As I noted in my review of the Citicorp report this optimism flies in the face of the views of the DMR in North Dakota – who ought to know, since they have the data. The report further seems a little confused on how horizontal wells work in these reservoirs. As Aramco has noted, one cannot keep drilling longer and longer holes and expect the well production to double with that increase in length. Because of the need to maintain differential pressures between the reservoir and the well, there are optimal lengths for any given formation. And as I have also noted, the report flies in the face of the data on field production from the deeper wells of the Gulf of Mexico.
It seems pertinent to close with the report’s list of assumptions on which the gain in oil production from the Bakken is based:
Consequently, I expect 300 billion barrels of OOP and 45 billion of proven oil reserves, including Three Forks;
- A price of oil (WTI) equal to or greater than $ 70 per barrel through 2020
- A constant 200 drilling rigs per week;
- An estimated ultimate recovery rate of 10 percent per individual producing well (which in most cases has already been exceeded) and for the overall formation;
- An OOP calculated on the basis of less than half the mean figure of Price’s 1999 assessment (413 billion barrels of OOP, 100 billion of proven reserves, including Three Forks).
Based on these assumptions, my simulation yields an additional unrestricted oil production from the Bakken and Three Forks plays of around 2.5 mbd by 2020, leading to a total unrestricted production of more than 3 mbd by 2020.
- A combined average depletion rate for each producing well of 15 percent over the first five years, followed by a 7 percent depletion rate;
- A level of porosity and permeability of the Bakken/Three Forks formation derived from those experienced so far by oil companies engaged in the area.
Enough, already! There are too many unrealistic assumptions to make this worth spending more time on. To illustrate but one of the critical points – this is the graph that I have shown in earlier posts of the decline rate of a typical well in the Bakken. You can clearly see that the decline rate is much steeper than 15% in the first five years.In a lot of ways, this is just another version of the same old, same old – take the most optimistic imaginable assumptions and push them all together in new ways without regard to any possible negative consequences or less optimistic outcomes, and lo and behold, all problems disappear. We can do the same thing with anything else (and, in fact, that’s pretty much how modern economics often works) – want to see a world security picture in which everything is rosy? All we need is the most cheerful predictions. Want to have 6% annual year over year economic growth? Easy to find experts to say it could happen – all you have to do is just pretend they are the only voices that matter.
Moreover, as Kurt Cobb has pointed out, the more shrill and passionate the insistence that peak oil is over as an issue, the more nervous everyone really is, as the data does not show a radical increase in production, no matter how badly one is desired. He writes:
It may be disheartening to see so much disinformation in the media spewed by people who ought to know better. But it is ever so delicious to contemplate the desperation hiding behind their fretful posturing and incantation. I can almost hear them say, “It can’t be so, it can’t be so…it simply mustn’t!” They seem to believe that if they say “Bakken, Brazil, offshore, tar sands, technology” enough times in a row, it will make $100-a-barrel oil go away. But that incantation will not make the data go away, and so we must keep pointing out that the trend remains flat despite all of those things.I also don’t blame Monbiot for his credulousness on the math – he’s hardly the only one. On the other hand, it wouldn’t have been that hard to find the relevant data. Consider, for example, the work of Geologist Jeffrey Brown on this subject. Brown, for those not paying attention is the author of the Export Land Model and also the Vice-President of ASPO-USA. Brown in an email injects his usual incisive numerical analysis to this, and adds in the net export picture (remember, nations don’t stop using oil just because other people would like them to export it – witness the US):
Regarding Monbiot’s comments about Saudi Arabia, Saudi annual production has not materially exceeded their 2005 production level, and their annual net exports have been below their 2005 level of 9.1 mbpd (BP, total petroleum liquids) for six straight years, with 2011 net exports at 8.3 mbpd.
I’ve renamed the exporting country production to consumption ratio the Export Capacity Index (ECI) and the Saudi ECI fell from 5.6 in 2005 to 3.9 in 2011. At this rate of decline, the Saudis would approach a 1.0 ratio, and thus zero net oil exports, around 2034.
Note that there are certainly case histories of a declining ECI that were “false negatives,” e.g., Saudi Arabia in the early Eighties and Russia in the early Nineties, but in the former case Saudi Arabia was cutting exports in response to declining oil prices and in the latter case the decline in the Russian ECI was clearly related to political unrest following the collapse of the Soviet Union.
The recent decline in the Saudi ECI, from 5.6 in 2005 to 3.9 in 2011, corresponded to a doubling in annual Brent crude oil prices.
Regarding Iraq, following are recent annual net export numbers for Iraq (BP, total petroleum liquids, some EIA numbers for consumption):Iraq’s Net Oil Exports (Total Petroleum Liquids, mbpd):
2005: 1.29 mbpd2006: 1.472007: 1.572008: 1.842009: 1.812010: 1.742011: 1.98
After declining for two years, Iraqi net exports increased in 2011, to show an increase of 140,000 bpd over the 2008 net export level.
Regarding the global net export supply balance, I don’t think that China & India will actually be consuming 100% of Global Net Exports of oil (GNE*) in 2030, but on the other hand, it sure is one heck of a trend line, and it looks like China’s oil production may be peaking. US net oil imports increased at 11%/year from 1949 to 1970, when we peaked. US net oil imports then increased at 14%/year from 1970 to 1977 (doubling in about five years).
Note that at the 2005 to 2008 rate of decline in the GNE/CNI ratio, the Chindia region would be at a 1.0 ratio (consuming 100% of GNE) in 2033. At the 2005 to 2011 rate of decline in the GNE/CNI ratio, the Chindia region would be at a 1.0 ratio (consuming 100% of GNE) in 2030.
Among environmentalists it was never clear, even to ourselves, whether or not we wanted it to happen. It had the potential both to shock the world into economic transformation, averting future catastrophes, and to generate catastrophes of its own, including a shift into even more damaging technologies, such as biofuels and petrol made from coal. Even so, peak oil was a powerful lever. Governments, businesses and voters who seemed impervious to the moral case for cutting the use of fossil fuels might, we hoped, respond to the economic case.That, I think, either says more about George Monbiot than about “environmentalists” or it is straight out horse shit. As noted above, no one with four brain cells to rub together has ever thought that peak oil could get us out of climate change – since the emergent consensus that 350ppm might represent a critical tipping point, there’s very little debate on this subject by credible scholars, simply because we know we could cross that line because we have.
Moreover, anyone familiar with the issues never thought that peak oil was an answer to the climate crisis – while there are considerable debates on how much coal there is in the ground, no one who takes peak oil seriously doubts that an energy crisis will drive us to burning more coal to generate compensatory electricity, to burning more wood in areas that have relied on heating oil, to hunger because of the tremendous oil dependency of our food system.
Did “environmentalists” want it to happen? The biggest drivers of climate change are unlikely to be helped in the near term by peak oil – and most people could figure that out. So did we want it? Ummm…yeah, kind of the same way I want to have six root canals with blunt dental instruments and no anaesthesia.
Climate change alone contains plenty of economic incentives to act – we don’t need peak oil for that. Monbiot either completely fails to understand what peak oil implies, or he is shifting the ground for purely rhetoric effect, but not honestly. In fact, for the most part there has always been a profound tension between peak oil and climate change – with adherents to both sides, environmentalists all in most cases, arguing that one is primary and the other secondary.
Moreover, they both result in slightly different natural responses – if you don’t believe in climate change, there really is no reason not to burn all that coal (how much coal there is is another issue). If you believe in peak oil, liquid fuels are the focus, not electrical generation and coal plants, except as a transitional fuel. They generate a lot of different kinds of responses.
I genuinely don’t blame Monbiot for not looking carefully at the data and buying the hype – after all, this hype is on everyone’s lips. What I do blame him for is his implication that peak oil is something that you believe in because you want to, whereas climate change belief is data-driven.
Ultimately, both these things are data-driven – it is much more fun to believe that the oil will always be there and that the world is not warming than either one. The only problem is that belief in either comes at the cost of one’s self-respect after you do even minimal data analysis – looking carefully at the data, at the play out rates of new fields and the flat reality of oil production tells a very different story.
If Monbiot wanted to believe peak oil was true so that it could save us from climate change, he was kidding himself. If he wants to believe it is untrue because it can’t, well, that seems like a line of faulty reasoning right there.