Preface. I just added the category “Peak Oil History” because I believe the coming oil crisis will be a complete surprise to the vast majority of the public who are unaware of the role fossil fuels play in our civilization, that we are completely dependent on them for the most part in transportation, manufacturing, food production and more.

In 2005 I went to the first USA peak oil (ASPO) conference in Denver, where some of the speakers included:

• Albert Bartlett Professor Emeritus of Physics, University of Colorado. Arithmetic, Population, and Energy          http://www.hawaii.gov/dbedt/ert/symposium/bartlett/bartlett.html
• Congressman Roscoe Bartlett of Maryland, co-founder of the House of Representatives Peak Oil Caucus with Senator Tom Udall of New Mexico (other members or co-sponsors include James McGovern (MA), Vern Ehler (MI), Mark Udall (CO), Raul Grijalva (AZ), Wayne Gilchrest (MD), Jim Moran (VA), Dennis Moore (KS) and cosponsors virgil Goode, Walter Jones, Tom Tancredo, Phil gingrey, Randy Kuhl, Steve Israel, G.K. Butterfield, Chris Van Hollen, Al Wynn, John McHugh. House Resolution 507: Expressing the sense of the House of Representatives that the United States, in collaboration with other international allies, should establish an energy project with the magnitude, creativity, and sense of urgency that was incorporated in the ‘Man on the Moon’ project to address the inevitable challenges of ‘Peak Oil’.
• Dr. Roger H. Bezdek, co-author with Robert Hirsch of the Department of Energy 2005 “Peak Oil Mitigation Plan”
• Peter Dea,  CEO of Western Gas Resources, a 3.5 billion dollar natural gas exploration and production company
• Jeremy Gilbert, worked at BP as chief petroleum engineer, VP of Alaska exploration
• Henry Groppe founded Groppe, Long & Littell in 1955.  This energy consulting firm is noted for long range forecasts of oil and gas supply, demand and prices.
• Charles A. S. Hall, Systems Ecologist, obtained his PhD working with Howard Odum, the great energy theorist, and founder of the concept of Energy Returned on Energy Invested
• John Hickenlooper, Mayor of the City & County of Denver (and now Senator Hickenlooper of Colorado and one of the very few with a science degree (geology))
• Dick Lamm, former Governor of Colorado
• Charles Maxwell, Senior Energy Analyst with Weeden & Co., has worked in the energy field for 36 years
• Tom Petrie CEO of Petrie Parkman & Co., an energy investment banking firm.
• John Sheehan, is at NREL now and at DOE before that, working on biodiesel and ethanol projects for 12 years
• Matt Simmons   CEO of an energy investment banking firm
• Chris Skrebowski Editor of the UK Petroleum Review

I wrote this up to share with the Oakland & San Francisco peak oil groups that David Room began in 2004.  We invited Tad Patzek and many other professors at U.C. Berkeley to educate us, and other experts such as David Fridley at Lawrence Berkeley National Laboratory.

I suspect that given how there are endless stories in the news about moving as fast as possible to renewables now that Putin has invaded Ukraine and with Europe very dependent on Russia to provide oil, natural gas, and coal, the world will be surprised when energy shocks occur.  Though at first this will be blamed on Putin and other oil nation leaders as well as not enough investment in renewables, at least by the public.  But as you can see from the category Experts/Government, the House, Senate, and military are very aware of petroleum being the life blood of society.

Alice Friedemann  www.energyskeptic.com  Author of Life After Fossil Fuels: A Reality Check on Alternative Energy; When Trucks Stop Running: Energy and the Future of Transportation”, Barriers to Making Algal Biofuels, & “Crunch! Whole Grain Artisan Chips and Crackers”.  Women in ecology  Podcasts: WGBH, Jore, Planet: Critical, Crazy Town, Collapse Chronicles, Derrick Jensen, Practical Prepping, Kunstler 253 &278, Peak Prosperity,  Index of best energyskeptic posts

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Highlights of the Denver ASPO Nov 10-11, 2005 conference by Alice Friedemann

This is a summary of the Association for the study of Peak Oil & Gas conference.  ASPO is concerned about the cultural, economic, and ecological impacts of petroleum depletion.  Energy resource management must include conservation and efficiency, and the ecological use of energy in production and consumption. Petroleum depletion will force extensive changes, so it’s imperative to find the most constructive ways to deal with them at all levels of government in partnership with private and public organizations. Since no nation will be able to resolve its energy challenges without due consideration for the energy needs of other nations, we encourage international cooperation in the development, production and consumption of our planet’s energy resources”.

The establishment, the Wall Street “suits”, the CEO’s, and politicians have jumped on the peak oil bandwagon.  Even Prince Charles is aware of Peak Oil.  Over 26 congressional members now understand the implications of Peak Oil, thanks to Congressman Bartlett, and a Peak Oil Congressional caucus has been formed.

Randy Udall dubbed it the “Energy Woodstock”, though no one was running around naked. The speakers and over 425 people in the audience were from government agencies, universities, oil companies, green builders, politicians, journalists (though none from the papers of record), and so on.  There was a feeling that history was being made.

I was sad that Dr. Youngquist, author of the most important book I’ve ever read, “Geodestinies: The Inevitable Control of Earth Resources over Nations & Individuals” wasn’t there to receive the award he received in absentia (he couldn’t come because he’s taking care of his wife).   I had no idea how many other people besides myself revered him, there was tremendous applause, cheering, and a standing ovation.  Walter Youngquist said in a prepared statement, “Peak oil will affect more people in more places in more ways than anything else in the history of the world.”

Dr. Albert Bartlett, who I also admire a great deal, was also given an award.  And I had the wonderful good fortune to meet Dr. Charles A. S. Hall, student of Howard Odum, who has published papers on human use of energy in the ecological system, energy returned on energy invested, and hopes to someday replace neoclassical economics with economics based on living sustainably and in balance with nature.

I’m going to talk about depletion, techno-fixes, poverty, what can we do, the surprising speech of Republican congressman Roscoe Bartlett of Maryland, why aren’t politicians doing more, and insights of speakers I found interesting.

From what I learned at the conference, it sounds like tight oil shale oil and gas won’t give us energy independence, but give us another decade or two of “normalcy” and relatively cheap oil to carry on as usual. Nor are there alternatives to oil that can save us, so I don’t mention any of the speakers on biodiesel, natural gas cars, etc. I’ve also interjected a lot of my own analysis and some information from outside of the conference.

Depletion and Techno-Fixes

One piece of big news was Matt Simmons telling us he’d heard from Sadad Al-Husseini, former vice director of Saudi Aramco, the largest oil company in the world, that the world’s 2nd largest oil field in the world, in Kuwait, has peaked.

And even bigger, scarier news that depletion of oil  (the decline of production rates from oil fields) might be running at 8% per year, not the 2% often used in projections.  This is what Andrew Gould, CEO of oil service company Schlumberger says appears to be the case. The 8% possible rate of decline was also mentioned in the presentations of Chris Skrebowski, Tom. Petrie, Henry Groppe, Matt Simmons, and Roger Bezdek.  This is a civilization collapsing big deal, too fast to cope with.

In addition to physical geological depletion, the capitalist economic system pushes companies into exploiting the oil unwisely to produce a larger profit today rather than coddling the oil fields responsibly to maximize overall oil output for tomorrow, as illustrated in this comment in the discussion of the article above:

“My company has a decline rate exceeding 15% because we push to maximize production. We do this because offshore operating costs are high, and by getting it out as fast as possible, we reduce the operating overhead over time quite a bit. Many offshore operations do the same thing, and it is likely to become the norm as lifting and finding costs are rising to stratospheric heights. Thunderhorse is a prime example of this, where the injection wells are actually in place before first oil. But as much as that monster cost them, the only way to get your money back and then make more is to move the whole thing to the next big project…”

Robert L. Hirsch, just wrote a paper for the October 2005 vol 226 no 10 issue of worldoil.com which concludes: “The data shows that the onset of peaking can occur quite suddenly, peaks can be very sharp, and post-peak production declines can be comparatively steep (3 – 13%). Thus, if historical patterns are appropriate indicators, the task of planning for and managing world conventional oil peaking will indeed be very challenging”.

Even bigger news was the extraordinarily high depletion rate of natural gas, which peaked 32 years ago.  According to Peter Dea, the decline rate for natural gas in North America is 31% (in new wells).  And we can’t import it to a meaningful extent for years (if ever, given how every LNG plant that’s been proposed has been shot down in the United States by cities that don’t want something with the explosive force of a small atomic bomb nearby).   The LNG plant slated for Mexico will be add a drop in the bucket, not enough to make any difference.

Dea said that half of the natural gas we need in 2012 to stay flat we haven’t even discovered yet.  This will be a huge challenge.  We’ll need to drill 27,300 new wells by 2020, and 35,000 if renewables haven’t kicked in.  We learned from Charles Brister, a Drilling Field Engineer, and John Barnes, the CEO of a small oil company, we don’t have enough drilling rigs to do that. Following the oil price collapse in the 1980’s the rig count plummeted from about 4,000 to 600 rigs by 1999.  Most of the rigs were melted down for scrap iron.  Over half a million oil-workers lost their jobs.  So there aren’t enough rigs or people to drill for more oil and gas. Half of existing employees will be eligible for retirement in 10 years.

Which brings us to the much touted Techno-Fix that optimists insist will save us.  Matt Simmons told us there is a staffing crisis in the energy business.  There aren’t enough oil engineers to invent new technology, and you can’t invent new technology in a month like you can in Silicon Valley.   None of the speakers saw a techno-fix superhero flying to our rescue, only desperate stopgap measures until some unknown deus ex machina saves us.

Matt Simmons, Peter Dea, and other speakers said the next energy shock will be natural gas, not oil. It’s already been a shock to the 100,000 chemical and fertilizer workers who’ve lost their jobs.   Homeowners are next. [2022 update: it’s fracked oil that will hit before natural gas it turns out, 7 or the 8 basins are in steep decline, and the Permian has maybe 5 to 10 years more oil left]

One of the reasons the depletion rate is so high is the technology that’s supposed to be saving us has accelerated the rate of depletion instead, as both Tom Petrie and Matt Simmons pointed out. The 3D seismic imagers found oil and gas sooner than they would have otherwise been found. The extra pipes, or think of it as extra straws in a milkshake of petroleum, have pulled out the existing oil faster. Matt Simmons, in his book “Twilight in the Desert”, also talks about the damaging methods that may have been used to maximize short-term profits in Saudi Arabia’s large oil fields (and no doubt in many other oil-fields as well).

Simmons remarked “what’s left is heavy, gunky, dirty, sour, contaminated oil.  It doesn’t come out fast, and it’s very energy intensive to get out”.  It will take a while to get our refineries up-to-speed to process this lower-quality oil, and the processing will be slower and more expensive.

So in summary, there is a likelihood of a potentially high over-all rate of decline in world oil fields, due to technology, greed, gunky oil, shortages of oil-workers, and shortages of rigs.  In addition, the rate will further be accelerated by hurricanes, revolutions wars, missed deadlines on oil projects, and increased demand from China and India.

It won’t help that we’ll be trying to buy oil with from countries that hate us with questionable dollars.  Not only have United States citizens maxed out their credit cards, the national debt is at a level the World Bank would never allow a third world country to reach.  Will oil countries even want to sell us oil for our inflated dollars?

It would be stupid beyond belief to seek a military way out of our predicament, surely we should learn from the mistakes the British made trying to do this (see Yergin’s “The Prize” for details). And it wouldn’t work.  We’d plunge the Middle East into civil war, they’d blow up their refineries and pipelines, etc.

The population of the world is growing by 250,000 people a day.  They all want oil.  To feed that demand, at this point the world uses about 30 billion barrels of oil a year.  Peak oil means that there will even be less oil for us and all the new people coming on board.  If the overall decline rate became 2% (we’re not there just yet), then we’d have 24.5 billion barrels of oil in 10 years, even though the demand will be for 37.3 billion.  When the scary 8% depletion rate occurs, then we’ll have only 13 billion barrels in 10 years.  This is “The Gap” that everyone is trying to figure out how fill.

Something’s got to give.  Princeton professor Kenneth Deffeyes believes the consequences will be “War, famine, pestilence and death”.

In terms of your financial situation, realize that everything you shop for will go up in price.  Consider one of the most basic: food.  Not only will growing it cost more, because agriculture uses 10 kcal of fossil fuel to produce 1 kcal of food, we’ll be selling food for oil.  You’ll also be competing with China, because they’re on the brink of starvation (read Lester Brown’s “Who will feed China”?), but at least they’ve got a balance of trade with us so large they can afford to buy all of our grain.

You’ll be damned lucky to still have a job 10 years after oil decline begins (that date isn’t known yet, just that it’s coming since oil is finite).  If you do, the government will be sorely tempted to tax you to the max to get revenue to pay for essential services, such as water and sewage, delivery of food from agricultural regions, extra police to maintain civil order, etc.

After Denver Mayor Hickenlooper spoke, a young man asked him to consider what what’s being taught to children in Denver schools.  He said “Don’t we need to change that?  What I’m hearing is that most of us will be out of jobs unless we’re farmers or energy gurus.  Shouldn’t we start teaching children now how to grow their own food?”  Hickenloopers plans for energy decline included self sufficient smaller cities spread out along rail lines into Central Denver and to try to get people to live near where they worked.

I’m not going to go into what was said about renewable energy, because it could not possibly make a dent in the shortfall of oil and natural gas we’re facing.  This is a liquid fuel crisis:  wind, solar, nuclear, geothermal, wave, and hydropower are irrelevant.

Biomass liquid fuels such as ethanol and biodiesel have a number of problems. First, there’s one of scale – biomass contributes less than 3% of our energy now.  To ramp that up to replace declining oil and natural gas would require farming all of the worlds’ land for energy crops for the United States alone.   We’ll all have to become Breatharians.

Most importantly, the environmental effects are unacceptable.  The energy required to remediate the damage is not even considered in the EROI of biomass. Growing crops for fuel depletes the groundwater that fifty percent of Americans now rely on.  Industrial agriculture pollutes ground and surface water irreparably with pesticides, herbicides, and fungicides.   Farmers use a lot of natural gas based fertilizers, which allows them to grow three to five times as much as they could otherwise, but natural gas is declining quickly, so industrial agriculture will not be able to produce a significant amount of biomass long-term.  The nitrogen runoff from these fertilizers is killing the Gulf of Mexico – why isn’t lost fish and shrimp protein taken into account when calculating the EROI of biomass?  Finally, any biomass you remove from the soil harms the soil structure, increases erosion, depletes soil nutrition, and ultimately turns the land into a desert.

However, there is one important use for ethanol:  we’re all going to need a little moonshine to drown our sorrows as times grow harder.

All of the speakers mentioned poverty.

The tremendous inflation and loss of jobs will lead to a depression that will make the Great Depression seem trivial.  Roger Bezdek said “Four recessions followed oil spikes and shortages in the past.  That’s nothing compared to what lies ahead.  The impacts in 1973 and 1979 were brief.  The next oil shortage will kick in a time of immense suffering and shortages as it gets worse every year for the next 20 years.

Charlie Maxwell, said: “We’ve decided to ration by price.  It’s a sign of our failure.  As part of Wall Street culture, I’m aware of the Pyramid of Debt – which will eventually result in the decline of the dollar.  I hate high prices, but I don’t know any other way to go about reducing demand.  A great depression is likely.

Denver Mayor Hickenlooper said that it made sense to help the poor with their gas and electric bills in the dead of winter to get them through the coldest months, but to do that forever in the future as the permanent energy crisis hits would bankrupt the city, it can’t be done.  And how was he going to keep the snowplows running, collect the garbage, etc? He’ll be meeting with the mayors of Oakland, Chicago, Seattle, Portland, Austin to discuss and share ideas on how to cope with declining energy in cities, and they’ll present their findings at the national conference of mayors.

Plan “B”

The DOE Peak Oil mitigation report is very important, because it’s the most likely plan to be tried.  Bedzek seemed the most shaken of all the speakers, he kept saying things like “the world has never faced a problem like oil peaking”, and was clearly unnerved by the 8% depletion rate being bandied about, he said his estimates were based on a 2% decline, there was no way his proposed stopgap measures could save us if the rate of decline is that high.

The Hirsch-Bedzek plan will try to make up for oil depletion with Heavy Oil, Gas-to-Liquids, Enhanced Oil Recovery, Efficient Vehicles and Coal Liquids.

Congressman Roscoe Bartlett of Maryland gave the most amazing speech at the conference.

He said: “Let’s not fill in the gap.  We shouldn’t use the Hirsch plan, because the higher you rise, the harder you fall.  And the more damage you do to the environment.  When the stopgap measures run out, even more people will die than if we just kicked the oil habit now”.

He dismisses all other energy sources as potential solutions, so he’s taken what some would call the “deep ecology” position – let the die-off begin.  Though he hopes to cheat death by having us stay under the depletion curve, reducing our demand by 5% relentlessly year after year (he didn’t say this at the conference, I found out later that’s what he has in mind).

He said “We’ve blown 25 years even though we KNEW peak was coming!  Shouldn’t we have paid attention when we had a chance to cushion the fall?”  We’ve borrowed a tremendous amount of money from our children’s future.  But we can’t borrow their time.  We should have started yesterday, but it’s too late for that. We must begin reducing demand NOW.  What kind of world are we going to leave to our children?

He also talked about exponential growth, which is key to understanding the situation we’re in.  To illustrate exponential growth, Bartlett talked about how if we have 250 years left of reserves in coal, and we turn to coal to solve our problems, increasing our use by 2% a year — a very modest rate of growth considering what a huge amount is needed to replace oil — then the reserve would only last 85 years.  If we liquefy it, then it would only last 50 years, because it takes a lot of energy to do that.

He also said there was no such thing as sustainable growth.  And that efficiency would do nothing for us.  He explained Jevons paradox to the audience.  First he gave the standard example: when people buy cars that go twice as far on a gallon of gas, they drive twice as far.  Then he talked about a businessman who puts low-watt lighting in his factory and saves $5,000.  If he spends the money on a vacation in Europe, he’s more than burned up that saved energy in jet fuel.  If he puts the money in the bank, it’s even worse, the bank will lend that money out another 5 or 6 times, and some guy using a lot of energy to grow his business will borrow it.

Congressman Bartlett put up a slide of Easter Island heads captioned EASTER ISLAND – They Didn’t Make It!  He said: “I’d like to make the case that that’s where we are now.  They ended up eating each other.  How did they reach that point?  Aren’t we doing the same thing?”

After the event, about half a dozen of us surrounded congressman Bartlett.  He is a true Renaissance man, he discussed satellites, regional droughts in the southwest, his life as a farmer, but what I thought most interesting was that Bartlett told us the main problem was population. This is a topic he said he and other politicians don’t dare mention.

Why aren’t politicians doing more?

After the conference, I had a chance to ask Congressman Bartlett if Barbara Lee knew about Peak Oil, and he said “Oh yes”.  She and 26 others were on board with him.  But they were dealing with day-to-day matters, Peak oil wasn’t on their front burner.  It would take an oil shock to make that happen.

Bartlett also said “I’m cognizant that people like to hear good news and that politicians who bring bad news don’t get re-elected”.

Insights

Jeremy Gilbert told us that “In the Middle east, admitting decline is a sign of weakness.  It’s not in their interests to be honest.  We’re using 5 times more oil than we’re finding.  It’s likely there’s 775 Billion barrels in the ground, and 130 billion left to find”.  Or 29 years left at current rates of use.

Henry Groppe thought that 35 people pulled off the biggest heist in world history when they took over soviet oil fields.

Some of the energy analysts said that Big Oil is likely to drill for oil on Wall Street, it’s a lot easier to find it there than in the ground.

Charles Hall told us that drilling for oil appears to have a negative net energy according to the New York Times October 10, 2004 article by James Boxwell “Top oil groups fail to recoup exploration costs”.  Current production of oil from existing wells has a net energy of around 17.  Compare that with the net energy of 100 we got when we first started drilling for oil.  In one of the articles he gave me, he guesses that you can’t run western civilization without an EROI of at least 5.

I asked one of the speakers at the conference, who has known this was coming for decades, how he planned to cope with what lies ahead.  He said he hopes to be dead when the shit hits the fan.

Chris Skrebowski: “Because the price of natural gas-based fertilizer is so high now, I’ve heard farmers in Europe say they may plow under their potatoes and grow rape seed, in other words, grow energy rather than food crops”.

Chris thought factors that might advance ‘Peak Oil’, which are already occurring, are: Project slippage, increasing taxes with tighter terms on oil production, accelerating decline rate, upheavals in major producers, which has already happened in Iraq, Nigeria and Venezuela, accelerating demand growth in China & India, wars, revolutions, & hurricanes.

Bedzek thought environmental protections were unlikely to fare well if there’s widespread hardship.

Randy Udall, one of the conference organizers, told us that “Oil has given us a perpetual motion machine, something we’ve always sought.  Oil has the greatest energy density known to man apart from nuclear”.

Randy pointed out we’re as dependent on oil as the Sioux were on buffalo.  They had many songs and rituals to celebrate that.  But in America, our level of discussion is at the level of talking about people stuck in an elevator during a power outage at MacDonald’s:

Charles Maxwell thought enough oil was coming online from 2006 through 2008 that prices might remain relatively flat on average, though Chris Skrebowski whispered to me that that would only be true if the depletion rate were only 2%.  Weedon said that if the price of oil remained flat, it would be a bad thing, because the Cornucopians would be crowing that $22 oil was coming back and we’d be complacent and do nothing.  He fears we may try to assassinate Venezuela’s Chavez, which would immediately drive oil to $100 a barrel, because Venezuela provides 14% of our energy. It’s a sure bet that civil war would erupt, taking Venezuelan oil offline indefinitely. Weedon closed with, “Someday, we’ll be like Oliver Twist begging “Please sir, can I have more!” from countries that don’t like us, that will suddenly have a lot more political power, and it is not in their national interest to drain their oil quickly to please us, so prices are going to go way up eventually.

Weedon believes that deflation is the greatest danger, and that the dollar will fall.

Matt Simmons talked about how too many key countries are past peak, that decline rates might now be 8 to 10% or that high within a decade or so.  The world is running out of spare drilling rigs – finding new oil without ample rigs is a tough task. The top 250 oil fields produce 80% of the world’s oil.  In Saudi Arabia, 5 super giant fields produce 90% of the output, three more another 8%.

Congressman Roscoe Bartlett said: Our financial system is likely to collapse because it’s predicated on growth and paying off debt.

Roger Bezdek said that the goal of his stop-gap measures was to avoid economic catastrophe.

Charles Maxwell said “If we don’t choose community, it will put a terrible strain on democracy.  If Americans feel like other groups are taking away what’s rightfully theirs, things will get very ugly”.  He told us about declining times in Greece, and how the public turned to a tyrant to prevent a further fall.  But it backfired, and Greece collapsed.

Matt Simmons second slide was “Crises Do Happen”.  The bullet points were “Although the 20th century was the greatest century of enlightenment and innovation, it was also a century marked by unattended problems that became awful crises”, and he lists WWI, WWII, the Great Depression, and Stalin and Mao killing over 100 million of their citizens.

I asked Chris Skrebowski about the possible nationalization of oil and gas companies, and he said absolutely — five years after peak, the government will have no choice if the depletion rate is 6% or more.  The military will say they can’t keep going without their share, mayors will ask for a certain amount for their police forces to maintain civil order, and so on.

Basically we have about 5 years of relatively normal lives after Peak oil, barring wars and if everything goes well.  So enjoy the party while it lasts.  It isn’t over yet, but it’s darn close.