By Mark Halper
Posting in Energy
The production of petroleum isn't exactly in decline, according to one report. We're just paying a huge financial and environmental premium to extract it from new and harder to reach places.
The notion of "peak oil" says that the world's rate of oil production will hit a permanent decline, if it hasn't already. It's one compelling reason why we're supposed to pursue alternative fuel sources, especially for transportation, where oil rules.
But as the latest Time Magazine notes (subscription may be necessary, although you get a few free trial issues), we're so addicted to the stuff that we are paying a huge premium both financially and environmentally to extract it from harder to reach places often using unconventional drilling techniques.
By tapping new sources, we would add to dwindling global reserves, and delay peak oil. As you can see below in figures from the Time story, our quest for "extreme oil" could add considerably to the oil at our disposal, especially when you add them to what the CIA World Factbook says are the two largest proven national reserves - Saudi Arabia's 262 billion barrels, and Venezuela's 211 billion barrels (some rankings put Canada at number two). The "extreme" search includes:
-Tight Oil. Oil extracted from shale in states including North Dakota, Montana and Texas using the same controversial "fracking" techniques that are allegedly polluting drinking water and triggering earthquakes in the shale gas business. Global reserves estimated at 300 billion barrels.
-Oil Sands, aka Tar Sands. Oil extracted from sticky bitumen, itself extracted from the plains of Alberta, Canada, often from open-pit mines that leave toxic tailings. Oil sand production itself requires a lot of carbon-emitting energy to provide industrial heat - as SmartPlanet has noted, small "modular" nuclear reactors could help reduce the carbon footprint. Global reserves estimated at 169 billion "recoverable" barrels.
-Arctic Offshore Oil. What some people would call an environmental downward spiral. As fossil-fuel based global warming melts Arctic ice, it becomes easier for oil companies to drill in the Arctic region, providing more fossil fuels for consumers and industry to burn and emit more CO2 to feed more global warming. Any oil spill - think iceberg meeting tanker - would be much harder to clean up than the Horizon disaster in the Gulf of Mexico. Global reserves estimated at 90 billion barrels.
-Presalt Deepwater Oil. As the Donovan song says, "way down below the ocean." Presalt oil requires drilling through nearly 2 miles of water and "post-salt" rock and then through over a mile of salt, off the coast of Brazil, where state oil company Petrobras thinks it has a bonanza. The project goes deeper than the Horizon. "A blowout would be incredibly difficult to control," Time notes. Reserves estimated at 50 billion to 100 billion barrels.
-Oil Shale. This is different from "tight oil" and "oil sands", and thus far has been too costly to implement. Shale contains a solid bituminous material called kerogen, which companies would mine and then heat in order to separate the oil from the rock. In the U.S. oil shale occurs in Wyoming, Colorado and Utah, and from Michigan and Ohio south to Tennessee. Global reserves estimated at 800 billion barrels (which is 3 times Saudi Arabia's proven 262 billion barrels).
All new sources would continue to feed our addiction to polluting and CO2-spewing oil.
And they're not cheap. According to Time, "the new supplies are for the most part more expensive than traditional oil from places like the Middle East, sometimes significantly so." In ascending order, it ranks the per barrel cost of production at $45 to $65 for presalt deepwater; $50 for tight oil; $50 to $75 for oil sands, and at over $100 for both arctic offshore and oil shale.
In a dire financial scenario for consumers, the high price that oil companies now get for gasoline (about $8.65 a gallon at my local "petrol" station here in Britain - you have it easy in America!) helps support the high cost of extracting extreme oil.
Of course, ever since Western Pennsylvanians burned wooden oil derricks to keep warm when the world's first wells ran dry in the 1860s, oil has been characterized by boom and bust. Will the price of oil ever collapse again? Big oil has an incentive to keep it high to fund its Arctic explorations and the like.
The high consumer prices also help fund development of renewables for some oil companies (several are investing in solar, among other areas). Like lunch, there's no such thing as a free switch to renewables - we all have to pay for it somehow or another.
Demand is also doing its part to keep prices high. The West isn't exactly kicking its oil habit, and China is buying way more of it than it ever did. Then there's the old standby excuse: Middle East tensions. (For more on oil price trends, see the links below to SmartPlanet "Energy Futurist" columns).
Greed, as usual, factors in as well. Sometimes I wonder if Big Oil sees the writing on the wall - sees us stumbling to what could eventually be a non-oil future as we turn to alternatives - and is gouging us as much as possible while supply and demand lasts!
Images: Uncle Sam the addict, from Snowlepard via Flickr. Diagram and rig from Petrobras.
Reducing the environmental impact of oil sands and Arctic oil, on SmartPlanet:
Some oil and peak oil lessons from SmartPlanet's Energy Futurist Chris Nelder:
Apr 3, 2012
Because of total focus on petty politics, the science of energy and it's long term consequences to the US have been lost to both political parties - whose staggering ignorance on the subject is amazing as it it is repulsive. In the best case more drilling and conversion to nat gas will buy us a few decades. Biofuels on the other hand will actually shorten the time we have to develop truly renewable energy. Over two billion dollars has been spent on algae biofuel research - mostly in the last five years with exceptionally limited results - so why? Exxon alone claimed to be investing 600 million in 2010 and several other big oils are heavily invested - why? Big oil is logically interested in algae and other biofuels because they would be the primary recipients of biofuels business. All significant scale biofuel production is dependent on NPK fertilizers. The N - nitrogen in NPK comes from natural gas. P - phosphorous from rock phosphates (another peak commodity - like oil) whose mining consumes huge amounts of petroleum fuels - diesel and natural gas as does K potassium. Some experts have calculated that a global biofuels would quadruple the NPK demand: (http://seekingalpha.com/article/182522-taking-stock-of-phosphorus-and-biofuels) and consequently have dramatic impacts on the 85-95% of human food production that is currently completely dependent on NPK. Did I mention that 85% of the essential P (rock phosphate in NPK are located in Morocco and the Western Sahara. (http://www.linkedin.com/redirect?url=http%3A%2F%2Fwww.foreignpolicy.com%2Farticles%2F2010%2F04%2F20%2Fpeak_phosphorus%3Fhidecomments%3Dyes&urlhash=0B1M&_t=tracking_disc) That's biofuels energy independence strategy - we swap our oil dependence on Saudi Arabia and the ME for a new phosphate dependence on Morocco and N. Africa. Brilliant!
About oil and peakoil, a call to French presidential candidates "mobilizing society in the face of peak oil" has been published March 22nd in lemonde.fr. Signed by : Pierre Ren?? Bauquis - Former Director of Strategy and Planning at Total Jean-Marie Bourdaire - Former Director of Economic Studies at Total, former Director of Studies at World Energy Council (WEC) Yves Cochet - European Deputy, former Environment Minister. Jean-Marc Jancovici Consultant, energy and CO2 issues, ASPO France Jean Laherr??re - Former Chief of Exploration Technologies at Total and ASPO founder Yves Mathieu - Former Hydrocarbon Reserves Project Manager at the Institut Francais du Petrole (French Petroleum Institute) Translation published on Energy Bulletin : http://www.energybulletin.net/stories/2012-03-29/mobilizing-society-face-peak-oil-call-french-presidential-candidates And on a dedicated site (with petition/join the call functionality) : http://tribune-pic-petrolier.org/mobilizing-society-in-the-face-of-peak-oil/ Please do not hesitate to sign and forward! Any language welcomed for the message Thanks Yves
I always love how people who hate oil make all these artificial distinctions about oil types. In the end it doesn't matter as long as refined products are available at prices people are willing to pay. What's really going on here is that all these people are looking for any excuse to move us away from oil because it doesn't fit their vision of a green utopia. All the prices cited in the article are under the current price for a barrel of oil (about $100), with the possible exception of arctic offshore and oil shale. The others are profitable at prices that translate to pump prices for gasoline at around $3 or less. History shows we can easily get by with those kinds of prices. Lots of other critical resources such as iron and copper have long since exhausted their highest grade sources. We are having to use much more low-grade sources for these and as a result pay more for them. Yet somehow we get by. I don't hear any anti-fossil fuel people complain about "peak iron" or worry about the end of these resources. Finally, we do own the greens a word of thanks. In the past, their actions in the US have artificially put off-limits all sorts of oil such as offshore and ANWAR that is now relatively easy to tap. No other country in the world has voluntarily put off-limits such immense resources. Once the US comes to its senses, this oil will be a huge boon for the US -- and the federal deficit. Better to pay royalties to the federal government than ship our money to Venezuela.
The world may not be near peak oil but it certainly is at the end of cheap oil. World demand for oil is greater than the production, this does raise the cost of oil for everyone. The airline industry has been the hardest hit because the profitability of the airlines diminishes as the price of oil goes up.
Your citing the "fossil fueled global warming" mantra shows you are of that liberal slant, where ANY use of that nasty, icky old oil is abhorrent! There is NO scientific-based study which conclusively establishes fossil fuel is the primary cause of global warming, which itself is ALSO NOT proven! This is just one of the ways liberals build one lie upon another, based on an unrelated fact! For instance, there is a "consensus of opinion" holding forth that 'global warming' exists, however this 'consensus' is from a group of 'experts' in fields totally unrelated to world weather patterns and conditions. This is as if a carpenter, a bookkeeper, a travel agent, and a salesman were to decide the advisability of your having YOUR appendix removed! Likewise, 'global warming' has been blamed upon other sources, as well! Remember a few years back, the 'hole in the ozone' scare "caused by escaping auto air-conditioner Freon"? Hydrocarboflourosomething or TFE (aka RS-22 Freon) was causing too much or too little (whichever) ozone! Whatever the nasty gas, the same chemical stuff emitted in a year by these leaky auto air conditioners was, at the same time, LESS than what was produced by Mt.Pinitaubo erupting at that time in the Philippines in ONE DAY! If you have proof of the accusations you've made, please cite your references!
[i]Greed, as usual, factors in as well. Sometimes I wonder if Big Oil sees the writing on the wall - sees us stumbling to what could eventually be a non-oil future as we turn to alternatives - and is gouging us as much as possible while supply and demand lasts![/i] Before this last statement, you were on track to a quite reasonable conclusion: increased demand + tighter supplies = higher prices.
Whatever. However, persistently high fuel costs will push people toward other energy sources and further efficiency, more Government regulations notwithstanding
Most soils are very good at retaining phosphorus, nearly all of it is in insoluble form which doesn't leach out - but plants can't use it in that form, either. In healthy soil, microbes constantly release soluble phosphates - but when you disrupt the natural soil life by applying chemical fertilizers and pesticides, or by depleting the soil's organic matter, you can run short of available phosphate. To correct this, chemical farmers add superphosphate - rock phosphate that's been treated with acid to convert it to soluble form. Organic farmers, however, can get all the phosphate needed by returning plant residues and animal manure to the soil. It's just another reason why chemical agriculture is unsustainable.
I love oil. I love the "energy potential" it puts at my use at the lowest possible out-of-pocket "price". Even if I have to blind myself of the "costs" on the system. The system you need to have a decent healthy life. I love that in 1/10 barrel of "light sweet crude" grade oil I have the equivalent of 1.25yrs of human labor at a current Brent Crude out-of-pocket price of just USD$10.50. Would you flip burgers for 1.25yrs to earn USD$10.05? If you were willing to do it for federal minimum wage of roughly $15,000/yr, would I be willing to pay you if I can use a machine that only requires me to feed it $10.50 of fossil-fuel-derived energy? Of course something's not going right for back in 1970 people paid slightly less than 10cents for the same 1/10 barrel of light sweet crude. Further, something tells me am being swindled even more for back in 1970 it was actual crude oil sold. Today that's not the case since according to Exxon's 2011 prospectus their actual reserves are more than 50% crude condensate (notice the "condensate"). This means, as an industrial consumer you better start paying attention to the "grade" of "oil" you purchase for it is not the same oil. Hence, and this is key, not the same energy density. Meaning you pay MORE USD$ out-of-pocket for LESS work potential in the "condensate" you're now getting (one factor why so many refiners can't make a buck nowadays and rather shut their plants eh?). Am fine paying more, as long as it is not as much as I'll have to pay you to do the same work. But then we get to the finitude of the resource. The fact that petroleum and its condensates are a finite resource. Meaning it will get to the point where it will cheaper to pay you to do the work that oil now affords me at these out-of-pocket prices. At that point it may be "cheaper" for me to force you do the work by removing labor and safety laws, lowering quality of life expectations, freezing/lower minimum wage, outlawing unions. If it gets that expensive it would be much easier to lobby some unethical Congressperson for certainly there's no lobbying a depleting oil well, or bribing tar sands to have similar energy density as light sweet crude. And if there are many more like you to take your place, then, as a true capitalist, I can always rest assured that were you to die, others will replace you by similar means at not much more "cost" to my pocket. They'd probably want to replace you. Oh wait, that's what we've been doing since the 1970s, yes? So you see? Is not just a green Utopia simpleton greens wish would materialize so we could replace oil, is that the depletion of oil means likelier chances of very ugly traits in human nature will come back to the fore. And so give a toast to the energy slaves the different grades of crude affords you. And pay attention to those "grades" of crude for some will allow multiple more while some grades will allow less, a lot less. So few in fact that it will be impossible to tune up our infrastructure. Oh wait, that could explain why USA now has the highest number of key infrastructure components (ie bridges) either needing immediate maintenance, getting postponed on maintenance or being closed. Ditto for smaller roads getting converted back to gravel.
Thanks Zackers. Those sub-$100 figures are "cost" not price. So, now we're back on profits, greed, funding renewables, etc. We can't turn off the oil tap overnight and probably not for a long, long time. But the less of it the better, don't you think? Related thought: I generally like the way the auto industry is finally, finally, finally responding, with improved efficiency designs.
...before implying you know what "scientific-based" would mean to "conclusively establishing" anything. Not being disparaging, really. You learning the scientific method and the process of proving/disproving a theorem would likely help you, your community, your country in the long term. Not that we have a long term to look forward to at this rate, but better to be aware and humble at our analytical shortcomings as individuals rather than go all-in with ideology talking-points as the Macondo Deepwater Horizon rig sinks beneath your feet. Instead you're coming off as a puppet of some fringe movement that tells you "always ask them for proof and we'll delay them". May work for a while but makes you no more than a puppet nonetheless.
Scientific consensus is not suggesting that! The consensus (throughout all related fields of science and many others by the way) is that human actions are contributing to the increase in CO2 levels, and that CO2 levels almost perfectly corresponds to average global temperatures and has done for millions of years. Carry on seeing what you want to see in your mind, it doesn't discount real evidence. http://data.giss.nasa.gov/gistemp/
Your equation is absolutely valid but incomplete, Lexchis! Somewhere in there I would factor in - call it what you will - a 5th family car, a 3rd vacation home, a 24-ounce steak, a better life, more more more, greed, or (____your better word here____), it's not a strictly scientific formula. Not all are guilty, but the factor is present.
What's so terrible about making money? Do you work for free? While the oil industry makes the most money in absolute dollars because energy is big business, it's hardly the most profitable. In fact, if you look at the top 50 most profitable companies (see http://money.cnn.com/magazines/fortune/fortune500/2011/performers/companies/profits/revenues.html ) you'll find no major oil company and only a few niche energy companies. Instead, among the top 50 most profitable companies are the likes of Visa, Microsoft, Apple, Coca-Cola, and McDonald's. Why single out the evil oil companies for their profits when they aren't even the "worst" culprits? As for the auto industry, they've provided more energy efficient cars for decades. Of course, by today's standards an '80s "energy efficient" car is not much because the technology has improved, but buyers always had the option since the first oil shocks in the '70s. The problem is that whenever gas prices eased, buyers always made their preferences for larger and more powerful cars known. Is this the auto manufacturers' fault?
Mogul264 - As Casualjoe has kindly provided the links you requested (thanks CJ) I won't enumerate or elaborate except to add one more - an eloquently folksy video presentation of man-made global warming from veteran climate scientist James Hansen: http://www.ted.com/talks/james_hansen_why_i_must_speak_out_about_climate_change.html. But I'm up for a level-headed discussion. Yes, there are causes other than fossil fuels, including the sun itself. "Liberal"??!!!! Hey, let's keep the language clean!!!
It seems the best paid joumalists, if you can really call them that, are the ones who are willing to throw out the truth and spew whatever junk is put in front of them in an entertaining manner. To show a recent example, it is amazing how much money MSNBC and Current were willing to pay Keith Olbermann as long as he ranted what they told him too. The moment he went off the reservation and drifted too far left even for them they cut him loose.
Hah! I ain't whining. First, I love what I do. Second, you asked , I answered - that's not a "whine", it's a "reply" (Hates - you're a great commenter here on SmartPlanet - much appreciated, and please keep it up!) Third, it's not a "whine", but rather a "public service" when I point out that society poorly compensates journalists. It's getting worse and this, my friend, is as much a threat to free society as any oil shenanigans are.
Living beyond ones means is also common among people suffering from class envy. If your chosen profession does not pay enough you have two options. Get into a new field that pays more or live within your means and quit whining. Both options are within your control, so your overdrawn situation is well within your control. Stop blaming people who earn more than you through an honest days work. Envy green in not a pretty color.
Hah! That's not socialism you see, Hates. Rather, it's the flag on my bank account that signifies "overdrawn." A common banner among honest journalists practicing in a society in which the truth does not pay (well)!