Economy and recovery

[Caramon]

"The point is that the general technological advancements that have been had in the mineral industry, offset the cost increase that you get from depletion. So that's why, for example, the price of ore. copper and iron, etc. don't tend to increase in the long term, even though we've been using them a lot longer than we've been using oil."

Michael Lynch, on Democracy Now! 4/28/06

"Some people think technology and prices will protect us. That happens with minerals, but mineral geology is very different from petroleum geology ... What happened after 1970 [ after the peak in the US] it was 1973 and 1979 when oil prices skyrocketed. It was also a golden era in the development of technology in the oil business - the upstream part of the oil business - but it was not It can only turn the situation around.

Robert Hirsch, speaking at "Energy: a Conversation about Our National Addiction", Washington 4/24/06


I think these two quotes illustrate quite clearly the fundamental difference in the views of economists versus geologists.

We now know that the Hubbert peak, the typical bell curve for an individual oil field or oil province, tends not to be significantly affected by technology adoption. There are no cases that I know of, other than the geologically anomalous Ekofisk mine in the North Sea, where the decline in production has been reversed by the adoption of technology. It is always a case of minimizing deterioration or pushing out the life of the field by means of secondary or tertiary restoration methods.

Now when I hear Michael Lynch talk about the size of the oil resource being '8 to 10 trillion barrels of oil in place', it becomes clear that he is counting all the oil in the ground that has ever been known or dreamed of. recoverability, sufficient investment and favorable price.

Colin Campbell and others tend to point out that resilience is ultimately not significantly altered by technology adoption, only increased flow allows you to deplete your field faster. Lynch opposes this, and I think this conflict must be the result of confusing economically recoverable oil with physically recoverable oil. After all, nearly all oil fields can continue to produce at a very small fraction of their peak output for a very long time - the effect of most EOR methods is simply get these residues out a little faster - fast enough to be economically viable. Does that change the eventual resiliency significantly?
Lynch suggests that the ultimate in recovery has actually increased dramatically as a result of technology, and it is this growth in reserves that has confused pessimists like Campbell in their previous predictions about the future. original global peak. The counter argument for this is that reserve growth (in the West at least) is mostly a factor of reporting practice in line with stock exchange rules, but now we are seeing a major oil companies - Shell - adjusted their reserves down because the physical reality did not match their shareholders' expectations - that of steady reserve growth.

So I wonder if I'm missing something here, or is Lynch just full of it?

[Catweazle]

It seems likely to me that oil company executives would use the absolute "best case scenario" of new technology extraction when calculating their reserves, simply because share price is king when you get paid on that basis, often in shares. The reality is probably very different, but they're not telling and Joe Public will have difficulty finding the truth. I'm sure that fortunes have been made by people who could use new technology to wring oil out of an old well and use the results to re-calculate the reserves of a whole oil company or even country.

Personally, I'm past worrying about it because we can't burn all we have without wrecking the planet, so a large amount of oil will have to stay in the ground, or we all fry.

[kenneal - lagger]

I was watching a program last night, Bruce ... In the Arctic, and he was doing a piece on the tar sands which contain reserves of billions of tonnes of oil. He said that they only get 2 tonnes of oil out for every 1 tonne that they put in, an EROEI of 2. This is against an EROEI of about 100 for the first wells which were sunk.

Given that Hall and Klittegard, Energy and the Wealth of Nations, say that an EROEI of 5 is necessary to keep society as we know it going all that reserve will be useless even if it is economically possible to extract it because society will fall apart around it. There will be no support for the provision of the plant, the transport of the oil, the marketing nor indeed any market. And then, of course, there is climate change.

Economists don't take EROEI into account so many other sources of oil might be equally unusable. Unless we transition away from oil we will reach a stage where we find that the economy is falling apart around us and economists, most of them, won't be able to tell us why. Then there will be climate change of course!

[Catweazle]

I was watching a program last night, Bruce ... In the Arctic, and he was doing a piece on the tar sands which contain reserves of billions of tonnes of oil. He said that they only get 2 tonnes of oil out for every 1 tonne that they put in, an EROEI of 2.

Not only expensive, it also means that for the two tonnes burned we get three tonnes-worth of emissions.

[PS_RalphW]

I'm not sure that the EROEI requirement of 5 quite applies in the case of tar sands. As far as I remember, for each 3 tonnes of tar extracted, one is immediately burned as a heat source to help melt the tar in situ so that the next 3 tonnes can be extracted. (this is a simplification I a sure). So the EROEI excluding this aspect is somewhat higher.

Of course, this means that the net CO2 emissions of tar sands extraction are 50% higher than than any other source of oil, even before other factors are taken into account like the extra chemical processing needed to break the tar down into usably sized hydrocarbon molecules.

[BritDownUnder]

I could see tar sands EROEI being less than 5 so long as another source of energy has an EROEI of greater than 5 that together with tar sands will give an average of 5.

For instance if coal is mined with a higher EROEI then it could be burnt to extract oil from tar sands. I would say that a quantity of oil containing the same amount of energy as a quantity of coal costs more because it can be used for more purposes than coal and is more desirable. Hence something that makes little sense in terms of energy can make sense in economic terms. From what I understand Canada uses a lot of natural gas to extract tar sands because the oil sells for more and is more 'useful'. I did read of plans to build nuclear reactors for the sole purpose of generating energy to power the tar sands extraction.

[kenneal - lagger]

According to Hall and Klittegard, Ralph, that requirement applies to all forms of energy production as society as a whole has to back up the resources needed to not only produce the fuel but to produce the fuel to produce the equipment needed to produce the fuel and then to produce the equipment as well.

An EROEI only makes any sense if all the energy used to produce a unit of energy is included so the fuel required to melt the tar sands is an integral part of the equation.

[kenneal - lagger]

According to The Sun the way out of our current problems is a four day week so that we have another day to spend, spend, spend to revive the flagging High Street. That would be OK until climate change induced severe rainfall events made worse by the environmental impact of the extra spending flooded it. But then all the flood remediation work would be good for GDP as well!