More on Peak Oil
I’ve been reading the 2004 book The End Of Oil and it’s made some interesting reading. It’s amazing how much is changed in just 3 years actually. The author does a good job closing the book on conventional oil - it’s a done deal. First comes the peak of light, sweet crude oil (that may have happened in the late 90’s). Then comes peak of light, sweet crude plus condensate. Then peak of all conventional crude plus condensate (possibly 2005 was the peak - we won’t know till a few more years go by most likely), then peak of all liquids will come (includes liquid natural gas’s), then peak of all oil, conventional and unconventional (ie, tar sands, oil shale, etc may have already peaked too because unconventional oil is so hard to produce in quantity), then peak of natural gas (north america has peaked, asia still has a lot left, but a “lot” may mean til 2015-20 range, and it’s hugely expensive to liquify natural gas to ship it over seas), and then peak coal (some say it has no more than 20 years left before peak, other say peak was in 1998 because if you look at peak coal in terms of energy content then we have yet to surpass 1998’s harvest of coal). The 3-year-old book though is behind the times on coal, and he throws out the old number of 200 years of coal reserves. This is before world coal reserve estimates were updated and down-graded substantially.
Natural gas is going to be huge in the next decade. Unfortunately, it will always be expensive here, due to the shipping costs, and it will be snapped up eagerly by every sector of industry, because it is so useful for nearly any task - electricity generation, hydrogen extraction (used to make tar sands into real oil, for example), and can even be turned into gasoline fairly easily. And as oil declines, it’s only going to get more expensive, and we’re going to run through our reserves of natural gas very quickly. And possibly the worst aspect of it is that when a natural gas well goes into decline, it is steep, and usually completely dry in just 3-4 years. Whereas an oil well can continue producing less and less for decades. This means if we fool ourselves into thinking “well, oil is done, coal is declining, but gas - gas will go on forever!” (which seems to be our modus operandus), then we’ll be in for a tough time when gas starts to fizzle out, cause it’ll be high one year, and 3 years later, we’ll have lost 50% of it, and that crash will be ruinous.
Today the oil drum has a good article about Thermal Depolymerization and the hype from the Discover magazine article from 2003. It follows up on the story about how a small company was going to generate $15/barrel oil from wastes such as turkey carcasses and car tires. As it turns out, they can’t produce the oil for less than $80/barrel. And as the oil drum author astutely points out, so many cost estimates for alternative energies are based on the current cost of oil (as all these solutions generally require a lot of manufacturing, which is energy and fuel intensive, so the current cost of oil is one of their costs). At $20/barrel, the cost to depolymerize turkey carcasses is one thing. At $60/barrel of oil, it’s something else. Guess what turkey gas will cost when oil costs $80/barrel? More than the current estimate of $80/barrel, I bet. And though it may seem like eventually the two costs must cross, that is not necessarily the case, as it matters what the overall EROI of the process is. Part of the reason for the $15/barrel original estimate was based on the idea that they could get waste products for free. But that means, their costs weren’t reflecting their energy inputs (their turkeys represented a fair amount of energy input to raise and feed and transport them). As energy costs increase, we get closer to correctly matching cost inputs with energy inputs, and if a new processes EROI is lower than oil’s, then it will always remain more expensive than oil. Well, maybe an over-statement there, but the fundamental point is sound, and it’s one most people don’t think about. As oil prices go up, the cost to create solar cells goes up too, and the cost of manufacturing wind turbines. If we don’t start this manufacturing process while oil is still cheap enough to do so, then we may miss the chance to do it.



