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Good news about oil, but for our grandkids – not us

14 July 2008

A comment on this site said “The data really do speak for themselves if given a chance.”  Unfortunately this is not so.  Change can disorient us, making it difficult to clearly observe and analyze the situation.  Lawrence Solomon demonstrates this for us in his article about peak oil.  Too many people make his mistakes, and we will pay dearly as a result.

Abundant energy will power future growth”, Lawrence Solomon, op-ed in Canada’s Financial Post, 12 July 2008 — Opening:

Up! Up! Up! The world is consuming more and more energy and, as if by miracle, the amount left to consume grows ever higher. Never before in human history has energy been accessible in greater abundance and in more regions, never before has mankind had more energy options and faced a brighter energy future.

Everything Solomon says about oil reserves is correct, yet his conclusions are almost totally wrong.  How can this be?  He commits one of the classic analytical errors, confusing stocks and flows (e.g., the annual fiscal deficit vs the total accumulated debt).  He sees the problem as a lack of reserves (stocks), when it is a shortage of production (flows).  It is a common mistake, despite countless explanations in the the peak oil literature that Peak Oil is not about running out of oil.  Our great-grandchildren will still be pumping oil — just less of it.

Peak oil means shifting from conventional to unconventional reserves

Peak oil is a transitional phase, from conventional oil sources to unconventional sources – non-flowing deposits (Bakken Formation in the US), polar, deep sea (new finds off Brazil), heavy oil (Venezuela), bitumen (Canadian oil sands), kerogen (US oil shale), and coal (converting it into a liquid fuel).  The aggregate reserves of these are immense.  But they are not directly comparable to conventional reserves in the way Solomon does.  Unconventional sources differ from conventional petroleum in two ways. 

  1. Their extraction costs — either initial capital outlays or operating costs (or both) — are usually far higher.  
  2. Their production flows are lower.   Nothing like the massive flows from the great fields of Texas and Saudi Arabian.

For example, by 2020 Canada’s bitumen mining might produce 5 million barrels/day — after tens of billions of capital investments, with incalculable costs to Alberta’s environment (much of it will look like the moon).  That assumes sufficient water and natural gas inputs, both of which might be insufficient (nukes have been suggested as alternatives to the nat gas).  But that will not nearly offset the natural depletion of other N. American fields, let alone replace the peaking of the supergiant fields like Cantarell in Mexico or Gwahir in Saudi Arabia.

Another distinction between conventional and unconventional petroleum:  the latter often require far larger inputs of energy for their extraction and refining than conventional sources.  For example:  heavy oil, bitumen, kerogen — all must be mined, heated, and hydrogenated to produce useful products. 

Unconventional sources are valuable, and will increasingly represent the remaining global oil reserves.  But neither their flows nor costs can be compared to the ample and cheap conventional fields now being sucked dry.  That is the missing element in their euphoric stories.

Two briefer explanations

All unconventional oil needs time to be produced in great quantity, no matter how much effort is made.  It is not possible to have a baby in a month with nine women.
Jean Laherrere, A-team oil expert (from a DOE internal energy briefing, August 2007)

An analogous situation between rate and “reserve” appears with water. The planet’s surface is covered with it (approximately 71%) and to great depths, yet we have “water shortages.” If the same approach of those advocating large oil reserves reserves meaning “no problem” was applied to water, how could we ever have a water shortage?  However, it’s not in a usable form and much effort has to be expended to treat it for suitable use.
— Comment posted at The Oil Drum, 25 October 2006 by “Starship Trooper” (a chemical engineer)

Solomon’s second error

“But most of the world remains unexplored — the interiors of Africa, Asia and South America have seen relatively little oil exploration. Oil exploration in the oceans, too, is in its infancy.

This almost qualifies as an urban legend.  While there are certainly many yet undiscovered conventional oil fields, it is unlikely there are many giants — let alone supergiants — to be found.  And hundreds of small fields must be found to replace fields now in rapid decline, like Cantarell in Mexico and in the North Sea.

Update:  magical thinking about energy

Can shale oil be developed economically?  At today’s prices, of course.
— “One Way To Get Serious About Saving Our Economy“, posted at Power Line, 12 July 2008

Like Solomon’s op-ed, this is factually right — but misleading.  We do not have a commercially-proven method of extracting oil from “shale oil” (kerogen).  Commercially-proven means more than economics.  The engineering must work reliably on a large-scale, with acceptable environmental impacts and available inputs (esp water).  We are not yet there.  From Wikipedia (an excellent article, with links to the sources used);

There are hundreds of patents for oil shale retorting technologies.  However, only a few dozen have been tested in a pilot plant (with capacity 1 to 10 tonnes of oil shale per hour) and less than ten technologies have been tested at a demonstration scale (40 to 400 tonnes per hour). As of 2008, only four technologies are in commercial use, namely Kiviter, Galoter, Fushun, and Petrosix.

Once the engineering is proven — construction and operation of a modern pilot plant — it will take a decade to scale up production (building progressively larger plants) to a meaningful level.  So “shale oil” might be part of a solution, but time and money will be required to find out.  Then more time to put this technology into play.  It’s not magic.

Please share your comments by posting below (brief and relevant, please), or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

Who is Lawrence Solomon?

  1. Wikipedia biography
  2. Executive director of the Urban Renaissance Institute.
  3. Here is an archive of his articles.  Also the author of 5 books.
  4. Author of a ten-part seriesof articles in the National Post showing some weaknesses in the case for anthroprogenic global warming, later published in book for as The Deniers.

Of special interest:  “Wikipropaganda – Spinning green“, National Review, 8 July 2008. This describes how a small number of people have in effect hijacked Wikipedia to promote their own views and censor others.  An important issue to folks like myself, who frequently link to Wikipedia.

For more information about Peak Oil

  1. When will global oil production peak? Here is the answer! (1 November 2008)
  2. The most dangerous form of Peak Oil  (8 April 2008)
  3. The three forms of Peak Oil (let’s hope for the benign form)  (23 April 2008) 
  4. The world changed last week, with no headlines to mark the news   (25 April 2008)
  5. Peak Oil Doomsters debunked, end of civilization called off  (8 May 2008)
  6. What does $120 oil mean for the global economy?  (15 May 2008)
  7. President Bush begs for oil, and is refused   (20 May 2008)
  8. Two valuable reports about global oil production!  (30 May 2008)
  9. When the King of Saudi Arabia talks about oil, we should listen  (2 July 2008)
  10. Red Alert: the Saudi Princes have annouced the arrival of Peak Oil  (11 July 2008) 

Here is an archive of my articles about Peak Oil.

Here are other resources about Peak Oil.

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5 Comments leave one →
  1. 14 July 2008 1:17 pm

    Is 85 million barrels a day peak oil?“, Going Down Bitter in the Hinterlands, 9 June 2008.

    Our modest contribution to the Peak Oil debate. You are correct, Peak Oil is a production peak, not reserves or discovery peak. That is a reality that has yet to sink in, despite years and years of discussion. The oil companies and oil producing nations understand this; just look at the plummeting production in Mexico over the last few years. Oil is not running out, but each year it becomes harder and more costly to produce.

  2. Robert Petersen permalink
    14 July 2008 2:43 pm

    I wonder if the “real” problem about Peak Oil isn’t about our attitude to the world. What we seek and desire. No matter what we say or do our core belief in our society is growth and accumulation of wealth. Certainly not a bad idea, but bad if we deplete everything around us. The reason why Peak Oil is such a problem is because we want growth and wealth at any cost. But couldn’t a change of our goals in our lifes change that? Could it be that is just a question about accepting a certain living standard and not expect it to change too much? Peak oil would certainly not be such an issue if we accepted to live like we did back around 1950.

    I also wonder what countries like North Korea and Cuba tells us. They experienced an artificial Peak Oil back in 1991, when the Soviet Union collapsed. I can’t add much information to it, but I would welcome your thoughts about how relevant the experiences of Cuba and North Korea are for the problem the world faces now. At least Cuba and North Korea show us that Peak Oil won’t mean the end of the human race or civilization, which some seems to suggest.

  3. Fred Strong permalink
    14 July 2008 3:45 pm

    Thanks for tracking this post. Solomon seems to be celebrating the end of the first phase of the Far Right offensive against GHG alarmists – and a resounding victory. CO2 pricing was never an easy road, but after the latest G8 meeting and increases in oil prices, the game is now pretty much officially over as far as material demand-side policy is concerned. With zero margin of safety, we are reduced to praying GHG alarmists are simply wrong.

    Now it’s onto supply disinformation. How about the sheer chutzpah of crediting environmentalists for “setting the table” for this new feast? Doesn’t the end of scarcity also represent the end of economics? Maybe not in their world. “Let’s pretend” theories, where demand will somehow create supply have been driving IEA data for years. Maybe Mr. Solomon is angling for a new posting.

    But isn’t it a familiar refrain? Call everything that may be contrary to your set POV “junk science” and launch well-financed ad hominem attacks designed to discredit anyone that dares to disagree. Above all, blame the contrarians for using the tactics you are using and use them better.

    Cornucopian assumptions drove the enormous tax cuts Bush gave to the wealthy while launching a major war of choice alongside apparently unlimited military spending. Among other things, we are building supersonic fighters, space weapons and nuclear subs to “match forces” with ragged landlocked opponents. In fact, cornucopians are like any other Fabian philosophers. If scarcity rules, their policies are dangerous, divisive and so wasteful as to be practically demented.

  4. Stephen permalink
    14 July 2008 4:40 pm

    What concerns me with oilsands is the fact we’re using nice clean natural gas in the proccess. Better to use nukes as the energy source and the save the gas as a feedstock for something useful.

  5. 14 July 2008 9:19 pm

    What about peak demand?
    .
    .
    Fabius Maximus replies: What about peak demand? The world looks supply-constrained for the visible future. At some point every car will have its own Mr. Fusion power supply — but not soon.

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