A Peak Oil Thought Experiment: Letting The Optimists Speak

by Liam

Many of you know I’m writing this during a severe health crisis. You can support the work at the links below. Now, on with the grease.

What is Peak Oil? No, That’s Not What It Is.

People imagine that people who subscribe to “peak oil” believe that oil will run out. This ain’t so. What peak oilers tend to believe is what petroleum geologists actually experience: that oil gets heavier, stickier and harder to get the deeper you go. You use the light stuff first, the medium grade second, and then you try to dig into the 140 dollar per barrel tar at the bottom…

Some people say we peaked in world oil production in 2005 or so. This preceded (and then caused) the economic melt-down of 2008 and 2009. Less energy in an economy means fewer jobs, lower-paying jobs, and people not paying for what they’ve bought with card-based plastic debt accounts. (You can’t survive by eating credit cards, after all.)

The petrol industry brought in expensive “fracking” to bolster our fading supply. Fracking is very expensive, requiring many horizontal and vertical holes to be dug, trillions of gallons of water pumped at high pressure into the holes to crack and fracture the shale rock, then the extraction of some hydrocarbon grease is accomplished. The fall-off rate for fracking is fast – up to 70% loss of return in the first year, unlike traditional Texas and Middle Eastern oil wells, which can be pumped for decades before fading.

The Middle East countered by hyper-pumping their legacy fields (old reliables that are past peak, but still outputting much more easily than tar sand and oil shale). The comparably cheap prices from the Middle East crippled fracking market (the very high cost of fracking had nothing to offer on the market but pain and a quickly shrinking economy).

Now, the Middle East is agreeing to slow down. Even they know this is a short-term game and can’t pump forever. The Saudis have been moving to offshore (ie, very expensive and less productive) drilling, they’ve filled their oil reservoirs with sea water since the 1960s to push supply up (thus increasing the free-fall when it slows down), and they’ve even toyed with moving to nuclear power as their oil fortunes fade. (Sound plausible to you? Nukes in the blistering desert? Me, neither.)

What could possibly go wrong?

Money, It’s A Gas

People who like to be very positive about oil speculate that there are another trillion barrels of oil left in the world for us to get. I’m not sure anyone in petroleum geology actually believes that, so let’s give a more reasonable estimate and then let the optimists have their say.

Remember, the world uses about 33 billion barrels of oil per year. That’s 100 billion barrels for 3 years. A hundred billion starts to not sound like such a big number. A trillion is ten times that – or thirty years. But we don’t have a trillion.

Don’t forget that the amount of oil we use per year is supposed to increase – because our economies are supposed to be ever-growing. That’s right – we’re not allowed, by total system design, to simply stay where we are. We always have to “grow, grow, grow!”

Why can’t we slow down and enjoy life more? Why can’t we grow food locally instead of paying for it to be shipped, driven and flown from far-off Monsanto-lands? Here’s why:

Our monetary system requires work promised to be done tomorrow for the cash that you spend today. We spend debt, not money. That’s the system. To pay off debt means we have to do work tomorrow – more than equal to the work we did today. That requires more energy. That requires more oil.

Cash = oil spent tomorrow. To print cash then, means we must have a new Saudi Arabia every couple of years magically appear.

Does that happen? You have a map. Go see if a new Saudi Arabia has shown up anywhere and let me know.

We’re Always Finding More!

“But!” says the optimist. “The press is full of oil discoveries!”

Which is true, sort of. Discoveries happen, but are also at an all-time low. Investment in searching for oil has nearly died, because the results have been so bad for so long.

But you wouldn’t know this from the press. There you get headlines about 20 billion barrels “found” in Texas.

But that’s not what happened. That “find” was in a field already being produced. It’s a known quantity, in that sense. And the “20 billion” is a worm on the Wall Street hook for investors. It’s not what’s actually going to come out of the ground. More on that in a minute.

For a couple of decades, we’ve been burning six barrels for every one we’ve found. We’ve often found 1/10th of what we burned in a year. That is, if we burned 30 billion barrels, we only found 3 billion. And it takes a lot to get that three billion out of the ground:

1. Time. It doesn’t come out in ready-to-use building blocks. It seeps out through mud and sand, needs a lot of work to refine it and turn it into the important plastic that we throw away daily, and the gas to dump it there.

2. It takes work (which is oil) to power the machinery to do all of this digging and refining.

3. And money (which is debt…which is just another way of spelling “oil”).

Back to that 20 billion. We do get big promises that prove to be small once the digging begins. They advertise “20 billion barrels discovered” with a flourish in the press, but in the small print say things like: “But probably more like 11, and maybe we could recover some smaller portion of that – if the market would support more expensive oil.”

Will The Market Support More Expensive Oil?

“Cool!” says the optimist. “There’s always more oil! We just have to pay more for it!”

We found the answer in 2008, 09, 10 and 11. The answer is: “No. No we won’t. We can’t.” Our internationally-interconnected, multi-layered, 24-7-365, perpetual growth machine reached its tolerance level for high prices and showed the world that oil has to cost no more than 60 dollars per barrel to keep this growth-debt-cash version of America (and now much of Europe and Asia) going.

When oil flies high above that cost, the market crashes, unemployment rises sharp and fast; the printing of paper money (or digital cash) increases, and fraud is everywhere that politics shows its head. The only way we really “bailed out” the economy after 2009 was to invest heavily in fracking. That drove oil prices very high (up to 140 a barrel), and the airline economy, the travel and tourism economy all tanked, and national and local prices all spiked. So, here we are, hoping to find more and more and more oil.

How Much Oil Is Left? Let’s Play The Game…

Back to today’s oil. Let’s say that there are, in actual non-inflated numbers, not a trillion, but rather 400 billion more barrels of recoverable – that’s truly and ultimately recoverable oil – left on the planet. (The oil industry has magical “fudge” words for oil: “possible, potential and undiscovered.”) This is what they say in the initial announcement: 100 billion barrels found near a London airport!

A year later, they can’t drill for anything, because it’s crap (sulfuric, leaden) oil in horrible geological formations that prevent anything from budging. This happened in north-central California. The Monterey shale oil was going to “save” us, but turned out to be a big empty nothing. Too hard to get to.

Or, in a better scenario, you get a few billion barrels out – by sinking enormous wads of cash (that’s debt, which is oil) and energy (that’s the machinery for drilling and refining) into the project. And you can only get out so much per year. It doesn’t come out in barrels, gift-wrapped for use. People really forget that one quickly…it comes out as gooey, toxic crap. Then the work begins to turn it into Lady Ga-Ga and Beyonce CDs and the DVDs we buy on sale at Target.

It comes out through hard pumping. I suppose it’s like achieving an orgasm in that sense, but even messier and with more dangerous spills. You can’t Kleenex an oil spill….

A few hundred thousand barrels a day is a good operation. A couple million barrels per day is a great operation. But the United States uses 20 million barrels per day. The world, about 95 million – per day. You begin to see the problems mount.

Give Us Our 400 Billion Barrels!

But no matter how you spell it out, or how many oil field histories you put on the wall, some optimistic oil hopefuls won’t stop talking about the trillion barrels of “undiscovered” oil.

It’s not that no one has tried; it’s that it’s been tried and failed. It’s too expensive. It’s tar buried 3 miles down in tiny pores that won’t flow or budge. The investors won’t bite. The return of 1% on a couple billion dollars spent is not worth anyone’s time. The return of negative 30 percent is what happened in the fracking fields. Banks shrivel up at news like this.

There may be twenty trillion barrels of tar some many miles beneath the earth’s crust. But we can’t get to it any more than a dog can dig out a bone buried three miles deep 100,000 years ago. (The bone is there, the energy, strength and return on investment for the pooch is not.)

I suppose you could just nuke the whole planet, remove a half-mile of surface soil and life worldwide, and boil the remaining planet to free the petroleum: then maybe you could get that trillion.

Let The Oil Optimists Speak!

But avoiding that project (which I’m sure has been considered by at least a few of the minds on the Joint Chiefs of Staff) let’s stick with 400 billion. Which sounds, in simple division, like – well – more than 13 years – if we can cut down to 30 billion barrels per year worldwide usage (We’re above 30 now, so we’d have to use less). Or something like 16 years if we can cut down to 25 billion per year.

“Great!” says the optimist. “We’ve got 10 years of usable oil to make a transition! Or 16! And imagine if we cut down to 20 billion barrels per year. We could do it! Cut out Chinese and Indian growth, reduce American driving…and we’re home free, really!”

The problems come fast and furious: we live in a perpetual growth Ponzi banking dollar scheme where today’s money is a hole we dug in the future promising ourselves more energy to do more stuff and sell more plastic and metal garbage to consumers. So… in order to conserve, we have to destroy the American economic system, and current ‘way of life.’ Which, one must admit, would be tough on the things we think are important, like Wall Street, that den of psychopaths, and constant media, internet and cars on every road all day and night.

But, well. Maybe we can. (It’s a thought experiment! Go with it! I know it would never happen!!!)

Dividing The Spoils

Back to oil – The first 100 billion:

A quarter of that 400 billion will flow without too much trouble from legacy fields. 100 billion barrels. Three years at current usage – but of course, the question arises about speed of production….

Sure, these old fields will have to be battered with CO2 and natural gas a bit, but the stuff will come up. It’s manageable by the refineries already in existence, so that about 40 percent of it is convertible to gasoline using the current machinery.

“Great!” says the optimist. “We’ll reduce gasoline usage by individuals and have enough to go around to power buses and even build some better rail lines.”

The next 100 billion barrels is deeper, heavier and stickier — that thing called API where higher (37 degrees – nice old-fashioned gusher oil) is better than lower (10 degrees – ie – tar). That heaviness reduces the amount of gasoline that is producible from that 100 billion barrels from 40 percent down to 20 percent, but plenty is left for diesel (ie, trains and big boats). This is 40 to 60 dollar per barrel oil. Hard to invest in for the big drillers.

In this scenario (which is trying to reflect certain realities), that 100 billion isn’t the same as the first 100 billion.

“Well, we’ll manage!” says the optimist. “By using less and sharing more – in communities! Garden parks and local farmer’s markets will take over the parking lots of old, half-empty grocery stores. We’ll begin our new way of life!”

Back to our 400 billion, we’re down to the last half.

The last 200 billion are heavy, sulfuric, leaded, and hard to get, requiring a great investment of steam heating, CO2 injection, gas injection and pressurized water (fracking) to get it out of the ground. That last 200 billion gives results a lot more like the second 100 billion than the first. So, the value of 200 is reduced to the value of a middling 100.

It’s expensive too, hitting 75 to 90 dollars per barrel, pushing at and past the upper limits of what the economy can bear and still (barely) function as a 20th Century capitalist commercial market.

“Well, good!” says the optimist. “A shift is needed, and this last push for the more expensive oil will put us on the trail of managing our remaining resources so that these numbers shift radically – and we stretch our small budget by growing almost everything locally and using fuel for important things like tractors and a few emergency vehicles, while we build bicycle and local shared transport structures in towns.”

The pessimist looks at all of this and says: “We’ll be fighting wars with everyone who has oil at every step. We’ll waste the remaining fresh water to boil oil out of tar sand and shale, and the energy we need to even keep this international oil drilling scheme going has to be over a 15 to 1 return on investment. So, you can forget the 2nd, 3rd and 4th 100 billion of that total. That’s for the military-industrial complex only. They’re the only ones who will be properly invested to do it. The rest of us will be in the new “Greencorps” at Camp Wal-Mart/FEMA.”

You want to throw 5 to 8 percent wind and solar power into the mix? Remember, it doesn’t work for trains, boats, trucks or cars and everything has to be replaced piecemeal or wholesale within 20 years to keep it going….

Any takers for any other scenarios?

___________

Thank you for playing along….

As many of you know, I’ve suffered a terrible health crisis, what appears to have been a cerebellar stroke during dentistry, which has caused months of a shitstorm of hellacious crap, and is now affecting my ears. I’m working to raise money ($6,000) to offset the cost of an expensive system of hopefully retraining my brain not to kill me. You can donate a few petro dollars to the paypal link, and always buy the book that critically thinks the 20th Century – politics, war and science – down to nuts and bolts: Official Stories.

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Liam

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