done in the fifites by M. King Hubbert where he made the connection that because
we can draw a production curve that predicts max production and total production for a
field, we can do the same thing for a region or a country. Hubbert's prediction was very
good science, he had a theory that production in the usa would peak, he made a prediction
and he was proven right. That is science not belief.

The reason that Malthus has been proven wrong about food production and mass death is
precisely because we are putting more energy into the system in the form of hydrocarbons.
Oil production is precisely malthusian though, even if the earth was just one big sphere of
oil, eventually one day it would run out. The reality is worse, there is oil and gas in the
ground in limited reservoirs around the world and it will run out not in the distant future
but within 200 years, and as an economic resource much sooner.

here's a good straw man argument:

Let’s take the rate-of-discovery argument first: it is a statement that reflects ignorance of industry terminology. When a new field is found, it is given a size estimate that indicates how much is thought to be recoverable at that point in time. But as years pass, the estimate is almost always revised upward, either because more pockets of oil are found in the field or because new technology makes it possible to extract oil that was previously unreachable. Yet because petroleum geologists don’t report that additional recoverable oil as “newly discovered,” the peak oil advocates tend to ignore it. In truth, the combination of new discoveries and revisions to size estimates of older fields has been keeping pace with production for many years.
This is really good rhetoric because it would take a lot of work to disprove since he doesn't
cite any data or a specific case where this is true. It's more of a straw army because it
mentions several parts of the industry across boundaries of knowledge, how oil reserves
are booked is one of the dark arts, and I would never be able to argue against that. I'll take
one straw arm and try to shoot it down, the idea that estimated oil in place is normally
revised upward over a field's lifetime, and it's not reported.

In my personal experience being involved with a worm's eye view of the process of drilling
and logging wells, the most optimistic estimate of oil in place happens when nothing has been drilled and seismic data is just estimating the area and thickness of the reservoir. A well
is drilled that confirms the reservoir is really there, then more wells are drilled to laterally
define the area and volume of the reservoir. These "step-out" wells continue until the
reservoir rock isn't seen any more on the well logs, or the well intersects the reservoir
below the oil-water contact. More infill wells are drilled and production begins.

What I've seen is typically the seismic is optimistic, then as the wells are drilled either the
reservoir isn't there unexpectedly, or it is found to be faulted in some way that the reservoir
isn't continuous and needs more wells to produce the field. Off the top of my head I can think
of a dozen wells where there was some problem and the expected reservoir wasn't there, but only 2 where there was much more than expected.

A nice using of the vague arm waving argument:

A related argument — that the “easy oil” is gone and that extraction can only become more difficult and cost-ineffective — should be recognized as vague and irrelevant.
Here's a chart from a good primer on peak oil. I'm sure they are
slanted, but if someone has another chart that shows more fields are being discovered now
than in the past, please post it. It shows that production is steadily increasing while we
are finding fewer and fewer new barrels.

Sure we are still finding fields and
doing it more efficiently than ever,
but we're finding fewer and fewer
new fields when the technology being
applied is amazing.

In the '60's when a field was found
using 2d seismic that was pretty good,
with 9 out of 1o wells being dry holes.
Now with 3d seismic it is possible to
drill wells and have people say they've
never drilled a dry hole.

In the past they were using a bow and arrow and still finding oil, now we're using a laser
scope and hitting fewer and fewer. I too would say the easy oil is gone.

To me the peak oil argument is easy to understand, it's just taking the integral of all the
production curves of all the wells in the world, plus new discoveries plus improvements
in production. Since so few new fields have been found lately, much of the increase in
production has come from improvements in production technology, with secondary and
tertiary production techniques.

Counting on new production techniques to continuously improve
production will lead to a production curve like canterell, with continous injection to
maintain pressure and sudden production drop as the oil/water contact moved
above producing wells. (i have no idea what happened there, I'm just guessing). The
reason the high water cut from saudi fields is so scary is the same thing could happen
there. Instead of declining pressure gradually reducing production, the pressure stays
constant due to water injection, as the oil water contact moves steadily upward more
and more wells "water out".

I don't know what will happen in the future, I'm sure it will be similar to the past with
cycles of demand increase, price increase then demand destruction as people switch to
alternatives at high price points. Demand falls then price falls crashing the oil industry
and reducing supply and the cycle starts again with a frequency of about 5 years. Peak
oil is the background curve that this occurs against, at some point in the future demand
will increase and no oil production increase will be possible at any price (sort of like last
summer, but worse).

It would be best if the usa would be working on this problem in a way that prevents some
future giant shock, like an import tax on oil and gas so that people are moving to
alternatives now instead of waiting for a big shock to do it. Also building nuclear plants
and space based solar power. It does no good to have gm electric cars everywhere, if there
isn't any juice.

Sunday, August 30, 2009

Don't use Hotwire

I used Hotwire to book a hotel room in rome last week. I won't use them
again. They have a business model where they list prices and star level
without saying the hotel name. I think the underlying assumption is supposed
to be that they are honest, otherwise why would I buy a box without a label?

They aren't honest. Or they are incompetent. Or both. The hotel that was
supposed to be 4 star was at best a 2.5 star hotel. No internet, no gym, resterant
only open for dinner, no room service, no valet parking would make it a non-
4 star hotel for me. But then the rooms were crappy, worn, small, crappy TV
with few channels, crappy snotty service, which to me make the hotel a 2 star.
(hotel Pacific).

Anyway. Don't use Hotwire, they suck, their answer was they went there this year
and rated it themselves as a 4 star. They can't do math, they said their fare was lower
than the hotel's posted fare, it was $10 less on the hotel's website than hotair.

for google: hotwire sucks, hotwire sucks hotwire sucks.

Monday, August 24, 2009

downside of 1st class

I paid the extra 10E
for a first class ticket
on a trip to milano, thinking
I can plug in my laptop
and work instead of just
sweating in 2nd class.

Unfortunately I forgot
my power supply, so
I just sat in 1st class
and watched the scenery
roll by very quickly
as the new fast train
ate up the distance from
bologna to milano in about 58 minutes. Unfortunately, if you're in
the last car of the train the trip to the station door in milano is pretty
long. This picture shows the huge painting on the wall of the station
that is about 100 yards across.


Norm Geras was nice enough to post a profile of me on his blog
last Friday. Going back and reading the questions and answers, it's
obvious that he's spent a long time crafting the questions while I answered
them in the short time it takes for the rest of the office to get back from

Sunday, August 23, 2009

healthcare hustle

The Czar of Muscovy has done a great service by reading the
entire healthcare bill from the House of representatives. I wish
I could do something similar, but I struggle to read a tax form;
"if you paid taxes to only one foreign country use column a in part I
and line A in part 2....zzzzzzzzz."

Various parts of the summary scared the heck out of me, the Czar's
summary says it best:

Reading this bill in its entirely leads to some inescapable conclusions: the supporters and authors of this bill clearly do not understand its contents, nor do they understand all possible interpretations and implications. ...

But the Czar realizes that this bill is very much like President Obama himself. Rushed through without proper review, and containing an unfocused blend of various liberal and radical ideas, the bill promises extensive reform, but ultimately cannot provide specifics beyond trivial process and procedure.


John Lennon's song "Woman" is playing on the top videos of all time show coming
out of the living room. at the same time I read this quote of the day on Neptunus Lex:

“Whatever you give a woman, she will make greater. If you give her your love, she’ll give you a baby. If you give her a house, she’ll give you a home. If you give her groceries, she’ll give you a meal.. If you give her a smile, she’ll give you her heart. She multiplies and enlarges what is given to her. So, if you give her any crap, be ready to receive a ton of sh!t.”

Friday, August 14, 2009

Signal and Noise

So much of what passes as the results of global warming is due to
aliasing. Aliasing occurs when a signal is sampled too frequently or not
frequently enough, when the samples are used to recreate the original
signal you get the wrong answer, such as a hockey stick fitted to a sine wave.

The real temperature signal is a sine wave, or several sine waves superimposed
on one another. A long term glaciation signal, a short term multi-decade oscillation
and probably several others in between. Unfortunately the most common sample
of temperature data is a human lifetime. We remember that when we were young,
it was hotter or colder, but now it is different, and it is worse. It's such a common
experience that it is enshrined in jokes ("back in my day we walked two miles in
the snow to school, uphill both ways").

Some examples of this effect:
We used to see several hurricanes per year way back in the 1930's, but now we see
The temperature at the airport used to be much colder than in the city,
now it's the same. We used to have zero sunspots at the solar minimum, now
there are several even though they are not visible without electronics.

All of these measurements that seem to be proving global warming could just
as easily be just proving that our measurements are now much better, or they
are much worse than they used to be, but they are not the same.

More measurements, more science and less demogogery are what's needed now.
Instead we're getting the inverse.

Monday, August 10, 2009

On some future dark day...

At the Hawaii White House:

General: "Sir, I'm sorry to report, but all 187 F22 fighters were destroyed on the
ground by terrorist attacks"

President O: "We should be ok, we still have our Joint Strike Fighters"

General: "Sorry sir, none have been delivered due to project delays, all we have
are the two demos, one flies just up and down the other flies forward but doesn't
have any weapons."

President O: "Luckily a far-sighted politician was ready for this day, equipping the
one branch
of public service always ready to use the equipment at their disposal.
Get me Nancy Pelosi on the phone"

(cue music: da da da de da da dedede da...highway to the danger zone...)

Tuesday, August 04, 2009


I've been commenting a lot on blogs lately, hopefully I haven't
offended Lou Minatti with my depressing visions of the future
economy and geopolitics. I'm still betting that oil prices are going to crash
(which is sad to me) then they'll rebound because decline rates are a
fact of life. Right now a couple percent of oil production per day are going
into storage on oil tankers or storage tanks. When storage is full or if
traders think it is almost full, prices will crash.

The competing effect is whether the economy will increase demand
or if production will decline enough before that crash happens. When demand
starts to get close to actual supply and oil in storage starts to decrease,
prices are going to go back to $140 before you can say peak oil.

One driver of decreasing supply is natural production decline. All oilfield's
production rates decline and if money isn't spent on driling and
workover then production will decline as reservoir pressure decreases.
As long as this "crises" atmosphere continues and drilling stays slow,
production will decline.

The other effect that will drive up long term prices is the dollar. I think
in the medium to long term the dollar has to go down so that trade and
investment comes to some kind of balance. Maybe it's just my upbringing,
but i don't think we can go on spending more than we make forever. One
way that the USA would stop importing so much oil is if the dollar goes down
relative to the rest of the world. The price of oil in the US would go up and
imports would go down until our income and outgo meet up at some point.

That would happen by Obama devaluing the dollar or if enough investers around
the world vote with their feet and sell their dollars. That's when the real nutty
comments started to flow. All of this is a plan by the red chinese! Their goal
was to destroy the usa and create a workers paradise around the world. If
that was their plan, it seems to be on track, as industry and jobs are outsourced
to china destroying our future, while dollars that are acceptable around the
world flow into the mandarin's coffers. [muhahahahaha]

Once the chinese use up some of their dollars buying land and oilfields around
the world in sudan, Iraq, south america, nigeria, then they pop the last balloon
dump the rest of their dollars to make things so expensive in the usa that the
economy collapses and only fuel, food, clothing, steel, cars etc that are made in
the usa are available. The questions then become does the usa have guts to
crawl back out of the hole that we have created? Make our own stuff; make stuff
of high enough quality at a low enough price that other people want to buy it?
Does the chinese government care if their capitalist economy collapses when they
are communists? I think not.

At that point I'm nearly out of red wine so my 'creative' juices stop. Instead of
a gizmo on comments to make sure i'm not a bot, there should be a breathalizer.
Anyway, less commenting in the future for joey. Apparently I cross the line too
easily from witty oilfield guy to neak noil nirther.