[Graeme]

The Americas will become world's energy Mecca

The turmoil for reform sweeping most Middle Eastern oil producers is grabbing big headlines today, but that region may lose some of it’s economic clout in the future: there are signs that the Americas will replace the Middle East as the world’s biggest oil-producing region.

An article in the current issue of Foreign Policy magazine sums it up in a two-word headline: “Adios OPEC.” It says the Middle Eastern countries-dominated Organization of Petroleum Exporting Countries will lose much of its power in the 2020s, because “the Americas, not the Middle East, will be the world capital of energy” by then.

Amy Myers Jaffe, head of the Baker Institute Energy Forum at Rice University and author of the article, says the shift will take place because of technological and political factors.

While geologists have long known that there are huge untapped deposits of energy in the Americas, most of these reservoirs were hidden in deep waters, shale rock or oil sands, that made them economically unfeasible to tap. But new technologies are changing that.

There are more than 2 trillion barrels of oil from unconventional sources in the United States, plus another 2.4 million in Canada and 2 trillion in South America, compared with the Middle Eastern and North African conventional oil reserves of 1.2 trillion, the article says.

kansascity

[Keith_McClary]

Right.

[Pops]

But new technologies are changing that.

The "new technology" is $80/bbl oil, which is now the long-term floor price required to green-light new development of unconventional oil mining.

As $20/bbl oil continues depleting into oblivion at 5%/yr, more and more $80/bbl oil is required just to stand still. Eventually of course the expensive oil won't suffice either and and we'll need to move to the newer technology of outrageously priced oil.


What all the ostriches are mumbling into the sand is that the economy of the world will be able to adapt to continuously escalating energy prices. The way we've been adapting so far is to borrow money, I'm not sure how long our credit will hold out.

[MD]

Eventually of course the expensive oil won't suffice either and and we'll need to move to the newer technology of outrageously priced oil.

That's signature line material right there!

[ian807]

As always, nobody familiar with the situation doubts that hydrocarbons exist in the North American continent, and in large quantities.

As always, the relevant questions are, do they exist at a low enough price, and with a sufficiently positive energy return to make them worth getting? A cup of oil in a cubic yard of rock at 20,000 feet simply can't be extracted, refined and delivered profitably or in an energy positive way.

What we've got at the moment are extenders (gas, coal and tar sands). Conventional cheap oil goes bye-bye in 40 years or thereabouts. We may get a few more years of it if we get lucky, but even if so, resource nationalism will probably keep much of this from the market before 40 years is up. We in the USA exchanged our national security for Arab oil when Reagan was elected. I doubt the Russians, Venezuelans or Iranians will do the same.

When the good stuff runs out, unconventional oil might keep the population of North America from starving a little longer and the oil companies might make some serious money from it, selling it on the international market. The results, however, might not be desirable if you live in North America. Look at oil-rich Nigeria, lucky souls.

[Loki]

There are more than 2 trillion barrels of oil from unconventional sources in the United States, plus another 2.4 million in Canada and 2 trillion in South America, compared with the Middle Eastern and North African conventional oil reserves of 1.2 trillion, the article says.

That's a classic apples-and-oranges false comparison, clearly meant to delude the ignorant.

[prajeshbhat]

There are more than 2 trillion barrels of oil from unconventional sources in the United States, plus another 2.4 million in Canada and 2 trillion in South America, compared with the Middle Eastern and North African conventional oil reserves of 1.2 trillion, the article says.

They have been there and people have known about them since 1905. Why has nobody exploited them so far?
Oh yeah. We didn't have the technology. We didn't have microprocessors back then. Miniaturization of computers and gigantic offshore oil rigs are essentially the same thing.

[Graeme]

I didn't expect to get the above responses! Thanks for your contributions. I'd like to share with you the following infographic, which I believe clarifies the PO issue. Of note is the statement that EROEI for enhanced recovery could as high as 20:1. I don't agree with Al Fin's statement at the end regarding CO2 hysteria and nuclear. However, I think that his statement regarding solar and geothermal is fine.

Peak Oil Infographic – A Clear Picture of Where we Stand with Fossil Fuels

We should always remember that our long term goal is to replace combustion technologies with more advanced technologies which are sustainable on the time scale of millions of years at least. At this point, of all the large scale power technologies, only advanced nuclear technologies qualify as sustainable on those scales.

That is not to say that better solar and geothermal technologies will not be developed.

oilprice

And this:

Crude is on a fracking record pace

North American production of crude oil is expected to hit an all-time high within the next five years. So much for all the talk of “peak oil” which many believe occurred 40 years ago. Given the current rate of drilling in Canada and the United States it looks like crude production will hit the record by 2016. It's a huge turnaround from the steady decline in production that started in 1971.

You can give most of the credit (if that’s what you want to call it) for this recent oil boom to the combination of horizontal drilling and hydraulic fracturing.



And then there’s the 800-pound gorilla in the room.

The U.S. military has taken a particular interest in advanced biofuel research. A study, just released that was led by retired Republican Senator John Warner, former chairman of the Senate Armed Services Committee, former Secretary of the Navy, identified the U.S. Department of Defence as one of the world's largest consumers of fossil fuels, spending $11-billion a year on liquid petroleum fuels. Aside from cost, the report worries about the impact of fossil fuel availability on the effectiveness of military operations.

As a result, the DOD has set the goal of getting 25 per cent of its energy needs from renewables by 2025. The U.S. Air Force plans to be on 50 per cent biofuels for all its domestic needs by 2016. The U.S. Navy and the U.S. Marines both plan to get 50 per cent of their energy from alternative energy sources by 2020.

theglobeandmail

[Cog]

Graeme continues his happy motoring into infinity.

[Graeme]

U.S. Turns on Taps to Export Liquefied Natural Gas

The growing dependence of the U.S. on energy imports has for years seemed to be one of the immutable truths of the global market. This week, one part of that trend was flipped on its head as the first deal was signed to export liquefied natural gas out of the U.S.

On Wednesday, Houston-based energy company Cheniere signed a deal with U.K.-based gas producer BG Group to ship 3.5 million tons a year of LNG out of its Sabine Pass terminal in Texas.

Within a couple of years, BG will take LNG from Texas and sell it to its customers in Europe or Asia.

Just how much of a turnaround this is for the U.S. is demonstrated by the fact that Sabine Pass was built to import gas into the country, and will require significant construction work to enable exports.

The surprising journey of America from importer to potential LNG exporter is the result of a confluence of factors.

The largest is the recent boom in the production of gas trapped in shale rock. Driven by new technology and economies of scale, shale gas production has reversed a long-term decline in U.S. gas output and is expected to keep growing for many years to come.

wsj