Oil's energy contribution has declined by about 12% since 1999. The world's economies have also declined by about 12%. (Using conventional metrics, which are time delayed determinations, this will only be seen in hind sight). The massive destruction of asset values now occurring testifies to it happening.
Peak is well behind us, world economies have peaked and will continue to decline.
Posted: Wed Jun 11, 2008 9:41 pm Post subject: Re: Oil shortage a myth, says industry insider
TonyPrep wrote:
I'm still not sure what group you speak towards but those who appear to cite reserve growth as the reason for peak being a long way off (Michael Lynch appears to be in that group) would seem to think that it actually does mean new oil. Some here even regard it as new discoveries.
I'm more than happy to work either angle, reserve growth as "new discovery", or reserve growth as nothing more than a change in recovery factor. I suppose at some level it boils down to a definition argument, you pick how YOU want to define "new" oil, and I'll be happy to buy into that one when posting in response to you. _________________ Freddy RULZ!
www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits) (or bankers) (or web "experts")
Joined: Sep 25, 2005 Posts: 2053 Location: Waiuku, New Zealand
Posted: Wed Jun 11, 2008 10:56 pm Post subject: Re: Oil shortage a myth, says industry insider
FreddyH wrote:
The funny backdating thingy by ASPO does not hide the new oil found by geologists. Before the backdating, 148-Gb of new oil is found each year. At least since 1996. It is attributed to Discoveries, Reserve Growth and Future Resource. With consumption of only 31-Gb/yr, knowing where the oil is located is not at all an Industry concern.
Are you saying that proven reserves are now 1,440 Gb more than there were at the beginning of 1996? (About 120 Gb net of use per year.) Or are you talking about all grades of oil, including shale?
Joined: Sep 25, 2005 Posts: 2053 Location: Waiuku, New Zealand
Posted: Wed Jun 11, 2008 11:02 pm Post subject: Re: Oil shortage a myth, says industry insider
KillTheHumans wrote:
I'm more than happy to work either angle, reserve growth as "new discovery", or reserve growth as nothing more than a change in recovery factor.
Doesn't it matter what it actually means? If it is a change in recovery factor, then it depends at what stage the recovery is at, doesn't it? If, for example, production is already in decline, it might slow the expected decline. Before the peak, it might delay the expected peak. For a new field, we can expect production to ramp up to a peak before declining. Reserve growth may not do any more than extend the life of the field rather than improving the flow rates. Of course, there is an overlap in the overall production figures of one definition versus another but reserve growth doesn't seem, to me, to be much like real new oil.
Posted: Thu Jun 12, 2008 6:20 am Post subject: Re: Oil shortage a myth, says industry insider
TonyPrep wrote:
KillTheHumans wrote:
I'm more than happy to work either angle, reserve growth as "new discovery", or reserve growth as nothing more than a change in recovery factor.
Doesn't it matter what it actually means?
I know exactly what it means, but I am willing to expand my view to accomodate anyone else's definition, is all. If a person is absolutely married to the concept of "only reserves = known oil" then I allow new reserves to equal "newly discovered" oil. If a person understands that reserves are nothing more than moving volumes around inside a resource pyramid, I am more than happy to stick with "reserves=economic revisions to inventory by changing recovery factor incrementally".
TonyPrep wrote:
If it is a change in recovery factor, then it depends at what stage the recovery is at, doesn't it?
Absolutely. I believe Richard Nehring made exactly this point last October during the Houston/Dallas ASPO meeting.
TonyPrep wrote:
If, for example, production is already in decline, it might slow the expected decline. Before the peak, it might delay the expected peak. For a new field, we can expect production to ramp up to a peak before declining.
Peaks are inefficient and wasteful, a nice stable and long plateau is preferred.
TonyPrep wrote:
Reserve growth may not do any more than extend the life of the field rather than improving the flow rates. Of course, there is an overlap in the overall production figures of one definition versus another but reserve growth doesn't seem, to me, to be much like real new oil.
Considering that reserves growth takes place where known reserves already are, I don't consider it new oil either. But if someone takes the firm stance that only reserves are oil ( a common viewpoint you have to admit, some even say that reserves are too big and there is actually less ) then reserve growth is newly discovered oil because it brings something to the table which is "new". _________________ Freddy RULZ!
www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits) (or bankers) (or web "experts")
Posted: Thu Jun 12, 2008 11:35 am Post subject: Re: Oil shortage a myth, says industry insider
Reserve growth from improved recovery is quite different to making up numbers to game a quota system. I see no problem with the former so long as it is properly acknowledged as such, but practice of the latter by ME Gulf producers since that specific instance in the late 80s has had a regrettable effect on data and derived assumptions. I understand that regulatory reporting requirements (where applicable), technology, economics and understanding of a field can change, but what happened there was very suspicious. So when people talk about reserve growth, I have to point out that in that specific instance it is not known how much of it was genuine addition and how much of it was fraud. The real additionally recoverable barrels can be pumped and used, the ones added to play with quotas cannot. Because the numbers were so large, it is an important distinction to make as we will have little advance warning of the precipice that is probably be out there. _________________ Volatility. When life isn't exciting enough.
Posted: Thu Jun 12, 2008 11:53 am Post subject: Re: Global oil reserves may be seriously underestimated??
Enough fields have entered terminal decline for us to surmise any such effects are limited going forward. Reserve additions hit a wall in the end. Eventually production rates cannot be kept up. If there is any substance to the claim, it is describing more history than future. _________________ Volatility. When life isn't exciting enough.
Joined: Jan 14, 2008 Posts: 321 Location: The Yukon
Posted: Thu Jun 12, 2008 12:07 pm Post subject: Re: Oil shortage a myth, says industry insider
IOCs, NOCs & geologists continually shift resource within the classification base. With higher prices, EOR, annual discoveries & 4D scanning, some Prospective is moved to the Contingent column, some Contingent is upgraded to 3P, some 3P to 2P, some 2P to 1P & 31-Gb of 1P to Consumption.
On the macro scale since 1996, 148-Gb/yr is reclassified from uncategorized OIIP (15-Tb - the whole box) to URR:
Posted: Thu Jun 12, 2008 12:28 pm Post subject: Re: Oil shortage a myth, says industry insider
Twilight wrote:
Reserve growth from improved recovery is quite different to making up numbers to game a quota system.
True. Also I would add that reserve growth because of changing economics, changing technology, changing regulations and changing ownership and thereby company experience are all also components in reserve growth ( tending to lead to the same thing, increased incremental recovery factors ).
Twilight wrote:
I see no problem with the former so long as it is properly acknowledged as such, but practice of the latter by ME Gulf producers since that specific instance in the late 80s has had a regrettable effect on data and derived assumptions.
With a caveat. The profile you reference is a data artifact, not an actual effect of reserve growth happening in OPEC countries in one fell swoop.
The people who deal with reserve growth professionally know this. And this is the kicker...those people are NOT limited to using BP World Reserve data.
You are effectively complaining about something which only effects the amateur ranks ( but the professionals and their data also have other, more interesting, issues ).
Twilight wrote:
What happened there was very suspicious. So when people talk about reserve growth, I have to point out that in that specific instance it is not known how much of it was genuine addition and how much of it was fraud.
I do not automatically assume fraud. Political manuveurings? Sure. But fraud implies a manevolence which I most certainly haven't ever felt when talking to ME engineers, geologists or company people.
Twilight wrote:
The real additionally recoverable barrels can be pumped and used, the ones added to play with quotas cannot. Because the numbers were so large, it is an important distinction to make as we will have little advance warning of the precipice that is probably be out there.
Actually, peak oil theory itself would seem to contradict this particular angle. Reserves cannot, as a general rule, be run at full bore production rates right up until a point in time where....they halt. The actual death of an oilfield tends to be a long, slow decline, rather than a short and abrupt, where one afternoon someone turns off the valves and turns out the lights, everyone cleans off their desks and goes home. _________________ Freddy RULZ!
www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits) (or bankers) (or web "experts")
Joined: Jan 14, 2008 Posts: 321 Location: The Yukon
Posted: Thu Jun 12, 2008 12:46 pm Post subject: Re: Oil shortage a myth, says industry insider
TonyPrep wrote:
FreddyH wrote:
The funny backdating thingy by ASPO does not hide the new oil found by geologists. Before the backdating, 148-Gb of new oil is found each year. At least since 1996. It is attributed to Discoveries, Reserve Growth and Future Resource. With consumption of only 31-Gb/yr, knowing where the oil is located is not at all an Industry concern.
Are you saying that proven reserves are now 1,440 Gb more than there were at the beginning of 1996? (About 120 Gb net of use per year.) Or are you talking about all grades of oil, including shale?
The TrendLines AVG of 21 URR Model Estimates is 4023-Gb and has doubled since 1996.
Net of Consumption, the "available" component of URR is 2843-Gb and has doubled since Y2k.
Reserves as measured by BP is 1390-Gb and has doubled since 1982.
On this last point: it is noteworthy that while global Reserves in general have doubled since 1982 as reported by both BP & OGJ, when OPEC nations report exactly the same 1983 to 2007 growth statistic, they are considered "liars & bastards". .. hmmm.
Joined: Sep 25, 2005 Posts: 2053 Location: Waiuku, New Zealand
Posted: Thu Jun 12, 2008 12:53 pm Post subject: Re: Oil shortage a myth, says industry insider
FreddyH wrote:
it is noteworthy that while global Reserves in general have doubled since 1982 as reported by both BP & OGJ, when OPEC nations report exactly the same 1983 to 2007 growth statistic, they are considered "liars & bastards". .. hmmm.
Well, you didn't really answer my question directly but, on this last point, didn't most of those "revisions" happen in the first few years of the period you mentioned, and, in each case, within a year or two, not over 24 years?
The notion that oil companies have actually discovered 143 Gb of oil per year, on average, over the last dozen years seems a bizarre one.
Posted: Thu Jun 12, 2008 12:53 pm Post subject: Re: Global oil reserves may be seriously underestimated??
Total remaining reserves is just half of the equation. The other half is how hard is it to produce those reserves. The latter is the real basis of peak oil, the increasing effort to produce oil will limit the above ground supply.
Posted: Thu Jun 12, 2008 12:59 pm Post subject: Re: Oil shortage a myth, says industry insider
KillTheHumans wrote:
The profile you reference is a data artifact...You are effectively complaining about something which only effects the amateur ranks ( but the professionals and their data also have other, more interesting, issues ).
A pity that a better representation of ME Gulf reserves is not given. I think a balance can be struck between protecting commercial interests and moving on from quoting placeholder numbers for public consumption. This has been accepted without question for a long time, but officials will find that people living with oil prices well in excess of $100 per barrel are less willing to give the benefit of the doubt. It may be a long time yet, but someone's hand will be forced eventually.
KillTheHumans wrote:
I do not automatically assume fraud. Political manuveurings? Sure. But fraud implies a manevolence which I most certainly haven't ever felt when talking to ME engineers, geologists or company people.
Fraud requires no malevolence. It is what it is - where it is the case. It can be perpetrated by quite pleasant people who may even stand to gain no personal benefit.
KillTheHumans wrote:
Actually, peak oil theory itself would seem to contradict this particular angle. Reserves cannot, as a general rule, be run at full bore production rates right up until a point in time where....they halt. The actual death of an oilfield tends to be a long, slow decline, rather than a short and abrupt, where one afternoon someone turns off the valves and turns out the lights, everyone cleans off their desks and goes home.
Oh I know that. The precipice to which I was referring is not a complete cessation of production, but hitting a steep decline slope while the reserves are still quoted as what they became in the late 80s. If the reserve numbers are never to be changed, this becomes a certainty. So one way or another the true reserve picture will be revealed, through disclosure or eventual failure to deliver. _________________ Volatility. When life isn't exciting enough.
Joined: Jan 14, 2008 Posts: 321 Location: The Yukon
Posted: Thu Jun 12, 2008 1:17 pm Post subject: Re: Oil shortage a myth, says industry insider
TonyPrep wrote:
FreddyH wrote:
it is noteworthy that while global Reserves in general have doubled since 1982 as reported by both BP & OGJ, when OPEC nations report exactly the same 1983 to 2007 growth statistic, they are considered "liars & bastards". .. hmmm.
The notion that oil companies have actually discovered 143 Gb of oil per year, on average, over the last dozen years seems a bizarre one.
Firstly, i never said the 143-Gb was Discoveries only. Please stay on the page.
Even using the conservative ASPO figures, this principle is evident. Today ASPO assumes 2300-Gb of discoveries in its URR Estimate (plus 143 of future discoveries). In 1996, this discovered quantity was 1650-Gb (plus 150 future allocation).
Thus before backdating, ASPO admits to 650-Gb of new discoveries between 1996 and 2008 on their funny armageddon graph. This coverts to 54-Gb/yr. Gotta love that backdating, eh. _________________ www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits)
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