About
Community
Bad Ideas
Drugs
Ego
Erotica
Fringe
Society
Politics
Anarchism
Central Intelligence Agency (CIA)
Corporatarchy - Rule by the Corporations
Economic Documents
Federal Bureau of Investigation (FBI)
Foreign Military & Intelligence Agencies
Green Planet
International Banking / Money Laundering
Libertarianism
National Security Agency (NSA)
Police State
Political Documents
Political Spew
Right to Keep and Bear Arms
Terrorists and Freedom Fighters
The Nixon Project
The World Beyond the U.S.A.
U.S. Military
Technology
register | bbs | search | rss | faq | about
meet up | add to del.icio.us | digg it

Peak Oil

by Dark_Magneto

Peak oil. A subject which has been hotly debated in the scientific and socioeconomic institutions for some time now. Most of you are probably unaware of this phenomena, and yet it will affect each and every single one of us when it occurs.

So what is this "Peak Oil" you may ask? Quite simply, it is the end of the age of oil, and consequentially the end of modern civilization and the American way of life.

Petroleum geologists have known for 50 years that global oil production would "peak" and begin its inevitable decline within a decade of the year 2000. Moreover, no renewable energy systems have the potential to generate more than a tiny fraction of the power now being generated by fossil fuels.

Peak oil theory states that any finite resource, including oil, will have a beginning, middle, and an end of production, and at some point it will reach a level of maximum (also known as "peak") production.

Oil production typically follows a bell shaped curve when charted on a graph, with the peak of production occurring when approximately half of the oil has been spent. With few exceptions, this is constant for a single well, an entire field, an entire region, and the planet. Oil becomes more difficult and expensive to extract as a field ages past the halfway point of it's life expectancy.

For example, in the U.S. oil production grew steadily until 1970 and declined thereafter, regardless of market price or improved technologies.

In 1956 M. King Hubbert, a geologist for Shell Oil, predicted the peaking of US Oil production would occur in the latter part of the 60's. Although derided by most in the industry, he was correct. He was the first to claim that oil discovery, and therefore production, would follow a bell shaped curve over its life. After his success in predicting the US peak, this analysis became known as the "Hubbert's Peak".

The amount of oil discovered in the US has dropped since the late 1930's. 40 years later, US oil production peaked, and has fallen ever since. World discovery of oil peaked in the 1960's, and has declined since then. If the 40 year cycle seen in the US holds true for world oil production, that puts global peak oil production, right about now; after which oil becomes less available, and more expensive.

Today we consume about 4 times as much oil as we discover. If we apply Hubbert's Peak to world oil production, estimation shows that approximately half of all oil that will be recovered has been recovered, and oil production may reach a peak and decline in the near future, or perhaps already has.

Peaking is one of these phenomenas that you can only say with certainty "We have peaked" when looking in the rear-view mirror, because it's determined by looking at previous figures of output with current production rates.

Oil is increasingly plentiful on the upslope of the bell curve, increasingly scarce and expensive on the down slope. The peak of the curve coincides with the point at which the recoverable reserves of oil has been 50 percent depleted. Once the peak threshhold is crossed, oil production begins to go down while cost begins to go up.

In simple terms, this means that if 2000 was the year we peaked, global production of oil in the 2020 will be equivalent to production rates of 1980. However, the world's population in 2020 will be much larger (approximately twice) and much more industrialized (dependent on oil) than it was in 1980. Consequentially, global oil demand will exceed global oil production by a significant margin. As a result, the price of oil, and everything by extension, will skyrocket. Oil dependent economies will crumble, and resource wars will erupt.

Our scientists and geologists have gone beyond asking if oil is going to peak, to asking when.

International Energy Agency accepts Peak Oil

"In the Summary, the IEA states: "Production of conventional oil will not peak before 2030 if the necessary investments are made". But we find in Chapter 3 that a peak on this date is premised on the USGS Mean estimate of 2626 Gb (billion barrels) for remaining conventional oil (IEA include NGL, Natural Gas Liquid, in conventional oil), adding that if this estimate should prove too high, the peak of production would come by 2015 or before. It is very important to note that the IEA now accepts the notion that there is a peak in oil production, even if there is uncertainty as to the date. The range is from 2015 to 2033, coming even sooner if all the assumptions are not fulfilled. It follows that Governments are now on notice that they must make energy plans for the future that accept peak oil as a reality. That will be a departure from past practice."

In the practice of mining, miners take a canary in the mineshaft to test the safety of its atmosphere due to the bird's small lung capacity. If the bird lives, the air is breathable and it's likely that you're going to be fine. If the bird dies, abandon the shaft post haste. In today's world, the airline industry is that figurative canary in the mineshaft. I project the peak oil crisis, as it pertains to the economy, will start here. I think that it has already begun.

Airline's bankruptcy filing cites higher fuel costs

Jet fuel prices, which are approximately 16% of airline expenses, have increased 52 percent in the last year. Many companies use financial trading tactics that trin their fuel expenses and, wherever possible, tag fuel surcharges on their customers' bills. This method of hedging effectively permits them to lock in prearranged prices for fuel, so that they are not hurt if prices jump above those margins. Some distressed airlines, requiring the money for other expenses, have less than 50% of their fuel needs hedged, leaving them more vulnerable to the high market prices. Delta has no hedges in place, and in the second quarter its fuel costs soared 54% from a year earlier.

The International Air Transport Association estimates a $1 per barrel rise in jet fuel costs the airline industry an additional billion dollars per year. Several of the large, conventional carriers such as United Airlines and Delta, already were in dire financial straits before this year. United, the nation's second largest airline, has been functioning under court supervised bankruptcy protection since 2002. United sought a 1.6 billion dollar loan guarantee from the government, and was turned down. Arlington based US Airways, which already received a 1 billion dollar loan guarantee, claims it is trying to avoid a return to bankruptcy. Delta has said bankruptcy is an option unless it can eliminate its losses.

Executive Travel Associates

"Unless fuel prices abate, or the revenue environment improves, we will have to furlough employees and seek wage and benefit concessions," Bethune warns. "We may also have to reduce our pension funding."."

United has already stopped paying into its pension accounts. If the other airlines begin follow suit to stay competitive, that could send huge shockwaves through the economy. If United Airlines defaults or goes bankrupt, the effect on the economy is nearly incalculable. No matter what else happens, in 5 years time, 2 or 3 major airlines are going to be gone. United heads the list, followed by Delta and US Airways.

The U.S. airlines have pleaded for President Bush to stop diverting oil from the market to the Strategic Petroleum Reserve at a time of record fuel prices. Any investor who's worth his salt will tell you that you buy low, sell high. Unfortunately, the government is doing just the opposite by accelerating the rate at which it's filling the SPR at a time when oil prices are sky high. I believe the reason for this to be due to the fact that they have the foresight to see that the price is low now compared to what it will be later on.

The domino effect of job loss will cascade through the economy. If the government bails them out it will cost billions of taxpayer dollars, much like the S & L fiasco of the 1980's.

Soaring Fuel Costs Undermining Airlines

"Even as big airlines are beginning to successfully rein in labor costs -- $1 billion in annual concessions from Delta's pilots being the latest example -- soaring fuel expenses are essentially negating their effects, leaving many of the carriers in perilous financial shape."

"It's like they're all treading water, but they've got 100 pound weights around their necks," said airline consultant Robert W. Mann of Port Washington, N.Y. "You can only do it for so long."

'Fiscal timebomb' for US airlines

For U.S. airlines to break even, oil prices must remain below $31 a barrel.

Most of these airlines are doomed. Using Chapter 11 to continue trading is just causing good money to be thrown after bad. The employees now realise that the only choice they have is either the swift demise of liquidation or the drawn-out death of a thousand pay cuts. I'm not surprised that the older pilots are cashing in their retirement chips, getting out now and trying to save what money they can.

The CEO's that continue to operate these businesses knowing that they have no chance of success are simply robbing investors. I assume that their reason for keeping the airlines going so that they can continue to draw their own inflated remuneration. At least if the companies were wound up they would find themselves sans a job along with everyone else.

Canadian natural gas reserves continue to fall despite record drilling activity

Canada was responsible for 15% of our natural gas, which is half of their production. Well they recently peaked and cut us off.

Opec agrees to cut oil production

Perhaps it's not because Saudi Arabia believes that prices will fall that they are cutting production. What if they realized that they are unable to maintain their surge production and want to mask this under OPEC policy?

Iran, Venezuela and Indonesia havent been producing up to their quotas. These were also the countries which were pressing the production cut.

I think there is something seriously wrong within OPEC. Since the OPEC manifest does not permit the production ceiling of a single country to be raised or lowered, they want to lower the production ceiling in order to hide the fact that they are nearing depletion.

The list of countries which can still increase production is becoming increasingly short, whereas the list with declining countries is growing rapidly. Moreover, the few countries which still can still increase production seem to be hesitant to do so.

It has occured to me that the true test will be when the oil price starts to edge over $50 again and OPEC are again under pressure to increase production.

If this increase in production is not forthcoming, then we can reasonably assume the January production decrease was a result of "unsustainable" levels of production We could very well be on the downslope of the production curve?

Trouble in the World's Largest Oil Field-Ghawar

^From a geologist acquaintence of mine, Glenn Morton.

The have been flooding the wells on Saudi Arabia. For some time now, it would appear.

"Today the world produces 82.5 million barrels per day which means that Ghawar produces 5.5 percent of the world's daily production. Should it decline, there would be major problems. As Ghawar goes, so goes Saudi Arabia.

"The field was brought on line in 1951."

"I have noted elsewhere that the data I am being told by engineers who have actually worked on Ghawar, that this decade will see it's peak. (Morton, 2004 PSCF in press). Others have noted how the percentage of water brought up with the oil has been growing on Ghawar. There are published reports that Ghawar has from 30-55% water cut. This means that about half the fluids brought up the well are water. Today the decline rate is 8%."

"Cumulative production from the field is 55 billion barrels. In 1975 Exxon, Mobil, Chevron and Texaco estimated that the ultimate recovery from the field would be 60 billion barrels."

"What is the future of Ghawar and Saudi production? It is not good.

"All production comes from "very old fields", with no major exploration success since the 1960s, and almost every field has high and rising water cut.".

"Saudi Aramco is injecting a staggering 7 million barrels of sea water per day back into Ghawar, the world's largest oilfield, in order to prop up pressure. It accounts for 30% of Saudi oil reserves and up to 70% of daily output."

"Doubts grow about Saudi As Global Swing Producer"

Remember these facts:

- Ghawar supplies 5.5% of worlds daily oil production.

- Ghawar supplies up to 70% of Saudi daily oil production.

- The average life of an oil well is 50 years. Ghawar started producing in 1951. Look at the numbers.

- Ghawar is declining produntion at 8% per year and that number is increasing every year. Ghawar production numbers could drop off a cliff any month now due to water injection.

- In 1975, estimated ultimate recovery from the field would be 60 billion barrels. Cumulative production from the field so far is 55 billion barrels.

Oil & Gas

"Saudi's "king" of oil fields, Ghawar, is the world's largest oil field. Wildcat discoveries there from 1948 to 1952 proved reserves estimated at 170 billion barrels of oil in place and 60 billion barrels recoverable. Those numbers remained unchanged in Aramco's 1975 reserve estimates. Ghawar has accounted for 55 percent to 60 percent of all Saudi oil produced. If these numbers are correct, Ghawar's oil is 90 percent gone."

"Simmons points out that 20 percent of the world's oil supply comes from 14 fields that are an average of 60 years old. New giant oil field discoveries, he says, ended in the late 1960s to early 1970s.

Remember, an oil well's average lifespan is 50 years. Most of Saudi Arabia's largest producing oil fields could collapse at any time.

Ghawar has peaked. It peaked 2 decades ago, it started declining and they started to inject water to delay the decline and maintain production, increasing the overall recovery rate from about 60% to now, which is so far 88%.

The fact is, the Ghawar reserve estimate is 60 billion barrels, so far they've produced around 55 billion. Either some massive shock is coming very soon, or the reserve estimate was wrong, and it's actually larger than stated. I think the latter can be ruled out by virtue of the fact that most the oil is turning to cut; the 7 million barrels of seawater per day they've been flooding the wells with to raise the oil and pressure table.

Ghawar is in terminal decline and nearing death.

When Ghawar hits terminal decline, sorry folks, that's it. It will have officialy happened then. Saudi Arabia will have peaked, and therefore categorically the world itself will have peaked. We are beginning the arc of decline of the bell curve. This is bad fucking news.

Assuming that the ultimate recovery figure for Ghawar is 60 billion barrels, then it should fail in late 2006/early 2007 if oil continues to be pumped at 1.8 billion barrels/year. Unless another Ghawar or several North Sea-sized oil fields are up and running, the global economy will be slammed into a recession.

When that happens, I predict Peak Oil and its implications will be seared into the mainstream public consciousness, the same way satelite photos showing the Antartic ozone hole highlighted the threat of ozone depletion. The effect of Ghawar's demise will be immediate and significant. No amount of spin can cover up a sudden 70% drop in Saudi production.

When Ghawar shuts down, the other wells will be extracted from much faster in an effort to pick up some of the slack since the big daddy king of Saudi Arabia went belly-up. That is going to accelerate depletion on these already mature wells, and the individual wells will be headed toward their peak capacities even faster, assuming they aren't already there, and then terminally decline.

If these other wells start terminally declining, then Saudi Arabia will cease to become a swing oil producer altogether. If you've been following this article, then it isn't necessary for me to illustrate the ramifications of that happening.

The whole reason we have such a huge population is because of cheap oil giving us the means to create the necessary petroleum-based pesticides and fuel for large farm machinery to produce enough food to keep them alive.

The Green Revolution, which brought along all of that and exploded the quantity of food we could grow, is responsible for the world population numbers as they are today.

Now when oil becomes a scare commodity, how's that going to affect agriculture? Well, international trade will grind to a hault and we'll have a hell of a hard time just moving things around in our countries alone. That farm equipment that can do the work of a thousand men in a fraction of the time is going to collect dust, and there's going to be a critical shortage of essential supplies.

Without petrochemicals, the progress of the Green Revolution is reversed and we go back to old production capacity at best. We don't practice things like crop rotation anymore due to petrochemical fertilizers and pesticides. For every 1 calorie of food we eat, 10 calories of hydrocarbon energy went into it, and that doesn't factor in packing, transportation, storage, and distribution.

So what happens to billions of people when food production can't sustain the population? A massive die-off, which is usually prefaced by turbulent political instability, rioting, looting, and impromptu survival behavior.

A majority of our electricity comes from from methane, which is just a fancy term for natural gas, which is also in decline. Oil is responsible for a gross majority of the things we take for granted in our day to day living, and all of that is about to change. People are in for a rude awakening when they realize that they exist in a wasteful, consuming, unsustainable environment.

The suburbs will become the graveyards of the 21'st century.

- Dark_Magneto

 
To the best of our knowledge, the text on this page may be freely reproduced and distributed.
If you have any questions about this, please check out our Copyright Policy.

 

totse.com certificate signatures
 
 
About | Advertise | Bad Ideas | Community | Contact Us | Copyright Policy | Drugs | Ego | Erotica
FAQ | Fringe | Link to totse.com | Search | Society | Submissions | Technology
Hot Topics
Global Warming is Helpful
1000th thread
Al Gore's Energy Use
co2 gas whats the big idea to save us all!!!
Why isn't eugenics being taken seriously?
Recycling a detriment?
Hydrogen cars
A point often missed...
 
Sponsored Links
 
Ads presented by the
AdBrite Ad Network

 

TSHIRT HELL T-SHIRTS