Bush acknowledges peak oil  

Jerome a Paris reports that George Bush has been pushing the "soft peak oil" line during his arms sales mission to the middle east.

This is a pretty stunning admission, during his press conference in Saudi Arabia:

I hope that OPEC, if possible, understands that if they could put more supply on the market it would be helpful. But a lot of these economies are going -- a lot of these oil-producing countries are full out.

There are various definitions of peak oil - the "hard" one being actually declining production, with a "soft" version being production unable to catch up with latent demand and prices increasing instead. Then you can measure it for oil alone, or for oil plus various liquid substitutes that we are increasingly using (ethanol, processed tar sands, coal-to-liquids, etc...).

With the above quotes (repeated again below), Bush is clearly into "soft" territory, and could be argued to be in "hard" territory. There is no longer any argument in the industry that non-OPEC oil is peaking (that includes the International Energy Agency and even ExxonMobil), which means that any production increase must come from OPEC. If they are also producing "full out", you can reach your own conclusions....

And this was not just an isolated assertion by Bush - the topic was disucssed 3 separate times in the interview...

CERA is still muttering that peak oil isn't here, but has reported that global decline rates for existing fields are 4.5% - which is plenty of oil to bring online each year just to stay on the plateau. Discussion followed at The Oil Drum

The primary conclusions drawn from CERA’s analysis of 811 fields during the production build-up, plateau and decline stages in the oilfield life cycle include:

* Aggregate decline rate - The 4.5 percent per year aggregate global decline rate among fields in production (FIP) is much lower than the 8 percent rate cited in many studies and projections. This pessimistic estimate may be a function of the generally more rapid decline rates observed in small fields – increasingly being developed in mature non-OPEC countries – and the rise of deepwater projects, which tend to flow at high rates as a requirement of commerciality, but which also decline rapidly.
* Fields in decline stage - Only 41 percent of production is from fields in the database that are beyond the plateau stage and into the decline phase of their production lives.
* Low decline rate, longer lives - Annual field decline rates are not increasing but, as a result of increased investment, improved planning and technology, can be maintained at low decline rates in many fields for prolonged periods, and field life is very often longer than originally projected.
* Offshore vs. onshore fields – Individual offshore fields are declining at a 10 percent annual rate compared with 6 percent for onshore fields, and deepwater fields decline at 18 percent annually compared with 10 percent for shallow-water fields. Non-OPEC offshore fields decline 5 percent per year compared with 12 percent for those in OPEC.

Bart at Energy Bulletin comments:

I find three general problems with CERA's approach, without even getting into specifics.

1. The research is only available to clients of the company, typically at very high costs (in the hundreds or thousands of dollars). Since the reports are not publicly available, it is difficult to assess their accuracy and assumptions. Science depends on the open flow of information.

2. As consultants to the oil industry, CERA's findings might be swayed by the desire to keep its clients happy. On the plus side, CERA does not make a secret of its industry ties.

3. CERA presents one forecast: an undulating plateau of oil production that will last long enough for us to develop alternatives. However, as CERA is no doubt aware, the field is fraught with uncertainties. Wouldn't it make more sense to formulate several scenarios, each with an estimated probability, as climate scientists are now doing for global warming? Even if CERA believes the "undulating plateau" to be the most probable future, shouldn't we be planning for other possibiities? (See Peak oil forecasts and asymmetrical risk by Kurt Cobb)

The Globe And Mail's "Inside Energy" column has a post on "CERA v. peak oil".

CERA, the Boston energy consultancy, took another swing at peak oil on Thursday morning, announcing what it called "the missing link for understanding the future of world oil supply."

That link? Decline rates, as in how quickly do production rates in the world's oil fields slide each year. The figure is indeed key because the rate indicates how much oil needs to be found just to make up current-year declines, never mind increasing the world's total output.

Cambridge Energy Research Associates, after analyzing 811 oil fields (that account for two-thirds of global production and half of proved and probable reserves), concluded that the world's annual oil production decline rate is 4.5 per cent - about half of the 8 per cent CERA said is cited in many studies.

Basically, without getting into some math (calculating decline rates are more complicated than they might seem), a lower decline rate obviously is much better than a higher one for producers and consumers.

“Some of the more gloomy, pessimistic ‘peak oil’ views about the future of oil supplies that are current today result from an assumption of high decline rates,” Peter Jackson of CERA said in a release Thursday, adding that there has been an “information vacuum” that has led to “widely differing estimates of the potential future availability of oil.”

“This new analysis provides the basis for more confidence about the future of available oil.”

CERA, as is obvious, is not a peak oil preacher. It sees world oil production easily exceeding 100 million barrels a day within a decade, keeping up with demand and more. In terms of any peak in production, CERA envisions an “undulating plateau,” lasting decades, giving the world ample time to ease its addiction to the black gold that fuelled the 20th century (and the first decades of the 21st).

Others, however, are less sanguine and way more skeptical. Inside Energy occasionally chats by e-mail with Jim Lemon, a smart, retired geography professor who taught at the University of Toronto, with Mr. Lemon standing on the side (not necessarily dogmatically) of peak oil. In December, he sent Inside Energy the latest issue of the Peak Oil Review from the American Association for the Study of Peak Oil, pointing us particularly to the obituary of Ali Morteza Samsam Bakhtiari, cited by the review as “one of the world’s foremost experts on the subject of peak oil” who died of a heart attack last October.

Mr. Bakhtiari was a senior corporate planner for the National Iranian Oil Co. in Tehran and was especially skeptical about the Middle East’s so-called reserves, specifically of his home country Iran. Of the “Middle East Five” - that is Iran, Iraq, Kuwait, Saudi Arabia and United Arab Emirates - Mr. Bakhtiari saw only about 355 billion barrels of oil reserves, half of the advertised 710 billion or so. Only in Iraq did Mr. Bakhtiari see anything close to the widely advertised figures of what is below those deserts.

Whether he’s right is obviously unknown, but another main point - be skeptical - cannot be argued.

“It goes without saying that when assaying Middle Eastern oil reserves, one should tread carefully,” Mr. Bakhtiari wrote in a 2006 commentary. “Because, on the one hand, oil reserves' estimation is both a science and an art; and, on the other hand, seen from the point of view of most ME countries, oil reserves are more political than geological. Thus, non-scientific views come to prime over science and further enhance the various types of shades that have led to an overall opaque situation in the Middle East.”

That’s Inside Energy bolding the above key point. Underlying CERA’s analysis is a likely assumption that Middle Eastern reserves are what those countries say they are. Dan Yergin started CERA and is the author of The Prize, the Pulitzer-Prize winning history of the oil business. He is also close with top officials in Saudi Arabia - some industry players argue he’s too close - and in November received a special award for his work from the kingdom (and, it is rumoured, $100,000 in cash) when it held a summit of OPEC leaders.

Mr. Yergin is a smart man. Mr. Bakhtiari was, too. Mr. Yergin’s undulating peak is immediately more reassuring - we have lots of time to change. Mr. Bakhtiari was more anxious, seeing change forced on the world much more quickly, in four stages, the first (right about now, he argued) seeing oil production slip almost imperceptibly. Then, in the second stage, it becomes clear oil production is not rising but in fact falling. Then, worsening in stage three, a “remarkable” decline begins, with stage four featuring a harrowing “rather steep” slide (and that could occur by 2020)

Reuters reports that BP is also predicting peak oil is upon us - but because demand will fall rather than than supply limits being hit. Apparently he thinks carbon taxes and other measures against global warming will make that happen (but maybe he's a finance doomer and thinks demand will drop as the world economy shatters - you never can tell with economists - they don't call it the dismal science for nothing).

World oil production may peak in the coming years, but it will be because of a decline in demand for petroleum rather than constraint on supply, a BP economist said on Wednesday.

The comments come in the wake of remarks from other industry officials who in recent months have questioned mainstream supply forecasts, suggesting a peak in output may be closer than the industry has previously admitted. "I believe there is a realistic possibility that world oil production will peak within the next generation as a result of peaking demand," BP Special Economic Advisor Peter Davies told a meeting at parliament organised by a group of lawmakers looking into peak oil.

A rally in oil prices, which hit a record high above $100 a barrel earlier this month, is leading to growing interest in peak oil -- the view that supply has reached, or will soon reach, a high point and then fall.

Tom Whipple's latest peak oil column gloomily predicts "We are starting to dim".

While waiting to see how the contest between a demand-killing recession and shrinking oil stockpiles plays out, it might be worthwhile to spend a little time reviewing the world’s electricity situation. If there is any form of energy that would be sorely missed by people who had once had it, electricity would be it.

Private cars we could do without, but not our lights and appliances. Most of us here in America have been blessed to have an unlimited amount of electricity for all of our adult lives. There are very few left who can remember a time when it was not universally available.

Although it has received scant coverage in the U.S. media, in many parts of the world, the electric grids are shutting down for long periods each day. In a few places the electricity is now off most of the time. Some of this is due to droughts which have reduced the hydroelectric generating capacity in many parts of the world. Some is due to the price of oil which has simply become too expensive to use in thermoelectric generating stations and in a few places the electricity is out or has been greatly reduced because of civil strife. Iraq, Nigeria, Gaza and Pakistan are the most prominent instances of the latter. Even the climate has contributed to the problem as a wave of unusually cold weather has enveloped the Middle East, Central Asia and Siberia, forcing many to use electric heat as their only means of survival.

Currently, there is some form of power shortage starting in southern China and ranging south to Vietnam and then westward across the subcontinent to Africa. Parts of Bangladesh, India, Nepal, Pakistan, Iran, Iraq, and many places in central and southern Africa have reported shortages. These range from minor inconveniences to cities where the economy is close to shutting down. Problems have been reported in Central and South America and nearly everywhere where oil-fired power plants are used to generate electricity.

Thus far the developed countries have largely avoided problems due to better electrical infrastructures, domestic fuel supplies, or the ability to pay whatever it costs to obtain the necessary fuel. In effect, the rich have outbid the poor who are now suffering the consequences.

The key question is where is all this going? Are these shortages temporary or is the age of electricity, the way it is currently being generated, over for much of the world? The future of the droughts which are reducing much of the world’s food production as well as hydroelectric production is unknowable. In theory increasing temperatures should increase evaporation and produce more rain, but whether this will happen in the right place at the right time cannot be foreseen.

What we do know is that mountain glaciers are disappearing rapidly. To the extent that melt water contributes to hydroelectric potential, particularly in China, and the subcontinent, we can safely say this resource for generating hydroelectricity will diminish steadily in coming years.

From a peak oil perspective, electricity generated by oil and natural gas does not have a future. Already high oil prices are making petroleum products too expensive for electricity generation in much of the world. The substantial increase in the price of petroleum which is bound to come in the next five to ten years will almost certainly reduce or nearly eliminate the use of oil-fired power stations in places without a domestic source of petroleum.

Currently the use of small generators to replace power from national grids is sweeping the underdeveloped world. Businesses using computers simply cannot function without electricity. In many of the world’s largest cities there is an unbearable racket as these un-muffled devices have replaced national grids as the reliable source of power for much of the day. In addition to the noise, the downside of small generators is their high operating costs for they are a very inefficient way to produce electricity. As prices rise and oil shortages grow only the most affluent business and individuals will be able to afford them.

At the root of the electricity problem is the growth of the world’s population and economy. The earth’s population is currently increasing by about 77 million people a year. Throw in a pretty good world economic growth rate and you can see where the problem is coming from.

China is the most interesting case. Growing at 11 percent a year, Beijing just announced that China’s electric generating capacity is now 700 gigawatts. This may not sound impressive, until you learn that they could be surpassing the U.S. in few years and last year they added more capacity than all of Britain’s power stations combined. Seventy-eight percent of this generating capacity comes from coal. To maintain this rate of growth, China, which used to export 100 million tons a year, has become a net-importer of coal with imports increasing 34 percent last year to 51 million tons. World coal prices increased 73 percent in 2007 because of this demand.

With coal price increases mirroring those of oil, the chances are we won’t be seeing much switching to coal fired stations, unless you have some really big coal fields in your country or are very rich.

If you are poor, you can forget nuclear power and all those advanced solar, wind and wave generators. Their cost is likely to skyrocket and the rich are likely to have a lock on production for decades.

Sad as it may seem, we may have a situation shaping up where the world will shortly be divided into countries that have general access to electricity and those who don’t. If you have a good source of domestic fuel for generation, then you are probably in good shape. If you don’t, you probably won’t be able to afford to import it for the competition will be fierce.

What this means for the billions around the world that will be without it is difficult to contemplate. They can certainly forget electric cars for awhile and it is a good bet their governments will restrict or maybe even eliminate household use. Whatever electricity is still available will be used to pump water, maintain communications, public services, and some amount of industry.

Of course, if we scale up solar, wind, geothermal and ocean energy fast enough, along with a concerted effort to develop energy efficient transport infrastructure (both public and for individuals), this needn't come to pass...



End of week link dump:

* Peak Oil Debunked - The Solution: Electrification + Conservation
* The Independent - Loss of Antarctic ice has soared by 75 per cent in just 10 years
* Joseph Romm - Why Vinod Khosla is very wrong: A pragmatic view of cellulosic biofuels
* The Energy Blog - Brighter LED Lights Could Replace Household Light Bulbs Within Three Years
* Renewable Energy Access - Ireland Launches Ocean Energy Initiative
* Renewable Energy Access - Harnessing Waste Heat for Electricity
* Solve Climate - Breakthrough: Concentrated Solar Power All Over Southwest US
* Grist - Google invests in solar thermal company eSolar
* Grist - Put a (smart) grid on it
* Solve Climate - Leading the Pack Again, Edwards Calls for Moratorium on Dirty Coal
* David Strahan - The great coal hole
* Technology Review - Better Bugs for Making Butanol
* Jeff Vail - Back to Rhizome for a moment...
* Huffington Post - The Terrific News In Iraq
* San Francsico Chronicle - Green Party holds presidential debate in San Francisco
* Past Peak - Mike Huckabee: American Taliban
* Grist - Pro-global warming Mitt Romney has sham slam on McCain
* After Downing Street - New Hampshire: Diebold Miscounts Reported Across Many Wards
* Grist - Former Hollywood madam to open wind-powered brothel
* Crikey - Why government internet filtering won’t work
* Road To Surfdom - The new censorship laws
* Barista - a planet full of criminals
* Crikey - Angry geeks: "Don’t waste money on internet filters"
* AlterNet - Punishing Thought Crime: Would New Bill Make YOU a Terrorist?. The censored internet. Coming to Australia soon. Coming to you next. George Orwell should be named the patron saint of the internet...

"Legislation such as this demands heavy-handed governmental action against American citizens where no crime has been committed," Republican presidential candidate Ron Paul complained to the House in December, after missing the vote while campaigning. "It is yet another attack on our constitutionally protected civil liberties. It is my sincere hope that we will reject such approaches to security, which will fail at their stated goal at a great cost to our way of life."

"It will no doubt prove to be another bureaucracy that artificially inflates problems so as to guarantee its future existence and funding," Paul predicted in his House speech. "But it may do so at great further expense to our civil liberties." It is, he concluded, an "unwise and dangerous solution in search of a real problem."

The most pressing liberty Ron Paul, the ACLU, Dennis Kucinich and pretty much most left- and right-leaning organizations fear outright is a restriction on the right of internet access, since the House Subcommittee hearings and text of the resolution seized upon it with almost draconian intent. "The Web as a Weapon?" The question begs another: How do you disarm that weapon?

Kucinich, who was one of the scant few to vote against the resolution, was equally suspicious. But as usual, he's a bit more dystopian about such measures in his outlook, calling it the "thought crime bill" during a speech to supporters in December. "If you understand what his bill does, it really sets the stage for further criminalization of protest," Kucinich said. "This is the way our democracy, little by little, is being stripped away from us."