What came/comes out of the Shale/Tight gas/oil Miracle/Mirage?

A lot of hot air has been blown into the bubble called shale oil (often actually tight oil) miracle. The basic argument has been that soon the US will surpass that of Saudi Arabia as oil produces (and perhaps even exporter) due to non-conventional oil reserves and "advances in oil recovery technology".
Well, most of that is of course pure poppycock. Bakken and other US tight oil / shale formations are estimated to peak at around 2017:

The fracking miracle whis has greated the natural gas boom in United States is real, but with devastating environmental costs and unsustainable resource base. That is, it destroys groundwater resources, pollutes land and uses up more land these days in the active states than is used for wheat or corn production.

Further, unconventional resources always peak faster and once peaked, will decline extremely rapidly year-by-year, much faster than the old conventional resource bases that we got used to. This will create a frantic and increasing rate of drilling - a marathon to the death in order to just basically stand still (i.e. to stay even at the current level of production, not to say meet growing demand). That is not a miracle nor is it a future anybody in the fossil fuel industry hopes for. It's a race to the bottom.

Good resources on this issue is a fairly recent write up by Randy Udall titled 'The shale phenomenon: fabulous miracle with a fatal flaw' (2013), the Tullett Prebon report 'The Perfect Storm' (2012) and Chris Nelder's recent post on Smart Planet blog (2013).

Robert Hirsch - Nexus of Energy & Risk in the 21st Century

Presentation by Dr. Robert Hirsch on Peak oil and likely consequences from November 2012.

Some teasers:

There you have it. Nothing's changed. We are still on plateau. Price is still on an oscillating at-least-linear (more likely exponential) tendlike rise, which is triggering increasing recession-central bank intervention periods.

Reminder: The New Energy-Economic-EROEI Reality

The brilliant ecologist Charles A.S. Hall gave an ASPO-Webinar recently about 'Peak Oil, Declining EROI and the New Energy-Economic Reaility'. The simplified version of Hall's argument should be easy to understand:

Wealth creation (and it's proxy GDP) is based on energy resources

The growth rate of even wealthiest nations is declining:

Oil is becoming thin on the ground:

Due to increased drilling the EROI of oil production is going down:

This also increases oil prices:

Thus a larger chunk of money AND energy is going into energy production:

....leaving less money & energy for the rest of the economy:

This creates a new world, where the old economic models and policies do not work:

That's it. What else do you need to know? How will you react. This is an ongoing process. You are in it. You can make a choice as to how you will adapt to the new world. It starts with an attitude and education.

If you want to see the whole presentation along with Hall's voice, you can watch the Webinar on Vimeo or if you want the analytical version, you should read Hall's book 'Energy and the Wealth of Nations'.

Kyle Bass on European Debt Restructuring

The most important point of this video comes between 5:15 and 6:00.





The more important point from the point of energy is this:


There is NO way that oil production can grow at the speed required by the world credit market interest rate payments to be covered by real (non-financial) economic growth.

As Jim Puplava put it: Brent oil barrel price is the new global and automatically rising federal funds rate. It will cut off all economic growth every time it goes above $120-$140 / barrel (in c. 2008 dollars, as you have to keep  inflation in mind).

The world economy is toast. There is no way around it.

No amount of extra credit can solve this.

Only debt restructuring (i.e. default) will solve the economic issue.

The limited flow rate of energy guarantees that no other options is available.

And the more this issue is pushed into the future with temporary emergency measures, the bigger the debt that has to be written down will be and the faster the oil flow rate decline will be (it's increasing day by day).

And thus, harder the landing.

Brace yourself for impact in this slow-motion train wreck and try to position yourself to the last cart on the train.

Peak Oil, ERoEI, Maximum Power Principle & Markets

Excellent 13 minute Q&A with Nate Hagens, who understands the way we use oil, the coming supply crunch and how financial markets work.



For a more detailed discussion of some of the concepts discussed, check the the presentation A Framework for Supply and Demand on a Full Planet (35 mins).

Nate Hagens on Oil, Bond Market, Stocks and Economy on going forward

Conventional oil peaked in 2005. All liquids from ground are on a +/-5% plateau. Each extra barrel required for economic real growth costs more. This squeezes the real world economy. This is the lesson of net energy return falling.



Solution?

Globally -- long and slow crash, via economic turmoil.

Communally : know your family, your neighbours and the locals. Pull together.

Personally: scale down, get better psychologically, physically, financially and spiritually.

Increase your resilience to shocks and outages.

Stay safe.

Why Economics is Wrong

An excellent 20 minute talk from William Rees at the Institute of New Economic Thinking conference on how Economics is completely wrong modelling human ecological production.



If you don't understand it, watch it twice. It's really that important.

And if you're an economist and refuse to believe it, pick up some of the following for your reading list.

A Safe Operating Space for Humanity (Nature, 2009)
Towards a Green Economy: Pathways to Sustainable Development (UNEP, 2011)

Oh, why is this on an energy blog? Because economy drives energy usage and energy resources are a crucial part of our ecology. It's all connected. Thinking within the constraints of old academic domains will not lead to one really understanding the big picture.

Wesley Clark : We have a plan to take over Arab and African Oil Countries (since 2001)

Non-violent civil uprising in Egypt is already failing as the US jackals have taken over along with the Egypt military. This is merely a geostrategic move as Egypt is not important for it's oil reserves (it's a net importer).

However, the same cannot be said of Libya, Lebanon, Syria, Iran, Iraq, Afghanistan and Somalia.

"The Truth is about the Middle-East - had there been no oil there, it would be like Africa. Nobody is threatening to intervene in Africa." 

- Wesley Clark (retired general of US Army)

Nothing new here, this was already leaked in 2002, but a good reminder of what the playbook was and is. 

Naomi Klein : Gambling with Risk with No Exit Strategy

Cost-benefit analysis works, until it stops working. After that, it offers no consolation, no idea of risk, no idea of backup, no idea of how to recover.

And as Nassim Taleb has so eloquently put, modern risk analysis is not just wrong, it's stupid.

Fossil Fuels in 338 Seconds

Do you want a really quick introduction to fossil fuels, energy use, economics, ecological issues and global warming?

Here it is - 200 years of past and guesses about the next 100 years:



Well worth watching.