rotary presentation

Oil is a liquid fuel.It is energy dense and easily portable.

Conventional oil was plentiful and easy to get;

therefore the most profitable.

Friday, February 15, 2013

Discovery and Consumption: global crude oil

Has demand already outpaced supply?1900 1910 200019901980197019601950194019301920 203020202010

Peak Discovery1964

Rising US production makes up for falling European production, but doesn’t do a whole lot more.

* partial year data

Peak oil means we cannot increase production.Friday, February 15, 2013

The US was energy independent in 1970 when our population was 204 million.

43% decline

When you subtract depletion from new production supply is decreasing

By 2030 we’re projected to have 1/2 the oil that we do now.

Energy Density by volumeSource: Department of Energy, Green Econometrics research

Natural Gas (methane) takes time and money to make into a liquid. Left as a gas it is hard to store and takes up a

great deal of room to transport.Friday, February 15, 2013

The average American consumes more then twice the amount of oil as the

average European.Friday, February 15, 2013

Energy Return on Energy Invested

Diminishing returns on investment

Economic growth depends upon energy consumption.

Gail Tverberg at Our Finite World 7/12

A race to the bottom.

For each calorie of food we consume, there is an equivalent of 8 calories of oil invested to bring that food to us.

Inflation adjusted Oil Price since 1950

Sources: Bloomberg, Erste Group Research

Our economy was put

into place using

cheap oil.

10 years ago a barrel of oil was about $40.

Recessions follow oil spikes

The 2008 crisis is thought of as a housing crisis or a financial crisis. Oil at $147 barrel is hardly mentioned.

Steve Kopits of Douglas Westwood

From Gail Tverberg at Our Finite PlanetFriday, February 15, 2013

Our national budget is still based on the assumption of cheap oil.

Geology:1) We are at peak.2) Oil is significantly more energy dense (read potent) than renewables or natural gas which are fitted for electricity.3) We have already mined the easy to get oil.

Summary

Economics:1) Oil consumption, GDP and the cost of food is highly correlated.2) The developing countries are adopting our lifestyle.3) Western standard of living was founded on cheap oil.4) No cheap, potent, versatile, scalable or swappable replacement for oil on the horizon.

Renewables nor nuclear will be able to take the

place of oil.

Global Energy Use by Source 2011

US Natural Gas Declination Rate

Source: Arc Financial Research

The US is a net importer of natural gas. Natural gas imports constituted 12.7 percent of consumption in 2012.

- Kurt Cobb from Resilience.orgFriday, February 15, 2013

Population growth and energy consumption go hand in hand

7 billion people

Source: David Murphy at The Oil Drum

Gross Peak Oil vs. Net Peak Oil

Russian oil production is leveling off

Saudi oil production is not increasing

A. Berman on The Oil Drum 10/31/12

Do humans have to consume so much

to be happy?

Association for the Study of Peak Oil

Our economic well being is dependent on oil consumption.

As our oil consumption declines so does the GDP

Oil prices in nominal and real dollars

Our economy flourished under cheap oil conditions.

The Economics of Peak Oil

Conclusion: We are at the end of economic growth.

1. The Economy must grow.

2. Energy consumption and GDP are highly correlated.

3. We are at peak oil. We are consuming oil as fast as it is produced. Oil production decline is imminent.

World GDPas it has declined in the past 40 years

World Oil Production as it has declined in the past 40 years

North Sea, NorwayFriday, February 15, 2013

Data from the US Energy Information Agency

Tight coupling of production and consumption means we’re at peak oil with little spare capacity.

Notice that the aqua color that denotes vehicles is so small as to not be observable - peak oil is a

transportation issue.

Gail Tverberg at Our Finite World

This data on Saudia Arabia demonstrates theExport Land Model

Exports decline because of massively expanding

consumption and growing population.

Chris Martenson at Peak ProsperityFriday, February 15, 2013

Saudi Arabia's plans to invest $109 billion in its solar industry over 20 years.

Why are they doing this? Bloomberg November 19, 2012

Figure 1 Global crude oil and condensate less tar sands and shale oil (US Bakken, US Eagle Ford and Canadian Bakken) has been on a bumpy plateau of just over 73 million bpd since May 2005.

Global Crude Oil + Condensate Production

Conventional crude oil + condensate production has been static since May 2005, thus most of the liquids growth since then has come from NGL, non-conventional oil and other sources.

Global liquids production excluding crude oil and condensate

Peak Oil Definitions

3. Peak oil is best defined as the point at which the cost of incremental supply exceeds the price economies can pay without destroying growth. -- Chris Skrebrowski, former BP analyst and oil journalist

2. Peak oil is the point in time when the maximum rate of petroleum extraction is reached, after which the rate of production is expected to enter terminal decline. -- Wiki

1. The term Peak Oil refers to the maximum rate of the production of oil in any area under consideration, recognizing that it is a finite natural resource, subject to depletion. -- Colin Campbell, petroleum geologist

flowrate

by weight

TextFriday, February 15, 2013

Once Cantarell was the oilfield with the world’s second-highest rate of production. Uppsala Univ has found that the peak production of giant oil fields is

reached before 50% of their oil is produced.Friday, February 15, 2013

Source: Douglass WestwoodEnergy Consultants

Source: EIA 2009

By 2035 the Energy Information Agency predicts we’ll have half the oil that we do today.

From Gail Tverberg at Our Finite World

Similar trends in oil

production and GDP. Both are

heading towards 0%

growth.

Everything is made out of oil

Everything is made with petroleum

Oil is extremely versatile, easily portable and it used to be cheap and plentiful.

5% fluctuation band

We’ve been on a bumpy plateau of oil production since 2005

Chart: www.gregor.usData: EIA Washington

Global Average Crude Oil Production in mbpd

TextThe Export Land Model

Shifting to today’s high cost of oil (up near $100 barrel) causes severe economic dislocations.

Global Net Exports / Chindia’s Net Imports

China and India, are on track to consume 100% of Global Net Exports of oil in only 18 years--

theoretically leaving zero available net exports for everyone else.

The Oil Drum12/11/12

rotary presentation

barrel of oil

oil prices

oil drumfriday

conventional oil

consuming oil

place of oil

oil consumption declines

gross peak oil

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