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#94 - 13th February 2005 [250+397
When Will the Oil
Easy permalink: http://tinyurl.ie/oil
This post has been periodically updated
since the original publication
May 2008, the Irish Times
kindly published an article by me largely based on the
of this post.
Click on the thumbnail to view it.
I am quite often asked this question by people who
are unfamiliar with the oil industry, and it's not an easy one to answer,
for reasons perhaps this post will make clear.
According to published sources, the world has
something like one
barrels of oil reserves (that is, 1012) and consumes around 84
million (106) barrels a day. Therefore we will run out of oil in
1,000,000 / 84 = 11,905 days = 32.6
years, ie in 2037 or thereabouts.
That's within the lifetime of most of us (well, not
me, obviously), so panic about a coming oil drought is entirely
Wrong. So wrong.
For the equation
assumes stasis, yet its two key components, reserves and consumption, are
wildly dynamic and uncertain.
Take CONSUMPTION. It is dictated
by demand, but this in turn is driven
by energy mix (oil, gas, coal, nuclear,
renewables such as wind, wave, tides, bio - more of one means less of another);
by technology (machines that are either more
fuel-efficient or less so);
by business organization (arranging things more
cleverly, such as by
eliminating process duplication within or
between companies, or
eliminating processes altogether, eg replacing
with video-conferencing, or
reaping economies of scale, or
a multiplicity of simple things like
by oil price (higher prices lead to less
which is itself driven by demand (more
consumption leads to higher prices);
by free-market competition forcing businesses to
drive down their costs in order to survive;
by overall world economic circumstances that can
foster either tighter or looser financial control, lower or higher demand.
So if there is one thing you can be certain of
between now and 2037, it is that consumption is not going to remain at 84 million
bbl/day or any simple multiplicator of this.
Then there's the RESERVES question,
which is even trickier.
Start by asking, what are reserves ?
of a given oilfield are someone's best estimate of how much oil can be economically
produced at today's prices and using today's
technology. But reserves can't be measured like liquid in a swimming pool, because oil sits in
voids (eg the space between two grains of sand) within rock several kilometres downstairs and typically between a
million and a billion cubic metres in size. So you have to
the volume of the oil-bearing rock you've got,
how much of this comprises voids able to contain
how well the voids are connected together for
easy tapping (permeability),
the percentage to which the voids are filled with
oil rather than water (saturation),
how easily the oil itself can flow (viscosity), from one void
to another, till it gets to a well bore,
what help you may need to provide (eg external
pressure) to push the oil
the proportion, based on all the
above, of the oil actually present that you will be able to
economically extract - the so-called Recovery Factor.
On the last point, Recovery Factors
for given oilfields range typically from 15% to 60%, with a global average
meaning the other 60% doesn't appear in reserves estimates.
The above is what you need to know, but all you can measure
is a few metrics that will yield
seismic data which vaguely maps the shape of the
good raw data about rocks and fluids from individual wells drilled - but
wells are expensive, so they are few and far between, and
reliable data about past production, though this largely just tells you how wrong your previous estimates
So with this limited, spaced-out information, covering only
a very small percentage of the rock, you nevertheless have to interpolate
what it means for all of the rock.
It is not hard to see, therefore, that if two
engineers get together to agree on a reserves estimate, they come up with
three different solutions.
And that's not even to talk about human
factors, such as
bonuses they might earn for themselves and their colleagues if they can
increase reserves for their company and hence its share price,
or the interest of many OPEC countries to inflate
their reserves to qualify for bigger production quotas, while
simultaneously obscuring the basis of their calculations.
But even all this is only part of the story.
Technology is changing all the time in a manner that in effect continuously
increases reserves, as new ways emerge
to use ever-better seismic techniques to locate oil-bearing
rocks - smaller, deeper, tougher - that would otherwise remain hidden;
to drill wells
ever-deeper, rougher waters and in more demanding
land locations (from frozen wastes to thick jungle).
that go ever-deeper underground,
that snake in three dimensions
oil-bearing zones like a fighter jet stalking
that are multi-tentacled, able
to reach out several kilometres - perhaps up to 15 km - in all
directions like the spokes of a bicycle wheel;
to drill wells ever-more cheaply, and to re-use old
wells, thus yielding a profit from what would otherwise be uneconomic
to use increasing sophistication
to improve the Recovery Factor, ie to untrap more of the 60% of oil
(over a trillion barrels) currently not economically producible,
through applying enhanced recovery techniques such as
cracking the rock open by
pumping in water at high pressure
[known as fraccing, as
explained in this 2012 post,
dissolving the rock and/or
solid impurities by soaking with acid or other solvents,
flushing the reservoir with
water, or steam, or gas, or thinning chemicals, or viscous fluids down one set of
(injection) wells, in order to drive more oil into the bores of
other (producing) wells,
combining several of the above
to convert gas to liquid fuel
using the latest so-called gas-to-liquid (GTL) technology, or indeed
coal to liquid, so adding to liquid fuel reserves;
to double present reserves by economically
developing vast oil deposits hitherto locked within, for example,
to transport and process oil in ways that
relentlessly drive down costs on a never-ending basis.
And don't forget the direct effect of oil
Firstly, price rises encourage further exploration and investment
which ultimately add to reserves.
But also, a rise of one dollar a barrel, instantly, with no
effort by anyone whatsoever, augments global reserves by making
economic a slew of prospects from which the oil was previously
uneconomic to extract.
Thus, for example, rising demand pushes up prices
that in turn cause reserves to rise. And vice versa of
Moreover, as the oil price rises,
so alternative energies become economic as this chart from
The Economist shows, and this of course reduces oil demand and
hence spins out oil reserves for longer.
Published reserves of the world's oil represents the
sum of millions of estimates that take into account all the above
factors. They are
performed every day all over the globe by hundreds of thousands of
engineers and geologists, competent and incompetent, honest and flaky,
checked and not checked.
So when you see a figure like one trillion barrels of
reserves, know that it is no more than a best estimate as of a certain
moment in time, and certainly wrong, and that it's changing all the
Know also that less conventional energy alternatives
- wind, solar, hydrogen, tidal - are developing fast, their costs are
dropping and before long they will be able to
displace significant oil volumes (in the process making oil reserves last
Above all, know and trust that there is no limit to
human ingenuity. Indeed it is said that oil is found not in the ground but
resource that is the human brain, prompted it must be
said by the driving force of benign human greed that so fascinated the
Scottish economist Adam Smith, spiritual father of capitalism.
The limitless human mind will always ensure there is
sufficient oil to meet humankind's needs until well after our grandchildren have
died of old age.
And then there's politics and oil. Ahh, but that's a story for another
Saudi Arabia's Fading
Oil Reserves, 23rd July 2006
Later Note (29th
Who would have thought
Contrary to conventional wisdom,
the days of finding super-giant oilfields are not yet over.
A super-giant is a field with
more than 500 million barrels of reserves.
have recently announced the discovery of
no fewer than
three of them offshore Brazil
- Cariocas-Sugar Loaf, Tupi and Jupiter,
shown red in the chart -
which between them hold an astonishing
46 billion barrels of recoverable oil,
plus unquantified gas and condensates.
These fields alone
would keep the
whole world going for 1½ years!
“limitless human mind” is
still working its magic.
Every cloud has a silver lining.
The chart below chart illustrates how
the monstrously high oil prices of mid-2008 (approaching $150/bbl) can
liberate vast quantities of additional untapped oil, to be measured in the
trillions of barrels. All the oil ever produced to date amounts to
just one trillion barrels.
It comes from a paper entitled
Systematic Approach to Hostile Environments”,
by Ashok Belani, Schlumberger's Chief Technology Officer and Steve Orr, its
President of Artificial Lift. The paper appears in the July 2008 issue
of the prestigious
Journal of Petroleum Technology, July 2008.
Later Note (28 Jan 2010)
IHS Cambridge Energy Research Associates is a leading
to international energy companies, governments,
financial institutions and technology providers.
It is headed by Daniel Yeargin, author of
which is the brilliant and definitive history of the oil industry.
The book won the Pulitzer prize in 1992.
In November 2009 IHS-CERA published a 16-page
Future of Global Oil Supply: Understanding the Building Blocks”,
by Peter M Jackson, a senior director.
24,000 fields and discoveries
across the world,
he comes to the conclusion
that so-called Peak
Oil, at ca 115 million barrels per day
will not be reached for another twenty years.
In 2009 it was 92 mb/d.
Moreover, once reached the peak will
not be followed by a precipitous drop-off,
but rather by a couple more decades or so of an undulating plateau.
The oil industry undoubtedly will face
major challenges as it finds new oil
and turns discoveries into commercial production.
Nevertheless, once again the apocalyptic doom-mongers
predicting imminent collapse are wrong.
They fail to take account of
global economic conditions, geopolitics,
energy prices, new technologies, efficiencies, alternative energy sources.
We are dealing with a complex, multi-component system,
and factors such as these - and above all the incredible fertility of the
human brain -
are what keep, and will keep, the oil flowing for a long, long time.
Easy permalink: http://tinyurl.ie/oil
to List of Contents
readers may recall that some time back I ran a world exclusive which
featured the full
inside story of the DHL
freightliner that was shot down in November 2003 whilst climbing out from
Baghdad. The event received a lot of media coverage, not least by
Paris Match which had a French reporter and photographer embedded, extraordinarily,
with the insurgents who launched the SAM-14 missiles. However,
no-one had the surrounding details that I had obtained.
International magazine has now run the story, though it concentrates
solely on what transpired within the
Airbus A300 B4, to the
exclusion of other angles. Nonetheless, its tale of three skilled
crewmembers battling for 25 nail-biting minutes to save their aircraft and
their own lives is a rattling good yarn of derring-do, which someone
should surely turn into a movie.
Since the article is subscription-only, I've
transcripted it; just click on the flight-path thumbnail above.
Especially if you're a film-maker.
to List of Contents
Apologise to Edward
It's been a season of apologies.
First, Ireland's President Mary MacAleese showed how to
apologise after she likened Ulster's protestants to Nazis, and
Protestants then showed how to accept an apology gracefully.
Last week, the Irish Times' humorous, right-leaning columnist Kevin Myers
spent an entire column being very,
very sorry for
in a previous column to the children of
unmarried parents as bastards and causing a storm of outrage. Both columns are
(It is an irony, incidentally, that it is seemingly perfectly acceptable
to procreate bastards but not to describe them as
And Britain's Tony Blair issued a formal
apology to the so-called Guildford
Four and Maguire Seven for the gross miscarriage of justice that resulted in their
having been wrongly imprisoned for 14
years for IRA bombings in 1974 in Guilford and Woolwich that killed seven
All three apologies were gracefully received.
Now we hear that Prince Charles is going to marry, with
the blessing of both the State and the divorce-forbidding Church of
England which he will one day head. The lucky girl is his mistress
of 35 years, some divorcée called Camilla Parker Bowles, who still
carries the surname of her cuckolded, discarded ex-husband. She is
also (whisper it quietly, a Catholic, albeit non-practicing and probably
by now a convert to some other faith). Yet despite all this (and
widespread hostility on the part of the British public), Charles will apparently remain
eligible for kingship.
He should be ineligible for two reasons.
Firstly, the king's consort is not supposed to be a
The government of the day hounded his great-uncle
King Edward VIII from his throne and into lifelong French exile for
exactly this offence.
Even his aunt Princess Margaret was forced to give
up her boyfriend/fiancé Peter Townshend because he was divorced.
Secondly, the king's consort is not supposed to be a
And as any Catholic knows (though perhaps not
every Protestant), once a Catholic always a Catholic, no matter
how many other religions, voodoos or witchcrafts you sign up
Only the Pope or a very senior bishop can release you and
no-one like that has
released her or we'd have heard about it.
It's the very reason Charles didn't marry her in
the first place.
So if His Toniness is going to give Charles his seal of
approval, then on behalf of the State, he should also issue a posthumous
apology to King Edward VIII and Wallis Simpson for the shabby way they
were treated 68 years ago.
Apologising is all the range and Mr Blair has shown he
knows how to do it.
Oh, and technically he needs an Act of
Parliament to let a Catholic in the door. But he's hoping no-one
(else) will notice.
More on the love travails of Margaret, Charles and
from a previous post, here
to List of Contents
Freedom Institute Blog Awards
I go incommunicado in Hungary for ten days and what
happens. I suddenly find that during my absence, the otherwise
Institute has the temerity to make no fewer than five
awards for Irish Liberty Blogging and a further one for an
international blog. This apparently is to foster high-quality online political commentary and discussion.
Now the fact that the Tallrite Blog is conspicuous by
its inexplicable absence from this list in no way leads me down the path
of green-eyed-monsterism. I am the last to begrudge anyone winning
anything, least of all the above worthy bloggers, all of whom I heartily
congratulate and now hold in the highest (grrr) esteem.
However, who dreamed up such boring categories
The contest would have been far livelier, and thus
the winner(s) even more worthy, had it been judged on criteria that are
undoubtedly much closer to surfers' hearts and minds.
For example, whose blog
Is the most technically complex (writing,
saving, archiving, permalinking and so forth all strictly D-I-Y, with
no namby-pamby typepad,
blogspot etc to do all the dirty work)?
Makes most use of those beloved little red squares
(each one celebrating the defeat of Soviet communism)?
has most drivelly letters published in national newspapers
(say 21 in 2004)?
Is the best, or let's say only, weekly?
Includes the most comprehensive indexing?
Makes best use of luxurious sky-blue in the
Is the worst loser?
Can't think of anything else?
There. I knew you'd agree with
Looking forward to a slightly more enlightened FI awards
process in 2006.
to List of Contents
Apartment in Budapest
any readers are interested in a long weekend, or longer, in Europe's new
hottest city, Budapest, I have available for short lets a luxurious, large (75
square metres, or 807 square feet) self-catering apartment in the buzziest
part of town, the classy XIII district alongside the Danube. The
property is right beside the stunning Vigszinhaz, or Comedy Theatre, shown
in the thumbnail.
For full details and photos, click here.
to List of Contents
Quotes of Week 94
Quote : Three spooks and a lord
Adams, president of Sinn Féin,
disparages the distinguished four-man
International Monitoring Commission
that found the IRA and Sinn Féin to be responsible
for the £26½m heist of Belfast's Northern Bank and
the leaderships of both to be intertwined.
He had also refused to meet them to refute such claims
during their investigations
Former Assembly Speaker
Former Deputy General of
Central Intelligence Agency
Former Secretary General of the
Department of Justice in Dublin
Former Deputy Assistant
in the Metropolitan Police
had already taken the resolute action of pulling out of the (Nuclear
Nonproliferation Treaty) and have manufactured nukes for self-defence to
cope with the Bush administration's evermore undisguised policy to isolate
and stifle the DPRK
The laughingly named Democratic People's Republic of
confirms the distinctly unfunny though not unexpected news
that Pyongyang has nuclear capability.
Evidently shaken by George Bush's stated intent
to spread freedom across the world,
its President Kim Jong Il is upping the stakes in his battle
to remain in power, keep his people subjugated and
extract money from the West.
He is almost daring America to bomb his nuclear facilities
to List of Contents
the Archive and Blogroll at top left and right, for your convenience
to Top of Page
to Tallrite Blog
Now, for a little [Light Relief]
Cuddly Teddy Bears
looking for a home
Click for details
Neda Agha Soltan;
shot dead in Teheran
by Basij militia
Good to report that as at
14th September 2009
he is at least
FREED AT LAST,
ON 18th OCTOBER 2011,
GAUNT BUT OTHERWISE REASONABLY HEALTHY
Atlantic Blog (defunct)
Broom of Anger
Cox and Forkum
Carey / GUBU
Thinking Man's Guide
Victor Davis Hanson
Tales from Warri
Graham's Sporting Wk
My Columns in the
What I've recently
“The Lemon Tree”, by Sandy
is a delightful novel-style history of modern Israel and Palestine told
through the eyes of a thoughtful protagonist from either side, with a
household lemon tree as their unifying theme.
But it's not
entirely honest in its subtle pro-Palestinian bias, and therefore needs
to be read in conjunction with an antidote, such as
This examines events which led to BP's 2010 Macondo blowout in
the Gulf of Mexico.
BP's ambitious CEO John Browne expanded it through adventurous
acquisitions, aggressive offshore exploration, and relentless
cost-reduction that trumped everything else, even safety and long-term
Thus mistakes accumulated, leading to terrifying and deadly accidents in
refineries, pipelines and offshore operations, and business disaster in
The Macondo blowout was but an inevitable outcome of a BP culture that
had become poisonous and incompetent.
However the book is gravely compromised by a
litany of over 40 technical and stupid
errors that display the author's ignorance and
It would be better
to wait for the second (properly edited) edition before buying.
As for BP, only a
wholesale rebuilding of a new, professional, ethical culture will
prevent further such tragedies and the eventual destruction of a once
mighty corporation with a long and generally honourable history.
Note: I wrote
my own reports on Macondo
A horrific account
how the death
penalty is administered and, er, executed in Singapore,
the corruption of
Singapore's legal system, and
enthusiastic embrace of Burma's drug-fuelled military dictatorship
More details on my
nonagenarian Alistair Urquhart’s
incredible story of survival in the Far
East during World War II.
After recounting a
childhood of convention and simple pleasures in working-class Aberdeen,
Mr Urquhart is conscripted within days of Chamberlain declaring war on
Germany in 1939.
From then until the
Japanese are deservedly nuked into surrendering six years later, Mr
Urquhart’s tale is one of first discomfort but then following the fall
of Singapore of ever-increasing, unmitigated horror.
After a wretched
journey Eastward, he finds himself part of Singapore’s big but useless
Taken prisoner when Singapore falls in
1941, he is, successively,
part of a death march to Thailand,
a slave labourer on the Siam/Burma
railway (one man died for every sleeper laid),
regularly beaten and tortured,
racked by starvation, gaping ulcers
and disease including cholera,
a slave labourer stevedoring at
shipped to Japan in a stinking,
closed, airless hold with 900 other sick and dying men,
torpedoed by the Americans and left
drifting alone for five days before being picked up,
a slave-labourer in Nagasaki until
blessed liberation thanks to the Americans’ “Fat Boy” atomic
distraught and traumatised on return to Aberdeen yet disdained by the
British Army, he slowly reconstructs a life. Only in his late 80s
is he able finally to recount his dreadful experiences in this
There are very few
first-person eye-witness accounts of the the horrors of Japanese
brutality during WW2. As such this book is an invaluable historical
“Culture of Corruption:
Obama and His Team of Tax Cheats, Crooks, and Cronies”
This is a rattling good tale of the web
of corruption within which the American president and his cronies
operate. It's written by blogger Michele Malkin who, because she's both
a woman and half-Asian, is curiously immune to the charges of racism and
sexism this book would provoke if written by a typical Republican WASP.
With 75 page of notes to back up - in
best blogger tradition - every shocking and in most cases money-grubbing
allegation, she excoriates one Obama crony after another, starting with
the incumbent himself and his equally tricky wife.
Joe Biden, Rahm Emmanuel, Valerie Jarett,
Tim Geithner, Lawrence Summers, Steven Rattner, both Clintons, Chris
Dodd: they all star as crooks in this venomous but credible book.
ACORN, Mr Obama's favourite community
organising outfit, is also exposed for the crooked vote-rigging machine
This much trumpeted sequel to
Freakonomics is a bit of disappointment.
It is really just
a collation of amusing
little tales about surprising human (and occasionally animal) behaviour
and situations. For example:
Drunk walking kills more people per
kilometer than drunk driving.
People aren't really altruistic -
they always expect a return of some sort for good deeds.
Child seats are a waste of money as
they are no safer for children than adult seatbelts.
Though doctors have known for
centuries they must wash their hands to avoid spreading infection,
they still often fail to do so.
Monkeys can be taught to use washers
as cash to buy tit-bits - and even sex.
The book has no real
message other than don't be surprised how humans sometimes behave and
try to look for simple rather than complex solutions.
And with a final
anecdote (monkeys, cash and sex), the book suddenly just stops dead in
its tracks. Weird.
A remarkable, coherent attempt by Financial Times economist Alan Beattie
to understand and explain world history through the prism of economics.
It's chapters are
organised around provocative questions such as
Why does asparagus come from Peru?
Why are pandas so useless?
Why are oil and diamonds more trouble
than they are worth?
Why doesn't Africa grow cocaine?
It's central thesis
is that economic development continues to be impeded in different
countries for different historical reasons, even when the original
rationale for those impediments no longer obtains. For instance:
Argentina protects its now largely
foreign landowners (eg George Soros)
Russia its military-owned
businesses, such as counterfeit DVDs
The US its cotton industry
comprising only 1% of GDP and 2% of its workforce
The author writes
in a very chatty, light-hearted matter which makes the book easy to
However it would
benefit from a few charts to illustrate some of the many quantitative
points put forward, as well as sub-chaptering every few pages to provide
natural break-points for the reader.
This is a thrilling book of derring-do behind enemy lines in the jungles
of north-east Burma in 1942-44 during the Japanese occupation.
The author was
a member of Britain's V Force, a forerunner of the SAS. Its remit was to
harass Japanese lines of
command, patrol their occupied territory, carryout sabotage and provide
intelligence, with the overall objective of keeping the enemy out of
is admirably yet brutally frank, in his
descriptions of deathly battles with the Japs, his execution of a
prisoner, dodging falling bags of rice dropped by the RAF, or collapsing
in floods of tears through accumulated stress, fear and loneliness.
He also provides some fascinating insights into the mentality of
Japanese soldiery and why it failed against the flexibility and devolved
authority of the British.
The book amounts to
a very human and exhilarating tale.
Oh, and Irwin
describes the death in 1943 of his colleague my uncle, Major PF
Click for an account of this momentous,
of March 2009
Click on the logo
to get a table with
the Rugby World Cup
scores, points and rankings.
crackling, compelling, captivating games, the new World Champions are,
England get the Silver,
Argentina the Bronze. Fourth is host nation France.
No-one can argue with
the justice of the outcomes
Over the competition,
points per game = 52,
tries per game = 6.2,
minutes per try =
Click on the logo
to get a table with
the final World Cup
scores, points, rankings and goal-statistics