Other entities

Public “majors” ExxonMobil (2nd to

Apple), Chevron, BP, Shell, ConocoPhillips, Total

Downstream 720 refineries, in US

designed as $ losers Most new are in ME &

Asia, 3-5 yr build +$5 billion each

US imports 8.3 of 14.8 Mb/day

Strategic reserves All OECD nations have

multi-wk supply of crude oil

US = 44 days of imports 2 wks of gasoline, jet fuel,

etc in pipelines

Oil flow

Who uses it?

Who has oil?

= # of supertankers

What limits the flow? According to MBAs …

• Inefficient use

Investment bubblers & Cartels Extreme weather damage

No new US refineries (NIMBY)

… Above ground factors

US oil production

Horiz.drilling

Oil reservoir factors Discovery (seismic, 2D 3D/4D

Off-shore drill rigs, complex & one-shot, so very expensive & limited

Declining N. Sea oil extraction

State of artreservoirmanagement tomaximize total oilproduction

Projectionbased on past experience

NOCs limit exports to maintain domestic supply & extend duration of “petrowealth”

Financial constraints on new reservoir development

Water & electricity availability

1990

2003

EXPORT LAND MODEL

… According to “Peak Oilers”

Global per capita power declining (flat energy supply consumed by growing # of users)

ERoEI declining because we drain large concentrated reservoirs, but new finds are mostly smaller/deeperLarger effort/energy use for new reservoirsMore waste pollution refining lower-grade

fuelsRusting infrastructure & aging workforce,

petroleum no longer seen as “sexy”Innovations are now complex “one-off”, not

breakthroughs w/ wide application

So many constraints! Can we estimate when world flow will decline?

Mistaken calls have been made before

Is there any scienceto Peak Oil?

Texas Oil Depletion 1935-2003

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0 10 20 30 40 50 60Millions

Cumulative Depletion

An

nu

al D

ep

leti

on

/Cu

mu

lati

ve

Texas Oil Depletion 1935-2003

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0 10 20 30 40 50 60Millions

Cumulative Depletion

An

nu

al D

ep

leti

on

/Cu

mu

lati

ve

1935-1960

Texas Oil Depletion 1935-2003

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0 10 20 30 40 50 60Millions

Cumulative Depletion

An

nu

al D

ep

leti

on

/Cu

mu

lati

ve

1935-1960 1961-1980

Hubbert’s “curve fitting”Plot (annual extraction) / (total extracted to date) vs. total extracted to date.

Plot starts at (1st year,1st year), over time drops to (ultimate recoverable, 0)

After “noisy” start, curve settles to straight line, so perhaps can extrapolate to predict ultimate (total) recoverable resource (URR) in future

Stepping back halfway approximates year extraction starts to decline (= peak)

Texas Oil Depletion 1935-2003

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0 10 20 30 40 50 60Millions

Cumulative Depletion

An

nu

al D

ep

leti

on

/Cu

mu

lati

ve

1935-1960 1961-1980 1981-2000

Texas Oil Depletion 1935-2003

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0 10 20 30 40 50 60Millions

Cumulative Depletion

An

nu

al D

eple

tio

n/C

um

ula

tiv

e

1935-1960 1961-1980 1981-2000 2001-2003

Shows that Texashas extracted 90% ofall its recoverable oil

1970

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 10 20 30 40 50 60Millions

US-48 & Saudi oil histories

URR

Applied to World Oil Liquids Supply

Peak oil “rolloff timing

FACT: Too few large-volume projects underway to overcome post-2013 depletion

FACT: New projects tap non-conventional oils, costly & difficult, deliver smaller flows after delays

Tar sands

FACT: crude oil production has not increased for 5.5 yrsdespite high prices until2 yrs ago

Simplest explanation:Oil flow will no longergrow

Will “tar sands” help?

Is there a physical model of oil depletion?

Yes!

First simplification: separate discovery from extraction

BUT Hubbert “analysis” is only curve fitting, no predictive power, only appeal to precedent.Not science!