Tuesday, November 22, 2016

Peak Oil in a Fact-Free World: the New "Oil Bonanza" in West Texas



Sometimes, I have the feeling of living in a fact-free universe where the laws of physics hold only if you believe in them. (image)



So, the USGS comes out with a press release that the media immediately diffuse in terms of a great discovery: 20 billion barrels, somewhere in Texas in a place called "Wolfcamp".  Bloomberg multiplies the number by the current oil price and comes up with a title that reads: "A $900 billion Oil Treasure," for a piece that tells of "bonanza" and of "the gift that keeps on giving". USA today speaks of "The Largest Oil Deposit Ever Found in the US". And how about the comments? Just a few examples.


As our new President will do - DRILL BABY DRILL!!! Energy independence - that sure has a nice ring to it. Middle finger to Middle East arabs.
...
I remember in the late 70's when scientists said we would be running out of oil by the late 90's. I wonder where those scientists are working now? Climate change?
...
They are constantly finding more reserves. President Trump will open up more land and ocean for safe drilling. Something the Obama administration had no clue how to do..
 ...
but of course the Radical Left, determined to return all of western civilization to the hunter-gatherer society of 10,000 years ago will do all it can to prevent this once great nation from becoming energy dependent and permanently kicking the barbarian raghead arab oil nations out of this country.


Great fun, and all fact-free! But let's suppose, for once, that facts mattered. What should we say about the "Largest Oil Deposit Ever Found in the US"? One point is that nothing new was "found;" the Wolfcamp formation was well known and already being exploited. The USGS just made a new estimate; probably valid within the assumptions made; but it is just that: an estimate. It doesn't mean that these resources have been discovered (note that the USGS explicitly says "undiscovered.") So, what all this means is that, statistically, these resources should be there, but nobody can be completely sure and it wouldn't be the first time that these estimates turn out to be optimistic. (in this case, the round number "20" is more than a little suspicious).

But never mind that; let's assume that these 20 billion barrels are there for real. How does this amount stack up in comparison with the world's oil situation? Here are some data, taken from Bloomberg (not exactly a den of Cassandras).




Let's compare these data with the world's oil consumption that, according to "Index Mundi," is today a little more than 33 billion barrels per year. So, you see from the figure that, during the past decade at least, we have been consistently burning more oil than we could discover. Now, if there had been other major discoveries this year, they would have been trumpeted enough that we would know of them. So, adding the 20 billion barrels of the Wolfcamp formation to the meager total of 2016, probably, we still don't reach a total of 33 billion. In the end, all that we can say is that, for this year, oil discoveries were just a little less, rather than much less, than what the world has consumed. These would be the news, if facts mattered.

But, that's not even the point: the essence of depletion is not how much of it there is, it is how much it costs to extract it. Here, Arthur Berman notes that Bloomberg had calculated the value of this "treasure" at $900 billion as if "if the oil magically leaped out of the ground without the cost of drilling and completing wells; if there were no operating costs to produce it; if there were no taxes and no royalties." Then, Berman calculates how much it would cost to extract all this "bonanza" of oil and concludes that, at the current prices, it would result in a net loss of some $500 billion. 

So, aren't you happy to live in a fact-free world? You can keep thinking that it is enough to poke a few holes in the ground to see it gush out in never ending abundance because, as everyone knows, it is really "abiotic." Sure, and you can also walk on thin air, as Wile E. Coyote can do as long as he doesn't realize he does.








13 comments:

  1. You know, those comments are pretty depressing until you realize that there are whole armies of trolls paid by the oil industry to post comments under stories about oil depletion, climate change, pipeline fights, etc.

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    1. You know, Mary, I think paid trolls exist, but they are a minority. No, these guys (have to be males, for sure) really believe in what they write

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  2. Another great comment from Art Berman's article on "Forbes"

    And yet, it is a great discovery and perhaps proves my point that oil is created at a much more rapid rate than the evolutionists would have us believe. This has been created at least since the flood, so it is 5000 years old, not millions and I believe it can be created much more rapidly.

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  3. To say nothing of the tweet by the Governor of Texas, Greg Abbott

    "Texas just got about a trillion dollars richer: A $900 Billion Oil Treasure Lies Beneath West Texas."

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    1. Recently I met a petroleum geologist who had worked in Bakersfield CA for 20 years. When I discovered what company he worked for I asked what had happened with the Monterrey Shale field to revise the reserve estimate downward to a tenth of its original size. "The original estimate was based upon the structural characteristics of the area. Once we had drilled enough holes we determined that the oil just wasn't there."

      Even with "known unknowns" like Gahawar (that accounts for half of Saudi Arabia's production) it is very convenient to forget facts like rising water cut---and substitute Hopium or Trumpium. But the real world doesn't care what we believe.
      http://peakoilbarrel.com/closer-look-saudi-arabia/

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  4. Or this one: "Hey. Where are all those experts from 20 to 30 years ago that predicted we'd run out of oil by now? Oh yeah, man made global warming."

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    1. It's a good thing we have burned all of this CO2 into the atmosphere or else we might be having a mini ice age starting in the 1970's. Cold is tougher to deal with than heat or not-cooling. +1 on building up an industrial civilization, too. The trick will be to preserve it through the cold times coming after we can't afford to get the no-longer-easy&cheap fuels from the ground in sufficient quantity to sustain the slight warming effect it provides. Maybe, we'll be able to do local warming with thorium-burning reactors processed out of coal before liquifaction (synDiesel)?

      Human migration to better habitat from places that have become impossible always happens, regardless of housing costs at the new place or financial losses left at the old place. If it takes war, there will be war.

      pdxr13

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    2. And this message is proof that there is life on other planets.

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  5. Hello,

    From what I understood from the petroleum industry, when known reserved are re-evaluated, increased value of the reserve should not been placed on the date of the re-evaluation, but on the date of the first discovery. So this "discovery" would not be for 2016, but for sometimes in the past. I didn't found the date of the first discovery, but it could be in the 50's.

    Best regards,

    Etienne

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    1. That's true, too. But way too subtle for those people who are convinced that oil is abiotic and will gush out of the ground just by poking a little hole in it.

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  6. The trick is to throw yourself at the ground. And miss. (c HHTTG)

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  7. "So, what all this means is that, statistically, these resources should be there, but nobody can be completely sure and it wouldn't be the first time that these estimates turn out to be optimistic. (in this case, the round number "20" is more than a little suspicious)."

    As anyone who spends 10 minutes to read the USGS report can attest, the reported "20 Billion barrles" is a probabilistic estimate that has been rounded of to he closest integer (number). The USGS is a fact-based scientific organization that is not controlled by the oil industry. Their estimates are based on technically-recoverable oil / gas; and as they state, they are not evaluating the economics of the new evaluation. As a retired geologist who worked in the Williston Basin in the early 1980's and drilled through the oil-satuared Bakken Shale to deeper targets due to the lack of widely available horizontal drilling and hydraulic fracturing technologies, this report's findings on the Wolfcamp Shale seems to be entirely plausible.

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Who

Ugo Bardi is a member of the Club of Rome and the author of "Extracted: how the quest for mineral resources is plundering the Planet" (Chelsea Green 2014). His most recent book is "The Seneca Effect" to be published by Springer in mid 2017