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TEQs & Peak Oil : Peak Price for Energy ? $200 Barrel ?
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Bandidoz
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PostPosted: Wed Nov 05, 2008 12:07 pm    Post subject: Reply with quote

If there's falling production coupled with a low price, it's to balance supply and (low) demand.

If there's falling production coupled with a high price, it's constraint on supply.

Isn't it as simple as that?
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RGR
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PostPosted: Wed Nov 05, 2008 3:15 pm    Post subject: Re: Dipstick in hand Reply with quote

[quote="jo"]

Last edited by RGR on Thu Aug 11, 2011 1:37 pm; edited 1 time in total
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jo



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PostPosted: Thu Nov 06, 2008 12:05 am    Post subject: A little more background Reply with quote

The depletion of oil and gas wells is not always the same shape, and not really some kind of bell curve, but the decline of production is usually preceded by a plateau in most cases, as far as I understand it.

Here's some examples of the British production :-

https://www.og.berr.gov.uk/information/wells/pprs/Well_production_offshore_oil_fields/offshore_oil_fields_by_well/offshore_oil_fields_by_well.htm

The point is that decline is happening apparently in 6 out of the 7 oil producing regions of the world. And it's widely accepted as fact :-

=x=x=x=x=x=x=x=x=x=

http://gristmill.grist.org/story/2008/11/3/102836/827

If anything, the outlook for oil supplies is somewhat more pessimistic than it was a few years back. Take a look, for example, at this recent survey of petroleum geologists [PDF] that was conducted at a recent professional convention and reported in the journal of the Society of Exploration Geophysicists. Three out of five petroleum geologists surveyed believed that global oil production would "peak" within 10 years.

http://www.seg.org/SEGportalWEBproject/prod/SEG-Publications/Pub-The-Leading-Edge/Pub-TLE-Non-Technical-Past-Issues/pdf/pdf-archive-2008/tle2710r1240.pdf

http://www.seg.org/

The geologists may be wrong, of course. But trying to outguess the considered opinion of well-informed scientists is a sucker's game. So no matter what oil prices do in the short term, we'd be wise to prepare ourselves for tightening oil supplies, and higher oil prices, in the not-too-distant future.

=x=x=x=x=x=x=x=x=x=
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RGR
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PostPosted: Thu Nov 06, 2008 1:48 am    Post subject: Re: A little more background Reply with quote

[quote="jo"]

Last edited by RGR on Thu Aug 11, 2011 1:37 pm; edited 1 time in total
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jo



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PostPosted: Tue Nov 11, 2008 1:14 pm    Post subject: Failure to reply Reply with quote

@RGR

Sorry to be so slow in replying. I tried to reply several days ago with loads of links and text, but the posting failed, and I don't have time to replay all the content.

Suffice to say, in response to you saying : "It has been reversed in various places around the world" : yes, production depletion in various places and even in specific oil wells has been reversed, usually by variations on Enhanced Oil Recovery.

However, even though the total production from the well is above expected returns, the rate of flow is not enhanced greatly. [Some reference to the North Sea and 3% increased flow from one well.]

So we are left with oil wells that will carry on performing for longer, but not performing much faster. The net effect overall is still depletion.

As you hint at with : "Once transient behavior crosses over into standard production decline, the flow rate can best be described as a exponential decline for some period of time, possibly lasting until the well is plugged."

And when you say "a reasonable amount of choke is applied to keep production/pressure within various operating constraints, pipeline fill, reservoir management, minimize any possible formation damage, etc etc" : yes, of course output from various oil wells is controlled, not only by operational issues, but also by investment issues.

Just knowing that there are heap big oil chambers out there does not necessarily mean that anyone will spend the money to get it pumped out.

You say : "Sometimes it is reversed by unconventionals." Yes, let's talk unconventional. If it takes more energy input to get the same energy output, the high quality oil and gas is always used first, and the corporates are unwilling to go after the lesser quality unless there is a market for it...which brings me on to the Carbon Price.

If the EROEI Energy Returned on Energy Invested is graded downwards : in other words, if people switch their business from crude to tar sands, it causes a step change in profitability, owing to the higher Energy required to process the product.

If as seems likely everywhere in the World initiates some form of Carbon pricing, that will be a double whammy on unconventionals, which are Carbon Emissions dirtier to bring to product, as well as being more expensive to process.

The necessity for Carbon Emissions limitation will inevitably make unconventionals unprofitable and undesirable. So we are left in a discussion about the competition for the last remaining good quality hydrocarbon Energy resources, and whether Demand Side control is perhaps the best way to calm that and extend the lifetime of the Oil Age.

Paul Mobbs (Energy Beyond Oil, Less is a 4 letter word) shows a nice diagram. With even a few percentage points drop in demand year on year, the good oil supply could last a hundred years.

We need restraint. We need prudence.
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RGR
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PostPosted: Tue Nov 11, 2008 3:27 pm    Post subject: Re: Failure to reply Reply with quote

[quote="jo"]

Last edited by RGR on Thu Aug 11, 2011 1:38 pm; edited 1 time in total
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jo



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PostPosted: Tue Nov 11, 2008 5:39 pm    Post subject: You got me on the terminology ! Reply with quote

@RGR

Yes, sir, you got me on my loose terminology !

Yes, depletion simply means "emptying the well" and decline means "emptying the well more slowly".

There are a couple of issues I'd like to raise :-

1. Decline in production is beyond our control

Leaving aside enhanced oil recovery, and leaving aside the idea of choking the oil well, production decline is entirely out of our control. Once an oil well gets beyond a certain point in its maturity (measured by a number of factors), production will inevitably deline.

What I am attempting to establish is that many of the current oil wells are known to be liable to production decline, or have already begun their descent. In fact, there are particular fields which are declining in their entirety.

2. Applying new technology cannot boost production by very much

Hats off to you for pulling production out of a 100 year old well !

But the question is : what was the flow rate of production ? Not high, I'd guess.

This is the general experience of most attempts to increase extraction beyond expected. It doesn't come fast.

Therefore, although more oil is produced, it doesn't flow as quickly.

If this stays the standard experience, and all the oil regions become "mature", then we are definitely facing a peak : Peak Oil Flow.

Then what happens is (a) Since almost all we do in industrialised societies depends on the "Liquid Black Gold", prices for Carbon Energy will rise relative to the rest of the Economy (b) It becomes more expensive to go drilling for new oil. This would cause a "choke point" in production.

3. More is possible, but only if you can afford it

With any oil well, if someone is prepared to spend money, more oil can be extracted, albeit very slowly. This is true of any of the hydrocarbon resources, but there is a problem. The more unconventional fuels are sought, the more expensive they become, and the more Carbon Dioxide emissions are involved, which again makes them more expensive in a Carbon Costed World.

At some point, unconventionals become uneconomic, and you end up with the "dead zones" : abandoned tar sands areas will be impossible to clean up and return to nature. This will mirror all the former oil-rich areas now abandoned. People couldn't even afford to clean up the old rigs, pumps, derricks and gantries.

This sudden "Carbon Crunch" - a sharp decline in worldwide fuel production - would dwarf the current Economic disturbances. I would therefore recommend against fuel sources like unconventional oils as they require high input energy (and therefore cost), and so a shift away from crude to unconventionals could exacerbate any Carbon Crunch point - that is - make it more sudden.

We have to think systemically, and this means leaving precious crude oil underground where we can, sharply improving energy efficiency in industry and in equipment and vehicles, and also moving to renewably-sourced energy.
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RGR
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PostPosted: Tue Nov 11, 2008 9:08 pm    Post subject: Re: You got me on the terminology ! Reply with quote

[quote="jo"]

Last edited by RGR on Thu Aug 11, 2011 1:38 pm; edited 1 time in total
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jo



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PostPosted: Wed Nov 12, 2008 1:21 am    Post subject: Where does the value of money come from ? Reply with quote

@RGR

Here's one thing I'd like to put before you, and I know your little grey cells are up to the task of analysing it.

You said : "More is nearly ALWAYS possible if you can afford it, thats the entire point of why the peaker dogma doesn't hold up well."

I would like you to consider the question : where does the value of money come from ?

I think that we can both agree that money is a form of exchange whose value is to a large extent buoyed up by the flow of crude oil.

In other words, Oil giveth Wealth.

The other half of my thesis is this : the International Energy Agency and other research and science organisations predict a decline in global production of crude oil, annual, as of now.

Which effectively means : Wealth is going away (or rather, Wealth Creation is going away).

Which leads me to my conclusion : since it is true that "More is possible, but only if you can afford it.", but it is also now true that what you can afford buys you less, there will come a point at which more will NOT be possible, because what you can afford cannot cover it.

My summary is that Money is a Hydrocarbon-backed Currency. It does not have a value that exists outside of the frame of reference of the markets in crude oil, natural gas and coal (about 95% of all Energy we use).

What we can afford depends largely on how much crude oil/gas/coal is gushing/hewn out of the ground.

Peak Energy takes away our ability to extend the life of declining oil wells.

It's OK at the moment to use unconventionals, but as money value becomes tight, we will not be able to justify affording unconventionals.

Signs that money value is shrinking : the cost of shipping, oil rigs, exploration is all increasing.

What do you make of all that ?
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PostPosted: Wed Nov 12, 2008 1:57 am    Post subject: Re: Where does the value of money come from ? Reply with quote

[quote="jo"]

Last edited by RGR on Thu Aug 11, 2011 1:39 pm; edited 1 time in total
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PostPosted: Thu Nov 13, 2008 10:54 am    Post subject: Trade is not the whole story Reply with quote

@RGR

You say "TRADE=wealth".

While it is true that trade brings wealth to those who can command natural resources, it cannot bring wealth when those natural resources start to tail off, or if those natural resources begin to be considered of lesser or negative value.

Let's take the example of those rock crystals that some call diamonds. If, for example, people began to value some OTHER form of artificial crystals for decorative or industrial purposes, then the value of diamonds would fall away. Aboriginal peoples around the world have been tricked of their land rights by exchanging them for baubles. People talk to me about the innate lasting high value of gold, but it has none, really. We might just as well collect flints. What about Carbon Pricing ? As soon as Carbon has a price, the use of hydrocarbon fuels becomes charged. Should the traded value of hydrocarbons fall in that scenario ?

And what if the resource starts to tail off ? What if the United States is unable to continue to import crude oil ? Two thirds of the imports are used for transportation. The indigenous production would be entirely diverted to transport in order to secure that. And then there would be no trade possible with that natural resource. It probably would not even be traded within the borders of the USA : rations would have to be issued, and these would have an untraded value, so people wouldn't trade them.

Unlike you, I do not have a basic belief in the wealth-generating powers of trade. I think it is obvious that the value derived from trading must derive from the value of the goods that are being traded. In other words, oil performs a service that is valued, so oil itself has a value, so trading in oil confers value.
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jo



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PostPosted: Thu Nov 13, 2008 11:04 am    Post subject: Industrialised societies have come to depend on oil Reply with quote

@RGR

You say : "I can buy gold, silver, guns, real estate, cars, politicians and health care with the US $$, so I'm guessing that it has a value outside of your hydrocarbon frame of reference."

Before our industrialised societies used petroleum oil, what did we use to generate power ? Well, we didn't have electricity then. And how did we propel vehicles ? Horses fed on oats.

My view is that we have committed to a path of becoming dependent on oil and natural gas and coal.

It's not that oil is the only thing that generates value, it's that without oil, many of the systems and processes we currently use would not function.

Nobody could manufacture without oil, natural gas or coal, because all the plant runs on oil/gas/coal or oil/gas/coal-derived power.

Given that the International Energy Agency has done research that indicates that, if we continue with the current levels of consumption, the world has 40 years of oil left, I would hazard to suggest we need to get out of Carbon NOW :-

http://www.guardian.co.uk/business/2008/nov/12/oil-gas-companies-credit-crunch

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5141848.ece
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PostPosted: Thu Nov 13, 2008 1:27 pm    Post subject: Reply with quote


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PostPosted: Thu Nov 13, 2008 2:52 pm    Post subject: Re: Trade is not the whole story Reply with quote

[quote="jo"]

Last edited by RGR on Thu Aug 11, 2011 1:39 pm; edited 1 time in total
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PostPosted: Thu Nov 13, 2008 2:58 pm    Post subject: Re: Industrialised societies have come to depend on oil Reply with quote

[quote="jo"]

Last edited by RGR on Thu Aug 11, 2011 1:39 pm; edited 1 time in total
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