The Power of Exponential Growth: Every 10 years we have burned more oil than all previous decades

Preface. There is a lot of oil left. The problem is, most of the remaining oil is unconventional, which needs a lot more energy, money, and time to produce, so much so that the oil can no longer be produced at the rate we’d like. The days of easy oil when oil gushed out in a towering fountain of black gold are over.  Remaining oil needs to be blasted or forced out, and is nasty and gunky, full of impurities requiring ever longer intestines at refineries to process. That means the oil industry needs every larger amounts of the economies money and energy to get more oil, with less and less produced, which leads to less energy for businesses to grow so they can pay back their debts and continue to operate.

That’s the crux of peak oil, not running out, but declining. GDP and oil production are locked in a death grip, exactly mirroring each other, and if energy declines, debts can’t be repaid, and credit dries up.

Geologically speaking — assuming no wars, financial crashes, that we can figure out how to drill for oil in the Arctic, and that remaining reserves can be gotten out at the same rate as the cheap, easy, free-flowing oil reserves we used up first, here is a clock of the remaining oil left: World Oil Supply Clock ( 50 years left July 2019 assuming 1.7 trillion barrels of reserves)

If you’ve read any of my posts on exponential and limits to growth, this ought to alarm you . Just think, half of all fossil fuels ever consumed took place over the past 26 years. And according to Bloomberg, Oil discoveries in 2015 lowest since 1947 — 2016 likely to be even lower.  More recently the Wall Street Journal reported on April 26, 2017: “Oil shortage feared by 2020 as discoveries fall to record low”.

The real reason Trump voters are impoverished is that factories moved overseas to be near remaining fossil fuels after America’s oil peaked in 1970. This was much cheaper than invading China, India, Mexico and other oil and coal producing nations, which now import more oil than they produce. And it had the added bonus of much cheaper labor and exporting pollution and environmental destruction abroad.

America’s wealth came from the fossil fuels that powered industrial machinery, transportation, and electricity. No other nation on earth came close to producing as much oil as the U.S. per capita.  And since it is energy, not money, that does the actual work of civilization, the United States was the wealthiest nation by far in “productivity”.  And not just in the world, but in all of history.

At U.S. energy peak, 3.5 billion barrels of high-quality oil were produced a year, at a time when there were 205.1 million people, 121 million less than in 2017. Per capita, each citizen could claim 718 gallons of oil. By 2005, oil production fell nearly in half to 1.8 billion barrels, while population had grown to 295,500,000 people, with just 262 gallons per person.  Fracked oil saved us for about 12 years, but is expected to peak from 2019 to 2023.  The census bureau projects about 400 million people in 2050, double 1970 population, at a time when oil production will certainly be far below 2005 levels.

Where do we get our oil from?

In 2005, 60% of world oil production came from just 500 of the giant oil fields of the world, nearly all discovered over 40 years ago (the rest comes from about 49,000 smaller fields). Therefore, future world oil production depends on the fate of these giant oil fields, because they represent roughly 65% of the global ultimate recoverable conventional oil resources.

What is the decline rate of conventional oil?

Giant oil fields decline at the slowest rate, smaller fields much faster.  Of the 331 largest fields, 261, or 79%, are declining at 6.5% per year.  Yet every year the decline rate increases. By 2030, these giant fields will be declining at a rate of 9% a year, and meanwhile the other 239 giant fields will be joining them.  For a full discussion of this, see Giant oil field decline rates and their influence on world oil production. If Hook et al are correct, conventional oil production could be as low as 19 million barrels per day in 2030 (see figure 13) versus 31.8 million barrels per day in 2015.

EROI of conventional vs unconventional oil

Many scientists have estimated that an EROI of at least 10 is needed to sustain civilization as we know it. The Energy Returned on Invested (EROI) of unconventional oil is far less, and likely to lead to a net energy cliff rather than a bell curve. Tar sands EROI is between 6 and 1 depending on mined versus in situ, and whether the energy to move the tar sands from Canada to refineries in the USA and refine the tar sands is included or not.  Researchers estimate an EROI of at least 7 and as much as 14 are required for civilization as we know it.

Arctic oil

At best 20% of remaining oil is in the Arctic, and we have no idea how to get it out yet, and when we do, it will take decades to find and develop.  Once we do, it will take even more decades to build a vast infrastructure of roads, pipelines, ports, facilities and ships for year-round oil-spill workers, while we meanwhile destroy the ecology of this fragile environment.

Fracked oil

The fracked oil bubble may be popping, so it is likely that Dittmar’s 7.5 mbd of world tight oil may be high.  It hasn’t yet worked out in any country but America in part due to geology but also because the expensive infrastructure to distribute natural gas was already in place.

Saudi Arabia and Russia have exaggerated and mismanaged their oil reserves

It is possible that Saudi Arabia and Russia mismanagement of their oil fields will both cause peaking sooner than it would have otherwise, and that mismanagement will mean that a great deal of oil will never be recovered (see “Russia, Saudi Oilfield Mismanagement Will Bring Back $100 Oil“, Forbes 2016).

Enhanced Oil Recovery may mean that we’re getting oil out NOW that we would have gotten out later. So for that and all of the above reasons, the downslope of the peak oil curve may be much steeper than the rise of oil production, not a bell curve, which many refer to as an energy cliff.  In fact, “When oil turns it will be with such lightning speed that it could upend the market again” (Evans-Pritchard 2016):

• Oil discoveries around the world are the lowest in more than 60 years, preparing the ground for a game-changing spike and raising serious questions about energy security.
• Oil discoveries have fallen to the lowest level since 1952 and the global economy is becoming dangerously reliant on crude supply from political hotspots, the world’s energy watchdog has warned.
• Annual investment in oil and gas projects has crashed from US$780 billion to US$450 billion over the last two years in an unprecedented collapse, and there is no sign yet of a recovery next year.
• The International Energy Agency said wells are depleting at an average rate of 9 per cent annually. Drillers are not finding enough oil to replace these barrels, preparing the ground for an oil price spike and raising serious questions about energy security.
• There is evidence that cuts in exploration activities have already resulted in a dramatic decline in new oil discoveries, dropping to levels not seen in the last 60 years,” said the IEA’s World Energy Investment 2016 report. The drop is so drastic that the effects are likely to overwhelm slow gains from fuel efficiency and the switch to electric cars, at least for the rest of this decade.
• Many of the steepest falls in spending are in stable political areas. Britain’s North Sea investment has crashed to 1 billion pounds from an average of 8 billion pounds over the last five years. Spending in Canadian fields has plummeted by 62 per cent.

Oil is finite, duh. Petroleum discovery follows a predictable path and rules:

1. Most petroleum in a given area lies within a few large fields
2. These large fields are usually discovered first
3. For several decades now very few giant oil fields have been discovered
4. For over 30 years consumption of oil has exceeded discovery of new reserves

In 2012, the USGS made an estimate of “Undiscovered CONVENTIONAL oil and gas resources of the world“, and came up with 565 billion barrels of oil.  That sounds like a lot, but the world burns 30 billion barrels a year, so that is 18 years at current rates of use, but given that population is exponentially growing at 1.3% per year, adding 75 million new people annually, even if every drop of this hoped for oil is discovered, there may be less than 18 years left.  Exponential growth is a key concept to understanding why the crisis is so extreme and why a fast, rather than a slow collapse is likely.

The July 7, July 2016 “Peak Oil Review” reports “Analysts are once again questioning just how big Saudi oil reserves are. They note that after the Saudis took full control of Aramco in 1980, they stopped publishing detailed data and announced that their reserves had climbed from 170 billion to circa 260 billion barrels where they have remained ever since, despite the production of nearly 100 billion barrels of crude in the intervening years.  Last week, the respected consultancy Rystad Energy put the Saudi reserves around 70 to 120 billion barrels. As the Saudis attempt to sell off parts of their oil industry, these questions become more important.”

The actual work of society is done by heavy-duty diesel engines in trucks (tractors, harvesters, long-haul, delivery, logging, mining, cranes, forklifts, construction, etc), locomotives, and ships, the oil that actually matter is diesel fuel, which can only come from a fraction of the 60+ products made from crude oil (i.e. asphalt, propane, etc).  Diesel engines can’t burn ethanol, and 85% of natural gas liquids are used to make plastics and other petrochemicals, not transportation fuel.  See my book “When Trucks Stop Running” for details.

Below are excerpts or links to articles about how much oil is left.

• 2017-2013 Oil and gas production in North America   and global energy statistics
• 2016-1-20 Is the World drowning in Oil?

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts:  KunstlerCast 253, KunstlerCast278, Peak Prosperity]

“When will oil, natural gas, and coal peak?” G. Maggio, G. Cacciola, Fuel vol. 98, pp. 111–123 (2012)   Estimated peak years: 2009–2021 for oil, 2024–2046 for gas, 2042–2062 for coal

Ahmed, Nafeez. 2017. Failing States, Collapsing Systems BioPhysical Triggers of Political Violence. Springer. 

Excerpts follow:

“The Physics of System Failure. Today, human civilization under late capitalism maintains its increasing distance from thermodynamic equilibrium via the throughput of vast quantities of increasingly depleted fossil fuel reserves, along with other finite and increasingly scarce resources such as metal ores, radionucleotides, rare earth elements, phosphate fertilizer, arable land, and fresh water (Nekola et al. 2013).

One indicator of the system’s growing complexity today is the measure of material throughput, or economic growth—Gross Domestic Product (GDP). Under capitalist social-property relations, GDP must continuously increase through the maximization of private sector profits, simply for businesses to survive in the competitive marketplace and for the economy to maintain its ability to meet the consumption requirements of a growing population. However, as the complexity of human civilization has advanced, the continual growth in material throughput is correlated with an escalating rate of depletion of energy and raw materials,

Global reserves have been further inflated, he concluded, by adding reserve figures from Venezuelan heavy oil and Canadian tar sands—despite the fact that they are “more difficult and costly to extract” and generally of “poorer quality” than conventional oil. This has unjustifiably inflated estimates of total global reserves by a further 440 billion barrels.

Jefferson’s conclusion is stark: “Put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels. Thus, despite the fall in crude oil prices from a new peak in June, 2014, after that of July, 2008, the ‘peak oil’ issue remains with us” (Jefferson 2016).

As of 2016 as prices have declined from their peak the production of both Canadian and Venezuelan tar sands has dropped off considerably (Morgan 2016; Vyas and Puko 2016).

“If conventional oil production is at peak production then projected unconventional oil production cannot mitigate peaking of conventional oil alone” (Mohr and Evans 2010).

Similar concerns apply to shale gas. An extensive analysis by former Amoco petroleum geologist Arthur Berman, who has consulted for ExxonMobil and Total, challenges industry forecasts for shale gas. He argued presciently that actual shale gas production rates would be less than half of official industry projections—this is because production decline rates at shale wells are far higher than assumed. Although EROI of shale gas at the well head is high, the EROI of all gas production rapidly declines as energy costs of compression and distribution to consumers is factored in (Klump and Polson 2016).”

Dittmar, M. January 29, 2016. Regional Oil Extraction and Consumption: A simple production model for the next 35 years Part I.  25 pages.

Conventional oil production was 71 million barrels per day (mbd) in 2014, and likely to decline to 66 mbd in 2020, 50 mbd in 2030 and 33 mbd in 2050.

Adding all unconventional oil and oil-equivalent liquids, and 2014 refinery gains of about 2.5 mbd, the upper production limit for all liquids will be 93.5 mbd in 2015, declining to 92.5 mbd in 2020, 79.5 mbd in 2030 and less than 62 mbd in 2050.

Laherrere predicts a global conventional crude oil peak at about 73 mbd around 2015-2018, declining to 72 mbd in 2020, 65 mbd in 2030, and 35 mbd in 2050. 

Laherrere’s ALL-LIQUIDS global production peak (including refinery gains) is 94 mbd in 2020, 88 mbd in 2030, 60 mbd in 2050.

[ If Hook et al are correct that the decline rate of conventional oil fields will exponentially increase over time, conventional oil production could be as low as 19 mbd in 2050, not 33 to 35 mbd as Dittmar and Laherrere propose above. As far as all-liquids go, I don’t see how there can be 25 (Laherrere) to 29 mbd (Dittmar) of unconventional oil produced in 2050.  It will be coming from very low EROEI, likely unprofitable sources that the financial system may not be able to lend to in a depression (credit will dry up). Worse yet, these projects will be increasingly using more  conventional oil, so these figures of all-liquids being 60 to 62 mbd, even if realized, don’t reflect that not all of that energy will be available to society at large, as the energy industry consumes increasingly larger shares to produce less and less oil. ]

Russia: rt.com March 17, 2016 Running on empty: Russia has less than three decades of oil remaining,  and March 9, 2016 Russia may be running out of oil.

ASPO Oil Production overview based on BP statistic Review of World Energy 2015 (using 2014 data) by Steve Andrews

Andrews predicts an 80% chance of peak oil before 2020.

In reviewing BP’s latest Statistic Review of World Energy, the big story for world oil last year was obvious: the USA’s third straight record-breaking increase in average annual production. Just over 75% of the net increase in world oil production during 2014 came from the USA; add in Canada and 90% of the total increase came from North America.  Throw in Brazil’s first significant increase in 3 years and you have all the world’s net gain in world oil production accounted for by 3 non-OPEC players.  Production from all other producers combined was flat.   Peak oil appears close but is not yet here, delayed rather than dead (as widely written in the media since 2012), and disguised by the inclusion of natural gas liquids in BP’s accounting.

Despite all the happy talk about “American energy independence,” our petroleum future includes a peaking in world oil production, and the adjustments that is likely to require.

Peakoilbarrel.com

Ron Patterson. May 5, 2015.  Peak Russia + Peak USA means Peak World

Ron Patterson. July 14, 2014. World Crude Oil Production by Geographical Area.

Check out the graph “World Less North America” at Peak Oil Barrel which shows world oil production minus North American production is down by 2 million barrels.  Are we starting to see the petticoats of the net energy cliff?  As David Hughes wrote in Drilling Deeper. A reality check on U.S. government forecasts for a lasting tight oil & Shale gas boom, both peak tight (fracked) oil and gas are likely to happen before 2020 in North America.  Powers has also documented this in great detail in his book “Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth” and Arthur Berman discusses peaking oil and gas in the November 12, 2014 James Howard Kunstler podcast #260).

Robert Rapier. Jun 25, 2012. How Much Oil Does the World Produce?

Cornucopians keep coming up with rosy predictions.  This article: Don’t worry, be happy, there’s plenty of oil, natural gas, & coal left has a list of articles that rebut their arguments, good summaries of how much oil is left and why peak oil is nearly upon us.

Finding More Oil

Deffeyes dismisses proposals to simply explore more or drill deeper. Oil was created by specific circumstances, and there just isn’t that much of it. First there had to be, in the dinosaur era, a shallow part of the sea where oxygen was low and prehistoric dead fish and fish poop could not completely decompose. Then the organic matter had to “cook” for 100 million years at the right depth, with the right temperature to break down the hydrocarbons into liquid without breaking them too far into natural gas. Almost all oil, he said, comes from between the hot-coffee warmth of 7,000 feet down and the turkey-basting scald of 15,000 feet down – a thin layer under the surface, and then only in limited areas. We could drill the deepest oil, he said, back in the 1940s.

“More than 70% of remaining oil reserves are in five countries in the Middle East: Iran, Iraq, Kuwait, Saudi Arabia, Oman,” said Dean Abrahamson, professor emeritus of environment and energy policy at the University of Minnesota. “The expectation is that, within the next 10 years, the world will become almost completely dependent on those countries.”

“In 2000, there were 16 discoveries of oil ‘mega-fields,'” Aaron Naparstek noted in the New York Press earlier this year. “In 2001, we found 8, and in 2002 only 3 such discoveries were made. Today, we consume about 6 barrels of oil for every 1 new barrel discovered.”

Shale Oil (aka Light Tight Oil) peak 2019, World Oil Peak 2014:  More David Archibald on LTO plus Net Imports by Ron Patterson September 24, 2014

Tom Whipple. 11 August 2014.  1. Oil and the Global Economy.   Peak Oil Review (ASPO-USA).

How long before US shale oil production peaks and starts what will likely be a rapid decline? Outside analysts using different techniques have been providing estimates as to how long what is termed the “shale oil bubble” will last. The most pessimistic of these estimates have been running around 2016-2017 giving the shale or light tight oil industry another two or three years to grow.  Last week a new study based on Hubbert linearization was released. This study crunched the last seven years of US tight oil production and concluded that the US shale industry will ultimately produce a total of 7.7 billion barrels of oil with peak production reaching 3.9 million b/d in mid-2015. If these projections turn out to be reasonably correct, then US tight oil production could be down to circa 1 million b/d by the end of the decade which is considerably less than the EIA and the financial press has been projecting

The world faces an oil supply crunch within the next five years, British business leaders led by Virgin tycoon Richard Branson warned on Wednesday.

Chris Skrebowski on Peak Oil Phase 1   Nov 9, 2013

2015-2016 and then a recession

Additional reading: Brecha, R. J. 2013. Ten reasons to take peak oil seriously. Sustainability, vol. 5, no. 2, pp. 664-694.