Peak Oil, Transitioning to Renewables, Carbon Offsets, Collapse, and why I think pessimism has been proven silly

[Veritas]

What makes you think someone like Saudi Arabia or Venezuela is 'holding back'?

It's really no secret in Saudi Arabia's case. They cut production in the 80s as part of agreement with OPEC. They have regularly set relatively public production quotas. They may not be holding back right this minute, but they have habitually held back intentionally and it's quite public.

http://www.eia.gov/countries/cab.cfm?fips=sa

Saudi Arabia maintains the world's largest crude oil production capacity, estimated to reach about 12 million bbl/d at the end of 2014, and the country is subject to OPEC production quotas

In October 2014, they were producing 9.7ish million.

http://ycharts.com/indicators/saudi_ara ... production

Current oil consumption is somewhere around 92 million/year.

https://financialpostbusiness.files.wor ... _c_ab.jpeg

They essentially produce about 10.5% now, and they can produce as much as 13% of world demand with current production capacity -- no investment in additional pumps, wells, etc.

Furthermore, production all across the rest of the world is being shut down.

Essentially, oil is more a buyer's market than a seller's market nowadays. The only reason it wasn't a buyer's market before is because supply was being artificially restricted. When the US started investing in oil shale, however, it functioned as a swing producer which forced the lower cost producers to either cut production or accept a loss of market share. Saudi Arabia was the only member of OPEC that has reliably cut production to meet quotas before. This time, they chose not to. The result is that we had that big crash in oil prices a few years back.

We aren't at peak oil yet on a global basis. On the other hand, the US is way past its peak oil production.

The thing is, as oil prices rise, so do effective reserves. US shale oil is not viable at $50/barrel. At $70/barrel it's an attractive investment. At $100/barrel, it's a bonanza.

Of course, there are terrible environmental consequences and the EROI of oil shale is very low. However, the principal value of oil isn't so much the EROI anymore so much as its value as a chemical feedstock and high energy density fuel precursor.

EDIT: It's worth noting that I don't drive a car and have no desire to. I'm really not pro-oil dependency/usage. Our reliance on fossil fuels is pretty terrible, but since we do rely on them, having them available is probably better than not. Our technology and infrastructure to produce alternatives is also rapidly improving -- fast enough that we could be on almost entirely renewables within 3-5 decades. That's not a faith based statement so much as a research based one. I agree that blind optimism is silly, and technology/science has its limits (warp drives, anyone?), but this doesn't really appear to be one of them, in the long term.

http://c1cleantechnicacom.wpengine.netd ... h-rate.png

This is exponential growth, and if even one of them holds up for more than few decades we don't really need to worry about having a declining long-term energy budget, we'll just be dedicating more of our capital to replenishment than consumption. There's no inherent problem in this, especially for us savers.

The thing I always used to worry about us running out of fossil fuels before we could switch over to renewables. However, becoming more aware of the multiple decades of conventional oil, and separate multiple decades of shale oil available has made me more worried about global warming than EROI.

[jacob]

@Veritas - I'm not really going to provide/argue a narrative because it then becomes an argument about the narrative. There are usually several different ways to explain the same facts. Frankly I don't know the complete motivations of all the players and so a narrative would only be speculation. I do, however, know the following facts (<- in my world, fact means a nondebatable state of reality) which seem to be pertinent.

0) I presume the Gaussian shape of multi-well/field production curves is known to you, because your total reserves/current rate=numbers of years to go implied otherwise (That's not how reality works). Many countries have already reached their peaks; their rate of decline concentrate around 2-5%. The production peak also follows the backdated discovery peak by a common number of years (usually around 40).
1) US shale oil is not a swing producer (a producer with large excess capacity). It's a marginal producer. [This is just a technicality; to be sure we're using the words in the same way.] When prices drop, marginal producers go out of business or shut down production ASAP. A swing producer behaves differently.
2) US shale oil is a bubble based on cheap financing and exaggerated promises (fool me once...). This used to be the point of contrarians but now it's commonly known so I'm not revealing any crazy opinion here. Reserve estimates are continuously being revised down and people are getting laid off. IOW, a lot of US oil production is driven by bubble money. See 7.
3) Conventional oil peaked or more fairly plateaued in 2005. It's remained more or less constant ever since.
4) Russia is actually the main exporter in the world. Saudi Arabia is only #2. Well, depending on what year you ask. They're about the same.
5) Russian oil exports massively declined after the fall of the USSR in ~1990. It bottomed in ~2000 and only recently regained it's former ~1990 peak. However, it's expected (by the Russian government) to roll over and peak production in 2016. If you subtract the V shape of the Russian production, the world conventional peak becomes a lot more clear. The Russian V has hidden the peaking world signal for about 10 years.
6) SA does have about 2M bbl/day in spare capacity, however, they substantially increased investments in 2013 to keep their old fields going. Unlike most out countries, SA production is actually quite erratic. They're really trying to squeeze as much oil out of their underground as possible.
7) SA is a Sunni dominated theocratic/feudalist monarchy. On an annual basis it beheads more people than ISIS. Like Venezuela, the population is kept in check by a combination of power and oil money. They need that money. IOW a lot of SA oil production is driven by the desperate need for money. ME politics is extremely complicated. Your enemy's enemy is your ... well nobody can really be sure because it changes month by month. See 2.
8) The political/financial situation of the US and SA temporarily obscures the overall picture.
9) Official orgs continuously move the goal posts by changing the definitions of oil to include ever more exotic variants. You can see this as either technological progress or maintaining the narrative of infinite supplies.
10) The North Sea is in steep decline (3-4% year).
11) Ukraine is about the control of gas pipeline to Europe.
12) Sanctions make it harder to expand Russian production.
13) Present supply is not increasing as much as demand is falling. The surplus is being stored in off-shore tankers.---Despite the low price, demand is not catching up. Supply lag time currently dominates.
14) In every system that involves information, volatility indicates that the "lines" are loaded to capacity. The fact that oil price is volatile indicates that SA can not control it anymore. This has to do with them not actually being able to implement their spare capacity sufficiently fast while at the same time battling their old declining fields.

Overall, this is my position:
1) Renewables are no substitute for fossils due to energy density concerns. We can run a society on alternatives, but it will look nothing [as rich] like our present world.
2) China builds one new coal plant EACH WEEK. (There's plenty of coal in the world; hundreds of years, not decades) Alternative energy ramp up while looking impressive in terms of percentages or when considering tiny areas are puny when considered on an absolute or global scale.
3) Fossil fuel reserves will not be imputed by GW concerns. (Rogue geoengineering (albedo management) is more likely, perpetrated by one of the major food consumers). Also consider that coal burning imparts a net negative radiation forcing of about -55 CO2e ppm equivalent. If we suddenly stop polluting, we're in dangerous territory. Ironically, air pollution prevents nonlinear GW runaway feedbacks.
4) I'm much closer to JMG (mentioned above) than I am to any kind of Zombie Apocalypse. I expect the "cost" to be paid in a highly symmetric manner. Wars will be fought at the "boundaries" between rich and poor. The ME will get worse.

In conclusion... after the fracking bubble pops, I expect an annual production decay of about 2-3%/year starting 2020-2025. Conventional oil production will never be substantially higher than it was in 2005. I don't really see much point in trying to call the exact year. Maybe 2018 will be 5% higher; it doesn't matter. Yes, and there will still be some derricks running in 2090.

[Veritas]

@Jacob -- I like that you started indexing at 0. Makes the computer scientist in me happy. To be clear, I'm not trying to pick a fight or anything here, so much as increase my understanding. This has been an immensely helpful thread. I've been disagreeing because I genuinely looked at what I knew and came to different conclusions. I'm just not the type to take the result of a very complex argument on faith when my (fairly limited) knowledge seems to contradict what I'm hearing.

I genuinely appreciate the time you've put into this. I have read a lot of your stuff over the years, but seeing a lot of it in one place and some additional/clarified perspectives is giving me a better picture. I also totally understand if you don't want to keep yammering away at this point. I asked for contrary/prove me wrong positions, and I got a lot of solid ones from you, especially in this latest post.

I'm not going to try to cover all of the things I agree with or that I could accept upon first reading, which there were a lot of. I would be interested in hearing your thoughts on my few points of contention, though, as well as clarification on the specifics of one of your positions.

I remember reading some time ago (and I can't find it now because you have made so many blog posts on similar topics that searching is unproductive) that you thought humanity had essentially reached what might be called its "extensive apex", the point at which we had the most free energy available to us we ever would and that we would likely not come back to the point of high technology we do today after fossil fuels are depleted. Is that the case?

Now, the few things I contend with:

1) Renewables are no substitute for fossils due to energy density concerns. We can run a society on alternatives, but it will look nothing [as rich] like our present world.

Today, fossil fuels offer both energy production (positive EROEI) and energy storage in one package. However, there are some only-slightly-negative EROEI technologies which I think offer viable substitutes to the energy storage problem in the few cases where it really matters. Namely, burning hydrogen or the use of hydrogen fuel cells. They really aren't the best alternative for most use cases gasoline offers today, but the areas that really need it -- which I'd say is mostly limited to long haul trucking and international shipping -- could remain economically viable (albeit less economically viable than gasoline) when powered from renewable infrastructure.

To the second proposition in there, that it will look nothing like / as rich as our present world, I think that the first one is something of a matter of perspective on what's "close", but the second one I think is only true in the medium run. Capital accumulation will continue, and renewable technology will enable us to gather more or less constant EROIs until we are wealthier, in terms of energy budget per capita, than we are today. It will take more labor and capital to achieve, but that's just a matter of changing a few macroeconomic variables over time. Obviously a big deal, but nothing a dynamic global economy can't handle.

Everything else, I think I agree with at least "mostly".

Also, what's JMG?

[jacob]

JMG is John Michael Greer (blogs every Wednesday)

http://bravenewclimate.com/2014/08/22/c ... y-storage/ (BNC Postscript) ... EROEI (or energy density) limits the level of complexity of a society possible by that source. The lower the number the more capital (human wealth) needs to be employed in its generation. That is, the less human wealth is available for other pursuits. Keep in mind that we've gone from 200 to 20 (so we have the advantage of a lot of legacy capital). Now the proposition is to go from 20 to 10-20 while rebuilding much of the infrastructure. Hence the effective surplus is much smaller.

EDIT: It occurred to me that you might think of EROEI for a given source as a method() that can simply be called recursively method(method(...()) to boost the total EROEI alternatively, that we can just call it on multiple threads (e.g. wait and build more capital/threads) but that is not the case. Those EROEI numbers are based on how the source integrates into the whole of society (e.g. workers making sheet metal, driving supplies, feeding them, ... ).

[Veritas]

This is a very interesting read. Thanks.

[cmonkey]

@Veritas
Two things I have noticed you mention that I disagree with. First is that we do technically have "decades" of oil left but this statement is a bit misleading. Since we began extracting oil we have very nearly always had a surplus supply (in other words we were always able to extract more this year than last), and so could keep up with increasing demand just fine. In fact, our economy essentially expects it, being debt based and all. The 'peak oil' point is not when we run out of oil (which is decades away), its the point where you can't keep increasing your supply year after year. At that point, demand outstrips supply, rationing begins and we have problems that affect essentially the entire economy because the economy hinges on trade and trade is only possible through transportation. Close to 100% of all transportation is currently run on oil so if you can't keep growing your oil base, you can't keep growing your transportation base. Switching out to a different transportation infrastructure (such as natural gas) would take, at best, 10+ years.

This feeds into the second point and that is hydrogen. You can't generate energy from a hydrogen cell, it is simply a storage mechanism and you need some other way to generate the power. Currently, the best method in EROEI terms is probably coal, but with a shrinking transportation sector, how are we supposed to move around enough coal to fuel up all those hydrogen cells?

Also, we do not have decades of shale oil in the ground. The two agencies that are supposedly "managing" all of the information about reserves are continually revising their estimates down. I suggest you read through at least the executive summary of a report put out by the Post Carbon institute.

http://www.postcarbon.org/publications/drillingdeeper/

Best case scenario is that the current decline in demand will push off the peaking of shale production by a year or two but still, the low 2020's are not that far away... Be watching the Bakken over the next couple of years. Expectations are that it will begin declining in 2016-2018 time frame.

I agree with Jacob that JMGs approach to civilizational collapse makes the best sense, but I do believe we are going to see oil shocks that make the 70's look small in comparison. Also, we can expect a financial reset as well because our monetary system is debt based and so is hardwired for an economy that grows each year. I expect the most obvious sign over the next 5 years or so will be dramatically decreased mobility.

On the up shot, we do have all those miles and miles of interstates that will make biking and horseback riding a breeze.

[Scrubby]

All the world's solar panels generate as much electricity as two coal power plants.* For solar power to meet current world demand we would need to cover an area as large as 190,000 sq miles with solar panels.** As of 2007 there were 4 sq miles worth. (Although I'm struggling to find where I heard this).

On the other hand, the output from solar cells has been increasing at about the same exponential rate for more than 20 years.
https://en.wikipedia.org/wiki/Timeline_of_solar_cells

[IlliniDave]

I heard a prediction on the radio this morning that there would be a large disruption in the status quo over the next 30ish years. One of the main features was that on a macro scale there would be a transition back towards a more "rural" lifestyle/mindset, not necessarily in location, but in the sense of reduced mobility and a bit more self reliance, especially when it came to recreation/entertainment.

The caveat is that the prognosticator is a professional tarot card reader

I also recently heard the summary results of a study performed on California where they played something like a 70 or 90 year extreme drought into economic models of the state. The results were less dire than expected (presuming there would not be nation-wide riots due to shortages of inexpensive pre-packaged baby carrots). Apparently California agriculture consumes staggering amounts of water, is rather sloppy in how it's utilized, and has a system of water rights that is probably not sustainable going forward. The models assume an amount of behavior change on the part of farmers.

I have no idea exactly how things are going to play out, but the simplest view is that our species is going to have to adapt back to a lifestyle that uses less energy per capita than we've grown accustomed to in the western world, or suffer a large reduction in the denominator of that per capita calculation. It's hard to imagine a magic bullet coming along in the foreseeable future to provide effectively unlimited, clean, non-disruptive energy to supply ever increasing amounts of power for each member of a rapidly expanding population base.

[steveo73]

It's hard to imagine a magic bullet coming along in the foreseeable future to provide effectively unlimited, clean, non-disruptive energy to supply ever increasing amounts of power for each member of a rapidly expanding population base.

Nuclear power.

[IlliniDave]

It's hard to imagine a magic bullet coming along in the foreseeable future to provide effectively unlimited, clean, non-disruptive energy to supply ever increasing amounts of power for each member of a rapidly expanding population base.

Nuclear power.

It might work for some of the "haves" provided they have the water. But for obvious reasons the technology is suppressed to keep it from getting into the hands of some of the "have nots". It's had an overall decent track record for safe deployment, but still has the potential for catastrophic accidents. It's probably the best solution we have in hand for those wealthy enough, however in my mind it's not the magic bullet.

[George the original one]

Strictly speaking, you're right, because I slightly mispoke. What I really meant was that our electricity was 90+% non fossil fuel, which I'm pretty sure is true. However...

I'm trying to crunch the numbers, but there's some weirdness on the IEA site that makes is hard to do. On the one hand, they claim 851 trillion BTU of hydropower in Washington, on the other hand they claim 4448 GWH of hydroelectricity. Given that 851 trillion BTU is about 250,000 GWH, I really think I'm missing something. There's no way that only 2% of the hydro in Washington goes to electricity. Anyone have any insight?

Data from the various tabs here:
http://www.eia.gov/state/?sid=WA#tabs-1

Specifically I'm comparing the hydro numbers from tab 1 and tab 4.

I would immediately jump to the electricity vs thermal factor (although even that wouldn't account for that huge difference), but we're talking about hydroelectric dams, so that isn't even relevant.

Try http://apps1.eere.energy.gov/states/ele ... m/state=WA which distills the data. 86.8% of electricity was generated by renewables in 2011 for Washington. Also worth noting trends for total electricity consumption on that same page or comparing to other states. Note anything odd about Washington's consumption trend around year 2000 and what that implies?

[George the original one]

It's hard to imagine a magic bullet coming along in the foreseeable future to provide effectively unlimited, clean, non-disruptive energy to supply ever increasing amounts of power for each member of a rapidly expanding population base.

Nuclear power.

Coal, if you can scrub it clean of mercury & other toxins. Which leaves breeder reactors and a host of political problems. Conventional nuclear has a very limited supply of uranium.

[DSKla]

I'm diving into Overshoot right now, and wanted to bounce an idea off of you folks to see if I'm properly grasping it.

One of the cargoism arguments is that everything will be fine because humans are creative out of necessity, and have reached this point because of that trait. We will figure out cold fusion or some other form of ultracheap, renewable energy and that will propel us forward.

I can't help but feel that would only delay and magnify the eventual crash. Even if we have a near-limitless energy supply which allows the population to continue expanding at current rates, we would still run into the problem of overshooting the carrying capacity for humans with regards to water and food, and exceed it by a larger margin, wouldn't we?

If you imagine us remaining earthbound it would happen sooner, if you get all sci-fi and give us fusion + space colonies I suppose (with a little optimistic imagination) it could be extended for quite some time in the same way that discovering a new hemisphere allowed for a population expansion, but isn't this a debt that will be paid eventually?

So with regards to the best case scenario, I'm wondering if you think it will be 1) a solution, 2) a postponement and exacerbation of the overshoot and crash, or 3) do you feel we are far from the last period of overshoot (the one that leads to a big crash), and that there may be several iterations of a technology that allows expansion in some way we may not be able to currently imagine (as fire, tools, iron, new hemispheres weren't specifically anticipated)?

[theanimal]

Your initial analysis is spot on. Solving the energy problem of peak oil does not solve overpopulation, peak fresh water, peak vegetables etc. or mitigate the issues related to climate change. If you think what John Michael Greer says is true, that the collapse will be gradual (based on historical precedent), rather than a sudden, dramatic hollywood-like crash, one could argue that the crash/collapse has already started. I think the best case scenario is to hope for is something like a late 19th century living with some modern technology. However, if nobody acts things could regress much further back.

[cmonkey]

Personally I agree with what theanimal said. Slow steady decline is the likely outcome until in about 20-30 years from now we look back and say "hey wait a minute".

If a solution to our energy issues was to be found, it would have been found by now. Fusion is the best alternative for electricity (and possibly a hydrogen fueled transportation sector) but has been 20 years away for going on 30-40 years now and is still 20 years away by best estimates. No one really talks about how transportation is key to nearly the entire economy, yet it is very fragile, relying on essentially one fuel source (oil). Crude oil production has been flat/declining for 10 years, offset only by expensive tight oil that is putting a chokehold on the entire economy. It doesn't matter how much coal you have, if you can't move it to a coal plant, you have no energy.

Even still, you bring up a valid argument. Exponential growth doesn't care what resource base you have (clean, nearly limitless or very finite fossil), it will grow using the same paradigm. Once you get past the bend there is no going back. Humans need to learn to live in steady state, be happy with what they have instead of constantly looking at the horizon for the next advancement. Only then will we be mature enough for more advanced energy sources. Until then, we are not ready.

[cmonkey]

An endorsement of Export Land Model on a global level. Seems producers are starting to get squeezed by their own populations.

http://peakoilbarrel.com/world-exports- ... n-the-elm/