CASE STUDY

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CASE STUDY

• Peak Oil

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Theres always more

• Thats what more means Doesnt it???

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Oil is a non-renewable resource!
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How oil forms

• Dead plankton accumulate on the ocean floor
  during times when the oceanic circulation stops
  and the bottom of the ocean goes anoxic.
• Thousands of feet of this material accumulates.
• Then it is buried by other sedimentary material.

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How oil forms

• As the sediment is buried deeper, the temperature
  rises cooking the organic rich shales, like the
  oil shales in the Rockies
• Oil is generated. Pressure expels the oil from
  the source rock because the oil plus shale takes
  up more volume than the shale alone.

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How oil forms

• Pressure fractures the source rock allowing the
  oil to float up because oil is less dense than
  water.
• The oil will float up until it hits a place where
  the upper rock won't let it pass. That then
  becomes an oil field.

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Hubberts Peak
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Hubberts Peak

• is the maximum rate of production of oil

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Peak Oil

• Occurs when the demand for oil equals Hubberts
  Peak

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Oily Facts

• Current global oil consumption was 83 million
  barrels per day in 2004 (1 bbl 42 gallons)
• 20 million bbl/day in 1960
• 60 million bbl/day in 1980
• At current rate of increase, will be 97 million
  in 2014, 118 million in 2030
• So far, production has been able to meet demand
• Will this be able to continue?

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Ultimate Production
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Global Oil Production

• Will eventually reach a maximum
• At which time, demand for oil will equal
  production rate ( Peak Oil)
• The result?
• Very high prices, and even more importantly
• Shortages ask your parents about 1973

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The 4 biggest oil fields in production are

• Al Ghawar, Saudi Arabia 4.5 million barrels/day
• Cantarell, Mexico 2.1 million
• Burgan, Kuwait 1 million
• Da Qing, China 1 million
• Only one of these was discovered after 1960 ---
  Cantarell in 1976

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New oil finds?

• Oil found by exploration drill bit worldwide is
  as follows (in billions of barrels)
• 1997 4.5
• 1998 5.8
• 1999 9.5
• 2000 13.05
• 2001 4.02
• 2002 3.34

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New Oil exploration?

• The annual exploration cost for the 10 companies
  as a group exceeded the estimated value of annual
  new discoveries made in both 2001 and 2002a
  reversal from previous years
• When people spend more than they make, they quit
  spending
• The US onshore went value negative (money spent
  vs. value of oil found) back in the 1990s. 
• For the world to go value negative is a really
  bad omen. It shows in 2004 exploration budgets 
• In spite of high prices, Shell, ENI, Total, BP,
  Anadarko, and El Paso have all cut their
  exploration budgets!

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Analogy Inheriting a Fortune

• Suppose you were given a billion dollars, but
• Could withdraw only 100 a day
• Would you still be a billionaire?
• Analogous to oil --- maybe 100 years of molecules
  left in ground, but
• When demand exceeds maximum production, were in
  trouble Peak oil

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The World's Second Largest Oil Field Declines

• http//home.entouch.net/dmd/burgan.htm

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Websites

• www.theoildrum.com
• The most comprehensive source for the Peak Oil
  issue
• Glenn Mortons pages

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U.S. Oil Consumption

• Energy Information Administration (EIA) website

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World Population Check

• http//www.census.gov/cgi-bin/ipc/popclockw

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Some musings http//home.entouch.net/dmd/burgan.
htm

• All this was foreshadowed in the energy crisis of
  the late 1970s when a serious inflection in oil
  supply by the year 2000 was clearly forecast. How
  ironic that those earlier forecasts now look
  correct, while more modern and recent forecasts
  begin to look over optimistic and out-of-date
  with geological reality.
• Nobody can change the geology, and forces of
  nature that laid down reserves of oil and gas
  over millions and millions of years. Could it be
  that we have been blinded by technological
  advances into thinking that there is some way to
  beat nature?
• The natural world has an uncanny ability to hit
  back at the arrogance of man, and perhaps a
  reassessment of reality at this point is called
  for, rather than a reliance on oil statistics
  that may owe more to political maneuvering than
  geological facts.

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Philosophy of Science

• Epistemology models ontology nature is real and
  its study yields real results
• Consilience knowledge from various areas must
  fit together opposed to ad hoc
• Heurism good scientific theories should lead
  to further research