Posts tagged “oil production”
A few years ago, I made the observation that the best thing that could happen to mitigate against some of the potentially severe consequences of peak oil was for oil prices to rise, and remain high in the years before oil production peaked. That would have the effect of encouraging conservation, as people adapted to a world in which oil is no longer cheap. High oil prices would also incentivize oil production, which would have the effect of preventing steep declines in global oil production — which some had predicted would lead to severe economic crisis or possibly economic collapse.
We have certainly seen both conservation and increased oil production, but I have been really surprised by some of the details of how it has happened.
For example, as oil prices raced to $100, consumption in the US and Europe declined as I expected. But consumption in all developing regions increased sharply — so much so that the net impact was for global consumption to increase.
(Read More: Petroleum Demand in Developing Countries)
I didn’t expect this; rather I expected that we would see oil consumption decline across the board.
Increased Domestic Oil & Gas Production, Declining Demand and Shrinking Imports
The American energy revolution is starting to come into focus. Technological breakthroughs in shale gas and tight oil production are poised to make the United States — not Saudi Arabia — the world’s largest producer of crude oil as early as the end of the decade, according to the latest World Energy Outlook published by the International Energy Agency (IEA). The IEA’s analysis found that the United States could even be a net exporter of oil by 2035, a position the United States has not been in since the 1940s, when it had one of the world’s few developed oil industries.
At the same time, U.S. demand for crude oil is in decline and its crude oil imports are shrinking. Higher fuel efficiency standards in U.S. vehicles have contributed largely to depressed demand, with U.S. oil imports falling from 56 percent of total consumption to 46 percent between 2008 and the end of 2011, according to the U.S. Energy Information Agency. By 2035, the United States could be importing less than 2 million barrels a day, down from more than 8 million barrels today, according to the IEA. (Read More: Top 15 Sources for U.S. Crude Oil Imports in 2011)
A new report from the International Energy Agency (IEA), a group made up of 28 nations, says that the United States will surpass fossil fuel giants Russia and Saudi Arabia as the world’s largest oil producer by the year 2017.
The United States is closer than many think to true energy self-sufficiency, says the annual long-term report, contrasting sharply with previous IEA numbers that suggested that Saudi Arabia would remain the world’s top oil producer until at least 2035. (Read more: Hofmeister: Surging Demand and Flat Production Equals High Oil Prices)
Can Oil Supplies Grow Fast Enough to Keep Prices in Check?
I, along with my editor Sam Avro, recently conducted a broad-ranging interview with John Hofmeister, former President of Shell Oil and currently the head of Citizens for Affordable Energy, a non-profit group whose aim is to promote sound U.S. energy security solutions for the nation. In the first part of this interview Mr. Hofmeister spoke of A Difficult Decade Ahead For Oil Prices and Supplies. In the second, he set forth an Energy Plan for America. In the current installment, he discusses the events responsible for the explosion in the price of oil over the past decade.
Developing Demand and Depleting Supplies
I prefaced my question with my own view that the explosive growth in oil prices mostly boiled down to new demand outstripping new supplies, which resulted in loss of spare capacity. Some have suggested that the real culprit is a massive influx of financial players into the oil markets, so I was curious to get Mr. Hofmeister’s views on the factors behind the escalation in oil prices over the past decade. CONTINUE»
Potential for Expansion of Global Oil Production
I, along with my editor Sam Avro, recently conducted a broad-ranging interview with John Hofmeister, former President of Shell Oil. The topics touched upon included future oil supplies and prices, climate change, U.S. energy policy, and topics familiar to R-Squared Energy readers such at Peak Lite and the Long Recession.
I will present this interview in a series of stories covering some of the various topics. In this first story, I will discuss Mr. Hofmeister’s detailed answer to the question, “What do you feel is the potential for expanding global oil production, and the time frames?”
Readers my recall that I have put forth a pair of hypothesis with respect to future oil production and prices. One is called Peak Lite. (See also: Five Misconceptions About Peak Oil)
INCREASED ENERGY INDEPENDENCE? The U.S. has met 83 percent of its energy needs this year through June, according to the Department of Energy
Oil production in the United States rose last week to levels not seen since January 1997, helping the country to reduce dependence on foreign sources of crude as it continues to implement the drilling and fracking technologies needed to increase daily oil output. (See also: Are President Obama’s Policies Causing U.S. Oil Production to Rise?)
Reports from the Energy Department released this week show that overall crude output in the U.S. rose 3.7 percent to 6.5 million barrels per day by the week of September 21, a trend that has continued since the country met 83 percent of its annual energy needs from the beginning of the year through June. Should domestic oil production continue at its current rate, the United States will enjoy 2012 as its most self-sufficient year since 1991.
Saudi Arabia’s per capita oil consumption is higher than the U.S. and most developed countries
Long known as perhaps the most oil-rich country in the world, Saudi Arabia’s dwindling crude oil deposits could see that nation become an oil importer in less than 20 years, according to a a report compiled by Citigroup Inc.
With the country’s peak rates of electricity production growing at up to eight percent per year and with oil and its derivatives used to generate about 50 percent of the power used by its own citizens, the bank warns that Saudi Arabia could find itself without the crude oil needed to keep its young and relatively wealthy population stocked with energy, forcing it to import the fuel from other nations as soon as the year 2030.
This week I was reading an article from the Associated Press called Some fracking critics use bad science. The gist of the article is that Gasland director Josh Fox used false information in his new film, The Sky is Pink. Among other things, he claimed that cancer rates were higher in Texas where fracking is taking place. Three different cancer researchers in the area contradicted him on this claim.
But then the article went on to say something that I thought was very relevant to debates on just about any controversial energy topic — fossil fuel subsidies, climate change, hydraulic fracturing:
One expert said there’s an actual psychological process at work that sometimes blinds people to science, on the fracking debate and many others. “You can literally put facts in front of people, and they will just ignore them,” said Mark Lubell, the director of the Center for Environmental Policy and Behavior at the University of California, Davis.
Lubell said the situation, which happens on both sides of a debate, is called “motivated reasoning.” Rational people insist on believing things that aren’t true, in part because of feedback from other people who share their views, he said.
As a result, misinformation is hard to stamp out, because it tends to be repeated — confirming the views people already hold. That brings me to the topic of today’s column: Climate change claims around the Keystone XL pipeline.
Since 2005, the “total oil supply” for the United States as reported by the Energy Information Administration increased by 2.2 million barrels per day. Of this, 1.3 mb/d, or 60%, has come from natural gas liquids and biofuels, which really shouldn’t be added to conventional crude production for purposes of calculating the available supply. Of the 800,000 b/d increase in actual field production of crude oil, almost all of the gain has come from shale and other tight formations that horizontal fracturing methods have only recently opened up. Here I offer some thoughts on how these new production methods change the overall outlook for U.S. oil production.
Let me begin by clarifying that “shale oil” and “oil shale” refer to two completely different resources. “Oil shale” is in fact not shale and does not contain oil, but is instead a rock that at great monetary and environmental cost can yield organic compounds that could eventually be made into oil. Although some people have long been optimistic about the potential amount of energy available in U.S. oil-shale deposits, I personally am pessimistic that oil shale will ever be a significant energy source.
In this week’s episode of R-Squared Energy TV, I discuss the recently released paper by former Eni executive Leonardo Maugeri — in which he suggests global oil supplies will increase by 17 million barrels per day by the end of the decade — as well as George Monbiot’s highly publicized reaction to the report.