[FoRK] Malthusiasm II: Hubbert's Peak meme picking up steam

jbone at place.org jbone at place.org
Wed Feb 25 17:28:06 PST 2004


	
Geege posted a link about this a week or so ago;  I think I've  
mentioned it once or twice (once today, I know) --- and now this in  
from the NYT, via John Robb's blog:

--

	http://jrobb.mindplex.org/2004/02/24.html#a4332

Economy: The looming oil crunch

  The NYTimes [1] has an interesting report (anticipated by this blog)  
on Saudi oil fields:

Energy forecasts call for Saudi Arabia to almost double its output in  
the next decade and after. Oil executives and government officials in  
the United States and Saudi Arabia, however, say capacity will probably  
stall near current levels, potentially creating a significant gap in  
the global energy supply.

This is in line with Hubbert's peak -- an analytical technique that has  
proven to be extremely accurate at predicting the peak of oil  
production.  The analysis predicted the peak of US oil production in  
1972 and the peak of global production in 2003.

The idea behind the analysis is that while vast new resevoirs of oil  
have been found, that oil is very expensive to extract.  Additionally,  
the easy to extract oil, that is being pumped at the current price, is  
depleting at at ever increasing rate:

The average decline rate in Saudi Aramco's mature fields — Ghawar and a  
few others — "is in the range of 8 percent per year," without  
additional remediation, according to the company's statement. This  
means several hundred thousand barrels of daily oil production would  
have to be added every year just to make up for the diminished output.

As the price of oil increases, it makes the newly discovered fields  
economical.  However, the amount of new oil production at a higher  
price will not make up for the loss of production at mature fields.   
The result in aggregate is a fall in production.  The US hit this peak  
in 1972 and its oil production has fallen every year since.  The world  
hit it in 2003.  Here's an example of this dynamic:

To offset its declines, Saudi Aramco is bringing back into production  
one idle field, Qatif, and is enhancing production at a nearby offshore  
field, Abu Safah. The company says that with expert management, these  
fields will produce about 800,000 barrels a day.  But current and  
former Saudi Aramco executives question those expectations, contending  
that the goal of 500,000 barrels a day for Qatif is unrealistic and  
that development costs are higher than anticipated.  Qatif poses real  
difficulties. It is near housing for Saudi Arabia's minority Shiite  
population and contains high concentrations of hydrogen sulfide, a  
highly toxic gas. Its development is "particularly challenging,"  
according to a technical paper by Saudi Aramco engineers presented last  
year in Bahrain, which said that 45 percent of potential drilling sites  
"were rejected due to safety concerns."

The problem we all face is that global demand for oil is climbing at an  
accelerated clip (with new requirements coming from rapid development  
in China and India) at the very point that global oil production is  
starting its inexorable decline.  The economic and social problems this  
will cause are going to require some of the best diplomacy we have ever  
seen.

Some more:

This decline in production, and the higher prices that result, will  
create increasing demand for alternative energy sources.  For exampe:  
Bill Gross is on the right track.

It does point to an alternative reason to take Iraq: to eliminate the  
political impediments to full Iraqi oil production.

Developing countries like China are incredibly inefficient in their use  
of oil, so the impact of this crunch will be felt faster there.

--

[1]  
http://www.nytimes.com/2004/02/24/business/24OIL.html? 
ei=5007&en=dc727c73cd688914&ex=1392958800&partner=USERLAND&pagewanted=pr 
int&position=

[2] http://pup.princeton.edu/titles/7121.html

[3] http://jrobb.mindplex.org/2002/12/18.html#a2979





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