Friday, February 1, 2013

How 'bout checkin' the oil #1

I'm proud to be an American--we got two chickens in every garage
And I wish every other kid could be one--in my country, the medium is the massage
'Cause it's impossible to give
Equality and justice to inferior foreigners
too jealous to trust us
Gimme your weak and your homeless

How 'bout checkin' the oil ah, fella?

Pround to Be an America
the Tubes

Greetings Peaksters

Time for check up.

#1 -  Stuart Saniford  has the final figures for 2012,  See the graphs here.  Nothing too dramatic, all liquids remains flat.  

"What has been striking about 2012 is that oil production has been remarkably flat, with no significant rise across the year (there was a small 0.25mbd/yr trend overall, but that was not statistically significant).This is in contrast to 2009-2012 when production has generally increased, except for the interruption of the Arab Spring, particularly the loss of Libyan production in early 2011.  Instead, 2012 looks more like 2005-2007 when production was pretty much flat, occasioning a huge spike in global oil prices
If this new 2012 production plateau continues, I would expect prices to rise again.  They have otherwise been on a gentle slide since the situation in Libya stabilized in mid 2011"
#2   This is consistent with the view of Chris Skrebowski, former editor of the Petroleum Review, who predicts a peak of all liquids in 2015-2016.  Here is a  nice short video.  He notes that Colin Campbell was correct in his prediction that Crude and Condensates - the stuff that goes into refineries - peaked in 2005.  He also notes that peak exports also occurred in 2005 and that between 2005 and 2010, exports dropped from 44.2 to 41.4 . 

Here's a paper by Skreboski from a year ago.  He expands on the theme of "economic peak oil" (peak cheap oil) vs "geologic peak oil"  , noting that the price needs to stay between $80 (to recover costs) and $120 (where demand falls off.)  He notes that different countries have a different price points - which explains the fact that US and EU use is dropping, while China continues to increase use.

"This in turn poses a terrifying question: Would this higher price tolerance mean developing economies could keep developed economies in growthless stagnation by paying oil prices that were just above those that bring developed economies to an economic halt?"

     The only thing left for the US is "adaptation" - using less, and converting other fuels.   This requires time and money.

  " The key adaptive response to high oil prices, at least initially, is fuel substitution. In the 1970s around 25% of all oil went for power generation as heavy fuel oil. Currently, oil in world electric power generation is 4% and falling, having been backed out by coal, gas and nuclear generation. Similarly the use of oil for space heating (gas oil/furnace oil) is in decline and largely displaced by gas although efficiency in use and improved insulation have played their part.
Gas to liquids (GTL), Coal to liquids (CTL), Biomass to liquids (BTL) and Enhanced Oil Recovery (EOR) all have the potential to increase oil liquids supply as does Algal oil. At the moment only GTL costs are economically robust and then only if there is a guaranteed supply of low-cost gas. According to the IEA currently the lowest cost of these potential incremental supplies is CO2 EOR then GTL, other EOR, BTL and CTL.
The new challenge is, that with 70-75% of oil going into the transport sector globally and 80-85% in the US how can or will this be substituted? The radical change – moving to electrical power – is not yet fully economic and is really only applicable to surface transport. Biofuels are being actively promoted but are really only fuel extenders. In addition the food or fuel challenge has not been fully resolved. The so-called second and third generation biofuels solve the food/fuel dilemma but are not yet economic. The use of natural gas for transport in places like Pakistan, India, Brazil, Iran and other emerging economies is becoming fairly widespread. However, in all economies, any transition takes significant time and investment."


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