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Oil Will Be Cheap And Plentiful For At Least 100 Years


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Thanks Raj

If 5-8bn increases Brazils reserves by 50% then GO's claim of 33bn in 2008 is horseshyte

No probs. Thought I'd look it up, as the link provided by Game Over contained the following unconvincing phrases:-

may have discovered a huge petroleum field that could contain reserves large as 33 billion barrels
'non-official, non-confirmed sources'
cautioned that his information on the field off the coast of Rio de Janeiro is unofficial and needs to be confirmed
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No probs. Thought I'd look it up, as the link provided by Game Over contained the following unconvincing phrases:-

I think you are actually confusing the 2005 discovery with the much larger 2008 discovery

Anyway, turning in now.

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I think you are actually confusing the 2005 discovery with the much larger 2008 discovery

Anyway, turning in now.

I don't think so. Here's an article released today :-

http://in.reuters.com/article/oilRpt/idINN0424708520090604

SAO PAULO, June 4 (Reuters) - Brazil's state-run oil company Petrobras (PETR4.SA: Quote, Profile, Research)(PBR.N: Quote, Profile, Research) said on Thursday a third well in the Tupi area has confirmed estimates of a potential of between 5 billion and 8 billion barrels of recoverable light oil and natural gas in the field, in the subsalt cluster.
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Do you honestly think that in those 60 - 100 years 8-10 billion people will not have managed to develop commercial nuclear fusion?

No chance due to basic economics and science.

The science simply says fusion is more difficult than fission and the economics says that fission fuel is dirt cheap making up about 10% of the cost of nuclear power.

With those two facts you can determine that fusion will not produce power commercially unless the price of nuclear fuel increases some 20x which is highly unlikely (and that is assuming that building a fusion reactor is only 3x as expensive as a fission reactor. It may be 10x or 100x more expensive and it will never be cheaper than a fission reactor)

However if they are subsidised like wind farms then there is a possibility. But you can do anything with enough subsidies so that doesn't count.

But you do not need to have fusion to save mankind.

We have potentially 15TW of untapped relatively cheap energy and 5TW of easy efficiency gains. That is 20TW of power which is equal to about 300 million barrels of oil per day.

After that we have a more expensive but near limitless energy in the form of solar panels. More than we would ever need and it will last for billions of years.

The only way fusion will have a commercial chance is if they can get the temperatures down a lot. No way to currently do that even in theory. Some sort of nuclear “catalyst†might work.

Some whole new filed of science might open the door. But right now, it task seems impossible (not due to physics but due to economics. Unless they can build the reactor cheaper than a normal nuclear reactor)

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No chance due to basic economics and science.

The science simply says fusion is more difficult than fission and the economics says that fission fuel is dirt cheap making up about 10% of the cost of nuclear power.

With those two facts you can determine that fusion will not produce power commercially unless the price of nuclear fuel increases some 20x which is highly unlikely (and that is assuming that building a fusion reactor is only 3x as expensive as a fission reactor. It may be 10x or 100x more expensive and it will never be cheaper than a fission reactor)

However if they are subsidised like wind farms then there is a possibility. But you can do anything with enough subsidies so that doesn't count.

But you do not need to have fusion to save mankind.

We have potentially 15TW of untapped relatively cheap energy and 5TW of easy efficiency gains. That is 20TW of power which is equal to about 300 million barrels of oil per day.

After that we have a more expensive but near limitless energy in the form of solar panels. More than we would ever need and it will last for billions of years.

The only way fusion will have a commercial chance is if they can get the temperatures down a lot. No way to currently do that even in theory. Some sort of nuclear “catalyst†might work.

Some whole new filed of science might open the door. But right now, it task seems impossible (not due to physics but due to economics. Unless they can build the reactor cheaper than a normal nuclear reactor)

I agree that fusion will not 'take off' if fuel for fission is readily available

But people here keep telling me that fuel for fission reactors is in very short supply

I thought that fast breeder reactors meant that the fuel could be recycled 20 times or so

But apparently nuclear fission is not economically viable

Makes you wonder why France have gone down this route and China are also thinking of going nuclear, although they have loads of cheap coal.

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i will just make you aware of this organisation who have just switched on the biggest laser system in the world with some interesting objectives

https://lasers.llnl.gov/

Thanks for that

Yes, I am aware of these developments

Everyone here is assuming that there is only one route to nuclear fusion, but the ultimate solution will probably not be based on the current approach.

Don't forget, internal combustion engines are powered by thousands of rapid 'explosions', there is no reason why a fusion powered generator could not operate on the principle of tiny pellets of fuel injected into a combustion chamber then 'ignited' by high power lasers. This would solve plasma containment issues and combustion temperature could be more easily controlled by some kind of cooling system similar to that used in rocket motors.

The thing is, as the science is proven, the problem is mostly an engineering one and problems like this can be solved more or less rapidly depending on the level of resources allocated to tackling the problem.

:)

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This is quite funny. I thought you were being facetious. Thirty seconds to discover that you don't actually know what peak oil is. Peak oil has nothing to do with the quantity of oil left. A peak oilist does not say we are going to run out of oil. The very fact that you put peak oil down to running out of oil shows that you don't understand the concept.

Peak oil is when daily production cannot meet daily demand...and this is a geological problem, along with an economic problem. Yes there is lots of oil, however producing enough in one day is the real problem.

The oil in the tar sands of Canada you mention will never solve the problem. Research has shown from credible resources that maximum oil production by 2020 in the tar sands will only reach 4mbd...which is not going to solve the problem. Most of the elephant fields are in deep decline.

I suggest you read up or speak to some people in the industry who actually do have a much firmer grasp of the concept that 30 seconds of googling an article from the WSJ...

Here is a good start...Oildrum production forecasts

The most knowledgebale person I know is Matt Simmons... Twilight in the Dessert

I passed the Oildrum link on and thought you might find the response of interest:

I’ve read some of the discussions. There are two somewhat separate issues:

1) have we reached peak oil in 2008 and

2) what is the ultimate recoverable reserves or what is sometimes called resources (not oil in place).

I think that we are near peak oil. Whether we reached it in July 2008 is somewhat irrelevant. Production has been around 73-74 mb/d from 2004 to 2008, during this time the oil price rose from 40 to 150 $/b. The spurt in prices for 2007-2008 is somewhat artificial (speculation, civil wars/unrest, hurricanes). I did some work last year in West Africa when oil prices were moving up sky high. I talked to JG then to see what he thought about the intrinsic price of oil. I told him that a price of 65-75 $/b should be in the ball park. JG does some work for the the RBS and said that this was spot on 65 $/b as their mid price with a floor of in the mid 50's. (Banks use historically a low oil price when they lend money for oil/gas investments.) This checks very well with ace's article of 19 may.

The main structural reasons for the underlying oil price increases since 2002 are:

1) Less spare production capacity: historically there was a surplus production capacity of about 3-5 mb/d. This has dwindled to about 1 mb/d. I mean here capacity which is deliberately shut in and which can be turned on tomorrow.

2) Demand from China and to a lesser degree India.

3) Decline in the value of the dollar versus other currencies. It may be worthwhile to plot the oil price against a more fundamental value such as gold or even better a commodity basket (gold, iron, wheat etc.).

4) The rate of discovery of new reserves lower than consumption. An interesting web site is the annual BP statistical review.

The time of cheap oil is over (oil price had just hit 50 $/b as far as I remember). The principal issue is not the reserves of oil (there are vast amounts, mainly in the form of "difficult" oil but also large amounts of easy oil depending on the price one is willing to pay and more recently the terms the host governments impose) but the rate at which they can be extracted and more importantly the climate effect.

As an example of the effect of host government terms and environment (deep water, remote location, ice-bergs), there was a conference last year which showed that to develop a 25 mmb field in the UK North Sea is more profitable than developing a 250 (or maybe even a 500) mmb field in offshore West Africa (not sure of the numbers exactly but they are in the ball park).

To comment further on ace's analysis. He uses exponential decline. This is notoriously pessimistic. It is also the reason why it is widely used to estimate URR (Ultimate Recoverable Reserves) for banking purposes and reserves audits. But as was pointed out rightly so it is called decline analysis, i.e. the fields are on decline. We can reduce or even arrest

the decline (temporarily) by infill drilling, horizontal wells, well stimulation, Enhanced oil recovery using CO2 or N2 injection etc. but there is no doubt that a lot of the big discoveries of the 50's to 70's are declining. If one were to make a massive investment one could produce more for a while but it would be uneconomic to do so even if it were technically feasible (construction yard space, lead time for manufacture etc.). For instance when I looked at West Africa last year there was a scramble for rigs and you could not get one for the love of money. They were willing to pay over 1$million a day but could not get a rig!

Somebody last year send me an e-mail that they had discovered a billion barrel (reserves) field offshore Guinea and that therefore the scare of "no more oil" was unjustified. It sobered him up when I answered that the discovery had just delayed "doomsday" by just about 4 months at present consumption rates.

The main point is that the current rate of new discoveries is (probably) less than the annual extraction rate. Have a look at the BP website and go to their statistical review. It has a graph as to how many years are left at current consumption rates. The last time I looked at it (2004) there was about 40 years left but indications were that it was declining slightly.

The other thing I noticed was the attention paid to King Hubbert's Linearization analysis, which he published I believe in 1956 which predicted that peak oil in the US would occur around 1970. King Hubbert was an employee of Shell Oil in the US and a very clever engineer. A problem with the analysis is that it is based on historical data (so is decline analysis) and that the effect of new technology is difficult to incorporate. New technology can improve production rates and/or recovery.

Take horizontal wells for instance. The technology was pioneered by Elf in the 80's. It has since then found widescale application. As a result a whole host of reservoirs have now been developed which were previously considered uneconomic. A good example is the Troll field in Norway. The field is mainly a gas field but there is 10-20m oil rim. As the area is very large this represents a lot of oil in place but if you stick a vertical well in it production will quickly turn to gas (or water) unless you produce at a ridiculously low rate. With horizontal wells it was possible to develop the field as an oil reservoir first after which they will produce the gas. The Campos basin in Brazil and offshore West Africa depends on horizontal/high angle well technology.

I believe we are probably close or at "peak oil" but it is maybe not as important as is being made out. There are a lot of oil reserves left but the problem is extracting at a faster rate then we do already. What makes oil so difficult to forecast is that it is not only used as an energy source but for a whole host of other things as well. It is a waste to use oil for electricity generation (or for that matter for transport but we are someway off to find a suitable alternative). If you cut the energy role of oil, demand will decrease and reserves will last a lot longer.

As an aside, I found the comments on sulfur in the blog interesting. Had no idea that sulpheric acid is such an important chemical.

All the above is a bit of waffle without a firm conclusion. Will think a bit more about it but the main conclusion we should possibly draw is that the current crisis should provide an opportunity to do things differently and to aim for sustainment instead of growth. Pricing goods at "total recycle" cost would be a good start and the economy will adjust.

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What exactly do you think the green revolution was?

Something which didnt happen to China?

Such analysis raises serious questions about the number of hungry people in the world in 1970 versus 1990, spanning the two decades of major Green Revolution advances. At first glance, it looks as though great progress was made, with food production up and hunger down. The total food available per person in the world rose by 11% over those two decades, while the estimated number of hungry people fell from 942 million to 786 million, a 16% drop. This was apparent progress, for which those behind the Green Revolution were understandably happy to take the credit.

But these figures merit a closer look. If you eliminate China from the analysis, the number of hungry people in the rest of the world actually increased by more than 11%, from 536 to 597 million. In South America, for example, while per capita food supplies rose almost 8%, the number of hungry people also went up, by 19%. In south Asia, there was 9% more food per person by 1990, but there were also 9% more hungry people. Nor was it increased population that made for more hungry people. The total food available per person actually increased. What made possible greater hunger was the failure to address unequal access to food and food-producing resources.

The remarkable difference in China, where the number of hungry dropped from 406 million to 189 million, almost begs the question: which has been more effective at reducing hunger-the Green Revolution or the Chinese Revolution, where broad-based changes in access to land paved the way for rising living standards?

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Energy and in particular oil underpins our 6-7bn souls on this planet.

It is used to:

plough

harvest

make fertilisers

make pesticides

dry

store

transport

process

pack

refrigerate

retail

research & develop

FOOD........

In pictures - What the world eats

You are generalising for a world where 1 in 3 live on less than $2 a day. The primary energy source for 1 in 7 is wood. If you earn more than $7 a day you are in the worlds top 20%. Europe and the US, with 15% of the worlds population, account for half of global oil demand. The vast majority, 70%, is used for transport. In the Uk almost 75% of all journeys made are less than 5 miles long and more than two thirds of all 1-5 mile journeys are made by car.

26111501.jpg

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