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.

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