Rabu, 09 Agustus 2006

When Oilmen Turn Sour on Crude

San Antonio Current

By Greg Harman

It's a small group: three members of the Unitarian church we're gathered in, an engineer from Mexico, a smattering of activists, and a Pacifica Radio reporter. The meeting opens - the second of the just-hatched Houston Climate Protection Alliance - by talking about what each at the table has done to cut down on their fossil-fuel use.

Bringing down Energy City, from within: Former oilman Jeffrey Brown and activist Nan Hildreth have been spreading the Peak Oil message. They're part of a Peak Oil mini-conference this Sunday in Houston.

From there on out it's what you would expect in such company: One rode a bike to the meeting; another hopped a bus; yet another cut down on her meat intake. Small sacrifices - and just the type that so often rankle the uninitiated with their odor of do-goodery. Talk turns to launching a campaign to encourage Houston Mayor Bill White to join a national movement of U.S. mayors fighting global warming. That's when it occurs to you something deeper is at work here. A few miles from where you sit are the national headquarters for some of the richest, oiliest companies on Earth. Halliburton, ConocoPhillips, Reliant Energy, Shell's U.S. oil division - all make their homes here. This is Houston, Texas, by God. Why haven't these people been locked up?

Has global-warming-think sunk in this deeply? Have climate fears finally saturated our country to the point that even Houstonians are mobilizing? When one recovers from the remarkable fact that a campaign to fight global warming has infiltrated Energy City, the rebounding tremor comes quickly with the realization that the movement isn't an aberration. It's actually growing.

A central plank of the movement involves "Peak Oil," the belief that world oil supplies, as a finite resource, have a "peak" point the world's production capacity will never exceed. The peak could come suddenly, with terrible energy upsets shocking the market on the way down, or it could be drawn out for decades, providing an easier buffer period for the world's petroleumbased economies.

Nan Hildreth is refilling printer cartridges over a low, round coffee table in her South Houston home. Brandishing stained fingers, she recalls one of the forces that propelled her into forming a climate group in Houston. It was a comment made by the Houston mayor's health and environmental advisor, Elena Marks. It happened at a global-warming conference, of all things, hosted by Rice University. She remembers Marks telling the crowd, "We don't say global warming in Texas. We talk about sustainable development." It got under Hildreth's skin.

Bringing down Energy City, from within: Former oilman Jeffrey Brown and activist Nan Hildreth have been spreading the Peak Oil message. They're part of a Peak Oil mini-conference this Sunday in Houston.
Then came hurricanes Katrina and Rita, the highway deaths and chains of human misery stretching in all directions from New Orleans. By the new year, the idea of forming a Houston climate group, leavened by the growing scientific evidence that global warming was intensifying the frequency of these powerful storms, became tangible. Hildreth thought at the time, "I can help the mayor say, 'Climate change,'" she recalled. "Integrity will do that to you. It will make you say strange things, like 'global warming.'

The climate-protection mindset isn't restricted to activists, either. In recent years, prominent and not-so-prominent members within the oil and gas industry have stepped away from the herd - the most often cited (and criticized) of these being a former energy advisor to President George W. Bush, Matthew Simmons.

It was only a few months after the hurricanes of '05 ripped through drilling rigs and production platforms and damaged refineries across the Gulf of Mexico. Simmons, who now serves as CEO of a major Houston energy-investment bank, told members of The Petroleum Club of Houston that Hurricane Katrina was "our energy 9-11," that the world oil supply was "peaking," and that the industry needed to get on "war footing."

Two months later, an article appeared in Fortune magazine featuring another Bush confidante: Richard Rainwater, who made his billions in oil and Houston real estate. It was titled simply "The Rainwater Prophecy," and it forecast an economic tsunami that was about to rip through the world as a result of the peak-oil crash.

“I don’t want the world to
wake up one day and say,
‘How come some doofus billionaire
in Texas made all
this money by being aware
of this, and why didn’t
someone tell us?’”

— Richard Rainwater

A few hundred miles to the north, Jeffrey Brown, an independent geologist living in the Dallas suburbs, is waiting for his daughter outside Forth Worth's Kimbell Art Museum. As much a product of Texas A&M as his family's West-Texas oil business, Lucero Oil & Gas, Brown still strikes the quiet and assured mannerisms of the power elite. His gaze is direct. Though we stand outside one of the country's most recognized art museums, Brown is far more interested in talking about Peak Oil and something called Heather's House, a nearby home built to function almost totally off-grid. "You should see it," he says.

It was only a decade or so ago that Brown was still in the West-Texas oil patch. Though the lingering pockets of petroleum around San Angelo are worth some serious green today, Brown got out when oil dropped to $10 per barrel following the Gulf War. He set himself up as an independent geologist. Soon, prices were recovering. He began hearing the term "Peak Oil" tossed around. The thought, along with the corresponding dressed-up returns, made Brown, and many, many others in his position, giddy. In fact, when Kenneth S. Deffeyes's book Hubbert's Peak appeared, explaining in calculated detail why the world was in for a long, drawn-out scramble in its hunt for petroleum energy, Brown went on a buying spree.

"Literally, I was buying copies of the book and handing it out," he said. "I was basically encouraging investment in looking for these small [West Texas] fields." It wasn't long before the other side of the Peak Oil coin rolled over in Brown's head.

Peak Oil, if true, may make one rich today, but it comes at a terrible price, he realized. "I started reading up on this because I thought it was just good news for oil prices," he said. "Then the reality dawned on me that, well, it's good news for oil prices but it's incredibly bad news for the overall economy and the world."

Brown became a true believer, organized a Dallas conference on the topic with Simmons as one of the speakers, and started visualizing what a sustainable society will look like, post oil-crash. He began holding private screenings of Peak- Oil movies for friends.

Somehow during this period, Brown connected with Hildreth and he's since come several times to eavesdrop on the Peak-Oil community in Houston. This week's conference will be the first time he has appeared as a speaker. His topics will be about farming and ensuring a stable food supply into the future. Think Quakers with 12 gauges.

Brown says, "I was, you know, like Rush Limbaugh. 'The environmentalists are out to get us. They're a bunch of crazies.' The hard, cold reality is the environmentalists had it right. We live in a world of finite resources.

"It took close to 65 years to fully deplete the East-Texas oilfield" where the first true gusher announced the birth of the oil age, says Brown. Now we burn that much petroleum every 30 days. "It gives you an idea of how unsustainable our lifestyles are."

Greg Harman is a freelance writer and the editor of Earthhouston.net, an environmental- news website focusing on Houston and the entire South Coast.

Oil supply can outpace future demand, CERA says

canada.com

By Paul Haavardsrud

Global oil capacity can rise faster than demand for the next decade and beyond according to a fresh study of world oil fields that works to puncture views that higher prices are imminent as supplies near a peak.

The call from a well-respected international energy consultancy comes as oil prices trade near a record, pushed this week by problems that are forcing Alaskan producers to shutter 400,000 barrels a day.

Immediate disruptions aside, worldwide production capacity could increase nearly 25 per cent by 2015, according to Cambridge Energy Research Associates.

"In the short term, as we all know, this is a world oil market that is labouring under stress and apprehension, but the growth that we see there is very substantial," said Dan Yergin, CERA chairman and Pulitzer Prize-winning author of The Prize: The Epic Quest for Oil, Money & Power.

Updating and extending a study released last year, CERA now believes world supply can hit 110 million barrels a day in the next nine years up from 89 million barrels a day currently.

It's a far cry from projections from the so-called ``peak oil camp'', who believe cresting oil supplies will spur a rude comeuppance for a world hooked on oil.

Counterpunching that notion, CERA's field-by-field analysis and look at 360 new projects suggests global supply can keep climbing for decades.

"You have to ask yourself, why wouldn't you see further growth with prices where they are, why would you not see tremendous levels of investment, unless economic laws were abolished," Yergin told reporters on a conference call.

After jumping three per cent to start the week, oil closed off 67 cents in New York trading at $76.31 US.

Already jittery due to instability in the Middle East, markets were further roiled this week when pipeline corrosion forced BP Plc. to shut-in 400,000 barrels a day from Alaska for several months.

In an energy world with little buffer between supply and demand, even the spectre of lost barrels is enough to send prices higher. CERA argues that dynamic won't last forever.

Bringing on meaningful amounts of oil is a long process and one that had slowed dramatically in the late 1990s due to low prices, plentiful supply, and sluggish demand.

A growth surge earlier this decade caught the industry flat-footed. When consumption was, in the span of a few short years, pushed higher by some six million barrels to the current level of about 85 million barrels a day, oil markets were forced to respond with the record prices seen today.

Coming soon, though, investments in big projects such as those in Canada's oilsands will start to give oil markets more breathing room.

Oilsands production is set to more than triple to 3.5 million barrels a day by 2015, according to CERA's estimates. The increase represents about 12 per cent of the total growth in oil supply envisioned by CERA over the next nine years.

Unfortunately for those who would like to see prices head lower, adding production from a stable country such as Canada is hardly the norm. Much of the pending capacity is being counted on from places where political uncertainty is the rule rather than the exception.

On this point, CERA is quick to note that its analysis is based on what's geologically possible, and may well be derailed by above-ground politics.

Regardless, for some energy experts, the choice to gloss over political realities is a flaw that marginalizes CERA's work.

"When they talk about OPEC increases, how much is in Iraq and Nigeria?" Jan Stuart, a global oil economist with UBS Securities LLC told Bloomberg News.

"How is this remotely relevant or realistic or useful would be the key question I have."

In the context of dire predictions from the ``peak oil crowd'', CERA's study does offer a counterbalance that can be lost when oil prices rush higher.

A look at Saudi Arabia, for instance, shows that new projects and a fresh emphasis on exploration will shortly lift capacity there to 12.5 million barrels a day from about 10 million.

The finding directly refutes claims made by Houston-based investment banker Matthew Simmons who posited in his 2005 book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, that production from the Kingdom was set to fall sharply taking the global economy along for the ride.

"I have no reason to suppose that Saudi Arabian productive capacity is really in any danger and might start falling off rapidly anytime soon," said Peter Jackson, a co-author of the CERA report.

"The peak in oil production that is being debated, ostensibly, at the moment, is many decades away."

phaavardsrud@theherald.canwest.com

Sabtu, 05 Agustus 2006

Peak Oil Passnotes: A Peak Oil Critique

Resource Investor

By Edward Tapamor

We all believe in peak oil. Everyone believes in peak oil. Yes, apart from the whacko brigade that say oil reservoirs fill up again due to abiosis. Sensible people can stop giggling now please. Abiotic oil is sheer lunacy.

So, everyone believes in peak oil. Yes, even Daniel Yergin and his band of merry persons at Cambridge Energy Research Associates. They admit to an “undulating plateau.” Even Jeroen van der Veer, head of Royal Dutch Shell [NYSE:RDS-B] said there would be “many peaks.” In other words oil would be one of them.

The “undulating plateau” is also part of peak oil. It is not a magic moment when oil reaches a maximum then descends like a child’s drawing of a mountain. It will reach a maximum one day and it will descend but most likely it will have a long tail. A pleateauing, undulating kind of tail if you get my graphic drift.

Even Michael Lynch, the anti-peaker in chief, believes in peak oil. He does think that there will be a maximum level of production, he just thinks it will not be until next century.

Because what happens with peak oil is that everyone starts to argue about the date. It is now, last year, next year, in 2010, 2030 or in Mr. Lynch’s case 2130.

The arguments over peak oil are also thrown into doubt by some, or many, of its proponents. The Association for the Study of Peak Oil last year published an article by a neo-fascist – actually that’s too kind he was just a regular fascist – that rambled hysterically about some kind of Darwinist, eugenicist fantasy. Where the weak would die off in the peak oil tumult and some kind of stronger race of people would survive, without the aid of nasty liberal wishy-washy things like hospitals, medicine and social benefit. And oil.

Overnight it tarnished the name of a group who up to then had seemed relatively coherent and approachable. One TV reporter was telling me about a meeting with a man who has spoken widely on peak oil events – not an ASPO representative - who turned to him and said “you know six million didn’t die don’t you?”

I myself have had peak oil advocates telling me 9-11 was an inside job. One telling me how his “prophecy” was ignored by the mainstream media. Telling me the CIA are tapping their phones, using x-rays to view into their houses and so on.

Then we get people like James Kunstler who has to be the chief ranter of the peak oil movement. He really cusses a lot. That’s right … swears!! Richard Heinberg who just has a hopeless, you-are-ducked, smile about him. Matt Savinar the expert doomer who trained to be a lawyer. No!! Not a lawyer. Paul Roberts who was horrified that he saw a 30% water cut in one field or another. No not 30%!!

One thing unites those men. Publishing revenue.

Matt Simmons’ book Twilight in the Desert made some good points. But it also made some really bad ones. After people trawled through it, once again, we were faced with, well, conjecture.

So let’s look at these figures from this week. Real nice figures. No swearing, no trainee lawyers, no smug academic grins.

In May U.S. production fell 459,000 barrels a day year on year. In May U.K. production fell 292,000 barrels a day. Mexican data saw a 150,000 barrels a day slide and statistics from Norway saw a 226,000 barrel a day fall.

For 2006 as a whole production is down by 196,000 barrels a day in the U.K. and 503,000 barrels a day in the U.S., 229,000 barrels a day in Norway and by 24,000 barrels a day in Mexico.

French company Total [NYSE:TOT] saw production – which may well rise again it is true – fall 9% year on year. BP [NYSE:BP] said it will struggle to meet its targets for 2006, 4.2 million barrels a day despite 1 million barrels a day from its venture with TNK [OTCPK:TNKBF] in Russia. Shell [NYSE:RDS-B] produced more in 2003 than it does now and the only companies who have put on big production outside of Eni [NYSE:E] in Italy have done it by buying other companies, ConocoPhillips [NYSE:COP], Chevron [NYSE:CVX] and so on.

Everyone believes in peak oil. But maybe they could just stick to the figures.

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