Oil Crisis

[benjamin]

http://news.bbc.co.uk/1/hi/business/4649580.stm

[Badger]

Quick, get some buy to lets there!

[Gtr London FTB]

Yep, as oil prices rise, more will come on tap. When is that Peak Oil again? 2250? 2300? lol

[benjamin]

thinking more about this - they wouldn't do this if they expected oil to drop in prices, thus making it uneconomic to extract. further proof (if ever it was needed) of permanently high oil costs.

[dog]

But this is wilderness: haunt of the bear and the buffalo and the caribou and the moose. The oil companies are promising to restore the land to what it looked like before, shifting back the washed sand minus oil of course, covering it with muskeg, and replanting the scraggy trees.

Environmentalists (and the native First Nation people) are not so sure that virgin wilderness can really be recreated; the jury is still out.

The environmentalists whinge when you dump oil on their beaches and then they moan when people remove the oil from the oil sands. What do we have to do to please them?

It has just occurred to me that with global warming, the oil sands will become a big pollution problem since warmer weather will reduce the viscosity of the oil and increase its vapour pressure (which will cause it to spread). If you care about the environment start using more petrol.

[algor]

The environmentalists whinge when you dump oil on their beaches and then they moan when people remove the oil from the oil sands. What do we have to do to please them?

It has just occurred to me that with global warming, the oil sands will become a big pollution problem since warmer weather will reduce the viscosity of the oil and increase its vapour pressure (which will cause it to spread). If you care about the environment start using more petrol.

Reminded me of this from a while ago.

http://www.theonion.com/content/node/28362

[jimmy]

EROEI (Energy Returned on Energy Invested)

For this type of "oil" it is ridiculously low

A couple of things:

1) You need to use conventional oil to power the machines that extract and convert the oil.

2) This is not easy "oil" to convert - again it takes energy to extract

More info here... The fact they are having to extract this stuff pretty much shows that we are reaching crisis point...

Tar Sands and Peak Oil

As you might expect the earliest discoveries of oil and coal were the easiest to get and thus yielded the highest net energy. Before 1940 the net energy for oil was greater than 100 to 1, that is 100 units of energy yielded for every 1 unit expended. Since then it's declined to around 20 to 1 for current production and 8 to 1 for new discoveries. The same is true of coal though the ratios differ.

When oil optimists point to the Canadian oil sands and say there is more oil there than in all of the Middle East, what they don't tell you is this. First, as I mentioned in Do high oil prices foreshadow a deeper crisis?, no resource can ever be economically extracted at 100 percent rates. It's not unusual for oil fields to yield only 30 to 40 percent of their total oil before it costs more to extract the oil than it's worth. There's every reason to believe that extraction rates for the oil sands will be no better.

Second, it takes a lot of energy to separate the oil film from the sand. Lots of hot water is involved. That takes a lot of energy. Third, the water has to come from somewhere and pumping it takes energy. (The oily waste water is pumped into vast lagoons for disposal, but that is another issue.) Fourth, and very important, the product produced up to this point isn't conventional oil. The residue left from this process has to have hydrogen added to it before it becomes suitable for use. Where does the hydrogen come from? Much of it comes from natural gas another finite resource the supply of which may very well be peaking in North America and may peak worldwide sometime before 2050.

The bottom line: It takes something like the equivalent of two barrels of oil in energy to make three barrels of conventional oil from oil sands. The technology will surely improve. But, it is unlikely to ever move from 1.5 to 1 to the 20 to 1 ratios we're getting from old production. And, as the cost of all conventional energy sources rises, so will the cost of extracting oil from oil sands.

This doesn't mean that oil from oil sands won't be useful. Many who say a peak in world oil production is imminent believe that such sources of oil will prevent an abrupt falloff of production on the other side of the peak. But, oil sands and other nonconventional sources of oil will probably not do anything to delay the peak if it is nearby, say, within the next 10 to 15 years.

[dog]

Reminded me of this from a while ago.

http://www.theonion.com/content/node/28362

Very funny and very well written.

[Time to raise the rents.]

Anyone who was making comments about oil, but didn't know Canada had 4 times the reserves of Saudi Arabia, is obviously feeling a little foolish now.....

[malco]

The oil crisis is still on and will soon accelerate.

It's well enough accepted that the tar sands will be a very slow development. They are relevant to Canada and will greatly impact the standard of living and security of that country (if they are not invaded by the US). The most optimistic figures I have seen for production suggest about 3 Mnb/d by 2020. That is less than 4% of global consumption today, let alone what it would be with economic growth throughout the world.

The latest news from the Middle East is rather bad, with the news that Kuwait's oil reserves are actully only half what they were officially supposed to be. This reduces global reserves by 5%, and could be just the beginning of a string of admissions from other ME countries that their oil reserves have been inflated. See today's energybulletin.net.

For a more disturbing picture of the crisis that we are now in, I suggest you view this global production curve developed by Stuart Staniford:

http://www.theoildrum.com/story/2005/12/22/41839/374#more

The actual reality is that global is rolling over the top now, even while the price is steadily rising. The implications of this require little elaboration.

[OnlyMe]

Anyone who was making comments about oil, but didn't know Canada had 4 times the reserves of Saudi Arabia, is obviously feeling a little foolish now.....

The clue is in the wording, it isn't oil sands it is tar sands.

[Van]

A lot of people may disagree with me, but here is my view:

Oil is being propelled on hype more than fundamentals. It may not be at bubble proportions yet, but it's heading that way, and fast. If you look at the advfn boards, 90% of the interest is in oilies and miners. Oil stories dominate the news.

It amazes me (well, not really) that oil went up 50% last year and people are still confident that it's going to keep on going up parabolically at that sort of rate, whereas the FTSE went up 17% and people are saying it's gone too far and are terrified that it's going to collapse and wipe out their hard earned gains.

Let's get some perspective here. If oil rises at the same rate as 2004 and 2005, we're going to see $100pb this year, and $150 in 2007 - that is just not going to happen. Super-cycles notwithstanding, all bull markets take a breather now and again, and in my view we are going to see a mini collapse back under $50 before we see a recovery and new highs.

Edited January 26, 2006 by Van

[Levy process]

Anyone who was making comments about oil, but didn't know Canada had 4 times the reserves of Saudi Arabia, is obviously feeling a little foolish now.....

Don't dum down the issue here. If you know anything about the oil issue, you know that Canada has much LESS oil than Saudi Arabia, if you are talking about oil reserves of the types that are currently exploited today i.e. the type of rich oil reserves that allow extraction to be economically viable at the price per barrel seen before last year's rises.

If you include these much more expensive-to-extract types of reserve, then the reserve figures obviously change. But of course these types of reserve only become "exploitable" when prices are high. So although they increase the time humanity can go on using oil by expanding the amount, they don't generally allow the price to recover - only to stop rising quite as fast.

This can't be a mechanism for allowing prices to drop much, beacuse if they do the reserves cannot be exploited economically - i.e. it again costs more to produce than to sell.

So, forgive me, but anyone like YOU who thought that Canada had 4 times the reserves of Saudi Arabia in the conventional sense of oil reserves and low cost oil should be feeling a little foolish now...

[?...!]

There’s loads of oil that will never be retrieved.

One in ten wells finds a retrievable source.

Would you pay for ten oil wells to look for a pocket of 100,000 barrels?

Even if you could operate a well for $1 million.

100,000 barrels ~ $ 6.5 million revenue (@ $65/barrel), no you would not.

You would still lose $3.5 million.

If you could operate a well at $1 million, the price of oil would have to be $100 / barrel. Just to break even on a 100,000 barrel deposit.

AS the price stands at $65 / barrel the smallest deposit anyone would even attempt to drill would be about 200,000 barrels with 47,000 barrels of pure profit, or ~ $3 million a 30% return before various costs. But non of the big oil companies could be arsed to get out of bed for this. Only small firms.

This is why more oil becomes available as prices rise.

The oil in Canada is shale oil and is very, very expensive to extract.

When compared to other sources of energy such as hydrogen cells and nuclear power it is the most expensive.

[LalaLand]

U.S. has plans for Canada oil sands

"It's crap oil" This coming from the mouth of senior vice president of oil-sands operations for Shell Canada!

"You've got to use a lot of energy and a lot of pots and pans to extract it from the sand, and you have low-quality oil. It's a high-cost business and a lot of capital and a lot of operating costs."

Oil Crisis dead ahead - I wonder where that will leave interest rates

[MediaTrash]

Anyone who was making comments about oil, but didn't know Canada had 4 times the reserves of Saudi Arabia, is obviously feeling a little foolish now.....

anyone who doesn't realise we are using 4 barrels of oil for every one we find is obviously spending too much time writing smart aleck remarks...

In the case of peak oil you have to decide if you believe economists or geologists - I know who I'd sooner trust:

http://www.oilcrisis.com/campbell/TheHeartOfTheMatter.pdf

[murpaul]

I realise that the costs of extraction and processing are higher for these reserves. It just occurs to me that the ultimate costs may still be less for the western world if it means that they dont have to pay for security as is the case in the ME. Iraq and Afghanistan are costing a fortune. Iran seems to want military action against it, and the costs of bribing and holding up friendly tyrants must be large.

Better to pay extra charges for extraction than the present policy in the ME? If there really is as much oil in Canada as suggested, then the policy for the US has to be to look North rather than East, and let the Chinese and Indians have the ME ( and let them deal with the consequences of funding the Islamic theocracies ).

Just a thought, I'm sure the more knowledgeable posters will blow my points to bits.

[Control Freak]

anyone who doesn't realise we are using 4 barrels of oil for every one we find is obviously spending too much time writing smart aleck remarks...

http://www.oilcrisis.com/campbell/TheHeartOfTheMatter.pdf

Hmmm but that statement does not necessarily mean that we 'will' run out anytime soon. Looks a bit like scaremongering IMHO.

It is only newly discovered oil you refer to, how much has already been found? Quite a lot methinks - Saudia Arabia, this Canadian stuff etc.

[Saving For a Space Ship]

What a rampy spun article, sounds like something from a PR Co. press release.

'I rode on one. It was a 400-tonner' 'it feels like driving a house' reminds me of quotes from Krustys boyfriend

[?...!]

Two tons of dirt must be mined and processed to produce a single barrel, or 42 gallons

Also the process requires Hydrogen to be added. Hydrogen cost more energy to produce than can be released from burning it.

It seems like a lot of expensive work for any yield to me.

[rockdoctor]

My firm, Petro-Canada, is doing experimental steam injection to try to access the tar sands that are under too much overburden to be worth extracting by the standard strip-mining technique.

It is very expensive, and doesn't look likely to make the company much money.

That's why we are looking overseas (inc. the North Sea) because the profit margins are so much better for liquid oil.

I think impending Peak Oil is a fact (as an exploration geophysicist) and the debate is really only about when it occurs. The range of possible dates is getting narrower, and announcements like Kuwait's halving of its reserves (as prices rise!), reduce the spread further.

At best we've got a few decades. At worst we are within months. We aren't replacing reserves as fast as we use them, and we haven't for a long time. Technology is our only hope - we can now drill in the deepest water, we can extract from pretty tight reservoirs, we can detect hydrocarbons directly with seismic in favourable circumstances, and we have looked in virtually every part of the world to some degree.

It's hard to see where we are going to find much more oil than we already have. I'm pessimistic and it's my job to be optimistic.

[?...!]

My firm, Petro-Canada, is doing experimental steam injection to try to access the tar sands that are under too much overburden to be worth extracting by the standard strip-mining technique.

It is very expensive, and doesn't look likely to make the company much money.

That's why we are looking overseas (inc. the North Sea) because the profit margins are so much better for liquid oil.

I think impending Peak Oil is a fact (as an exploration geophysicist) and the debate is really only about when it occurs. The range of possible dates is getting narrower, and announcements like Kuwait's halving of its reserves (as prices rise!), reduce the spread further.

At best we've got a few decades. At worst we are within months. We aren't replacing reserves as fast as we use them, and we haven't for a long time. Technology is our only hope - we can now drill in the deepest water, we can extract from pretty tight reservoirs, we can detect hydrocarbons directly with seismic in favourable circumstances, and we have looked in virtually every part of the world to some degree.

It's hard to see where we are going to find much more oil than we already have. I'm pessimistic and it's my job to be optimistic.

A very honest response Rock Doctor,

Are you nearing retirement? Is that what allows you to be so honest on the subject?

Or are you very worried that your industry may stumble before you can finally put your feet up?

[MediaTrash]

Hmmm but that statement does not necessarily mean that we 'will' run out anytime soon. Looks a bit like scaremongering IMHO.

It is only newly discovered oil you refer to, how much has already been found? Quite a lot methinks - Saudia Arabia, this Canadian stuff etc.

it was a soundbite used by Colin Campbell when he presented to MPs...

to qualify:

- the entire global economy is based on cheap available oil

- we aren't finding much in the way of new oil sources (see previously attached doc)

- production is peaking (see previously attached doc)

- demand is growing considerably thanks in particular to China & India

- OPEC rewards inflated reserve figures (quotas for members are dependent on stated reserves, see Kuwait)

- Irrespective of price, extracting oil from, for example tar sands, is constrained by the energy expended to undertake the extraction. To produce three barrels of oil from tar sands you require 2 barrels of energy. And it required additives

in short, big trouble

[OnlyMe]

RD,

So basically what is happening in Canada now is what is happening in the open cast coalmines in the UK - the easily available near-surface resources are being economically mined - the rest, well you can forget it until the price really goes up, even then it might not be economic?

[gone west]

I used to work for Imperial Oil many moons ago on their tar sands project I have touched this stuff with my own hands. It is more like ashphalt than oil.