Friday, December 19, 2008

"Peak oil: postponed"? Dr Richard Pike.

This is the title of the transcript of a recent interview with Dr Richard Pike, the CEO of the Royal Society of Chemistry, by Andrew Orlowski. For many years, the RSC (not the Royal Shakespeare Company) has been a fairly dormant animal, and I did used to wonder what its purpose was exactly, even though I am a Fellow of the Royal Society of Chemistry, as I became shortly after I was awarded a research professorship in chemistry. However, its role is to sound the voice of chemistry in the United Kingdom, especially during these tough and inclement times, in regard to funding, the relative unpopularity of hard subjects such as science which students are reluctant to enrol on degree courses in, and the health of the chemical industry. Hence I applaud Dr Pike for his proactive stance on important issues where chemistry and a sound chemical training really do matter, namely those concerning the many challenges posed by our energy and environmental demands, such as peak oil and global warming.

He has previously pointed out that growing crops to make biofuels is a non-starter, at least on a petroleum-significant scale, otherwise there is a conflict between growing crops to feed cars or humans. I couldn't agree with him more and have said as much on various occasions and in appropriate postings on here; also on my regular monthly column at Dr Pike is also of the opinion (as I noted in yesterday's posting) that there is most likely far more oil in the ground to be recovered than the 1.2 trillion barrels that is generally quoted. I don't disagree, but I stress that it is the rate of recovery that is the most pressing issue, not so much how big the reserve is in total, and we will experience a demand-supply gap within the next decade, for sure, as even the CEO of Shell concurs.

Dr Pike points out that the figures given by the oil companies tend toward the conservative side, and that if a probabilistic analysis is done, based on the P50 estimate (see yesterday's posting) which refers to "proven but possible" oil reserves, rather than the P90 (90% chance of oil being recovered) , the ultimately recoverable resource (URR in Hubbert terms), or size of the oil bounty, can be "two or three times" greater. Thus, we might expect to recover a grand total of 2.4 trillion barrels not 1.2 trillion, even if the P90 figures given by some nations are suspect.

As Pike says, "P90 is a lower bound, and companies have a duty to report what the lower bound is to statutory bodies, such as the Securities and Exchange Commission, and BERR in the UK. And that figure is conservative. Over time, "lower bound" has come to mean "proven reserves". But it's actually the extreme left hand side of the probability curves."

Dr Pike makes some good points about peak oil doomsayers ("eschatologists", i.e. those who believe in the end times usually attributed literally to the "events" described in the biblical Chapter of Revelations), who think that "the end of the world is nigh". In fact there is a great deal of misunderstanding about what peak oil means, and this is where Pike's point is particularly salient. Many think that peak oil = end of oil, but that is not what it means, and nobody versed in the Hubbert analysis has to the best of my knowledge claimed as much.

Peak oil = end of "cheap" oil (the title of my posting here on May 13th, 2008) and we will indeed be producing oil for many decades yet, and many more in accord with Dr Pike's analysis. The Hubbert curve (or its adaptation, the Hubbert Linearization) refers to the production of a particular field. To date, this has meant readily available cheap, oil. It is not strictly within this remit to refer to a global peak since to derive such a thing means averaging over the production of many different oil fields in the countries of the world that produce oil. All fields have different capacities, and are at different stages in their production (or depletion). One consequence of this is that different countries will run out of oil quicker than others and that will shift economic power and stir-up geopolitical tensions. Russia comes to mind. The New World Order will be compelled by who has the oil, and the power that is attendant to it, while those like the UK who are short on oil will be accordingly weakened.

However, even if the world is not about to run out of oil, producing oil against a rising demand for it will raise the price, and there will be economic fallout, probably a recession and then a Long Emergency scenario according to Kunstler. Eventually there will be an effective global "peak" when overall oil supplies do decline and this will either widen the supply-demand gap or create it if it has not already come about. Pike concedes that there will be a peak eventually but no one knows when exactly; however, he considers that the analysis done so far is "ill informed" and that it will not come about immediately. It is true that we will only know the date of peak oil retrospectively, but most analyses suggest it will be with us by 2012 if not before. Even if peak oil is "postponed" the gap will not be, though it will certainly widen after the peak.

Once a supply-demand gap manifests, the price of oil will increase relentlessly, or at least so far as the market can bear. Pike notes that "you can buy your way out of capacity constraints". This is also quite correct, but it is a dicey business. I agree with him that if you invest in overcoming "surface constraints", as in the number of wells, gas/oil separators, pipelines, storage tanks or jetties, the supply of oil is improved, but the cost of a barrel of oil inevitably and accordingly increases. He says, "The rough rule of thumb that applied three or four years ago was that to get 1 million barrels a day extra, you needed to spend in the order of $10 billion, very approximately."

He notes that the money is recovered very soon, and that at $140 a barrel, the payback is 100 days. Yes, but we have seen the economic consequences of such high oil prices, coupled with a distinctly dodgy global financial system, and while the output of oil might be increased, it will cost.

In terms of renewables and chemistry, Pike states that "no economies are yet geared-up for electricity as a direct heating source, or as automotive fuel, or for hydrogen storage." This is absolutely true. He thinks that solar-energy is the answer, but there is the scale-up problem I have commented on before. In other words, even if solar/PV can be done using thin-film cells and using organic conductors (otherwise the shortage of platinum metal will scupper the whole enterprise, along with fuel-cell technology), it will still take decades to install enough to run the world on. This will indeed need to be "putting things together on a grand scale which requires leadership, because we're in a position where some of these decisions are not made by individuals or individual companies. It's going to require a lot of collaboration." Yes, and collaboration between entire nations and continents, probably, which might prove a longer job.

Pike also stresses the issue of scientific ignorance among the public, and refers to the level of questions being set to 14 year olds on science courses. He comments, that while the course material is often comprehensive, the examinations barely skim it - and are almost fail proof. Without better education, the next generation of policy makers is as likely to be as scientifically illiterate as the present one. The cycle needs to be broken"

I agree, but it is quite ironic that in this age of huge university expansion most of the ex-polytechnics (which did a fine job teaching science to technicians from industry) now they are the new-universities don't teach chemistry. In my opinion these institutions should be restored to the technical colleges they were once, and well, because in the time to come, as the energy crunch bites, we will need people who know how to do useful things, not a rising army of pharmacists, psychologists or media studies graduates, taught by "new-professors" some with no published work in the subject they are supposed to be professor of. Ironically a professor of "Chemical Education" is one lamentable example that comes to mind.

Related reading.
"Peak oil: postponed". By Andrew Orlowski.


Yorkshireminer said...

Chris can you tell me what the use is of all this University expansion if there is only a certain percentage of the population, that are able to benefit. I would take a guess that you need to have an IQ of at least 120 to take a technical course, especially when maths is involved. The concept of imaginary numbers is difficult enough to get your mind around and that is simple maths that are needed for electrical engineering among other things. Why this obsession with calling every mediocre technical college or learning institute a University, is it that the brain dead that seem to run these institutions want to garner the kudos of the name University without the effort. M.I.T. And Caltech seem to get by without the tag university after it's name. I would certainly have liked to have had an education at one of those two. Both had more than their fair share of Nobel laureates. I have said before in an earlier post that if you expand the Universities system to take in a larger and larger percentage of the population, you have to except people of a lower IQ because there are not enough people with high IQ's. Can't anybody understand a Gaussian distribution curve. The result is that you lower standards to maintain the pass mark ratio. It seems that under the present system if you don't get a good enough pass mark quota then you have failed as a University and you don't get the requisite Government grants. What do they do they move the academic goal posts. As far as I am concerned you have failed as a University if you have failed to maintain academic standards. I am not the sharpest tool in the toolbox but I despair when I read about the new proposals for the educational system in Britain, it seems to me that everybody gets a prize, if you attend 90% of the time you get an A. They are now going to do away with History and Geography from what I understand. I presume they are too politically incorrect for the Multicultural nutters that run the ministry of education. We must not offend the under performing, inbreed, low IQ immigrants of a khaki tint, who have been pouring into the country over the last few decades especially when they have got the vote. Nobody seems to have asked the question of these immigrants from failed states because that is mainly where they come from why they are failed states , could it be that you are a failed state because you are just too thick (polite form, do not have the requisite level of Problem solving ability), to even be able to form a state. Mind you if you don't know anything about History how are you to know that there was not a city, roads or any other form of civilization in Black Africa before the Europeans came while in China and Japan they had gunpowder roads canals paper money and while not quite understanding perspective they could at least paint and not daub.

Chris how are you going to get more graduates in the hard sciences if you continue to dumb down the population by an educational system that is now aimed at equality not quality, however bad the system was when I grew up after World War 11 and it certainly was bad, there were 50 in my class alone and we kept our school books in cardboard boxes in the corner of the methodist chapel where we were taught, we had a least an equal chance to be unequal, the 11+ did at least give a certain number of the more intelligent of the working class a chance of escaping from the confines of the system. Under the new orthodoxy not only are the best of the working class kept down but many of the middle class and however many go too University a mediocre university system is still a mediocre university system. Until we get away from this equality crap in our schools and teach equality of opportunity to be unequal along with teaching real subjects, like English Maths History and Geography, nothing is going to change, all those job as Chemists engineers etc are going to remain unfilled. Orwell in Animal Farm certainly understood the problem when he said “all animals are equal but some are more equal than others”.

Like you I certainly approve of Dr Pike for his proactive stance, what ever that may mean, but he might just as well go and piss into the wind, in fact I think it would be more useful because he would at least get a positive feed back.

I am sorry if I seem a bit cynical, but it is mainly anger and frustration at the antics of the so called ruling elite who embrace fantasy not reality and spend countless millions of public money paying for a Quango to arrange the deck chairs on the deck of the Titanic and countless more worrying over where to seat the Black Jazz musician and the Peruvian nose flautist, in the Orchestra as it is sinking, we must be inclusive, and not offend anyone.

Anyway rant off, may I say Chris that I enjoy your Blog. It has many good points. The main one being that it attempts to be objective and succeeds. Another one is clarity, always a plus point, I tend to be sarcastic and crudely verbose. A third point it is full of information which get me off checking the references especially if I am not too well informed on the subject. A fourth point is a genuine striving for honesty. I might not reply to many of your articles but I certainly read them and will certainly be reading them with pleasure in the New Year, so if you don't receive a comment it doesn't mean it has not been read with pleasure by myself and I am certain many other people but because we tend to agree with what you write.

Chris one last thing, A Merry Xmas and a Happy New Year

Deep Regards


energybalance said...

Hi Dave,

many thanks for your applause at my efforts on here. Really, this is just me and my thinking aloud a lot of the time.

I do try to be objective and to put the facts in, do a few sums which most environmentalists don't seem to. Perhaps they don't like the answers. The University of Sussex did a reasonable job on me, probably, and has produced 3 Nobel Prize Winners in Chemistry.

I agree with you completely about the crassness of what has become of the British education system, once regarded as the finest in the world, but no longer.

You will enjoy my novel "University Shambles", due to be published by Melrose Books in March 2009. It is a wry black comedy/satire on the state of play!

That is the best way I could think of presenting my ideas... oh yes, technical colleges that are now universities and professors with no academic credibility.They get e.g. a professorship in Chemical Education, with no published work in the subject in which they are supposed to "profess".

In Slovakia, so my colleagues there tell me, a professorship is awarded by the Prime Minister or the Minster for science, and so it bloody well should be. I worked hard for mine and when I see them handed out like sweeties to a bunch of ex-poly tossers who've done nothing apart from teaching, admin., committee work and so on it makes me feel like a mug!

If an investigative journalist took the trouble to look into the quality of senior staff in some of the new universities and also in older ones, in subjects like Pharmacy Practice, where they can't get the staff unless they off a Chair, otherwise they can't pay them anything like what they are on in the industry, they could have a field-day.

As I mentioned in response to your previous comments, I literally walked out of the last university that employed me, on these grounds and many others, and set up my own consulting firm, and began writing seriously, so actually they did me a favour!

So, for now Dave, wishing you to, a very Happy Christmas and a Happy New Year!

Deep regards,


ChuckT said...

Good article. I appreciate your scientific approach. Also, I am a Peak Oil advocate and have spent a good deal of the last four years trying to educate my profession - the supply chain world about the possible impacts of Peak Oil on global supply chains.

I am continually amazed at how many people dismiss the Peak Oil discussion as one populated by idealogues and fanatics. I don't think I am either. I simple try to take the best facts available and look at probably secenarios and ways to adapt.

The recent price decline has lead to a whole flood of dismal of the whole Peak Oil hypothesis. I really don't see the price decline changing any of the basis arguments.

Oil is finite. Conventional fields are declining at a rate of 5-9%. Major finds are rare. Geopolitics is still an issue. Massive investment is needed. The current infrastructure continues to rust. There are no quick fixes.

I don't know what the price will be in 2009 but I do this, the world: will burn about 30 billion barrels; find maybe 5 billion; see current fields deplete at a rate of 5 to 9%; cut back on exploration and development in hard ; reduce or scale back maintenance and equipment upgrades further weakening an already stressed supply chain; and not make any real progress toward reducing dependence on cheap oil. I also know the world oil industry will not survive for long in its current state with oil a $40 a barrel.

I just hope President Obama and team don’t believe the hype and push forward with the transformations we need to reduce long-term consumption of oil. So far he is saying the right things. This could be the last chance and the time is short.

energybalance said...

Hi Chuck!

No, I'm not a fanatic and have tried to continue these postings in a spirit of reasonable optimism, but the oil production peak is nigh, or more severely and immediately the gap between demand and supply. The peak will just enlarge that gulf.

The newspaper headlines are not good for Britain this morning and I really do wonder what 2009 will unfold upon the world.

I think too that the world has been "fooled" by the dramatic drop in the oil price but yet this is a symptom of the falling global economy, which ironically was precipitated by the hike in oil price last summer. Now all seems to be in melt-down. I think this is the Long Emergency that Kunstler has written about.



Richard Douthwaite said...

You write: "Pike notes that "you can buy your way out of capacity constraints". This is also quite correct, but it is a dicey business. I agree with him that if you invest in overcoming "surface constraints", as in the number of wells, gas/oil separators, pipelines, storage tanks or jetties, the supply of oil is improved, but the cost of a barrel of oil inevitably and accordingly increases. He says, "The rough rule of thumb that applied three or four years ago was that to get 1 million barrels a day extra, you needed to spend in the order of $10 billion, very approximately."

This analysis, and the calculations on the amount of oil there might be in the ground, overlooks the fact that the cost of winning the energy in the oil has to be measured in energy terms rather than monetary ones. In other words, the Energy Return on Energy Invested (EROEI) will determine how much oil is produced, not the market price. If it takes more energy to get the oil out of the ground, refined and delivered to the user than the user can usefully extract from it when the fuel is burned, that oil might as well not be in the ground at all. Oil production would have become an energy sink rather than a source and would only continue for uses where a loss of energy was acceptable, such as a chemical feedstock.

Professor Charles Hall of the New York State university, Syracuse, is the leading researcher in this area. One of his findings is that, if the EROEI of oil prospecting continues to decline at he current rate, it won't be worth looking for oil with present technologies after about 2017.

Richard Douthwaite, Feasta (

energybalance said...

Dear Richard,

yes, the EROEI is the ultimate constraint, as you say. As the EROEI falls oil must become more expensive and short in supply with catastrophic effects on the economy as we have seen from the recent huge oil price followed by a market crash, hand in hand with the trigger of sub-prime mortgages and a general lack on confidence in lending money; hence the recession which the world is in now.

There is a tendency to equate peak oil = running out of oil, but it is more complex than that, so how ever much there may be left does not change the fact that within a few years a supply-demand crisis must ensue.

It is the "gap" that matters, and the "peak" can only make matters worse by enlarging it.

I know Professor Hall's work, and I don't doubt his conclusions. If the gap hits around 2012 and the technology to find more fails within five years of that then in effect the oil-age will be over!

Keeping the chemical industry going is imperative but without oil, moving goods around - including chemicals - won't be easy. We have precious little time do anything else and so I fear that there will be a collapse of civilization, as we know it.

Best wishes,


opit said...

On the chance that this is not your work - enjoy !
And this might explain a thing or three about The System

energybalance said...

dear Opit,

no this is not my work but I appreciate its contents. I have not yet given full vent to how I feel about the deliberate destruction of what was once the greatest university system in the world, and it saddens me that someone is awarded a professorship in Chemical education and rather than retiring to the golf-course is now accepted by the Royal Society of Chemistry as a serious figure on its "Education Division"!

If an investigative journalist were to look into the quality of professors and readers in mostly the ex-polytechnics the result would be national embarrassment, but then the whole reason to have expanded the system was not about "opportunity" but getting the youth unemployment figures down!

When it is published on march 25th, you might like to tread my comical novel, University Shambles, which though a work of pure fiction does tell the tale of British values!!