Rainy day, planes trains and apocalypse

Here in Southern Mexico it's been raining continuously for 3 days.
It's cool, not cold, getting down to around 60 F, but it looks
cold and miserable so it feels colder. Reading the interwebs:
Egypt, good luck, congratulations, etc. Hopefully the radicals
won't take over and the worse thing they'll chant outside the US
Embassy will be "Serious knee injury to the Great Satan".

I can see high-speed rail is back on the drawing board. I really
like trains. It's fantastic in Italy,if you live within walking distance
to a train station, you can go from your house to anywhere in Northern
Italy in just 3 hours without a car. It works perfectly in a small
country with nuclear power, everything is all electric, if the price
of oil goes to 400/bbl, train tickets stay the same while airlines
go out of business. (Italy doesn't have nukes unfortunately)

I've taken trains all over europe, the longest run I took was from
Milan to Napoli. 400 miles and 5 hours, which wasn't really that
bad because you're going not to an airport an hour outside of town
and you don't have to be there very early, so a 5 hour trip is 5
hours.

Key things that make trains successful:
- train stations are downtown
- trains are on a separate network then roads, no crossings
- passengers separate network from freight

What makes high speed rail successful:
- high speed trains are on a separate network from other trains
- all distances are within normal airplane travel time, one day travel
is possible if unpleasant
- it's all electric. at some oil price point, high speed rail will
be more efficient if the electricity is coming from coal or nukes.

France is most prepared for the future, with all their major cities
linked by nuclear powered high speed rail, when the next oil shock
kills the airline industry they'll still be ok for internal travel.
I would be ok with emulating france, creating local high speed networks
in the usa with new nukes at the same time to power them.

What I would do if I were emperor, I'd start to build local routes
of less than 400 miles with the nukes to power them and spend money
on research for even faster trains using maglev to build the cross
country routes.

There are two similar length routs (400 mi vs 387 mi) from Milan to
Naples and New Orleans to Dallas, that's about the limit I could be on
a train and still make a meeting on the same day. I found a report
that estimated the building cost for the tracks, two way tracks on
elevated cement roadway, at 20MM euros per km, which is around
$40MM per mile. A 400 mile route would cost $16 Billion.
Or a better route to start with would be the triangle between
houston-dallas-san antonio, that loop would around 720 miles, or
$29 Billion. That triangle route has lots of traffic, lots of people
moving from downtown to downtown.



The purchase of trains versus the purchase of aircraft is a wash. I doubt
we'd save much on fuel costs if you include the cost of a nuclear power
plant to power these things, but we should build them so that we have
availability of travel. We made it through the last crash with some
part of the oil industry left, but I don't see how we can make it through
an infinite number of these crashes. When prices reach $150/bbl again next
year, the economy is going to crash again, then the oil industry. We're
really just starting to ramp up now, after another crash we won't ramp up
at all, prices will just march straight back up again because production will
really be in decline. As the economy circles the drain demand destruction
will kill the price of crude because no one will be traveling.

The reason I think we should be doing this I'm starting to think it's too
late for scrubbing the budget, we're using the credit cards to pay the
mortgage, we should probably build something so that after the crash people
can still travel without having to take a pack-mule.

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.

future shock

A really important post over at the oildrum that outlines what I think
will be happening over the next few years.

We now appear to be bumping our heads against an invisible ceiling, where the decline in real energy meets our pain tolerance for high prices. When gasoline hit $4 last year, it created real demand destruction because people simply couldn’t afford it with their evaporating dollars. Likewise, the spike in natural gas and coal prices ultimately translated into such high prices for basic building materials like cement and steel that demand was curtailed.

The economy is going to be squeezed steadily lower by decreasing availability
of energy. As energy prices increase, the economy spirals downward which crashes oil prices
leading to reduction in availability. I think this cycle will be repeated over and over in the coming months and years so that the business cycle will lurch from ´greenshoots´ to further
deepening of the depression.

We´re already seeing this at work where it is slower so that prices are coming down (the crises!),
but we´re still kind of busy because layoffs are cutting out the cushion of people that allow us to take advantage any extra business. None of the oil industry can ramp up in matter of weeks, it takes at least months to get tools and people, as soon as tools and people arrive things are slowing down again.

What the government should be doing should be a crash program to provide energy self sufficiency in the USA. Nuclear, Solar, fusion, oil and gas. Instead this cap and trade bill will probably finish the destruction of the domestic oil and gas industry if it passes the senate.
(I haven´t read it, but since neither has the house of reps I´m guessing it will be a giant boondoggle with lots of poorly thought out ideas chock full of unintended consequences).

What the bill needs to do is drive conversion of cars to natural gas and hybrid. Construct dozens of new nuclear power plants. Create dozens of plants to construct PV panels and wind turbines. support the drilling of natural gas in the USA. I´m guessing that it will drive some construction of wind turbines and pv panels that are made in china, but not much else.

We´re getting down to nut-cutting time as far as decisions go, the question will be what should individuals do to ride out the storm with some kind of style. I think the key will be personal sustainability, the ability to generate some amount of power and food as electricity rates skyrocket will be important. Anything imported will be prohibitively expensive and or the value
of dollar denominated accounts will go toward zero.

I´m personally stuck with one monkey´s paw wrapped around a job I´m too afraid to let go of and one paw grasping around looking for another. I think I´ll be forced by circumstances to take
my own advice when I get downsized in the near future.

LEARN it

From the Oil Drum, the acronym LEARN:

Localize food and energy production
Educate yourself and others
Adapt to a limited solar electric future
Ration all fossil fuels
Negative population growth

It's not certain that things will get bad as this acronym would indicate,
but if china does change the reserve currency to a non-dollar currency while
production declines not necessarily due to peak oil but because the only people
with money for exploration are the chinese, the saudis and exxon, the dollar
price of oil could skyrocket. Most of the oil produced in the usa will be exported
to earn yuan, or euros or whatever, while the average Joe's in the usa will have
to make do with the leavings.

A plan B instead of oil would be a good idea. Putting pv panels on everything possible and
building plug in hybrid cars with pv panels will be one way to continue a near
american lifestyle. The big bailouts and tax credits should be focused on getting
people to make things and stop buying chinese crap. One good thing to make would
be pv panels, batteries, racks, charge controllers and inverters.

Since that won't happen, if you live in an area that gets an average of at least 4 hours
of sunlight per day, then start cutting back, insulating and then installing solar
power.

[in italy they don't have enough electricity so they ration power, if we turn on the
washer and dryer and tv at the same time, the breaker on the meter trips. It
would be pretty cool if I had some pv panels to keep that from happening at noon.]

Cheaper gas, more problems for exploration and production industry

The New York Times has an article about the price of natural gas
collapsing due to oversupply caused by the economic crash, but also
by the globalization of natural gas supplies.

The decline in crude oil prices gets all the headlines, but the first globalized natural gas glut in history is driving an even more drastic collapse in the cost of gas that cooks food, heats homes and runs factories in the United States and many other countries.

Six giant plants capable of cooling and liquefying gas for export are due to come on line this year just as the economies of the Asian and European countries that import the most gas to run their industries are slowing.

Energy experts and company executives say that means loads of gas from Qatar, Egypt, Nigeria and Algeria that otherwise would be going to Japan, Korea, Taiwan and Spain are beginning to arrive in supertankers in the United States, even though there is a gas glut here, too.

For E&P in the USA, this will be bad, keeping prices below $4 until we reach peak gas
sometime in the next few decades. It will even out the normal swings in gas prices that is
normally seen in the USA, but it will cut the legs out from under yet another american industry.

For total oil recovery this will be bad as well as poorer countries monetize the gas in reservoirs instead of reinjecting it to maintain oil production. For production that has no
gas pipeline or method of selling the gas the only two options are reinjection or flaring or using
the gas locally. As more oil exporting countries have an opportunity to earn more hard cash
instead of maintaining reservoir pressure or selling cheap gas to the locals, I predict that
is what will happen.

The only good thing to come out of worldwide supplies and a worldwide glut will be the countries that depend on Russia for their gas supplies will have an alternative source of gas and won't have to depend on Putin to keep warm.

Global cooling, global warming

Fabius Maximus has a standard good post on the current financial
crisis with a summary of what could happen going forward:

The new world brought another period of peace and prosperity, perhaps the greatest 5 decades the world has ever seen. Now the two superpowers of that era both have uncertain futures. The world sinks into a severe recession. Beyond that new challenges await.

1. Peak Oil
2. Climate change
3. The shift of power from west to east
4. The second demographic transition, aging populations and perhaps extinction for some major cultures.

Perhaps the new world will be even better than we can dream. It’s up to us.

A commenter there leaps on the climate change item. Fabius leaps back:

Fabius Maximus replies: The climate has never been static, but the changes have often been bad news. Like the little ice age. I suggest you study that period, as there are tentative indications we may be entering another cooling cycle. Not necessarily as long or cold, but even a few years of cold would be unpleasant with world grain inventories (per capita, or days demand) at 50-year lows.

He makes a good point. I might be a an "AGW denier", but I do worry about
climate change. Here in Italy it's much colder than I'm used to and it makes
me see that without heat it would be pretty hard to live through the winter.
If it is several degrees colder it would be much worse, going from 3 degrees above
freezing to zero would mean snow every day instead of just rain every day.

If it is just warmer then things might suck, we might be sitting under ceiling
fans stirring barely moving air as we sweat like a scene from In the Heat of the
Night, but we won't die. We need to be spending money to mitigate current problems
now, and not wasting trillions to prevent a potential one or two degrees
temperature rise in 100 years. Problems #1 is my real worry.
If we have energy, we can survive heat or cold. If we don't have energy, then
instead of surfing the internet while watching my new 40" LCD I'd be in
bed with 2 comforters on top of me.

Peak oil price drop explained