Monday, April 2, 2012

Oil: The Hubbert Curve - Stretching it Out

As gas prices creep up to and past $4/gallon in the United States (it's happened before, it will happen again) we start seeing a lot of questions about the oil supply, with questions about why the price is going up. There is not room enough to adequately describe the several processes that control the price of gas, but there are some relatively straight-forward principles involved.

Is the world running out of oil?
Mark M.

The answer is yes and no. I thought you'd like that.

Yes, the world is running out of "sweet" crude - the easy-to-get stuff, the "low-hanging fruit" of the hydrocarbon world.

No, there is plenty of oil still left out there - surprisingly huge amounts, in fact - but it's the hard-to-get stuff.  It is more difficult to get (and therefore more expensive) and a lot more dangerous to get (and therefore more expensive) to extract... but there is a LOT out there.  The April 9, 2012 issue of Time Magazine gives a good summary of why there is lots of new oil coming online, but gas prices will still inevitably go up. However, even this article is not complete. Unfortunately, you also need a subscription to even link to it.

Sigh. These journalists - always feeling like they need to feed their families! The GALL.

In 1956, a US Geological Survey geologist named M. King Hubbert published a paper describing the life history of an oil play. From discovery to full exploitation, the production of a given oil field slowly ramps up, reaches a peak... and then declines in a roughly symmetric curve as you draw most of the good stuff out. If you put together a production curve for all the major fields in the United States, it makes sense that they would all, in aggregate, behave in a similar fashion: US production would ramp up, reach a peak, and then peter out. Hubbert was the first to reason this out, and his prediction in the late 1950's has held remarkably well ever since then: it's called the Hubbert Curve:

This curve has proven remarkably accurate - certainly in shape. It was consistently optimistic, in fact, as US production seems to have always lagged behind the Hubbert prediction. 

At this point it is tempting to either get depressed - or buy stocks in alternative energy sources. However, there were several things that this famous curve didn't factor in, and those things include basic supply-and-demand laws - basic economics - and the incredible ingenuity of the human species. It doesn't take a lot of smart guys, either, if there is money driving the train. Ah, Capitalism. If you have 7 billion people, it just takes a few with the vision and the determination to Find a Way. In most cases (the notable exception being Wall Street in the 'Oughts), everyone benefits. 

For this chapter, I will only discuss a thing called enhancing production - stretching that Hubbert curve out. I worked as a young man for Getty Oil Company in Bakersfield, California. Getty (formerly Tidewater Oil Company) had been sitting on vast stretches of the Kern Field since it had first been exploited in the First World War era. By the time I went to work for them, the area called Oildale was an ecological ruin: the ground everywhere was reddish brown, and there was sparse vegetation. Early wells in the '20's and '30's would "blow out" as the drill reached the producing horizon (which was quite shallow, ranging from just 500 - 900 feet) - the field was found by following natural seeps decades before geophysical technology was developed. The Roustabouts - the guys who worked the wooden derricks at the time - would rush to build a dam to save at least some of the Black Gold. The Kern field by that time was well past the maximum production point - the overlying ground pressure that had squeezed out the low-viscosity stuff, and no longer squeezed anything. Even pumps were producing ever-dwindling results, sometimes down to a barrel or two a day. Since the pumps ran on diesel fuel, it quickly became uneconomic to keep these running, and large parts of the field had already been shut down by the time I arrived.

But several brilliant geologists did some core-drilling, initially to see if there were places where they could put better pumps. They were astounded to learn that the "nearly dead" Kern Field had produced only about 15% of its entire contents since 1915!  The stuff that remained in the ground - and showed up in those cores as sandy tar - was too viscous to work its way out. It was too "gooey" for the straining pumps to move efficiently.  Today we call this Heavy Crude. Some equally brilliant engineers figured out that if you could heat the stuff, the viscosity would drop, and it would flow much more easily. 

Two problems with this: 
  1. ya have to somehow heat it up, and then 
  2. ya somehow have to keep it warm or it will clog your pipes. 

There were initially three ways to move the heavy crude sludge to the surface: water floodsteam flood and fire flood

With water flood (assuming there was SOME viscosity left in the producing horizon's oil) is a push-pull operation. You simply do just that: you flood a chosen well with water, and drive the oil out to other wells that would be pumping furiously to help pull the oil. This has been used in a failing field over near Taft, California.

With steam flood, the engineers built huge steam generators in several locations around the Kern Field. These things were monstrous: they looked like huge silver cans on their sides - and the size of a bus. The engineers would heat water to 500 degrees F, and pump it at 500 psi down the production pipes for 5 days. They would then let it "stew and cook" for two days, then would un-cap those same production pipes and let them blow off steam for several days. THEN they would start the pumps going again. For a long time the once-abandoned production wells would easily produce 50 - 300 barrels a day. 

With fire flood, you would drill a circle of wells around a central well. In the central well, you would ignite a fire at the producing horizon - then push air down into this well at phenomenal rates, up to 900 cubit feet per minute. The heat and the pressure would "loosen up" the Heavy Crude around that starter well, and drive it towards the surrounding periphery. One immediate problem: the producing horizon was never quite uniform, which meant that the fire reached one ring-well before the others. To keep this from blowing out explosively, the engineers put thermocouples down each of the peripheral wells; when one got too hot, they would shut down and cap that well. 

I've seen drill core from these Kern Field wells before and after a fire flood passed through them: beforehand the cores looked like cylinders of black, sandy tar. Afterwards, the cores looked like solid white beach sand!


I said that there was a separate problem, and my first introduction was impressive. An engineer at a fire flood operation gave us a tour of the field. First, he opened a spigot on a pipe and out burbled a tan-colored (and smelly) goop into a bucket. We watched it for a moment, and he led us away to see the huge fans used to drive the air down the central well to keep the combustion going. After an hour or two, he steered us back to the bucket. He asked me to lift it. With difficulty I did. "Turn it over," he said. Gingerly, using gloves because it was still quite hot, I turned it over. 

And nothing poured out. That tan goop had turned solid well before it had dropped back to room temperature.

So what do you do about this? It turns out that about the only thing you can do - besides adding some very expensive chemicals - is to make a slurry of this stuff. Mix it with sweet crude from a nearby field into a solid-liquid slurry, and it would move down the pipeline to a refinery without clogging that pipeline. A slurry is like that sweet Japanese drink with liquid surrounding little balls of semi-solid tapioca. You can easily get it through the straw - but not if the tapioca settles on the bottom!

As you might expect, "cracking" this heavy-crude-light-crude slurry was a lot more complicated than cracking the sweet crude into diesel and gasoline. So... this oil was technically accessible, but more expensive to turn into gasoline.

There just aint no such thing as a free lunch. 


There is a newer, more controversial technology that I've already written about, called Fracking. This is another way to get certain "tight" rock formations - rocks like dark, carbon-rich shale formed in an ancient swamp - to surrender some of that carbon. The problem with "tight" rock is that it has very low porosity, so the oil, while abundant, cannot move around or escape it. Think of trying to squeeze water out of a towel... then think of trying to squeeze water out of a piece of leather.  It just won't get out...

Unless you shatter it. And that ain't no free lunch, either.

The next part of this explanation will address yet another example of human ingenuity: It's titled "The Hubbert Curve - Cheating on It."


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