Claims like “BP will file for Chapter 11 by July 9,” and that “the ‘real, untold story’ is another leak that is 5-7 miles away spewing 120,000 barrels per day” are ruining Matt Simmons’ credibility.
Full article: http://oilprice.com/Energy/Crude-Oil/Is-Matt-Simmons-Credible.html
Scientists estimate that food and energy production will have to increase by 50 per cent and water availability by 30 per cent to meet the demand caused by the extra 1.5 billion people living on Earth in the next two decades – an increase of nearly 10,000 people per hour.
Many countries have already significantly exceeded their capacity to be self-sustainable in providing their people with food, water and land without having to import resources. According to a research charity, the Optimum Population Trust (OPT), 77 out of 130 countries that have been studied can be classified as “overpopulated” based on the fact they are consuming more natural resources than they are producing and depend on other countries for the difference.
Britain’s “ecological footprint” shows that it comes 17th in the league table of overpopulated nations, which are dominated by the high-consuming countries of the Middle East and Europe.
Roger Martin, of the OPT, said that if Britain had to rely on its biological resources, its sustainable population would be about 15 million rather than the present 60 million.
“Some people may argue that in a world of international trade, national self-sufficiency doesn’t matter,” Mr Martin said. “We think that’s a very short-sighted view. You don’t have to be a little Englander or an eco-survivalist to conclude that in an era of growing shortages – food, energy, water – being so dependent on the outside world puts us in a very vulnerable position.
“Overpopulation is a much used and abuse word, but we believe the index helps to anchor it firmly in the realm of sustainability; of people living within the limits of the place they inhabit.
“I think the index also clarifies what we really mean by sustainability and how important human numbers are to the concept.”
Our ecological footprint
*One measure of the environmental impact of human population is called the “ecological footprint”. It was developed more than 15 years ago by Mathis Wackernagel and William Rees, at the University of British Columbia in Canada. It is a measure of the demand placed on the biosphere by human activity, calculating the amount of biologically productive land and water area required to produce all the resources that an individual, population or activity consumes, and also to absorb the waste they generate, given prevailing technology and resource management. The “footprint” is measured in global hectares, or average world productivity, allowing one area or population to be compared with another.
OPEC’s spare capacity number is a deep sea monster, like something dark and shimmering in BP’s gushing seafloor well. It could be almost nothing; it might be 2 Mbd at best. The only thing people agree about is that the number is dropping.
What is the Petro-Apocalypse? Is it still alive, waiting to unfurl like Paul the Psychic Octopus, and tell us we will all lose? Or did the Apocalypse disappear like visions of Global Warming and mass CO2 fear and loathing, in 2009? Or has it been magicked away by huge finds of deep water oil, bounding tarsand oil production, and vast quantities of shale gas?
Scenarios of catastrophic rapid declines in oil supplies, economic crisis, geopolitical rivalry and Islamic-flavoured oil war faded somewhat since their heyday around 2005, being replaced by real world record high oil prices (and prices of coal and uranium) by 2008.
Today’s downsized Petro-Apocalypse cottage industry focuses events like BP’s Gulf of Mexico environmental massacre but without high oil prices to keep the consumer herd focused, scenarios for ‘traditional’ crises or ‘traditional’ oil wars are pale things, compared with the latest government austerity plan or latest idiocy on YouTube or Facebook.
Intellectuals, or supposed intellectuals, criticize Peak Oil as a “Malthusian view” of mineral resources – Malthusian doomsters defending the strange idea that non renewable resources necessarily decline as production and consumption rises. Other key arguments ranged against Peak Oil include the claim that human innovation, new technology and corporate initiative will always “unlock new resources”, and do so fastest whenever things look bleak for the human race. For fossil fuels, shale gas is the present shining light.
Tony Hayward of BP, still trying to get his life back, was himself an early cheerleader for shale gas development using hydro fracturing of “tight gas” reserves mostly found in shale formations, relieving and rescuing natural gas consumers forced to pay more for declining conventional gas reserves. BP, as we know, is a world leader in deep water oil exploration and production, and deep water oil resources are another claimed quick fix for beating the decline of conventional resources, an arena for steel nerved corporate risk taking, and a full metal replique to “Malthusian views”.
Certainly in the case of deep water oil, less surely for shale and fracture gas, these “last best” solutions are unlikely to head off high and rising oil prices, or gas prices that will trend upwards from their recent extreme lows, in the USA, and stay at what are called high price levels, outside the USA.
Talking down Peak Oil is always the basic goal. Since 2009, Peak Oil alarm has been heavily but inexpertly talked down from its mid-year 2008 high point, when oil prices on the Nymex briefly attained US$147 a barrel.
Keeping prices below “psychological ceilings” is very important, notably the US$90 a barrel price level identified by US Federal Reserve chairman Ben Bernanke, at the August 2009 Jackson Hole meeting of world central banking chiefs. The rationale is that high oil prices are bad for confidence in the economy, bad for inflation and bad for consumer spending – and the hoped-for economic recovery needs more oil.
Fighting Facts With Dreams
The cheap oil wish list dates back to the very first Oil Shocks, of the 1970s, and is based on what can seem credible, to lower IQ consumers of sloganized economic notions, but runs against simple geological and technological, industrial, economic and financial reality. The cheap oil dream held true for a long time – a long time ago, but today, when global oil demand recovers to anything like the 2004-2007 rate of annual increase, around 2% a year or 1.75 million barrels a day extra demand each year, the world supply ceiling will be quickly crunched.
Prices will then soon rupture the magic 90-dollar glass ceiling. The reason is that world production capacity has not caught up with demand, despite prices multiplied by around 7 in the last 10 years and record level oil exploration spending for more than 5 years. This alone should alert even the coziest minded economist to “something is wrong”, and of course fuel a million conspiracy theories.
To be sure, deep water oil discoveries are trumpeted in the corporate-friendly press and media, but the numbers given for oil finds carefully avoid saying that deep water resource finds, and producible reserves, are two different things. Resource finds like the BP Macondo field (on which Deepwater Horizon was drilling) announced as a resource find of maybe 300 million barrels or more, will probably produce less than 50 million barrels – BP in July 2010 itself estimating 44 to 50 million barrels.
World oil resource findings are still at most, and at best one-third annual consumption, that is 10 billion barrels are found but 31 billion barrels are consumed. Of the 10 billion found each year (and some years in the 2000-2010 period the ’score’ has been below 5 billion) we do not know what percentage will be extracted and produced, over the next 15, 20 or 30 years, but it will be low.
Almost at any time, the dreaded 100-dollar barrel can soar out from the ruins of the shattered 90-dollar glass ceiling.
World gas prices, increasingly dependent on high capital cost LNG infrastructures, will likely trend up towards current LNG prices, around US$9 – 11 per million BTU, not down to unrealistic current prices for US pipeline supplies at under US$5 per million BTU.
To be sure, these forecasts are rarely heard in the media, whether business, financial or other. Coal and uranium, which are far from Forgotten Fossil Fuels, face their own geological, as well as industrial, economic, financial and environmental, as well as geopolitical limits on constant supply expansion. In the 2007-2008 period both uranium and coal prices attained their most recent record highs, uranium prices growing from their most recent low, of US $8 per pound in 2000 to US $135 a pound in 2007, and coal prices mutliplying by 6 through 2000-2008.
Oil, gas, coal and uranium are needed to power economic recovery in the real world economy. That is needed to power real world airplane flights, and real world cars bought by real world consumers – not oil saving electric vehicles of the high cost and fragile, ecological fantasy future. Saving the airline industry and cranking out more cars have been two of the rare signs of economic recovery in OECD countries, following the subprime belly-up for the finance sector, recourse to massive government borrowing by political leaders, and “injections” of these borrowed funds into the economy – notably to encourage car buying.
This shift of private and corporate debt, to government and sovereign and national debt, has been the only real change in the economy since late 2007 and though 2008-2009. Restoring economic growth, if only to reduce national debt burdens needs confidence. The conventional “herd argument” for cheap oil says that if oil stays cheap, consumers will stay confident. This cozy argument has been many times disproved by simple global macro trends, and specially the petrodollar recycling fillip to growth, described in many IMF and US Federal Reserve working papers, but the story remains a crowd puller and favorite for the simple-minded.
What is real is that cheap oil wastes resources and keeps careless consumers wasteful, and oil greed starts wars, but that is not a consumer-friendly message.
Oil Demand Recovery
The world economy relies on oil, but the Petro Apocalypse theory pretends that high priced oil will blow up or blow out the economy in an inflation fireball. The economic crash of 2007-2009, triggered by scam financial products derived from mortgage debt traded by excited, greedy yuppies for supposedly responsible high street banks – and not by high oil prices – saw some countries, for example Japan and a string of European countries plunging at a rate of 5% to 15% in their GDP output over one year.
World trade contracted at more than 12% a year, in an economic crisis described by the IMF as the worst since 1929, but this economic woe managed only to dent world oil demand by about 3.5%. By midyear 2009, world oil demand contraction had ceased.
From late 2009-early 2010, demand growth returned and oil prices bounced back, as the giant emerging economies of China and India power ahead – using oil – in a totally classic model of industry based economic expansion. This notably includes their car industries, producing cars 98% fueled by oil, with car output growing at 10%, 15% or 20% a year, like the number of airplane passengers their national fleet operators carry.
Both China and India have a capital surplus and manageable national budgets, totally unlike the OECD countries, such as the USA with its federal budget deficit for year 2010 estimated at US$1600 billion. Despite average per capita wealth 10 or 15 less than OECD averages, paying for oil at US$90 a barrel is strictly no problem for China and India. Imagining Chinese and Indian economic growth might be possible without oil is like Tony Hayward imagining he can keep his job.
Finding More Oil
The Petro Apocalypse – for some this summarizes to paying more than US$90 a barrel – can only be pushed back a little further in time, another day gained for the plastics-and-pesticides greed-is-good consumer society, by finding more oil. Finding oil is what pushed and incited BP, and other major oil corporations, from all leading oil importer countries, including China and India, to make a lemming rush into extreme high cost, high risk and high loss deep water oil exploration and development.
The reason is simple: onshore and shallow offshore oil reserves are depleting. The OPEC states and Russia control the largest remaining onshore resources of cheaper-produced oil. They are not particularly interested in producing, and depleting their natural resources in the shortest possible time, to satisfy consumer countries. Between “resource nationalism” and “resource imperialism” the conservation-exploitation divide runs like Africa’s Rift Valley.
Getting more oil out of the ground, anywhere on Earth, is increasingly difficult. For the OPEC states and Russia the likely coming trend is a cap or freeze on exploration spending, dictated by costs more than supposed “economic terror” cravings or a desire to ruing the world economy.
To be sure, press statements and news releases from the Big-5 International Oil Corporations (IOCs) BP, Exxon Mobil, Chevron, Total and Shell vaunt their high-tech cutting edge, their corporate respect for the environment, and their supposedly high efficiency, low waste extraction of the precious oil needed to power the consumer herd. In fact their deep water and tarsand oil production is necessarily high cost, high risk and high waste. A single “dry hole” in an ultra deep water prospect, can cost US$200 million.
Producing synthetic oil from tarsand and oil shales typically needs barrel prices over US $75 to break even – and the break even price level rises with the barrel price, because production is so energy intensive.
Risks are shown by BP’s Macondo field disaster, and by typical “normal loss” rates as high as 1 or 2 percent of nameplate capacity in very deep water: leaving pollution that will take decades – or centuries – to disappear in the ice cold waters 1 or 2 miles straight down from the surface. Only in highly special circumstances, like BP’s disaster, are these loss rates made known to the consumer public, casually swigging the increasingly high cost, high waste and high environment impact oil they think they rely on.
Actual extractable or productible reserves, relative to resources, are usually in the range of 5% to 15%. In the case of BP’s Macondo field, the extractable amount will be around 44 – 50 million barrels, over 15 years or more, for a field probably holding an initial resource of 250 – 300 million barrels. BP’s nearby “supergiant” Tiber field, found in 2009, is claimed by BP to hold as much as 8 billion barrels, but BP estimates that probably under 400 million barrels can be extracted from it, over its operating lifetime.
Going back to the case of the Macondo field, we can note that BP’s current estimate of extractable oil from this field, about 44 – 50 million barrels, through about 15 years of field operations is enough oil to cover about 12 – 14 hours of today’s world demand.
If this is a robust defeat for Malthusian thinking or the “Malthus principle”, applied to oil, we could argue that rising NATO troop levels in Afghanistan are a sure proof that hearts-and-minds are being won. In fact, with oil like the tolerance of Afghans for military occupation, the faster we use it up, the faster it runs out and is gone.
Mother Of Invention
Apologists of deep offshore oil, and its onshore lookalike for destruction of the environment, high costs, high waste and low net energy yield – Canadian tarsand oil extraction – quickly shift their pitch. They describe deep water scraping of the barrel, and ripping tens of thousands of square kilometres of Canadian boreal forest land, as yet more stirring proofs that Necessity is the Mother of Invention.
When the oil based, oil fired society starts seriously running out of oil, today, producers find new ways to predate the environment, because Blind Society only has one need – to keep the party going. One More Day is the sole credo. This generates a never ceasing and solid outpouring of hypocrisy and bleating. One favourite is that High tech oil may only be “transitionally” damaging to the environment.
Well managed news on High tech finally reducing environment impact and ultimately reducing resource waste, has a simple bottom line: keep the consumer public bumbling along in happy ignorance of reality, and keep producing enough non renewable resources to keep the public consuming, powering unstable and fragile, certain-to-fail economic growth.
A 2003 version of this semi-religious morally flexible vision with ET trimmings, was applied to selling the Iraq war as a justifiable struggle to open up a formerly closed OPEC state, to high tech oil prospecting and development.
With the help of august bodies like the American Institute of Petroleum, the propaganda circus went as far as claiming that vast quantities of ultra light, sweet crude oil were located just a few feet deep, under each and every one of Saddam Hussein’s palaces. Remote sensing from spy planes or spy satellites clearly showed the prospect, on fuzzy, grainy black-and-white photos, the same type used to flash images of Iraq’s Weapons of Mass Destruction, threatening both cheap oil and humanity.
Sadly enough, the cheap sweet crude under Saddam palaces was as fake as most BP press statements on actual rates of oil spewing from its sea floor well blow out in the Gulf of Mexico. In a sign of the times – the move to Green Energy – the propaganda machine has moved on. Afghanistan is now claimed to hold vast quantities of lithium, to make electric car batteries. This will save the oil – that thanks to deep water exploration and production can never, ever run out!
Setting The Scene
Resource Cornucopians are a related race to babbling, hypocritical environment crunching and resource imperialist Apologists. Both know that to keep consumer friendly, they must move with the consumer herd’s shifting, unsure set of daily obsessions and instant slogans. Oil shortage was likely a 2008 worry bead; replaced in 2009 by climate change and CO2 emission fears, and then by economic crisis, austerity and debt in 2010.
The return of oil at over US$90 barrel, in 2010, will therefore surely set the scene for vintage media outpourings. Logically speaking, Afghanistan’s extremely rich lithium resources, justifying further excesses in this colonial war, makes it unimportant if oil prices rise. The consumer herd will only have to pay US$90 a barrel during the few years needed for the car industry to make a 100% shift to all-electric car manufacturing. How to charge the batteries of a 950-million world car fleet of electric cars, assuming the present car fleet doesn’t grow, and does shift to all-electric, is another fantasy subject area.
Unfortunately, logic is not a strong point of hippy dreamers, congenital liars and the braindead consumer herd. Oil resource Cornucopians inform us that when we get to the real paydirt for cheap oil, which will be onshore and will unsurprisingly be located in OPEC states and Russia, all prospect of oil shortage will be banished forever. Oil prices will fall to any nice, low number the most wasteful oil consumer would care to name.
Cornucopians normally respond to any question as to why the IOCs are foraging and recklessly grappling oil from ultra deep water, and from Athabasca tarsands, that getting oil from “tight formations” and from “hostile environments” is a great example of Necessity Mothering Invention, a splendid proof of man’s ingenuity. This heroic technology, they go on, will however only be needed in the interval before our IOCs get access the incredible bounty of cheap oil that remains.
This is onshore, in all OPEC states, not only Iraq, and also in Russia, as well as smaller amounts but more easily pillaged, in Africa.
Liberating Russia’s oil by military invasion, to be sure, is presently out of the question: the country has a lot too many nuclear weapons, can defend itself, and would massively react to oil-greed motivated “liberation”. Another problem is that Russia’s remaining oil reserves, like its gas reserves are both over-estimated and depleting. Getting what remains of Russia’s oil reserves needs more devious and diplomatic methods, than outright invasion, for example by long-term sapping of the country’s already super-corrupt economy, society and politics.
Liberating Resources For Civilization
This leaves the OPEC states, and the gaggle of smaller, but collectively interesting new oil producers of Black Africa as better targets for a quick hit, that is Afghan-style and Iraq-style military invasion and “liberation”, or at the least political intimidation and oil-fired Gunboat Diplomacy.
For the Black African oil producers there is one detail: to keep them exporting a high percent of their small production, they have to stay dirt poor and undeveloped, not using too much oil at home, to generate the oil export surplus that feeds the “mature postindustrial democracies”. This helps explain the rush to force Green Energy down African throats, most recently by the IMF’s thwarted attempt at creating a $100 billion facility for green energy in low income countries “by 2020″. Burning sticks or twigs and dancing round a solar collector will be very good for Africans, if it levers a little more oil for the average “postindustrial” environment conscious consumer.
Dependence on OPEC and Russia, in a world supposedly “brimful” with oil, is however depressingly easy to demonstrate. Saudi Arabia and other GCC country members of the OAPEC group, plus non-OPEC Russia, that is a total 7 countries, currently supply around 28 million barrels a day (Mbd). This is about 55% of world total traded and transported oil. This export surplus from 7 countries covers the oil needs of more than 100 countries.
The fantasy claim of cheap oil hopefuls is that OPEC can no longer “manipulate market prices”. These are now manipulated by American private bankers, notably Goldman Sachs and other “big players” on world oil markets. As shown by their antics of 2008, oil trading yuppies can gouge prices every bit as high as Arab despots or Russian mafiosi, in their permanent shadow play and rumor circus, a casino where 80 – 100 paper barrels are traded for every 1 real barrel. It has no relation at all to real world oil production, by OPEC states or anybody else, but it smacks of “free market transparency” whenever it talks down prices.
Supposed “key fundamentals”, feeding the rumor mill, include OPEC’s claimed surplus, or under-utilized oil pumping capacity at any one point in time. This claimed excess capacity has continuously declined from its heyday at around 10 Mbd, in the 1990s, when the oil trader fraternity had only to chant “Structural oversupply – Too much capacity”, and prices would obediently shrink to almost nothing. This story stopped working by at latest 2005.
OPEC’s flagrant non-performance in keeping up spare capacity, is clear.
Back To Oil War
Today’s OPEC spare capacity number is a deep sea monster, like something dark and shimmering in BP’s gushing seafloor Macondo well a mile below the surface. It could be almost nothing; it might be 2 Mbd at best. The only thing people agree about is that the number is dropping.
The media and press in the consumer democracies have few problems identifying why this is the case: OPEC’s hostility and cynicism, its refusal to invest in producing more oil to supply more and keep price low for consumers countries, and the diversion by OPEC states (and probably Russia) of oil revenues from the sacred quest of increasing oil output and depleting their national reserves faster, to aiding terror and hindering the free market.
This gives another cut on how Petro-Apocalypse will burst back, when the right price signal is set by Nymex yuppy traders: OPEC states are run by terror-aiding political despots intent on harming innocent drivers of 4WDs on their way to shop for plastics-and-pesticides in the Universal Supermarket. With only 2 Mbd “behind the valve,” oil supply they can turn on and off at will, we are evidently held to ransom. Pre-emptive oil war is justified and normal.
This we can note is despite what Apologists and Cornucopians throw at the microphone, on the vast oil resources held in deep water offshore provinces of civilized countries, like the USA, gorged with oil in the same way that Russia and the OPEC states are gorged with onshore oil. Unlocking this oil is a sacred task for our high-tech, environment conscious oil corporations like BP, but since this is taking rather a long while, costs too much, and can even cause minor environmental crises, invading OPEC states is a better strategy.
Global Non Investment
How can supply be so short when Cornucopian dreamers gurgle that so much oil is still available in the ground? The answer is under-investment. A favoured estimate of world oil reserves by truth-loving and reliable Tony Hayward of BP is that we have “at least 150 years supply”, about 4500 billion barrels, in reserve. His chief economist could give the cutoff barrel price used to cobble this massive prospect – maybe US$250 a barrel.
The basic problem is therefore simple: it costs a lot of dosh, not slick Powerpoint slide shows at business feel-ins and get-togethers, to extract smaller percentages of oil in place from depleting and smaller-sized reserves in more and more remote geological basins, including the deep ocean floor. Missing out on small, or tiny tiny pockets of high cost, very hot oil locked under salt beds, 5 miles under the sea floor, under 1 mile of water can cost US$200 million a shot. This explains why so few new barrels are found per dollar spent on exploration, and why the cost curve for new finds only goes up.
Through the 1985-1999 period – the Cheap Oil Interval – global oil industry investment was a no-no. There was too much supply capacity, due to Saudi Arabia caning its reserves to keep the USA happy, and Russia caning its reserves to pay off its debt. But all good things – for greedy oil consumers – come to an end. Oil sector investment has climbed the same steep curve as oil prices since around 2004, but to no avail. Every year it costs more to add or replace the same barrel-per-day pumping capacity.
Capital spending needed for each extra barrel-day of capacity, or to prevent or slow the same capacity from being lost, has been rising at typical rates of 20% a year for more than 5 years.
Deep offshore and Canadian tarsand oil are two of the most expensive possible methods of extracting oil. There is no possibility of this production being sustained without what average consumers, and their average political leaders call “high” oil prices.
Cornucopians wax realistic, from time to time, and for instance say it takes huge and costly investment to maintain capacity, and massive exploration, drilling and production budgets to sustain and replace lost and declining production. The Deepwater Horizon rig, blown up by BP in April 2010, killing 11 workers is an example: this supposed jewel of high-tech had a price tag of $365 million. Shallow offshore, and onshore rigs cost a fraction of this.
OPEC states that do not invest huge amounts each year to maintain export supply volumes are therefore natural targets of consumer ire – but the unsurprising fact is that OPEC states and Russia have other things to invest in, such as regular economic development, education, health, housing and transport – exactly like the oil consumer countries. Venezuela is favoured non-Arab target for American oil whining and jealousy, with the Hugo Chavez government accused of mismanaging a stagnant output oil industry, committing the heinous fault of not always increasing output, to prevent prices from rising, and satisfying American oil wasters.
Venezuela’s national oil company, PDVSA, which continues to employ many Americans in strategic posts, faces plenty of challenges – including geological depletion of its cheaper and easier produced reserves, which have been extracted for over 85 years. The claim is that Venezuela “could double its production”, especially if it was invaded, that is “liberated” Iraq-style. For Chavez however, like his ally Evo Morales of Bolivia sitting on a stash of lithium (but now menaced by Afghan warlords), high prices for his oil commodity export – say $100 a barrel – buys plenty of street credibility.
There Will Be Oil
Over and beyond to war-crazed ranting of old style imperialists unable to accept that depletion is a reality, the basic fact is there is no real shortage of oil, if the right price is paid. Also at this time, and simply because world supply/demand balances are so tight, the invasion and occupation “model” or “war option” for improving oil production performance in exporter countries, such as Iraq, would surely backfire if it was used.
Loss of supply from the country being “liberated” by war criminals would impact fragile and “mature” supply structures – quickly driving up oil prices, to the displeasure of average greedy consumers, who also occasionally vote.
The well-mapped tipping point for peak oil starting in 2010-2011 depends only on the intensity of the global economic recovery and the growth rate of world oil demand. By late 2010 we can have prices back over US$100 a barrel, and by early 2011 prices may be very high, due to structural shortage. Despite this, we will have only reached the point where 50 percent of the world’s ultimately recoverable oil has been consumed. The second round is coming, and
The other 50 percent will be more wisely used, simply because prices will rise to high levels – and stay at high levels despite cyclic or other economic recessions, encouraging conservation and substitution. Welcome to the real world, real future!
The possible spread of the oil spill from the Deepwater Horizon rig over the course of one year was studied in a series of computer simulations by a team of researchers from the School of Ocean and Earth Science and Technology (SOEST) at the University of Hawaii at Manoa.
Eight million buoyant particles were released continuously from April 20 to September 17, 2010, at the location of the Deepwater Horizon oil rig. The release occurred in ocean flow data from simulations conducted with the high-resolution Ocean General Circulation Model for the Earth Simulator (OFES). “The paths of the particles were calculated in 8 typical OFES years over 360 days from the beginning of the spill,” says Fabian Schloesser, a PhD student from the Department of Oceanography in SOEST, who worked on these simulations with Axel Timmermann and Oliver Elison Timm from the International Pacific Research Center (IPRC), also in SOEST. “From these 8 typical years, 5 were selected to create an animation for which the calculated extent of the spill best matches current observational estimates.”
The dispersal of the particles does not capture such effects as oil coagulation, formation of tar balls, chemical and microbial degradation. Computed surface concentrations relative to the actual spill may therefore be overestimated. The animation, thus, is not a detailed, specific prediction, but rather a scenario that could help guide research and mitigation efforts.
The animation shows the calculated surface particle concentrations for grid boxes about 10-km-by-10-km in size into April 2011. For an estimated flow of oil from the Deepwater Horizon of 50,000 barrels per day over a 150 day period, a concentration of e.g. 10 particles per grid box in the animation corresponds roughly to an oil volume of 2 cubic meters per 100 square kilometer.
The oil spreads initially in the Gulf of Mexico, then enters the Loop Current and the narrow Florida Current, and finally the Gulf Stream. “After one year, about 20% of the particles initially released at the Deepwater Horizon location have been transported through the Straits of Florida and into the open Atlantic,” explains Timmermann.
This animation suggests that the coastlines near the Carolinas, Georgia, and Northern Florida could see the effects of the oil spill as early as October 2010. The main branch of the subtropical gyre is likely to transport the oil film towards Europe, although strongly diluted.
The animation also shows that as the northeasterly winds intensify near Florida around October and November, the oil in the Atlantic moves closer to the eastern shores of the US, whereas it retreats from the western shores of Florida.
The narrow, deep Straits of Florida force the Florida Current into a narrow channel, creating a tight bottleneck for the spreading of oil into the Atlantic. As the animation suggests, a filtering system in the narrowest spot of the Florida Current could mitigate the spreading of the oil film into the North Atlantic.
This research was supported by the Japan Agency for Marine-Earth Science and Technology (JAMSTEC), NASA and NOAA through their sponsorship of the International Pacific Research Center in the School of Ocean and Earth Science and Technology at the University of Hawaii at Manoa.
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Spread of oil spill on Day 78 (July 7, 2010) based on simulation. Image credit: IPRC/SOEST/UHM |
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Spread of oil spill on Day 360 (April 15, 2011) based on simulation. Image credit: IPRC/SOEST/UHM |
http://www.soest.hawaii.edu/soest_web/soest.gulf2010_longterm.htm |
Topographical map with yellow bar showing the narrow section of the Straights of Florida that forms a bottleneck for the Florida Current. Image credit: IPRC/SOEST/UHM |
Forecasts are starting to indicate a rebound in activity for developing bitumen production from the oil sands in Alberta.
Alberta’s Energy Resources Conservation Board in its June 2010 update forecasts bitumen production to reach 3.2 million b/d in 2019.1 This rate is an increase from its forecast last year that saw oil sands production increasing to 2.9 million b/d in 2018. Bitumen production from the oils sands in 2009 averaged 1.49 million b/d.
ERCB also has increased its estimate of initial bitumen in place to 1,804 billion bbl from the 1,731 billion bbl shown in its 2009 report.
For determining its current projections, ERCB expects US West Texas Intermediate to average $78/bbl in 2010 and increase to $122/bbl in 2019.
In its June 2009 forecast, the Canadian Association of Petroleum Producers noted the deferral of some oil sands projects.2 The deferrals took place, but its June 2010 forecast says the economic climate has recovered somewhat and some companies are now actively developing phases of their projects previously placed on hold.”
CAPP said The pull back of capital spending last year had a limited impact on production growth over the short term, as companies that had already invested in the process continued to move forward.”
For its bitumen production forecast, CAPP kept the rate of growth consistent with last year’s forecast. It forecast oil sands production to increase to 2.2 million b/d in 2015, 2.9 million b/d in 2020, and reach 3.5 million b/d in 2025.
Oil sands resources
The main deposits discussed in ERCB’s report are the Athabasca Wabiskaw-McMurray, Cold Lake Clearwater, and Peace River Buesky-Gething that cover about 54,000 sq miles (Fig. 1).
The three areas contain 15 oil sands deposits.
Fig. 2 shows the ERCB bitumen forecast to 2019 and Fig. 3 shows the disposition forecast for crude bitumen and bitumen upgraded into a synthetic crude oil (SCO).
The report contains the following assessment of bitumen resources in Alberta at yearend 2009:1
• Initial in place – 1,804 billion bbl
• Initial established – 177 billion bbl
• Cumulative production – 6.9 billion bbl
• Remaining established – 170 billion bbl
• 2009 production – 0.544 billion bbl (1.49 million b/d)
• Ultimate potential – 315 billion bbl.
Although ERCB increased the initial bitumen in place, it left the initial established and ultimate potential the same as last year. The production of 1.49 million b/d for 2009 is an increase over the 2008 production of 1.31 million b/d.
For its 2010 report, ERCB’s reevaluation of the deposits led to an increase in initial bitumen in place by 28% to 406 billion bbl for the Athabasca Grosmont deposit and to a decrease in initial bitumen in place for the Cold Lake Upper and Lower Grand Rapids deposits by 20% and 5% to 34 and 63 billion bbl.
Unlike the other deposits, which are in sands, the Grosmont deposit is a late-Devonian shallow marine to peritidal platform carbonate. Currently there are no commercial projects in the Grosmont deposit.
In 2009, the mining areas produced 302 million bbl while the in situ areas produced 242 million bbl. ERCB expects the in situ bitumen production to surpass production from mining projects by 2015.
The in situ volumes include production with enhanced recovery methods, such as injection of steam, water, or other solvents into the reservoir to mobilize the bitumen, as well as bitumen and heavy oil produced with primary methods from the Athabasca, Peace River, and Cold Lake regions.
Of the 170-billion bbl remaining established reserves, ERCB considers 80%, or 135 billion bbl recoverable with in situ methods and the remaining 34 billion bbl recoverable with surface mining methods.
The currently active mining developments contain 23.3 billion bbl and active in situ areas contain 3.3 billion bbl of remaining established reserves.
ERCB considers seven mining projects as active (Table 1). The four currently producing are operated by Suncor Energy Inc., Syncrude Canada Ltd, Shell Canada Ltd. (Albian Sands), and Canadian Natural Resources Ltd. (Horizon).
Of the non producing projects, Shell expects to start production from Jackpine in late 2010 or early 2011 and construction of the first phase Imperial Oil Ltd. Kearl project has started, with production expected to begin in 2012 (Table 1). Suncor had deferred the Fort Hills project but now has reactivated the construction.
ERCB estimates that the ultimate potential in situ bitumen recovery is 208 billion bbl from Cretaceous sediments and 38 billion bbl from Paleozoic carbonates.
In situ remaining established reserves in areas under active development are 124 million bbl in Peace River, 957 million bbl in Athabasca, and 2,234 million bbl in Cold Lake.
Production
In 2009, the upgrading of 302 million bbl of mined bitumen and about 12% of the 242 million bbl from in situ projects yielded 279 million bbl of synthetic crude oil (SCO). ERCB notes that 60.6% of the bitumen produce was upgraded in the province.
Average production from the three oil sands areas in 2009 was:
• Athabasca—825,000 b/d mined, 298,000 b/d in situ.
• Cold Lak—318,000 b/d in situ.
• Peace River—46,000 b/d in situ.
The 2009 in situ production by method was 32% by cyclic-steam stimulation, 37% by steam-assisted gravity drainage (including experimental methods), and 31% by primary means (including water and polymer injection).
Mined production in 2009 increased by 14% compared with 2008. Syncrude produced 40% of the mined production while Suncor produced 35%, Albian Sands, 17%, and Horizon 8%.
ERCB noted that 2009 Syncrude’s SCO production of 334,000 b/d was 1% lower than in 2008 due to an extended turnaround and some unplanned outages.
Suncor’s SCO production increased by 17% over 2008 to 289,00 b/d because of improve reliability and the startup of the Steepbank mine in the third quarter even though a fire at an upgrader curtailed some production in late 2009.
Albian Sands SCO production increased 4% over 2008 to 140,000 b/d, while ramp up of Horizon continued with an average SCO production of 62,000 b/d for the year.
Table 2 shows the projects ERCB includes in its production forecast for mineable projects.
In 2009, Nexen Inc.’s Long Lake project began operations. This was the first project based on in situ bitumen recovery and field upgrading. The project is the only one with a gasification technology that takes waste product (asphaltenes) and transforms it into syngas to create steam for the reservoir and hydrogen for the upgrader.
Long Lake production averaged 50,300 b/d in 2009.
Alberta’s five upgraders produce various synthetic products. Suncor produces light sweet and medium sour crudes plus diesel. Syncrude, Horizon, and Long Lake produce light sweet synthetic crude. the Shell upgrader produces intermediate refinery feedstock for its Scotford refinery as well as sweet and heavy SCO.
ERCB forecasts that by 2019 SCO production will increase to 494 million bbl and the portion on in situ production upgraded will increase to 18% from the current 12% (Fig. 3).
Fig. 4 shows the historic in situ production and the number of producing wells. The 2009 average production was 664,00 b/d compared with 583,000 b/d in 2008. The average rate of each of the 9,700 producing wells was 69 b/d.
Companies have drilled most in situ producing wells in the oil sands as deviated wells from pads to minimize the drilling and production footprint. From 1985 through yearend 2008, the oil sands have had 40,701 wells drilled for exploration and development of the resource. In 2009, companies drilled 2,211 wells in the oil sands. Of these, 941 were development wells and 1,270 were exploratory wells.
Pipelines
ERCB expects that the pipeline capacity for oil sands production leaving Western Canada will increase by 1 million b/d after the completion of several major pipelines in 2010. The additional capacity should be enough to handle expected production capacity through 2016, according to the report.
Pipelines coming on stream within Alberta in 2010 include the Inter Pipeline Corridor pipeline expansion project that will increase bitumen blend transport capacity to 465,000 b/d from the current 300,00 b/d.
Fig. 5 shows the main existing and planned pipelines for oil sands production export. Table 3 lists the proposed pipelines with their capacity and start-up dates.
References
1. Albert’s Energy Reserves 2009 and Supply/Demand Outlook 2010-2019, ST98-2010, Energy Resources Conservation Board of Alberta, June 2010.
2. Crude Oil Forecast, Markets & Pipelines, Canadian Association of Petroleum Producers, June 2010.
The Lloyd’s insurance market and the highly regarded Institute of Strategic Studies (ISS, known as Chatham House) says Britain needs to be ready for “peak oil” and disrupted energy supplies at a time of soaring fuel demand in China and India, constraints on production caused by the BP oil spill and political moves to cut CO2 to halt global warming.
“Companies which are able to take advantage of this new energy reality will increase both their resilience and competitiveness. Failure to do so could lead to expensive and potentially catastrophic consequences,” says the Lloyd’s and ISS report “Sustainable energy security: strategic risks and opportunities for business”.
The insurance market has a major interest in preparedness to counter climate change because of the fear of rising insurance claims related to property damage and business disruption. The review is groundbreaking because it comes from the heart of the City and contains the kind of dire warnings that are more associated with environmental groups or others accused by critics of resorting to hype. It takes a pot shot at the International Energy Agency which has been under fire for apparently under-estimating the threats, noting: “IEA expectations [on crude output] over the last decade have generally gone unmet.”
The report the world is heading for a global oil supply crunch and high prices owing to insufficient investment in oil production plus a rebound in global demand following recession. It repeats warning from Professor Paul Stevens, a former economist from Dundee University, at an earlier Chatham House conference that lack of oil by 2013 could force the price of crude above $200 (£130) a barrel.
It also quotes from a US department of energy report highlighting the economic chaos that would result from declining oil production as global demand continued to rise, recommending a crash programme to overhaul the transport system. “Even before we reach peak oil,” says the Lloyd’s report, “we could witness an oil supply crunch because of increased Asian demand. Major new investment in energy takes 10-15 years from the initial investment to first production, and to date we have not seen the amount of new projects that would supply the projected increase in demand.”
And while the world is gradually moving to new kinds of clean energy technologies the insurance market warns that there could be shortages of earth metals and other raw materials needed to help them thrive.
Lloyd’s also calls on manufacturers, retailers and the wider business community to reassess global supply chains and their just-in time models because the “current system is increasingly vulnerable to disruption.”
The report says government needs to do much more to bring additional price stability and transparency if the global carbon market is to become a reality.
Richard Ward, chief executive of Lloyd’s, said the failure of the Copenhagen climate change talks last December has helped lull many business leaders into a false sense of security about the challenges ahead. “We are in a period akin to a phony war. We keep hearing of difficulties to come, but with oil, gas and coal still broadly accessible – and largely capable of being distributed where they are needed – the bad times have not yet hit … all businesses … will be affected by energy supplies which are less reliable and more expensive.”
Today’s women have just half as many as their mothers — an average of 2.6. Not just in the rich world, but almost everywhere.
This is getting close to the long-term replacement level, which, allowing for girls who don’t make it to adulthood, is around 2.3. Women are cutting their family sizes not because governments tell them to, but for their own good and the good of their families — and if it helps the planet too, then so much the better.
This is a stunning change in just one generation. Why don’t we hear more about it? Because it doesn’t fit the doomsday agenda.
Half the world now has fewer than the “replacement level” of children. That includes Europe, North America, and the Caribbean, most of the Far East from Japan to Thailand, and much of the Middle East from Algeria to Iran.
Yes, Iran. Women in Tehran today have fewer children than their sisters in New York — and a quarter as many as their mothers had. The mullahs may not like it, but those guys don’t count for much in the bedroom.
And China. There, the communist government decides how many children couples can have. The one-child policy is brutal and repulsive. But the odd thing is that it may not make much difference any more. Chinese women round the world have gone the same way without compulsion. When Britain finally handed Hong Kong back to China in 1997, it had the lowest fertility in the world — below one child per woman. Britain wasn’t running a covert one-child policy. That was as many children as the women in Hong Kong wanted.
What is going on? Family-planning experts used to say that women only started having fewer children when they got educated or escaped poverty — like us. But tell that to the women of Bangladesh.
Recently I met Aisha, Miriam, and Akhi — three women from three families working in a backstreet sweatshop in the capital Dhaka. Together, they had 22 brothers and sisters. But they told me they planned to have only six children between them. That was the global reproductive revolution summed up in one shack. Bangladesh is one of the world’s poorest nations. Its girls are among the least educated in the world, and mostly marry in their mid-teens. Yet they have on average just three children now.
India is even lower at 2.8. In Brazil, hotbed of Catholicism, most women have two children. And nothing the priests say can stop millions of them getting sterilized. The local joke is that they prefer being sterilized to other methods of contraception because you only have to confess once. It may not be a joke.
Women are having smaller families because, for the first time in history, they can. Because we have largely eradicated the diseases that used to mean most children died before growing up. Mothers no longer need to have five or six children to ensure the next generation, do they don’t.
There are holdouts, of course. In parts of rural Africa, women still have five or more children. But even here they are being rational — they need the kids to mind the animals and work in the fields.
But most of the world now lives in cities. And in cities, children are an economic burden. You have to get them educated before they can get a job. And by then they are ready to leave home.
The big story is that rich or poor, socialist or capitalist, Muslim or Catholic, secular or devout, with tough government birth-control policies or none, most countries tell the same story: Small families are the new norm.
That doesn’t mean women don’t still need help to achieve their ambitions of small families. They need governments or charities to distribute modern contraception. But this is now about rights for women, not “population control.”
It is also true that population growth has not ceased yet. We have 6.8 billion people today, and may end up with another 2 billion before the population bomb is finally defused. But this is mainly because of a time lag while the huge numbers of young women born during the baby boom years of the 20th century remain fertile.
With half the world already at below-replacement birthrates, and with those rates still falling fast, the world’s population will probably be shrinking within a generation.
This is good news for the environment, for sure. But don’t put out the flags. Another myth put out by the population doom-mongers is that it’s all those extra people that are wrecking the planet. But that’s no longer the case.
Rising consumption today is a far bigger threat to the environment than a rising head count. And most of that extra consumption is still happening in rich countries that have long since given up growing their populations.
China, the world’s second-biggest oil consumer, increased net crude-oil imports to a record in June as demand rose and costs fell.
Net purchases climbed to 22.14 million metric tons, or about 5.39 million barrels a day, from 17.65 million tons a month earlier, according to preliminary data released by the General Administration of Customs today. This was more than the previous record of 20.98 million tons in April.
Oil-product demand rises in China between July and September on summer demand for fuels including gasoline and diesel. The country is also increasing purchases to take advantage of lower costs than in May, said Qiu Xiaofeng, chief oil analyst with China Merchants Securities Ltd.
“State refineries would have increased crude purchases as oil costs dropped, also after they reduced imports quite a bit in May,” Qiu said by mobile phone in Shanghai today, “We don’t think the crude imports will sustain such strong growth in the second half as demand is poised to be hurt by the cooling economy.”
China paid an average $77.20 for each barrel of crude in June, down from $82.50 a barrel in May, according to Bloomberg calculations. May purchases dropped 16 percent from April to a four-month low of 17.84 million tons.
Purchases of crude oil in the first half rose 30 percent from a year earlier to 117.97 million tons, according to today’s data.
Storage Tanks
The country may also boost imports for stockpiling, said Standard Charter Bank commodity analyst Judy Zhu. “Crude oil imports remained robust by rising 34 percent year-on-year, in line with our expectation that China will remain active in the global crude-oil market to feed its state oil reserves this year,” Zhu said in an e-mailed noted today.
China last year started building storage tanks of crude reserve in a second phase development. The first phase holds the equivalent of about 16.4 million cubic meters of oil, or about 30 days of net imports, the nation’s top energy administration said last June.
China’s passenger-car sales to dealerships rose at the slowest pace in 15 months in June, adding to signs that the world’s third-largest economy is cooling. June power consumption growth eased “sharply” on a high comparison base last year and as demand from heavy industries showed signs of slowing, Shanghai Securities News said July 5, citing energy authorities it didn’t name. Demand growth in July and August may also slow “significantly,” the newspaper said.
Imports of oil products including gasoline and diesel reached 3.31 million tons, compared with 3.18 million tons in May, while exports totaled 2.15 million tons, from 2.69 million tons. The nation was a net importer of oil products last month.
The world’s biggest producer of coal exported 1.27 million tons of the fuel last month. The customs department didn’t provide coal import numbers in today’s release.
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