[I’ve combined & rearranged sections from the articles below]
April 28, 2013 The only true metric of energy abundance: The rate of flow
September 02, 2012 Why the oil industry doesn’t want you to remember the last 14 years
Energy abundance depends entirely on the RATE of energy flow.
Why is the rate of flow the key metric? Because in order to function the global economy depends entirely on continuous, high-quality energy inputs. We cannot shut down the world’s electric generating plants for 6 or even 3 months without crashing world society into a state of irretrievable chaos and decline. We cannot shut down the world’s shipping fleet for even a few weeks without doing irreparable harm. Modern global society has become like a shark. It either keeps barreling forward or it dies.
Despite our best efforts, we have only just been able to keep oil supplies from declining in the last seven years. Despite (possibly exaggerated) claims that we have more oil reserves than ever, we need to remember that the rate of flow, that is, our daily consumption, has grown by a factor of eight from 1950 to the present. And, half of all the oil ever consumed has been consumed since 1985. The available reserves may be large, but they are being consumed at such a colossal rate that supposedly record reserves have been unable to lift that rate appreciably above a plateau that started in 2005. The result has been record average prices for oil worldwide for two years running. Rate is and always will be primary in evaluating our energy wealth.
Crude oil production worldwide has been stuck between 71 and 76 million barrels per day since 2005 (calculated on a monthly basis). These numbers are reported by the U.S. Energy Information Administration, the statistical arm of the U.S. Department of Energy, and are widely considered to be the most reliable available. They reflect total production of “crude oil including lease condensate” (which is the definition of crude oil) from all sources worldwide. Despite enormous spending by oil companies on exploration and drilling worldwide, we have only just kept production on a plateau for the last seven years.
Why? Because we’ve exhausted the easy-to-get oil and are now left with mostly the hard-to-get oil. It only makes sense that the early oil pioneers harvested the easy oil first. This includes deposits far offshore and deep below the seabed as well as those locked in the Canadian Tar Sands, deposits that must undergo expensive and energy-intensive processing to convert what is really bitumen, a goopy, thick hydrocarbon, into what we call oil.
The critical factor in the oil markets and a global economy dependent on large, continuous supplies of oil is the rate of production. The rate is the key, not the size of the world’s reserves. It is the size of the tap, not the size of the tank that matters.
Let me offer another analogy: If you inherit a million dollars but can only withdraw $500 a month, you may be a millionaire, but you will never live like one. That is the situation we face with oil. There may be huge resources of tight oil (often mistakenly referred to as shale oil) and of oil-like substances such as tar sands. But the expense, the necessary energy and increasingly, the amount of water required to extract and process them is so great that we have been unable to lift the worldwide rate of production much above its current plateau the last 7 years. Even with all our vaunted new technology, we have only just barely been able to replace the capacity lost each year to the inexorable decline in the rate of production from existing oil fields.
Here’s what peak oil does NOT mean:
- Peak oil does not mean we are running out of oil. This is a canard used by the oil industry to confuse the public. Nobody who understands world peak oil production ever says that it means we are running out. In fact, we won’t run out of oil for a very, very long time. At the peak the rate of production will cease to rise, probably trace a plateau for a time, and finally begin a possibly slow and bumpy decline. That means we’ll have less and less oil available each year. As oil becomes more and more expensive, we will use less, and we will ultimately reserve it for critical purposes for which we cannot find good oil substitutes.
- Peak oil does not mean that we won’t find any more oil. We are finding oil every day. We’re just not finding enough and putting it into production fast enough to grow production in the face of declining flows from existing fields.
Oil will be with us for a very long time, just not at these levels of production. If the rate of flow for oil declined by half in the next 20 years, we wouldn’t be running out of oil at all. We’d still be pumping the same about as we were in 1967, a year of exceptional economic vitality. But, we’d feel the crunch because there are twice as many people on the planet now as there were then. And, the per capita consumption of oil has risen considerably since that year.
New unconventional sources of hydrocarbons are more difficult and costly to extract than conventional ones. In addition, the unconventional well flows exhibit very steep declines in their rate of production–so steep that in the tight oil fields of Texas and North Dakota drillers must replace about 40 percent of their production PER YEAR just to maintain current output. The decline rates for shale gas are even worse — 79 – 95% after 3 years according to a comprehensive survey of 65,000 oil and gas wells in 31 shale plays. Shale natural gas and tight oil drillers face a task similar to climbing up a down escalator. Each must replace enormous fractions of their current production frequently just to keep production flat.
Already, the shale gas production boom in the United States has ceased as natural gas production has been flat since December 2011 despite the more than doubling of natural gas prices from their lows in April 2012. World oil production has been on a bumpy plateau since 2005. Some 60 percent of current production flows come from aging giant fields representing just 1 percent of the world’s fields, and as a group they are in decline. Production from all existing oil fields worldwide is believed to be declining at a rate of about up to 5%. We are trying to make up that decline from tight oil fields that decline around 10 times faster, and we are only just succeeding for the moment.
The affordability of hydrocarbons will also matter greatly. Gail Tverberg has outlined in detail on her blog Our Finite World how the high price of hydrocarbons tends to suppress economic activity which then leads to a downturn that then causes oil and natural gas prices to fall due to falling demand. That fall in prices makes unconventional sources of oil and natural gas uncompetitive leading to a slowdown in their production even as production from conventional sources continues to decline. As prices rise with economic recovery, we begin the same cycle again. This suggests that there is a limit to how much of the modern economy’s financial and physical resources can be devoted to extracting energy without causing an economic contraction–something that the shark-like nature of the modern financial economy cannot withstand without the kind of severe repercussions we saw in 2008.
What matters is how much we can produce for continuous input into the world economy. As you might intuit, we’ve built a financial system and physical infrastructure premised on continuous and rising levels of oil consumption. That’s why peak oil matters so much, and why flat oil production has been a large contributing factor to the unstable world economy in recent years.
Attempts to extract natural gas from methane hydrates should more properly be compared to the search for methods to extract oil profitably from the vast oil shale deposits in the western United States. After more than a century of trying, no one has been able to produce oil commercially from these deposits. It may happen someday at much higher prices and in very limited quantities given all the constraints. Not the least of those constraints is the water necessary to process what is not actually oil, but kerogen, a waxy, long-chain hydrocarbon that requires considerable energy and water to convert into what we call oil. Even the ever optimistic U.S. Energy Information Administration projects that by 2030 these deposits may produce only 140,000 barrels a day of what will essentially be synthetic oil. That compares to current world consumption of around 75 million barrels per day of crude oil plus lease condensate (which is the definition of oil).
When it comes to oil shale, we know where it is. It’s just that it costs so much to extract and process that we are not producing it commercially. When it comes to methane hydrates, however, we do not even know if the deposits are numerous enough or concentrated enough to make substantial commercial production possible. To pin our hopes on this has the makings of dangerously foolish energy policy.
Now, here is what it does NOT depend on: supposed, but often unverified, fossil fuel reserves in the ground; hypothetical, sketchy, guesstimated, undeveloped, undiscovered resources imagined to be in the ground by governments or by energy companies and often deceptively referred to as “reserves”*; claims about future technological breakthroughs; mere public relations puffery about abundance in the face of record high average oil prices.
Fossil fuels that are actually proven to be in the ground are by definition not currently being used, whatever we may consider their potential. Fossil fuels that are hypothetical and undiscovered by definition cannot be used. Technology is NOT energy. Technology runs ON energy. Energy first, then applied technology.
*Reserves are properly defined as resources that can be extracted from known fields using existing technology and sold profitably at today’s prices. Reserves are thus a tiny fraction of “resources,” the estimates for which are actually vague, sketchy guesses about the amount of a substance present in the Earth’s crust in a given area.
Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he writes columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin, The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at firstname.lastname@example.org.
Darcy’s Law: Definition of the rate of flow from an oilfield
Most people know of Einstein’s formula E=mc2“Energy is the mass times the square of the speed of light”. Some know the first law of thermodynamics: “Energy cannot be created but only converted from one form to another”. However, few people known of Darcy’s Law despite the fact that it is this law that delimits historical, current and future oil production. Darcy’s Law, a little more complicated than Einstein’s, determines the flow rate of oil from an oilfield and this is its formula: q = – A k / µ ∙ ∂P/∂L
At first glance this law can seem difficult to understand but its logic is actually quite simple. The flow rate, q, is directly proportional to the cross-sectional area through which the flow occurs, A, and to k that is a measure of how porous the field is. The viscosity of oil is given as µ so that a thick oil with high viscosity flows more slowly than a thin oil. The term ∂P/∂L is a measure of the pressure in the field and the larger that is the larger the flow. When the oil industry discusses new technology it is one of the above parameters that they are trying to manipulate. Horizontal drilling involves increasing the cross-sectional area A while fracking can increase the porosity k. The pressure in the field can be increased by pumping in water and new technology in which solvents are pumped into the field can change the viscosity.
Source: Geological Society of America 2013.