Comments on comments to the Brännpunkt [“Focus”] article about oil and EU.

Posted on January 6, 2013


Shale oil f+ñrg skiss 2-1853

(To Swedish text)

Comments on the comments made following the “Focus” article (Brännpunkt) in Svenska Dagbladet: The EU must drastically reduce its oil imports”.

”Focus” gave its readers the opportunity to comment on my article published recently there. As one engaged in the peak oil debate I should respond to them. There are those who assert that such commentators are not worth bothering about but the fact remains that those who have left comments have probably read the article and that has given them cause to write. Focus limits comments to three per person and that means that I did not have the opportunity to enter a discussion at their website and respond to all the viewpoints that the various readers had contributed. I have now studied the 141 comments that have been made as I write this and they can be crudely divided into four topics: Peak Oil, the climate, atomic energy and conspiracy theories. In this blog I will discuss the comments that relate to Peak Oil and conspiracy theories.

Contributor “AWJE” wants “to get an explanation of the logic behind the conclusions drawn in the article”. AWJE concludes with “Let me also point out that what is called “Peak Oil” is a pure fantasy without basis in reality”. Contributor “Klarsyn” says, “Those who believe in “Peak Oil’ have been forced to delay its onset several times, in total by more than 100 years and with all the giant discoveries that they have recognised in recent times they will have to delay Peak Oil by a very significant amount next time”, and in another contribution, “Oil is formed continously at a rate that humanity has no idea about”. There are several other contributions of this type but let’s begin our discussion with these.

Oil Production in the North Sea

In the article I wrote [now with additional explanatory text within parentheses]:

“The term “Peak Oil” refers to that point in time when the rate at which oil is produced can no longer be increased [in a region or the entire world] and instead plateaus or begins to fall. Peak Oil does not mean that oil production is over but it does mean that the era of increases in the rate of oil production is over.”

The North Sea is one of the world’s oil producing regions. In the figure above is shown the history of oil production for the North Sea. Production began in the early 1970s and in 1997 had reached a level of 6 million barrels per day (Mb/d). During the five following years to 2002 production fluctuated around the 6 Mb/d level before beginning to decline in 2003. Towards 2030, the oil company Preem estimates that production will approach 500,000 barrels per day. For the North Sea we saw Peak Oil from 1997 to 2002. We can show a similar picture for nation after nation and, since the entire world is a sum of its parts, the entire world must also show a maximum or plateau of oil production. I do not believe that the oil producers of the North Sea think that Peak Oil is a fantasy. One of the giant discoveries that have been reported in recent times is the field Johan Sverdrup in the North Sea. It is still unclear how large the field is but 0.8 to 1.8 billion barrels has been suggested. That is a similar magnitude of reserves to the oilfield Thunder Horse in the Gulf of Mexico for which production is 250,000 barrels per day. Johan Sverdrup may attain a similar rate of production but that will not change Peak Oil for the North Sea. It may make the rate of production decline in the North Sea a little less steep. The fact is that the Global Energy Systems research group in a research report from 2009 showed that, statistically, it is possible to find a giant field in the Norwegian part of the North Sea and we included this possibility when we calculated Norway’s future production. Compared with the yearly global consumption of 30 billion barrels, the possible one billion barrels of Johan Sverdrup is equivalent to approximately 12 days of consumption. In the IEA’s World Energy Outlook report of 2012 – WEO 2012 – the IEA writes that the average annual discovery of oil over the past 10 years has been 14 billion barrels per day, i.e. half of yearly consumption. That this rate of oil discovery will delay Peak Oil “very significantly” cannot be correct. How oil is formed during millions of years from sedimentary layers of plankton and algae is well known and described in text books. There is no new oil formation now. A group of Russian researchers has a theory that so called “abiotic” oil and natural gas can be formed. That hydrocarbons can be formed under extreme pressure has been demonstrated but there is no oil that has been found that has formed in this way (see Abiotic oil).

An answer to contributor “Klarsyn” from “Hakan_Svensson” makes a fitting conclusion to the above text. “If you believe in that then, oh dear, but everyone can, of course, have their own dreams! But despite everything I think that you should try to learn about how the Earth’s oil has been formed. It is really not the hocus pocus that you believe!”

Among those comments that are positive are those by “Mikael Olsson”, “nomis_99” and “b p”:

“Aleklett has never said that the oil will run out. He has said that it will become expensive since the increases in production capacity will decline. -Kjell Aleklett has never warned that oil will run out. He warns that we have reached the maximum rate of oil production. -If you take the time to read the first part then you might understand. – Where has Aleklett warned that the oil will run out? References please.”

Fig 10-4 Peak Oil production 2003 1000

References to what I have said can be found in a research report that Colin Campbell and I wrote ten years ago for the journal Energy and Minerals (see figure above). The calculations that were mainly made by Colin Campbell show a production plateau at 31 billion barrels per year (85 Mb/d) that begins around 2009 and continues until 2014. In our production calculations are included products that can be compared with what BP reports in its annual “Statistical Review of World Energy”. We did not include shale oil in the prognosis. According to BP, we reached a plateau of production of around 82 Mb/d in 2005 and we are still at that level. (For 2011 we have 83 Mb/d which is 82 Mb/d plus 1 Mb/d from shale oil.) The fact that we did not reach a production rate of 85 Mb/d but instead leveled off at a lower rate means that the plateau of production can continue for longer than originally estimated. Currently, we estimate a level of production in 2030 that is higher than our previous prognoses. It is mainly technological advances that have made the downslope following Peak Oil less steep. We are currently revising our calculations to better consider this factor.

“Kenneth” said, “Many of the commentators have had a good laugh at the article’s author and have chosen the same intelligent technique as the osterich. What they cannot see does not exist. They must realise that the lowest hanging fruit have already been picked.”

Reviewing some additional comments can assist our discussion of Peak Oil:

“Birger Jarls”: “The Focus article above by Professor Aleklett is quite confused. Help! The oil is running out. Yes, and if it does not then it will become too expensive and if that does not happen then the emissions will kill the planet! * Sigh * No, oil will not run out for a long time yet. The professor does not know when “Peak Oil” will occur and neither do I. But there is no danger professor since when the price goes up then it will begin to be worthwhile to produce other sources of transport fuel. For example, it is easy to produce diesel from coal. The German Nazis were good at that.”

“Pilfinken”: “Why witter on about the EU needing to reduce its oil imports when he asserts that Peak Oil will fix the problem? Within the EU there is no production of shale oil/gas! Keep up with developments. Only now is shale gas production commercially possible. The UK and Poland have enormous resources. The brakes there are the political left. Russia has as much or more than the USA. Fossil fuel from shale will mean an upswing for the world economy and for common energy consumers.”

“Magnus_dr”: “Estonia has already come far with shale oil and there it represents 95% of electricity production”

And a final contribution from “pellegringo”: “Furthermore it is always the size of the tap that matters, not the size of the tank. And even if there are gigantic quantities of oil remaining in the Earth the fact remains that global production is not increasing at the rate it should according to the prognoses of future production. So the risk of an oil shortage remains.”

It is usual for an article such as mine to attract more negative comments than positive and it is common that commentators state that the article’s author has not taken into account this or that. The quotes above that I have chosen mainly assert that there are alternative sources of fuel that I have not considered. Of course my research group has studied the alternatives but the limited space in the article meant that I could not give all the details. One of the reasons why I cite my own book is because the alterntives are discussed in it. In Chapter 10, the “Mitigation Wedge” we discuss all the issues that have been mentioned above. From 2010 until 2035 the increase in the rate of ”unconventional” oil production is calculated to be 9 million barrels per day (see the figure below). During the same period, the decline in production rate from the conventional oilfields that were in production in 2010 is estimated to be around 45 Mb/d. This means that at least 36 Mb/d must come from technological advances, fields that are not yet developed and new fields. If we consider the North Sea that had a peak rate of production of 6 Mb/d then 36 Mb/d is the same as six new North Seas.

fig 9-6 10000

A little more detail. Oil can be light or slow-flowing and another distinction we can make is whether or not it floats on water. The type of rock that contains the oil can be porous but the oil may be held so tightly within those pores that it cannot flow through the stone. At a conference in London that included the organisations that classify oil and oil resources/reserves they divided oil in to four categories: easy-flowing crude oil in porous formations, shale oil as easy flowing oil in tight formations, oil sands with tar-like oil in porous formations and Kerogen shale with tar-like oil in tight formations. Olle Qvennerstedt has done a very good illustration of this.

Different types of oil

Production of oil has been and still is entirely dominated by production of conventional crude oil. The IEA states that we experienced a maximal plateau of crude oil production from 2006 to 2008 at 70 Mb/d and this is equivalent to 85% of all oil production. Conventional crude oil production is now decreasing and the IEA estimates that it will be 65 Mb/d by 2035. Our calculations for 2035 show a lower production rate but the fact remains that we are in agreement with the IEA that Peak Oil for conventional crude oil has occurred.

Apart from Canada, oil sands exist principally in Venezuela’s Orinoco field. The geographical extent of the Orinoco field has been known for many years and Venezuela has now chosen to report the entire field as reserves. But it is incorrect to compare the size of this field with equivalent conventional crude oil fields. Despite the size of the Orinoco reserves the IEA calculates that production from them in 2035 will only be some millions of barrels per day. (Those analysing Peak Oil usually say that “the size of the tap for unconventional oil is much smaller than that for conventional oil”). There are also large reserves of kerogen shale and Estonia is the world’s largest producer of kerogen shale but its volume is, nevertheless, very small relative to that of crude oil production. It is quite correct that the Estonians use kerogen shale as fuel to heat water for electricity generation. Note that kerogen shale (also known as “oil shale”) is not the same as ”shale oil”.

Figure 4.6 drilling rigs

The figure above is from WEO 2012

We are now being told that shale oil is the resource that will, for the time being, shelve Peak Oil concerns. It is correct that the technology used to produce shale oil makes this activity economically profitable if the price is above $80 per barrel. In this light, it is interesting to study the number of active drilling rigs in the USA over time. Up until 2008 the number of rigs increased to 2000 but when the price of oil and natural gas dived to less than $40 per barrel in late 2008 over half of the rigs became inactive. Currently the price of natural gas in the USA is too low but shale oil production is still profitable. The fact that fewer rigs are currently drilling for gas means that gas production will fall in a few years and we can expect the price of natural gas then to rise. The 1,400 rigs that are currently active to produce approximately 1 Mb/d of shale oil would need to be quadrupled for the rate of production of shale oil to approach the 4 Mb/d that some believe is the upper limit. Every well costs $5 to $6 million dollars to drill and currently the costs of drilling similar wells in Europe is around $15 million. It was at the conference in London that the experts said that we cannot expect any significant future production of shale oil in the EU.

The production of liquid fuel from coal requires a lot of coal. Currently it is South Africa that is the leader in this. In our article, “A review on coal-to-liquid fuels and its coal consumption ( we have studied how much coal is needed for production of liquid fuel. A conversion rate that is representative of South Africa’s production is 1 barrel per metric ton of coal. In 2010 the USA produced 984 million metric tons of coal and, under similar conversion conditions this would produce 984 million barrels of oil or 2.7 Mb/d. The yearly decline in crude oil production from existing oilfields in production is 4 Mb/d. To scale up current coal-to-liquids production to 4 Mb/d would require a rate of coal that is 48% higher than all the coal production of the USA in 2010. Applying this form of analysis to the world’s largest producer of coal, China, we see that they produced 3235 million metric tons of coal in 2010 and this would give 8.9 Mb/d of oil production. This means that 4 Mb/d is equivalent to 45% of China’s 2010 coal production. Thus, coal-to-liquids technology can only make a marginal contribution to world oil production.

For the final discussion I will choose the following comments:
“Ohkatten”: “Yet another doomsday prophet!”
“Mickej”: “Yes, as said, it is people like Aleklett, politicians and other that make the price of oil rise…I wonder if these [people/organisations] are not paid by OPEC?”

“Sync99”: ”Peak Oil is a propaganda trick to hold the price of oil as high as possible. Oil limitations are another idiocy like economic austerity. One cannot force a horse to run faster by starving it. All this leads us to those who will profit most by it; the banking cabal and the oil companies.”
“Inger E(norah4you) Johansson”: ”If we want to reduce the use of oil in the EU drastically then we will need to use coal to a greater extent again. So it is not so simple as the learned gentleman would have us believe.”
”Tredje_omloppet”: ”Aleklett is correct. Oil will not run out like the gasoline in a car but it will become extremely expensive. The only solution is to commission a number of nuclear power plants. Then we can support ourselves by exporting electricity to Germany.”
“Ingvar_e”: ”I question what Aleklett really wants to achieve by his writing other than advertising for his book. From what I can see he is saying that only the EU must reduce its oil imports. A little sign [that others may also need to do this] is that Kina is investing in nuclear energy. What will the EU replace its oil use with? Or should the EU reduce its standard of living? What does Aleklett expect us to replace oil with if we are not to reduce our standard of living? Or does he want us to reduce our standard?”

Over the years there are several people who have called me a doomsday prophet. I have never said that reduced oil production will lead to catastophe. Those who have called me a doomsday prophet are often economists. The fact that they see reduced oil production as a cause of the end-of-days is an indirect support for the fact that oil is crucial to our economy.

During 2012 there have been a number of reports that have said we do not need to worry about Peak Oil. If one examines that affiliations of the people producing these reports one can see that all of them in one way or another are connected to the oil industry. Another observation that one can make is that the reports they have released have not gone through any scientific peer-review. OPEC is actively opposing the idea of Peak Oil. The reason is that Peak Oil diminishes the oil companies’ share market value. However, ASPO, the International Association for the Study of Peak Oil, is run without sponsorship and so is not beholden to any special interest group.

The challenge that we have before us is a problem with liquid fuels. Coal and nuclear energy are used for electricity production and the future holds many possibilities for producting electricity. Personally, I have nothing against nuclear energy.

I mentioned my book Peaking at Peak Oil at the end of the Focus article and, of course, an article such as this can function as advertising for the book. The reason that I wrote the book is that I wanted to try to explain in a simple way the quite complex issues that are at play when oil is produced. I put approximately an entire working year into writing the book with the purpose, primarily, to communicate knowledge.

Previously I mentioned that commentator “AWJE” wanted “to get an explanation of the logic behind the conclusions drawn in the article”. Let me try. Often I am criticised for not considering economic factors when I discuss Peak Oil. In the analysis that Douglas-Westwood did (see the Focus article) one can see the connection between oil production and the price of oil that a society can tolerate. I thought it was interesting that China has undergone a transformation that means that their economy today can function even if the oil price is high while the USA’s economy has developed in a signficantly worse fashion. For the EU the increased price of oil has meant that many member nations currently operate with less oil than would be optimal for their economies.

Peak Oil can be examined from other perspectives but the Focus article was an attempt to describe the problems that it is currently causing.

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