Reporting gross oil production to hide the collapse of net oil production

[mooncliff]

This is a slick trick. It took me a few seconds and eye blinks to say... wait a minute...

The price of oil continues to be set by fear, not by supply and demand. World-wide oil production is growing quickly. By the end of the year, it will probably surpass 92 million barrels per day, with additional spare capacity of more than 3.5 million barrels. Thanks to the shale oil revolution, U.S. crude production could exceed 6.5 million barrels per day by the end of the year: around one million more barrels than the U.S. Energy Information Administration predicted in January.
http://online.wsj.com/article/SB1000...730090350.html

But the gross oil production level is meaningless if the Energy Return on Energy Investment (EROEI) worsens significantly so that net oil production declines rapidly.
See the truly terrifying third graph.
http://www.theoildrum.com/files/Net Hubbert_6.png
http://netenergy.theoildrum.com/node/5500
In other words, you can pump 10 million barrels of oil, but if the EROEI is 1:1 and you use 10 million barrels to get 10 million barrels, you get zilch, nada, nashi.

If the EROEI on any particular deposit of oil shale is 2:1, that makes it more or less meaningless no matter the price:
A measure of the viability of oil shale as a fuel source is the ratio of the energy produced to the energy used converting it (Energy Returned on Energy Invested - EROEI). The value of the EROEI for oil shale is difficult to calculate for a number of reasons. Lack of reliable studies of modern oil shale processes, poor or undocumented methodology and a limited number of operational facilities are the main reasons.^[20] Due to technically more complex processes, the EROEI for oil shale is below the EROEI of about 20:1 for conventional oil extraction at the wellhead.^[20]
A 1984 study estimated the EROEI of the different oil shale deposits to vary between 0.7–13.3:1.^[21] More recent studies estimates the EROEI of oil shales to be 1–2:1 or 2–16:1 – depending on if self-energy is counted as a cost or internal energy is excluded and only purchased energy is counted as input.^[20][22] According to the World Energy Outlook 2010, the EROEI of ex-situ processing is typically 4–5:1 while of in-situ processing it may be even as low as 2:1.^[4] Royal Dutch Shell has reported an expected EROEI about 3–4:1 on its in-situ test project.^[8][23][24]
http://en.wikipedia.org/wiki/Oil_shale_economics


So, our little plan to control the Middle East oil is clearly being abandoned by those who put the plan in place, and we know how long denial can persist because it is less painful than admitting you are wrong (see Karl Rove saying that Romney did NOT lose Ohio and there was still hope while the rest of Fox News rolled their eyes), so the fact that the Pentagon has abandoned Plan A and we are now on Plan B (fortress North America with Canadian and Mexican oil mine! mine! mine!) does not fill me with confidence. They didn't know what they were doing with Plan A, so why do we think they know what they are doing with Plan B? By the time they realize Plan B is not going to work (I give it until 2020), it really will be too late to do anything about managing the decline. The previous empire declined while fossil fuel availability was continuing to increase. This time we are in hard to imagine territory.

If fossil fuels can be produced by using solar thermal, photovoltaics, wind, etc., then EROEI would not apply. But as far as I know, renewables are not being used extensively to produce fossil fuels yet. So while in theory EROEI could be meaningless, I dont think this is true yet. Far from being a doomer, I am a technooptimist, but even I do not think I can live forever...

Scotland seems to be aiming for total renewables by 2020. That is amazing.

I laughed out loud when someone called Leonardo Maugeri a low-rent Daniel Yergin.

[touchring]

Re: Reporting gross oil production to hide the collapse of net oil production

This is a slick trick. It took me a few seconds and eye blinks to say... wait a minute...

The price of oil continues to be set by fear, not by supply and demand. World-wide oil production is growing quickly. By the end of the year, it will probably surpass 92 million barrels per day, with additional spare capacity of more than 3.5 million barrels. Thanks to the shale oil revolution, U.S. crude production could exceed 6.5 million barrels per day by the end of the year: around one million more barrels than the U.S. Energy Information Administration predicted in January.
http://online.wsj.com/article/SB1000...730090350.html

But the gross oil production level is meaningless if the Energy Return on Energy Investment (EROEI) worsens significantly so that net oil production declines rapidly.
See the truly terrifying third graph.
http://www.theoildrum.com/files/Net Hubbert_6.png
http://netenergy.theoildrum.com/node/5500
In other words, you can pump 10 million barrels of oil, but if the EROEI is 1:1 and you use 10 million barrels to get 10 million barrels, you get zilch, nada, nashi.

If the EROEI on any particular deposit of oil shale is 2:1, that makes it more or less meaningless no matter the price:
A measure of the viability of oil shale as a fuel source is the ratio of the energy produced to the energy used converting it (Energy Returned on Energy Invested - EROEI). The value of the EROEI for oil shale is difficult to calculate for a number of reasons. Lack of reliable studies of modern oil shale processes, poor or undocumented methodology and a limited number of operational facilities are the main reasons.^[20] Due to technically more complex processes, the EROEI for oil shale is below the EROEI of about 20:1 for conventional oil extraction at the wellhead.^[20]
A 1984 study estimated the EROEI of the different oil shale deposits to vary between 0.7–13.3:1.^[21] More recent studies estimates the EROEI of oil shales to be 1–2:1 or 2–16:1 – depending on if self-energy is counted as a cost or internal energy is excluded and only purchased energy is counted as input.^[20][22] According to the World Energy Outlook 2010, the EROEI of ex-situ processing is typically 4–5:1 while of in-situ processing it may be even as low as 2:1.^[4] Royal Dutch Shell has reported an expected EROEI about 3–4:1 on its in-situ test project.^[8][23][24]
http://en.wikipedia.org/wiki/Oil_shale_economics


So, our little plan to control the Middle East oil is clearly being abandoned by those who put the plan in place, and we know how long denial can persist because it is less painful than admitting you are wrong (see Karl Rove saying that Romney did NOT lose Ohio and there was still hope while the rest of Fox News rolled their eyes), so the fact that the Pentagon has abandoned Plan A and we are now on Plan B (fortress North America with Canadian and Mexican oil mine! mine! mine!) does not fill me with confidence. They didn't know what they were doing with Plan A, so why do we think they know what they are doing with Plan B? By the time they realize Plan B is not going to work (I give it until 2020), it really will be too late to do anything about managing the decline. The previous empire declined while fossil fuel availability was continuing to increase. This time we are in hard to imagine territory.

I laughed out loud when someone called Leonardo Maugeri a low-rent Daniel Yergin.

I would bet on oil anytime. The more they pump, the more oil Asia is going to consume. It's a diminishing resource.

[mooncliff]

Re: Reporting gross oil production to hide the collapse of net oil production

Russia is building a pipeline for oil and one for gas to China, Korea, and Japan, and Japan is considering constructing another gas pipeline from Russia.
The point of the above is that I do not see how we are going to get energy independence from such low EROEI sources.

[touchring]

Re: Reporting gross oil production to hide the collapse of net oil production

Russia is building a pipeline for oil and one for gas to China, Korea, and Japan, and Japan is considering constructing another gas pipeline from Russia.
The point of the above is that I do not see how we are going to get energy independence from such low EROEI sources.

Obama prints money, Asia will spend it on oil. It's free money from America.

[mooncliff]

Re: Reporting gross oil production to hide the collapse of net oil production

Haha! Asia has started printing their own money! The Russians want yen and yuan and have been asking for years! So now they have their own little piece of the "exorbitant privilege", at least for a while...
China is even more clever, buying huge amounts of Japanese bonds, forcing the Japanese to buy even more dollars, essentially forcing the Japanese to buy US bonds for the Chinese.

[globaleconomicollaps]

Re: Reporting gross oil production to hide the collapse of net oil production

Russia is building a pipeline for oil and one for gas to China, Korea, and Japan, and Japan is considering constructing another gas pipeline from Russia.
The point of the above is that I do not see how we are going to get energy independence from such low EROEI sources.

I'm still turning this EROEI idea over in my head. Effectively we are treating all kinds of energy the same. For instance, lets say you take a million gallons of water and boil it with natural gas that you would otherwise have flared off and inject it into rock to extract usable crude oil. It is true that you might even use more energy from a pure Watts and Joules perspective than you get out, but who cares? The point was to make usable fuel at a salable price. Likewise, I sometimes hear this criticism of corn ethanol. As a thought experiment, imagine that you are a farmer that has to run his farm equipment from ethanol. You make all your own fuel on the premisses. You need to grow 101 acres of corn to produce one net excess acre of corn. All the rest goes to fuel your tractor, BUT that one excess acre sells for enough money to pay for your entire operation. You can eat, buy shoes for your family, etc.


What am I missing here? Energy returned on energy invested might be an important philosophical problem, but real people are concerned with economic problems not philosophic ones.

[mooncliff]

Re: Reporting gross oil production to hide the collapse of net oil production

The falling EROEI idea is that at some point soon you will not be able to make money because there will be no energy for you to use.
For example, look what happened when the power, gas, and water went out in New York. All economic activity ground to a halt.
If there is no net energy for us to use, that is what will happen, and it will rapidly get worse.

From an economic perspective:
http://www.financialsense.com/contri...-but-not-cheap

[touchring]

Re: Reporting gross oil production to hide the collapse of net oil production

The falling EROEI idea is that at some point soon you will not be able to make money because there will be no energy for you to use.
For example, look what happened when the power, gas, and water went out in New York. All economic activity ground to a halt.
If there is no net energy for us to use, that is what will happen, and it will rapidly get worse.

From an economic perspective:
http://www.financialsense.com/contri...-but-not-cheap

Actually, I still think that climate change will destroy NY earlier than the world runs out of oil. Oil may still last for another 30 years, but parts of NY maybe under the sea before that happens.

[mooncliff]

Re: Reporting gross oil production to hide the collapse of net oil production

The sea level rise will take some time. What could change suddenly is many more storms. Like Bloomberg said, Hmm, the once a century storms are happening every other year now.

If the oil really goes to zero in 30 years, I think 90% of people will die. And the problems will start long before 2042, more like 2015 when it becomes apparent that there is a very serious accelerating oil supply problem. And to make things worse, if you are an oil producer, why would you be in a rush to pump out and hasten the depletion of your own oil?

[FrankL]

Re: Reporting gross oil production to hide the collapse of net oil production

The sea level rise will take some time. What could change suddenly is many more storms. Like Bloomberg said, Hmm, the once a century storms are happening every other year now.

If the oil really goes to zero in 30 years, I think 90% of people will die. And the problems will start long before 2042, more like 2015 when it becomes apparent that there is a very serious accelerating oil supply problem. And to make things worse, if you are an oil producer, why would you be in a rush to pump out and hasten the depletion of your own oil?

Because nation-states will not like it if you don't increase production to suit their needs. Look at what's went on, and is currently going on, in Iraq and Iran. The word 'sovereignty' for a country is meaningless if you cannot live both self-sufficiently and defend yourself against foreign aggressors.

Now why a nation like Norway is depleting their own reserves... that's a more interesting question. Do they really think that the bonds and equity in their sovereign wealth fund will preserve their wealth better than not pumping up their oil? Is the political class of Norway incompetent, corrupt, subverted or a combination of those?

[GRG55]

Re: Reporting gross oil production to hide the collapse of net oil production

I'm still turning this EROEI idea over in my head. Effectively we are treating all kinds of energy the same...What am I missing here? Energy returned on energy invested might be an important philosophical problem, but real people are concerned with economic problems not philosophic ones.

Bingo! EROEI is just the latest nonsense being promulgated by those that prefer we believe in the apocalyptic peak oil scenario instead of peak cheap oil. The idea that the world is "short" of energy, or that somehow the world is "running out of energy" is so utterly ludicrous that I am beyond wasting any more time debating it with people.

Crude oil as a feedstock to make refined liquid transportation fuels is becoming increasingly difficult and expensive to find, produce, transport, refine and distribute. And therefore it is becoming increasingly valued over other uses for crude oil derivatives (such as generating electricity). If there was an opportunity to take a cheap and abundant (and perhaps even "renewable") source of energy and use it as an input for the exploration, development and production of crude oil who cares what the EROEI is?

We aren't running out of energy, we are just slowly running out of cheap sources of a particularly important and highly valued form of energy that currently has no single equivalent substitute.

The falling EROEI idea is that at some point soon you will not be able to make money because there will be no energy for you to use.
For example, look what happened when the power, gas, and water went out in New York. All economic activity ground to a halt.
If there is no net energy for us to use, that is what will happen, and it will rapidly get worse.

From an economic perspective:
http://www.financialsense.com/contri...-but-not-cheap

The loss of energy into NY had nothing to do with energy source supply and everything to do with the wrecked or disrupted distribution system.

[NCR85]

Re: Reporting gross oil production to hide the collapse of net oil production

I've had the impression that low EREOI sources such as shale oil are effectively serving as arbitragers between abundant sources of energy such as coal and natural gas, and oil. Although there are obviously capacity limits to be dealt with at some point it doesn't seem to be as simple as saying 1:3 EREOI means 1 barrel to break even, 2 barrels gained.

[mooncliff]

Re: Reporting gross oil production to hide the collapse of net oil production

Huh?
Wow, you really misunderstand what I said.
EROEI is not a new made up story... it has been going on since the beginning.
If you dont have energy, you have no economic activity, or very little of it, the way the world was 300 years ago.
Of course what happened in NY had nothing to do with lack of energy source supply. Why would you misunderstand it like that?
So if there is no fossil fuel to run the power plants, where will the electricity come from?
There is some motivated reasoning or something going on here.

[lektrode]

Re: Reporting gross oil production to hide the collapse of net oil production

Bingo! EROEI is just the latest nonsense being promulgated by those that prefer we believe in the apocalyptic peak oil scenario instead of peak cheap oil. The idea that the world is "short" of energy, or that somehow the world is "running out of energy" is so utterly ludicrous that I am beyond wasting any more time debating it with people.

Crude oil as a feedstock to make refined liquid transportation fuels is becoming increasingly difficult and expensive to find, produce, transport, refine and distribute. And therefore it is becoming increasingly valued over other uses for crude oil derivatives (such as generating electricity). If there was an opportunity to take a cheap and abundant (and perhaps even "renewable") source of energy and use it as an input for the exploration, development and production of crude oil who cares what the EROEI is?

We aren't running out of energy, we are just slowly running out of cheap sources of a particularly important and highly valued form of energy that currently has no single equivalent substitute.

The loss of energy into NY had nothing to do with energy source supply and everything to do with the wrecked or disrupted distribution system.

+1
all i can say (to the anti-everything luddite brigade) is:

WE HAVE AN ABUNDANT SOURCE OF ALTERNATIVE AND RENEWABLE ENERGY (and it aint the sun/wind/tides)

but its that ole N word and none of the cheerleaders for 'alternatives' can even bring themselves to think about it.

hell - look what it did for harry reid's state - they got the BILLIONS TO BUILD the solution and then what!???

he/they shut the GD thing down, so it cant be used -AFTER TAKING THE BILLIONS TO BUILD IT - and so we're right back to square one - right?

so we'll just keep dumping trillions into war for oil, deficits to pay for it all, while france, china et al, continue to take that industry away from US too - right?

HAHAHAHAHAHAHAHAHAHA!!!!!!

oh and yeah - dont fergit - we, along with china et al - can just continue to smother the atmosphere with coal, because altho they're just soooo afraid of radiation (meanwhile its ok to be irradiated and groped by the TSA) - huh?

the luddite brigade wins another one - AND they got their boy back in DC, with harry&co _still_ in charge?

what could go wrong....

[mooncliff]

Re: Reporting gross oil production to hide the collapse of net oil production

There is nothing particularly wrong with nuclear. Although when Fukushima blew up, that will end up costing about 250 billion dollars. Still the overall cost to produce is about 8 cents a kwh in Japan, which is not bad, and that is taking into consideration the 250 billion dollars.
But of course, the next accident could be much worse and much more expensive.

So much emotion, so many things confused and conflated together... this is no way to learn deeply about something.