2005 Peak Oil study, and resultant stonewalling

[RBM]

My source for this post is Interview with Bob Hirsch - The Stonewalling of Peak Oil (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.).

The original article is from Interview with Bob Hirsch - The Stonewalling of Peak Oil (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)

Note that this study was in 2005. The continuing political handling of the issue is one aspect that is covered in the article because of his position.

Overview:

Robert L. Hirsch is the lead author of a seminal report–Peaking of World Oil Production: Impacts, Mitigation & Risk Management—written for the US Dept. of Energy’s National Energy Technology Laboratory (DOE, NETL) and released in early 2005.
...
Question: What have been your primary areas of focus during your energy career?

Hirsch: I started out in nuclear power. Then I did fusion research and later managed the government fusion program. I spent a lot of time with renewables over the years, including managing the federal renewables program. From there I went to the oil industry where I managed long range refining research and then synthetic fuels. Later I managed upstream research and development—exploration and production of oil and gas. Still later, I spent time in the electric power industry—all aspects of electric power. And then I got into energy studies and have been doing them for a number of years with Rand, SAIC, and now MISI. That’s it from the work standpoint; from another standpoint I’ve been involved with the National Academies [of Science] in energy studies since 1979 and have been involved in almost every aspect of energy through the Academies, either as a committee participant or as Chairman of their Board on Energy and Environmental Systems.
...
Question: How did the 2005 peak oil study for DOE’s NETL come about?

Hirsch: It was basically my creation. I was working with DOE NETL at the time, and they gave me a great deal of leeway to look into important subjects. I felt that peak oil was extremely important, so I did some study on my own and then proposed to NETL that I do a much larger study, with Roger Bezdek and Bob Wendling, who are extremely capable guys, who I had worked with along the way, and who were very pragmatic about energy and the real world. NETL accepted. I already was under contract, and they added Roger and Bob.

We coordinated closely with NETL as we did the study, so they had input and knew what was coming. But when they saw the final report, it shocked them, even though they could see what was coming. This is nothing negative about people at NETL, but when you’re thinking about other things most of the time, bad news creeping up on you doesn’t necessarily capture your attention immediately.

When the report was done, management at NETL really didn’t know what to do with it because it was so shocking and the implications were so significant. Finally, the director decided that she would sign off on it because she was retiring and couldn’t be hurt, or so I was told. The report didn’t get widely publicized. It somehow was picked up by a high school someplace in California; eventually NETL put it on their website. The problem for people at NETL—and these are really good people—was that they were under a good deal of pressure to not be the bearers of bad news.
...
Question: What was the immediate feedback from people outside of the government?

Hirsch: We briefed it to all kinds of audiences, including people in the hierarchy and at the committee level at the National Academies. We gave talks to technical and lay audiences, and have been doing so for years now. We’ve also published shorter versions in various media. Probably the biggest response we’ve received was disbelief—“this can’t happen.” And then there are number of people who agree, either quickly or after some reflection, that the reasoning is sound, both in terms of world oil production as well as mitigation. There are always some people who reject peak oil out of hand and, in fact, go on the counterattack and argue against it. I suspect that the kinds of reactions that I just described are what many people in the peak oil community have run up against.

I've excerpted 3 out of 11 questions. There are significant points made at the source link but I don't feel comfortable taking more room up with this particular post.

My point in posting this generally, is to provide a data point of reality. Mr. Hirsch expects decline of world oil production being sometime within the next five years. That's a short term timeline in most people's minds. The ironic thing is this may not even be the 'big' thing on the horizon, given the financial environment.

[Tristan]

So, what now? We haven't experienced a decline in oil production in the four years since the peak oil report. However- volatility and trade volume increased over the last two years. That says two things: first, that there is widespread expectation of a shortage, and two, that the market is reacting to the altered expectations (though not with the wholesale commitment demanded by its opponents... it's more like a rough accordance with the probabilities).

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[Hamburglar]

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Interesting blog about the Hirsch Memo Nov 2008.

[LaoTzu]

So, what now? We haven't experienced a decline in oil production in the four years since the peak oil report. However- volatility and trade volume increased over the last two years. That says two things: first, that there is widespread expectation of a shortage, and two, that the market is reacting to the altered expectations (though not with the wholesale commitment demanded by its opponents... it's more like a rough accordance with the probabilities).

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How much of that oil was actually produced, versus what was drawn from reserves?
Does that graph reveal more about sales/consumption rather than production? world consumption is around 80M Barrels/day...



Have there been any big discoveries in the past ...say... 20 years? I think that would be most telling on what reserves there are, and when we have had or should expect peak oil.

[RBM]

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Interesting blog about the Hirsch Memo Nov 2008.

My theoretical expectations of government is planning. Since as an institution, it is immortal, I expect long term planning.

Your link is an excellent partner piece to the the OP link because it has the thoughtful reflection already put in writing. This subject is one of those in which honest well-meaning people can disagree - strenuously.

As a daily reader of The Oil Drum, I remember quite well how upset some people were with Hirsch's 'memo' point of view. An essential aspect of this is the lack of leadership. Particularly in high places of power, such as government. And since out structure of government is hierarchal in nature, the buck stops at POTUS.

[blueback]

That blog makes a good point. What sort of plan can we possibly formulate that will deal with, or at least address, peak oil? It has the very real possibility of being not a performance, but an existence, problem. On the one hand I can see how bringing it to the public's attention, especially if there is no good plan for dealing with it, will cause damage to the system. On the other hand, can delaying public awareness in any way lessen the damage? This is not a bridge we will be able to cross when we get to it. The mere fact that no one can think of what to do is reason enough to get everyone thinking about it as soon as possible.

Additionally, I doubt that the news would destroy the US. Peak oil might, but bringing it to national attention will merely damage us. Damage to the US, no matter what it is, means a decrease in economic activity. That might be just what we need to push the inevitable peak off a while longer. We'll use less oil if we're in a depression. Additionally, a depression will mean high unemployment, which will mean a lot of people available for a national service program to deal with the problem. Peak oil is too close for the market to solve it alone; we'll definitely need deliberate effort, on the scale of the world wars.

I say Obama should shout it from the rooftops. The shock will slow down our use of what oil we still have left, the attention will get all our minds working on the problem, and the inevitable economic slowdown will free up people to be assigned necessary jobs.

[RBM]

There are plenty of mitigation strategies floating around. They all have some common attributes, one being lower consumption. That in anathema to the socioeconomic health.

After one recognizes the pivotal role consumption plays one has to cross the bridge of (political) will. That's the largest issue and the most sticky one. It's also one that can best be addressed be a leader.

(hey reb, I'm quoting Glen Beck, hehe)

There is so much inertia in this complex system that those on the top on the socioeconomic ladder aren't affected today.

May 2008:

"So Boone (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) says to me yesterday -- I said, so do you believe in peak oil? He said, oh, yeah, peak oil. He said, some people think it's, you know, 2010, 2012. Some people think we've already hit it back in the Nineties. I think we hit it in 2006. He said, so now we're going to start a slow drift down." ... "We got off the air -- this was in the first break. We got off the air and I said, so Boone, $150 a barrel by the end of this year, when does this break the back of the economy? And he looked at me dead serious and with all soberness and said, we're there. He said, we're at an emergency. He said, just, nobody will talk about it. Nobody will recognize it. Nobody will say it. We're at a full-fledged energy emergency right now. He said, we need an Eisenhower highway project. We need somebody with vision. I said, so wait a minute. Why is it that the people that we have in power aren't going there? He said, I have no idea."

I'll bet, most people on this board I'd bet have NO IDEA where they are on the ladder.

[SirJac]

There won't be any preperation for peak oil, we were just starting to feel its effects before the resession hit and pushed the peak back a couple years. But then and now the price of oil is being blamed on speculation. Those in power are off trying to pass laws to fight off the speculation ghosts because it's an easier scapegoat then facing the real problem.

Still, Hirche is right in his memo. Raising the alarm now won't do any good, all it would do is result in demand destruction, which is what is going to happen anyways. It is better to stay quiet about it and let some stabability return to the economy so that development into technologies that can actually play a role in reducing the impact of peak oil continue with minimal disruption before shit hits the fan. Once oil prices spike up again and the effects hit the broader economy, development in those technologies will be dramatically slowed as private funding gets diverted to more immediate issues.

Maybe if we're lucky the increase in oil prices will slow economic recovery and with it the demand of oil to precrash levels. That would slow the decline in oil supply some so that shortages don't grow quickly after peak and buy us some more time. Soften the peak so to speak.

[Tristan]

How much of that oil was actually produced, versus what was drawn from reserves?
Does that graph reveal more about sales/consumption rather than production? world consumption is around 80M Barrels/day...

My guess would be that drilling is still astride the rising production. If you care, here is my reasoning, though it is my impression of the event, and uncited:

While oil was making its climb to $140, few players were drawing on reserves. In fact, most were stockpiling it even further. A notable exception being US oil companies, who had been cashing out on some reserves '06-08 because they were already immense. Much to the resentment and frustration of the US population, the US oil companies posted record profits. The resentment is misplaced, since the profits were derived from these prescient trades in NYMEX contracts, and not from "colluding amongst themselves to raise the price of oil." US oil companies have barely more input into the price of oil than I do; as suppliers, they are insects next to Aramco and other countries' state-owned drills. Speaking of Aramco, they announced an increase in drilling when the price breached 110 or so, I think. The king of Saudia Arabia feared a crash. I do not remember them ever announcing a crunch on drilling. Refining is far more restrictive than drilling, worldwide, at this moment.

As for consumption, China's growth is responsible. China is adopting capitalist, pro-growth fiscal policies, and that means that one sixth of the world population is entering a state of prosperity, high productivity, and of course, hunger for resources. Again this is heresay, but I suspect that an equilibrium price for crude before China was ~$80, and after China will be ~$120.

Fortunately, there are still enough petty warlords, leftists, and other scum controlling the rest of the Third World to keep it in crushing poverty, and out of competition for white peoples' oil. Just kidding! Just kidding!

[reb]

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parse this carefully. one would think chevron stock wouda been through the roof; it did not-up $20 in 5 years-reflective of a modest appreciation for 'the biggest field discovery' blah blah-i'm not looking at their balance sheet-this could have a real affect on why the price has not doubled:

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had i to guess, i would guess that the lack of refineries, the market for oil/energy, the general economic climate and maybe some anomalies in the chevron sheet are making people nervous. they ought to be nervous. i heard the figure yesterday that the national debt is a quarter million bucks per household after this promiscuous money flinging that's been going on by 'the government' (some government-bunch of idiots). this has a dampening affect on my ardor for many investments marketed by the slick ones.

RBM,

'boone' as in t. boone? lol! you're losing your liberal cachet here, bud. next, Glenn Beck will be quoting YOU! heehee

to all, in general, i reiterate my oft hummed mantra 'we are idiots. we will all die. we have no leaders, only greeders.' i have my cremation paid for.

Fortunately, there are still enough petty warlords, leftists, and other scum controlling the rest of the Third World to keep it in crushing poverty, and out of competition for white peoples' oil. Just kidding! Just kidding! Tristan, sure you are, you Somalian chieftan...lol!

[Supreme Dick]

Jeff Rubin came out with a book earlier this year..."Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization". He makes the case that 'peak oil' is real. Not that we are running out of oil, but that we are quickly running out of cheap oil.

Reasons
- the big cheap oil reserves have been already been found and tapped
- OPEC countries are wasting oil
- BRIC countries demand for oil is soaring

All I know is that about ten years ago oil was $10 a barrel. Today it's around $70 - and this, in the midst of a global recession.

[RBM]

Recent words from the global crude oil swing producer -

Ali Naimi (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.) Saudi Arabia’s athletic oil minister, skipped his customary dawn jog around Vienna’s Ring Road during this week’s meeting of the Opec oil cartel. (It is Ramadan after all and ministers’ gatherings are happening after sundown.)

But his rhetoric as he left his hotel this afternoon, was in itself something of a victory lap.

Here is what he said:

On Price:

“We are happy where it is and it’s going to be there for a while.”

“We don’t have the slightest worry.”

On High Oil Inventories:

“It doesn’t make any difference. The world will eventually need it [oil],”

“The price is not going to fall. It has nothing to do with stocks.

“Stocks have no bearing on price. You must realize there is a fundamental change in the market.”

“That [52 days of demand covered by inventories] would be too tight…that would tighten the market too much,”

On Economic Growth:

“That is what will drive the price. Oil today is a commodity like equities, stocks and so forth.”

“Economic growth is the name of the game.”

On Saudi Arabia’s goal to ensure prices don’t again spike:

“No. No. We will bring it down.”

“With all the spare capacity we can do it.”

On stopping Opec’s cheaters:

“We don’t have to. People are complying anyway. Seventy percent is great.”

On whether he worries about others - namely Russia - taking advantage of Opec’s restraint and pumping full throttle:

“No. All people are doing is depleting their resource base fast. Time takes care of all these things. We are happy and content.”

On Saudi Arabia’s growing production of gas liquids:

“We are exporting close to 1 million b/d of LPG, NGLs and so forth. That is not part of the quota.”

It ought to be obvious that this country and all it's inhabitants are in crude oil shackles and he's got the key - in spite of the fact that we get very little from that source.