The remark that sticks most in my mind, as I look back on this year’s ASPO-USA Conference was one that I believe totally missed the underlying Conference message. It was Ralph Nader, the speaker at the final luncheon, who trying to encourage action, noted the likelihood of our still debating the same topic at the meeting ten or fifteen years from now. The chances of the happening are slim to none. If by that time there has not been an oil peak, with all its subsequent impacts, the Association will have lost any claim to be able to predict reality, and likely will no longer be having meetings. On the other hand, and the evidence was increasingly evident and worrisome, if the peak comes, then the group that met in Washington will have moved on to the equally worrisome topic of trying to predict how fast the decline in liquid fuels will be, and the impact. So we won’t be still talking about the same stuff.
And yet the tenor of the meeting felt different this year. I remember the excitement of going to Denver five years ago to meet the first group of folk that had the same concerns about future fuel supply that I did. I remember the video cameras, the emotional reaction when I realized that there were a significant number of folk, more knowledgeable than I, who had facts to substantiate an early rather than late date for Peak Oil to occur. Five years have passed. The intervening time has seen global oil use reach a rough plateau along which it has bounced. But the end to that plateau is now coming in the near future. This will make that future much darker than the present, and likely a lot of people are going to be hurt. Yet the mood at the meeting seemed more complacent, even as the message is becoming more urgent. Perhaps we have been talking to ourselves too long, for as the message becomes clearer, the reaction seems to lessen.
The Liquid Fuels problem (though there are concerns also over the effective supplies of energy as a whole) is not an immediately visible crisis. Yes the price of crude oil has gone up, but it is now held (largely through an adjust of the exports from a very few Middle Eastern countries) at a relatively steady price. As long as that reserve exists and is used, as it is now, the world can adjust to the current price and continue about its ways.
But the day when the carousel stops is almost at hand. The predictions at the meeting seem to increasingly focus on the 2012-2014 time frame. That begins to impact the next national elections. The price of crude will continue a slow ratchet up, that quickens towards the end of next year (there was at least one prediction that it will be back in treble digits by then). The slow growth of the crisis, partially because of the continued ill-health of the economies of the world, means that there are other more pressing topics of seeming more important concern. And so the meeting drew less attention than it should.
ASPO-USA is moving to Washington to seek more influence, but I suspect that the dawning awareness of the problem over the next eighteen months will do more to bring the group to national attention. What is needed is an underpinning of facts that explain some of the root causes of the problem, why it isn’t going to go away, and some of the resulting problems that are going to arise in the future. Plus of course the need to continue to work the numbers to better be able to estimate how bad it is going to get.
Robert Hirsch talked about what he has done to prepare – he knows it is coming and is getting ready – but I wonder how many other folks are? It has, to some, become almost an abstract topic, somewhat displaced from day-to-day reality in the way that some meetings change. We talk about the evidence, yes its getting stronger, and the dates are getting closer (even faster than that just due to time having passed) and yes the impacts could be severe, but . . . .
I remember coming away from my last ASPO Conference thinking I should talk to the mayor and council where I live. But it was still a few years from a crisis, and as someone said “if it won’t happen in this term, why should I worry, I might not be elected when it happens and so I won’t have to he concerned.” Well that isn’t true any longer. Those now being elected will begin to see the problem in their next term. The excuses for inaction are running out.
(Oh, and my wife, my eldest son and I drive hybrid cars. I spent the weekend before the Conference stacking wood for our tile stove. I have solar roll on the roof, and the house has been re-insulated. Living rurally I am loath to move nearer shops and we effectively have little public transport).
The evidence is stronger, more folk are becoming aware of it, the likelihood of significant mitigating measures being implemented are growing less, but, for a short while longer, we are off the public screens. But that will likely soon change – as earlier periods of awareness show, people do want web sites that can keep them informed, conferences that bring together folk that can build the encompassing picture of what is happening.
Unfortunately, as the Gulf oil spill showed, the current Administration thinks it can exist without much of that expertise. (The decisions were made by an overseeing panel assembled by the Secretary of Energy that did not contain a whole lot of Petroleum Engineering expertise, by number of members). It, sadly, takes time for those who don’t know the facts, or have the background knowledge, to be brought up to speed. So our role hasn’t gone away. It has actually become more important, and so we must continue to do what we do, until recognition comes. That it likely won’t be long coming is not necessarily good news.
Showing posts with label ASPO Conference. Show all posts
Showing posts with label ASPO Conference. Show all posts
Sunday, October 17, 2010
Wednesday, October 13, 2010
ASPO Conference- last day
One of the helpful aspects of the ASPO-USA organization is that they post the videos and presentations that were given at their conferences. Obviously these need to be tweaked after being recorded, and so do not go up immediately but, for example, they have just posted the video of the Jeff Rubin talk on their site. I am going to conclude my summary of the conference itself with this report. I was not able to stay for the final afternoon, and so Gail has kindly furnished a summary that I will add to cover that section of the Conference. As usual I will then give a short summary of what I felt were the highlights, but which is more opinion that content – the goal of these initial posts.
Turning therefore to the Saturday morning meetings, these began with a slight change, since Terry Backer the scheduled speaker was, unfortunately, ill. Paul, one of his advisors, spoke on his behalf, noting that Connecticut – where they are from – has no indigenous coal, oil or natural gas. They had a plan for moving forward that had received support for a significant effort to insulate houses, but unfortunately even though it would have provided a number of jobs, it fell victim to the recession. They are now looking to see the potential for micro-hydro in the state.
The first session was chaired by Ted Patzek and was focused on the Gulf oil spill and the likely consequences.
I led off with a chronological review of the events that occurred through the course of the spill until the time that the well was declared dead. This covered the initial completion of the well, the kick and explosion on the rig, and the sinking of the well. I then went through the stages of the capture of oil, and the capping of the well. This also covered the assumptions that led to the location of the relief well and what was found when it hit the well. Very largely it was a summary of the posts that were written at the time, with the aid of some photos that others had posted.
After my talk, Art Berman spoke of some of the errors that culminated in the failure of the well and the consequent disaster. He began by pointing out that the energy resource of the Gulf is much larger than that of shale gas, and in the deep water is likely the last great hope of American production. From that point of view the shut down (which has nominally now been lifted. He described the number of wells in the gulf and pointed out that the Macondo well was not an exception.
In reviewing the causes of the disaster he started with the problems that arose when the initial float collar, used in the injection of the cement to hold the production casing in place, did not properly function. To get to work the crew used a pulse of high pressure down the well, and then only cemented part of the lowest section, rather than injecting sufficient cement to fill the annulus up to the level of the previous casing. Because there was a considerable washout of the reservoir, the crew then chose to use a foam cement. Tests have shown that this takes some 24 – 48 hours for this cement to set, and yet they began displacing the mud holding the oil and gas within the reservoir after only 16 hours.
Because the well was drilled with an oil-based mud (rather than the more conventional water-based) natural gas will not come out of suspension at the same depth, but rather remained in suspension in the oil until very close to the surface. At that point it would expand, so that one cu ft of gas at depth would occupy some 800 cu ft and so the onset of disaster came very suddenly.
A problem that continues to face drilling and production companies has to do with experience. There is not a large cadre of well-qualified managers, since the highly cyclic nature of the industry means that many of those who would occupy such ranks were let go in the bad years, and are now otherwise employed. Thus the onus of management is falling to people that do not have the necessary experience and knowledge.
Rick Munroe brought the debate into the larger picture of the Peak fuel debate. Ho pointed out the considerable difference between the military view of the coming crisis, in contrast with the more complacent civilian government point of view. The Energy Bulletin lists over 40 papers from military groups that have highlighted the coming problems of fuel availability. In contrast it was only in 2008 that the IEA began to express similar concerns. Yet, as a paper in 2009 from the war college noted, while these strategic shocks are predictable, they are either not prepared for, or inadequately addressed. The plans that do exist are over 30 years old, dating from the last time we had such a event.
On July 25th the Energy Bulletin carried a review of the Peak Oil situation by the German military. The response to the crisis, because of this lack of preparation, will not be stable, but chaotic. This instability will increase with time as economies shrink. The result will be unprecedented in its severity.
He pointed out that, by and large, these reviews are not individual opinions, but rather the consensus of qualified analysts and it defines a comprehensive domestic external threat to the point that peak oil can be seen as a weapon of mass destruction. In earlier exercises it was projected that if 4% of the world supply was removed from the market then prices would triple.
Yet with all this information available he was unable to find any significant interest in the topic either in Canada or the United States. There is no planning for the impact of oil shortage on the agricultural production of either country, and the GAO noted that planning on the topic ceased about 20 years ago. It is only, apparently, in the UK that plans for a Liquid Fuel Emergency exist. And yet a fuel crisis will, in very short time, transform into also being a food crisis. The problem is, in part, that while the response of many in government is to ration by price, but to give farmers priority, most operate on the margin and a trebling of fuel prices would put them out of business. It is a complex problem, and thus no-one wishes to address it.
In introducing the second session of the morning Ron Swenson said that one of the goals of ASPO-USA was to bring people together in such a way as to leave a world worth inheriting. The session was on the Laws of Energy, Technology and Scale.
Tad Paczek talked of scale, and that the critical metric is the rate of production. He sees peak oil in 2 – 3 years; peak coal soon and peak NG in 20 – 30 years. But while there is still lots of fuel underground it is the rate of production, and the scale of production that are constrained and that drive us into these peaks. If, for example, oil lies in a piggy bank, and we can’t break down the walls, then the rate at which we get money back out depends on the size of the slot in the top. But we should also remember that, on average, we leave 2/3 of the oil in the ground and only recover 1/3.
We use 100 times the amount of energy we have to eat to survive. The world eats roughly 1 Exajoule (EXJ) and we turn fuels into 39 ExJ of energy. One of the more promising techniques for enhanced oil recovery (EOR) is to inject CO2 into the field. This is already in use in the United States and might be able to increase production by 10%, but this comes at the end of field life. In total it might be possible to get up to 2.5 mbd of EOR oil (remember that Ghawar is producing in the 4-5 mbd range), but to get to that level will require lots of money and engineering expertise – and he is not sure we have enough of the latter. He anticipates that Canada may be able to grow tar sand production to 3 mbd by 2020.
In discussing future energy projections he said that many companies will list the prospects that they are considering drilling into – but for budget and other reasons will only actually work a fraction of those lists. Thus those who rely on the projections paint an unrealistic view of what the future will bring. We are, therefore, not in as good shape as most predict.
Ken Zweibel spoke about the Solar Grand Plan. Current development of solar has not developed under any of the pressures that will come when supply as seen as an “emergency need.” Yet overall production gas reached 10 GW and so he is optimistic of the future. Because the liquid fuels supply problem is so tied to transportation the we need to see how the use of solar energy can feed that market. This will require evolution of the Smart Grid, and means for solar forecasting and balancing of power. Unfortunately solar distribution varies – the Southwest gets 30% more photons that the DC area, for example. But, on the other hand, wind is like the measles.
We have gone from $30 a watt to $1.50 a watt, but this only covers the module cost. That is no all the costs since installation and maintenance must also be included and these will likely double the module costs. However while one can pay back the cost of the module in 1.5 years, it might take 15 years in energy savings to cover the whole cost of the installation.
He covered the current costs of some of the major systems that we will likely see grow to dominate the market. The costs have dropped 40% of the last four years, but to go lower they need (and deserve) the lowest interest rate for loans. And he moved on from there to discuss payback on the different systems., though he noted that many costs are based on out-dated methodologies. Cadmium telluride is a promising new candidate, and is not that polluting. And he noted that, in contrast to most conventional systems solar does not use significant water. (A little for cleaning). He pointed out that of the 17 Quads used in transportation only 3.4 Quads (quadrillion Btu’s) do the effective work of moving the object. Electric powered vehicles are thus a more viable alternative.
He said that only 15% of the Canadian tar sands could be recovered by surface mining, and hat the energy costs are 15 – 50% of the recovered and useful energy. For the remainder it might be possible to get 80% of it out, but at a 40% energy cost.
On the other hand vehicles will not, in significant numbers, switch from liquid fuel to solar powered in the near future. There is also not enough lithium for batteries, so realistically the answer hans to be in electrified trains. He seen the end of fossil fuels marking the beginning of a slow-down in economic growth. So the meeting slowed down for lunch.
Lunch began with a tribute to Matt Simmons. Chairman of the ASPO-USA Advisory Board and featured speaker at many of he events. A check to support the Ocean Energy Institute was presented to his daughter Abbie, on behalf of ASPO.
The noon speaker was Ralph Nader who took his quota of time, and more, to discuss Energy and Policy. He proclaimed (just having written a novel on the subject) that “only the super-rich can save us.” The main form of censorship is self-censorship. Why do we do it? It encourages a stagnant society. It builds the blocking of technological advance through the creation of mind sets. Secretary Chu advocates nuclear power and refuses to meet with opposition groups on the topic.
Mr Nader does not see a correlation between energy and economic growth. We have passed the diagnostic phase of energy future analysis, but there has been little prescription for future action and the path forward is obscure. We must mandate changes to buildings, vehicles and connect them to jobs programs. And we must make the jobs local so that they cannot be exported to China. He sees innovation as dramatically higher than it was 10 years ago. , and expects that stimulus funds will lead to innovation. But he gave the example of Evergreen Solar which had intended to stay in the US, having 800 employees here, but found that all its competition is moving to China, so they are too. Then he quoted the example of the “largest tile carpet manufacturer” in the US who has chosen to stay, and through innovation keep costs down low enough that he can remain in business.
Unfortunately as this talk drew to a close I had to leave. Gail Tverberg remained and was kind enough to supply me with her notes, which follow.
Anthony Perl, author of "Transport Revolutions: Moving People and Freight without Oil" and fellow of the Post Carbon Institute talked about ways to reduce oil used in transport. In his view, we have lots of technology, but not much time. Emphasis needs to be on proven, robust technologies.
One thing he talked about was electric motors to replace internal combustion engines, particularly for trains. Also expansion of the use of trains. One issue, though, is the fact that most rail track is privately owned. Perhaps some approach can be used that would allow double tracking with government somehow paying for/receiving ownership of the additional track.
Another possibility is "sky sails", which can reduce fuel use by ships by 50% to 80%. Water transport is already the most efficient mode of transport, and sails would improve it further.
He believes it will cost $1 trillion for passenger rail and $1 trillion for freights train needed changes / improvements. He also pointed out that GM used to build trains and busses, and asked why they couldn't again.
Dr. Charles Schlumberger, Principal Air Transport Specialist, Transport Division of the World Bank, pointed out that from the airline's point of view, it was the recession, and not the price of oil that was the problem. He felt this way, because he felt the airlines had pretty well hedged the price of oil. Its problem was a lack of passengers and cargo, because of the recession.
He pointed out that air transport is the catalyst for modern globalization. For example, he pointed out that without access by air, there is little chance of foreign direct investment in a country.
He also pointed out that at $80 a barrel, fuel cost exceeds personnel costs. He believes that above $80 a barrel, airlines cannot be profitable.
Regarding fuel efficiency, there have been improvements, but these are becoming smaller as the low-hanging fruit have already been found. Some additional changes may be difficult. For example, if changes are made that cause the size of engines to be bigger, these might necessitate completely redesigning the aircraft. One possibility is to use "Air Ships" or dirigibles for moving freight long distances.
Biofuels are being investigated, but progress is slow--perhaps 1% replacement of fuel by 2015. One issue is the huge land area that would be required. According to his calculations, algae would require the least land area, but even so algae would require an area the size of Ireland to replace existing airline fuel.
At this point, it looks like there is a possibility that airline use will need to be significantly scaled back, but if this happens, there will likely be big social and political impacts.
Next, Sharon Astyk, ASPO-USA board member and writer, talked about the world food situation. In 2008, there were 1 billion people who were seriously malnourished. The number is perhaps a bit lower in 2009, but not a lot. While oil prices have backed off a lot from their highs, some food prices are still not too far from their 2008 highs. She pointed out that high prices are a real issue for many, since almost half of the world's population spends 50% or more of its income on food.
Now China is buying land around the world, so as to be able to feed its people. This is likely to present problems for people who live in the area, and need the farmland themselves. Sharon also talked about there likely being an "Export Land" land for food, with countries cutting back on food exports, either as their own population grows, or if crops fail.
She talked about food insecurity being a problem even in the US. One in seven people is on food stamps; one in four children receives food stamps. Children who are hungry are likely not to do well in school.
There is a close tie between food and energy, so reduced food supply in the future is a concern. There are other related issues, like phosphorous supplies, which are already getting short. Lesser energy availability is likely to make the situation worse. There is also the issue of biofuels competition with food for land and water.
The last speaker was Brian Czeck, President of the Center for the Advancement of the Steady State Economy. He talked about the need for governments to scale back their expectations from everlasting growth to a steady state economy.
Turning therefore to the Saturday morning meetings, these began with a slight change, since Terry Backer the scheduled speaker was, unfortunately, ill. Paul, one of his advisors, spoke on his behalf, noting that Connecticut – where they are from – has no indigenous coal, oil or natural gas. They had a plan for moving forward that had received support for a significant effort to insulate houses, but unfortunately even though it would have provided a number of jobs, it fell victim to the recession. They are now looking to see the potential for micro-hydro in the state.
The first session was chaired by Ted Patzek and was focused on the Gulf oil spill and the likely consequences.
I led off with a chronological review of the events that occurred through the course of the spill until the time that the well was declared dead. This covered the initial completion of the well, the kick and explosion on the rig, and the sinking of the well. I then went through the stages of the capture of oil, and the capping of the well. This also covered the assumptions that led to the location of the relief well and what was found when it hit the well. Very largely it was a summary of the posts that were written at the time, with the aid of some photos that others had posted.
After my talk, Art Berman spoke of some of the errors that culminated in the failure of the well and the consequent disaster. He began by pointing out that the energy resource of the Gulf is much larger than that of shale gas, and in the deep water is likely the last great hope of American production. From that point of view the shut down (which has nominally now been lifted. He described the number of wells in the gulf and pointed out that the Macondo well was not an exception.
In reviewing the causes of the disaster he started with the problems that arose when the initial float collar, used in the injection of the cement to hold the production casing in place, did not properly function. To get to work the crew used a pulse of high pressure down the well, and then only cemented part of the lowest section, rather than injecting sufficient cement to fill the annulus up to the level of the previous casing. Because there was a considerable washout of the reservoir, the crew then chose to use a foam cement. Tests have shown that this takes some 24 – 48 hours for this cement to set, and yet they began displacing the mud holding the oil and gas within the reservoir after only 16 hours.
Because the well was drilled with an oil-based mud (rather than the more conventional water-based) natural gas will not come out of suspension at the same depth, but rather remained in suspension in the oil until very close to the surface. At that point it would expand, so that one cu ft of gas at depth would occupy some 800 cu ft and so the onset of disaster came very suddenly.
A problem that continues to face drilling and production companies has to do with experience. There is not a large cadre of well-qualified managers, since the highly cyclic nature of the industry means that many of those who would occupy such ranks were let go in the bad years, and are now otherwise employed. Thus the onus of management is falling to people that do not have the necessary experience and knowledge.
Rick Munroe brought the debate into the larger picture of the Peak fuel debate. Ho pointed out the considerable difference between the military view of the coming crisis, in contrast with the more complacent civilian government point of view. The Energy Bulletin lists over 40 papers from military groups that have highlighted the coming problems of fuel availability. In contrast it was only in 2008 that the IEA began to express similar concerns. Yet, as a paper in 2009 from the war college noted, while these strategic shocks are predictable, they are either not prepared for, or inadequately addressed. The plans that do exist are over 30 years old, dating from the last time we had such a event.
On July 25th the Energy Bulletin carried a review of the Peak Oil situation by the German military. The response to the crisis, because of this lack of preparation, will not be stable, but chaotic. This instability will increase with time as economies shrink. The result will be unprecedented in its severity.
He pointed out that, by and large, these reviews are not individual opinions, but rather the consensus of qualified analysts and it defines a comprehensive domestic external threat to the point that peak oil can be seen as a weapon of mass destruction. In earlier exercises it was projected that if 4% of the world supply was removed from the market then prices would triple.
Yet with all this information available he was unable to find any significant interest in the topic either in Canada or the United States. There is no planning for the impact of oil shortage on the agricultural production of either country, and the GAO noted that planning on the topic ceased about 20 years ago. It is only, apparently, in the UK that plans for a Liquid Fuel Emergency exist. And yet a fuel crisis will, in very short time, transform into also being a food crisis. The problem is, in part, that while the response of many in government is to ration by price, but to give farmers priority, most operate on the margin and a trebling of fuel prices would put them out of business. It is a complex problem, and thus no-one wishes to address it.
In introducing the second session of the morning Ron Swenson said that one of the goals of ASPO-USA was to bring people together in such a way as to leave a world worth inheriting. The session was on the Laws of Energy, Technology and Scale.
Tad Paczek talked of scale, and that the critical metric is the rate of production. He sees peak oil in 2 – 3 years; peak coal soon and peak NG in 20 – 30 years. But while there is still lots of fuel underground it is the rate of production, and the scale of production that are constrained and that drive us into these peaks. If, for example, oil lies in a piggy bank, and we can’t break down the walls, then the rate at which we get money back out depends on the size of the slot in the top. But we should also remember that, on average, we leave 2/3 of the oil in the ground and only recover 1/3.
We use 100 times the amount of energy we have to eat to survive. The world eats roughly 1 Exajoule (EXJ) and we turn fuels into 39 ExJ of energy. One of the more promising techniques for enhanced oil recovery (EOR) is to inject CO2 into the field. This is already in use in the United States and might be able to increase production by 10%, but this comes at the end of field life. In total it might be possible to get up to 2.5 mbd of EOR oil (remember that Ghawar is producing in the 4-5 mbd range), but to get to that level will require lots of money and engineering expertise – and he is not sure we have enough of the latter. He anticipates that Canada may be able to grow tar sand production to 3 mbd by 2020.
In discussing future energy projections he said that many companies will list the prospects that they are considering drilling into – but for budget and other reasons will only actually work a fraction of those lists. Thus those who rely on the projections paint an unrealistic view of what the future will bring. We are, therefore, not in as good shape as most predict.
Ken Zweibel spoke about the Solar Grand Plan. Current development of solar has not developed under any of the pressures that will come when supply as seen as an “emergency need.” Yet overall production gas reached 10 GW and so he is optimistic of the future. Because the liquid fuels supply problem is so tied to transportation the we need to see how the use of solar energy can feed that market. This will require evolution of the Smart Grid, and means for solar forecasting and balancing of power. Unfortunately solar distribution varies – the Southwest gets 30% more photons that the DC area, for example. But, on the other hand, wind is like the measles.
We have gone from $30 a watt to $1.50 a watt, but this only covers the module cost. That is no all the costs since installation and maintenance must also be included and these will likely double the module costs. However while one can pay back the cost of the module in 1.5 years, it might take 15 years in energy savings to cover the whole cost of the installation.
He covered the current costs of some of the major systems that we will likely see grow to dominate the market. The costs have dropped 40% of the last four years, but to go lower they need (and deserve) the lowest interest rate for loans. And he moved on from there to discuss payback on the different systems., though he noted that many costs are based on out-dated methodologies. Cadmium telluride is a promising new candidate, and is not that polluting. And he noted that, in contrast to most conventional systems solar does not use significant water. (A little for cleaning). He pointed out that of the 17 Quads used in transportation only 3.4 Quads (quadrillion Btu’s) do the effective work of moving the object. Electric powered vehicles are thus a more viable alternative.
He said that only 15% of the Canadian tar sands could be recovered by surface mining, and hat the energy costs are 15 – 50% of the recovered and useful energy. For the remainder it might be possible to get 80% of it out, but at a 40% energy cost.
On the other hand vehicles will not, in significant numbers, switch from liquid fuel to solar powered in the near future. There is also not enough lithium for batteries, so realistically the answer hans to be in electrified trains. He seen the end of fossil fuels marking the beginning of a slow-down in economic growth. So the meeting slowed down for lunch.
Lunch began with a tribute to Matt Simmons. Chairman of the ASPO-USA Advisory Board and featured speaker at many of he events. A check to support the Ocean Energy Institute was presented to his daughter Abbie, on behalf of ASPO.
The noon speaker was Ralph Nader who took his quota of time, and more, to discuss Energy and Policy. He proclaimed (just having written a novel on the subject) that “only the super-rich can save us.” The main form of censorship is self-censorship. Why do we do it? It encourages a stagnant society. It builds the blocking of technological advance through the creation of mind sets. Secretary Chu advocates nuclear power and refuses to meet with opposition groups on the topic.
Mr Nader does not see a correlation between energy and economic growth. We have passed the diagnostic phase of energy future analysis, but there has been little prescription for future action and the path forward is obscure. We must mandate changes to buildings, vehicles and connect them to jobs programs. And we must make the jobs local so that they cannot be exported to China. He sees innovation as dramatically higher than it was 10 years ago. , and expects that stimulus funds will lead to innovation. But he gave the example of Evergreen Solar which had intended to stay in the US, having 800 employees here, but found that all its competition is moving to China, so they are too. Then he quoted the example of the “largest tile carpet manufacturer” in the US who has chosen to stay, and through innovation keep costs down low enough that he can remain in business.
Unfortunately as this talk drew to a close I had to leave. Gail Tverberg remained and was kind enough to supply me with her notes, which follow.
Anthony Perl, author of "Transport Revolutions: Moving People and Freight without Oil" and fellow of the Post Carbon Institute talked about ways to reduce oil used in transport. In his view, we have lots of technology, but not much time. Emphasis needs to be on proven, robust technologies.
One thing he talked about was electric motors to replace internal combustion engines, particularly for trains. Also expansion of the use of trains. One issue, though, is the fact that most rail track is privately owned. Perhaps some approach can be used that would allow double tracking with government somehow paying for/receiving ownership of the additional track.
Another possibility is "sky sails", which can reduce fuel use by ships by 50% to 80%. Water transport is already the most efficient mode of transport, and sails would improve it further.
He believes it will cost $1 trillion for passenger rail and $1 trillion for freights train needed changes / improvements. He also pointed out that GM used to build trains and busses, and asked why they couldn't again.
Dr. Charles Schlumberger, Principal Air Transport Specialist, Transport Division of the World Bank, pointed out that from the airline's point of view, it was the recession, and not the price of oil that was the problem. He felt this way, because he felt the airlines had pretty well hedged the price of oil. Its problem was a lack of passengers and cargo, because of the recession.
He pointed out that air transport is the catalyst for modern globalization. For example, he pointed out that without access by air, there is little chance of foreign direct investment in a country.
He also pointed out that at $80 a barrel, fuel cost exceeds personnel costs. He believes that above $80 a barrel, airlines cannot be profitable.
Regarding fuel efficiency, there have been improvements, but these are becoming smaller as the low-hanging fruit have already been found. Some additional changes may be difficult. For example, if changes are made that cause the size of engines to be bigger, these might necessitate completely redesigning the aircraft. One possibility is to use "Air Ships" or dirigibles for moving freight long distances.
Biofuels are being investigated, but progress is slow--perhaps 1% replacement of fuel by 2015. One issue is the huge land area that would be required. According to his calculations, algae would require the least land area, but even so algae would require an area the size of Ireland to replace existing airline fuel.
At this point, it looks like there is a possibility that airline use will need to be significantly scaled back, but if this happens, there will likely be big social and political impacts.
Next, Sharon Astyk, ASPO-USA board member and writer, talked about the world food situation. In 2008, there were 1 billion people who were seriously malnourished. The number is perhaps a bit lower in 2009, but not a lot. While oil prices have backed off a lot from their highs, some food prices are still not too far from their 2008 highs. She pointed out that high prices are a real issue for many, since almost half of the world's population spends 50% or more of its income on food.
Now China is buying land around the world, so as to be able to feed its people. This is likely to present problems for people who live in the area, and need the farmland themselves. Sharon also talked about there likely being an "Export Land" land for food, with countries cutting back on food exports, either as their own population grows, or if crops fail.
She talked about food insecurity being a problem even in the US. One in seven people is on food stamps; one in four children receives food stamps. Children who are hungry are likely not to do well in school.
There is a close tie between food and energy, so reduced food supply in the future is a concern. There are other related issues, like phosphorous supplies, which are already getting short. Lesser energy availability is likely to make the situation worse. There is also the issue of biofuels competition with food for land and water.
The last speaker was Brian Czeck, President of the Center for the Advancement of the Steady State Economy. He talked about the need for governments to scale back their expectations from everlasting growth to a steady state economy.
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Sunday, October 10, 2010
ASPO Conference - second day after lunch
This is a continuation of a series of reports on the ASPO Conference on Peak Oil that was held in Washington DC this week. I had covered the first 24 hours in two earlier posts, and return to the meeting at the luncheon on the second day of the meeting.
At the beginning of the lunch the Association presented the King Hubbard Awards for excellence in energy education. These, deservedly, went to Colin Campbell, Tom Whipple and Art Berman. They were followed by the Tom Whipple Volunteer Awards, which went to Lt. Col. Davis and Greg Geyer.
The first speaker at the lunch was Jeff Rubin who pointed out that although the deepest recession since the second world war has been blamed on the housing bubble and the financial problems of the American banking system, the problem was really global in nature, and it is not difficult to show the correlation with energy prices.
Historically economists have always said that when prices go up, then more oil will be released to the market, meeting demand, and the price will fall. This time they were wrong. There was no Alaska or North Sea to provide that additional source, only tar sands. With prices escalating oil demand declined in only the USA, Canada and Europe, which group has historically bought most of the international trade, but which now only consume half of it. That group has not dropped demand, it is just that others are now gaining in consumption (China is now at 9 mbd). OPEC now consumes some 14 mbd, and this is largely because fuel is so cheap in those countries (at around $0.20 a gallon). The OPEC internal consumption (as the Export Land Model predicts) is used at the cost of supplies to the export market.
Oil prices and demand fell during the recession, but are now growing again, as we return to $80 a barrel. As a result he is anticipating triple-digit oil prices again next year. For as demand rises the world is no more capable of balancing supply and demand than it was two years ago. He mentioned the conundrum that price controls growth, the Government cannot bring back cheap oil, and the balance between affordable general yet sufficient supply and the price of that supply is becoming a more difficult balance to sustain.
The rise in fuel costs will change the paradigm for manufacturing. For while it is cheaper to makes steel in China and ship it when transport costs are low, as those prices rise the cost of shipping will become too high. The benefits of local manufacture will become more evident. These economics will kill the suburbs. That will not be controlled by Government fiat, but rather the principles defined in Econ 101.
As the high-prices bring our entry into the Apocalypse it will not, at least initially , be that grim. The price changes will force change and this may help local manufacturing. So we may be moving to a better world, at least transiently.
The second speaker was Bianca Jagger who might, at first, appear to be a strange choice for the conference. However, as she explained, she has been following the topic for many years and initially had just planned on attending the conference, until asked to speak. She spoke of the need for a new Copernican Revolution in the use of renewable technologies. With no treaty in Copenhagen there is less than a decade before we will see dramatic changes in climate, due to greenhouse gas effects. Further the dependence on oil, and our need to get it from deeper waters and arctic regions threatens even more devastation for future generations.
The interactions of 9 billion people with the environment by 2050 will also impose increasing demands on the energy infrastructure, and have their impacts, some of which we have seen this year already in countries such as Pakistan and Russia. We must hold companies responsible for their damage, and she expressed concerns over the tar sand mining in Alberta.
She noted how the subject of Peak Oil had been considered a myth, but that the JOE Report showed that it was not, and she cited other reports that concurred. With the peak arrival we need the President to waken us from our current sleepwalking into disaster. We must democratize and decentralize energy production and if the Federal Government does not do this, then states and local government must act. We cannot compartmentalize the effort as the effects will impact us all, and we must make the investments to replace fossil fuels.
In the following question period the speakers pointed out that we should not expect the Administration to move until the point is reached where we really won’t have many choices left. But we have a greater capacity for change than the government gives us credit for. The problem is that with only 4 mbd of spare capacity, which may come at an increasing price, the balance between stability and recession will be small. We are, perhaps, at the bounds of affordable oil.
The worse the price rise, then the worse off the poorer segments of the community become, but it will become a zero sum game as oil production is bounded. It can be resolved by price – more bicycles are used in Copenhagen, for example, because cars have a 180% surcharge, and power is used economically because it costs $0.30 a kWh.
I chaired the coal session immediately after lunch, and briefly referred to my experience in hand-mining coal in a seam about 20 inches high, and the difficulties King Edward I had in banning the burning of coal. I then introduced Kjell Aleklett who paid tribute to Matt Simmons, and talked of the formation of ASPO – in which Matt played a part, before turning to the topic of coal supply prediction. In the IPCC reports there is an anticipation of coal use rising by 500% by 2100. But his group have been studying the likelihood of this happening and have written several peer-reviewed papers on the topic. (For example Dr Michael Hook nailed his dissertation on the topic to the wall last month, an Uppsala tradition.) He noted that there is a difference in the relative ranking of the worlds largest coal reserve holders and those that mine and export the most coal. China, for example, has 14% of the world’s reserves and yet mines 45% of the world’s coal. (These may be a little off due to my slow transcription of his table). There are only 10 nations that can be considered, as exporters, the “drug dealers” of the planet.
Global production is dominated by the big 6 (USA, China, FSU, Australia, India, and S. Africa) but the world is changing and increasing competition and regulation is changing the use and availability of coal. It is a fuel where there is no correlation between price and reserves, but we are now seeing a decline in coal quality to the point that we are at a peak in the energy level that can be produced from American coal. There are small changes that can occur (it is possible for Pennsylvanian Anthracite, which has peaked, to recover) depending on price but in general this is true. American hopes lie in the reserves of states like Montana, but local opposition, due to the sodium content of the water, makes this mining unlikely.
He then looked at production from the other large producers, and stated conclusions on their future performance, leading to the overall conclusion that coal will peak globally in 2030. He was not favorably impressed by the chances for coal-to-liquid (CTL) plants, and they may only possibly play a part in the future. None of the IPCC models consider peak oil, gas or coal, yet we cannot assume a business as usual (BAU) future, as fossil fuels run out. Concerns at the moment in Sweden are more related to politics than geology. And while coal will remain important, it will not be an answer to the energy challenge.
In questions one of the audience from Montana challenged the assumption that coal is unpopular in the state, and noted that it is likely that there will be considerable coal production in the future. Dr. Aleklett also noted that coal production is limited logistically and by infrastructure, rather than resource. And coal does not contribute to solving the liquid fuels problem.
David Rutledge discussed coal production in terms of the IPCC report, noting that the 2007 report showed oil production rising to 2100 in all 19 models that they ran in predicting future trends. His goal became one of reducing uncertainty in the predictions, and he began by explaining some of the statistical methods he used. He exemplified this by showing that UK coal production peaked in 1913, and is now down to what it was in Napoleonic times. Using statistical methods he was able to predict the likely total UK coal production over time, at around 27 billion tons. Future reserve estimates collapsed in the 1960-70 period as evaluators realized that reserves could only be coal that could be economically mined.
He looked at four regions, UK coal, Pennsylvania anthracite, France and Belgium, and Japan and South Korea. In all cases he found that mining will only extract about 25% of what was once considered a reserve. He tried to look at Chinese coal but had problems getting reliable statistics. While he was able to get good agreements between his plots and predictions and historic numbers his results were incompatible with IPCC coal presumptions.
Coal does not have the global fungibility that oil has and is more of a regional market commodity. He used Tom Wigley’s MAGICC computer model, but in trying to evaluate future temperatures he noted that, as a result of the Climategate incident, that the British Met Office are redoing their temperature records. He discussed some of the problems in assuring accurate temperature records. But overall he was confident of the IPCC predictions and those on the future rise in sea level, quoting Stefan Ramstorf.
Following a break Dr Robert Hirsch chaired a session on the link between Energy and the Economy, and it was possibly the bleakest of the meeting. Chris Martenson talked about looking at the economy as a straight highway, and then hitting a bend. While models often see progress in linear terms life does not turn out that way. Money is loaned into existence and credit (and thus debt) has increased over time. Since 1970 it has doubled five times. Money and energy have been tied, but while money must continue to grow, energy cannot. Credit market growth (with an R^2 of 0.98) has an exponential relationship with time. He sees the problem not with the individual smaller bubble causes of housing, etc but rather the overall credit size itself.
He sees the problems coming in the 2014-2015 time frame when Peak Oil will be recognized and while growth may continue, prosperity may not.
He was followed by Nicole Foss- who many of us have read under the pen name Stoneleigh . She sees fossil fuels as generating the largest bubble in history. The economy has been driven up by energy, but as that declines what will take its place? In the sense that bubbles are Ponzi schemes where only early investors make a return on their investment, as this one comes to an end as the largest suckers get fleeced, so they collapse to general hurt.
Markets are driven by perception rather than reality. But by the time the general public hears of “a good thing” it is generally over. Hearing the “it’s a new paradigm” should warn you to sell the stock. But the world is driven on emotion. And when there is a collapse it is often sudden, bringing the value down below what it was before the bubble began. (And oil prices are following this model). From this she could see nothing ahead but progress into a deflation and depression. We are already in a large debt and liquidity trap and as credit disappears the depression will develop and be sustained. The huge derivatives market may be the first to go, given its insignificant intrinsic value.
The problem is in part that it will be based on reducing volumes of oil, and with that reduction there is no possibility of a rebound, since the resource is not there to develop it. Oil has thus hegemonic power. The depression will, however, sustain its dominance since reduced demand will allow it to remain dominant.
The final speaker of the evening was Robert Hirsch, who has also recently co-authored a book – The Impending World Energy Mess which was available in signed copy at the meeting. In large measure his talk followed the book (from which you may gather that I did buy, and have half-read, a copy – and it is worth doing so, I may do a review later). He noted that the economy depends on energy, not the other way around. Further we should expect that the general public will still be surprised when oil supplies start to decline in the next 2 – 5 years. From then they will continue to decline for at least a decade, until alternate sources of fuel become sufficiently available. He covered the oil problem their forecast of how it will develop, and what an individual could do about it.
The story is a familiar one to the peak oil community, we are over reliant on a few giant oil fields that are depleting and not being replaced. We have been sensibly in a production plateau since 2005, something not predicted by earlier models, but there are an increasing number of reputable sources that see an end to the plateau, and the consequent decline, coming relatively soon. This will impact GDP and hurt national economies. The recent recession and drop in oil demand may have only shifted the onset of the decline by a few weeks.
It is unrealistic to expect a rapid answer to the decline from politicians. Looking at the likely rate of decline, a 2% fall could be easily handled, a 4% fall could be handled with difficulty, but at 6% it is going to be bad. They have had to guess, and think, at the moment that it will likely be at around 4%.
China, having foreseen this problem, are doing smart things to prepare for it. We in the West are not. It will lead to increased tensions – though they did not look at the potential for resource wars, or the likelihood that producers would withhold production for political or economic reasons.
Looking at individual response, we should all expect to be impacted, and because of the lack of political ability to resolve the issue (or even to address it yet) we should expect that the result will be very similar to the oil shortages of the 70s. There was a degree of panic – this will happen again. This time, however, there will be no North Sea or North Slope to come to the rescue. Nor can the oil taps be opened wider to remediate the problems. As a result he has got out of the market – since good stocks and bonds will be hurt as well as bad. He has added annuities to his portfolio, bought some gold, and moved closer to mass transit and the shops.
He reminded us that this is a liquid fuels problem, while most renewables (wind and solar and hydro) deal with the electricity supply, which is not helpful to the crisis. We also have enough food. The issue is in transportation where we need a substitute for oil.
In questions he was asked about rationing. He fully anticipates it happening, but it will be very complicated to develop and impose. Countries will respond in different ways and become more independent. The United States will have to reindustrialize, since it will not be able to rely on foreign manufacture. We increased productivity by having oil help labor. Now this must reverse.
He did not see the problem being deflation, but rather in the control of inflation. But then it is easier to write a history book than a forecast. He could only see that many people will get hurt in the coming years.
On which cheery note I went to find a drink, have dinner and retire for the evening. More later.
At the beginning of the lunch the Association presented the King Hubbard Awards for excellence in energy education. These, deservedly, went to Colin Campbell, Tom Whipple and Art Berman. They were followed by the Tom Whipple Volunteer Awards, which went to Lt. Col. Davis and Greg Geyer.
The first speaker at the lunch was Jeff Rubin who pointed out that although the deepest recession since the second world war has been blamed on the housing bubble and the financial problems of the American banking system, the problem was really global in nature, and it is not difficult to show the correlation with energy prices.
Historically economists have always said that when prices go up, then more oil will be released to the market, meeting demand, and the price will fall. This time they were wrong. There was no Alaska or North Sea to provide that additional source, only tar sands. With prices escalating oil demand declined in only the USA, Canada and Europe, which group has historically bought most of the international trade, but which now only consume half of it. That group has not dropped demand, it is just that others are now gaining in consumption (China is now at 9 mbd). OPEC now consumes some 14 mbd, and this is largely because fuel is so cheap in those countries (at around $0.20 a gallon). The OPEC internal consumption (as the Export Land Model predicts) is used at the cost of supplies to the export market.
Oil prices and demand fell during the recession, but are now growing again, as we return to $80 a barrel. As a result he is anticipating triple-digit oil prices again next year. For as demand rises the world is no more capable of balancing supply and demand than it was two years ago. He mentioned the conundrum that price controls growth, the Government cannot bring back cheap oil, and the balance between affordable general yet sufficient supply and the price of that supply is becoming a more difficult balance to sustain.
The rise in fuel costs will change the paradigm for manufacturing. For while it is cheaper to makes steel in China and ship it when transport costs are low, as those prices rise the cost of shipping will become too high. The benefits of local manufacture will become more evident. These economics will kill the suburbs. That will not be controlled by Government fiat, but rather the principles defined in Econ 101.
As the high-prices bring our entry into the Apocalypse it will not, at least initially , be that grim. The price changes will force change and this may help local manufacturing. So we may be moving to a better world, at least transiently.
The second speaker was Bianca Jagger who might, at first, appear to be a strange choice for the conference. However, as she explained, she has been following the topic for many years and initially had just planned on attending the conference, until asked to speak. She spoke of the need for a new Copernican Revolution in the use of renewable technologies. With no treaty in Copenhagen there is less than a decade before we will see dramatic changes in climate, due to greenhouse gas effects. Further the dependence on oil, and our need to get it from deeper waters and arctic regions threatens even more devastation for future generations.
The interactions of 9 billion people with the environment by 2050 will also impose increasing demands on the energy infrastructure, and have their impacts, some of which we have seen this year already in countries such as Pakistan and Russia. We must hold companies responsible for their damage, and she expressed concerns over the tar sand mining in Alberta.
She noted how the subject of Peak Oil had been considered a myth, but that the JOE Report showed that it was not, and she cited other reports that concurred. With the peak arrival we need the President to waken us from our current sleepwalking into disaster. We must democratize and decentralize energy production and if the Federal Government does not do this, then states and local government must act. We cannot compartmentalize the effort as the effects will impact us all, and we must make the investments to replace fossil fuels.
In the following question period the speakers pointed out that we should not expect the Administration to move until the point is reached where we really won’t have many choices left. But we have a greater capacity for change than the government gives us credit for. The problem is that with only 4 mbd of spare capacity, which may come at an increasing price, the balance between stability and recession will be small. We are, perhaps, at the bounds of affordable oil.
The worse the price rise, then the worse off the poorer segments of the community become, but it will become a zero sum game as oil production is bounded. It can be resolved by price – more bicycles are used in Copenhagen, for example, because cars have a 180% surcharge, and power is used economically because it costs $0.30 a kWh.
I chaired the coal session immediately after lunch, and briefly referred to my experience in hand-mining coal in a seam about 20 inches high, and the difficulties King Edward I had in banning the burning of coal. I then introduced Kjell Aleklett who paid tribute to Matt Simmons, and talked of the formation of ASPO – in which Matt played a part, before turning to the topic of coal supply prediction. In the IPCC reports there is an anticipation of coal use rising by 500% by 2100. But his group have been studying the likelihood of this happening and have written several peer-reviewed papers on the topic. (For example Dr Michael Hook nailed his dissertation on the topic to the wall last month, an Uppsala tradition.) He noted that there is a difference in the relative ranking of the worlds largest coal reserve holders and those that mine and export the most coal. China, for example, has 14% of the world’s reserves and yet mines 45% of the world’s coal. (These may be a little off due to my slow transcription of his table). There are only 10 nations that can be considered, as exporters, the “drug dealers” of the planet.
Global production is dominated by the big 6 (USA, China, FSU, Australia, India, and S. Africa) but the world is changing and increasing competition and regulation is changing the use and availability of coal. It is a fuel where there is no correlation between price and reserves, but we are now seeing a decline in coal quality to the point that we are at a peak in the energy level that can be produced from American coal. There are small changes that can occur (it is possible for Pennsylvanian Anthracite, which has peaked, to recover) depending on price but in general this is true. American hopes lie in the reserves of states like Montana, but local opposition, due to the sodium content of the water, makes this mining unlikely.
He then looked at production from the other large producers, and stated conclusions on their future performance, leading to the overall conclusion that coal will peak globally in 2030. He was not favorably impressed by the chances for coal-to-liquid (CTL) plants, and they may only possibly play a part in the future. None of the IPCC models consider peak oil, gas or coal, yet we cannot assume a business as usual (BAU) future, as fossil fuels run out. Concerns at the moment in Sweden are more related to politics than geology. And while coal will remain important, it will not be an answer to the energy challenge.
In questions one of the audience from Montana challenged the assumption that coal is unpopular in the state, and noted that it is likely that there will be considerable coal production in the future. Dr. Aleklett also noted that coal production is limited logistically and by infrastructure, rather than resource. And coal does not contribute to solving the liquid fuels problem.
David Rutledge discussed coal production in terms of the IPCC report, noting that the 2007 report showed oil production rising to 2100 in all 19 models that they ran in predicting future trends. His goal became one of reducing uncertainty in the predictions, and he began by explaining some of the statistical methods he used. He exemplified this by showing that UK coal production peaked in 1913, and is now down to what it was in Napoleonic times. Using statistical methods he was able to predict the likely total UK coal production over time, at around 27 billion tons. Future reserve estimates collapsed in the 1960-70 period as evaluators realized that reserves could only be coal that could be economically mined.
He looked at four regions, UK coal, Pennsylvania anthracite, France and Belgium, and Japan and South Korea. In all cases he found that mining will only extract about 25% of what was once considered a reserve. He tried to look at Chinese coal but had problems getting reliable statistics. While he was able to get good agreements between his plots and predictions and historic numbers his results were incompatible with IPCC coal presumptions.
Coal does not have the global fungibility that oil has and is more of a regional market commodity. He used Tom Wigley’s MAGICC computer model, but in trying to evaluate future temperatures he noted that, as a result of the Climategate incident, that the British Met Office are redoing their temperature records. He discussed some of the problems in assuring accurate temperature records. But overall he was confident of the IPCC predictions and those on the future rise in sea level, quoting Stefan Ramstorf.
Following a break Dr Robert Hirsch chaired a session on the link between Energy and the Economy, and it was possibly the bleakest of the meeting. Chris Martenson talked about looking at the economy as a straight highway, and then hitting a bend. While models often see progress in linear terms life does not turn out that way. Money is loaned into existence and credit (and thus debt) has increased over time. Since 1970 it has doubled five times. Money and energy have been tied, but while money must continue to grow, energy cannot. Credit market growth (with an R^2 of 0.98) has an exponential relationship with time. He sees the problem not with the individual smaller bubble causes of housing, etc but rather the overall credit size itself.
He sees the problems coming in the 2014-2015 time frame when Peak Oil will be recognized and while growth may continue, prosperity may not.
He was followed by Nicole Foss- who many of us have read under the pen name Stoneleigh . She sees fossil fuels as generating the largest bubble in history. The economy has been driven up by energy, but as that declines what will take its place? In the sense that bubbles are Ponzi schemes where only early investors make a return on their investment, as this one comes to an end as the largest suckers get fleeced, so they collapse to general hurt.
Markets are driven by perception rather than reality. But by the time the general public hears of “a good thing” it is generally over. Hearing the “it’s a new paradigm” should warn you to sell the stock. But the world is driven on emotion. And when there is a collapse it is often sudden, bringing the value down below what it was before the bubble began. (And oil prices are following this model). From this she could see nothing ahead but progress into a deflation and depression. We are already in a large debt and liquidity trap and as credit disappears the depression will develop and be sustained. The huge derivatives market may be the first to go, given its insignificant intrinsic value.
The problem is in part that it will be based on reducing volumes of oil, and with that reduction there is no possibility of a rebound, since the resource is not there to develop it. Oil has thus hegemonic power. The depression will, however, sustain its dominance since reduced demand will allow it to remain dominant.
The final speaker of the evening was Robert Hirsch, who has also recently co-authored a book – The Impending World Energy Mess which was available in signed copy at the meeting. In large measure his talk followed the book (from which you may gather that I did buy, and have half-read, a copy – and it is worth doing so, I may do a review later). He noted that the economy depends on energy, not the other way around. Further we should expect that the general public will still be surprised when oil supplies start to decline in the next 2 – 5 years. From then they will continue to decline for at least a decade, until alternate sources of fuel become sufficiently available. He covered the oil problem their forecast of how it will develop, and what an individual could do about it.
The story is a familiar one to the peak oil community, we are over reliant on a few giant oil fields that are depleting and not being replaced. We have been sensibly in a production plateau since 2005, something not predicted by earlier models, but there are an increasing number of reputable sources that see an end to the plateau, and the consequent decline, coming relatively soon. This will impact GDP and hurt national economies. The recent recession and drop in oil demand may have only shifted the onset of the decline by a few weeks.
It is unrealistic to expect a rapid answer to the decline from politicians. Looking at the likely rate of decline, a 2% fall could be easily handled, a 4% fall could be handled with difficulty, but at 6% it is going to be bad. They have had to guess, and think, at the moment that it will likely be at around 4%.
China, having foreseen this problem, are doing smart things to prepare for it. We in the West are not. It will lead to increased tensions – though they did not look at the potential for resource wars, or the likelihood that producers would withhold production for political or economic reasons.
Looking at individual response, we should all expect to be impacted, and because of the lack of political ability to resolve the issue (or even to address it yet) we should expect that the result will be very similar to the oil shortages of the 70s. There was a degree of panic – this will happen again. This time, however, there will be no North Sea or North Slope to come to the rescue. Nor can the oil taps be opened wider to remediate the problems. As a result he has got out of the market – since good stocks and bonds will be hurt as well as bad. He has added annuities to his portfolio, bought some gold, and moved closer to mass transit and the shops.
He reminded us that this is a liquid fuels problem, while most renewables (wind and solar and hydro) deal with the electricity supply, which is not helpful to the crisis. We also have enough food. The issue is in transportation where we need a substitute for oil.
In questions he was asked about rationing. He fully anticipates it happening, but it will be very complicated to develop and impose. Countries will respond in different ways and become more independent. The United States will have to reindustrialize, since it will not be able to rely on foreign manufacture. We increased productivity by having oil help labor. Now this must reverse.
He did not see the problem being deflation, but rather in the control of inflation. But then it is easier to write a history book than a forecast. He could only see that many people will get hurt in the coming years.
On which cheery note I went to find a drink, have dinner and retire for the evening. More later.
Read more!
Thursday, October 7, 2010
ASPO Conference - first evening
The initial report on the conference papers was getting a bit long, so I split it into afternoon and evening parts, and the second follows.
Again, there were three sessions in the final afternoon part of the program and I chose to go to the one chaired by Ron Swenson on Energy Alternatives. The first speaker was Charlie Hall who pointed out that the neo-classical economists and those who advocated different political theories had found it easier to justify their claims in an environment where oil became increasingly available to support GDP growth. However we are now entering a period of oil supply decline, when perhaps the “biophysical economics” theories will gain more credence.
Largely his talk covered the considerations of Energy Cost on the production of fuel, and with rising cost and renewables not being viable in parts of the USA he wondered if our best days were behind us.
The change in energy cost can be seen from oilfields that once produced oil but now produce water with a small oil content. The energy cost has therefore to be paid by an increasingly small fraction of the volume pumped. There are two impacts as the energy costs per unit of energy go up, the first impacts the industry, while the second impacts the consumer. As greater portions of income are required to meet fuel bills (travel, heat etc) then the amount available for discretionary spending is reduced.
Bill James talked of the need to go from the principles of Government Directives driving research to more properly taking advantage of “the nature of invention.” Cell phones have gone from non-existent for the common man in 1984, to the point where they are now ubiquitous. He noted that we don’t need “know-how”, but rather “know-what.” Driving to use the $40 worth of gas in a car tank, could be done on a train for a cost of $1.12. Yet we continue to pay to use the car. Increasing oil prices cut family discretionary income by $2,000 a year in the last three. He quoted Edison’s lines that:
While families might plant Victory Gardens one of the major expenses ($10,300 a year on average) is for transportation. Yet in commuting one usually has to swop time and inconvenience for money if one changes to public transport. A bus, for example, will average, in town, a speed of 8 mph, and light rail only 18, while a car gets 24 mph on average. This he used as a lead in to the discussion of the Jpods concept a small, personal light rail commuting vehicle that can carry individuals, under computer control around a network. As he noted “rollercoaster mechanics in an internet network.” The pods will be small and light, in contrast with the heavy frames of current vehicles, thus requiring less energy to move, and which can be provided by overhead solar panels. While this is largely still conceptual (though a prototype was shown at the ASPO Conference in Sacramento 2 years ago) he noted the system in Morgantown installed after the 1975 oil shock, and which has run 110 million passenger miles without injury and 99% reliability. That system is now seeking to expand. Podcars themselves have become of sufficient interest that there is now a conference devoted to their use.
Carey King was the last speaker before the reception, He stressed the importance of ensuring that an analysis of energy costs be comprehensive. Adding different elements that are not always considered can significantly reduce overall EROI values. The example he gave pointed out that, for example, a wind turbine might have an EROI initially set at 30:1. But as one included the energy required to build the turbine, to run it in the field, and to manage it from the corporation headquarters then this number could easily fall toward 10. If one then includes other costs (which have an energy component) such as debt financing etc. the value continues to fall. Thus the final number has , for particular installations, fallen to a peak of 13:1 and a low of less than 1:1. This is not something that is just peculiar to wind, natural gas may start with an EROI of 30 and lose 30% of that when quality adjusted and service included. These charges become even of more impact when the raw fuel is converted, such as for example when coal is burned to produce electricity and where, unless the heat is otherwise used, it must be disposed of giving a 33% energy conversion efficiency.
Following the reception, the Keynote session for the Conference was chaired by Tom Whipple who welcomed delegates and introduced Congressman Roscoe Bartlett to give the Overall Introduction to the Conference.
Congressman Bartlett has been a staunch voice for the community since I started coming to the ASPO meetings. (I put Stuart’s Thursday review up first so that those with eagle eyes might note I was there). I was fortunate to hear him at the meeting in Denver in 2005 and his remarks have remained on target and of concern – to us, if not his colleagues, since.
He was glad to note that Admiral Rice was the first speaker since the JOE Report recognized with its
China has already in place a “Post Peak Oil” strategy. It includes conservation, domestic supply, diversification, environmental impact issues, and international cooperation. It already buys oil from all over the world, including that still in the ground, and has a major Blue water Navy under construction to protect those interests. They are graduating seven times as many engineers as we are. They know you cannot rebuild exhausted reserves.
Admiral Rice was, until last week, the director of Strategy and Policy at the Joint Forces Command. They put out the JOE report although he took over from General Mattis. Since then he has received considerable push back on the contents of the report including comments on climate change; peak oil, China and Russia – and since these came from both sides, he felt that General Mattis had got it about right.
The problem that the Armed Forces face is that of the reliability and continuity of the logistics of supply, particularly to forward troops. It can cost up to $400 a gallon to get that fuel to outposts in Afghanistan. But it is in the primary purchase of that fuel, and the cost to the country, that he sees the greatest threat. When we spend $386 billion on overseas oil, 39% of which comes from dangerous or unstable regimes who funnel that money for use against us there is a problem. We pay Venezuela $60 million a day, enough for 2 modern fighter aircraft, and they have bought several. China is buying the fuel, resources and refineries they need to ensure their supply and to provide safe means to bring it to China.
Russia having rebuilt its economy on oil and gas income, is now aggressively rebuilding its armed forces. Our military recognize that they must change, an overly great reliance on oil means that if a tanker sinks a fleet cannot move, or aircraft fly (unless nuclear powered ships). And so there is a move to include renewable power plant in facilities. This includes solar at Nellis AFB, and geothermal at China Lake. The intent is to get half the power from renewable sources by 2020. But, while the military knows and recognizes the problem, it does not know how to carry this message to the rest of the country.
Dr Michael Klare was the final speaker, and discussed the problem of energy security and conflict, topics on which he lectures. He noted that we are in an intense, unrecognized, struggle for power and wealth. The most recent significant change in this has been that China has become the #1 consumer of energy in the world. The USA led for the last 100 years, but have now been overtaken. And on our part having exhausted our own reserves, we are now trying to exhaust everyone else’s.
While China and the USA both now consume around 100 Quads of energy, by 2035 the US will increase demand to 115 Quads. China will increase power consumption, at present trends, to 180 Quads. They currently get:
62% of their energy from coal.
19% from oil.
10% from renewables
5% from natural gas
3% from nuclear.
He sees the continued, or perhaps increasing dependence on coal as being disastrous because of the climate change effects. He does not see how they can import 10 mbd of oil in 2035 when the global supply will be less than it is today.
As a result conflict appears inevitable. We must however hope that they will increasingly rely on renewable sources, but even there we must chase and beat them (they are already leading producers) to remain competitive and to ensure our, an our children’s futures. It is essential that we accelerate change to renewable sources.
Questions from the floor included one from Bianca Jagger on how we could get the public to adopt the military view (though how widespread the JOE report thinking is within the military remains in doubt).
Tom Whipple noted that ASPO has changed its directors and is moving to Washington D.C. just so that it can have more influence, but it was Congressman Bartlett who realistically noted that we will need a major crisis for that to happen.
Unfortunately many of the “questions” in the remaining moments became statements of different viewpoints rather than questions to the Panel. So I will report back later on the second day of the Conference.
Again, there were three sessions in the final afternoon part of the program and I chose to go to the one chaired by Ron Swenson on Energy Alternatives. The first speaker was Charlie Hall who pointed out that the neo-classical economists and those who advocated different political theories had found it easier to justify their claims in an environment where oil became increasingly available to support GDP growth. However we are now entering a period of oil supply decline, when perhaps the “biophysical economics” theories will gain more credence.
Largely his talk covered the considerations of Energy Cost on the production of fuel, and with rising cost and renewables not being viable in parts of the USA he wondered if our best days were behind us.
The change in energy cost can be seen from oilfields that once produced oil but now produce water with a small oil content. The energy cost has therefore to be paid by an increasingly small fraction of the volume pumped. There are two impacts as the energy costs per unit of energy go up, the first impacts the industry, while the second impacts the consumer. As greater portions of income are required to meet fuel bills (travel, heat etc) then the amount available for discretionary spending is reduced.
Bill James talked of the need to go from the principles of Government Directives driving research to more properly taking advantage of “the nature of invention.” Cell phones have gone from non-existent for the common man in 1984, to the point where they are now ubiquitous. He noted that we don’t need “know-how”, but rather “know-what.” Driving to use the $40 worth of gas in a car tank, could be done on a train for a cost of $1.12. Yet we continue to pay to use the car. Increasing oil prices cut family discretionary income by $2,000 a year in the last three. He quoted Edison’s lines that:
"Sunshine is spread out thin and so is electricity. Perhaps they are the same, but we will take that up later. Now the trick was, you see, to concentrate the juice and liberate it as you needed it. The old-fashioned way inaugurated by Jove, of letting it off in a clap of thunder, is dangerous, disconcerting and wasteful. It doesn't fetch up anywhere. My task was to subdivide the current and use it in a great number of little lights, and to do this I had to store it. And we haven't really found out how to store it yet and let it off real easy-like and cheap. Why, we have just begun to commence to get ready to find out about electricity. This scheme of combustion to get power makes me sick to think of--it is so wasteful. It is just the old, foolish Prometheus idea, and the father of Prometheus was a baboon."He feels that the next 12 months will be critical to facing the problems of peak oil, but that it is so far advanced that innovations must come.
"When we learn how to store electricity, we will cease being apes ourselves; until then we are tailless orangutans. You see, we should utilize natural forces and thus get all of our power. Sunshine is a form of energy, and the winds and the tides are manifestations of energy.".
While families might plant Victory Gardens one of the major expenses ($10,300 a year on average) is for transportation. Yet in commuting one usually has to swop time and inconvenience for money if one changes to public transport. A bus, for example, will average, in town, a speed of 8 mph, and light rail only 18, while a car gets 24 mph on average. This he used as a lead in to the discussion of the Jpods concept a small, personal light rail commuting vehicle that can carry individuals, under computer control around a network. As he noted “rollercoaster mechanics in an internet network.” The pods will be small and light, in contrast with the heavy frames of current vehicles, thus requiring less energy to move, and which can be provided by overhead solar panels. While this is largely still conceptual (though a prototype was shown at the ASPO Conference in Sacramento 2 years ago) he noted the system in Morgantown installed after the 1975 oil shock, and which has run 110 million passenger miles without injury and 99% reliability. That system is now seeking to expand. Podcars themselves have become of sufficient interest that there is now a conference devoted to their use.
Carey King was the last speaker before the reception, He stressed the importance of ensuring that an analysis of energy costs be comprehensive. Adding different elements that are not always considered can significantly reduce overall EROI values. The example he gave pointed out that, for example, a wind turbine might have an EROI initially set at 30:1. But as one included the energy required to build the turbine, to run it in the field, and to manage it from the corporation headquarters then this number could easily fall toward 10. If one then includes other costs (which have an energy component) such as debt financing etc. the value continues to fall. Thus the final number has , for particular installations, fallen to a peak of 13:1 and a low of less than 1:1. This is not something that is just peculiar to wind, natural gas may start with an EROI of 30 and lose 30% of that when quality adjusted and service included. These charges become even of more impact when the raw fuel is converted, such as for example when coal is burned to produce electricity and where, unless the heat is otherwise used, it must be disposed of giving a 33% energy conversion efficiency.
Following the reception, the Keynote session for the Conference was chaired by Tom Whipple who welcomed delegates and introduced Congressman Roscoe Bartlett to give the Overall Introduction to the Conference.
Congressman Bartlett has been a staunch voice for the community since I started coming to the ASPO meetings. (I put Stuart’s Thursday review up first so that those with eagle eyes might note I was there). I was fortunate to hear him at the meeting in Denver in 2005 and his remarks have remained on target and of concern – to us, if not his colleagues, since.
He was glad to note that Admiral Rice was the first speaker since the JOE Report recognized with its
By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.the reality of the situation. He used the report to emphasize that China will not reach the levels of oil production anticipated in the general community by 2030. He noted that, within a decade, it is likely that Iran will be an oil importer. He noted that OPEC with 75% of the remaining reserves, has 42% of existing production; the Former Soviet Union with 12.7% of the reserves has 16.8% of present global production; and the US with 2% of the reserves, has 8% of the production.
China has already in place a “Post Peak Oil” strategy. It includes conservation, domestic supply, diversification, environmental impact issues, and international cooperation. It already buys oil from all over the world, including that still in the ground, and has a major Blue water Navy under construction to protect those interests. They are graduating seven times as many engineers as we are. They know you cannot rebuild exhausted reserves.
Admiral Rice was, until last week, the director of Strategy and Policy at the Joint Forces Command. They put out the JOE report although he took over from General Mattis. Since then he has received considerable push back on the contents of the report including comments on climate change; peak oil, China and Russia – and since these came from both sides, he felt that General Mattis had got it about right.
The problem that the Armed Forces face is that of the reliability and continuity of the logistics of supply, particularly to forward troops. It can cost up to $400 a gallon to get that fuel to outposts in Afghanistan. But it is in the primary purchase of that fuel, and the cost to the country, that he sees the greatest threat. When we spend $386 billion on overseas oil, 39% of which comes from dangerous or unstable regimes who funnel that money for use against us there is a problem. We pay Venezuela $60 million a day, enough for 2 modern fighter aircraft, and they have bought several. China is buying the fuel, resources and refineries they need to ensure their supply and to provide safe means to bring it to China.
Russia having rebuilt its economy on oil and gas income, is now aggressively rebuilding its armed forces. Our military recognize that they must change, an overly great reliance on oil means that if a tanker sinks a fleet cannot move, or aircraft fly (unless nuclear powered ships). And so there is a move to include renewable power plant in facilities. This includes solar at Nellis AFB, and geothermal at China Lake. The intent is to get half the power from renewable sources by 2020. But, while the military knows and recognizes the problem, it does not know how to carry this message to the rest of the country.
Dr Michael Klare was the final speaker, and discussed the problem of energy security and conflict, topics on which he lectures. He noted that we are in an intense, unrecognized, struggle for power and wealth. The most recent significant change in this has been that China has become the #1 consumer of energy in the world. The USA led for the last 100 years, but have now been overtaken. And on our part having exhausted our own reserves, we are now trying to exhaust everyone else’s.
While China and the USA both now consume around 100 Quads of energy, by 2035 the US will increase demand to 115 Quads. China will increase power consumption, at present trends, to 180 Quads. They currently get:
62% of their energy from coal.
19% from oil.
10% from renewables
5% from natural gas
3% from nuclear.
He sees the continued, or perhaps increasing dependence on coal as being disastrous because of the climate change effects. He does not see how they can import 10 mbd of oil in 2035 when the global supply will be less than it is today.
As a result conflict appears inevitable. We must however hope that they will increasingly rely on renewable sources, but even there we must chase and beat them (they are already leading producers) to remain competitive and to ensure our, an our children’s futures. It is essential that we accelerate change to renewable sources.
Questions from the floor included one from Bianca Jagger on how we could get the public to adopt the military view (though how widespread the JOE report thinking is within the military remains in doubt).
Tom Whipple noted that ASPO has changed its directors and is moving to Washington D.C. just so that it can have more influence, but it was Congressman Bartlett who realistically noted that we will need a major crisis for that to happen.
Unfortunately many of the “questions” in the remaining moments became statements of different viewpoints rather than questions to the Panel. So I will report back later on the second day of the Conference.
Read more!
The ASPO Conference - first afternoon
One of the speakers commented, just at the beginning of the ASPO 2010 Peak Oil Conference, that we would be subject to enough information that it would seem that we were standing under a fire hose. Well the Conference has had its first day, or at least afternoon, our first fire alarm (we got to the top of the stairs before being told it had been dealt with) and our first reception is over, as is the evening keynote session. He was right.
I occasionally think that attending Conferences should be a biennial practice, since change in the papers is so slow – but so far that hasn’t been the case this year where the new information available is already evident, though some of the old lions are still roaring on the same topics. There were three concurrent sessions this afternoon, and so I can only report on one set – starting with the session on the Export Land Model (which just gets more worrisome); then the Oil Drum session (where I was a speaker) and then the session on Energy Alternatives (which mainly talked about EROI). This report is being written incrementally, and has been updated once, but I will add the evenings two sessions in a second post, given the length that this one has already.
Jeff Brown began the session on the outlook for exports. His Export Land Model is now well recognized within the community, and after paying a short tribute to the late Matt Simmons, always a friendly and helpful face at these meetings, he brought us more up to date on where the model predictions were being validated, and what they were showing. With lots of papers to cover I can only hit the very high points of the presentation, so this is a very short summary. After commenting on how production declines in major fields, he tied this in to the rising standards of the producing country, and showed that, in a base case a 5% decline post-peak production for a country’s oil, when matched with a 2.5% growth in that country’s consumption, driven by the oil, but continuing after it starts into decline, rapidly lowers exports. Simplistically within 3 years after peak the country will have exported half the oil it will export post-peak. He then compared this theoretical situation with the realities of Indonesia and the UK, where within 9 years for Indonesia, and 6 years for the UK, the countries stopped exports and became importers. Export declines in the final years were over 25% per year.
He pointed to the problems that Venezuela is seeing, and noted that consumption in Saudi Arabia is rising at 6.9% a year. He anticipates that Saudi Arabia, until recently the largest exporter (now behind Russia) will stop exporting before 2030. Looking a the top 5 exporting nations, who collectively supply 50% of the imported oil around the world, he anticipates that they will have shipped half of their remaining export volume in two years. There are now only 33 countries that produce more than 100,000 bd. And, for these, production is sensibly flat over the past five years, while consumption has risen from 16 to 17.5% of production.
While unconventional oil is supposed to be a positive contributor in the future, he noted that when Canada and Venezuela are combined, production is actually falling. The worrying factor is the combination of China and India, who have increased imports from 11.3% of the total in 2005, to 17.1% in 2009. If this continues they will consume 25% of global oil exports by 2015, which will significantly reduce the amount available to the rest of us.
With the first speaker having raised the problem of oil, it was Jonathan Callaghan who shifted the topic over to Natural Gas. Jonathan runs the websites on energy that I use as a reference on occasion, where there are very useful plots of the energy consumption, production and import/export balances for the nations around the world. These provide patterns for the various fossil fuels, by nation, and Jonathan used representative plots from the series for his talk, beginning with the UK.
Noting that the UK used town gas (made from coal) until 1959, when the first LNG was imported from LA, gas in the UK was privatized in 1986 and reached peak production in 2000, becoming a net importer of natural gas in 2004. This last winter it was necessary, on three occasions for the National Grid to issue “Gas Balancing Alerts”, where industrial consumers should reduce use to protect domestic consumers. The situation is anticipated to get worse.
He contrasted this way of managing a resource with that of the Dutch, who have the large Groningen Gas field but which they have managed in a much more conservative way. With their different management philosophy they have retained a considerable margin for the future, over the same time interval.
Presentation of the data in this way also allows judgments that are not otherwise immediately obvious. For example consider the data for Argentina:
Without looking at the export/import data it might be hard to decide whether it had peaked in production, but when that data is examined the conclusion is relatively obvious.
And thus he went through different countries showing how the analysis of the plots, with a little local knowledge, gives a global picture of what is going on. As South America moves to becoming an overall importer and China is adding compressors to the pipeline from Turkmenistan to increase the flow rates, the time before world production peaks may be considerably sooner than people realize, since most of the fields are being run on the British, rather than the Dutch model.
He then turned to coal, in what was really a second talk, looking at the amounts that are available (pressing the coal button on the website) allowed him to note how dominant China is becoming in coal consumption.
The problem, however, is while the condition of the industry is known in general, the behavior of China and India will likely govern overall future coal use in ways that we have yet to understand.
There was then a very short break, and the team from The Oil Drum took to the podium. Gail Tverberg began with introductory remarks explaining some of the factors, such as Geology, Technology, Economics and Timing that influence production and its impact on demand, and ability to respond to it. She noted the difficulty in justifying large investment for increasingly expensive reserves, and the problem in justifying the expense years in advance of production. Further when there are new crises, which could be created by one of several scenarios (including higher industry taxes) drops in production which can be relatively immediate cannot always be made up in that short a time interval. And sometimes those with the capacity might not be so inclined – particularly if the shortage drives up prices.
I spoke second and took as my theme that Technology, while it can come to the rescue on some occasions if needed (the horizontal well, slick fracture development of gas shales for example) requires considerable lead time and the solving of several technical problems if it is to succeed. Those solutions as has been stated in the Hirsch Report, can take 20-years to become a significant player. Thus while, for example, the “Green Hornet” flew with biofuel power this April, it used oil from camelina, which is not a popular agricultural product in the US. I then pointed out ( and I will expand this thought into a technical post, perhaps this Sunday) that those who anticipate Peak Coal in the next few years are likely going to be mistaken. The reason there has been no innovation in mining has not been because no one has thought of answers, rather that what is used today is too cheap to need replacing.
Dave Murphy then gave a discussion on the changes needed to move away from the classical economics theories toward recognition of other factors in societal health. He noted that national economies are tied to the consumption of oil (which is then tied to price) rather than to oil price itself. The variation between expansion (up 2%) and recession (down 2%) is not great. Though it is the provision of cheap fuel that has funded international growth. Every recession since 1970 has been preceded by an oil price spike.
We are now in an era where small fluctuations in flow (on the order of 1 – 2 mbd) can have a significant impact on price and economic stability. We are entering a period where the cost of production of oil begins to reach the point at which a recession is started, but the drop in demand in a recession would not justify the oil supply. And so this conundrum illustrates the world into which we are rapidly entering.
As the production of energy requires complex drilling platforms that rent for $450,000 a day (of the Deepwater Horizon ilk) rather than the wooden platforms used to drill Spindletop, those costs will only continue to rise.
With so much uncertainty it is, perhaps time to change economic models, from the neoclassical to bio-environmental. He noted that studies have shown that emotional happiness increases only until a person earns $75,000 a year. Above that there is no increase, and so perhaps we should be content when we reach this level, and stop the perpetual growth cycle.
The session closed with a talk by Jeff Vail, who talked of the “Rescuing of Suburbia.” Much has been written about the trouble that those communities are in, but does it really need rescue? Of the 150 million Americans living in the 40 million homes in Suburbia, how many would have the money to relocate and where? There are 5 million homes at risk of, or in foreclosure with that big a problem already how could one afford to abandon Suburbia.
Commuting costs are a real problem, but this is a low hanging fruit. But to save energy and cost, one must accept inconvenience. (The Admiral later in the evening talked of going to a child’s game and seeing all the neighbors there in there SUVs , all having driven separately an hour and forty-five minutes to get to the game, and the same back.) He talked of making other decisions, citing Brad Lancaster in Tucson who harvested rainwater to grow good to feed 50% of the needs for a family of four on what started as a barren lot. The open spaces also allow more effective installations of solar power.
The transition however must go beyond that, if we are to re-invent suburbia – and there are tools in development. Rapid prototyping equipment and early machines that can make 3-D objects from computer programs. This will allow small-scale manufacturing and construction, and distributed manufacturing decentralizing the process and empowering suburbia. Suburbia, it must be remembered, has need the greatest egalitarian land ownership movement in history. Unfortunately the transition, without significant help, will not happen fast enough.
We then took the break in which I started this post. I'll write on what came next in a second post.
I occasionally think that attending Conferences should be a biennial practice, since change in the papers is so slow – but so far that hasn’t been the case this year where the new information available is already evident, though some of the old lions are still roaring on the same topics. There were three concurrent sessions this afternoon, and so I can only report on one set – starting with the session on the Export Land Model (which just gets more worrisome); then the Oil Drum session (where I was a speaker) and then the session on Energy Alternatives (which mainly talked about EROI). This report is being written incrementally, and has been updated once, but I will add the evenings two sessions in a second post, given the length that this one has already.
Jeff Brown began the session on the outlook for exports. His Export Land Model is now well recognized within the community, and after paying a short tribute to the late Matt Simmons, always a friendly and helpful face at these meetings, he brought us more up to date on where the model predictions were being validated, and what they were showing. With lots of papers to cover I can only hit the very high points of the presentation, so this is a very short summary. After commenting on how production declines in major fields, he tied this in to the rising standards of the producing country, and showed that, in a base case a 5% decline post-peak production for a country’s oil, when matched with a 2.5% growth in that country’s consumption, driven by the oil, but continuing after it starts into decline, rapidly lowers exports. Simplistically within 3 years after peak the country will have exported half the oil it will export post-peak. He then compared this theoretical situation with the realities of Indonesia and the UK, where within 9 years for Indonesia, and 6 years for the UK, the countries stopped exports and became importers. Export declines in the final years were over 25% per year.
He pointed to the problems that Venezuela is seeing, and noted that consumption in Saudi Arabia is rising at 6.9% a year. He anticipates that Saudi Arabia, until recently the largest exporter (now behind Russia) will stop exporting before 2030. Looking a the top 5 exporting nations, who collectively supply 50% of the imported oil around the world, he anticipates that they will have shipped half of their remaining export volume in two years. There are now only 33 countries that produce more than 100,000 bd. And, for these, production is sensibly flat over the past five years, while consumption has risen from 16 to 17.5% of production.
While unconventional oil is supposed to be a positive contributor in the future, he noted that when Canada and Venezuela are combined, production is actually falling. The worrying factor is the combination of China and India, who have increased imports from 11.3% of the total in 2005, to 17.1% in 2009. If this continues they will consume 25% of global oil exports by 2015, which will significantly reduce the amount available to the rest of us.
With the first speaker having raised the problem of oil, it was Jonathan Callaghan who shifted the topic over to Natural Gas. Jonathan runs the websites on energy that I use as a reference on occasion, where there are very useful plots of the energy consumption, production and import/export balances for the nations around the world. These provide patterns for the various fossil fuels, by nation, and Jonathan used representative plots from the series for his talk, beginning with the UK.
Noting that the UK used town gas (made from coal) until 1959, when the first LNG was imported from LA, gas in the UK was privatized in 1986 and reached peak production in 2000, becoming a net importer of natural gas in 2004. This last winter it was necessary, on three occasions for the National Grid to issue “Gas Balancing Alerts”, where industrial consumers should reduce use to protect domestic consumers. The situation is anticipated to get worse.
He contrasted this way of managing a resource with that of the Dutch, who have the large Groningen Gas field but which they have managed in a much more conservative way. With their different management philosophy they have retained a considerable margin for the future, over the same time interval.
Presentation of the data in this way also allows judgments that are not otherwise immediately obvious. For example consider the data for Argentina:
Without looking at the export/import data it might be hard to decide whether it had peaked in production, but when that data is examined the conclusion is relatively obvious.
And thus he went through different countries showing how the analysis of the plots, with a little local knowledge, gives a global picture of what is going on. As South America moves to becoming an overall importer and China is adding compressors to the pipeline from Turkmenistan to increase the flow rates, the time before world production peaks may be considerably sooner than people realize, since most of the fields are being run on the British, rather than the Dutch model.
He then turned to coal, in what was really a second talk, looking at the amounts that are available (pressing the coal button on the website) allowed him to note how dominant China is becoming in coal consumption.
The problem, however, is while the condition of the industry is known in general, the behavior of China and India will likely govern overall future coal use in ways that we have yet to understand.
There was then a very short break, and the team from The Oil Drum took to the podium. Gail Tverberg began with introductory remarks explaining some of the factors, such as Geology, Technology, Economics and Timing that influence production and its impact on demand, and ability to respond to it. She noted the difficulty in justifying large investment for increasingly expensive reserves, and the problem in justifying the expense years in advance of production. Further when there are new crises, which could be created by one of several scenarios (including higher industry taxes) drops in production which can be relatively immediate cannot always be made up in that short a time interval. And sometimes those with the capacity might not be so inclined – particularly if the shortage drives up prices.
I spoke second and took as my theme that Technology, while it can come to the rescue on some occasions if needed (the horizontal well, slick fracture development of gas shales for example) requires considerable lead time and the solving of several technical problems if it is to succeed. Those solutions as has been stated in the Hirsch Report, can take 20-years to become a significant player. Thus while, for example, the “Green Hornet” flew with biofuel power this April, it used oil from camelina, which is not a popular agricultural product in the US. I then pointed out ( and I will expand this thought into a technical post, perhaps this Sunday) that those who anticipate Peak Coal in the next few years are likely going to be mistaken. The reason there has been no innovation in mining has not been because no one has thought of answers, rather that what is used today is too cheap to need replacing.
Dave Murphy then gave a discussion on the changes needed to move away from the classical economics theories toward recognition of other factors in societal health. He noted that national economies are tied to the consumption of oil (which is then tied to price) rather than to oil price itself. The variation between expansion (up 2%) and recession (down 2%) is not great. Though it is the provision of cheap fuel that has funded international growth. Every recession since 1970 has been preceded by an oil price spike.
We are now in an era where small fluctuations in flow (on the order of 1 – 2 mbd) can have a significant impact on price and economic stability. We are entering a period where the cost of production of oil begins to reach the point at which a recession is started, but the drop in demand in a recession would not justify the oil supply. And so this conundrum illustrates the world into which we are rapidly entering.
As the production of energy requires complex drilling platforms that rent for $450,000 a day (of the Deepwater Horizon ilk) rather than the wooden platforms used to drill Spindletop, those costs will only continue to rise.
With so much uncertainty it is, perhaps time to change economic models, from the neoclassical to bio-environmental. He noted that studies have shown that emotional happiness increases only until a person earns $75,000 a year. Above that there is no increase, and so perhaps we should be content when we reach this level, and stop the perpetual growth cycle.
The session closed with a talk by Jeff Vail, who talked of the “Rescuing of Suburbia.” Much has been written about the trouble that those communities are in, but does it really need rescue? Of the 150 million Americans living in the 40 million homes in Suburbia, how many would have the money to relocate and where? There are 5 million homes at risk of, or in foreclosure with that big a problem already how could one afford to abandon Suburbia.
Commuting costs are a real problem, but this is a low hanging fruit. But to save energy and cost, one must accept inconvenience. (The Admiral later in the evening talked of going to a child’s game and seeing all the neighbors there in there SUVs , all having driven separately an hour and forty-five minutes to get to the game, and the same back.) He talked of making other decisions, citing Brad Lancaster in Tucson who harvested rainwater to grow good to feed 50% of the needs for a family of four on what started as a barren lot. The open spaces also allow more effective installations of solar power.
The transition however must go beyond that, if we are to re-invent suburbia – and there are tools in development. Rapid prototyping equipment and early machines that can make 3-D objects from computer programs. This will allow small-scale manufacturing and construction, and distributed manufacturing decentralizing the process and empowering suburbia. Suburbia, it must be remembered, has need the greatest egalitarian land ownership movement in history. Unfortunately the transition, without significant help, will not happen fast enough.
We then took the break in which I started this post. I'll write on what came next in a second post.
Read more!
Monday, October 4, 2010
Of Chilean rescue progress, ASPO meetings and horses
The latest word from Chile is that the second of the three drills working to create an escape shaft for the miners may complete the wider passage within another 48 hours. The initial drill that was being used to drill an access hole, before reaming that to the required diameter has now been stopped, since although the initial hole is at 1,925 ft and about to break through with the smaller hole, it has had some problems with the drill, and with the other two drills so far ahead, is no longer considered necessary.
The second drill, once plan B, which is reaming its hole out to the desired diameter, is at a depth of 1,400 ft and is expected to reach the miner location by Thursday. Once the reaming is completed it is expected to take another two to six days to line the bore, before the men are brought out. There is, however, some debate as to whether the lining is necessary, given that without it the rescue could happen earlier. The President of Chile would like to have the men rescued before leaving for Europe, a trip currently planned for the 17th October.
The current back-up drill, originally plan C, which is drilling a single hole of the required size in a single pass, has reached a depth of 650 ft, but has to be repositioned to align with the intended target position down at the miner level
While I will post more on this story over the rest of the week, as the story unfolds, I will be travelling to Washington on Wednesday for the ASPO 2010 Peak Oil Conference which will take place from Thursday through Saturday. As has been my previous habit, I hope to be able to post some summaries of the different talks that I am able to attend (though giving a couple and moderating a session will limit which sessions I can cover). But it will restrict the posts that I can put up for the rest of the week.
I was planning on putting up a small story on the changes in France to re-introduce the horse, rather than relying on the more conventional garbage trucks. It took me back a number of years. Whether the idea is totally economically viable is not always certain, though on a limited scale I can imagine that it could be successful given the right location.
There are also other possible societal benefits. Growing up, as I did, in Northern England after the Second World War, there were a number of services that came via horse-drawn cart. Later some (milk being one) changed to where small electric-powered vans were used instead, but the clop of the horse’s hooves down the street would often be enough to get the kids in the house out into the street. (The manure was also prized as a good fertilizer for the garden, particularly roses, though it contained a lot of weed seed).
In the interim they have become a common sight as a way for tourists to get around the scenic parts of many cities. And along the way methods have developed for keeping the cities cleaner than the horses left them when they were more commonly used. That would provide a basis from which they could again expand their usefulness.
This is not a horse diaper (from Ben and Alonna)
However, while the French are hailing this as an innovative idea, it should be noted that in Israel it was only last November that the Mayor of Tel Aviv yielded to pressure and banned the use of horse drawn carts in the city. And in other parts of the world where horse drawn vehicles remain a common method of haulage and transport, the conditions of the horses can still give rise to concern, as for example, in Mumbai.
There are lots of little trails I fancied wandering down in writing a post about this, but unfortunately have run out of time, so I will leave you to conjecture. Remember that in some places animals are required to wear diapers Though it is also reported that these can cause some additional traffic problems.
The second drill, once plan B, which is reaming its hole out to the desired diameter, is at a depth of 1,400 ft and is expected to reach the miner location by Thursday. Once the reaming is completed it is expected to take another two to six days to line the bore, before the men are brought out. There is, however, some debate as to whether the lining is necessary, given that without it the rescue could happen earlier. The President of Chile would like to have the men rescued before leaving for Europe, a trip currently planned for the 17th October.
The current back-up drill, originally plan C, which is drilling a single hole of the required size in a single pass, has reached a depth of 650 ft, but has to be repositioned to align with the intended target position down at the miner level
While I will post more on this story over the rest of the week, as the story unfolds, I will be travelling to Washington on Wednesday for the ASPO 2010 Peak Oil Conference which will take place from Thursday through Saturday. As has been my previous habit, I hope to be able to post some summaries of the different talks that I am able to attend (though giving a couple and moderating a session will limit which sessions I can cover). But it will restrict the posts that I can put up for the rest of the week.
I was planning on putting up a small story on the changes in France to re-introduce the horse, rather than relying on the more conventional garbage trucks. It took me back a number of years. Whether the idea is totally economically viable is not always certain, though on a limited scale I can imagine that it could be successful given the right location.
There are also other possible societal benefits. Growing up, as I did, in Northern England after the Second World War, there were a number of services that came via horse-drawn cart. Later some (milk being one) changed to where small electric-powered vans were used instead, but the clop of the horse’s hooves down the street would often be enough to get the kids in the house out into the street. (The manure was also prized as a good fertilizer for the garden, particularly roses, though it contained a lot of weed seed).
In the interim they have become a common sight as a way for tourists to get around the scenic parts of many cities. And along the way methods have developed for keeping the cities cleaner than the horses left them when they were more commonly used. That would provide a basis from which they could again expand their usefulness.
This is not a horse diaper (from Ben and Alonna) However, while the French are hailing this as an innovative idea, it should be noted that in Israel it was only last November that the Mayor of Tel Aviv yielded to pressure and banned the use of horse drawn carts in the city. And in other parts of the world where horse drawn vehicles remain a common method of haulage and transport, the conditions of the horses can still give rise to concern, as for example, in Mumbai.
There are lots of little trails I fancied wandering down in writing a post about this, but unfortunately have run out of time, so I will leave you to conjecture. Remember that in some places animals are required to wear diapers Though it is also reported that these can cause some additional traffic problems.
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