In today’s world of arguments and discussion – each side can only see what they want to see. There are not many open receptors for differing thoughts. Cases in point – Global Warming, Peak Oil, Republican vs. Democrat…. and on. My title could also read “figures never lie but liars always figure”. The use of large numbers can also challenge our ability to decipher some realities.
A recent article I have read was linking quotes about peak oil – the theory is that we have reached the peak in production or near that level. Stating in another way – the current producible reserves can not sustain this production level, and new reserves are not coming on line fast enough to counteract the decline – therefore what we have is what it will be for???? Time without significant effort and investment. The first poster put in links that pushed the idea we had reached Peak Oil production and more reviews and experts were agreeing…
Later in the post another poster used a link to refute the first poster but in my assessment (granted I am a bit biased) I see problems in the argument… all related to my title and the fact that figures can be used to miss-lead if you do not put them in context… let me review:
In the refute – Oxy has found new reserves of “LIKELY” 1 billion barrels in an old field – I say great but wait…
It further states that “within 2 years” (pretty long time) it could be producing 100,000 barrels (sounds big)… but wait – no mention of current production and what the increase actually is but if we assume it is all new production, and we assume that the US uses 25million barrels per day, and we import 70% of that… all numbers that are published by reputable sources, we see that this new huge field will produce about 0.4% or our needs (in two years). Some how I think this 100,000 is the total output of some field that maybe today is producing 50 to 70,000 now?
An elsewhere statement listed a field in West Texas that was bought for 3.5 billion. Economics would be that it should pay out in????? 15 years???? To be a profit… ok that is it needs to pay out 233 million per year. ok, the statement goes further to say by using tertiary recover techniques (stuff we have known for 20 years as I worked on some back in 84) that they increased the production of that field from 130,000 to 200,000 = 70,000 bpd increase. NO mention of the cost of this injection and the costs of increased maintenance associated with pumping a low level acid into the zones, etc… But just from the increase they are getting one day of US needs in the increased production. Assuming a good business model of getting 30% return on the production they are making 1.575 million per day or twice what they need to pay out in 15 years… actually this investment could pay out in 7 years but over that time they will have the same decline curve in production that they had before the treatment started… unknown but might be 1/2 the production increase at the end of 7…
The quotes form OXY is they have enough projects to increase production by 5%… oh boy but wait that is not near enough to offset the production decline elsewhere vs. the daily use that will not decline. Daily use will remain at current levels unless we have significant economic and supply disruptions (regional war, disasters, etc.) or changes in lifestyles – not likely.
Strange how some see these huge field finds, or change in reserve calculations as statements that we have somehow cured the fact that all easy resources (not just oil but we need to include potable water, timber, food, etc. )Are being used up and to maintain our current usage standard the cost of that resource will naturally have to increase. Along with that, as the cost goes up the use patterns will change, new methods or materials or ways will develop to offset some of this and we all go on, arguing the depletion vs. supply. In reality it is not just supply vs. demand it must also be measured on supply vs. demand vs. cost+change.
I do not know if we have reached “peak oil” but I do know you can use numbers to make it sound better or worse than it is. I do consider from my limited knowledge (30years in the patch) and my limited ability to read numbers, that if the last two years of economic slowdown (globally) did not make a big dent in the oil use number and the production did not (in real measure) go way up or way down, and there is no known huge increase in storage, and the price did not go belly-up and see that predicted $30 per bbl again then we may be seriously reaching a tight spot. Looking at the past few years of production, there was only a listed 1 to 2% difference in potential production vs. use? That is too damn close to not see the price has set a new base for energy costs and the future. JMHO
To that end it may be a real good time to look at quality natural resource assets to invest in?