Tuesday, April 3, 2012

Oil: The Hubbert Curve - Cheating on It

Here are some interesting numbers that will predicate the rest of this discussion:

Total World Oil Consumption (2010): 32 Billion Barrels/year

Estimated World Total Hydrocarbon Reserves (excluding coal):
World Oil Reserves: 2.6 trillion Barrels
World Gas Reserves: 15,400 TCF (2.567 Trillion Barrels of Oil Equivalent)
World Natural Gas Liquids: 324 Billion Barrels.
World Heavy Oil and Tar Sand Reserves: 1.2 Trillion Barrels
World Oil Shale Reserves: 2.8 - 3.3 trillion barrels

For reference:
US's proven oil reserves: 19.1 Billion Barrels. That's not much, is it?
Venezuela's proven oil reserves: 211 Billion Barrels. That's more...
Venezuela's Orinoco Heavy Oil Belt: 513 Billion Barrels... the sludgy stuff that requires steam-and-fire-flooding.

There are several superficial conclusions that one might draw from these numbers. If you knew nothing else about it, at current consumption of world reserves of oil, the world can keep on truckin' for 81 years before it's all gone. If we could convert all our cars and trucks to natural gas, we could keep on truckin' for another 80 years. Add in heavy crude and tar-sands and you get another 38 years of motive power. If you frack the entire world's oil shale - maybe another 100 years.

Well, we don't have to worry about running out of oil then, right?


In the previous chapter I used the expression "there ain't no such thing as a free lunch" - twice. Most adults understand that if someone says that something is "free" - well, then, they are listening to a liar. Or at least someone who is not an adult.

Remember the Macondo 242 Well/Deepwater Horizon debacle of the Spring and Summer of 2010? "Just" 11 men died, and nearly five million barrels of oil made its way into the Gulf of Mexico. Some of this stuff was natural gas and other aromatics and was dissolved away. Some if it was burned off the surface. Some of it ruined the Louisiana, Mississippi, Alabama, and Florida coastlines. Some of it biodegraded... but at least 38% of it drifted off into the Gulf Loop Current. And no one really knows where it went.

There is a huge oil platform in the North Sea east of Scotland, named the Ensign. One of its wells drilled down to about 5,400 meters depth into a "high temperature-high pressure" gas reservoir. We are talking about pressures over 1,000 times atmospheric pressure, and temperatures in the 200+ degrees Centigrade range (a bake-bread temperature in your oven). There was a shallower, less productive horizon that they were not particularly interested in, at around 4,000 meters depth - so they cased it off and cemented the casing in place.

"Cement and Forget" is an interesting expression, but in this case there is apparently some active tectonic movement going on. That's "long" for ACTIVE FAULT. Workers on this platform a few weeks ago heard the gas-warning siren, and remembering the Macondo disaster, they started evacuating within minutes. As I write this, no one has died - and they have discovered that the gas is coming up through the annulus of the well, not from some crack on the seafloor. This means that the casing and cement job have failed. If there is a spark, there will be an explosion. How big? A small leak into your house could blow your house to matchsticks. THIS leak is tens of thousands of times greater - maybe hundreds of thousands of times. More methane, more atmospheric oxygen by orders of magnitude. Some people have called this sort of an explosion the "Poor Man's Atom Bomb" (the US military has even developed a fuel-air or "Thermobaric" bomb like this). In other words, we're talking about a huge explosion.  How do you deal with a gas-leak failure 4,000 meters below you in deep hot rock? You guessed it: with a lot of money. And very, very gingerly.

And that won't stop the gas, by the way.


By that I mean ALL of it is fraught with problems. You know the rule: if it SOUNDS too good to be true, than it probably ISN'T true. There may be 800 Billion Barrels of oil tied up in oil shale in the United states - but you'd have to tear down a quarter of the Rocky Mountains and large chunks of Indiana, Ohio, Kentucky, and Tennessee to get at it. "There ain't no such thing as a free lunch" in this case means that there is a HUGE amount of energy required to get at and process this oily rock. I won't even begin to get into the environmental problems this will start. Denver is already a pretty dry place, getting most of its water from the west side of the Rockies. Imagine losing most of that. The amount of earth-moving alone will not be cheap... in fact the real cost may be equivalent to what is gained - so it becomes a net "bust." That's the up-front way of saying that there may be oil there, but it may not be economic.

What about the Athabascan Oil Sands in Alberta, Canada? Estimates suggest that there may be about 170 Billion Barrels of recoverable oil there - but you'll have to strip mine about a quarter of that prairie province to get at it. All the tailings will become giant piles of toxic waste, polluting rivers and groundwater in the region forever afterwards. Canadian companies have already proven that this vast resource, at least, is economic... but there is an open question about whether the real long-term costs have been factored in - yet. We're talking about polluted water, cancer, huge dust-bowl conditions down the line. That will translate into real money eventually.

In both these cases - oil shale and tar sands - an incredible amount of water is needed to process the deposits. There goes all the water in that region that humans might need for agriculture... and drinking. The Oil Sands also have startlingly high amounts of nickel and vanadium in that dark sludge, which are toxic at the levels that would be released, so they have to be captured and sequestered. Yet more money.

Do you wonder, looking at the numbers at the beginning of the chapter above, why we are still importing massive amounts of Middle Eastern oil? We do so for the simple reason that it costs less and we only have to deal with the carbon footprint after-effects. Well, we also have to care about the Middle East - did I forget to mention that?

In his book "The Race For What's Left", author Michael Klare says "I'm less concerned about the absolute disappearance of fossil fuels than about the environmental consequences of pursuing what's left." His one-liner: There will be oil, but it will be expensive, dirty, and dangerous. 

The Environmental Protection Agency published a report not long ago, a report describing all the alternative energy possibilities that we may have for the future. These include nuclear power (does anyone remember the names "Chernobyl" or "Fukushima Dai-Ichi"?). There is also hydro and wind power, but these tend to be feast-or-famine things that either don't produce the power when you need it - or they produce so much that the wind turbines have to be tethered to keep from damaging the electric grid. The one item that the report listed as the cheapest alternative? Conservation. It's the only alternative energy source without a terrible and costly side effect.

Think about it: if your car's mileage doubles, that's the same as cutting the price of gas in half.

I'm not advocating ONLY conservation, and I also don't believe we can switch off Middle Eastern oil overnight. However, we must go into this with our eyes open or we will pay a dear price. ALL the EDGE sources of hydrocarbons come at multiplicative costs in terms of power just to even get it in the first place. You've also probably noticed that down-range environmental costs are not something that the companies providing these energy sources worry a lot about. Heck, THEY don't live there.

If something goes wrong with these sources, it tends to go very badly wrong, and Macondo is just the freshest example... but won't be the last. The energy companies employ brilliant engineers. By drilling in ultra-deep environments in the Gulf, and by fracking and chasing unconventional sources of fossil fuels on land, there has been a net change in the past few years. For the first time since the 1950's the United States is actually - realistically - looking at the possibility of becoming energy independent, at least for awhile. But we will have to drill and frack like chickens for it.

So... that means the price of oil will go down, right?  It would if only the United States occupied this planet.  But India and China have well over a billion citizens each, and each country's economy is advancing at 3% - 8% per year. That translates into a huge and probably permanently growing demand for fossil fuels. The people we used to see pictures of riding bicycles - now want instead to drive cars and get chubby like the Americans. Increasing demand requires equally ever-increasing resources for the price to stay low. If the resources can't keep up, or the oil comes from an EDGE source, then the cost will climb and climb. The price of oil this morning when I got to work was "down" to $103/barrel.

The idea of energy security is fine - but it doesn't have much meaning in a global economy.

No, we are not running out of oil. It just seems like it.


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