Dec 3, 2010
Steve Crower returns to give his latest insight on Peak Oil, or rather the introduction of the term 'Plateau Oil'. The Plateau Oil term refers to the introduction of both new technologies that increase the existing oil fields (marginally improving the yield) and new technologies that bring shale oil to the market. The effect will be a plateau-ing of oil production or, to put it differently, oil supply. The demand part of this equation remains a question mark but we spend most of our time in this interview discussing the supply side.
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It's interesting that an ieclnftion point appears to occur around 2005, well before the economic downturn, but about at the point that the price of gasoline reached $2.50 per gallon. There have been only two other periods since the 1920s when the inflation-adjusted price of gasoline has been higher than $2.50/gal., these were WW II and the late 70s thru early 80s.
Wait, I cannot fathom it being so staatghiforwrrd.
Near the end of the podcast, Steve & Steve were discussing news sources and mentioned The Economist. Steve Crower lamented that The Economist offered too much content and wished for a podcast version. The Economist does offer a bunch of audio content. For paid subscribers of the newspaper, they actually offer a podcast that is a word for word audio version of that week's print edition. For everyone else, they offer summary podcasts throughout the week at http://feeds.feedburner.com/economist/audio_all.
I find these podcasts to be a nice summary of many of the topics in their print edition
James,
I am still in peak oil camp. However, advances in exploration, drilling and production will assist in the development of plays like the Bakken may push the point where supply and demand invert out a few more years. Viewed in another 20 to 30 years, the “plateau” of oil production will certainly look like a “peak oil” curve common to all oilfields. In the short-term, at $80 to $90 per barrel, reworking the thousands of old oilfields using recent advances in technology will allow “high oil prices to cure high oil prices” bridging supply/demand gaps.
I am finally starting to see new technologies come to the market that will increase production in existing oilfields. I never saw attempts to innovate in the 2002 to 2008 oil price rally because most people in the industry saw boom before, invested and lost when commodity prices came back down. At that time, the concept of a finite resource hitting a maximum production and potentially declining was unheard of - even for people that worked in the industry. The industry was hedging production at prices in excess of $50 per barrel and incorrectly waiting for prices to revert back to a mean of $20 per barrel.
A country-by-country analysis clearly shows the production decline rates in Mexico, Nigeria and the North Sea; similar to what the U.S experienced in the past 30 years. However, technology exists to recover an additional 2-3 percent of the oil in place that could supplement the incremental supply available in Brazil, Russia, Canada, Iran, Iraq and Kuwait. Time will tell if the countries that have excess production capacity will decide to use it; or preserve their resource when oil is finally priced higher based on its inherent value as an energy source.
The analysis also suggests that 94 million bpd is the most optimistic scenario for all sources of oil production. Keep in mind that the world has not exceeded the “86” million bpd discussed in my May 2009 YouTube video “91.86.90”. It appears that even the EIA is coming to their senses by lowering their maximum production estimate from 130 to 99 million bpd in less than two years.
The oil industry has seen dramatic growth for 150 years by severely discounting a valued natural resource rendering other fuel sources uneconomic. Extending a potential decline for another three years by leveling off the production curve is meaningless. In fact, it should be viewed as a positive development indicating that the energy industry is able to innovate using the limited resources that remain in place.
First of all I always enjoy Mr Crower. I was actually the one that sent his 91-86-90 video to TBWS. I am a Petroleum Engineer and a peak oil advocate.
There is no dispute that the Bakken is currently the most profitable oil play in the US and will continue to be so for many years to come. It is a great investment and will be vitally important to our US needs.
With that in mind, I am very skeptical that the combined production (Sask, MT, ND)from the Bakken will ever reach 1 million bpd. Time will tell. A quick look at the ND website (dmr.nd.gov) will show some very interesting data which bring numbers like barrels of oil per day per well, etc. down to a more reasonable reality. Again, I do not downplay it's importance but we must be reasonable in accessing its overall impact on our 20 million bpd apetite. To illustrate, the USGS estimate 3.65 billion bbls technically recoverable from the Bakken. A big number but the US imports 10 million bpd or 3.65 billion bbls per year. Again, important but not going to reverse the forces of growing world demand and depletion.
I have to agree with JHK that the long plateau aurgument was not well supported. I believe a plateau worldwide is likely but not one that will extend decades into the future.
Keep up the great work.
Your faithful fan.
Thank you JHK, I will relay what I told another listener who was having his preparations for a Post Peak Oil world (homesteading, Energy efficienies, etc.) questioned by this interview with Steve Crower. Let's suppose oil production does plateau there are still many reasons to continue with moving forward with 'prepping'. The plateau is not a bridge to a new technology that 'saves' us all and it may not last decades but a mere few years. Neither of those scenarios are any reason to re-plug into the matrix IMHO.
I haven'the thrown in the towel on Patterson Farms yet...
I was kind of disappointed by Steve Crower's lack of clarity on his oil "plateau" position. The only part of his argument that came across was expectation for Bakkan shale oilcoming in at 1m/b/d maximum (at some future point) but right now tending around 300-400k per day. OI did not catch any discussion of other plays around the world that promise any similar payoff. Discoveries like the Brazil deep water sites are far from production and very uncertain. I just didn'tr get any specific sense of why he believes we're looking at, in effect, a permanent oil glut. He is very likely a smart guy and a canny investor, but he doesn't present his argument very clearly