Peak Oil, peak Gas Peak Coal.

[frogcurry]

The cost break point for authorising developments in the UK North Sea as of this time last year was still only about ~$22 / barrel oil (up from $11/ barrel in 2000). No one has had any faith that oil prices would be high enough to think of authorising more marginal developments. I'd imagine that most countries have had similar criteria (except China, who seem much less cost concious in their offshore oil developments).

Increased oil company revenue will recycle back into increased investment. That and a higher acceptable cost to invest against will bring a lot more new fields on line in the next few years than would otherwise have occured. I expect you will see a peak in production, a drop, then a rise back up again as the extra wells produced from this strong high price starts to have affect.

[TithonusSyndrome]

Don't commend Canada as a whole. Ontario is part of the East Coast liberal region, so we have all these high-falutin' ideas about environmentalism and sustainability in our heads. Out west in Alberta, they're having a fossil fuel party, trashing their environment in the process, and praising The Lord for the financial bounty.

I agree wholeheartedly with every word of it except the implication that there is elevated religiosity in Alberta. Perhaps this is true with relation to the rest of Canada, but having been all up and down the province all my life I can safely testify that the nouveau-riche here are too busy at secular consumerist temples to bother with Jesus to any extent that could be compared to the American south or any other fundie stronghold. The most religious people in this country who aren't xenophobic immigrants clinging to tradition are all Mindless Middle fucks.

[frogcurry]

To show I'm not bs'ing:

Real world example; a new Norwegian oil field (I'm doing flow assurance work on a pipeline for it) has a $500 mill break point that they want to avoid being on the wrong side of. The downside of saving that money is that they'll get (best case) 10 mill. barrels of oil less out of the reservoir (plus the associated gas). Thats an extra $50 per marginal barrel production plus operating costs. Oil companies are tight, so they won't go for the mega-bucks option. But at current oil prices, they could go for that option and still make a profit on it. If the prices stay this high, production will go back up for a few years at least - there's too much money to make not to.

[Admiral Valdemar]

The cost break point for authorising developments in the UK North Sea as of this time last year was still only about ~$22 / barrel oil (up from $11/ barrel in 2000). No one has had any faith that oil prices would be high enough to think of authorising more marginal developments. I'd imagine that most countries have had similar criteria (except China, who seem much less cost concious in their offshore oil developments).

Increased oil company revenue will recycle back into increased investment. That and a higher acceptable cost to invest against will bring a lot more new fields on line in the next few years than would otherwise have occured. I expect you will see a peak in production, a drop, then a rise back up again as the extra wells produced from this strong high price starts to have affect.

Increased prices mean the oil companies have higher costs. The oil they are going after is not only harder to get, but less energy abundant. The law of receding horizons means that as the price of oil goes up, so, too, do their material costs in extracting oil. As if that wasn't enough, there is a shortage of VLCCs, rigs, specialists and numerous other pieces of equipment or people who helped the industry in the great boom times. Many petro-geologists are retiring along with the rest of the baby boomers, for instance.

In any case, the chances of finding major fields to off-set decline is approaching zero fast, to say nothing of the lead times in their producing of first oil flows and what energy return you get. Marginal fields will be developed, but they will not change the situation at all, just make someone some more cash before they cash in their chips.



During Bush's first term in office, we used 10% of all oil ever used on Earth. That number if climbing.

[Stuart Mackey]

Anyone got supporting info on the NZ FTP plant? I'm discussing synthetic fuels elsewhere and backup for them reopening the plants and the projection of $60 per barrel would be useful.

I can only tell you that its something that Solid Energy has planned.

Also from here link

"People are worried about $US110 (a barrel) ($NZ136) oil, and yet we've got one of the cheapest energy resources in the world sitting on our doorstep."

Conventional technology could be used to gasify Southland lignite to produce high quality diesel, for example, he said.

A price of around $US60 to $US65 a barrel was likely to make diesel produced from lignite that achieved required rates of return on investment.

On the environmental consequences of doing so, he said carbon capture and sequestration, using conventional technology was now in a "near-to-commercial" phase .

and here PDF link

Earlier this month, L&M Group announced
it’s investigating up to three plants,
worth a total of up to $15bn, to convert lignite
to diesel and possibly other fuels in Southland
and Otago. If all three plants proceed, it could
see 50m tonnes of lignite mined annually. L&M
is also investigating coal seam gas in Southland
and Otago. Meanwhile, Solid Energy is pushing
ahead with a separate project to convert lignite
to motor fuel and expects to make a decision
within the next 12 months on whether it will
proceed. Solid Energy CEO Don Elder believes
lignite-to-fuel projects in NZ are viable at world
oil prices above $US35 to $40 a barrel. Dr
George Hooper from the Centre for Advanced
Engineering at Canterbury University is upbeat
about the potential of Southland’s lignite and
coal seam gas. Hooper believes lignites are
now NZ’s “most strategic energy resource.”
The Centre for Advanced Engineering released
a report about 12 months ago warning against
the importation of liquefied natural gas into NZ
when the country has indigenous reserves which
may be more cost-effective.

[Admiral Valdemar]

The EIA's TWIP shows another large draw in inventories of around 4.6 mb, which is over four times what analysts expected. How they react is up in the air, but the price is going up so far.

In other news, the BP Stat. Review is out for the year, showing production falling for the first time in five years and reserves also dropping.

[frogcurry]

Increased prices mean the oil companies have higher costs. The oil they are going after is not only harder to get, but less energy abundant. The law of receding horizons means that as the price of oil goes up, so, too, do their material costs in extracting oil. As if that wasn't enough, there is a shortage of VLCCs, rigs, specialists and numerous other pieces of equipment or people who helped the industry in the great boom times. Many petro-geologists are retiring along with the rest of the baby boomers, for instance.

I disagree partly; the material cost of extraction is irrelevant, as long as you spend less than you sell it for, and that is now a lot easier for many previously impractical fields. The increased difficultly will only be significant if you are going for something truly exotic like gas/hydrate-clathates or shale oil. Most of the more conventional hard-to-get fields that are undeveloped like deep oil, heavy crudes & remote fields are more a matter of cost, you need to buy some extra kit to produce them. i.e. There's a floating production facility going in off the coast of Africa shortly that will be re-circulating hot dry oil continuously down ~2 km of vertical flexible riser to prevent hydrate and wax blockage when not producing from the wells. I can't imagine that anyone would have tried such a clunky concept 10 yrs ago, but now its worth doing just to make that field producable.

Heres a goodish article in part:

http://www.thisismoney.co.uk/news/artic ... _id=2&ct=5

Assuming a global response like this, there's no way the oil price can keep going up in the present short term as supply /demand will rebalance more favourably. Thats a huge (probably exaggerated) claim for the reduction in demand in a very short period. Still it suggests that at least some of the current usage is just waste encouraged by the previous lack of cost to incentivise smarter usage. Add in the lag effect of new fields and tie-backs that haven't come online yet due to their approval only being made in the last few years and you've got a drop in the price over the next year.

BTW, I'm not going to touch the long term with a barge pole, I don't think anyone can predict what'll happen in >5 years time.

[Starglider]

I find it interesting that the current Wikipedia article on Oil Prices appears to be largely a summary of this source.

Due to rapidly changing valuations of the United States Dollar, it is unclear when these price points will break. While it is not expected to reach as high as $200 a barrel anytime soon, backsliding but still leveling at the previously unheard of $70 Dollars a barrel could become the norm.

...

As with any speculation market, it is well within investors' ability to drive up the price of futures well out of proportion with the supplies & demands involved. But there are two dangers that can quickly effect such transient spikes. Demand can drop off, and supply can increase. This was precisely the case in 1998/1999 when the Asian market collapsed (reducing demand) and Iraq increased production by over 12%(increasing supply/surplus). This caused the all time low of $8/barrel.

The future is not certain, but it is known that OPEC and other Oil producers are currently showing rather large surpluses. As well, as American and European economies are forced into reducing demand, it is not likely that anything above $70/barrel can be sustained for more than the next nine months. This was shown, in effect, when the price of a barrel of oil dropped significantly after expected demand of the American Memorial Day traffic failed to materialize. Similar disappointments can be expected for the American 4th of July, and Labor Day holidays.

While I am nowhere near as pessimistic as the peak oil 'true belivers', this does strike me as rather optimistic and unbalanced for a supposedly 'neutral point of view' article.

[Admiral Valdemar]

I find it funny that they point to demand destruction as a good result here. I guess prices staying at one high level because people can't afford to drive as much is healthy for the economy.

Also, "true believers"? LOL.

[Surlethe]

Due to rapidly changing valuations of the United States Dollar, it is unclear when these price points will break. While it is not expected to reach as high as $200 a barrel anytime soon, backsliding but still leveling at the previously unheard of $70 Dollars a barrel could become the norm.

While I am nowhere near as pessimistic as the peak oil 'true belivers', this does strike me as rather optimistic and unbalanced for a supposedly 'neutral point of view' article.

Not to mention full of bullshit -- $200/bbl oil has been projected since March.