Squeezing the Last Drop of Oil

Tuesday, January 31, 2006

A story by Steve Rosenbush in BusinessWeek Online describes efforts to recover abandoned oil:

Until a few years ago, few oil companies bothered to extract every last drop from their fields. That might seem surprising, given the ever-rising price of what the theme song from TV's Beverly Hillbillies so eloquently described as "Texas tea.”

Yet most oil wells still have a fair amount of life in them. That's because it's relatively easy to extract the first 20% or 30% of a field's capacity. After that it becomes progressively more difficult and expensive to tap the remaining reserves. "That's why for every barrel we produce, there are two more in the ground," says Jeff Johnson, founder and CEO of Fort Worth (Tex.)-based Cano Petroleum (CFW).

Johnson, 41, a former finance executive, is betting that he can make a fortune extracting those stubborn reserves buried beneath the plains of Texas and
Oklahoma. . . .

But many people, Johnson included, believe that humanity has burned through roughly half of its oil reserves. This theory of "peak oil" suggests that a 200-year oil epoch is about half over, and that prices of oil will only rise from now on. Rising demand and dwindling reserves will keep prices well above the level that makes advanced drilling techniques worthwhile, Johnson says.

Energy gap: Crisis for humanity?

Monday, January 30, 2006

A story by Richard Black on the BBC News Web site reviews the current state of affairs and our options:

It is perhaps too early to talk of an energy "crisis".

But take your pick from terms like "serious concern" and "major issue" and you will not be far from the positions which analysts are increasingly adopting. . . .

The immediate question is whether the crash comes soon, or whether humanity has time to plan a comfortable way out.

Even if it can, the planning is not necessarily going to be easy, or result in cheap solutions. Every energy source has its downside; there is no free lunch, wherever you look on the menu. . . .

No free lunch, indeed - but a desperately tortuous and risk-laden menu and a kitchen where political or environmental fires could flare up at any moment.

Madison's Virent generates electricity from hydrogen

Friday, January 27, 2006

A story by Tom Content in the Journal Sentinel details the progress of of Virent Energy Systems:

A first-ever effort to make electricity from hydrogen is generating power in Madison, using a sophisticated chemical process with a little help from a four-cylinder Ford engine.

The renewable energy system, developed by Virent Energy Systems, a Madison-based energy start-up, began sending electricity to the power grid in late December, said Virent Chief Executive Eric Apfelbach.

In 2003 RENEW interviewed the CEO Mark Daugerty who gave credit to Focus on Energy for the company's survival:

Focus on Energy was critical to Virent’s survival in the initial period. Without the support from Focus, Virent wouldn’t be nearly as far along, and we might be operating with only two or three people instead of six fulltime staff and about that many parttimers.

How long will the gusher last?

Tuesday, January 24, 2006

Investors recognize the impending start of the oil decilne as demonstrated by the following quote from an article by Jeffrey Ball in the Wall Street Journal, January 23, 2006:

Longer term, perhaps the biggest issue facing the energy industry is its increasing difficulty finding enough new fossil fuel each year to replace what it is producing. In 2004, several oil companies failed to book enough new "proved reserves" to replenish the oil and natural gas they produced, at least according to the reserves-accounting
method favored by the Securities and Exchange Commission. The oil industry, arguing the SEC's accounting method is too pessimistic, is trying to persuade the SEC to change its method.

Awareness of oil decline grows

Monday, January 23, 2006

The Beaver Country Tribune/Alleghaney Tribune (Pennsylvania) on-line edition editorializes on the dangers of the U.S. commitment to oil:

Americans are going to rue their collective decision to opt for cheap oil instead of pursuing energy conservation and alternative energy sources in the '80s and '90s.

Take a look around the world.

If Iran gets hit with international sanctions, it could very well retaliate by cutting off its oil. While that would cripple its economy, it also would impact the world economy as well.

Iraqi oil production is nowhere near what it was prior to its invasion and occupation by the Bush administration and still has a long way to go. Saudi Arabia could be ground zero when it comes to Muslim extremists gaining power, which would in turn threaten other oil-producing nations in the Gulf region.

In Nigeria, the fifth biggest source of U.S. oil imports, militants are targeting oil installations. And down Venezuela way, President Hugo Chavez could shut off oil exports to the United States because, well, just because.

In the midst of all this uncertainly, China and India are gobbling up energy at a pace that is putting enormous pressure on world markets where supply is definitely not keeping up with demand.

The United States would have been in a better position to deal with these uncertainties if it had conserved and innovated in the '80s and '90s. Instead, it opted for cheap oil. The day of reckoning might be much sooner than many people expect.

Are Peak Oil Advocates 'Cultists'?

Friday, January 20, 2006

EV (electric vehicle) World carrries this commentary by EV founder Bill Moore:

"Proponents of the imminent peak of global oil extraction -- led by Colin Campbell, Jean Laherrere, L.F. Ivanhoe, Richard Duncan, and Kenneth Deffeyes -- resort to deliberately alarmist arguments as they mix incontestable facts with caricatures of complex realities and as they ignore anything that does not fit their preconceived conclusions in order to issue their obituaries of modern civilization".

So begins the opening sentence of Vaclav Smil's equally polemic paper, Peak Oil: A Catastrophist Cult and Complex Realities castigating the "cultists" of peak oil, which I suspect he'd also consider EV World.

The thrust of his argument is that advocates of peak oil, the point at which global demand exceeds global supply, erroneously assume that mankind will not find a way to adapt; and as a result, the world will descend into a destructive spiral of economic and geopolitical crises that could result in a new dark age. . . .

Is mankind likely to adapt to a changing energy world? Certainly, but I doubt it will be painless or without disruption. My guess is that somewhere between the "sect" of free-market optimism espoused by Professor Smil and the "cult" of peak oil pessimism personified by Professor Heinberg, lies the future in motion.

What peak oil means for biodiesel

Thursday, January 19, 2006

Jamie Derr from Great Lake BioFuels, LLC will discuss what peak oil means for biofuels on Saturday, January 28, at 1:00 p.m. in the 3rd floor conference room of the Madison Enterprise Center, 100 S. Baldwin.

John Edward Peck, organizer of the event, wrote on the Sustain Dane listserve:

We are ending the era of cheap oil, apparent in an expensive war on the middle east and steadily rising prices at the pump. Geolgists and economists agree that the total supply of petroleum available is diminishing.

Effects are certain to ripple through our society within our lifetims. Jamie will catch us up on the latest on Peak Oil, where we are as a global petro consumer, and what this means for BioFuels.

All are welcomed to bring ideas and issues to join in the discussion.

RENEW & Corn Growers support ethanol in gasoline

Wednesday, January 18, 2006

Brett Hulsey, President of Better Environmental Solutions, an environmental health consulting firm, delivered testimony in support of ethanol in gasoline. His testimony began:

I am speaking on behalf of RENEW Wisconsin and the Wisconsin Corn Growers. We urge you to adopt SB 15 for cleaner air, more energy security, lower gas prices, and to help our farmers and workers.

We have a simple choice for our energy future: get more oil from the Mideast or grow more fuel in the Midwest. Homegrown fuels like ethanol are a better, safer environmental solution to our energy challenges than drilling for more oil.

To summarize, 10% ethanol (E10) blend reduces air pollution and cancer risks, helps create jobs in Wisconsin, support our family farmers, and could eventually make Wisconsin and America energy more independent. This bill is the first in the nation to set a goal of 20% ethanol from natural sources like cellulose, prairie grass, and wood waste by 2020 and sets up a process to achieve that goal.

Read his full testimony on the Web page of RENEW's News & Views.

T. Boone Pickens on the future of oil

Monday, January 16, 2006

Howard Thompson offered his insights on the listserve SolarAustin@yahoogroups.com about an interview on NPR:

Oil industry tycoon/visionary/crook/corporate raider T. Boone Pickens was interviewed briefly on NPR this morning. He is actually quite upfront. He predicts $100+ oil price, to which the announcer expresses some disbelief:

Pickens: "Oil prices will go down. We are now temporarily oversupplied. I think 06 will be a pretty lack luster year. For the far out, the long look at it, you will control demand with price. As price goes up, demand will thottle back, it will be kind of herky-jerky, and ten years from now, who know's, $100, $150 a barrel."

NPR: "You really think there will be three digit oil prices in the next decade?"

Pickens: "I don't think there is any question about it."

Historically demand has not been as elastic as he makes it sound, but I suppose there must be a tipping point somewhere. He proceeds to say:

Pickens: "I don't think you can increase production, globally, more than it is right now."

which is of course the same as saying we are at peak. He also believes alternative will be developed, which is shocking to hear publicly from an oil guy. The interview is here. It is about 7 minutes on NPR's site.

In 50 years, we could cure our oil addiction

Friday, January 13, 2006

From a 2004 article by David L. Chandler that appeared in the New Scientist magazine:

. . . the perception that the world cannot do without oil is misguided. True, many of the alternatives, such as wind power, biofuels or a hydrogen economy, appear too impractical or distant to allow an immediate divorce from oil. But a raft of studies, researched and funded not just by advocates of alternative energy but also those with vested interests in the status quo, suggest otherwise.

The potential pay-offs are huge. No more massive subsidies for oil exploration and extraction. No more reliance on troubled regions such as the Middle East, which has 65% of the world's oil reserves. Huge cuts in pollution and a curtailing of climate change. In short, the strategy is a no-brainer. The only losers would be the oil business — one of the world's richest and most powerful industries.

Atomic Energy of Canada Limited responsible for 12% of national debt

Thursday, January 12, 2006

An excerpt from the opening of a report from Energy Probe, a Canadian consumer and environmental research team, active in the fight against nuclear power, and dedicated to resource conservation, economic efficiency, and effective utility regulation:

Subsidies to Atomic Energy of Canada Limited (AECL), the federal nuclear promotion agency, are responsible for 12% of today's federal government debt, according to a new study from Energy Probe. Since its inception in 1952, $74.9 billion of today's federal debt is attributable to subsidies provided to AECL.

In a related analysis, the study established that, had our federal government's nuclear subsidies been invested in the Canadian economy, the value today would be $194.6 billion – an amount equal to 11.5% of the value of the Canadian companies traded on the TSX.

2006: The Year of Oil Collapse?

Wednesday, January 11, 2006

AlterNet posted three perspectives on the prospect of peak oil and its implications for modern society and the global economy. 2006:The Year of Oil Collapse? comes from James Howard Kuntsler (knutsler.com). The other two are from World Watch: Christopher Flavin writes that while we can't know exactly when oil production will start declining, we must focus on alternatives to petroleum now; and Robert K. Kaufman describes the role the market and government should play in helping to make the transition from a petroleum-dependent society.

Kaufman's observations begin with the following:

You will never wake to the headline, "World Runs Out of Oil."

Rather, global oil production will rise, reach one or more peaks, and decline. Well before production declines to very low levels, the peak will mark a point of no return that will be a watershed in the economic history of the 21st century. For the first time, industrial economies will be forced to a lower-quality energy source. And this decline will affect every aspect of modern life.

Ford Motor calls long-term prospect for oil supplies `bleak'

Monday, January 09, 2006

A story by Tony Van Alphen in the Toronto Star reports that Ford Motor Co. chief executive officer Bill Ford told reporters at the North American International Auto Show that long-term prospects for adequate supplies of world oil or assurances that it will be available are "bleak."

The story continues:

"It is very hard to envisage a world in which oil either becomes more plentiful or produced in a more geopolitical stable part of the world," Ford said.

Ford, who has been steering the Detroit-based auto giant toward alternative fuels in recent years, said regardless if oil prices remain stable, the auto industry is moving away from gasoline-powered engines.

Biggest threat to American: Petrolism

Friday, January 06, 2006

New York Times columnist Thomas Friedman offers his insights into "petrolism."

As we enter 2006, we find ourselves in trouble, at home and abroad. We are in trouble because we are led by defeatists - wimps, actually.

What's so disturbing about President Bush and Dick Cheney is that they talk tough about the necessity of invading Iraq, torturing terror suspects and engaging in domestic spying - all to defend our way of life and promote democracy around the globe.

But when it comes to what is actually the most important issue in U.S. foreign and domestic policy today - making ourselves energy efficient and independent, and environmentally green - they ridicule it as something only liberals, tree-huggers and sissies believe is possible or necessary.

Sorry, but being green, focusing the nation on greater energy efficiency and conservation, is not some girlie-man issue. It is actually the most tough-minded, geostrategic, pro-growth and patriotic thing we can do. Living green is not for sissies. Sticking with oil, and basically saying that a country that can double the speed of microchips every 18 months is somehow incapable of innovating its way to energy independence - that is for sissies, defeatists and people who are ready to see American values eroded at home and abroad.

Living green is not just a "personal virtue," as Mr. Cheney says. It's a national security imperative.

The biggest threat to America and its values today is not communism, authoritarianism or Islamism. It's petrolism. Petrolism is my term for the corrupting, antidemocratic governing practices - in oil states from Russia to Nigeria and Iran - that result from a long run of $60-a-barrel oil. Petrolism is the politics of using oil income to buy off one's citizens with subsidies and government jobs, using oil and gas exports to intimidate or buy off one's enemies, and using oil profits to build up one's internal security forces and army to keep oneself ensconced in power, without any transparency or checks and balances.

When a nation's leaders can practice petrolism, they never have to tap their people's energy and creativity; they simply have to tap an oil well. And therefore politics in a petrolist state is not about building a society or an educational system that maximizes its people's ability to innovate, export and compete. It is simply about who controls the oil tap.

In petrolist states like Russia, Iran, Venezuela and Sudan, people get rich by being in government and sucking the treasury dry - so they never want to cede power. In non-petrolist states, like Taiwan, Singapore and Korea, people get rich by staying outside government and building real businesses.

Our energy gluttony fosters and strengthens various kinds of petrolist regimes. It emboldens authoritarian petrolism in Russia, Venezuela, Nigeria, Sudan and Central Asia. It empowers Islamist petrolism in Sudan, Iran and Saudi Arabia. It even helps sustain communism in Castro's Cuba, which survives today in part thanks to cheap oil from Venezuela. Most of these petrolist regimes would have collapsed long ago, having proved utterly incapable of delivering a modern future for their people, but they have been saved by our energy excesses.

No matter what happens in Iraq, we cannot dry up the swamps of authoritarianism and violent Islamism in the Middle East without also drying up our consumption of oil - thereby bringing down the price of crude. A democratization policy in the Middle East without a different energy policy at home is a waste of time, money and, most important, the lives of our young people.

That's because there is a huge difference in what these bad regimes can do with $20-a-barrel oil compared with the current $60-a-barrel oil. It is no accident that the reform era in Russia under Boris Yeltsin, and in Iran under Mohammad Khatami, coincided with low oil prices. When prices soared again, petrolist authoritarians in both societies reasserted themselves.

We need a president and a Congress with the guts not just to invade Iraq, but to also impose a gasoline tax and inspire conservation at home. That takes a real energy policy with long-term incentives for renewable energy - wind, solar, biofuels - rather than the welfare-for-oil-companies-and-special-interests that masqueraded last year as an energy bill.

Enough of this Bush-Cheney nonsense that conservation, energy efficiency and environmentalism are some hobby we can't afford. I can't think of anything more cowardly or un-American. Real patriots, real advocates of spreading democracy around the world, live green.

Green is the new red, white and blue.

Peak oil and the politics of global solutions

Thursday, January 05, 2006

From the blog Peak Oil and Simpol:

For all of the good work being done by folk, the fact cannot be escaped that government action needs to be taken at the nation state and, more importantly, global levels. It is indeed notable that some of the leading activists on the peak oil issue are advocating living in small, self-sufficient communities and also the Oil Depletion Protocol (1).

However, when pressed about the issue, the standard response from politicians seems to be an almost dogmatic faith that the market will respond to higher energy prices by spurring developments in further oil and gas exploration and recovery, alternative fuels, and energy efficiency measures (2).

Black Gold or Black Death?

Wednesday, January 04, 2006

An op ed in the New York Times, January 4, 2006, by Jeff Goodell, author of the forthcoming "Big Coal: The Dirty Secret Behind America's Energy Future."

IN recent years, one of the toughest turnaround jobs in American industry has been the effort to change the perception of coal from an industrial relic of 19th century to an energy source for the 21st century. The high-water mark of this makeover campaign may well have come last spring, when General Electric began its "ecomagination" advertising campaign touting its new clean coal technology. One ad featured glamorous, scantily clad models (male and female) shoveling coal in a dark mine while Tennessee Ernie Ford's version of "16 Tons," the great song about hard labor and corporate exploitation, played on the soundtrack. Near the end of the ad, a voice announced, "Harnessing the power of coal is looking more beautiful every day."

But there is nothing pretty about coal, as we have been grimly reminded by the plight of the 13 coal miners trapped by a mine collapse near Tallmansville, W.V. The American Lung Association estimates that 24,000 people die prematurely each year from power-plant pollution. In Appalachia, mountaintop removal mining - a method of mining in which the mountain is removed from the coal, rather than the coal removed from the mountain - has flattened some 380,000 acres in the region and destroyed more than 700 miles of streams.

Coal plants generate more than 130 million tons a year of combustion waste - fly ash, bottom ash, scrubber sludge - that is laced with toxic metals like arsenic and mercury and pumped into holding ponds and abandoned mines, where it can sometimes leak into aquifers and drinking water. Most important, coal plants are responsible for nearly 40 percent of the carbon dioxide released in the United States, meaning that if we're going to get a handle on global warming, we'll have to get a handle on coal.

Still, in recent years - thanks in part to skyrocketing natural gas prices, worries about dwindling oil supplies, regulatory rollbacks of the Bush administration - coal has become sexy. And it indeed has many virtues.

Coal is cheap and plentiful. Right now, more than half the electricity generated in America is produced with coal. America is often called "the Saudi Arabia of coal," with enough to last us for 250 years. Improvements in emission controls make new coal plants much cleaner than the old coal burners; 120 of these up-to-date plants are in the works right now. New technology allows coal to be liquefied into diesel, a possible substitute for oil.

There is also a strong cultural connection to the resurgence of coal, particularly in the producing areas: it is a red-state rock, a taking back of America from the silly blue-staters who believed the future would be powered by solar panels and switchgrass. I recently attended a rally for a new coal plant in the Midwest where boosters chanted, "Coal is U.S.A.! Coal is U.S.A.!"

Nothing, however, has been more important to the comeback of coal than the purported safety improvements in mining. The coal industry knows that as much as Americans may love a cheap kilowatt, they are not going to support burning coal if it results in people suffering miserable deaths in Appalachian coal mines. The industry works overtime to suggest that coal mining today has nothing in common with its dark and exploitative past. The old days of breaker boys (children who picked rocks out of the coal) and methane explosions are gone, the coal industry argues, and mining today is safe, well paid and professional.

Promotional literature published by the National Mining Association and other industry groups usually show miners as clean-faced men in close proximity to high-tech machinery - computer screens, global positioning systems, bright yellow haul trucks. The average salary of a coal miner, the association says, is $50,000 a year. According to one coal industry Web site, working in a coal mine today is as safe as working in a grocery store.

The people in Tallmansville know better. Coal mining remains a dirty and dangerous business, especially in regions of Appalachia where all the easy coal is gone and what's left is increasingly difficult and dangerous to mine. (Coal mining is indeed a fairly safe operation in the big strip mines of Wyoming, where the 70-foot seams of coal lie so close to the surface that, in places, you can practically dig it out with a spoon.)

In parts of West Virginia, Pennsylvania and Kentucky, some mines are so complex and tight the workers call them "dogholes." Working in an underground mine, especially one owned by a small non-union operator in Appalachia, is one of the few jobs in America that is nearly as dangerous as commercial fishing in Alaska.

Not long ago, I spoke with a coal miner who was spending eight hours a day in a coal seam in western Kentucky that was a mere 20 inches high. You can't even turn around in a mine like that, have to mine laying on your belly. I asked him how much he earned. "Not enough to buy a new truck," he told me.

If coal is indeed going to be taken seriously as a fuel source in the 21st century, it's up to federal and state regulators to make sure that even 20-inch dogholes are safe (and they can be, with the proper technology, worker skills and governmental oversight). A good first step would be to reverse the Bush administration's new privacy rules, which have made it tougher for outsiders to obtain federal inspectors' reports. Even better would be to increase fines and other penalties for operators who break the rules. In many cases the penalties for running a dangerous mine - the West Virginia mine had 208 federal citations in 2005, up from 68 in 2004 - amounted to little more than a slap on the wrist.

In the summer of 2002, outside the Quecreek Mine in Pennsylvania, I watched for three days as heroic men rescued nine co-workers who had been buried alive. There was no talk about the Saudi Arabia of coal there, no easy words about energy independence or the economic virtues of burning coal. Like the families who stood vigil in Tallmansville this week, they were people who understood the real price of cheap power.