When the news starts to spread

My cynical view on this world has caused me to fall back on a few principles when it comes to predicting the "what next". Some of these are human nature, history and "when it appears in financial publications". The latter might sound a bit off track but let me explain. In my view this world (western world that is) is shaped by money and the money business. We can get upset about this but I see it as a thing we have to live with.

The moment Peak Oil or energy shortages begin to appear in financial blogs or newspapers the time is there for things to start changing. This morning I stumbled across a Dutch financial blog called Blikopdebeurs. The current home page features a text on Matthew Simmons and a few pages down the history line has an interesting article on investing in precious metals where PO is mentioned as well.

When financial analysts begin to think, read and write, investors start to read and act and the world is honed into a new shape. Maybe this time no honing but chopping with a blunt ax. When investors act we will feel it and when we finally feel it we (the people) will do a lot of things among which panicking.

Now we only have to wait for major newspapers to get the green light to start publishing the ins and outs and finally I don't have to answer questions like "if this is going to happen why don't we read about it?".

Another believe system debunked at the same time?

Russia - Can it produce and export oil that Europe needs?

The above image is from Jeff Rubin's (CIBC) October 2007 presentation OPEC's Growing Call on itself (PDF). So, clearly not everybody agree that Russian can export oil that the world is expecting it to.

In addition to the above, this news which has been circulating for 2 years now:

Russian oil output could peak .... in 2010..... Russian Industry and Energy Minister Victor Khristenko said.

The reinstated this October in International Herald Tribune:

The oil and gas fields feeding this bonanza are running dry. Russian gas output has leveled off; oil production is expected to peak by 2010. Russia has more gas and oil, but its energy sector has to make the right decisions now to tap new fields. Western energy companies, whose capital and know-how will be essential to sustain Russian oil and gas production, have felt distinctly unwelcome in Putin's Russia.

Coincidentally, Rosneft is also renegotiating their deal with China after 2010:

State-controlled Rosneft (ROSN.MM: Quote, Profile, Research), Russia's largest oil firm, said on Tuesday it will not renew its existing crude oil supply contract to China after 2010 unless China offers better terms.

There has also been discussion about overstated reserves with Russian OilCos.

Mitvol was visiting analysts with several banks in the United States who hold investments in companies operating in Russia, warning them about the dubious reserve accounting methods.

Then again, there's been discussion about Russia capping it's production voluntarily. High prices really is good for Russia (and esp. Putin's cabal):

So Russia may be about to cap its oil production just when the global community is looking for it to produce more oil. Of course, that is the global community's problem, not Russia's.

As for actual export data, exports did fell in 2006 2.4% according to Prime-Tass news agency (article not available on web anymore). Rian reported a 1% fall y-2-y for 2006 exports for Russia.

However, according to Alexander's Gas & Oil Connections, Russia's 1-8/2007 oil exports grew by 4.75% compared to year earlier.

So, for now, Russian exports of oil are still growing. However, if they start to decline soon, it'll be interesting to read the analyses as to whether this will be involuntary (i.e. geology of peaking) or voluntary, in order to support Putin's goal of doubling GDP by 2010 - a goal which Russia is unlikely to meet.

So you want to do something concrete, eh?

This blog is mostly about reality, numbers, modelling, policity, geopolitics and technology.

It deals very little with practical transformation of current fossil fuel use to something more sustainable.

Somebody might say that's an oversight. We'd like to consider it focus.

However, to break the constant stream of not so upbeat news, here's a list of 50 things that will save the planet from UK Environment Agency.

It's worth reading, as it'll definitely give everyone simple concrete ideas to do. It'll also make us think about more difficult changes in our lives. Changes that are very likely - unavoidable. Better to get accustomed to them in advance, right?

So you like skimming presentations? Here's a few...

Who has time for in-depth article reading or *gasp* scouring through academic journal pieces these days?

Many of us are condemned to the world of powerpoint presentations and quick skimming of overall trends and some basic facts.

So here's a few presentations, on peak oil related matters, hand selected for you from various recent sources. Many stay on an overview level, so don't expect technical details, scientific proof of each argument, although most are heavy on graphs and some on numbers.

These are powerpoints after all.

• A Hungry World In Search Of More Oil - Matthew Simmons, Nov. 2007, 26 slides, 1.8 MB
  Reserves, production plateau, peak timing & oil price = overall view and current reports explained: we are running short on time for big mitigation efforts
  
• World Oil Shortage Scenarios for Mitigation Planning - Robert L. Hirsch, Oct. 2007, 43 slides, 1 MB
  Shape of the peak, decline rates, GDP growth, resource nationalism = prepare for different kinds of peaks
  
• Aviation and Peak Oil - Why the conventional wisdom is wrong - Roger H. Bezdek, Oct. 2007, 27 slides, 1 MB
  Availability, price projections and alternatives for aviation fuel & aviation growth risks from GDP downfall = aviation unlikely to grow projected 100% in next 25 years, big risks ahead
  
• Alternative World Energy Outlook - Ludwig-Bölkow-Systemtechnik GmbH, June 2007, 24 slides, 1 MB
  Timing of peaking of oil, gas, coal & nuclear production & alternatives to fill the gap = more than oil may peak in coming decades, need to ramp up alternatives
  
• Future of Oil Supply - How fast (not how much) - Energyfiles, April 2007, 57 slides, 2 MB
  How global peak happens, why drilling more is not solution, how production matters more than actual reserves = not enough production capacity left to continue current demand growth
  
• Beyond a Thousand Barrels a Second - Peter Tertzakian, Sept. 2007, 57 slides, 4 MB
  Uniqueness of oil, consumption growht, fuel obesity, depletion, China, population, suburbanization = big challenges ahead, regardless of what we do
  
• Implications of Peak Oil for Climate - Pushker Kharecha and Jim Hansen, Sept. 2007, 28 slides, 1 MB
  Peak oil projections, CO2 emissions, role of coal, climate change, scenarios = climate may be ok, if we don't burn coal
  
• How Good Is Our Bet on Biofuels? - Kyriacos Zygourakis, Sept. 2007, 34 slides, 2 MB
  Various liquid biofuel types, energy required, scaling of production = important for mitigation, but not enough to fill gap left behind by oil peaking
  
• Future Energy Challenges - Matthew Simmons, 2007, 19 slides, 3 MB
  Energy infrastructure, oil & gas peak, challenges of transformation = no plan B for energy, experts have been wrong, big changes ahead.
  
• Peak oil and Transition Towns, Rob Hoskins, May 2007, 76 slides, 2 MB, PPT file
  What/when peak, what it means for food, agriculture, transport, jobs. How cities can cope = plans for mitigation on town/city level
  
• The Challenge of Peak Oil - Richard Heinberg, April 2007, 27 slides, 2 MB, PPT file
  What peak, oil/gas/coal issues, alternatives, scaling of production, hybrid cars, conservation, green issues = opportunities ahead
  
• The Next New Energy Thing - Ron Swenson, Aug 2007, 72 slides, 8 MB, PPT file
  Peak, renewable fiels, energy resource vs field, thermodynamics, mass transport = very big transition, we are not doing enough. Economics will lose out to physics
  
• Top 10 Reasons why Peak Oil arrives sooner rather than later - Steve Andrews, Mar 2007, 23 slides, 6 MB PPT file.
  Consumption, peaking patterns, geological reality, political risk, overstated reserves, growing producer consumption, unconventional oil does not scale fast/high enough, net energy will impact recovery ratio = Hopes about 2050-2100 peaking is wishful thinking.
  

Do note that above present the views of the authors and may not be fully shared by the Energy Standard team, or you for that matter. However, understanding of the various points of view on peak oil and it's mitigation is crucial to understanding the reality and how it is likely to unfold.

There is no single truth, so try to read many.

So you like listening (to podcasts)?

To those of you with little time to read, but more time to listen, here's a few interviews & podcasts about current status of Oil peaking (all in mp3 format):

• WEC report - conventional crude oil peaked in 2006 - Chris Skrebowski (editor, Petroleum Review), 29 mins, 13.3 MB, Oct. 2007
  
• Quality of Crude Oil Supply Declining - Larry Chorn (Platt's Chief Economist), 6 mins, 6 MB, Oct. 2007
  
• Oil production has peaked & prices will continue to rise - Sadad Al-Huseini (ex-Head of Oil Production of Saudi Aramco), 12 mins, 2.9 MB, Oct. 2007
• Has oil peaked & why are we not hearing more about it - James Schlesinger (former US Energy secretary), 14 mins, 13 MB, Sept 2007
• Official world oil reserve figures are overstated - Ray Leonard (Kuwait Energy Co.), 17 mins, 4 MB, Sept. 2007
• Peak oil means peak economy - Robert L. Hirsch (SAIC, ex-RAND, ex-Exxon, ex-ERDA), 17 mins, 4 MB, Oct 2007
• Export Land Model - How oil producers are exporting less oil for us to us - Jeffrey J. Brown (petroleum geologist, TOD), 36 mins, 25 MB, Sept 2007
• Oil Decline Rates in key oil fields & World Energy Outlook - Fatih Birol (IEA chief economist), 12 mins, 3 MB, Oct 2007
• Roundup of recent news: Oil, geopolitics, dollar decline, oil discovery, population, food - Bart Anderson (Energy Bulletin), 52 mins, 24 MB, Oct 2007

That should be enough to get started. For more podcasts, check Global Public Media, The Last Oil Shock blog, older ones from The Watt, EV World energy podcasts, Platts audio features.

Can't drill your way out of geological depletion

For people who often claim: "We'll just drill more!" this graph should explain some of the basics of how reality works:



(click image for a larger version)

The image clearly shows, that while efforts to drill more have grown exponentially, the actual production has still decreased at about linear speed since mid 80's.

It's a race against infinitely reciding horizon. You can't catch up with it, but you can slightly slow down the speed at which it distances itself from you.

As a pattern, this should also remind you: don't try to fix geological natural reality with economics. Reality will always win.

60 seconds of your life

The following is a quickly patched together animation of various Oil, Natural Gas, Hard Coal and Nuclear Energy resource peaks as compiled by LBST (GER).

Click to see the full image size with animation

It compares the total combined energy peaks with IEA World Energy Outlook (2006) reference case for energy needed to carry on the world economic growth (at c. 2% / year).

Even if one does not believe in the exact numbers for oil, gas, coal and uranium respectively, the same principle applies - the peak is just pushed forward into the future.

So a series of questions arise: Where does future energy come from? To which energy forms will we transition into? What will the effects of this transition be, esp. for the climate and environment in general?

And the more painful question: can we have steady annual average 2% economic growth with accompanied energy consumption growth?

We conclude with a quote from Harvard physicist, Albert A. Bartlett, Ph.D.:

"The greatest shortcoming of the human race is our inability to understand the exponential function." - Albert A. Bartlett

While the inability seems to be real (innately, overcome through learning), it remains for you to decide whether it really is a shortcoming or not.

Energy Watch Group: World Oil Has Peaked Now

Al Jazeera has the scoop on Energy Watch Group's latest report on peak oil, which claims that the world oil production has peaked about now and that we are facing a major economic adjustment to a new reality we have never experience before.

Al Jazeera : Inside Story - Peak of Oil production Part 1 (Oct 23rd , 2007, 12 mins)


Al Jazeera : Inside Story - Peak of Oil production Part 1 (Oct 23rd , 2007, 10 mins)


More info @ Guardian:

"The world soon will not be able to produce all the oil it needs as demand is rising while supply is falling. This is a huge problem for the world economy," said Hans-Josef Fell, EWG's founder and the German MP

...RGE-Monitor:

King Abdullah of Saudi Arabia: "The oil boom is over and will not return. All of us must get used to a different lifestyle."

...Chris Skrebowski (editor: Petroleum Review) w/ Julian Darley interview on the issue (mp3):

The report's finding"Oil production has probably peaked now and will decline steadily from here on out at about 3% a year, which then means that we have - looking forward - some pretty dramatic decline... This may be the start of a very major social and economic upheaval." - Chris Skrebowski

CNN (with an interview with Leo Drollas, market analyst):

"Scaremongering"

New Scientist:

The report also predicts significant falls in gas, coal and uranium production. The group warns that supply shortages could cause "a meltdown in society", leading to scenes of mass unrest, such as those that took place in Burma earlier this month when the government pushed up fuel prices.

... and in the actual report 'Crude Oil - The Supply Outlook'

Just one image today

ASPO 2007 presentations

ASPO 6 (cork, Ireland) and ASPO USA 2007 (Houston, USA) are now over. You can find most of the presentations for the conferences at the respective web sites. For those who don't know, these are the two major 'open to public' Peak Oil conferences that deal with facts of the reality and peer discussion.

http://www.aspo-ireland.org/index.cfm/page/presentations
http://www.aspousa.org/proceedings/houston/

ASPO Ireland has also a DVD of all the ASPO 6 Conference presentations for sale.



If you are in a hurry, here's a quick rundown of some of the presentations based on their approach:

Consumption & Production forecasts + Peak Timing

• Chris Skrebowski: Just How Close to Peak Oil Are We? (Petroleum Review, ODAC)
• Mike Rodgers: Global Hydrocarbon Liquids Supply Forecast (PFC Energy)

Summary: Non-FSU non-OPEC (sic) has peaked. FSU to peak in 10-15 years (?). OPEC data still very unclear, but may be close to peaking (or not). Global peak 2011-2017?

OPEC & Growing consumption in Producing nations

• Jeff Rubin: OPEC's Growing Call on Itself (CIBC)
• Jeffrey Brown & Samuel Foucher: Quantitative Assessment of Future Net Oil Exports (The Oil Drum)

Summary: Available oil will be reduced faster than geological depletion occurs due to oil exporting nations using more themselves and starting to ration production (in order to sustain a longer production).

PO & GW

• Jeremy Legget: Peak Oil and Climate Change (Solar Century)
• Richard Vodra: Peak Oil and Climage Change (ASPO 2007)

Summary: Coal is the major problem. If we turn to that after oil, pretty much all climate bets are off (including the most optimistic ones). This comes at a time when Tim Flannery reports elsewhere that the world may have surpassed c. 450 ppm of CO2 already in 2005. That was not supposed to happen for another 10-15 years - the time we were supposed to use for radical CO2 emission reductions...

Economics & PO

• Nathan Hagens: A Supply and Demand Framework for a Full Planet (Univ. Vermont)
• Robert L. Hirsch: World Oil Shortage Scenarios for Mitigation Planning (MISI)

Summary: The actual effects of peak oil depend a lot on the shape of the peak and plans in place. However, regardless of the shape/plans, the mitigation is not going to be easy: hard choices ahead.

Alternative & Renewable fuels

• Kyriacos Zygourakis: How Good Is Our Bet on Biofuels? (RICE Univ.)

Summary: Do NOT scale fast or high enough, but will be produced, even if some of them might be energy or climate losers.

Nuclear power & Electricity

• Michael Dittmar: Nuclear Energy Option - Facts and Fantasies (CERN)
• Pierre-Rene Bauquis: Nuclear and Oil (IFP)

Summary: Nuclear electricity production share has actually gone down, not up. Fusion energy has been and still looks to be "50 years away". Oil is liquid (energy source), electricity is a transport system (energy vector). Nuclear cannot replace oil in a short timespan (20 years).
OR
Nuclear power will reach a (new) renaissance and take us into the next golden cleaenergy age, through the fusion of oil and nuclear industries. It all depends on who you believe.

Planning, Response & Restructuring

• Seth Itzkan: Houston After Oil (Planet-TECH)
• Debbie Cook: The Local Story (City of Huntington Beach)
• Alan Drake: No Oil Required (ASPO-USA)

Summary: Mitigation is possible at many levels. Requires a lot of political work, investments and time. USA looks to be far worse off than Europe, due to very high oil use and car dependency with very low mass transit usage.

There are many others in addition to the ones linked above. Go to the presentation folders linked first, to find them all.

On a related note, David Strahan (of 'The Last Oil Shock' fame) interviewed Robert Hirsch on the economic effects of Peak oil and responses (incl. rationing) with the title 'Peak Oil means Peak Economy' (mp3). Well worth listening.