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Oil and Politics
Richard Heinberg, truthout
On Tuesday, Senate Democrats introduced legislation that would halt a US arms sale to Saudi Arabia worth $1.4 billion. The implication is clear: no more war toys for the Saudis unless they agree to up their oil output.

The same day, the House approved a Senate plan to suspend oil deliveries to the Strategic Petroleum Reserve in hopes of diverting that oil to the market, thus lowering the pump price a tiny amount.

A week earlier, a handful of senators proposed a bill threatening a trade dispute with members of OPEC if the organization doesn't stop its "anti-competitive practices and illegal export quotas on oil."

It's understandable that our elected leaders would want to do something about the meteoric rise of gasoline, diesel and heating oil prices that are now bankrupting independent truckers and forcing many folks in colder states to choose between being able to stay warm and being able to drive to work. Yet, efforts like the ones just mentioned are based on a profound misperception of why oil prices are rising.

The real problem is summed up in the phrase Peak Oil. Petroleum is a finite substance and we have reached the inevitable point at which it simply isn't possible to increase the rate at which we extract it from the ground. Most oil-producing countries, including the US, have already seen their glory days and are now watching output from their wells gradually dwindle. Only a few nations are early in the production cycle and able to ramp up the rate of flow.
(15 May 2008)

Tapped Out
Paul Roberts, National Geographic
World oil demand is surging as supplies approach their limits.
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In 2000 a Saudi oil geologist named Sadad I. Al Husseini made a startling discovery. Husseini, then head of exploration and production for the state-owned oil company, Saudi Aramco, had long been skeptical of the oil industry's upbeat forecasts for future production. Since the mid-1990s he had been studying data from the 250 or so major oil fields that produce most of the world's oil. He looked at how much crude remained in each one and how rapidly it was being depleted, then added all the new fields that oil companies hoped to bring on line in coming decades. When he tallied the numbers, Husseini says he realized that many oil experts "were either misreading the global reserves and oil-production data or obfuscating it."

Where mainstream forecasts showed output rising steadily each year in a great upward curve that kept up with global demand, Husseini's calculations showed output leveling off, starting as early as 2004. Just as alarming, this production plateau would last 15 years at best, after which the output of conventional oil would begin "a gradual but irreversible decline."

That is hardly the kind of scenario we've come to expect from Saudi Aramco, which sits atop the world's largest proven oil reserves-some 260 billion barrels, or roughly a fifth of the world's known crude-and routinely claims that oil will remain plentiful for many more decades. Indeed, according to an industry source, Saudi oil minister Ali al-Naimi took a dim view of Husseini's report, and in 2004 Husseini retired from Aramco to become an industry consultant. But if he is right, a dramatic shift lies just ahead for a world whose critical systems, from defense to transportation to food production, all run on cheap, abundant oil.
(June 2008)
Paul Kedrosky writes:
I was hoping for more neat maps and glossy pictures, but even without 'em the current National Geographic has a worth-reading article on peak oil. No huge revelations, but lots of useful context

Crude Oil: how high can it go?
Ugo Bardi, The Oil Drum: Europe
(19th century whaling as a model for oil depletion and price volatility)
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19th century whaling is today one of the best examples we have of a complete cycle of exploitation of a natural resource.

... There are all sorts of economic models that attempt to predict prices, but their record is very poor. So, maybe the answer can be found in historical examples. If we can find a resource that has peaked and declined to zero or near zero production in the past, then its historical prices could give us some idea of what to expect today for oil.

There are many resources that have peaked and declined at the regional level; crude oil in the United States is a good example. But the price of US oil doesn't depend only on US production; it is affected by imports from other regions of the world. So that's not useful for understanding price trends at the global level. What we are looking for is a global resource that has peaked worldwide or, at least, in an economically isolated region.

After much search, the best example that I could find is not that of a mineral resource but of a biological one: whaling in 19th century. Whales are, of course, a renewable resource but if they are hunted much faster than they can reproduce, they behave as a non renewable resource; just like oil. We have good data about whaling compiled in books such as Alexander Starbuck's "History of the American whale fishery" (1878). In Starbuck's times there was no such thing as a "global market" for whale products. But the reach of the whaling ships was worldwide and the effects of whale depletion were felt in the same way by all markets in the world. So, we can take the prices reported by Starbuck as directly affected by the behavior of the production curve.

So, here are the results for the two products of whaling; whale oil and "whale bone".
Posted by Ugo Bardi
(15 May 2008)

Abqaiq and Eat It Too (or, More Geological Analysis of Potential Saudi Depletion)
JoulesBurn, The Oil Drum
Abqaiq, an aging super giant Saudi Arabian oil field, has yielded over 11 billion barrels of oil since it was discovered in November of 1940. Its past provides us with the poster child for easy oil.

The first well flowed at 9720 barrels per day, a far cry from today's land finds where multiple horizontal laterals are necessary to coax lesser quantities from stingier reservoirs. But Abqaiq's more recent past paints a more muddled picture, as efforts to extract the remaining oil have produced mixed results.

More advanced recovery methods have been successfully employed in some parts of the field, but these have likewise revealed unexpected geological complexities which have in turn hindered recovery in other areas. Many of the new challenges encountered in Abqaiq are relevant to the future prospects for other fields, particularly Ghawar and Khurais.

This article will evaluate the development status of the field using satellite imagery to identify recent drilling in correlation with several recent technical reports on new developments and strategies for maintaining production.
(15 May 2008)

Author gushing with oil knowledge; Professor speaks at conference
Tara Hagan, Sarnia Observer (Canada)
Homer-Dixon's speech at Petrolia's Victoria Hall, "The Great Transition: Coping with the end of the oil age," focused on oil production and the severity of the ongoing climate and energy crises.

His message: we're running out of cheap oil.

That is high quality, conventional oil pools that are large and close to the earth's surface.

We are probably near peak global output of conventional oil," he said, noting a decline of existing oil fields. "Today, we're having to work harder and go deeper to find it."

Companies are being forced to drill in more challenging environments, he said, like deep, offshore sites, only to find smaller pools of lower quality oil.

Forty per cent of the world's commercial energy and nearly 100 per cent of the world's transportation energy relies on conventional oil.

"There are estimates that humankind has consumed about one-trillion barrels of oil since 1859, but there is much disagreement over how much recoverable oil is left," he said.

"This stuff is so valuable it's the best energy source we're ever going to find."

... "This crisis may just be the greatest thing to happen to humankind," he said. "Because it's going to scare the hell out of us. And that's what it'll take to mobilize us."
(14 May 2008)