An urban legend to comfort America: our massive reserves of unconventional oil

Summary:  The bad news is that much of the good news about energy is wrong.  Repeated so confidently by so many for so long, these fallacies have become a major obstacle to our preparation for peak oil.  This post examines one such fallacy:  that the world has massive reserves of unconventional oil, and that those will prevent peak oil.

This post substantially expands to my replies in a discussion with M. Simon, lifted from the comments to “A powerful perspective on the candidates for President of the US“.  M. Simon posts actively on his blog, Power and Control, and at Classical Values– an influential libertarian weblog discussing politics, current affairs and pop culture (to which the Instapundit frequently links).  M. Simon is an engineer, and involved in some cutting edge projects.

I gave a broad but brief reply to his comments in “Discussing geopolitics with the famous M. Simon (of the “Classical Values” blog)“.  This post focuses on one specific subject that he mentions:  reserves of unconventional oil sources.  M. Simon reiterates his views in his post of 29 August:  “How Much Oil Is There?

Other chapters in this series:

I.     Our massive reserves of unconventional oil.
II.    We’ll run crash programs to solve peak oil, just as we mobilized for WWII.
III.   Demand creates supply, by raising prices.
IV.   Oil is Oil, even if it is not oil
V.    Demand creates supply, from new technology.


  1. M. Simon’s comments
  2. What are Unconventional oil sources?
  3. Comparing conventional and unconventional reserves
  4. Considering two unconventional sources:  Bitumen (aka “oil sands”), Kerogen (aka “shale oil”)
  5. Cost of mining oil sands
  6. Reserves are complex, and not just for oil.  How much coal do we have?
  7. What happens when urban legends are disputed?
  8. Conclusions
  9. Where to go for more information about Peak Oil

M. Simon’s comments

Comment #10:

There is no energy problem. There is a restraint of trade problem: cartels. You break cartels by bringing more product on to the market. We are 20 to 30 years away (due to technology and logistics issues) from making a serious dent in the necessity for oil.  What can America do if Congress and local Democrats get out of the way? Drill, mine, refine.  At this point in time energy is a political problem not a geological one.  Where do you folks get your misinformation?  BTW the most misunderstood discipline in war and industry is logistics. You know – arm chair generals study battles, real generals study logistics.

Comment #13

Two trillion barrels of oil shale in America. 1.5X that in tar sands in Canada. The Canadians are producing at around $15 to $20 a bbl.  And that doesn’t even count the amount we might have in the continental shelf which is not well explored thanks to Congress.  Yep. Not enough oil. I’m convinced.

Fabius Maximus replies

2.  What are nconventional oil sources?  They include, among others:

  • biofuels,
  • low-flowing deposits (Bakken Formation in the US)
  • deepsea petroleum (e.g., new finds off Brazil),
  • polar petroleum and natural gas,
  • heavy oil (e.g, Venezuela)
  • bitumen (aka oil sands, as in Alberta),
  • kerogen (misleadingly called shale oil, as in America’s NW),
  • converting coal to diesel fuel (coal-to-liquids, CTL).

They are often described as a bounty that will save us from peak oil.  This is almost certainly wrong.

Peak oil is a transitional phase as production shifts from conventional oil sources to unconventional sources.  Unconventional reserves are immense.  They are, in effect, low quality petroleum “ore”; conventionals represent high-quality “ore.”  There is, of course, more low-quality than high-quality ore.  However, they are not directly comparable as Simon implies.  Let’s look at M. Simon’s comments, line by line.

M. Simon says:  “Two trillion barrels of oil shale in America. 1.5X that in tar sands in Canada. … Yep. Not enough oil. I’m convinced.” 

Unconventional sources differ from conventional petroleum in three ways. 

  1.  Their extraction costs — either initial capital outlays or operating costs (or both) — are usually far higher.  
  2.  Their production flows tend to be 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 — not enough to offset the reduced production from Mexico’s supergiant Cantarell and other North American fields.
  3.  They often require far larger inputs of energy for their extraction and refining than conventional sources.  For example:  heavy oil, bitumen, and kerogen all must be mined, heated, and hydrogenated to produce useful products.

Unconventional sources are valuable, and will play an increasing role in our global oil supply.  But their reserves, flows, and costs cannot easily be compared to the ample and cheap conventional fields now being sucked dry.  That is the missing element in these euphoric stories told by M. Simon and so many others.

“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 paper, August 2007)

This also applies to “crash programs” hoping to develop new energy sources.

3.  Comparing conventional and unconventional reserves

Unconventional reserves are not easily comparable to conventionals. Gross numbers of barrel-equivalents have little meaning. Numbers on a net BTU basis (net after extraction costs), would be more useful, but still misleading.  That is because reserves of unconventional energy resources mean little.  Most unconventionals are production-constrained, not reserve-constrained, due to their combination of high capital costs, operating costs, resource requirements (e.g., energy, water) and environmental impacts (each has a different mix of these).  Also, they require longer to scale-up than conventional sources (time is money).

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)

4.  Considering the two unconventional sources that M. Simon mentions

(4a)  Bitumen (aka “Oil sands”)

From Wikipedia (this article also links to some good sources):

Tar sands is a colloquialism for what are technically described as bituminous sands, and commonly known as oil sands or (in Venezuela) extra heavy oil. The sands are naturally occurring mixtures of sand or clay, water and an extremely dense and viscous form of petroleum called bitumen. They are found in large amounts in many countries throughout the world, but are found in extremely large quantities in Canada and Venezuela.

Oil sands are mined and extensively processed (requiring major energy input) to become a liquid fuel, in no way comparable to a field like Ghawar. It has taken 20 years to get Alberta’s output to 1 million b/day; their goal for 2020 is 5 million b/day — which might not be feasible due to resource limitations (water, natural gas) and ecological impacts. None of these are “political” limitations in any meaningful sense.  

The capital invested, and planned to be invested, is staggering.  Canadian companies spent close to $9 billion on oil sands capital investments in 2005. Currently, there are close to 35 projects in the planning or expansion process in oil sands. Canada’s NEM said in their November 2007 report that “capital costs for adding integrated mining and upgrading capacity, to come on in the 2010-2011 timeframe, are estimated to be in the range of $C 80,000 to $100,000 per flowing barrel” and aprox. $C 80 billion will be spent over the next decade to boost tar-sands output from the current 1.3 million barrels a day.  This report also lowered their forecast for 2015 output due to rising costs and regulatory uncertainties, from their 2006 forecast of 3 million barrels/day to 2.8 million barrels.

Update:  Costs are rising rapidly, with estimates of $80 – $100 oil required to justify investment in new projects.  See these two articles for details:

  1. High costs squeeze oil sands“, Financial Post, 5 September 2008 — “Break-even price jumps 31%.”  Now aprox $85/barrel.”
  2. UBS says new oil sands projects need pricey crude“, Reuters, 19 September 2008 — New projects need $100+/barrel oil to turn a decent profit.

For more information on this see the following studies of the oil sands industry.  They provide balanced looks at the challenges and costs of expanding production in Alberta.

  1. Canada’s Oil Sands Resources and Its Future Impact on Global Oil Supply“, Bengt Söderbergh, Uppsala University, January 2005 (105 pages). 
  2. Canada’s Oil Sands – Opportunities and Challenges to 2015“, Canada’s National Energy Board, June 2006 (85 pages). 
  3. Canadian Oil Sands: A new force in the world oil market“, US Congress Joint Economic Committee, 26 June 2006 (14 pages, good maps)
  4. Canada’s Energy Future“, Canada’s National Energy Board, November 2007 (155 pages) — Scenarios out to 2030

(4b)  Kerogen (aka “shale oil”)

We do not yet 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 the available inputs (esp water).  We are not yet there.  I believe the largest plant is that of Fushun Mining Group in China, scheduled to produce 7,400 barrels/day in 2008 and 14,000 b/day at some point in the fuure (source).

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 by operation of a commercially feasible plant, it will probably take roughtly a decade to scale up production (building progressively larger plants) to a meaningful fraction of global oil use. “Shale oil” might be part of a solution to peak oil, but time and money will be required to find out. Then more time will be needed to put this technology into play. It’s not magic. Most estimates show that decades will be required to perfect and scale-up extraction and refining of these reserves — assuming the many technical problems can be overcome.

For more information see:

  1. Wikipedia on shale oil and shale oil extraction
  2. Shale Oil – the elusive energy“, Walter Youngquist, Colorado School of Mines, October 1998 — An excellent introduction to the geology and history of shale oil.
  3. the Congressional Research Service report on Shale Oil dated 13 April 2006 (32 pages)

5.  Cost of mining oil sands

M. Simon says:  “The Canadians are producing at around $15 to $20 a bbl”

I do not know what Simon means by this.  The key — and obvious — aspect of most unconventional sources is that today they are more expensive than conventional oil (with a few exceptions, such as recycled waste vegetable oil or meat).   In the past 5 years growth in demand has been met by expensive alternative sources, which has pushed up the price of oil.  When unconventional sources become less expensive than conventional oil, we will have left the Age of Oil (the third age of humanity) for a new era.  This will happen, eventually.

As for Simon’s statement, the companies themselves state much higher operating costs.  For example, on 29 July 2008 Canadian Oil Sands Trust forecast operating costs of $32/barrel for 2008, plus $14.50 in royalties to the resource owners (in Canada, the government) for a break-even point of about $46.50 a barrel.   This does not include capital costs on the massive investments they have made, which pushes the break-even numbers even higher.

6.  Reserves are complex, and not just for oil.  How much coal do we have?

America’s coal reserves are far less than most people have been led to believe.  We have mined most of the dense, high BTU coal.  We are mining the remainder of the good stuff.  We have vast reserves, but some large fraction of this might have the BTU content of Kitty Litter.  Too little research has been done on these reserves.  For more about this, see these reports:

  1. Coal:  Resources and Future Production“, Energy Watch Group, March 2007  (47 pages, PDF)
  2. The Future of Coal“, B. Kavalov and S. D. Peteves, Prepared for European Commission DG Joint Research Centre Institute for Energy (JRC IFE),  February 2007
  3. COAL OF THE FUTURE (SUPPLY PROSPECTS FOR THERMAL COAL BY 2030-2050)”, Energy Edge Limited, Prepared for the European Commission – DG Joint Research Centre Institute for Energy (JRC IFE), February 2007
  4. Coal:  Research and Development to Support National Energy Policy“, National Academies, June 2007 — Summary. The full copy is aprox $40. 

Here is the key paragraph from the last report (#4):

“Present estimates of coal reserves – which take into account location, quality, recoverability, and transportation issues – are based upon methods that have not been updated since their inception in 1974, and much of the input data were compiled in the early 1970s. Recent programs to assess coal recoverability in limited areas using updated methods indicate that only a small fraction of previously estimated reserves are actually recoverable. Such findings emphasize the need for a reinvigorated coal reserve assessment program using modern methods and technologies.”

7.  What happens when their urban legends are disputed?

  • Challenges:  “Where do you folks get your misinformation? ”  — An interesting response, in that that Simon provides no sources (not that he needs to, of course).
  • Irrelevant Sarcasm:  “BTW the most misunderstood discipline in war and industry is logistics. You know – arm chair generals study battles, real generals study logistics.”
  • Insults:  “Honestly, I’m dumber after I visited here than before I came.”

Here is a gentle paraphrase of an email discussing my review of his work, reprinted with M. Simon’s permission:

The thing lacking in most people discussing the issue is:

  1. Not an engineer.
  2. Not studied war sufficiently.
  3. Ignorance of history.
  4. Ignorance of logistics.
  5. Too invested in Shrinking Media memes.
  6. Too utopian. 

8.  Conclusions

Belief in the ability of our vast reserves of unconventional sources to save us from peak oil is an urban legend, in the sense of “widely dispersed misinformation” that meets an emotional need — in this case, reassurance.

M. Simon is a respected figure on the Internet, a reputation gained one post at a time over the years.  This is a requirement for passing on urban legends, so that people take his words seriously.  This brings us to the reason for posts like this, other than public education about this important issue.  I believe that for the Internet to fullfil its promise we need to use it better.  We must be more careful what we write.  We must attempt to hold each other to a reasonable standard of accuracy.  We are all in this together.

9a.  For more information about Peak Oil

Reference pages about other topics appear on the right side menu bar, including About the FM website page.  Of special relevance to this post:

Some posts about unconventional and alternative energy sources:

  1. Links to articles and presentations of some A-team energy experts , 11 November 2007
  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. Fusion energy, too risky a bet for America (we prefer to rely on war) , 4 May 2008
  6. Peak Oil Doomsters debunked, end of civilization called off , 8 May 2008
  7. When the King of Saudi Arabia talks about oil, we should listen , 2 July 2008
  8. Red Alert: the Saudi Princes have annouced the arrival of Peak Oil , 11 July 2008
  9. Good news about oil, but for our grandkids – not us , 14 July 2008
  10. The secret cause of high oil prices , 6 August 2008

11 thoughts on “An urban legend to comfort America: our massive reserves of unconventional oil”

  1. I often wonder why some people are so offended by what seem to me to be sensible warnings and concerns. Simon obviously considers Peak Oil itself to be an urban legend — a bit of false consciousness that offends his standards of clear thinking, and possibly threatens his way of living. I feel that way about the ethanol solution — a clear bit of spurious public policy dreamed up by agribusiness.

    Maybe he fears that if we accept the concept of Peak Oil, it will lead to gasoline rationing, the value of his suburban home will fall, and his taxes will be raised in order to fund a sensible mass transit system.

  2. The question about oil supply is even more important now with a hurricane bearing down on our major supply of oil in the Gulf of Mexico. If we have two Katrina-style disruptions in the same are in three years the impact on our production will be very dramatic. Even if there is not much production lost due to Hurricane Gustav how much longer can we rely on a production area that is regularly hit by hurricanes? The cost of insurance and the risk premiums of operating in the Gulf are almost certain to rise.

    On another note, I think the likely outcome in the future is a continued large-scale use of fossil fuels even with all the unconventional energy supplies being researched today. So the large-scale energy exporters, like Russian and Saudi Arabia, won’t worry about finding customers for their product.
    Fabius Maximus replies: Large oil deposits were found long before markets were developed. Hence the first age of oil was one of excess supplies. To keep prices up, some group acted to limit production. The Standard Oil Trust, the Texas Railroad Commission, and (after US output peaked) OPEC.

    “So the large-scale energy exporters, like Russian and Saudi Arabia, won’t worry about finding customers for their product.”

    We are in the second age, the age of scarcity. In general, producers of energy need not worry about finding customers. That time is gone.

  3. One little point you leave out. As a resource gets used the methods for its use improve. In short the technology gets better. It is called the learning curve. I don’t see you taking that into account in your estimates.

    American oil reserves (conventional) are as high as ever. Why? Higher prices, better technology. If the changes are slow re: prices economies adjust without much pain. An increase of 5% to 10% a year is easy. Increases of 40% or more a year are hard. The only reason for the faster change is lack of political will and system lags.

    Control theory is quite helpful in this regard. Shocks cause the system to oscillate. Gentle changes are integrated. Look at PID loops and integrator windup for more details.

    What Diamond and his ilk leave out of the equation is the rate of technological advance. Consider water. Most is used in agriculture. The Israelis are most efficient in that regard. They will get better. They have to. If water in the US becomes a limiting factor the technology has already been invented. The only question is how fast can it be deployed.

    If technology advances faster than resource depletion collapse is unlikely. That is new.
    Fabius Maximus replies: I do not believe the following is correct.

    “One little point you leave out. As a resource gets used the methods for its use improve. In short the technology gets better. It is called the learning curve. I don’t see you taking that into account in your estimates.”

    If you look at the studies I cited as sources, you will see that they do take this into account. Given the folks writing these reports, who would expect otherwise?

    “If the changes are slow re: prices economies adjust without much pain.”

    This is a basic rule of economics. I mention it frequently. What is its relevance to this post?

    ‘What Diamond and his ilk leave out of the equation is the rate of technological advance.”

    Interesting change of subject on your part. I assume you are referring to “Collapse: How Societies Choose to Fail or Succeed”, a 2005 book by Jared M. Diamond, professor of geography and physiology at UCLA. His first book (Guns, Germs, & Steel) was great. This 2nd one is a collection of stories. The core of the book, the collapse of Easter Island, is — like the subject of this post — probably an urban legend. Diseases from sailors and kidnapping of the population as slaves destroyed Easter Island’s society, probably more than any prior ecological collapse.

    There are many articles debunking this myth. I suggest starting withRethinking the Fall of Easter Island“, Terry Hunt, American Scientist, Oct-Nov 2006.

    “If technology advances faster than resource depletion collapse is unlikely. That is new.”

    True, but hardly new. The famous whale oil story is the classic example of this. The key word is “if”. If, if, if. What a little word on which to risk the prosperity of America for the next decade or two. I prefer to ALSO plan for scenarios in which technology does not “advance faster than resource depletion.”

  4. According to energy investment banker Matthew Simmons and most independent analysts, global oil production is now declining, from 74 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 14%.

    This is equivalent to a 33% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted.

    Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.

    Surviving Peak Oil: We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from “outside,” and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.

    This is documented in a free 48 page report that can be downloaded, website posted, distributed, and emailed: “Peak Oil Report“, by PEAK OIL ASSOCIATES INTERNATIONAL {FM: this appears to be some sort of for-profit consulting outfit}

    I used to live in NH-USA, but moved to a sustainable place. Anyone interested in relocating to a nice, pretty, sustainable area with a good climate and good soil? Email: clifford dot wirth at yahoo dot com or give me a phone call which operates here as my old USA-NH number 603-668-4207.
    Fabius Maximus replies: Thank you for the link to your report. From a quick skim it looks like a good primer about peak oil, and links to excellent source material. However, the comments here seem excessively pessimistic IMO.

    “global oil production is now declining, from 74 million barrels per day to 60 million barrels per day by 2015.”

    The Oil Drum is one of the major sites warning about peak oil, and their most recent analysis does not support this: “Production Forecasts and EIA Oil Production Numbers“, 30 August 2008. They show August 2008 as the peak month of production, and the most recent month of data.
    * The all liquid peak is 86.05 mbpd
    * Or 82.6, if you wish to consider crude plus natural gas liquids.
    * 74 mbpd is “crude oil plus condensate”, which is only 86% of total liquids consumption.
    (treat these numbers with some skepticism, as their 4 significant digits gives an illusion of precision).

    The forecasts for 2015 all liquid production range from (roughly) 60 to 100+ mbpd. Not much a basis on which to declare DEFCON 3 to your family.

    Given the poor data and back-of-the-envelope calculations available (crayon sketches by comparison with economic data and modeling), forecasts are a dime a dozen, and this wide range is natural.

    Much of the rest is a mild version of the forecasts I discussed in “Peak Oil Doomsters debunked, end of civilization called off“, looking at Summary: a brief analysis of Matt Savinar‘s Life After the Oil Crash.

    “During the same time demand will increase 14%.”

    Not likely. That’s of 1.9% per year for five years — very rapid demand growth. Although the relationship between real global GDP and oil use fluctuates, this implies five years of very rapid economic growth. Probably equal to or faster than the past 5 years, which was the fastest on record (reliable records only go back 20 or 30 years). After that spurt, global GDP is now materially slowing. The EU, Japan, USA, and Canada are all at or near recessions.

  5. The link is broken for 6.3, the interesting report prepared for the European Commission on “COAL OF THE FUTURE (SUPPLY PROSPECTS FOR THERMAL COAL BY 2030-2050)”.

    But it’s available on another server

    Overall this report doesn’t see coal as a magic bullet to deal with peak oil, predicting only a gradual rise in coal’s share of the world’s energy market to 2025. But it is optimistic about one new way of using coal – “Underground coal gasification is a highly promising, cost effective approach to expand the global coal reserve”.

    For the EU what matters most is Europe’s energy security. This is a more pressing issue than peak oil as a theoretical threat. The EU is worried that it now gets nearly a quarter of its oil and gas from Russia. In the wake of the Georgia crisis this is now being actively discussed by EU heads of government.

    Russia will not hold us to ransom – Brown“, Guardian, 31 August 2008

    Georgian crisis puts EU supplies of Russian energy back in focus“, AFP, 31 August 2008

    So it’s possible that technologies that would allow import substitution will now attract much more state support.

    What’s attractive about underground coal gasification is that it promises the maximum exploitation of local coal deposits for power generation, in place of imported oil or gas.

    But as you point out, the issue with all these unconventional alternatives is whether they can be brought on stream in time to make a difference.
    Fabuis Maximus replies: Thank you for catching the broken link (the bane of internet archives).

    As for the EU-folks: brave words from scared people with few options. Their dependence on Russia was forced years ago, and will take as many years to break.

    As for alternatives, the problem is not just the feasibility — but also (as the “Mitigations” report by Hirsch et al says) the long time required for development and rollout. The long timelines increase the risk of changed conditions. As China is learning with their massive program to build coal to liquid plants:

    China halts coal-to-liquid projects“, 29 August 2008 — “China has ordered the suspension of all but two coal-to-liquid (CTL) projects as it strives to curb excess investment in the sector and ease tight coal supplies, the planning commission of a coal-rich northwestern region said yesterday.”

    As for America’s CTL industry, the future is wonderful. Or bleak.

    Liquefied-coal industry gains energy“, McClatchy Newspapers, 22 August 2008 — Excerpt:

    “Nearly a dozen companies are pursuing plans for starting coal-to-liquid complexes early in the next decade to tap into a potential high-growth market fed by consumers seeking relief from gasoline prices, says Corey Henry, a spokesman for the National Mining Association, a leading member of the Coal-to-Liquids Coalition.

    “But whether the industry grows beyond its infancy depends largely on its ability to convince skeptics — including environmentalists and Democratic congressional leaders — that liquefied coal can be produced cleanly without contributing to global warming.

    “Industry supporters say it can, promoting technology that strips out carbon dioxide and other impurities. But the Natural Resources Defense Council calls liquefied coal “the height of folly,” saying it would deepen the country’s dependency on fossil fuels. “This is the filthiest, most impractical and expensive way you could ever dream up to make fuel,” said Julia Bovey, the environmental group’s Washington spokeswoman.”

  6. M. Simon appears to have more credibility on this issue than yourself, FM. I have noticed a disturbing tendency on this site to pretend to broader and deeper expertise than is actually possessed. Nothing can destroy the reputation of a blogger faster than such displays of arrogant hubris.
    Fabius Maximus replies: An interesting comment! Please provide some specifics, why you believe “M. Simon appears to have more credibility on this issue than yourself.”

  7. According to Simmon’s numbers, a decline at a rate of 1/3 in 7 years requires a yearly decline of 5.7%. This is much greater than the previous estimates of 2.5% or so one finds floating around. 5.7% is a halving time of only 12.2 years in rough numbers. Is this the rate for light sweet crude? Is peak oil happening a lot faster than we’ve been told? If this is true, consider me very disturbed.
    Fabius Maximus replies: A non-experts explanation…

    Up to very roughly six years ago the consensus for production decline rates was based on experience in the US, the lower 48, which peaked aprox 1970. The low decline rate of these fields resulted from their gentle treatment, due to production limits. First, by the Standard Oil Trust, then the Texas Railroad Commission.

    Since them fields are not only run “open throttle”, but also production is accellerated by what used to be considered secondary recovery methods — such as “flooding” by water (Ghawar) and nitrogen gas (Mexico’s Cantarell). While this produces wonderful flows, the unhappy result is rapid post-peak declines. Post-peak declines in the teen’s are common, as in the UK’s North Sea and Cantarell.

    For graphs to illustrate this see slide 7 and 17 in Peaking of World Production: an Overview (October 23, 2006)

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  9. “But the Natural Resources Defense Council calls liquefied coal ‘the height of folly'”

    So, this would be a recommendation for the activity, then. If the NRDC is against it, it’s probably exactly what society needs.

  10. The key word is “if”. If, if, if. What a little word on which to risk the prosperity of America for the next decade or two. I prefer to ALSO plan for scenarios in which technology does not “advance faster than resource depletion.”

    Hoard gold. Stock up on guns and ammunition. Cause it is going to be ugly if technology doesn’t keep up.
    Fabius Maximus replies: I believe that is a needlessly pessimistic view. Technology will advance over time, just not necessarily on a “just in time” basis — providing innvations exactly when we need them. To rely on such a thing is to make our civilization into a cult, with a blind faith in tech as its foundation.

    Rather we should prepare for likely events under the assumption that there are “come as you are” parties, rather than building our society on dreams of future innovation.

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