'Peak Oil' far, far away


#2950

There has always been the risk that fuel supplies would fail to keep up with consumption, it has happened at least twice since the early 1970’s and both times it resulted in a huge spike in oil prices, thus rationing by cost which prevented any real shortages from ever occurring and allowing the oil companies to bring on the next level of costlier supply.

The next time I expect that EV’s will be pushed forwards as alternative transport while ICE vehicles rapidly become too expensive to run for many people. As for electricity generation, don’t be surprised if coal is resurrected to provide the extra power all these EV’s will need.


#2951

We don’t have to justify it. There are people selling oil and people buying oil – there is no guiding hand determining what they can and can’t do, and no supranational body that can dictate terms. As it happens, the west is reducing its CO2 output somewhat because oil consumption is not increasing significantly, and coal-fired electricity generation continues to be replaced by natural gas. Look to the developing world where all the consumption growth is generated, from all sources. They are also the biggest new users of renewables (although China just recently announced the termination of subsidies for domestic solar panel makers, for reasons that are not yet clear). But insatiable energy demand growth will see CO2 output increasing in spite of big increases in solar and wind. I think it is premature to say where we will end up. If renewables keep growing at the current rate they will eclipse fossil fuels in the medium term. But they are at such a relatively low level that it is impossible to predict that the exponential trajectory will continue, rather than the S-curve that we see in the more mature European market. We also do not have a very good grasp on the depletion curve for fossil fuels.

I don’t think the price run-ups have been related to physical limits so far. The early crises were manifestly the result of the two Arab oil embargos. Admittedly they coincided with the peak of American oil production which created extra tensions. But they were also related to the nationalisation of several middle eastern oil companies, and were as much geopolitical as anything else. Price swings in oil markets are inevitable even without physical limits, as production lags new investment by such a long period. This has actually been considerably smoothed out by tight oil production which can be brought online much faster than the giant offshore projects, and also benefits much more rapidly from technological improvements. Permitting of tight oil “fracking” has been more liberal in the US, but there are large quantities elsewhere in the world so I don’t think we can rely on physical limits to curb CO2 production from liquid fuels for transport anytime in the very near future. Maybe 20-30 years from now. It’s amazing how quickly people are talking about the next supply crunch when the recent run-up in prices is almost 100% the result of a Saudi-Russian pact on artificial supply restrictions. It’s a moderately good thing, though, as under-investment would certainly lead to an actual short term bottleneck otherwise.

I’m a big fan of fusion research and keep a close eye on it as it will be the game-changer of the century when it comes to fruition. However, we have to be realistic. The important vital statistics of any workable fusion reactor were understood decades ago, and they are a combination referred to as the fusion triple product, nTτ, – the combination of ion density, temperature, and confinement time. (Temperature should really be called ion energy, as not all approaches involve a thermalised plasma). Basically you have to squish enough material together, at high enough energy, for a long enough time, to make nuclear fusion likely and you have to minimise the considerable energy losses from multiple factors in order to achieve Q > 1, where Q is the ratio of input energy to output energy, and Q = 1 represents breakeven.

Fusion is easy – it’s been done by amateurs and even school children. Breakeven fusion is very, very hard. Enormous strides have been made but a good analogy is the commercial space race between, say, Virgin Galactic, Blue Origins and SpaceX. They have all done brilliant stuff and each has their own merits, but if you consider the goal of regular commercial interplanetary travel, nobody is close. Even if there are orders of magnitude difference in the altitudes achieved by different efforts, they are all still orders of magnitude away from being able to travel to the planets. Fusion research is like that. It would be a mistake to say it’s as far away as ever, as that would ignore the huge leaps that have been made. But the remaining engineering challenges are formidable.

The next round of advances will come from testing high-temperature superconducting magnets. Those have real potential to increase ion density, or beta (the ratio between plasma pressure and magnetic pressure). This may also be the key to creating reactors smaller and more practical than the ITER behemoth. Right now there are several companies pursuing this – the MIT Sparc initiative mentioned by el diablo, Tokamak Energy in the UK, and a number of smaller enterprises. The good news is that these are making progress through private funding, as public funding is massively concentrated on ITER which simply is not progressing fast enough, though it is still important and may contribute vital technologies.


#2952

Thumbs up ps200306 for an informative post and thread. :slight_smile:


#2953

cross posted with Venezula thread
Venezuela’s Oil Meltdown Defies Belief

Quote:
The utter collapse of the country’s oil production is obviously a big factor in PDVSA’s inability to ship enough oil. Output is down below 1.5 million barrels per day and falling fast.

But the tanker traffic at a handful of its ports has created unexpected bottlenecks, which have slowed loadings. Clogged ports are the direct result of the seizure of operations on several Caribbean islands by ConocoPhillips last month. The American oil major sought to enforce an arbitration award, laying claim to a series of storage facilities on the islands of Bonaire, Curacao and Aruba.

Those assets were crucial to PDVSA’s operations – in fact, they had become even more important as PDVSA’s facilities in Venezuela deteriorated. They had the ability to service very large crude carriers (VLCCs), and were important for storing and blending PDVSA’s oil, and preparing it for export.

oilprice.com/Energy/Crude-Oil/V … elief.html


#2954

The EU requires members to hold a Strategic Petroleum Reserve. Ours has been held in the UK heretofore.


#2955

Do we have enough refinery capacity to store 200K tonnes?


#2956

The Whiddy Island oil terminal in Bantry Bay alone has about six times that amount of storage, though I’m not sure how much is available for rent. (It’s used for shipping crude to refineries on the US east coast). The 200kt mentioned in that article is only a quarter of our strategic oil reserve, assuming we maintain the EU-mandated 90 day supply. The rest of it is already stored at the Whiddy terminal, at the Whitegate refinery in Cork Harbour, at Tarbert in Kerry, Ringsend in Dublin, and Kilroot in Antrim.


#2957

as PS said with some additons
i think our requirement is for storing refined product
total of about 2million m3
mainly held in ireland - NORA tanks on whitty, whitegate, tarbert etc
some in UK/EU and some in short term contracts - i,e. oil tankers destined for Ireland etc


#2958

Yep, it’s about 5% crude, 95% refined. Of the 95%, a little under 20% is petrol, and over 80% distillates. About two thirds of it is held in Ireland and one third abroad.


#2959

Distillates being? Fractions higher than petrol?


#2960

Yeah, the terminology is a bit weird, as petrol itself is a light distillate. But the generic term ‘distillates’ seems to refer to heavier fractions that go into diesel and kerosene (for jet fuel and heating), and heavier fuels.


#2961

it varies i think by location
includes , Gas Oil, Diesel, Kerosene,
Jet fuel for the minister etc.
not sure if heavy fuel oil is included


#2962

Interesting how WTI has decoupled hard from Brent (and collapsed relatively) in recent months.

In a nutshell the US can increase pumping but its pipelines cannot deliver the increase to market and this cannot be hidden anymore.


#2963

Also interestingly, it has a positive effect on oil in the Bakken/Dakotas which used to trade at its own discount to WTI because of the cost of rail transport. The pipeline bottleneck in the Permian means there is more demand for Bakken oil shipped to Gulf refineries by rail. Though I believe the pipeline situation will get sorted out in the medium term (end of this year?).


#2964

Just noticed this advance on making superconducting tapes for 50 Tesla magnets. The challenge of such materials is to avoid tearing themselves apart as they generate Lorentz forces equivalent to tens of thousands times atmospheric pressure. Unfortunately in this case “high temperature” means a few tens of Kelvins, not the 77K of liquid nitrogen. Practical magnets for broad use would ideally be above liquid nitrogen temps, rather than liquid helium. But it’s all progress.


#2965

Is this the end of the CARB? jmc will likely be doing a little jig.

bloomberg.com/news/articles … ting-power


#2966

:smiley:
Just in case jmc gets too carried away, here’s a little something to jar him back to reality. The Environmental Justice Warriors of San Bernardino County throw a free vegetarian breakfast along with a workshop on improving air quality. Paid public relations people tell you how your tax dollars are being spent on environmentally friendly vehicles for low income people, and which are the best apps for tracking air quality. An old-style hippy environmentalist gets ornery.


#2967

Here is one number to show what a mega bubble the US Shale Bubble really is, and this number dates from september BEFORE the price of oil dived sharply starting october.

Yes, this means that shale oil frackers only planned on financing 21% of their activities in 2019 from cashflow and that they intended to suck in almost 80% of their requirements from muppets sophisticated investors. A traditional oil company finances everything from cashflow. :frowning:

https://static.wixstatic.com/media/62bf21_2a905d3ca87c4c89894e38afb4a5e712~mv2.png/v1/fill/w_470,h_350,al_c,q_90/62bf21_2a905d3ca87c4c89894e38afb4a5e712~mv2.webp

It would be no surprise then to find out that they already owe $0.25Tr to these muppets sophisticated investors and due for repayment/refinancing in the next 5 years.

And nor would it be a surprise to know that paying interest on their existing loans costs 20% of cashflow already and that they are underwater in the ‘Permian’ shale in west Texas where transport costs to market are large. There are relatively few oil pipelines in the Permian, not enough for any expansion, and the amount of gas flared off there equals Irelands daily gas consumption alone…and no there are no gas pipelines in the Permian either.

This lunacy must come to an end, surely the muppets sophisticated investors realise they will not get most of their money back even with Permian oil fetching $60 rather than the $40 they will often take for it today. $40 Permian means they cannot cover the interest on their loans.

We might see a bit of a pipeline bubble to finish this off before it all goes bang. And don’t forget that more oil was thrown on the flames last month. :smiley:

forbes.com/sites/arielcohen … 23c27f2c91

Too big an “if” for me though. :smiley:


#2968

The upward revision for Permian resources is still pretty amazing. Yes, they are classed as “undiscovered, technically recoverable”. Sure, people may lose their shirts. Favourable economics are not guaranteed. But like with the oil price slump in 2014, someone else may step in and take the spoils if the initial drillers go to the wall. The industry as a whole proved more resilient than expected, even if individual operators didn’t.

Like in the last cycle, the number of DUCs (drilled uncompleted wells) is soaring again. In the last five years it has gone from 600 to 4,000 just in the Permian. Production has gone from 1.4 mbpd to 3.8 mbpd. There’s no doubt the resources exist to support huge expansion. Oil price and pipeline capacity could keep a lid on it in the short term, and current investors could get burned. In the long run the US, which has already edged out Russia for world’s second biggest producer, could even overtake the Saudis if the Permian turns out to be bigger than the mighty Ghawar field.


#2969

The rules are

  1. It is a resource until drilled
  2. It is a reserve after you drill and get an estimate of recoverables

But then a shale well declines very fast and some are reduced to a useless trickle of oil within 4 years of first recovery and the well goes OPEX negative. The Permian is not the worst shale, you get near enough $1m of oil (at say $50 BBL) per hole there, other shale formations return a lot less than that.

Against that the new resource is quite far west, much in New Mexico rather than Texas, and the temptation for drillers is to ‘complete’ a couple of very sweet spots and claim that all their drilled/incomplete wells will be equally good resources once complete…and they won’t be complete in a hurry I can guarantee you. :smiley:

Utter hogwash but the US drilling industry have plenty of previous in inflating massive bubbles.

I well remember the insane Gas bubble that exploded in Oklahoma in 1982 and if you only ever read one book on bubbles then you should read this classic on that notorious fiasco which boiled down to someone saying the deeper you drilled (deeper than anyone had ever drilled in fact) the higher the pressure would be and surely the more gas was down there…around 6 or 7 miles down it was.

Then people started to believe in this nonsense. The bubble collapse brought down one of the 10 largest banks in the US then and severely damaged 3 of the remaining top 20 banks at the time.

The shale bubble has sucked in $0.3TR of which $0.25TR needs full refinancing within five years and this for an industry that pays out 20% of its turnover last year (over $50 a barrel time) just to service the existing loans they have.

In the US you can lend to these clowns at a blended 7% or so or go risk free Fed Bonds for 10 years at 3%