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Inexpensive oil vanishing at alarming rate  |  Peak Oil News and Message Boards

Inexpensive oil vanishing at alarming rate  |  Peak Oil News and Message Boards.

Inexpensive oil vanishing at alarming rate

Inexpensive oil vanishing at alarming rate thumbnailThe United States is awash in shale oil. Iran, once OPEC’s second-largest producer, is slowly ramping up output. Oil consumption growth in the Western world has been somewhere between negative and flat since the 2008 financial crisis. The “peak oil” theory has pretty much vanished, along with The Oil Drum, the bible of peak oil believers. Rest in peace.

Or turn in your grave, for the oil price charts tell a different story.

On the New York Mercantile Exchange, crude oil futures are up 13 per cent over one year. Since 2009, they have climbed every year except 2012. In Europe, the Brent crude futures are flat over the year after rising three years on the trot. Brent, the de facto global benchmark, trades at about $108 (U.S.) a barrel; West Texas Intermediate, the North American benchmark, is at $97. For the sake of argument, let’s say the world is valuing oil at $100. You would think the price would be far less as the United States challenges Saudi Arabia for top producer status.

While the oil forecasters were pumping out bearish calls, the market itself has stuck to its triple-digit price outlook. Oil buyers apparently know the Western world’s economic recovery will boost consumption, since growth and oil use are aligned. That’s not all. They also know that the math doesn’t work: Prices can’t go into gradual, long-term decline, or even stay flat, when the world’s conventional oil fields are in fairly rapid decline.

Exotic production – oil sands, biofuels, natural gas liquids – are supposed to fill the gap. But this so-called unconventional production is highly expensive and quite possibly insufficient to cover the drop off in cheap, conventional production. Prices will rise to the point that demand will have to level off or fall. The “peak oil” and “peak demand” theories are really opposite sides of the same coin.

A few days ago, Richard Miller, the former BP geochemist turned independent oil consultant, delivered a sobering lecture at University College London that laid out the case for dwindling future oil supply. His talk was based on published data from the U.S. Energy Information Agency, the International Energy Agency, the International Monetary Fund and other official sources.

The data leave no doubt that the inexpensive oil is vanishing quickly. Conventional oil production peaked in 2008 at about 70 million barrels a day and is declining by about 3.3 million barrels a day, every year. Saudi Arabia pumps about 10 million barrels a day. The math says a new Saudi Arabia has to be found every three years to offset the conventional oil drop off. Good luck. Now you know why Russians, Canadians and Americans are so keen to lock up the Arctic, the alleged keeper of vast new reserves.

About one-quarter of conventional production comes from the 20 biggest fields and most of them are in decline, some precipitously. North Sea oil production peaked at 4.5-million barrels a day in 1999. This year’s production is forecast at between 1.2 million and 1.4 million barrels a day. The so-called Forties field, the North Sea’s biggest, has been losing 9 per cent a year for more than 20 years. Ditto two other North Sea biggies – Brent and Ninian.

Great Britain shed its status as an energy powerhouse about a decade ago, when it became a net energy importer. Its energy import bill is horrendous. Last year, Britain spent almost £22-billion ($38-billion) buying foreign oil, natural gas and coal.

Repeat all over the world, from Mexico to Indonesia. Indonesia’s oil production has been in steady decline since the mid-1990s, and the country has gone from oil exporter to importer, at which point it got kicked out of the Organization of Petroleum Exporting Countries. While new exploration and technologies will extend the life of some of the gasping old fields, the long-term downward trend is intact.

The conventional fields are running out of puff just as world demand is climbing again, which can only put upward pressure on prices. This week, the IEA estimated that oil demand will rise by 1.2 million barrels a day in 2014, or 1.3 per cent, to 92.4 million barrels.

The increase is driven by economic recovery and ever-rising demand in China and elsewhere in the developing world. China is willing to pay almost any price for oil because oil drives growth more than it does in the West, where energy use is less intensive per unit of economic output. China has also developed a love affair with traffic jams. The number of cars and motorbikes in China increased twentyfold between 2000 and 2010. It is forecast to double again in the next 20 years.

The oil shills, the tech geeks and most, but not all, oil companies would have you believe that non-conventional energy will fill the gap as the cheap, easy-to-pump oil heads gently into the night. It might, but at what price and cost to the environment? Or it might not at any price.

Deep-sea production is monstrously expensive and risky, as BP found out when its Macondo well in the Gulf of Mexico blew up. The Alberta oil sands also spew out more carbon dioxide than conventional production. Most biofuels, such as U.S. corn-based ethanol, are taxpayer-subsidized economic horror shows with dubious environmental benefits.

The peak oil crowd has thinned out, to be sure, but it won’t disappear. Gushing U.S. shale oil doesn’t mean oil is about to become cheap and plentiful. The fall off in conventional oil production is real, and scary.

Globe and Mail

 

Noam Chomsky Criticises Canada’s Energy Ambitions

Noam Chomsky Criticises Canada’s Energy Ambitions. (source)

Noam Chomsky, the famed linguist, philosopher, and political commentator has recently taken part in aninterview with the Guardian, to discuss Canadian Prime Minister Steven Harper’s exploitation of the Alberta tar sands in an effort to pursue economic development no matter the cost.

“It means taking every drop of hydrocarbon out of the ground, whether it’s shale gas in New Brunswick or tar sands in Alberta and trying to destroy the environment as fast as possible, with barely a question raised about what the world will look like as a result,” he said.

Referencing the indigenous Canadian’s opposition to the expansion plans at the Alberta tar sands, one of the most polluting and fastest growing sources of oil in the world, Chomsky said that “it is pretty ironic that the so-called ‘least advanced’ people are the ones taking the lead in trying to protect all of us, while the richest and most powerful among us are the ones who are trying to drive the society to destruction.”

Related article: U.S., Canada Lead World in Shale Gas Production

Idle No More

Recently, in response to an indigenous movement called ‘Idle No More’, which was set up to oppose Harper’s aggressive promotion and expansion of polluting tar sands projects and his disregard for the environment, armed Canadian police forces raided a camp of shale gas protestors in New Brunswick. A sign that the conflict between the government and environmentalists is becoming more heavy-handed.

Chomsky explained that the calls to save the environment are currently ineffective, and that they must be worded in a way that emphasises how fighting climate change is can improve people’s lives.

“If it’s a prophecy of doom, it will act as a dampener, and people’s reaction will be ok, I’ll enjoy myself for a couple of years while there’s still a chance. But as a call to action, it can be energising. Like, do you want your children, and grandchildren, to have a decent life?”

Related article: Canada and China Deepen Cooperation but Potential Roadblocks Loom

He suggests that mass transportation, localised agriculture, and higher energy efficiency are easy ways to reduce energy consumption and therefore reduce emissions, giving an example that it is much better for an individual, and the environment, to spend 10 minutes on the underground travelling across a city, than an hour stuck in traffic on the surface.

One of the greatest foes of climate change, according to Chomsky, are the markets. “Markets are lethal, if only because of ignoring externalities, the impacts of their transactions on the environment. When you turn to energy production, in market exchanges each participant is asking what can I gain from it? You don’t ask what are the costs to others. In this case the cost to others is the destruction of the environment. So the externalities are not trivial.”

After the 2008 financial crisis banks were able to ignore free market systems and ask the government to bail them out, unfortunately “in the case of the environment there’s no one to bail it out,” and it is fast approaching a major crisis point.

By. James Burgess of Oilprice.com

 

Canadian Natural cuts production after gas-pipeline rupture | Canada | Reuters

Canadian Natural cuts production after gas-pipeline rupture | Canada | Reuters. (source)

Canadian Natural Resources Ltd said on Thursday it has cut production at its 115,000 barrel per day Horizon oil sands project and its Woodenhouse heavy oil operations after natural gas supplies were cut following a rupture on TransCanada Corp’s Nova regional natural-gas pipeline network.

Canadian Natural said in an email that production has been reduced following the incident on TransCanada’s 1.6 billion cubic foot per day North Central Corridor pipeline, which delivers gas to the Athabasca oil sands region.

 

Why Not Everyone’s Happy to See the Bitumen Bubble Burst | Jeffrey Rubin

Why Not Everyone’s Happy to See the Bitumen Bubble Burst | Jeffrey Rubin.

 

Oil Sands: 4,000 Environmental Infractions, 40 Punishments | Kevin Grandia

Oil Sands: 4,000 Environmental Infractions, 40 Punishments | Kevin Grandia.

 

Canada says sees no net increase in emissions from Keystone | Canada | Reuters

Canada says sees no net increase in emissions from Keystone | Canada | Reuters.

Half of First Nations children live in poverty – Canada – CBC News

Half of First Nations children live in poverty – Canada – CBC News.

Harper heads to New York to face environmental grilling – Politics – CBC News

Harper heads to New York to face environmental grilling – Politics – CBC News.

 

Clement: Ontario ‘Ring Of Fire’ Will Be Canada’s Next Oil Sands

Clement: Ontario ‘Ring Of Fire’ Will Be Canada’s Next Oil Sands.

 

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