Oil depletion

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Peak oil
Mitigation of peak oil
Predicting the timing of peak oil
Hubbert peak theory
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Oil depletion is the inescapable result of extracting and consuming oil faster than it is naturally produced, because the formation of new natural petroleum is a continuous geologic process which takes millions of years. [1] No one knows for sure when the long-term decline of oil reserves will begin, or what the consequences will be. The Hubbert peak is an influential theory concerning the long-term rate of conventional Petroleum (and other fossil fuel) extraction and depletion. The Hubbert peak is named for United States geophysicist M. King Hubbert, who created a model of known reserves, and proposed the theory. The concept of passing the peak-point, so that society is on the downward side of the oil supply curve, is also referred to as Peak oil or the end of cheap oil. By most projections, this point has already been passed or is about to be at some point between the years 2007 and 2010, although by United States government prediction [2], world consumption of oil will increase to 98.3 million barrels a day in 2015 and 118 million barrels a day in 2030. This represents more than a 25% increase in world oil production. Many predictions have been made about the potential implications of passing the peak. These estimates range from warnings of a doomsday scenario created by long term lack of growth to faith that the market economy will allow a relatively smooth transition to other energy sources through technological solutions.

Contents

[edit] Mechanisms of oil depletion

Main article: Hubbert peak theory

Oil depletion occurs in a predictable fashion based on geological principles and engineering practice which apply in varying degrees to all oil fields. The shape of the decline curves can vary depending on particular circumstances and government policies, but all oil fields decline over time, and the geological and operational mechanisms involved ensure the fields will decline in a relatively predictable manner.

[edit] Oil well production decline

Theoretical oil well production decline curve.
Theoretical oil well production decline curve.

In theory, Oil wells would follow an exponential decline curve[citation needed]. Produced at their natural rates, oil wells will start off by producing at a high rate and then will decline rapidly from that rate and eventually level off at a low rate of slow decline[citation needed]. There are many exceptions to this, some dictated by operational procedures at the surface (the typical Saudi Arabia well does not decline in this manner for example) and others dictated by allowable restrictions, such as oilwells in Louisiana, and specifically excludes any wells involved in EOR projects involving injection elsewhere in the reservoir.

Each well drains the oil reserves in its portion of the oil field at a high rate when pressures are high. As pressures decline and the oil in the immediate vicinity is reduced, the rate will fall, but will gradually level out as the production rate falls and pressure decline becomes slower. The theoretical curve will never actually reach zero, but at some point the well will no longer produce enough oil to cover its production costs and will be shut in as non-economic. In the United States, these low-production wells are referred to as marginal or stripper wells and receive special tax breaks to encourage companies to keep operating them as long as possible. Volumes for this wells can easily decline to less than 0.1 BBL Oil/Day and still be economic under operating scenario's in the Appalachian Basin.

This standard decline curve can be affected by a number of factors which can modify its shape:

  • The well may be restricted to a lower production rate by lack of market demand or government regulation. This will flatten the top of the curve and level it out, but will not change the area under the curve (the total well production) significantly.
  • The well may receive a workover such as hydraulic fracturing (fracing) or acidizing to improve its production rate. This can cause a sharp spike in production as well as increase the recoverable reserves from a given wellbore.
  • The field may undergo a secondary or tertiary recovery project, discussed in the next section.

[edit] Oil field production decline

Typical oil field production decline curve[citation needed].
Typical oil field production decline curve[citation needed].

An oil field covers a fixed area. If oil wells are drilled in this area at a fixed distance apart at a steady rate, a curve such as at right will result[citation needed]. Production will rise rapidly at first[citation needed], but start to level off as the wells which have already been drilled begin to decline. Eventually, when the field is completely drilled out, production will go into a sharp decline as all wells are now in decline. This decline will level off and production can continue on for a very long time. A number of oil fields in the U.S. have been producing for over 100 years.

This curve can be modified by a number of factors:

  • Production may be restricted by market conditions or government regulation. Large oil fields tend to flood the market with oil and cause a temporary glut and low prices. This discourages drilling, flattens the peak of the production curve and pushes production into the future.
  • The field may undergo a secondary recovery project, such as water or gas injection. This can repressurize the field and improve the production rate, putting off the decline for a while. However, it will not change the area under the curve. Eventually the field will go into a steeper decline than it otherwise would.
  • the field may undergo an enhanced oil recovery project, such as drilling of wells for injection of solvents, carbon dioxide, or steam. This can be very expensive but allows more oil to be coaxed out of the rock, increasing the ultimate production of the field.

[edit] Multi-field production decline

Multiple oil field production decline curve.
Multiple oil field production decline curve.

Most oil is found in a small number of very large oil fields, and there are probably a limited number of them. If they are found at a constant rate until they are all found, the combined production of the fields will yield a curve such as the one at right. Production starts off slowly, rises faster and faster, then slows down and flattens until it reaches a peak. After the peak, it starts to decline faster and faster, and eventually flattens out. Oil production never actually reaches zero, but eventually becomes very low. Factors which can modify this curve include:

  • Inadequate demand for oil, which does not keep up with supply. This will limit the steepness of the rise and push the peak into the future.
  • Sharp price rises at the top of the curve as production fails to meet demand. This can cause a sharp drop in demand and a dip in the top of the curve.
  • Introduction of new technology and production of non-conventional oil. This can reduce the steepness of the decline and cause more production of oil or conversion of other substances to oil.

[edit] United States production decline

United States oil field production decline curve.
United States oil field production decline curve.

Oil production in the United States has followed the theoretical Hubbert Curve in a general fashion. U.S. oil production reached its peak in 1970 and by the mid-2000s it had fallen half way down the production curve to a level last seen in the 1940s. In 1950, the United States produced over half the world's oil, but by 2005 that proportion had dropped to about 8%. In 2005, U.S. oil imports were twice as high as domestic production.

Alaska oil field production decline curve.
Alaska oil field production decline curve.
Texas oil field production decline curve.
Texas oil field production decline curve.

The production peak in 1970 came as a complete surprise to the U.S. government and oil companies, and despite their best efforts, the production decline was irreversible, except during the embargo of the late-70's. - U.S. oil production never reached the peak of 1970 again but has outstripped Hubbert's projections consistently since the US Peak. Oil companies have drilled large numbers of oil wells but did not find enough oil to slow the decline, on a nationwide scale. Production declines have been reversed in natural gas in the United States as well as smaller areas, or countrywide areas the size of Venezuela. By 1972 all import quotas and controls on U.S. domestic production had been removed. Despite this, and despite the quadrupling of prices during the 1973 oil crisis, Texas oil production peaked sharply in 1973 and has been declining ever since. It now is less than 1/3 of the level it was at its peak.

Despite the fact that Hubbert was only one year out in predicting the peak of U.S. oil production, the actual production curve does deviate from the Hubbert curve in some significant ways:

  • Production followed the demand curve up rather than the classic bell-shaped curve. This was because too much oil created a glut on the market and regulatory agencies such as the Texas Railroad Commission stepped in to restrain production.
  • The curve peaked at a sharp point rather than gradually flattening out. This occurred because as consumption began to approach production limits, oil companies drilled out all their existing fields as fast as they could, and many of those fields peaked simultaneously.
  • Production fell after 1970, but started to recover and reached a secondary peak in 1988. This occurred because, despite the fact the supergiant Prudhoe Bay field had been discovered in 1968, regulatory delays prevented completion of the Trans-Alaska Pipeline System (TAPS) until 1977.
  • After 1988, production began to decline again because Alaska production peaked that year. By 2005, Prudhoe Bay had produced over 75% of its oil. As a result, the TAPS may have to be shut down in a few years because production will not pay its operating costs. The Arctic National Wildlife Refuge (ANWR) may contain enough oil to keep the TAPS running for a few more years, but the U.S., as a mature basin, is primarily growing its reserves through the growth of reserves in existing fields rather than new discoveries.

[edit] World oil production

Further information: Peak oil
World oil field production curve.
World oil field production curve.

World oil production has followed a typical exponential growth curve, which has continued to grow for over a century with only a few dips, but the experience of the United States decline has caused many people to question how long the world can continue to produce steadily increasing amounts of oil. As of the mid-2000s, all of the world's oil producing countries except Saudi Arabia were producing at maximum capacity, and some experts such as Matthew Simmons were questioning whether even Saudi Arabia had any reserve capacity left.

Industry observers and proponents of the peak oil theory have pointed to the similarities between the global production curve in mid-2000s and that of the United States in the 1970s, which peaked without warning and started to decline.

  • The oil price increases since 2003 were preceded by a decade of production cutbacks in OPEC countries in an attempt to keep prices high despite an oil glut. This is similar to production cutbacks in Texas and other states to maintain prices despite an oil glut in the decade prior to the 1973 oil crisis.
  • World oil prices reached record highs in the mid-2000s, but new oil did not appear on the market, as the theory of supply and demand would predict. This is reminiscent of price increases in the United States in the 1970s when U.S. oil production started to decline despite record high prices and record drilling by oil companies.
  • There are serious doubts about whether OPEC countries really have the oil reserves they claim. This is similar to the illusionary oil reserves that U.S. oil companies claimed to have in the decade prior to the 1973 and 1979 oil crisis. In the 1970s, the companies were unable to produce as much oil as they claimed, and production went down instead of up.

[edit] Implications of a world peak

Further information: Possible effects and consequences of Peak Oil
An oil power plant in Iraq.
An oil power plant in Iraq.

A peak in oil production could result in a worldwide oil shortage, or it could not even be noticed as demand decreases in conjunction with decreased supply, such as what happened in the U.S. in 2005 and 2006. While past shortages stemmed from a temporary insufficiency of supply, crossing Hubbert's Peak would mean that the production of oil would continue to decline, and that demand for these products must be reduced to meet supply. The effects of such a shortage would depend on the rate of decline and the development and adoption of effective alternatives, ongoing as you read this. If alternatives were not forthcoming, it has been speculated that the numerous products produced with oil would become scarcer, leading to at the very least lower living standards in developed and developing countries alike, and possibly in the worst case to the collapse of the entire international banking system, which could not hope to sustain itself without the prospect of growth[citation needed]. The political situation may change dramatically, with potential wars between countries over access to dwindling supplies. Accordingly, inequalities between various countries and regions of the world may become exacerbated.

[edit] Catastrophe

Economic growth and prosperity since the industrial revolution have, in large part, been due to increased efficiencies in the use of better and higher concentrations of energy in fossil fuels. The use of fossil fuels allows humans to participate in takedown, which is the consumption of energy at a greater rate than it is being replaced. Some believe that decreasing oil production portends a drastic impact on human culture and modern technological society, which is currently heavily dependent on oil as a fuel and chemical feedstock. For example, over 90% of transportation in the United States relies on oil.

Some envisage a Malthusian catastrophe occurring as oil becomes increasingly inefficient to produce, others have learned from the examples demonstrated in mature basins and applied those operational procedures to these basins to preserve their operational tempo. Since the 1940s, agriculture has dramatically increased its productivity, due largely to the use of chemical pesticides, fertilizers, and increased mechanisation. This process has been called the Green Revolution. The increase in food production has allowed world population to grow dramatically over the last 50 years. Pesticides rely upon oil as a critical ingredient, and fertilizers require natural gas. Farm machinery also requires oil. Arguing that in today's world every joule one eats requires 5-15 joules to produce and deliver, some have speculated that decreasing supply of oil will cause modern industrial agriculture to collapse, leading to a drastic decline in food production, food shortages and possibly even mass starvation. It must be noted, however, that most or all of the uses of fossil fuels in agriculture can be replaced with alternatives. For example, by far the biggest fossil fuel input to agriculture is the use of natural gas as a hydrogen source for the Haber-Bosch fertilizer-creation process [3]. Natural gas is used simply because it is the cheapest currently-available source of hydrogen; were that to change, other sources, such as electrolysis powered by solar energy, could be used to provide the hydrogen for creating fertilizer without relying on fossil fuels.

Oil shortages may force a move to lower input "organic agriculture" methods, which may be more labor-intensive and require a population shift from urban to rural areas, reversing the trend towards urbanisation which has predominated in industrial societies; however, some organic farmers using modern organic-farming methods have reported yields as high as those available from conventional farming, but without the use of fossil-fuel-intensive artificial fertilizers or pesticides. [4] [5] [6] [7]

Another possible effect would derive from America's transportation and housing infrastructure. A majority of Americans live in suburbs, a type of low-density settlement designed with the automobile in mind. Current EV technology would allow these living arrangements to continue well into the next millennia but some commentators such as James Howard Kunstler argue that because of its reliance on the automobile, the suburb is an unsustainable living arrangement; the implications of peak oil would leave many Americans unable to afford fuel for their cars, and force them to move to higher density, more walkable areas. In effect, surburbia would comprise the "slums of the future." A movement to deal with this problem early, called "New Urbanism," seeks to develop the suburbs into higher density neighborhoods and use high density, mixed-use forms for new building projects.

[edit] Recession

A more modest scenario, assuming a slower rate of depletion and a smooth transition to alternative energy sources could cause substantial economic hardship such as a recession or depression due to higher energy prices. Historically, there is a close correlation in the timing of oil price spikes and economic downturns. Inflation has also been linked to oil price spikes. However, economists disagree on the strength and causes of this association. The world economy may be less dependent on oil than during earlier oil crises. Conversely, the recessions of the early 1970s and early 1980s were associated with a relatively brief period of somewhat dwindling energy availability; the possible future increase in oil prices might be much higher and last longer. See Energy crisis.

[edit] Rising food prices

Main article: food vs fuel

Rising oil prices cause rising food prices in two ways. First, if it costs farmers more to fuel their tractors etc. they will have to charge more for what they produce. Second, higher oil prices are causing farmers to switch from producing food crops to producing biofuel crops. [1] [2] The law of supply and demand predicts that if less farmers are producing food the price of food will rise. [3]

[edit] Further reading

  • Kenneth S. Deffeyes. Hubbert's Peak : The Impending World Oil Shortage, Princeton University Press (August 11, 2003), ISBN 0-691-11625-3.
  • Richard Heinberg. The Party's Over: Oil, War, and the Fate of Industrial Societies, New Society Press ISBN 0-86571-482-7
  • Mathew R. Simmons. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, Wiley (June 10, 2005), ISBN 0-471-73876-X

[edit] References

  1. ^ Food versus fuel debate escalates
  2. ^ How Food and Fuel Compete for Land by Lester Brown - The Globalist > > Global Energy
  3. ^ The Economist – The End Of Cheap Food.

[edit] See also

[edit] External links