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Old 07-14-2009   #21
Rick M
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Default Peak Oil

Hi, Steve

Thanks for your latest detailed observations, and I’m sorry that I still have not responded to all of your ideas in your previous posting.
We’ve finally had a break in the rain so I’ve been busy at the hay.

I’ll take your points in order:

1. The Oil Drum
I don’t like their lay-out… vertical with wide sidebars, hard to read because the reader is forever scrolling up & down… hard to work with.
I also don’t like the fake names, but I’ve come to learn that it’s necessary for some of the most knowledgeable contributors to remain anonymous, so that aspect no longer bothers me.
Personally, I prefer Energy Bulletin which prefers sourced info and a standard wide format in terms of presentation.
But TOD has some excellent info from credible analysts: please examine this one on export decline and let me know if there is something you are skeptical of:

I have no answer to the gap between what the mainstream analysts say (the three that you mentioned, plus I would add CERA and some but not all industry officials) and what the PO analysts say.
Personally, I find almost all of the main PO analysts to be credible.
Simmons is an industry insider, has done the annual forecasts for World Oil journal for many years, etc…. it’s hard to imagine that he needs book money, nor how his up-front concerns could possibly help his company win contracts.
I think the guy deserves a medal.

Likewise Bob Hirsch…. it appears that doing the research for the 2005 paper has become a bit of a life-changing wake-up call. He and Bezdek continue to push on this issue.

Meanwhile, both industry spokesmen and senior bureaucrats have many good reasons to express a “no foreseeable problem” message.
The recent WEO was a major step for the IEA but I was stunned to discover four months later that my country’s lead ministry had not shifted its position to reflect the IEA’s sudden worries. The ministry still say that “there are no imminent peak oil challenges” and that “Canada’s oil supply is secure for about 200 years.”

2. peak in 2005-08
I agree with your points, but the PO analysts have always said that we can only know from the rear-view mirror, well after the peak has occurred.
And price volatility may be worse than steady high prices since the dips subvert the efforts to bring along the next-generation liquid fuels, which sustained high prices would foster.

3. Price volatility
You may be reading too much into what I had said.
Like yourself, I am not convinced that we are at peak, though I do think we are so close that it barely worth debating, especially if we examine it from a net-energy perspective.
Is there enough oil in the ground to get over 90 mbpd? Certainly.
Will we ever see the 130 that was talked about only a few years ago? Not even close.
But how much physical energy and how much additional financial investment will it take to get us over 90?
I believe that nearing the apparent peak will cause volatility of both price and supply, but volatility alone is no proof of peaking..

4. the 2008 price spike
I agree with your three points, including the third (speculation).
The recent talk about limiting speculation on oil (same as limits re food-grains) could be helpful in containing the next spike.

5. fuel emergencies
As for your final paragraph, I agree completely, and please remember what I indicated in the previous post… my own thinking has shifted considerably over the years, from
1. becoming aware of PO and viewing it as a legitimate and overlooked concern, to
2. recognizing that pricing and export decline would be more imminent issues, especially for import-dependent regions, to
3. my current focus on government plans for fuel emergencies.
I view the stresses caused by a real (or even an apparent) peak as likely to precipitate an event which then trips a fuel crisis (rather like the shot at Sarajevo in June, 1914 which sparked WWI, meanwhile pressures had been building for years).

Meanwhile, when I began to enquire about fuel emergency plans, it became clear that this is a grossly overlooked area, especially here in North America.
It was then that I contacted the military (in my country and in several other countries), believing that this is a neglected matter of internal national security.
The military/security issues would be external as well, of course, but they have been widely acknowledged & discussed.
It’s the threat to domestic social order that so few are willing to address.

Hence the Energy Security thread on this site and at Armed Forces Journal.
Hence also two postings which I expect will be posted at Energy Bulletin within the week, both of which examine studies by US military analysts.
They will be posted here as well.

6. the export decline video
Sorry, I don’t have a transcript.
But Brown’s theory is illustrated & examined on the Oil Drum link (above).

I greatly appreciate your insights on this vital topic, Steve

Last edited by Rick M; 07-14-2009 at 04:26 AM.
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Old 07-14-2009   #22
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Default A few points

Hi, everyone. I hope I can join the conversation...I'm happy to represent the view that oil has peaked or will peak very soon.

I think it's important to put the near peak models in context. What seems to be happening is that the far peak models are moving closer in time so that we have the following situation:
  • (2010-2012) Association for the Study of Peak Oil and Gas — the people raising the alarm
  • (2015) Shell Oil ("reach a plateau") — see their website for their latest scenarios "Blueprint" and "Scramble" (
  • (2020) Neftex/Toyota — this only happens if three conditions are met: Iraq must increase its production to 8mb/d (from its current ~2mb/d), Saudi production must not decline at all and each expensive project that has been fiscally sanctioned must come in on time
  • (2020) IEA — for this peak date, the oil industry must put into production the equivalent of four Saudi Arabia's in twenty years to maintain current production, six Saudi Arabias if growth resumes
  • (no date) DOE — the Department of Energy does not put out peak oil models, they put out consumption models and assume the oil industry will supply the oil. People then mistake these for supply models and this is the source of untold planning errors by third parties using DOE graphs.

Then there is the CEO of Total Christophe de Margerie who has continually lowered his estimate of peak production so that it is now down to 90mb/d.

Given the above, it seems like a near term peak is almost certain since the assumptions of the other models are unlikely, in my view, to come to pass. For instance, $170B worth of oil projects have been cancelled in the last nine months due to the credit crunch and reduced near-term oil use projections. (See the various megaproject databases for more on that.) That's why the near peakists are asserting that we will never surpass the production of last summer. The projects to do so are no longer on the books and depletion marches on.

There are some outlier models like CERA but they have recently backed away from their view because it was clearly untenable (peak in 2030) and they were increasingly looking "out of touch."

Once one has satisfied oneself that we will have a near peak, then it makes sense to focus on the near peak models as Samual Foucher does on The Oil Drum.

One could quibble over whether the peak is in this decade or it will show up early in the next decade but asserting that it will occur past 2020 requires some awfully optimistic assumptions.

On the matter of costs for the marginal barrel of oil, CERA has put out this graph. While it is a little dated (> one year old) it shows the relative costs well. Prices have come down perhaps 15%-20% since the graph was made.

And of course the net export problem is real and is going to cause what I call "The Great Oil Squeeze" — top line production will decrease while oil-producer consumption will go up increasingly leaving less oil available to the world market. With gasoline at 20 cents (Venezuela) or 90 cents a gallon (Saudi Arabia), there is simply no reason in these producer countries to conserve and their populations continue to rise.


Last edited by aangel; 07-14-2009 at 04:25 PM.
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Old 07-15-2009   #23
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Originally Posted by Rick M View Post
But TOD has some excellent info from credible analysts: please examine this one on export decline and let me know if there is something you are skeptical of:
Right up on top of that link I see a big multicolored chart, and there's plenty there to be skeptical about. The chart holds projections for 18 different exporters. All but one - the former Soviet Union - are forecast to peak in 2006, the year the chart was produced, FSU is forecast to peak in 2010. The forecast declines after 2012 descend at a remarkably - and suspiciously - consistent pace.

What bothers me about this set of projections is the almost identical forecast curves for so many different exporters. In a real-world projection set based on real country-by country-analysis there should be far more variation. Some producers should be able to hold a plateau and reduce the pace of decline by additional investment in production capacity, some should show far steeper declines... but in the real world there will always be variation, that kind of consistency in the export curves of such a diverse group of producers is beyond implausible.

Farther down the page we see the comment that the chart was produced by "a simple accounting exercise, based upon rudimentary forecast tools", which may explain the deficiencies. It looks like they simply imposed the same assumption set on each producer without regard for the variables.

The problem with forecasts beyond the short to early-medium term is that there are too many variables and too many of those variables are non-quantifiable. Of course analysts will insist on producing forecasts, no matter how low the confidence level, but in many cases these forecasts tell us more about the agendas of the analysts than they do about the future of whatever is being analyzed.

Originally Posted by Rick M View Post
Meanwhile, both industry spokesmen and senior bureaucrats have many good reasons to express a “no foreseeable problem” message.
I'm not sure I see those reasons. It seems to me that energy analysts across the board have a very substantial stake in talking up the idea of impending crisis. Squeaky wheels get grease, and those who analyze oil, whether private, government, or multilaterally funded, are going to get more attention and bigger budgets in an atmosphere of imminent crisis. Politicians who see a major problem on the horizon have every incentive to raise the alarm: how else do you build the political will required to drive responsive measures? Oil producers will want to raise the issue as well: fear pushes prices up, and producers want to get as high a price as possible for their reserves, especially if they see those reserves dwindling.

Where's the incentive behind "no foreseeable problem"?

There's a great deal missing from the discussion, it seems to me. Projections have to be based on assumptions, especially about three critical elasticities: price/production, growth/consumption, price/demand. I don't see that discussion happening, or I see it happening in terms that seem driven by a desire to generate a pre-ordained conclusion. I don't see nearly enough discussion of political, security, and investment risks, the constraints they pose on production and exploration, and the possibility of changes in those situations.

When I look at the charts that spring up all over the Oil Drum, for one, I get the feeling that they are designed to generate fear. Look at how all of the projections show a peak followed by an absolute dive... that says "scare chart" to me. I think a fairly extended plateau trailing off to a gradual decline is a lot more likely, with fast declines among some producers offset by transient increases in others, with some producers stepping up in response to improved political or security climates, others running into sharp barriers... in short, complexity. When I see simplicity and consistency I tend to tune it out, because in my experience the real world doesn't work that way - though agendas definitely do.

It also strikes me that when the sky is falling, people who sell sky-props do really well. I don't see any financial disclosure on the Oil Drum, for one. There's a donation button, but who donates? Who pays the bills? What money comes in, and from who? I don't see any meaningful privacy policy either: if you go to sign up (I didn't) they promise that your e-mail address will not be made public, but they don't say anything about selling it. What do you figure that mailing list would be worth to somebody in the business of promoting energy stocks...?

That might be cynicism or paranoia, but when expended effort exceeds visible reward by a large margin, the possibility of invisible reward is always there.

In any event, my own personal tendency is to take what I call the Olympic Diving method of examining projections: toss the low and high scores out from the start. Somewhere between the diving bell-shaped curve and the perpetual rise lies reality, mixed up in a huge bundle of non-quantifiable political and security-related variables. Preparation, flexibility, and above all sustained high oil prices will serve us well... panic will accomplish nothing.
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Old 07-16-2009   #24
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Forgot to mention: another thing that bothers me about the data on the Oil Drum link you is that the historical export data for Venezuela is simply wrong. Venezuelan exports peaked in 96, had a sub-peak in 2000, and declined steeply from 2000-2003. The Oil Drum chart shows a sharp rise in Venezuelan exports from 2000-2003. If their "country-by-country analysis" misses out on historical data that is a matter of record... how are we supposed to trust their projections?

Originally Posted by aangel View Post
Given the above, it seems like a near term peak is almost certain since the assumptions of the other models are unlikely, in my view, to come to pass. For instance, $170B worth of oil projects have been cancelled in the last nine months due to the credit crunch and reduced near-term oil use projections. (See the various megaproject databases for more on that.) That's why the near peakists are asserting that we will never surpass the production of last summer. The projects to do so are no longer on the books and depletion marches on.
Some oil projects were put on hold when prices and demand projections dropped. Liquidity was not an issue: Saudi Arabia, Kuwait, Abu Dhabi etc do not face meaningful liquidity constraints. They are simply limiting new investment to the level they see as necessary. They have no incentive to produce more than the market will consume.

In the medium to long term both production and consumption are responsive to pricing. Growth and energy consumption are not necessarily proportional: look at a chart for OECD economic growth from 2002-2008 and a chart for oil consumption over the same period.

The other big question is a simple one: how much expensive oil is really out there? The only honest answer is that we don't know: for most of the last 30 years there has been little to no incentive to even look for oil in places where production costs would exceed $30-40/barrel, let alone develop these resources. We won't see significant moves in this direction until prices are sustained at a level at or above the $60-70 range. A spike will not inspire the necessary investment, it needs a clear, sustained price plateau.

High prices will flatten demand growth - it may not happen overnight, but it will happen. Look for the Chinese to build a lot of nuclear plants and burn a lot of coal over the next few decades: Greenpeace will be pissed, but the Chinese don't care. NIMBY is not a problem there.

High prices will call up more production. It won't happen overnight, but it will happen. How much more? Again, we don't know.

Political and security developments will have a major impact. 10 years from now Iraq could be producing 6mbpd... or nothing. Similarly variable possibilities exist for many other producers, and are almost impossible to project or quantify.
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Old 07-17-2009   #25
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Default Incentives for Optimism

Welcome, Andre, and thanks for your list of projections re timing of peak..
The CERA graph is also useful… it highlights the fact that price volatility may be more problematic than sustained high prices, since volatility will routinely undercut the efforts to bring the more expensive (and eventually necessary) oil on-stream.

Steve, once again your observations are detailed and specific.
1. de Sousa’s graph
I am trying to contact Luis de Sousa and will invite him to join this discussion.
I assume that he will be able to defend his projections.

2. Incentives for optimism
I agree with many of your observations.
But there are many reasons for industry to present an optimistic front and these outweigh the benefits of raising the alarm (which you identified).

I am no financial analyst, but surely if potential investors believe that individual oil companies were faced with decreasing access to viable reserves, were burdened with aging infrastructure, were likely to be penalized by some sort of “carbon pricing,” and were facing an significant (perhaps government-supported) shift to alternative sources of energy, this would surely hurt their ability to retain investors, the value of their shares, and their overall financial viability.

Similarly, government bureaucrats surely have a vested interest in assuring the public and the Ministers/Secretaries (to whom they are accountable) that they are doing a wonderful job of anticipating future needs and laying the groundwork for that.
There are many other reasons to maintain the status quo: employment, royalties, safeguarding investment, retaining stock-holders, maintaining existing flow rates, etc.

Politicians are extremely reluctant to sound the alarm on an issue for which they have no credible & palatable solution. When one considers the incomparable net energy which we get from petroleum and the many benefits and comforts which we obtain from it, who on earth is likely to vote for a politician who (as you point out) is describing an unhappy scenario based on a speculative scare chart?
That politician would be characterized as a scare-mongerer, a person who lacks faith in the creative abilities of his nation, is unworthy of a leadership role, etc.
If you take a look at some of the videos of presentations by Rep. Roscoe Bartlett, you will not that he is speaking to a near-empty hall much of the time… no-one is interested.

To his credit, he doggedly perseveres, stressing always the larger points which really matter:
- fossil fuels are finite
- we are using oil at 1000 barrels a second and have become dependent on it for virtually everything
- it’s getting harder and more expensive to obtain
- our oil-related infrastructure commitments (highways, auto sector, heating, agri-food, military, etc) are enormous and will require decades to alter (to what alternative source?)
- carbon emissions are beginning to inflict serious environmental consequences
and so on… you know all of this and I presume that you would not quarrel with any of these larger points.
Roscoe (now 82) keeps on pushing, reminding people how worried he is for his grandkids.
He deserves a medal.

The details over when specific countries peaked in production or in their exports will, in the end, matter little.
I am certainly no fan of Bush, but I do think he was correct in referring to our relationship to oil as an addiction.
Despite all the info on climate change, we regularly see people addling their cars to run the A/C… 200 hp to keep someone cool on a perfectly normal summer’s day.
Most North Americans will resist any attempt to deprive them of these everyday comforts, the political perils.

Sorry for the rant.
We’ll get back to the issue of export decline, but this is enough for one posting.


Last edited by Rick M; 07-17-2009 at 03:53 AM.
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Old 07-17-2009   #26
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Hi, Steve. There is a lot in your post so I'll just address of few of your points and perhaps Rick will discuss the others.

One thing you mention is that there is little incentive for bureaucrats and industry spokespeople to hide "bad news." I see it completely differently. The incentives to keep smiling and saying there is no problem are many and very, very strong.

For industry, their company share price is directly correlated with the expected future earnings of the company. For an energy company to say that it is having or will have trouble securing future product to bring to the market would mean an immediate negative reaction by Wall Street. Businesses must be forced to disclose material adverse information on a prospectus, for instance, because the natural tendency of people is to hide the bad news so as not to risk doing business. I think it highly unlikely to expect to hear bad news from the oil industry, the incentives and penalties all line up to hide bad news not to be forthcoming about it.

For bureaucrats, they have different forces at work but the primary reason they stay silent is because no one gets credit for exposing a danger if the danger fails to come to pass. The risk of a danger not happening and looking like a fool is just too great. So bureaucrats and politicians are trained very quickly by their constituents to be very conservative. Stick one's neck out and it will get handed back to you. The public is very unforgiving on this score.

And it's not just in government. I have had many conversations with business people who understand and agree with what I am saying and when I ask them, "Will you say something about this?" they reply, "No way. What if you're wrong?"

I assure you there are many people out there currently participating in this conspiracy of silence. The background feeling is that it's ok to miss a big danger if everyone else misses it, too. After all, how could I be blamed for not speaking up when no else was speaking up?

And for both groups no one wants to be the person who shuts down the party. This is, I think, a big reason why the real estate/credit bubble we are seeing burst went on so long. Of course some participants just wanted to get their share out before the bubble pops, others actually can't see the problem and the ones who saw the problem mostly stayed silent, too, or were silenced (i.e. fired, told their opinion should be kept to themselves, etc.).

To see how people who raise the alarm are treated and why there are so few whistleblowers/alarm raisers of any sort, watch how Peter Schiff was treated in this video:

Of course he was exactly right. He spotted the trends, saw the peak in the US economy and was ridiculed. How many people have the courage of their convictions to endure that? It take a lot of courage to say something in the face of no agreement and not many people have it. Researchers who examine planetary trends (Club of Rome, Limits to Growth) are regularly called fear mongers. Humans aren't wired to hear bad news and actively avoid it until it's too late.

I assert that the near-term oil models make tremendous sense when one really looks into them and the far peak models require the kind of misplaced optimism (I would actually say poor analysis) that was demonstrated by the people in the video above.

Declining top line production (64 of 98 countries already past their peak and growing), declining net exports, decreasing net energy (aka energy returned on energy invested), how late the hour is, how poor the alternative energy sources are when compared to fossil fuels, the contraction of credit that would have enabled us to kick our fossil fuel dependency: all are conspiring to make life in the next decade very difficult indeed.

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Old 07-18-2009   #27
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Default de Sousa graph

I think you are mistaken with respect to Venezuela in de Sousa's graph.
You said (sorry, I am such a computer klutz that I don't know how to operate the Quote function):
"the historical export data for Venezuela is simply wrong. Venezuelan exports peaked in 96, had a sub-peak in 2000, and declined steeply from 2000-2003. The Oil Drum chart shows a sharp rise in Venezuelan exports from 2000-2003."

I'm pushing 60 and my eyes are not what they used to be, but when I look closely at de Sousa's graph... VZ is in yellow, above brown which is Norway, I see what you say that I should see: the yellow widens around 1996 and then constricts between 2000-2003.
The way the countries are layered is a bit tricky... when the overall curve rises or falls, the temptation is assume that individual countries follow suit, which is not the case.

The brief export life of the UK is reflected in pale blue at the very top, with Norway in brown being very constricted by 2020.
Mexico in white is pinched off around 2012... all of this is consistent with current trends as far as I am aware.

The country that most requires explanation to me is Canada, which is barely visible.
Mind you, when net energy is considered, perhaps that is warranted, but that's another story....

I will transfer the Export Decline info from Armed Forces Journal Forum here in a few minutes, which will broaden the range of evidence/info on this topic.
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Old 07-18-2009   #28
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Default Oil Export Decline

Warnings that global oil production would soon peak (and then decline) have been around for decades and have been the subject of some debate.
Credible warnings about the threat of export decline have surfaced increasingly during the past two years but have attracted little attention.
Here is partial list of these warnings:

Jeffrey Brown is a Dallas-based petroleum geologist who developed the Export Land Model several years ago.
In October 07 he warned that "we should base our plans on the very real possibility of a rapid decline in world net oil exports."
His ELM and some related analyses may be examined here:

In Sept. 07 Robert Hirsch (co-author of the Hirsch Report on peak oil) warned that a decline in exports could bite much more suddenly than the larger "peak oil" decline:
"But potentially overwhelming all else, considerations of resource nationalism posits an Oil Exporter Withholding Scenario, hastening the onset of decline and exaggerating world supply decline rates."
Hirsch elaborated on this during his presentation at the October ASPO-USA conference in Houston. His 28-minute presentation is available here (video): id=93

Also in Sept. 07 Jeff Rubin (Chief Economist at CIBC, on of Canada's chartered banks) warned of export decline during his presentation at the ASPO conference in Cork, Ireland.
Rubin went on to predict that Mexico will be unable to supply the USA with exports by 2012, but his warning about the disappearance of America's #3 supplier appears to have been met with complacency.
His report, "OPEC's Growing Call on Itself" is available here:

In May 08 Neil King (Wall St. Journal) wrote a concise analysis entitled "Oil Exporters are Unable to Keep Up with Demand," available here:

In July 08 a 40-page study was released by Chatham House in the UK. Entitled "Ending Dependence: Hard Choices for Oil Exporting States", their assessment is stark:
"Of the twelve countries in this study, oil production is in decline or at a plateau in three: Indonesia, Malaysia and Norway.
In a further seven countries, the plateau will be reached around 2010.
Saudi Arabia and Kazakhstan will reach a plateau before 2020" (p. 35).
The study is available here:

I hope people will find these five studies to be of interest. I see no reason to doubt the credibility of the authors nor the reasonableness of their conclusions.

But this information surely does not fit with current political realities.
Here in Canada, energy security was not on the radar screen during last year's federal election campaign.
In the USA it is an issue, but only from certain angles and there is careful avoidance of the peak oil issue and these recent warnings re export decline.

There is never a hint about the domestic disorder which would surely result should anything seriously interfere with that steady flow of affordable imports.

Thanks for your interest.
-- rm
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Old 07-18-2009   #29
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Stewart Brand publisher of The Whole Earth Catalog on the 4 heresies
of environmentalism. Go Micro-Nuclear power
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Old 07-18-2009   #30
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Default Exxon sabotage?

This was just posted a few hour ago at UpstreamOnline, which is very reputable:

These are very serious allegations... the USA currently gets almost 1 mbpd, about 18% of its domestic production from these low-output wells:

This is not insignificant, and for any company to deliberately damage wells to prevent a rival company from extracting the remnants is a very serious matter.

Please keep in mind, our energy security has been largely entrusted to companies like Exxon.
This is not encouraging....
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Old 07-18-2009   #31
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Default What is the other side of the story?

Sabotage or judicious blocking due to ground water concerns?

I'm not giving Exxon a pass -- nor am I ready to agree to 'sabotage' based on the linked article. Obviously you can state your opinion but if you know more than that article outlines, I for one would be interested.
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Old 07-18-2009   #32
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Default Patterson vs Exxon

Thanks, Ken

No, I don't know any more than this article indicates.

UpstreamOnline is a mainstream industry site and I have not known them to post information that appeared titillating or highly speculative. I assume that when they post something, they have done some homework on it.
In this case I'm not sure I like their headline "ExxonMobil may be fined $1b"... we are a long way from that outcome, with determination of guilt standing in the way.
A simple statement like "Exxon accused of sabotaging Texas wells" would have more accurately described both the issue at hand and its legal status.

Meanwhile, these are serious allegations against one of the world's most powerful corporations, and Mr. Patterson would have to be very foolish to make public accusations with little to back them up.

These accusations are worthy of investigation.
ExxonMobil should feel the same way.

Surely it is in the public interest that the Commission allow hearings on this issue.

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Old 07-18-2009   #33
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Default Background on Exxon sabotage allegations

This Statesman article (from Dec. 2007) provides some background and cites specifics of court testimony:
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Old 07-18-2009   #34
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Default Looks like Corporate Greed - a not unheard of or

unknown phenomenon -- got in the way of common sense and the Texas Supreme Court wiggled out of a decision in a case that the State would like to see go away. I suspect the truth is somewhere in between the two poles. Agree the Commission should hold the hearings, a case this old is bound to have produced reams of data and evidence. Be interesting to see what the Railroad Commission does.

Approaching the age of the shale that floats the oil, I see nothing new or really shocking here. Little stupid or crooked people do surprises me, unfortunately. Humble / Esso both were pretty rapacious and their offspring Exxon should be expected to be no different. Corporations and People are prone to do what they can get away with. Here we theoretically have a big, bad Corp vs. a little guy -- but little guys also have been known to cheat, lie and steal. Generally Governments and the Courts keep the large and the small from going too far but they slip up occasionally. Courts and Commissions, regrettably, are also prone to human foibles.

People just aren't as nice as we'd like...

Thanks for the links. Curious to see how this works out.
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Old 07-25-2009   #35
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Default Net Energy study (July 09)

A team of researchers has recently examined the data (of which there is precious little) relating to energy returned on energy invested (EROEI), or net energy.

Their study begins by stating, “Few issues, maybe none, are as important to industrial societies and their economies as the future of oil and gas supplies…. We no longer find large, cheap and easy to exploit reserves…” (p. 2).

The authors then point to a greatly overlooked aspect in the energy debate: “A critical issue missing from this debate is not how much oil is in the ground, or even how much we may be able to extract, but rather how much we can extract with a significant energy surplus. In other words, what we need to know is the net, not gross, energy available” (p. 2, emphasis added).

This research is an attempt to quantify what common sense tells us must be true: if we are drilling more, finding less, and the fields which we do find are either smaller, in more difficult locations, or of a lesser quality, then it stands to reason that it will cost not only more money but also more energy to find, develop and produce that energy.

They conclude that "global supplies of petroleum available to do economic work are considerably less than estimates of gross reserves and that EROI is declining over time..." (p. 1).

Their study is modestly entitled “A Preliminary Investigation of Energy Return on Energy Invested for Global Oil and Gas Production.”
Their pioneering attempt to quantify the decline in EROEI is a welcome addition to the literature.
This link provides the abstract and the link to the complete study (14 pgs):

More general information on EROEI may be found here:
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Old 07-25-2009   #36
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Rick M -

You may already have seen these. but the Center for Naval Analyses had what I thought was a thoughtful project and report on energy security last year. I didn't see it mentioned in this thread, but perhaps I missed it. Peak oil and fuel emergencies are not really my areas of expertise.

Here's a snippet:

Powering America’s Defense: Energy and the Risks to National Security is a report by CNA's Military Advisory Board (MAB) that explores the impact of America's energy choices on our national security policies. This report follows the MAB's groundbreaking 2007 report National Security and the Threat of Climate Change, which found that "climate change, national security, and energy dependence are a related set of global challenges."

This new volume builds on that finding by considering: the security risks inherent in our current energy posture; energy choices the nation can make to enhance our national security; the impact of climate change on our energy choices and our national security; and the role the Department of Defense can play in the nation’s approach to energy security and climate change.
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Old 07-26-2009   #37
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Default CNA study

Hi, Rborum

Yes, the CNA study (May 09, 60 pgs) is very worthwhile reading.
I did not mention it in the EROEI posting because the CNA study (like so many other studies of energy security) overlooked the issue.
In fact, there is quite a bit that CNA overlooked, and since I have seen no other reviews which point out these omissions, I have undertaken such a review myself.

I hope to have the review posted on Energy Bulletin early next month.
Two other military-related papers have also been submitted to EB which should be posted next week.
The links will be posted here once they are available.

As for peak oil and fuel emergencies not being your area of expertise, we are all learners and things are constantly evolving.
I think the PO concept has been rather misunderstood (and therefore inaccurately portrayed).
As for fuel emergencies, I think that the general public (and even many emergency planners) see this thorny issue as a very remote possibility, not on anyone's priority list in the near term.
I also believe that we now view as remote, even far-fetched, could in fact catch us by surprise, unprepared.

Thanks for your interest on this issue.
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Old 07-26-2009   #38
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Your review sounds very interesting and like a useful contribution. Good luck with it and please let us know here when it's complete. - Randy
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Old 07-26-2009   #39
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Default World Energy Outlook (IEA, Nov.08)

Hi, Randy

One of the two documents which will be posted on EB is a bibliography of publicly-available studies which have been conducted by researchers from the military/security community (War Colleges, CNA, etc) on the issue of energy security.
The listing will identify those studies which address the issue of peak oil and which find it to be a credible near-term concern.

One item which I plan to include separately at the end (separately because it was done by the International Energy Agency, which of course is not part of the military/security research community) is the most recent World Energy Outlook (Nov. 08).

There is probably some merit in offering it now, since it really does not belong in that bibliography. Similarly with the Hirsch Report, yet both are so central to the issue, and both have such credibility, that they would surely be included in any serious analysis of the peak oil issue.

Here is what I intend to say about the WEO:

This WEO marks a significant departure from the IEA’s traditional confidence in future oil supply.
Its opening sentences state, “The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable…. “
It then warns of “dwindling resources in most parts of the world and accelerating decline rates everywhere (p. 3). The WEO calls for “an energy revolution” and concludes, “Time is running out and the time to act is now” (Executive Summary, p. 15).

This sudden tone of concern is confirmed by subsequent verbal statements made by IEA Chief Economist Fatih Birol.

In a videotaped interview with George Monbiot, Birol states, “The reason we are asking for a global energy revolution is to prepare everybody for difficult days and difficult times. I think we should be very careful….”
This interview is available here:

Despite this recent tone of concern and the evidence which the WEO presents, the IEA remains very reluctant to state that the peaking of global oil production (whatever combination of factors “cause” the constriction) will present some very serious challenges, that effective mitigation will require decades of cooperative effort, and that that the world appears to be most unprepared for this event.

To provide some context, it should be noted that only four years ago IEA Executive Director Claude Mandil referred to peak oil analysts as "doomsayers" and went on to say that "none of this is cause for concern."
But barely 1000 days later, the IEA has suddenly told the world that "time is running out...."
As I said previously, this issue is constantly evolving, perhaps nowhere more rapidly than at the IEA.

The complete WEO is 578 pgs and must be purchased.
The Executive Summary (15 pgs, no graphs) is available here:

There are two WEO graphs in particular which I would like to post here and which are highly illustrative, if I could only figure out how to do it (I am hopeless with computer stuff, much to my brother's amusement).

Last edited by Rick M; 07-26-2009 at 05:05 AM.
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Old 08-03-2009   #40
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Default New warning from IEA

IEA chief economist Fatih Birol continues to sound the alarm on oil supply, most recently in an interview published this morning in The Independent (UK).

Mr. Birol’s key points include [these are quotes from the article]:
- the public and many governments appear to be oblivious to the fact that the oil on which modern civilization depends is running out far faster than previously predicted [emphasis added].
- Global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated.
- We will have the risk that the [economic] recovery will be strangled with higher oil prices.
- The UK Government, along with many other governments, has believed that peak oil will not occur until well into the 21st Century, at least not until after 2030. The IEA believes peak oil will come perhaps by 2020. But it also believes that we are heading for an even earlier “oil crunch” because demand after 2010 is likely to exceed dwindling supplies.

Mr. Birol also mentioned the fact that oil is essential for our global food system and that it “is a strategic asset for the military.”

This morning’s Independent article is here:

It also contains the link to a related article by Jeremy Leggett who asks, "Why haven't more people in government, and the oil industry itself, seen this particular crisis coming? Why aren't they acting proactively to soften the blow?"
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