“The World Keeps Not Running Out of Oil”


Watts Up With That?
by David Middleton

 

the-world-keeps-not-running-out-of-oil-fig1

The World Keeps Not Running Out of Oil

July 2017 By David Brown, Explorer Correspondent

The world has anticipated the “rapid exhaustion” of crude oil supplies for at least 100 years.
Will it go on being close to running out of crude for the next 100?

“Peak Oil” — the idea that global oil production will soon reach a maximum and then begin to decline — attracted a significant number of believers in the 1990s and early 2000s.

Then unconventionals happened.

Unconventional resource production blossomed in the United States. With rising crude production, the U.S. stopped soaking up the world’s excess oil supply.

Instead of cutting back crude production to balance the market, Saudi Arabia increased production to protect its market share.

And ta-da! — we got a global glut of crude and liquids, along with a truly major price collapse. Today, you are more likely to hear people talk about a possible worldwide peak in oil demand rather than a peak in oil production.

But the principal arguments for Peak Oil haven’t changed much.

[…]

Doomsday Averted

The concept of Peak Oil developed from a theory put forth by American geoscientist M. King Hubbert. Based on overall reserve estimates and the pattern and history of field discoveries in the United States, Hubbert created a composite, mega-decline curve that predicted U.S. crude oil production would peak in the 1965-70 time period.

And U.S. oil production did reach a peak, a little later than the original Hubbert curve predicted. But with the discovery of North Slope oil in Alaska, production began to increase again. The domestic Peak Oil estimate was re-labeled as a Lower 48 prediction.

Now, it appears that Hubbert’s approach predicts a profile for conventional oil production in a defined geographic area, when technological development and oil prices remain within limited bounds.

“When people ask, ‘How much oil is there?’ the answer is, ‘At what price?,’” Sternbach noted. “Things like tar sands could release huge amounts of oil at the right price.”

Breakthroughs in technology, especially horizontal drilling plus hydraulic fracturing — call it “hydrozontal development” — combined with today’s improved exploration and production tools have reversed the U.S. oil production decline.

In its June energy outlook, the U.S. Energy Information Agency forecast that U.S. crude production will reach an all-time high of more than 10 million barrels per day (b/d) in 2018, along with 4.19 million b/d of natural gas liquids and 1.02 million b/d of ethanol.

Instead of Peak Oil, the world has gotten a peek at a new energy future.

Innovation is “ increasing the value of the resources and it’s reducing the cost of getting to them. When those two things combine, you get to a sweet spot,” Sternbach said. “That’s a paradigm shift that creates waves of increased value.”

AAPG Explorer

the-world-keeps-not-running-out-of-oil-fig3

Figure 1.  The original Hubbert curve displayed with modern graphics (AAPG Explorer)

Hubbert’s original 1956 paper can be accessed here.

Hubbert fits the growth and decay of oil production to a logistic function (Hubbert Math).

“Peak Oil” is a basic function of resource extraction.  Peak resource production generally occurs when nearly half of the recoverable resource has been extracted.  This example from Eugene Island 330 field in the Gulf of Mexico is a good example:

jl_gom_51a_ei330oildecline

Figure 2. Eugene Island 330 Field, rate vs cumulative production (Source: The Oil Drum)… (Before anyone prattles on about The Oil Drum being a Peak Oil propaganda site, the EI 330 graph is accurate. I can reproduce it from production data available to anyone with a licence to Lexco’s OWL database.)

EI 330’s first peak occurs at roughly the half-way point in the extraction of the first 250 million barrels of oil.  Old fields, particularly large old fields, will often exhibit multiple secondary production peaks.  In the case of Eugene Island 330, the secondary peaks were due to a combination of well recompletions, sidetracks and limited recharge of some of the reservoirs (No, this is not evidence of abiotic oil).

The Hubbert equation is a valid method of predicting the peak rate of resource extraction.  So, the the fact that “the world keeps not running out of oil” doesn’t invalidate the equation or the concept of “Peak Oil.”

Where Hubbert went wrong:

SEP 8, 2016

Robert Rapier , CONTRIBUTOR

What Hubbert Got Really Wrong About Oil

[…]

Hubbert’s fame in peak oil circles comes primarily from the assertion that he accurately predicted the 1970 U.S. peak. Because of this prediction, Hubbert is widely-regarded among peak oil adherents as a visionary. He has been called an oracle and a prophet. A recently published article — What Hubbert And Pickens Got Right About Oil, And What’s Next — recounts the uncanny accuracy of his prediction.

The truth, however, is much more nuanced. Hubbert got a lot of things tremendously wrong, and his much-heralded 1970 prediction contains a large caveat of which most people are entirely unaware. Here is what his 1956 paper actually stated.

Hubbert estimated that the ultimate potential reserve of the Lower 48 U.S. states and offshore areas was 150 billion barrels of oil. Based on that reserve estimate, the 6.6 million barrels per day (bpd) extraction rate in 1955, and the fact that 52.5 billion barrels of oil had been cumulatively produced in the U.S. already, Hubbert estimated that oil production in the U.S. would reach maximum production in 1965. That was his base prediction. He wrote “the curve must culminate at about 1965 and then must decline at a rate comparable to its earlier rate of growth.” Hubbert illustrated this 1965 peak in his paper:

hubbert-us-peak

Source: Nuclear Energy and the Fossil Fuels by M. King Hubbert

As shown in the illustration, Hubbert projected a U.S. oil production peak in 1965 at an annual production rate of about 2.8 billion barrels, or 7.7 million barrels per day (bpd). However, note that there is another curve rising above and extending beyond the 1965 peak. This was Hubbert’s “contingency case.” He calculated that if the U.S. oil reserve was 200 billion barrels, peak production would occur in 1970, a delay of five years from his base case. However, he indicated skepticism about the reserve being that high, noting that this would imply “an amount equal to eight East Texas oil fields” beyond the 150 billion barrel estimate. Nevertheless, if the U.S. reserve was as high as 200 billion barrels Hubbert estimated a 1970 U.S. oil production peak at 3 billion barrels, or 8.2 million bpd. Oil production in the U.S. did in fact peak in 1970, albeit at 9.6 million bpd.

While Hubbert’s prediction was in the ballpark, those who cite him don’t seem to be aware that his “perfect” 1970 prediction was based on a secondary case about which he expressed skepticism, and it was about 15% too low on the production rate. Hubbert’s base case — a prediction made in 1956 of a 1965 peak — was off by 5 years and was 20% too low . Or to put it another way, his base case at that time was that U.S. oil production would peak in 9 years, but it actually peaked after 14 years and at 15% higher production than projected.

My point here is to address his oil production predictions based on what he actually wrote. Still, as someone who frequently makes predictions, I will say that his predictions about U.S. oil production were pretty good. They weren’t prophetic, or nearly as exact as many peak oil adherents claim. But they were in the ballpark.

Yet when we look at what he had to say about global production and natural gas production, his predictions were way off the mark. He arrived at an estimate of the ultimate conventional oil production of the world by comparing a number of estimates. He settled on an estimate of 1.25 trillion barrels for the ultimate potential conventional oil production. We now know that this estimate was far too low. But based on this estimate, Hubbert projected that the global peak in crude oil production would occur around the year 2000 at 34 million bpd . In reality, crude oil production in 2000 was more than twice as high at about 75 million bpd. Further, while conventional crude oil production did flatten around 2005, more than a decade later there is no evidence that it has begun to decline. (Overall global production has continued to grow, primarily because of the rise of shale oil production). So this was a big miss.

Hubbert’s defenders will argue that he only really missed the date of the conventional crude oil peak by 5 years. But, his methodology specifies a peak and decline. That is not what we have seen. In fact, until conventional crude begins to decline in earnest we really don’t know how far off the mark his peak 2000 prediction may be.

[…]

Forbes

Hubbert simply underestimated the total volume of recoverable oil (past production + proved reserves + future discoveries).

Hubbert

Figure 3. Hubbert Curve, US. with 2014 production, reserves and undiscovered estimate.

If we assume that U.S. proved oil reserves and the undiscovered recoverable resource stopped growing, the Hubbert “peak” for the U.S. would have occurred in 2004.  Bear in mind that the Hubbert curve is not meant to be an exact fit to the data.  “Hubbert math” fits the data to the curve.   The “Hubbert peak” would have occurred in between the two actual peaks in the data.  An alternative approach would be to break the production down into two phases, with two separate logistic functions.  Either way, if proved reserves and the estimated undiscovered recoverable resource stopped growing, we would currently be in the neighborhood of Peak Oil.

The world has anticipated the “rapid exhaustion” of crude oil supplies for at least 100 years.

Will it go on being close to running out of crude for the next 100?

Since proved reserves will likely continue to grow over time and the total undiscovered resource is unlikely to contract, Peak Oil will likely remain just over the horizon for the foreseeable future.  So, the answer is a qualified “yes.”  People who fail to grasp the concept of Peak Oil will continue to anticipate the “rapid exhaustion” of crude oil for many years to come.

In the interest of full disclosure: I have been employed in the U.S. oil industry as a geophysicist/geologist since 1981, with a six-year exile into management.  I have always worked for “little oil” (as opposed to BIG OIL).  I am a member of the American Association of Petroleum Geologists (AAPG), Society of Exploration Geophysicists (SEG) and Houston Geological Society (HGS). Despite my penchant for ridiculing greenschist, green is actually my favorite color… Oil is colored green on maps and well logs.  Peak Oil is real but not really very relevant, abiotic oil is possible (despite a total lack of evidence for it) and is also irrelevant. Neither the reality of Peak Oil nor the lack of evidence of abiotic oil are part of a conspiracy to keep oil prices high.  If it was, it would be a pretty p!$$ poor conspiracy  because oil prices have been low for most of my career.  And, no, ExxonMobil is not hiding the secret formula for turning (fill in the blank) into oil… But they  did know all about Gorebal Warming waaay before Al Gore invented it… They knew it was wrong.

As usual any and all sarcasm was purely intentional… Except for the bit about Gorebal Warming.

Watts Up With That?

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