Peak Oil- what it is and how it will impact your life

Discussion in 'Peak Oil' started by Minuteman, Aug 4, 2005.


  1. Collapsenik

    Collapsenik On Hiatus Banned

    A number cruncher who once upon a time spent a decade in the field. And I can say that the combination of real world experience with a solid foundation in oil and gas research comes in plenty handy.

    Another way of putting it is more like someone who started as a private and is now a General because his skills go far beyond digging foxholes and attacking machine gun nests. Certainly something of value in the army, but you don't hand the control of nuclear armed bombers to someone who only knows how to use a shovel and a rifle.

    Specific to the industry you are in, it means I have the exact reference for why Ghawar isn't the largest oil field on the planet, nor is Cantarell #2.

    Please feel free to check the best information available to industry and verify it, certainly you must have access to this data as a frontline guy, right?

    Of course I will. Someone must come up with the locations for you to drill, you can't supervise the illegal immigrant construction workers until I get the subdivision planned and permitted, the constructions plans approved by the county, the appropriate tax structure created, a dozen general contractors hired, a supervisor to make sure they do their jobs, and fire the 3 that aren't worth a damn, etc etc.

    And guys who did that job and have been promoted beyond it will make sure you are supplied with shovels for foxhole digging and machine gun nests to throw yourselves at. And god bless...someone has to do it. I believe I've mentioned this previously, I wasn't 30 years old watching a 60 year old company man hiking his ass up to the drill floor to convince me that there is a life beyond drilling rigs. FAR beyond I might add.

    Oh...company men aren't space shuttle pilots, that would require use of that calculator. Your previous description of general contractor was quite a bit better. You sign tickets. Like that general contractor, you approve the payment for the work as the onsite babysitter. Onshore you sign the tickets for the people who do the work, like clean those toilets, and the tickets for the MWD, and tickets for the directional driller, and the mud system, and everything else. Pilot a space shuttle? More like sign the tickets for the crane to attach the shuttle to the solid fuel rockets. Sign the tickets for the crawler to take it to the pad. Sign the tickets for the toilets to be cleaned. Sign the tickets...sign the tickets....just..sign..those...tickets. And then fax the days bookkeeping in to the office. And then do it over..and over..and over. May your dragon hunting go well..and may you enjoy forever the endless paperwork that comes with every one of them. Someone has to do it, and I am forever appreciative that in the latter stages of my career, it is someone else. And you seem to still like it, so good for you!
     
  2. DarkLight

    DarkLight I self identify as a Blackhawk Attack Helicopter! Site Supporter

    Can we lock this thread as a pissing contest and start a new one with a no "my rig is bigger than your rig" rule? The last three or more pages have contributed nothing to the conversation and in my case resulted in only my third ignore on the entire site (yes, I recognize the irony of the previous statement).
     
  3. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    Well, maybe not lock it, but look at the balance for perspective.
    -Collapsenik has a grand total of 23 posts, all in this thread and none related to survival or preparedness. Conclusion, Collapsenik has only one trick.
    -Minuteman has over 4000 posts in a wide range of threads. Multifaceted would be an understatement.

    Now, who would be the better companion if things went pear shaped? Alternatively, who would be most missed if they quit the site?

    I'm willing to stipulate expertise in the industry for both. One of them I know well, the other via posturings. The stipulation has limits, however, and I'd make a small wager that the trolling/sniping will stop, either by the willing participants or the intervention of admins.

    'Nuff said, gents?
     
  4. Minuteman

    Minuteman Chaplain Moderator Founding Member

    One last comment. I'm sorry if members saw this as a pissing contest, it was never a mine is bigger than yours, it is exposing a poser who was trying to promote himself as something he's not. I would love to see a guy come on here and try to pose as a combat experienced vet when in fact they were a rear echelon bean counter. Our military monkeys would rip them a new one in short order.
     
    Last edited: Nov 27, 2014
  5. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    So its about supply and demand when a price goes up or down? Or is it artificially affected by governments and countries? I'm confused... again..
     
  6. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    It's supply and demand if the market were allowed to operate. Thing is, OPEC has a market share that is big enough that they can manipulate price, so the market can't operate freely.
     
    Quigley_Sharps likes this.
  7. vonslob

    vonslob Monkey++

    In regards to those numbers reserves that were being replace were not necessarily actual oil reserves but natural gas equivalent. Am i correct?
     
  8. Minuteman

    Minuteman Chaplain Moderator Founding Member

    Conspiracy theory has it that the U.S. and Saudi Arabia are working together to pull oil prices down to punish Russia.

    OPEC Tells US To Pull Back. Airlines Cheer, Energies Tear - Asia Stocks to Watch - Barrons.com

    Ghrit is right OPEC has the market share to manipulate prices, but not to control prices. They don't wield the power they did 20 years ago. And contrary to popular mythology we actually import very little (relatively) of our oil from OPEC nations. Our biggest foreign supplier of oil is Canada, followed by Mexico.
     
  9. Collapsenik

    Collapsenik On Hiatus Banned

    Then you have failed MM. I am exactly what I have claimed, and have provided the means for you to demonstrate even a fraction of what is available to other professionals in the field on the topic of peak oil. And we have demonstrated that Ghawar isn't the large oil field on the planet, Cantarell isn't #2, in-place and reserve calculations and the accompanying economics are the only reason you have a job and Simmons was an accountant who recommended nukes to do what you and I both know is a ridiculous claim.

    Certainly if you think you have exposed me as an ex-field hand who after stints in production and reservoir engineering now is forced to deal with those who don't even understand the economics of how their positions work within the oil field...well...yup...I've been exposed.

    I would love to see someone capable of digging foxholes learning the intricacies of figuring out better bomb yields on thermonuclear weapons. of course, years before that could ever happen they would need to take that course I mentioned in using a calculator.
     
  10. Collapsenik

    Collapsenik On Hiatus Banned

    I'm not sure. What do you mean by "natural gas equivalent"? Syngas assembled from coal? Natural gas generated from the cracking of crude oil,, either naturally or in a refinery? Reserves can never be "replaced" in the sense that once they have been consumed, they aren't coming back. What "replaces" reserves is the conversion of resources (estimates of oil, gas, condensate, whatever) into "reserves" (that amount of resources that can be produced at a profit and with current technology, prices and planning).

    At the end of the day the amount of crude oil, syngas, synoil, coal, heavy oil, hydrates, shale oil, tar sands, resources of any or all, reserves and what have you, is NOT what the consumer demands. The consumer demands, gasoline, diesel and jet fuel and those things can all be manufactured from all of the previous listed hydrocarbons.

    It is unlikely anyone on this website, or any website, puts crude oil in the tank of their plane, train or automobile, jet ski, dirt bike or weed wacker.

    It is this fundamental problem that befuddles some peak oilers, as they discuss in vivid detail a single commodity (light, sweet, crude produced onshore in countries governed by friendly people) and ignore the fact that their cherished sub-divisions are irrelevant except within the overall scheme of the cost of supply curve for those previously mentioned consumer products, across the entire planet.

    But for us to discuss such things, we would need to consider one of the few cost of supply curves generated for the chemical feedstock the planet uses, and it doesn't come from a peak oil source because...well...they haven't ever provided one to substantiate their position. Neither when Colin Campbell claimed peak oil in 1988 or so, or when he did it again later, and so on and so forth.

    Presented for those who wish to discuss peak oil in an appropriate context...how much is available to produce those consumer products, and at what cost it might be extracted. In 2008 or 2009 dollars I believe, from the WEO report of the IEA, page 218 I believe, figure 9.10.

    [​IMG]
     
  11. Collapsenik

    Collapsenik On Hiatus Banned

    It is always about supply and demand. Oil production could fall 20 million barrels a day, peak oilers would cheer and be happy, but if demand fell 25 million barrels a day, price would crash, and consumers would be happy. Lower production in the peak oil context is all that matters, this is a fundamental misunderstanding of supply and demand. Which is fundamental to why peak oil has gotten their price predictions so wrong, be it the original Simon and Ehrlich bet on resources in general:

    Simon–Ehrlich wager - Wikipedia, the free encyclopedia

    or the one Simmons lost:

    Simmons–Tierney bet - Wikipedia, the free encyclopedia

    The economists won in both cases, betting against the biologist turned end of humanity cheerleader, and the accountant playing oilman, who famously decided to announce on TV that nukes were needed to stop the Macondo Prospect leak.

    Tricky thing, predicting stuff. Especially the future.

    Quote by Yogi Berra: “It's tough to make predictions, especially abou...”
     
  12. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    Ah, yes. Peak oil, or peak any petrochem. Or, for that matter, any fixed quantity commodity.
     
  13. Gator 45/70

    Gator 45/70 Monkey+++

    You know, After 37 years in the field I have decided long ago that whenever you get a petroleum/production/reservoir (Insert Title) engineer involved in your production that the majority WILL sand up/water out a well in record time all under the guise of increasing production.
    We send them packing, They can talk a good line but the end result ...Is a dead well.
     
    Minuteman likes this.
  14. vonslob

    vonslob Monkey++

    What i was referring to was from an annual report i read. The report stated that they were replacing oil reserves with what they called per barrel natural gas equivalent.
     
  15. Minuteman

    Minuteman Chaplain Moderator Founding Member

    All the engineering gobbledygook aside the simple answer is that they are talking about production rates and how much they are replacing what is being sold. If you are selling 100 bushels of apples a day and your orchard is producing 100 bushels a day you are replacing 100% of your output. You don't replace apples with oranges, so any replacement stats are for current and future crude oil production levels. But as the article states that figure is commonly overinflated. Many companies world wide have been guilty of falsely inflating their "reserves" and fudging production figures. A few people have even gone to prison over it.
    That is why these data bases and crystal ball predictions like oil in place or known reserves is all just smoke and mirrors and completely unreliable. The only way to gauge the strength of a company, the size of a field, the probable production and profits is by the past and current production levels. What is actually pulled out of the ground and sold. Everything else is just speculation and WAG.
     
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  16. vonslob

    vonslob Monkey++

    Thank you minuteman i have really enjoyed this post. I have learned much. Before this pretty much everything i knew about the industry was from a book i read called The Prize by Daniel Yergin and from periodicals.
     
  17. Minuteman

    Minuteman Chaplain Moderator Founding Member

    I really like "The Prize" myself. Good book. I like it mostly for the history. There is also a 4 part documentary based on the book that is good as well. The only problem I have with Daniel Yergin is that he is a cornucopian and closely aligned with the oil companies. It is in their interest to deny any problems with production and depletion. They have stock holders to answer to and don't want anything devaluing their stocks. That is why there have been many cases of fraud in the industry where "known reserves", "oil in place" estimates and profit margins were greatly exaggerated or flat out falsified. Since you are new to the debate, here are some definitions of terms you will see.

    A cornucopian is a futurist who believes that continued progress and provision of material items for mankind can be met by similarly continued advances in technology. Fundamentally they believe that there is enough matter and energy on the Earth to provide for the ever-rising population of the world.
    In other words, go back to sleep all is well, there is no problem.

    COLLAPSNIK (n): One who has given up the fight for a resilient future. A collapsenik believes that a collapse is inevitable and some even contend that we should do everything we can to hasten it. They are most associated with the environmental movement.

    Peak Oiler a peak oiler is one who believes that the world is facing a peak of oil production(we actually have already reached the peak. Production levels have been declining for the last several years. Unless new production comes on line to push us past that previous level then world peak has already occurred.) and that we face a future of shortages and rising prices.
     
  18. Minuteman

    Minuteman Chaplain Moderator Founding Member

    There is a war brewing. It may seem like good news for US consumers at first glance but the ramifications could ripple throughout the entire economy. Lower fuel prices may seem like a good thing at first but when all the money for investment starts to dry up and millions are out of work it is going to negatively impact the rest of the economy.

    Here Comes $60 Oil as OPEC Tests U.S. Shale - Yahoo Finance

    "At $60 you start to price out a lot of critical mass production around the world," said Marina Petroleka, an analyst at Business Monitor International, a unit of Fitch Group. "U.S. shale, deep water in the Gulf of Mexico is affected. It doesn't price out a lot of Middle East OPEC supply."

    OPEC Policy Ensures U.S. Shale Crash, Russian Tycoon Says - Bloomberg

    OPEC policy on crude production will ensure a crash in the U.S. shale industry, a Russian oil tycoon said.
    American producers risk becoming victims of their own success. At today’s prices of just over $70 a barrel, drilling is close to becoming unprofitable for some explorers, Leonid Fedun, vice president and board member at OAO Lukoil (LKOD), said in an interview in London.

    Oil Enters New Era as OPEC Faces Off Against Shale; Who Blinks as Price Slides Toward $70? - Yahoo Finance

    OPEC's decision to cede no ground to rival producers underscored the price war in the crude market and the challenge to U.S. shale drillers.

    The 12-nation Organization of Petroleum Exporting Countries kept its output target unchanged even after the steepest slump in oil prices since the global recession, prompting speculation it has abandoned its role as a swing producer.

    "We are entering a new era for oil prices, where the market itself will manage supply, no longer Saudi Arabia and OPEC," said Mike Wittner, the head of oil research at Societe Generale SA in New York. "It's huge. This is a signal that they're throwing in the towel.

    "OPEC has chosen to abdicate its role as a swing producer, leaving it to the market to decide what the oil price should be," Harry Tchilinguirian, head of commodity markets at BNP Paribas SA in London

    Conventional Producers
    Conventional oil producers in OPEC can no longer dictate prices, United Arab Emirates Energy Minister Suhail Al-Mazrouei said in an interview in Vienna on Nov. 26. Newcomers to the market who have the highest costs and created the glut should be the ones to determine the price, he said.

    "That is what OPEC is hoping for," Carsten Fritsch, a commodity analyst at Commerzbank Ag in Frankfurt, said in an e-mail. "It's the question of who will blink first."

    OPEC may now be prepared to let prices fall to force some drillers with higher production costs to stop pumping

    Since the early 2000s, surging demand growth drove up prices allowing companies to apply new extraction techniques and develop deep-water and other costly oil. That ended an era that pervaded since the mid 1980s, which was characterized by low prices and OPEC regaining the market share that it had previously sacrificed in an attempt to preserve high prices

    Middle Eastern exporters including Saudi Arabia, Iran and Iraq can break even on a cost basis at about $30 a barrel, Sanford C. Bernstein & Co. They need more to balance their budgets. Some U.S. producers need more than $80, the consulting firm said in a report last month.

    OPEC's policy will spur a crash in the U.S. shale industry, Leonid Fedun, a vice president and board member at OAO Lukoil, Russia's second-largest oil producer, said in an interview in London before the group's decision.

    "In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again," said Fedun. "The shale boom is on a par with the dot-com boom. The strong players will remain, the weak ones will vanish."
     
  19. Minuteman

    Minuteman Chaplain Moderator Founding Member

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  20. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

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