Countdown to WW3?

This is all a little bit worrying.

That the oil will soon start to run short is no surprise, but it's unnerving that the alternatives seem so impractical when compared to oil.

Every cent on oil (and therefore petrol) prices makes the "alternatives" more attractive. While oil was below its true value the alternatives didn't make sense economically.

Now solar, wind and water power can become a reality. District heating instead of centralised energy poduction. Local windmills instead of concentrated power at the centre. Heat pumps, windturbines and small scale water power could thrive.

While America was running the world the alternatives were ignored. The puppet jumped to his energy lobby masters. America's hyped-up Cold War as just smoke and mirrors. But it kept the weapons companies employing the brains who should have been saving the planet not destroying it.

If we can just get rid of the rotten wood in the upper hierarchy of world politics the corrupt posturers will make room for those who care. Being told that there is only 10-15 years of oil left instead of the calculated 50+ should be concentrating minds wonderfully. The buggers holding the reigns hadn't allowed for a Chinese boom in their calculations of remaining oil reserves. Now they are scratching about looking for their old slide rules to see where they went so horribly wrong.

Most wars between "civilised" nations are an attempt to take resources from others or to overcome a denial iof resources. The status quo has just been given a huge nudge. Will Bush fall off the edge of his flat earth? Or will he be pushed?

I hear father Chistmas is cutting back hard on elves. The Chinese are delivering direct this Christmas.

DON'T PANIC

A different view...

http://www.radford.edu/~wkovarik/oil/

Remember, the Club of Rome (in 1970 or so) said we'd all by done for by the 1990's...

I'm not saying that Kovariks' view is any more accurate than the alarmist ones, just that there's a lot of views out there...how much oil do we have left is a question like "how long is a piece of string?".

Ah, the old “oil is about to run out” variant of scaremongering.

I seem to remember first hearing this as a young whippersnapper back in the 1970’s and at least once in every decade since – and it’s always going to run out in 10 – 15 years.

As far as I can see, the chances are high that oil will not run out in our lifetimes; nor in those of our children. Of course, it will eventually run out – it’s a finite resource that is not capable of being replenished (at least not in any time frame measured in less than millions of years). Also, it will become increasingly expensive as its scarcity increases.

My reasons for saying this are:

(1) Advances in exploration technology. Back in the 1970’s and 1980’s, the tools available for seismic and geophysical analysis were not a patch on what is available now – and we can expect these to improve further. It’s fairly common for oil companies to re-interpret old exploration data with new techniques and find drilling prospects that were simply not picked up at the time.

(2) Advances in production technology. Again, back in the 1970’s/1980’s, drilling in water depths of more than 65 – 100 meters was almost unknown. Now, drilling in depths in excess of 1,000 meters is becoming increasingly common – and I have personal knowledge of one 4 TCF (trillion cubic feet) gas field in 1,000 meter water depth that is already producing. Reserves that were previously unknown and unreachable are now capable of being recovered – and we can expect the technology to improve still further.

(3) EOR (enhanced oil recovery). There is a growing secondary market where smaller companies buy declining / depleted oil fields from the majors and use EOR to extend the production life of the field and squeeze out more production. The economics of doing this don’t make sense to the majors, but it is attractive for smaller producers – and that attraction will increase as the oil price increases.

(4) The difference between a ‘discovery’ and a ‘commercial discovery’. Oil companies are businesses that are run for profit and are only interested in ‘commercial discoveries’; i.e. – an oil or gas find that can be produced at a profit. This means they have to factor in all their costs of exploration, development, production, marketing and administration and then consider the likely return on investment from production of oil / gas over the next 20 years or more. Naturally, what is or is not ‘commercial’ is highly sensitive to the oil price.

If it costs, say, $20/bbl to produce the oil and the price is, say, $22/bbl, then this will be regarded as sub-commercial. If the oil price rises to, say, $40/bbl, then what was previously sub-commercial has now become a commercial proposition. With oil now running at $58/bbl and testing the psychological resistance level of $60/bbl, many discoveries that were previously seen as unattractive commercially will now be under consideration for exploitation. Of course, oil and gas field development doesn’t happen in a month or two. It can take 3+ years to bring a project to first oil.

(5) There are untapped regions where oil / gas is known to be present. For example, the surface has barely been scratched in places like the Caspian Sea and the Komi Republic. Then there are places like the Falkland Islands and the Atlantic margin (west and north of Scotland and the northern part of Ireland). The fact that several countries are fighting over ownership of the insignificant Rockall has nothing to do with pride and everything to do with the sub-sea rights within the 12 mile territorial limit.

In the latter cases, these regions have already featured in bidding rounds and some exploration licenses have been granted – although little or no exploration has been carried out. It is highly probable that there is oil / gas there, but it will be very expensive to produce (think of the pipeline distances required – and then think $1-2 million per 1 km of pipeline). FPSO’s (floating production, storage and offtake) are probably a non-starter owing to the extreme conditions.

Oil companies will prefer to produce their lower cost oil from other locations first, since this maximises profits for now. As existing production declines and the oil price rises, however, we can expect more activity in these regions.


As for the future oil price, well, many a reputation has foundered on making predictions here. About 8 years ago, the oil price headed south from $22/bbl and dropped as low as $10-11/bbl. Many oil companies cut back severely on exploration or stopped it altogether and many experienced people were made redundant. I remember being in the audience when a senior executive from an oil major declared that it would be a “$12/bbl world for the next 5 to 10 years”. Two years ago we were pleased with ourselves for securing oil hedging contracts at $30-32/bbl. As recently as last year, I heard someone in the industry predict that the oil price in July 2005 would be … $15/bbl.

My own opinion (and it is only an opinion) is that we may see some resistance at the $60/bbl level for a few months, but this barrier will be broken later this year. After that, I expect the price to creep slowly but steadily upwards towards $80/bbl over the next 12-18 months. After that, your guess is as good as mine. If I’m right, then we can expect a general bear market for the next year or so.

As for the scaremongers, they will try to whip up hysteria based on telling part of the story. If you look closely, they all speak only of EXISTING reserves and ignore all the rest that could be added, especially if the price stays high.

I agree, however, that more and more serious effort, encouragement and determination needs to be devoted to the search for efficient and effective alternative sources of energy. I also feel that oil companies are not the best people to do this work.

Dan

I simple terms:

I learnt in my final year at University that economically viable exploitable resources are approximately 5% of total reserves. As the price of oil increases it becomes more viable to begin to tap into the other 95%.

I also read at that time (can't quote my sources right now I'm afraid) that the US was 50% self-sufficient in terms of its oil production, and yet consumed oil at 2.5 times the rate of W. Europe and 3 times that of the Japanese.

Excellent post Dan! The scaremonger here was Danish Radio. I really must stop listening to them. They have so many university specialists amd professors of this and that talking on there that you just can't trust them. The science programmes are worst! I have to go and have a lie-down afterwards to console myself.

I've been hoping for a revolution in solar, wind and water power since the 60s. If only to bring it down to a price level at which I could afford to buy and still save lots of money.

Interesting how the article linked to seems to ignore that higher oil prices will affect demand. The scope for reducing deamdn drastically with out signifcantly affecting the quality if life in hte developed world is very large, less SUV's, more high efficiency vechicles, more energy efficent appliances etc etc etc. Even before this the fact is that if you look at the level of productivity of GDP per BTU used the developed economies are far more efficient then the developing world, Europe in particular is very efficient.

Current oil prices in real terms are not that high in comparison to historical values, in fact there is some scope to see the prices rise higher and then in a few years once SUV markets have shrunk and small to medium size cars are the norm the balance will swing once again.

Oil majors have now generally shifted there threshold for new oil to $20, or maybe a little above. Why so low?

Roughly 10% of oil traded is physical trade, the rest is paper trade, how much of the current price is tied up in Wall Street?

What happens when the current decline in SUV purchases in the US starts to have a noticable impact on gasoline consumption?

Is the idea of having most of the worldcovered in windmills very attractive? Will your naim gear sound best in moderate wind conditions or a raging storm?

I do, however, think that something should be done to moderate the use of oil as we are wasting this resource in many applications currently.

Matthew

Yep, there's a lot of debate about this right now but as sources of energy become more expensive or difficult to produce and maintain, such as the horse, slave labour and coal, technology advances to make alternative energy sources more efficient and cost effective. The oil will of course eventually run out, alternates will be found as prices of oil rise and alternates become more economically viable. Where there's a will (and a dollar) there's a way.

What should worry us more is the apparent falls in fresh water levels around the world. This is a little harder to replace. And in case you may think this could simply cause a bit of rationing and the need to flush the loo only once a day, think again.

For instance, to make electricity you need cold fresh water. Close to home, France and Italy's national grids are on the verge of meltdown. Of course agriculture suffers too and Spain is about to have it's worst year in decades due to lack of adequate irrigation.

In Australia, wheat production is 20% down and given that this is the 2nd largest global producer after the US, which is itself in the 5th year of a midwest drought, then that's bad news. Water shortages cost Australia A$5bn last year.

Shrinking Glaciers in the Himilayas are causing water shortages in Northern India, Brazil is having it's worst coffee and soya crops in living memory and the Gobi is fast spreading south and affecting weather patterns in Beijing. 3/4 billion people in China only have access to contaminated water.

Demand is rising fast but there's no more fresh water than there was for the dinosaurs. 97% of the planet's water is salt water and desalinisation is bloody expensive. Industry needs more and more freshwater, especially to provide for the increased steel and cement consumption of China (a single ton of steel production needs 20,000 gallons of freshwater).

Of course it's not just commercial consumption that causes problems. An average US citizen requires 600 litres of water a day and an average African 10 litres (make of that what you will). Ageing water infrastructure in the West is a real problem too. The UK loses 23% (23%!!!!!) of water to leaking pipes (this is 50 to 60% in London and Scotland), that's 800 million gallons a day. Bearing in mind that due to its dense population, the SE of England has 75% less available water per head than Sudan, then this leakage could be regarded as criminal as well as expensive.

Bizarrely, although Thames Water has managed to raise its bills by 21% (an extra £44 per household, per year) supply efficiency has not increased at all. Profits though have increased, up 6% and its Chairman Bill Alexander earned an increassed basic of £800,000 last year. Other UK wtaer authorities show a similar pattern from Northumberland to Wales.

What price a Perrier now?

Why are modern windmills white? They can be seen for miles around and are thus more intrusive than they need to be. Why not paint them grey or green?

Does anyone have an answer?

Regards
Steve M

To avoid low flying aeroplanes?

Or maybe to disguise the bird poo

Andrew

quote:

Originally posted by 7V:
Why not paint them grey or green?


Regards
Steve M

Or stone-clad them so the anti-windfarm brigade will like them as they'll look 'traditional'



Stephen

quote:

Originally posted by 7V:
Why are modern windmills white? They can be seen for miles around and are thus more intrusive than they need to be. Why not paint them grey or green?

Does anyone have an answer?

Regards
Steve M

Are they really white? The danish windturbines are a sort of eggshell, off-white to mid-grey depending entirely on the ever-changing light. I find the effect most attractive. If they were simply painted white they would be stark all of the time. Instead of the wide variation we see here every day. But I'm biased of course. I've always loved windturbines.

quote:

If they were simply painted white they would be stark all of the time. Instead of the wide variation we see here every day. But I'm biased of course. I've always loved windturbines.

If they were covered in a reflective mirror like finish that would allow them take on the colour of their surroundings and then slip into the background without attractiung too much attention?

Given the usual angle of incidence when viewing the tall tower you would simply be reflecting the sky behind you. I remember a science fiction story where they covered an object in optical fibres that showed the view beyond to make it invisible to the aliens. Rather expensive idea in practice I would imagine.

Danish researchers have obtained a patent for a cheap, flexible, long life, solar electric cell made from plastic sheet. Expected to come to market in around two years.

http://www.risoe.dk/solarcells/projects/solar_2005-1.htm

quote:

Originally posted by chiba:
Life after the oil crash...

I'm sure this ought to include a discussion of Methane Hydrates in order to be complete.

In fact, once the oceans warm noticeably, these sea-bottom deposits will start to sublimate (evaporate), flooding the atmosphere with methane. This is a much more potent greenhouse gas that carbon dioxide, and there are vast amounts down there.

It is hypothesized that once atmospheric temperatures rise significantly, heating of the oceans will make this process unstoppable. Apparently, this runaway effect (ie positive feedback loop) might cause a 10C climate shift at temperate latitudes, which would give Britain the climate that the Sahara desert currently has.

It seems to me that we *must* harvest these deposits before they start to break up. Burning them for energy will actually reduce the long-term damage that they would otherwise cause, by turning them into much less potent CO2.

Of course, these deposits (probably) won't break up if we stop burning fossil fuels immediately. And pigs might fly.

cheers, Martin

Talking of ocean bottoms, they are working on an idea to deposit CO2 in the empty spaces left by oil and gas extraction.

quote:

Originally posted by Nime:
they are working on an idea to deposit CO2 in the empty spaces left by oil and gas extraction.

"Carbon sequestration".

cheers, Martin

Start a vege garden, raise chickens and make a compost pile.

Teach you children to respect things and others.

Kill your TV.

Read books.