Seeking the True Shape of Peak Oil

The most simplistic graphic description of peak oil is shown above. The curve moves smoothly upward to the peak, then drops quickly to negligible levels. This is how unsophisticated peak oil doomers typically see the "peak oil" phenomenon.

A more sophisticated observor of oil and liquid fuels production is likely to be aware of the economic "recruitment" of new oil supplies and substitute fuels, as the cheaper, low-hanging fruit is plucked and prices trend upward. Notice the unsophisticated peak oil curve in dotted orange, labeled "Peak oil--Campbell."

Sine / Cosine Graph Simulating Out of Phase Oil Price and GDP Curves
But that is not to say that all peak oilers and peak oil consultants are as unsophisticated as Hubbert, Campbell, or Simmons. A new breed of more economically informed peak oil consultant is beginning to describe "peak oil" as more of a cyclical phenomenon, driven by the interaction between oil prices and economic growth.

Peak Oil is, in fact, a complex but largely an economically driven phenomenon that is caused because the point is reached when: The cost of incremental supply exceeds the price economies can pay without destroying growth at a given point in time. While hard to definitively prove, there is considerable circumstantial evidence that there is an oil price economies cannot afford without severe negative impacts.

The corollary is that if oil prices fall back to and sustain levels that do not inhibit growth, then economic growth will resume, with both recoveries and downturns lagging oil price changes by 1-6 months. _ChrisSkrebowski

You can easily see in the above definition of "peak oil," the driving forces of a co-cyclical pattern involving oil prices and economic growth, simulated by the out of phase sine and cosine curves.

But for peak oil to mean anything at all, it must incorporate an element of doom, catastrophe, and collapse. The above graphic simulates a cyclic economic pattern with attenuation, damping to very low levels of economic activity. This graphic might best depict the new, more sophisticated economic / geologic synthesis of peak oil doom consultants, as described by Skrebowski, when economies do not have enough time enough to fully recover from the previous crash before the next oil price hike hits the system. Each successive cycle leads to a worsening economic picture, in this scenario -- since the economy is thrown too far off balance to develop substitute fuels or power sources in time to prevent collapse.

Now, contrast the "peak oil plateau" graphic that is the second image from the top, with the damped sine wave depiction of peak oil collapse in the lowest graphic. In the case of the "complex plateau," there would seem to be time for advanced societies to move to safe, clean, advanced nuclear sources for power and industrial heat. But in the case of the damped sine pattern, it is not clear that societies could recover from the downward spiral.

A thinking person might perceive that different nations possess different resources -- both natural resources and human resources. Logically, the response curves to "peak oil" for different nations and societies would not be identical to each other. Rather, the response to "peak oil" -- no matter how it is defined -- is likely to vary widely between different economies, depending upon the available resources and the competence of national leadership. In other words, collapse is more likely to be regional in all but the worst price-shock cycle scenarios.

A careful reading of the Skrebowski piece linked above, will reveal that government policies will have a great deal to do with how a society weathers high energy costs. If governments pursue policies of energy starvation -- such as the Obama government and certain European governments are doing -- economic hardship within the society will multiply.

More:

Two sides to peak oil
An interesting historical look at the evolution of viewpoints toward oil resources and peak oil.

How an excessively gloomy view of peak oil might distort markets and cause unnecessary disruption and hardship

Cross published at Al Fin Energy

Peak Oil: Meet Sophisticated Coal and Biomass to Liquids

There is more than 250 billion tons of recoverable U.S. coal reserves – equivalent to an estimated 800 billion barrels of oil, compared to Saudi Arabia’s proven reserves of 260 billion barrels

_National Mining Association_via_Accelergy.com

EERC PDF
Accelergy's Coal Biomass to Liquids (CBTL) process utilises direct liquifaction of coal (using hydrogen from gasification of algal biomass and coal), combined with advanced catalytic processing of hydrotreated coal and hydrotreated algal lipids, to produce advanced hydrocarbon liquid fuels at high yields.

Accelergy is developing its coal biomass to liquids technology in several locations across the US, in China, and for the US military.

In the United States, Accelergy is working on demonstration facilities in Pennsylvania, Montana, and North Dakota. Accelergy's process can be tuned to utilize a wide range of feedstocks, and the company is currently exploring the use of both coal and natural gas in the U.S, along with biomass.

The company is also targeting its efforts in China since the country already has a small number of synthetic fuels plants where coal is converted to a liquid, he said. China is also the world's largest producer and consumer of coal. _Energy.AOL.com

Consider these facts about CBTL [Coal Biomass to Liquids]:

Abundant Supply: There is more than 250 billion tons of recoverable U.S. coal reserves – equivalent to an estimated 800 billion barrels of oil, compared to Saudi Arabia’s proven reserves of 260 billion barrels. (Source: National Mining Association)

Environmental Benefits: Combining the Coal-to-Liquids (CTL) and Biomass-to-Liquids (BTL) processes, Accelergy removes 20% of the CO₂ emissions associated with standard refining methods, resulting in cleaner fuels that reduce nitrogen oxide and particulate emissions and enabling use of higher efficiency engines.

Reliable Sources: Coal currently provides more than half of the nation’s electricity and is the largest single source of overall domestic energy production at more than 31% of the total, according to the National Mining Association. Additionally, our feedstocks can be grown domestically an land deemed unsuitable for food crop cultivation. _Accelergy

More on direct coal liquefaction:

• Direct liquefaction processes add hydrogen to the hydrogen deficient organic structure of the coal, breaking it down only as far as is necessary to produce distillable liquids.
• Coal dissolution is accomplished under high temperature (~400 0 C) and pressure (~1500-3000 psi) with hydrogen and a coal-derived solvent.
• The coal fragments are further hydrocracked to produce a synthetic crude oil.
• This synthetic crude must then undergo refinery upgrading and hydrotreating to produce acceptable transportation fuels. _Direct Liquefaction of Coal PDF

More on Accelergy's licensing of Exxon Mobil technologies

Accelergy patent dealing with a related but variant process

More on Accelergy's potentially lucrative move into the Chinese market

Accelergy's approach to CBTL is rather sophisticated, involving some advanced Exxon Mobil technology along with other imaginative innovations. The fact that Accelergy is working with the US military, with civilian US entities, and inside China, indicates that the company is following an aggressive path of expansion and development.

Taken from a previous posting at Al Fin Energy

With its vast resources of coal, natural gas, bitumens, kerogens, oil, uranium, thorium, and more, North America is well situated to transition from the fossil fuel age to the advanced fission / fusion age.

Bad government is a far greater threat to North America and Europe than resource depletion, climate catastrophe, or overpopulation doom. Fear only bad government and the accompanying twin demons of debt and demographic decline.

Peak Oil: Meet the Heat that Spells Your Doom

With plentiful process heat provided at temperatures between 700 C and 950 C, a person could kill peak oil and have plenty of energy left to power industry and a broad spectrum of industrial processes.   Specifically, one could:

1. Unlock the trillions of barrels oil equivalent in oil sands (PDF)


2. Unlock the trillions of barrels oil equivalent in coal to liquids and gas to liquids (PDF)


3. Unlock the trillions of barrels oil equivalent in oil shale kerogens 


4. Provide abundant industrial process heat for production of fertilisers, refining fuels, making plastics, etc 


5. Split CO2 into CO to use as a hydrogen carrier 


6. Overturn conventional fears of EROEI and Peak Oil 

Those things, and many more, will be accomplished by next generation gas-cooled high temperature nuclear reactors. Helium gas coolant will run gas turbine generators at high temperatures, which provides electrical power at higher efficiencies than older steam cycle generation systems. And as mentioned above, the higher temperature process heat will find a wide range of practical uses in industrial processes and energy production.

Conventional fears about EROEI and peak oil will be overturned since the energy used to produce hydrocarbon fuels, fertilisers, plastics, and other products of industry and energy, will come from the high temperature heat effluent of nuclear reactions -- of which there is no conceivable near term shortage.

The "green dream" of modern faux environmentalism is a dysfunctional fantasy that will lead to the energy starvation of industry and commerce, and an ongoing widescale economic hardship. Greens have pushed governments away from most forms of reliable energy -- out of deeply felt carbon hysteria and nuclear phobia. The green rainbow fantasy love affair with wind and solar is eating away at European economies, and any other economic entity that comes to rely on those inherently unreliable sources of power.

Don't let your government lead your society down that ruinous primrose path.

Adapted from an article originally published at Al Fin, The Next Level, and cross-posted to Al Fin Energy

Biological Substitutes for Petroleum Scaling Up Economically

As the price of petroleum edges up in fits and starts, booms and busts, substitution products are coming on board to replace petroleum in many uses -- including fuels, plastics, high value chemicals, lubricants, and more.

Making plastic from sugar can be just as cheap as making it from petroleum, says Dow Chemical. The company plans to build a plant in Brazil that it says will be the world's largest facility for making polymers from plants. _TechnologyReview

Rather than jumping on board the peak oil bandwagon of doom, many dozens of startups and large industrial players are lining up to produce substitution products and feedstocks.  The process of substitution takes time, of course.  But given the abundant energy resources of the planet, and the political will to develop them, there will be more than enough time to make the different transitions which will be needed.

Bio-based chemicals production has grown quickly in recent years, but it still represents just 7.7 percent of the overall chemicals market. Production has been limited in many cases to specialty chemicals or niche products. But Dow now says chemicals made from plant feedstocks may be ready to compete head-to-head with petrochemicals made in large volumes.

Most large-volume chemicals are made from petroleum. About 80 million tons of polyethylene are made annually around the world. But high oil prices have increased the costs of petrochemicals. And in Brazil, long-standing government support for sugarcane ethanol production has allowed the industry to drive down costs, making ethanol competitive with fossil fuels. Making polyethylene from sugar "would not necessarily be attractive in other regions," says Luis Cirihal, Dow's director of renewable alternatives and business development for Latin America.

The technology for converting ethanol into ethylene, the precursor for polyethylene, is not new. "The dehydration process for converting ethanol to ethylene has been known since the 1920s. The only thing that's really new here is the scale," Cirihal says. _TechnologyReview

Oil prices have been bouncing around from very high to very low for over 150 years.  Boom and bust has been the name of the oil game since it began.  Predictions of global oil depletion and consequent economic doom have been made over that same 150 year time period, and all have failed.  But that does not stop a lot of people from selling books, newsletters, seminars, and workshops in order to cash in on the cyclical sentiments of impending depletion doom which seem to come on with every boom cycle.

Trivial truisms lie at the heart of most mass delusions. The delusion of impending peak oil doom (POD) is no exception. The truisms at the heart of POD include: "the total supply of oil in the Earth is finite," and "oil wells deplete rapidly, once tapped." But the truisms can only take you so far, without questionable assumptions and educated guesses. A lot of people want to believe in doom, and are willing to take those leaps of faith into the unknown.

But there is no need to do that, if all you want to do is live a full, abundant, and satisfying life, despite the finite nature of world oil supplies. To do that, you merely need to keep a few general concepts in mind, and follow a small number of central parameters. More on that later.

A Pandemic of Malthusian Illiteracy?

Global economy optimists however say that "Malthusian illiteracy" lurks behind remaining adherents of Peak Oil theory - which basically says conventional oil production will stagnate and fall but demand will go on growing. _MarketOracle

As knowledgeable analysts come to understand that oil demand, rather than oil supply, is currently in the driver's seat, some of the impetus behind the peak oil panic has subsided. And yet the "Malthusian Impulse" continues to drive many observers, against their more rational proclivities. Still, global hydrocarban reserves continue to grow, year after year, and oil demand is slated to decrease in time.

New sources for transport fuels are likely to come from many directions, including new gas-to-liquids (GTL) technologies. Oxford Catalyst's microchannel GTL technology is very much in demand, as are other new varieties of GTL technologies. The market for GTL fuels may be more than 20 million barrels per day! Imagine the impact of that huge new supply on the global oil market. (Note that approximately between 5 and 10 million barrels per day could be produced via GTL from currently flared gas alone. Stranded gas could double that number.) More information at this PDF white paper download from Velocys, creator of the Oxford Catalysts microchannel technology.

A more conventional source for GTL transport fuels is the large scale technology championed by Shell.

In 2011, Shell began shipments from its Pearl GTL project in Qatar...The project is able to produce 140,000 b/d of fuel and 120,000 b/d of ethane and condensates... _Petroleum Economist

And that is just the beginning. As long as the huge price spread between the cost of natural gas and the cost of crude oil remains, more and more GTL projects will kick in to take advantage of this "easy money."

Second and third generation biofuels from biomass technologies are beginning to come on line, slowly (consult Al Fin Energy blog for updated news on this topic). Advanced biofuels technologies are not likely to take an appreciable bite out of crude oil demand for another 5 or 10 years. As long as natural gas prices stay this low, only the most efficient biofuels projects will be able to compete in the liquid fuels markets without government subsidies. But by the year 2030 if the technology continues to develop, the writing will be on the wall. This is a biological world, after all.

Advanced nuclear power technologies are likely to aid the development of new fuels technologies of all kinds, supplying safe and abundant power and heat for a multitude of energy development projects from oil sands to oil shales to biomass and aquaculture projects in cold climates, irrigation and desalination of saltwater in arid climates etc etc.

Other factors leading to a decreased demand for crude oil includes the increasing use of both natural gas and biomass as feedstock for the vast chemicals industry -- an industrial sector previously dependent upon petroleum for feedstock. (see Al Fin Energy blog for much more)

The ongoing global economic downturn and demand destruction extends from Europe to Japan to the US, and is beginning to put stress on the Chinese and Indian economies -- despite all the rah! rah! hype about the coming age of the Chindian global economy. Many nations which have maintained hefty consumer subsidies for transport fuels are being forced to reduce the subisidies. More downward pressure on demand.

Malthusian theories are appealing for their simplicity. And yet the never-ending and never-fulfilled Malthusian predictions of doom ignore the most salient and disruptive human technology of all -- the goal-oriented innovativeness of the human mind.

Despite the best efforts of energy-starvationists in the Obama administration, in the EU bureaucracy, in national bureaucracies of EU nations and advanced nations around the globe -- the prospects for abundant energy and fuels in the future are quite good, as long as the clowns in power do not destroy the economies they oversee.

If you have abundant clean energy and fuels, everything else is doable.

Scratching the Surface of Global Hydrocarbons

From Rogner(PDF 1997) via GWPF
It is odd that the vast size of global hydrocarbon resource is largely overlooked in the many discussions of "peak oil" and "resource depletion." It almost seems as if persons of influence would prefer to forget all about the huge resources which are out there waiting for humans to find, retrieve, and develop.

The image above was taken from a 1997 assessment of global hydrocarbon resources by Rogner (PDF). As you can see on the left, the amount of hydrocarbon already consumed by humans is negligible in comparison to all the hydrocarbon reserves and resources still remaining.

Recent large discoveries of oil off Brazil and Norway, plus the discovery of huge unconventional gas resources worldwide, added to the already incomprehensibly large resources of coal, unconventional oil, and methane hydrates -- and one's mind is in danger of boggling from all the hydrocarbon that has been sitting around waiting for someone to notice it.

But wait! That's not all. The planet itself is busy making more hydrocarbon, while you are sleeping -- deep in the hot pressured mantle. Some of this hydrocarbon is constantly migrating upward into the crust, providing vast future resources for intelligent beings to discover down the road.

And we have not even mentioned the immeasurable resources of uranium and thorium, waiting at our beck and call -- as soon as our bureaucratic obstructionists in government get out of the way of safe, new, more economical reactor construction.

What about enhanced geothermal? Orbital solar? Low energy nuclear reactions? etc etc. It is almost enough to make one forget about peak oil doom.

Betting on Oil Prices? Beware the Speculative Squeeze

Oil is selling higher than it should do. Speculation is just one of the reasons, but a significant one. After being bailed out, pardoned for their crimes, and otherwise given another chance, the uber-speculators are back for more devastation and booty at your expense.

Kevin Kerr, president of commodities firm Kerr Trading International, pulled no punches, calling the current price levels “simply a money grab and fear trade.”

“Speculators in the energy markets right now have a lot of risks to consider but unfortunately it can get overdone and I hope that the various funds and large speculative entities will take a step back and really evaluate the true fundamental picture. We do have plenty of oil on the market right now and while some fear premium is certainly legitimate, in my opinion it is not a justification for over $100 right now,” he said.

Kerr said the escalating violence in Libya, as rebel forces attempt to oust long-time dictator Col. Muammar al-Qaddafi, raises legitimate concerns for “real disruption,” but still does not justify the current prices.

Kerr also warned of the global impact resulting from artificially high oil prices: “Speculators and funds who are driving up the price of oil based on fear premium and the weak dollar will hopefully evaluate the implications for driving the price much higher than it really needs or deserves to go, at least at this stage,” he said.

Finally, Kerr recalled “the extreme liquidation” that followed the last precipitous rise in oil prices, when a barrel passed $147 in the summer of 2008 and then plunged below $40 in a matter of months.

“I would like to say that rampant speculators learned from what happened in 2008 but it seems fiduciary responsibility and true market fundamentals are still on the back burner,” Kerr concluded. _FoxBiz

The speculator-premium is closer to $30 a barrel than $15, according to Al Fin analysts. But then, the price of oil has been bouncing around like a pinball. The news media is happy to jump on every rumour, and oil traders are squeezing each one for every penny possible.

The discord sweeping Arab lands is quite real, justified, and long-overdue. The blowback from this discord onto global markets is likewise real, and will require serious planning and adjustment to compensate -- at least for the short term.

But the screeching hysteria coming from every peak oil doomer and hobbyist is just a bit overdone. The smart money understands that political disruptions to oil supply are temporary setbacks. Better analysts likewise understand that total energy reserves are growing, rather than shrinking, and that for the next decade or two, civilisation is not at risk from long-term energy shortages on either the supply or the demand side.

But political forces are a real danger, and the greatest danger comes from corrupt political agencies and factions -- including the US Federal Reserve and Treasury Department. US President Obama's grand strategy of energy starvation is not helping very much, either.

As for the energy speculators, they never sleep, they can game the system in ways you never dreamed of, and the only reason they haven't picked your pockets yet is because you're probably not worth it. Don't make it easy for them.

The name of the game for most people in the age of Obama is asset protection, and doing what you have to do to get ready for a changing of the guard and the return of opportunity eventually.

Peak Oil Keeps Slipping, Slipping.....Into the Future...

Important Note 3 Feb 2011: The author of the article quoted below is Jeremy Bowden, a writer and analyst who specialises in energy and other topics.

“The estimates for how much oil there is in the world continue to increase,” according to William M Colton, Exxon Mobil’s vice president for corporate strategic planning. “There’s enough oil to supply the world’s needs as far as anyone can see.” Just as prices rose sharply and peak oil concerns re-emerged, huge deep water oil fields were found off the coasts of Brazil and Africa. Higher prices also stimulated “unconventional” oil production from massive Canadian oil sands projects, which now provide North America with more oil than Saudi Arabia. In 2009, the United States increased domestic oil production for the first time in decades. _Source

Image Source
Much of the fashionable panic surrounding "peak oil DOOM!" is reminiscent of the catastrophic circus that surrounded Y2K. While it is true that the Y2K problem required the attention and effort of thousands of professionals to solve, the same thing is obviously true for the problem of providing ongoing energy supplies in the face of rising global populations and expectations. Maintaining reliable energy supplies is an ongoing problem which is solvable as appropriate effort is applied.

...at least one positive development has resulted from the sharp rise in oil prices of recent years. The influx of capital to oil companies from high prices, combined with expectations that prices are unlikely to fall very far, has boosted investment in oil exploration and production, especially in what the industry terms “frontier” areas – namely enhanced oil recovery (more oil from existing fields), the deep (or ultra-deep) water and the Arctic. Massive new reserves have been identified, proven up, and brought to production – whilst reserves previously considered impossible to reach are now no more than a horizontal drilling or steam injection technique away. All this should help ensure supply can meet global demand for far longer than was expected just a few years ago – pushing back the oft-cited “peak oil” date by decades.

...most of this newly-discovered potential avoids the above-ground risks and cartel policies that constrain oil production in most of the world’s largest proven deposits – the bulk of which lie in Organisation of Petroleum Exporting Countries (OPEC), or are controlled by national oil companies in central Asia and Russia. It is the technical expertise and project management skills of the most dynamic multinational and independent oil companies that hold the key to these new hard-to-get-at reserves, rather than the whims of Arab dictators or the level of OPEC budget deficits. A similar, but even more dramatic change has taken place with gas, where new techniques mean huge “tight” gas deposits present in many rocks are now recoverable. The International Energy Agency (IEA) recently estimated that natural gas reserves could last twice as long as previously expected – up to 250 years.

...Some experts claim enhanced oil recovery (EOR) could potentially double the amount of oil that can be extracted globally. Most fields only recover just over a half of the original oil in place and sometimes less than a third. With modern techniques field development should be able to extract a far higher proportion of the oil, while more and more oil can be made recoverable from existing wells.

...Faced with falling reserves and barred from acquiring fresh production in areas such as the Middle East, international oil majors began to search for new large deposits in the deep waters of the Gulf of Mexico in the 1990s – on the back of a proven drilling record in shallower Gulf areas, and in the North Sea. Exploration and drilling below 10,000ft of water and through miles of hard rock, thick salt and tightly-packed sands required the development of supercomputers and three-dimensional imaging techniques as well as equipment that could withstand the heat and pressures common at such depths, not to mention submarine robots to make repairs.

That technology is now available to drill in other areas such as the Arctic and elsewhere...Similar advances in technology have opened up huge unconventional oil shale resources in Canada. ...the Bakken shale field is now the country’s fastest-growing major oil field [in the US]. Production has reached about 350,000bpd, from 100,000bpd a decade ago. In a recent report, consultancy firm PFC Energy projected production would climb to 450,000bpd by 2013. _Industrial Fuels and Power

Meanwhile, Exxon Mobil forecasts that by 2030, gas will surpass coal as an energy source.

Many analysts are expecting a lot of new oil supplies from multiple locations around the globe.

Clever technologists are finding ways to make every barrel of oil go that much further. This is true in many ways, not just in terms of improved efficiency at the consumer level.

The concept of "peak oil" is heavily dependent upon unknown factors which could change at any time. Only a fool would maintain a posture of predictive certainty in that atmosphere of uncertainy and rapid change.

This article is excerpted from an earlier article published at Al Fin Energy

Peak Oil: Meet 10,000 Gal/Acre Algal Diesel Made at $1.25/gal

Cost of the firm’s [Photon8] algal based diesel fuel is said to be $1.25/gal which permits retail pricing at or below petroleum diesel without subsidies.

Photon8 has demonstrated photobioreactor production rate equal to 1.5 gal/square meter/yr and is on its way to an expected rate of 22,000 gal per 2.5 acre/yr then to best economic units of 5 acres. It believes further development may bring it close to 10,000 gal/acre/yr as a basis for planning large production systems, according to Brad Bartilson, President & CEO, Photon, Inc, Brownsville, TX. _Ai-Online_via_BiofuelsDigest

Photon8 is a new Texas algal fuels startup, based on technology developed at UT Brownsville. The company utilises "genetically enhanced" algae, and intends to produce a "drop-in" diesel fuel which requires no blending with petro-diesel. Photon 8 claims a number of unique technologies with patents pending.

Brad Bartilson is the president and CEO of Photon8 and seems to at least talk a very good game.

Brad Bartilson, Photon8’s president and CEO, says the Traveling Wave Tube technology boosts algae growth by 500 percent, representing a major advance in the profitable conversion of algae to biofuel — "profitable" being the key word...

...He invented his own patent-pending "photo-bio reactor" in order to slash production costs. Now, Traveling Wave Tube promises to cut costs further by dispensing with limits normally imposed on algae-to-biofuel production during "degassing" and the addition of carbon to the algae. In a nutshell, algae "broth" is exposed to sunlight in order to produce oily "lipids" — the more the better. The lipids are harvested for biodiesel production.

...Photon8 has discovered how to coax more lipids out of individual algae cells through genetic manipulation...Photon8’s team has figured out a short cut, Bartilson says.

"If you’re in production what you care about is how much oil (the cells) produce a day." he says. "Now we have confirmation that these cells are producing lipids at twice the rate of a wild cell."

Despite the breakthroughs, Bartilson finds himself struggling against a perception in the algae-biofuel industry that some problems are insurmountable — including the ones Photon8 claims to have surmounted.

"It’s so frustrating for me," he says. "I feel like were fighting town hall to some extent. Those that came out first are now being looked at as the ‘forefathers.’ The mantra from these folks is nobody has solved the confounding issues — (they say) we don’t have algae that can produce at the rate we need, and second there is no growth system that can have profitability. We have those, so we have to make believers." _BrownsvilleHerald

One of the UTB professors who has been involved in the underlying academic research is Tamara Pease. Dr. Pease appears to have an eye on some critical issues involved in the production of photosynthetic organisms to fuels -- both on an immediate time scale and on a geologic time scale.

Something tells me that Dr. Pease would be reluctant to make the same claims about Photon8's "mutant algae" that Mr. Bartilson is making. It is much easier to talk about breakthroughs and "10,000 gallons an acre production" than it is to actually produce an algal based diesel-equivalent that is cost-competitive with petro-diesel.

All the same, if Photon8 can bring their fuel to market within the next 10 years, Al Fin energy analysts will be quite impressed.

More algal energy news: OriginOil is focusing more narrowly on its algae extraction process -- moving toward a continuous separation process called "Live Extraction" which preserves the viability of the algae cells after "milking", for further lipids production.
OriginOil is a a better established company than Photon8, but in a wide-open field such as algal fuels -- still in its infancy -- it is far too early to predict ultimate winners and losers.

OriginOil Extracts Oil from Algae Timelapse from OriginOil on Vimeo.

Taken from an earlier posting at Al Fin Energy

Is North America the New Energy Kingdom?

With rising production from shale fields, the U.S. surpassed Russia last year to become the world’s largest supplier of natural gas. Shale now accounts for 10 per cent of the country’s natural gas production – up from 2 per cent in 1990. Chesapeake’s production from its next Texas project, expected by the end of 2012, will by itself supply the energy equivalent of 500,000 barrels of oil a day. _Globe&Mail

We know that Canada is overflowing with hydrocarbons from shale oil to oil sands to coal to natural gas to methane hydrates.... But the US was supposed to be "all tapped out" ever since oil production peaked back around 1970. Is it possible that all of the peak oil and peak energy doomers who foretold the end of US oil & gas may have been a bit premature?

U.S. domestic production for the year will be 140,000 barrels a day higher than last year (which was 410,000 barrels a day higher than 2008). Although the U.S. Energy Information Administration (EIA) says U.S. production will decline next year, who knows?

...As an article last month in The New York Times observed: “Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation.” Further still: “Another wave of natural gas drilling has taken off in shale rock fields across the United States, and more shale gas drilling is just beginning in Europe and Asia.”

...For natural gas, the U.S. has the four largest fields in the world: the Haynesville field in Louisiana (with production up by 77 per cent in 2009); the Fayetteville field in Arkansas and the Marcellus field in Pennsylvania (both with production up by 50 per cent); and the Barnett field in Texas and Oklahoma (with production up by double-digit increases). The EIA reports that proven U.S. reserves of natural gas increased last year by 11 per cent to 284 trillion cubic feet – the highest level since 1971.

Beyond shale oil and shale gas, there’s the awesome energy promise of methane hydrates, frozen crystals of water and gas that lie beneath the northern permafrost and beneath oceans floors around the world in quantities that boggle the imagination.

“Assuming 1 per cent recovery,” the U.S. Geological Survey says, “these deposits [in U.S. territory] could meet the natural gas needs of the country (at current rates of consumption) for 100 years.” _Globe&Mail

Gas producers are scurrying to find ways to export gas to cold, hungry customers in Asia and Europe. LNG -- liquified natural gas -- is one approach which is being developed for the export market. GTL -- gas to liquids -- is another approach that is likely to be developed inside the US within the next 10 years. Both approaches will allow for easier entry into the lucrative export markets. The GTL approach will also -- if economical -- allow gas to be converted into liquid fuels at a profit. That should help reduce North American dependency on overseas oil, once developed.

Cross-posted to Al Fin Energy

When Hubbert is God, Only a Fool Believes

MK Hubbert was only the "King" of Peak Oil (DOOM!), but to many true believers he is a god. Stanford Professor Steven Gorelick examined Hubbert's assumptions and predictions. In Chapter 4 of Gorelick's fine book "Oil Panic & The Global Crisis: Predictions and Myths", many of Hubbert's ideas and predictions were pinned to the dissection table and examined. I recommend a close reading of Gorelick's book, as well as a careful reading of Leonardo Maugeri's "The Age of Oil."

I have posted a few images from Chapter 4 of Gorelick's book, to give you a flavour of some of the information you can find there. One of the many bonuses of "Oil Panic" is that it presents both sides of the story of peak oil, and allows you to decide which is the more credible.

Where Is The Bell Curve?

The assumption that oil production will assume a roughly symmetrical, logistic bell curve. Logically, there is no reason for this assumption, but simple logic does not always come into play in the real world. What actually happens with production, vis a vis the bell curve?

Hubbert also applied his logistic model to US gas production. Real world results are juxtaposed with Hubbert's prediction for natural gas production below.

Hubbert came closest to achieving predictive "bell curve" success with his prediction for US lower 48 state oil production peak. Hubbert's "best prediction" for US peak oil was 1965, although one of his prediction scenarios (which he himself considered unlikely) predicted a peak for around 1970. This date was quite close to the actual US production peak, although it received a good deal of assistance from the tsunami of oil regulations that followed the 1969 Santa Barbara offshore oil spill.

So, score a tentative point for Hubbert, against all his demonstrated errors. Still, watch below, as US oil production takes a decided departure from its Hubbertian bell curve trajectory.

The human brain craves knowledge of the future, and prediction is one of the central functions of the brain. Hubbert was one of many analysts seeking to predict the future of the oil resource, and honestly believed that he had discovered a secret to predicting resource peaks.

But Hubbert was far more intelligent and open to contrary data, than most of his modern-day followers. No doubt he would have juxtaposed his predictions and the data and modified his approach accordingly.

Peak Oil DOOM(!)ers have a tendency to deify their prophets, such as Hubbert -- although Hubbert is more of an arch-prophet or god in the peak oil world. When one deifies a person, one is unable to objectively examine data that contradicts the words of the deity. Mass religious and quasi-religious movements -- such as peak oil DOOM! or carbon hysteria DOOM! -- comprise large numbers of persons who have suspended rational judgment in this way, and are thus unable to critically examine the evidence.

But the world doesn't stop for anyone -- not even a demi-god. Our rational examination of the ongoing data should not stop either.

This article is cross-posted to Al Fin Energy under a different title.

If Peak Oil Is Real, Why Does OPEC Need Production Discipline?

The cartel's 12 oil ministers decided in Vienna to neither expand output, in order not to add to current high stock levels, nor to curb supply so as not to hamper the global economic recovery with higher oil prices. _Source

Some OPEC members want to tighten the production quota to artificially drive the cost of oil up to $100 a barrel -- to compensate for the shrinking of the Obama-dolla.

The 13 percent decline in the Dollar Index since June has led some OPEC members to call for oil to rise to $100 a barrel.

The U.S. currency’s weakness means the “real price” of oil is about $20 less than current levels, Venezuelan Energy and Oil Minister Rafael Ramirez said after yesterday’s meeting of the Organization of Petroleum Exporting Countries in Vienna. The group, which accounts for 40 percent of global crude output, left targets unchanged and called for greater adherence to quotas, which are being exceeded by a supertanker load a day. _Bloomberg

Honestly, if OPEC really believed the world's supply was more than 5 years past peak -- and that oil is soon to naturally shoot up past $100 to $150 a barrel and higher -- why would there be a question about production discipline? They would be holding on to as much oil as possible, so as to get the much higher prices in the near future. Clearly, peak oil by natural causes is very unlikely.

Political peak oil -- phony peak oil driven by carbon hysteria, faux environmental legislation, and official cartel action -- is another matter entirely. Political peak oil could happen at any moment, and has nothing to do with oil and other hydrocarbon reserves in the ground, or with the ability of oil & gas companies to profitably extract these reserves.

Meanwhile, Iran and Iraq's vast oil reserves keep on growing. Likewise, Saudi Arabia has big plans for using powerful new technologies to reach even deeper into the monster Ghawar oil field to increase production even higher if necessary.

Up until now, drillers have been able to extract around 30% of oil from oil fields. But a wide range of marvelous new technologies promises to extend the yields by as much as 10% to 20% more of the initial reserves. Even old fashioned CO2 injection can add significantly to production of tired, depleted fields.

The Earth has barely been surveyed for hydrocarbon resources. The incredible recent global discoveries in shale oils and gases is good evidence for that. And as powerful new technologies for oil, gas, coal and other hydrocarbon exploration come into use, expect vast new discoveries of all kinds.

Watch and learn.

Understanding the Belief in Peak Oil: Is The End Near?

Until we explore the entire planet as carefully as we did Oklahoma and Texas, our assessment of global oil reserves will have plenty of room for surprises. _Vaclav Smil

Repent, Sinners, The End is Near!

Deeply held beliefs go beyond evidence and logic. Thus they tend to be unfalsifiable, invulnerable to demonstrable facts or reason.

Take belief in Peak Oil Doom. There are several blurred and shifting definitions of "Peak Oil", but none of them stand up to sustained examination. With any belief -- such as belief in a deity -- as long as one is not pressed for a rigorous definition of exactly what it is one believes in, there is little point to the argument. So what, exactly is this "Peak Oil" that so many people either do or do not "believe in?" Is it:

1. The point at which half the world's oil supply has been extracted and consumed?
2. The point at which oil production is at its historically highest point?
3. The point at which the cost of oil production can only go up?
4. The point where it costs as much to produce the oil as the oil is worth?
5. The point where oil consumption outruns oil production?
6. The point at which old oil fields are depleted faster than new oil field can be found to replace them?
7. The point at which all the cheap oil has been used and only expensive oil is left?
8. None of the above
9. All of the above (including none of the above)

You might point out to the peak oil religionist that "authorities" have been declaring "Peak Oil" since the 1800s or before. Geologists, oil executives, government leaders, spy agencies, military organisations -- a wide array of authorities -- have declared peak oil every few years over the past 140 years or so. There is nothing new about this belief. But every new generation of believers is certain that it is living in "the last days of oil." Their belief is strong -- and unfalsifiable.

You can never really know whether what you have is "true peak oil" or "fool's peak oil" except perhaps in hindsight, and even then you may not live long enough to ever know the truth. Price controls on gasoline, for example, might artificially create supply shortages that last as long as the price controls, but clearly that is only one variety of "political peak oil." It goes away when the price controls are revoked.

Peak Oil believers -- like all religious believers -- rely upon "revealed truth", or argument from authority. Whether a retired geologist, an investment banker, an energy economist, a sleazy con artist, or whatnot -- a believer must have someone in whom he can place his trust. Once a belief is established, it extends tentacles deep beyond ordinary logic into the territory of faith -- which is not subject to reason.

What is the finding and development cost per barrel of oil these days? The figure has varied over the years, going up and down. From 2001:

Thanks to new exploration, drilling, and recovery technology, the worldwide finding and development cost per barrel of oil equivalent (boe) has dramatically declined over the last 20 years, from an average of about $21 in 1979–81 to under $6 in 1997–99 (in 2001 dollars) (9). _EnergyBulletin

A recent Citigroup source says that the finding and development cost has gone up to $18 in 2010, from 2004 when it was but $14. So you see that these costs can fluctuate over time, according to technology and politics. Keep in mind that the Obama dollar is worth less now than it was 30 seconds ago, so all costs in dollars should be standardised.

Another interesting question is the amount of oil that is left in the ground when a well is depleted. As technology improves, we are recovering a higher percentage of the oil -- meaning that we can now often go back to old and "depleted" wells and reap another rich harvest of oil.

At the same time, the recovery rate from world oil fields has increased from about 22% in 1980 to 35% to-day. _Energy Bulletin

By 2030 more than 50 percent of the known oil will be recoverable. Also, by that time the amount of known oil will have grown significantly, and a larger portion of unconventional oils will be commonly produced, bringing the total amount of recoverable reserves to something between 4,500 billion to 5,000 billion barrels of oil. What’s more, a significant part of “new reserves” will not come from new discoveries, but from a new ability to better exploit what we already have. _SciAm

What is the "life index of world reserves?" It is the ratio between proven oil reserves and current production. In other words, about how long can we expect reserves to last? Funny thing about that, the life index of world reserves has been improving -- the opposite of what one might expect in the face of "Peak Oil."

All these factors partly ex-plain why the life-index of world reserves...has constantly improved, passing from 20 years in 1948 to 35 years in 1972 and reaching about 40 years in 2003.

Today, all major sources estimate that proven world oil reserves exceed 1 trillion (10 12 ) barrels, while yearly consumption is about 28 billion barrels (10–13).

Overall, the world retains more than 3 tril-lion barrels of recoverable oil resources (14). _EnergyBulletin

North America has seen about a million exploratory oil wells, whereas the oil rich regions of the Persian Gulf have seen only a thousand or two. [S] The planet has barely been explored or surveyed for hydrocarbons in any significant terms.

What we are looking for here are demonstrable or refutable facts, observations, data. We are not looking for authority figures to put our faith in. That is for religious believers and disciples. The religious faithful argue from revealed authority. The rest of us choose to look at what we can see, touch, and reason with.

For example, the mundane reality that motivates modern oil production has a lot more to do with the development policies of oil dictatorships -- which shut out modern internation oil concerns -- than with how much or how little oil is in the ground.

Critics could note that new oil discov-eries are only replacing one-fourth of what the world consumes every year (fol-lowing a declining trend that began in the mid- 960s), and that increases in re-serves largely derive from upward revi-sions of existing stock. However, the real issue is that neither major producing countries nor publicly traded oil compa-nies are keen to invest money in substan-tial exploration campaigns. The countries richest in oil have minimized their oil in- estments during the last 20 years, main-ly for fear of creating a permanent excess capacity such as that which provoked the crisis in 1986 (when oil prices plummet-ed to below $10/bbl). In fact, countries such as Saudi Arabia or Iraq (which to-gether hold about 35% of the world’s proven reserves of oil) produce petroleum only from a few old fields, although they have discovered but not developed more than 50 new fields each. Moreover, in countries closed to foreign investments, the technologies and techniques used are, in most cases, obsolete.

Nevertheless, international public oil companies have faced two sets of limits to their expan-sion in the last 20 years. The first is inaccessibility to foreign in- estment in the largest and cheap-est reserves—those in the Persian Gulf. Second are the demands of financial markets, which for years have insisted that compa-nies provide unrealistic, short-term financial returns that are in-consistent with the long-term na-ture of oil investments. This has compelled private operators to reject op-portunities that would normally be deemed economically worthwhile. _EnergyBulletin

We would better understand the political undercurrents behind production fluctuations, if we were more aware of them and took them as seriously as they deserve to be taken. If a country lacks the technical expertise to develop an oil field -- or to retrieve as much oil as possible from that field -- production numbers are artificially depressed for political and bureaucratic reasons. The oil is still there, but you would never know this merely by looking at production figures.

Peak oil disciples and believers reap much secondary gain from their faith. An important bonus is the pride of knowing something that other people don't know -- the end is near. It takes something much more potent than mere logic and data to overcome such an advantage.

Taken from an earlier article at Al Fin Energy

Also see: Peak Oil Bites the Dust, which has an interesting discussion in comments after the article.