Peak Oil and Permaculture  

The latest "Arlington Note" (Volume 9, Number 10) has an article that touches an all sorts of topics I've been including here lately - peak oil, global warming and "2012: The return of Quetzalcoatl" to name but a few. The RU Sirius interview with Daniel Pinchbeck that I linked to recently talked about 2008 as being a turning point of sorts (based on some sort of Mayan numerology embedded in their pyramid design) with various bad things happening. John thinks this involves financial collapse (but doesn't link to any reasoning behind this, other than referring to a podcast I can't find).

From where I sit, here at this nexus of incoming streams of information from many sources about early indicators of potential future events, things are definitely heating up.

There seems to be an acceleration of the number of significant events that point toward big change in the near future. At TAI we watch many different trends, but the most significant ones are climate change and the possibility of a rapid shift in the world’s weather, the peaking of the global supply of oil and the attendant emergence of a new energy era, a major disruption in the world’s financial system, a global pandemic and, of course, the possibility that terrorism will escalate to a much higher level. There are other areas that interest us, like the dwindling supply of drinking water and technology trends, but the big ones get most of our attention.

The possibility of a major disruption in the world’s financial system sometime after January 2008 is a subject that doesn’t get nearly as much ink as oil and climate, but the effects – particularly if it is as widespread as some observers believe – could really be profound.

We recently had a world expert on the converging fundamentals that are driving toward large-scale financial failure give a seminal presentation on the subject at The Arlington Institute. Dr. David Martin, president of M-CAM, the global leader in intellectual property valuation, certainly got the attention of the international audience assembled here with his step-by-step assessment of what was in the works and what likely scenarios would fall out of the inevitable collision. We’ve made it a podcast that you can download from our website. I would strongly encourage you to listen to this most interesting talk. We’re planning to have more of these talks at The Arlington Institute. We’ll keep you informed of them in the future.

All of the trends that we are following seem to me to be symptoms of some larger, historic shift that is taking place on the planet. I’ve talked about it in speeches as an approaching punctuation in the “equilibrium” of the present era – a major, fundamental reordering of the essence of who we are and how we live. These big shifts have happened many times in the past evolution of life on earth and if one tracks the historical pattern of these epochal events, it is rather easy to suggest, as philosopher Peter Russell and others do, that another one is fast approaching.

Many people attempt to explain the essential nature of this revolution in esoteric, new-age terms, almost all of which leave me unsatisfied. In the face of recommendations to “meditate more”, as the essential preparation one should make in anticipation of large-scale systems failure, I keep believing that there are additional things that we should be doing to support ourselves in the coming years. Others appear to be thinking the same way as evinced by the number of interesting new initiatives popping up that represent very basic social shifts. The Post Carbon Institute (www.postcarbon.org) has an interesting “relocalization” initiative designed to help deal with the systemic failures that they believe will inevitably result from reaching the peak in oil production. You can learn more at www.relocalize.net.

In terms of attempting to understand the really essential nature of what’s going on, the best book that I’ve found is Daniel Pinchbeck’s 2012: The Return of Quetzalcoatl. Be warned: this is a rich, deep, drug-enabled, intellectual exploration that quickly wanders out of the box of conventionality and smack into huge ideas that, if you buy them, will certainly change the way you live the rest of your life.

I went along to the "Peak Oil and Permaculture" show last night - both Richard Heinberg and David Holmgren spoke well, and the attendence was much bigger than I'd imagined - over 700 people - but there wasn't much new information for jaded old bloggers like me. David Holmgren did come up with one interesting stat - wood pellet stoves are the fastest growing energy source in Europe apparently (something he heartily approved of). Richard Heinberg spent quite a bit of time on the "Oil Depletion Protocol" which I tend to think is a dead horse that needn't be flogged too much - it won't ever happen in the world that currently exists, regardless of its merits.

Michael Pascoe (who I like and generally agree with) is possibly a little too sanguine about peak oil and global warming (and also makes a ridiculous comparison to whale oil, which he should know better than to do). His business partner Alan Kohler has generally avoided talk of peak oil but does track the oil price closely, noting tonight (Windows / RealPlayer) that local oil consumption has dropped 5% this year (with the economy still doing pretty well) due to high prices - "proof the market does work".

Competing doomsday scenarios are making life awfully difficult – I can’t decide whether I should be suicidal about burning too many fossil fuels or not enough. Maybe if Tim Flannery, Richard Heinberg and Andrew McNamara can coordinate their apocalyptic visions we’ll happily drown because we have no means of escaping them rising sea levels.

The “peak oil” worrywarts are having a nice run at present, most recently Queensland National Party state MP McNamara on 60 Minutes and about-to-visit professor and book flogger Heinberg in The SMH, never mind Four Corners last month. At Heinberg's extreme, the peak oil folks are forecasting a return to the 19th century with little and expensive travel and we all have to grow our own food in the backyard as civilisation as we know grinds to a halt.

It is the nature of journalism that catastrophic bad news is goods news. But it is also astounding that that there is such a uniform ignorance or calculated ignoring of the great twin realities of our society: the ability of the market mechanism to efficiently allocate resources and our incredible capacity for inventiveness and problem solving.

We’ve gone through “peak oil” before – only then it was whale oil. The truth is that we’re not running out of oil and never will. At a price, we can make all the oil we need. The oil lubricating my car’s delightful engine already is artificial. As crude oil becomes more expensive, we start to use it more efficiently while the economic stimulus leads to product substitution. Oil remains wonderfully cheap, especially in a handful of low-tax countries like Australia, but in time it will become more expensive and we’ll use less per head of population.

The Pascoe article prompted the APPEA CEO to complain about 60 Minutes' "alarmism".

Belinda Robinson, Chief Executive of the Australian Petroleum Production & Exploration Association, writes:

Michael Pascoe’s cynicism over the recent media coverage on peak oil is warranted (yesterday, item 9). Working hard on a story and getting it wrong is forgivable. Working hard on a story that pompously dresses up sensationalist, alarmist nonsense as "investigative journalism" is not. The recent 60 Minutes diatribe on the looming oil "catastrophe" seems deliberately to set out to create anxiety, fear, anger and hostility using illogical images, smug quips from presenters with no knowledge. The "report" was striking in its absence of fact, statistics or evidence. This is at best irresponsible and at worst a gross and dangerous breach of the right to speak freely. Surely with freedom of speech comes some ethically induced sense of obligation to treat the subject matter, those who participated in the program in good faith (and at considerable inconvenience to themselves), and the general public with respect.

Neil Robertson writes:

Michael Pascoe does not seem to understand the concept of "non-renewable". He says, "The truth is that we’re not running out of oil and never will". This kind of ignorance is not what I want to be reading in Crikey! I suggest Mr Pascoe stick with finance and refrain from commenting on environmental issues until he educates himself appropriately.

As a blast fromthe past, here's a quote from last year's APPEA conference in Perth.

Eric Streitberg, Executive Director of ARC Energy a successful small onshore producer, showed a slide of Swenson's post-peak scenarios (www.hubbertpeak.com/scenario.htm). Streitberg's graph showed us just past the peak.

Interestingly, he conducted a straw poll, of the 1,000 or so petroleum professionals present.

"Please put your hand up if you think that we have crossed the Hubbert Peak and we are entering a demand driven pricing era, and hands up those who don't? " Streitberg scored it 50:50 at the time and said "The rest of you who didn't put your hands up had better talk to your management consultants about a course in decision making.

Alan Kohler also has a good interview with Woodside CEO Don Voelte up.

ALAN KOHLER: Just on costs, there's no doubt costs have gone up a lot. Overall production costs are up 65 per cent. So what is going on there?

DON VOELTE: I think costs everybody in the extraction business - that's mining and exploration, producing of oil and gas - has been talking about this for quite a while. We've been subject to very high commodity rates, starting from steel prices through drilling rigs through facility cost and all the way down to skilled labour. So it's basically a situation where we have a lot of pressures and also governments are trying to get back more of this money because of the high prices. So you're right - we're under a lot of pressure, we focus on costs everyday. Are you saying that none of it is your fault? No, it's not that easy. Of course we have to watch our business every day. What we're really saying is that we have to really be careful for every dollar we spend and make sure we spend it on the right things, things that make a material difference to our shareholders.

ALAN KOHLER: On other opportunities it seems to me Woodside's been operating for more than 50 years now and you've only really found one thing - the North West Shelf of Australia. Is that right?

DON VOELTE: Well, we don't think so. I think if you take a strong look at what we've done, we're going to be adding a project here in the next couple of years, Pluto, which will be a very significant -

ALAN KOHLER: That's in the same area.

DON VOELTE: It's in the same area but what I mean to say is that more of some things are a good thing and Pluto and Browse are extremely strong projects, along with Sunrise, that will add to the portfolio. We have found a lot of oil in Mauritania. The trick's going to be, Alan, to get it out of the ground and we've had a difficult time with Chinguetti, our startup, earlier this year and we're trying to crack that code to get more oil out of the ground for that project. We have other discoveries there too.

ALAN KOHLER: Would you like, in fact, to get out of Mauritania?

DON VOELTE: We're not at that point at this point. We've - in the first half, you have to remember, we made just right under $100 million on Chinguetti project in earnings before tax - I believe the number is $98.6 or $98.7 million. So it's a very profitable business in that respect, if we learn how to get that oil out of the ground. That's why we're trying to crack that code.

ALAN KOHLER: How much has that cost you so far?

DON VOELTE: So far that project has run somewhere over $700 million in the Chinguetti project, total, and we're working hard at improving the productivity of that project at this time.

ALAN KOHLER: You were quoted when you took over as CEO a couple of years as saying you did not want Woodside to be a cash machine like Arco that wastes money in unsuccessful international ventures. Are you satisfied that that's what you've done?

DON VOELTE: I stand by that statement and I'll say it again today. It's very important that we're successful. I think the first half of this year we've drilled 15 wells. I believe seven of them have been successful. We are continuing to have a good exploration track record. We think we have very good opportunities in Libya. The first two wells we've drilled there have been successful. In the Gulf of Mexico we've drilled seven wells. Three were successful this first half of this year. So our hit rate is good. We've found a couple of really good finds in the Gulf of Mexico for the shelf. The big bonanza in the Gulf of Mexico, we hope, is coming when we start a deep-water drilling program either later this year or very early next year.

ALAN KOHLER: You mentioned Pluto before. Can we talk a bit about that? It's 100 per cent owned - Pluto - unlike the rest of the shelf. How will Pluto in particular transform your company? I mean, what sort of expected production, cash flow, do you think you'll achieve with Pluto?

DON VOELTE: The North West Shelf shelf, which up to this point we've operated on behalf of five other partners or six partners, they are equal. It's been a very good project for us and provides a deep cash flow for us for many years and for many years to come. Pluto, albeit a smaller reservoir, our present projections is that the cash flow that spins off of it because of our higher equity will be equal to or nearly equal to the money we make off our North West Shelf or even greater than in the future years our North West Shelf. So impact-wise to our company, we'll be more than doubling our company in LNG resources.

ALAN KOHLER: Then there's the Browse after that, which is bigger than Pluto but you've only got half of it.

DON VOELTE: It's a very big reservoir. We think it's nearing the size - not quite the size of the North West Shelf when it was originally found, so it's another North West Shelf lookalike, albeit a bit smaller. But instead of just owning a sixth of it, Woodside owns almost 50 per cent of that project. So again, another doubling, another tripling of our LNG capability.

ALAN KOHLER: It must be tempting to focus on the North West Shelf. If you did nothing but the North West Shelf, Browse and Pluto, kept your costs down, you would be generating so much cash your share price would be who knows what. Shareholders would be all deliriously happy.

DON VOELTE: Well, we've been there before. Remember in the mid-'90s and the end of the 1990s and in early 2000, LNG was in a trough and it was hard to almost give away LNG. So we have to remember diversity in your portfolio is an important thing. So, yes, we've got a window now where the LNG market and the market is strong. We are trying to capture Pluto and Browse inside that window but we also have to be prepared for our shareholders that LNG could go into another down cycle if there's an oversupply situation that comes about. We think that there's a window for a strong market, remains open to 2012 or 2013, but it could get back into the situation -

ALAN KOHLER: It's actually hard to imagine with oil where it is, and the oil market and the situation it is with China - it's hard to imagine another downturn. Are you actually predicting one or you just think it might happen?

DON VOELTE: I think people thought that back in 1995, and by 1998, remember, we were selling oil for $12.50 - so it's a cyclic business. I don't predict $12.50 oil again but I do predict oil to come back down I think in a reasonable level. I think the area we have to prepare for is about $40 a barrel, somewhere in that range.

ALAN KOHLER: By when?

DON VOELTE: Not any time soon. I would also say that with the prices you see now, I think the supply/demand, the tensions in the world, the supply disruptions, I'd say, at least for the rest of this year, probably well into next kind of what you see is about what you're going to get.

Mobjectivist has an update on North Sea oil production.

Oil production from the UK North Sea continues to plummet:

Oil production growth was down 4 per cent compared with May at 1,411,961 barrels per day (bpd) and down 13 per cent on the same month last year.

From last year's oil shock model for UK North Sea, I added an additional data point (green star):

Bart from Energy Bulletin has an interview up at Global Public Media.

Bart Anderson is a co-editor of Energy Bulletin, an on-line source for news and commentary related to energy, society and the environment. Bart is a trained journalist now specializing in media coverage and the cultural response to peak oil and global warming. He speaks with Jason Bradford about how the press is dealing with issues such as peak oil, climate change and the social ramifications, and gives a news round-up.

Energy Bulletin has a round up of articles from Rob Hopkins on the latest ASPO conference - Skrebowski tells us there’s 1,500 days until the Peak, Dennis Meadows - Peak Oil and Limits to Growth and Jeremy Leggett Intertwines Peak Oil and Climate Change.

‘Limits to Growth’ was criticised for predicting that oil would run out and for being wrong in that prediction. However, oil depletion is not mentioned once in the original 1972 report, this is a completely bogus criticism. Now that oil actually is running out and peak oil is impending, it is tempting to say “we told you so”, but we didn’t!

The key issue here is the relationship between oil flow and reserves, which I call the usage rate. Peak oil looks at this usage rate, whereas critics look at discovered resources, not the usage rate. The feedback loops controlling this are changing, the feedback loop that has managed this relationship over the last 50 years is changing (here I confess he lost me a bit, you’ll find his description of these feedback loops in his presentation).

There are four effects of a rise in oil price. From the fastest to the slowest;

* Lowered quality of life – i.e. drive less
* Increased energy efficiency – buy a Prius
* Adapt a new energy supply – ie. ethanol.
* Changed cultural aspirations- ie. buy a house in the city, no need for a car.

When we try to envision life over the next 100 years these 4 are adjusting to reduce energy supply. Alternative energy will never replace oil, and we will face a decline in the 4 ways above.

Matt Simmons recently wrote that he had reread Limits to Growth and was amazed at its accuracy. Limits to Growth began in the 1970s with the Club of Rome, a group who sought to raise awareness of environmental problems. No-one paid any attention, so they organised conferences, published books and so on, and after a few years people began to see that there was a problem. It was at this point, as all they had been able to contribute was observations on the nature of the problem, that they began to become irrelevant. ASPO needs to be aware of this possibility too, and to be helping people at a local level, offering solutions rather than just observations on the problem.

We don’t need a computer model to be able to prove that there are physical limits to physical growth on a physically finite planet. Some people will believe the premise and won’t need a computer model to convince them, and other people who refuse to even accept the premise won’t be swayed or convinced by all the computer models you can produce.

The contribution of Limits to Growth was to show that population and industrial growth are inherently exponential, and that exponential growth takes a resource to its limits very quickly. It showed that global society will most likely adjust to these limits by overshoot and collapse, not an S-shaped growth curve. However, I do still believe that sustainable development is possible, if important changes are made.

Rolling Stone has an article on "Vonnegut's Apocalypse".

He survived being captured by the Nazis and the suicide of his mother to write some of the funniest, darkest novels of our time, but it took George W. Bush to break him.

"I'm Jeremiah, and I'm not talking about God being mad at us," novelist Kurt Vonnegut says with a straight face, gazing out the parlor windows of his Manhattan brownstone. "I'm talking about us killing the planet as a life-support system with gasoline. What's going to happen is, very soon, we're going to run out of petroleum, and everything depends on petroleum. And there go the school buses. There go the fire engines. The food trucks will come to a halt. This is the end of the world. We've become far too dependent on hydrocarbons, and it's going to suddenly dry up. You talk about the gluttonous Roaring Twenties. That was nothing. We're crazy, going crazy, about petroleum. It's a drug like crack cocaine. Of course, the lunatic fringe of Christianity is welcoming the end of the world as the rapture. So I'm Jeremiah. It's going to have to stop. I'm sorry."

For the most part, this sort of apocalyptic attitude is to be expected from Vonnegut, who, after all, in his futuristic novel Cat's Cradle (1963) created Ice-Nine, a substance with the capacity to obliterate the Earth incrementally, like the "great door of heaven being closed softly." The naive protagonist of the novel -- a character named John/Jonah -- actually struggles to write a book titled The Day the World Ended. (Cat's Cradle also includes a hilarious faux religion known as Bokononism, whose religious texts carry the warning "All of the true things I am about to tell you are shameless lies.") In the interview collection Conversations With Kurt Vonnegut, he even dismisses the notion that his fourteen novels, six essay collections and dozens of short stories have a long shelf life, saying, "Anybody with any sense knows the whole solar system will go up like a celluloid collar by-and-by." Add to that doomsday scenario Vonnegut's notorious bouts of chronic depression, daily doldrums and suicidal longings, and you get a literary Cassandra of the first order.

Later, remembering his hyperagitation about global warming, I telephoned him at his Long Island summer cottage, curious about whether he saw Al Gore's documentary An Inconvenient Truth. "I know what it's all about," he scoffed. "I don't need any more persuasion." Not satisfied with his answer, I pressed him to expand, wondering if he had any advice for young people who want to join the increasingly vocal environmental movement. "There is nothing they can do," he bleakly answered. "It's over, my friend. The game is lost."

The NZ Prime Minister has been to see "An Inconvenient Truth" - unlike the Chimp, who still refuses to, preferring to hold some publicity stunts in the wreckage of hurricane Katrina.

In the United States, the world's biggest contributor of global warming pollution, our president has publicly refused to see the documentary film Americans are flocking to see, An Inconvenient Truth.

Compare that to New Zealand's Prime Minister, Helen Clark, who recently made a point to view An Inconvenient Truth during the Wellington Film Festival.
Not only was she moved by it, but she immediately arranged a screening for the entire New Zealand Parliament and government officials, scheduled for next week.

Other world leaders and dignitaries have made time to see the film, including Prince Charles, who has scheduled a special screening for UK business leaders next month. The Prince of Wales believes "climate change is the greatest challenge facing us all." Talk about getting it.

Billmon has a report from the "Unintentional Irony Department".

From my favorite Gen. Jack Ripper impersonator, Ralph Peters:

No society that oppresses women, denies advancement on merit even to men, indulges in fantastic hypocrisy, wallows in corruption, undervalues secular learning, reduces its god to a nasty disciplinarian and comforts itself with conspiracy theories will ever compete with us.

For a second I thought Ralph had been reading the Texas GOP's party platform, but he was just ragging on the Arabs again.