Peak oil and other fallacies: John Kemp

Reuters ^ | Jan 21, 2013 | John Kemp

[thackney]

"The limit of production in this country (the United States) is being reached, and although new fields undoubtedly await discovery, the yearly (oil) output must inevitably decline, because the maintenance of output each year necessitates the drilling of an increasing number of wells.

"Such an increase becomes impossible after a certain point is reached, not only because of a lack of acreage to be drilled, but because of the great number of wells that will ultimately have to be drilled."

This assessment could have been written recently about the outlook for oil production from North Dakota's Bakken formation or by any member of the Association for the Study of Peak Oil (ASPO).

In fact, it was written by Carl Beal at the U.S. Bureau of Mines in 1919.

Beale dramatically warned his readers: "At present the country is facing a serious shortage of petroleum ... favourable territory has become scarcer, competition has increased and the demand for petroleum and its products has created a market that cannot be adequately supplied."

When Beale was writing, the United States was pumping 3.8 million barrels per day and had produced a total of 4 billion barrels over the previous 50 years. The bureau expected domestic reserves to run out by the 1930s ("Decline and Ultimate Production of Oil Wells" 1919).

By the end of 2012, however, U.S. wells had produced about 205 billion barrels, 50 times as much, an amount that would have been unimaginable in 1919. And daily output was almost 7 million barrels, twice as much as in Beale's time.

MALTHUS REDIVIVUS

Fears about declining output from old fields, lack of new discoveries and peaking oil supplies crop up every few decades, almost always in the same form and usually at times when oil prices are rising strongly.

[SuziQ]

I'm thinking if they could get the production costs down, they might make a go of it. It wasn't just turkeys that could be used, it was ANY organic waste. Being able to process those to oil would certainly go a long way towards reducing the stuff put in landfills.

If the output was a clean enough oil, it could be used in automobiles that have been re-fitted for that purpose. They might like that better than driving around smelling of french fries and chinese food. Of course the biggest issue will be transportation to the consumer, but if that consumer is willing to pay for it, so be it.

[theBuckwheat]

I was very interested in the CWT process and was cheering them on, but the economic truth from the beginning was that this was only going to be “sustainable” unless it received enough subsidies and grants, which is only “sustainable” the Krugman Dictionary of Economic Terms.

Before they filed Chapter 11 bankruptcy, they had been the recipients of multiple multi-million dollar grants and loan guarantees, at least one initially and then more than one to help them buy the equipment to control odor.

Now why they decided to locate a plant that required many trucks hauling turkey waste every day is beyond me. Any truck hauling such products is going to have a substantial odor plume.

Early literature from CWT showed that sewage sludge could be converted. They claimed that the amount of sludge in the US, if converted by their process, would produce enough oil to displace all oil imports. This goes to the complaint about the energy balance of their process. The determination of economic viability is an economic calculation, not one of energy balances. I also saw discussion about converting municipal waste to oil.

It became apparent that one big problem the process has is it is hard to run correctly when the feedstock varies too much or has too much water.

When landfill space gets to be more expensive, that is one value driver that could eventually tip the economics in the favor of CWT. I look forward to the day when a lot more of what we throw away is converted to something useful rather than just being buried.