Peak Oil - "Its the Flows, Stupid!"

[bhikkhu]

Published on 12 May 2008 by ASPO-USA. Archived on 12 May 2008.
Peak oil: “It’s the flows, stupid!”

by Steve Andrews and Randy Udall

Verbal shots from legendary political consultant James Carville land with the shock of a hand grenade. If the always-blunt and ever-controversial Carville were to grasp our oil dilemma and begin a peak oil education campaign, his war-room slogan would probably paraphrase his winning axiom from the 1992 Clinton campaign, using “It’s the Flows, Stupid!”

Peak oil is about peak flow. It’s that simple, despite all those lame statements (some from people who ought to know better) that “we aren’t running out.” That’s right, we aren't, but who said we were!

Peak oil describes the maximum flow rate of oil from a well, an off-shore platform, a field, a basin, or a geographic area—state, nation, continent, and eventually the world. Webster’s defines “peak” as “the highest or most important point.” This summer we’ll watch Olympians in Beijing straining for peak performance—for their best. Peak doesn’t mean the end or the bottom or the dregs. It’s golfer Arnold Palmer or soccer player Mia Hamm at their most impressive zenith some years back. It’s Tiger Woods winning the 1997 Masters by 12 strokes, embarrassing the best players in the world. In most areas of human life, peak is a high point, a cause for celebration.

http://energybulletin.net/44078.html

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Here is a good article, just out today, clarifying one aspect of the problem, and one that is consistently gotten wrong in the media and simple arguments: that is, its not about how much there is left, but about what rate of production can be maintained.

[kristopher]

1. precisely right - what rate of production **can** be maintained nt

[Arctic Dave]

2. So would it be easier to call it a plateau then a peak?

Or a mound? Either way it is going to run out eventually.

[bhikkhu]

3. "Undulating Plateau" is a common term now

Production was about 84 1/2 mpbd in 2006 and 2007. A new plateau is currently 85 1/2 mbpd, according to EIA figures, for Oct 07 through Jan 08.

http://www.eia.doe.gov/emeu/international/oilproduction.html - under the "United States, Persian Gulf, Total OPEC, and World Total, Most Recent Months and Years" tab.

Whether production rates go higher depends on whether new projects start as scheduled and produce as projected, and more importantly how fast existing fields are declining.

A little change to estimated rate of decline % creates a very large difference in the picture of what production will be in 10 or 20 years, so that's usually the number that is fiddled with to arrive at either reassuring or frightening projections.

[GliderGuider]

4. Crude & condensate has been on a plateau since 2005

That's 3 years with a production variation of only +/- 1.25% -- in the face of rocketing demand from Chindia and prices that have risen 150%. Hmmm...

On the subject of post-peak decline rates, I like Bakhtiari's approach that he called the Four Phases of Transition:

The four Transition periods (T1, T2, T3, and T4) will roughly span the 2006-2020 era. Each Transition cover, on average, three to four years.

The major palpable difference between the four Ts is their respective gradient of oil output decline -- very small for T1, perceptible for T2, remarkable in T3, and rather steep for T4. In fact, this gradation in decline is a genuine blessing for those having to cope and adapt.

It should be borne in mind that these four Ts are only an overall theoretical structure for future global oil output. The structure is thus so orderly because predicted with 'Pre-Peak' methods, 'Pre-Peak' assumptions, and a 'Pre-Peak' set of rules.

The problem is that we now are in 'Post-Peak' mode, and that none of above applies anymore.

The fact of being in 'Post-Peak' will bring about explosive disruptions we know little about, and which are extremely difficult to foresee. And the shock waves from these explosions rippling throughout the financial and industrial infrastructure could have myriad unintended consequences for which we have no precedent and little experience.

So the only Transition we can see rather clearly (or rather, we hope to be able to comprehend) is T1. It is clear that T1 will witness the tilting of the 'Oil Demand' and 'Oil Supply' scales -- with the former dominant at the onset and the latter commanding toward the close (say, by 2009 or 2010).

But even during that rather benign T1, the unexpected might become the rule and the orderly 'Pre-Peak' rapidly give way to some chaotic 'Post-Peak.'

In any instance, the overall structure of the 'Four Transitions' is a general guideline for the next 14 years or so -- as far as global oil output is concerned. In practice, reality might prove to be worse than these theoretical Transitions; but certainly not better.

[bhikkhu]

5. Megaproject data to calculate decline rates:

http://en.wikipedia.org/wiki/Oil_megaprojects

The article above is a data-heavy Oil Drum project based upon the ideas that new oil projects information has been generally available, and a formula can be made from it: total production - new production = established field production. Crunching the numbers for each year allows a real year to year figure for existing field decline to be extrapolated.

Further, projecting the planned future production for fields in development, along with the extrapolated decline rate, allows a reasonable prediction of gross oil production for a few years into the future.

Needless to say, it indicates an undulating plateau for the next four years (there is in fact a great deal of oil coming online in the next couple of years), then a drop-off. Barring unforeseen discoveries.

[GliderGuider]

7. The Megaprojects DB is a good effort

But it still suffers from the optimism inherent in taking the producer's word for when the project will come on line and how much it will yield. Looking at the projected numbers for this year and the next compared to the historical numbers for the previous 5 years shows they are projecting the new oil supply to be double what it has been in the past. I just don't buy it -- the history of cost overruns, technical difficulties, delays and partnership failures in the last few years makes me suspect that the numbers for 08 and 09 will look pretty much like the historical numbers. There have been no output-doubling miracles in the oil industry that I'm aware of, everyone is still bitching about insufficient investment, and rig capacity has been maxed out all the way along.

My expectation is that production will start off with their "moderate decline" case (-4.5%/yr), but will add about half of what they are expecting in each of new projects, discoveries and unconventional. To my eyeball that would put the peak in 2009, with a gentle downslope to 2012 and then steepening to end up in 2030 at 45 mbpd. This is about what the EWG report forecasts (not surprisingly, since they use a similar approach) as well as Samsam Bakhtiari's WOCAP model.

[tom_paine]

6. Excellent article. K & R