The Return of Peak Oil

 

M. King Hubbert. Peak Oil.
M. King Hubbert (1903-1989)

My interest in issues to do with the Age of Limits started about nine years ago when I was working on an offshore oil and gas project in the nation of Malaysia. At that time my focus was on what was then referred to as ‘Peak Oil’. In the following years I learned more about other issues, such as global warming (which became ‘climate change’), our destruction of the biosphere, and the scary debt bubbles that we are blowing. It all came together in the idea of an Age of Limits.

The Peak Oil story, at the time, seemed so simple.

  • We need to find new sources of oil to replace what we are currently using.
  • Actually we need to find more than what we are using in order to fuel economic growth.
  • Unfortunately we have picked the low-hanging fruit, those sources of oil that provide abundant quantities at low cost. Finding and exploiting new sources is increasingly expensive. The technical term for this issue is Energy Returned on Energy Invested (ERoEI). It takes energy to find and exploit new sources of energy. Our ERoEI has been steadily declining.
  • Hence the price of crude oil will increase and supplies will be increasingly prone to interruption.

Absence of Peak Oil

But then, about seven years ago, extensive investments were made in the recovery of shale oil from fields in the United States (mostly in Texas and North Dakota). The impact of these discoveries can be seen in the following chart.

Hubbert Curve Actual

The chart has two lines. The red line is the famous Hubbert curve developed by M. King Hubbert in the early 1950s. Hubbert correctly predicted that production of conventional oil would reach a peak in the year 1970.

The green line shows actual oil production in the United States. Up until the year 1990 actual production followed Hubbert’s prediction closely. But then, starting around the year 2010 production of tight oil/shale oil took off such that overall production in 2018 was not much less than what it was in 1970.

Geologists always knew that the shale oil was there. But it required new (and expensive) technology in the form of hydraulic fracturing (fracking) using high pressure injection fluid consisting of water, sand and other chemicals. The produced oil is generally quite light, hence it is often referred to as Light Tight Oil (LTO).

The production of shale oil is costly. Therefore, it required that investors be willing to pour billions of dollars into this money-losing venture. Because the oil is so difficult to extract, and because there are relatively few sweet spots of high oil concentration, it has been estimated that the price of crude needs to be above $120 / barrel for the shale oil business to be profitable.

The chart shows actual prices (US $/bbl) for West Texas Intermediate. For the last few years the price of oil has mostly been in the $50-60 range — well below what is needed for the shale oil business to make a profit.

Oil Price (West Texas Intermediate)
Oil Price (West Texas Intermediate)

Consumption Continues

In the meantime, our consumption of crude oil and other fossil fuels is climbing quickly. In the recent article Fossil fuel burning leaps to a new record, crushing clean energy and climate efforts published in July in Canada’s National Observer, the author, Barry Saxifrage, cuts through much of the supposed good news to do with fossil fuel usage. He shows that since the year 1990 the rate at which fossil fuels are burned world wide has gone from 7.1 to 11.7 billion tons of oil equivalent (BTOE).  That’s a steady increase of 2.2% per year. Here is the chart.

Fossil fuel consumption since 1990

And here is another chart from the same article showing just how much oil we have used in recent years. Roughly half of the oil ever used by humanity has been used since the year 1980.

cumulative global fossil use since 1750

Global warming is not something we can blame on generations past — we are doing it to ourselves in the here and now. In fact, we have made the situation worse.  We are not slowing down.

Shale Oil Realities

Going back to the early work of M. King Hubbert, he made it clear that we need to focus on the exploration side of the oil business. It is essential that new reserves be found at a sufficient rate to replace what is being used. He himself did not use the term ‘Peak Oil’, but he developed the concept. Peak Oil does not mean that we run out of oil — it means that we run out of affordable oil. In other words, there comes a point at which it does not make economic sense for companies to continue exploration because the new discoveries cannot be extracted profitably.

In his post The wheels come off shale oil Kurt Cobb states that investors have had enough. He says,

. . . investors at some point would realize that shale oil was a long-term money loser. A former industry CEO did the math and calculated the damage as minus 80 percent for investors in the industry as a whole since 2008. Lately, investors seem to be reacting to facts rather than the hype.

Renewables

The first chart from the National Observer article shows that renewables and nuclear power have also been growing over the same time period. This leads to the good news conclusion that, “Alternative fuels are replacing fossil fuels”. Such a statement ignores two facts. First, our consumption of fossil fuels continues to climb. Second, alternative fuels still constitute only a small fraction of the overall energy picture.

Not only have alternative fuels failed to replace fossil fuels, it could be that the effect is additive — renewables have not replaced oil, they have simply added to the total energy consumption picture.

Also, since the rate at which we are using oil and other fossil fuels continues to increase the impact on the climate becomes ever more severe. Our overall emissions of greenhouse gases continues to rise. The atmosphere does not care about percentages — global warming increases with the total amount of greenhouse gases in the atmosphere.

Hence, in spite of all the conferences, articles, meetings and protests that have taken place since 1990 the harsh truth is that we have done nothing to cut back on our use of fossil fuels. In the words of the proverbs. “Fine words butter no parsnips” and “Talk doesn’t cook the rice”.

Conclusions

The situation can be summarized as follows,

  • The production of conventional oil is steadily declining, just as Hubbert said it would, all those years ago. The oil companies are having ever increasing difficulties in finding new reserves.
  • Yet we are consuming oil at ever increasing rates.
  • The production of shale oil is likely to go down. It is a money loser and it appears as if investors have had enough.
  • Alternative energy sources are growing, but they are only a small fraction of the overall energy picture — they are not replacing fossil fuels.
  • “If something cannot go on forever it will stop”. Like it or not, the growth in fossil fuel consumption will come to an end.

All of which suggests that the concept of Peak Oil may be ready to stage a comeback.


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Proper 14: The Unexpected Hour

Alarm clock for the second coming
Every week, as time permits, I look at the appointed Episcopalian lectionary readings for that week and try to interpret them in the context of the Age of Limits.

Appointed Gospel

This week’s Gospel reading (August 11th 2019, Year C) is from Luke 12:32-40.

Jesus said to his disciples, “Do not be afraid, little flock, for it is your Father’s good pleasure to give you the kingdom. Sell your possessions, and give alms. Make purses for yourselves that do not wear out, an unfailing treasure in heaven, where no thief comes near and no moth destroys. For where your treasure is, there your heart will be also.

“Be dressed for action and have your lamps lit; be like those who are waiting for their master to return from the wedding banquet, so that they may open the door for him as soon as he comes and knocks. Blessed are those slaves whom the master finds alert when he comes; truly I tell you, he will fasten his belt and have them sit down to eat, and he will come and serve them. If he comes during the middle of the night, or near dawn, and finds them so, blessed are those slaves.

“But know this: if the owner of the house had known at what hour the thief was coming, he would not have let his house be broken into. You also must be ready, for the Son of Man is coming at an unexpected hour.”

Collapse

Let’s take a look at that last sentence to do with the “unexpected hour”.

As we saw from the discussion to do with last week’s gospel reading, none of us know the future holds. We can make our plans but, “You fool! This very night your life will be demanded from you.” As they say, “If you want to make God laugh, tell him your plans”. This week’s reading is on the same lines — the Son of Man will come at some unexpected hour. The passage could be interpreted as meaning that there will be a final hour for all of society. Or maybe it means that each of us individually will experience his or her own time when “this night your life will be demanded from you”.

Either way, the passage suggests that, in addition to being unexpected, the ending will be sudden. The anticipation of a sudden end is part of the Christian tradition. Recent examples are the “Rapture” and the “Singularity”. Unfortunately the idea of sudden, lights-out end to the world does not really fit our understanding of decline in an Age of Limits. The image below is from the ‘Limits to Growth’ report first published by the Club of Rome in the 1970s. It shows how factors such as population growth, industrial output and food production vary over time. None of the curves exhibit a sudden step change. Some of the projected changes such as ‘Industrial Output’ change quite quickly but we are talking in terms of decades, not hours.  There is no sudden end time.

Limits to Growth

A central theme of this set of posts is that our national and political institutions have failed to provide leadership in the face of mounting crises to do with climate change, resource depletion, destruction of the biosphere and on-going financial emergencies. This situation provides an opportunity for the Christian church to provide that missing leadership. But our theology will have to move from the idea of collapse being a one-time event. Instead, we are looking at a future that will be muddled and confusing with no single end time.

Where Were You When Global Warming Happened?

The lack of a single end-point is something that we all have trouble grasping. For example, people might ask, “What will the world look like after global warming?” The simplest answer is, “Look around you, global warming started many years ago, hence we are living in a post-warming world.”

But next year the world will look slightly different. And the year after that slightly different again. Wait 50 years and we will have trouble recognizing what we see. But — and this is the crucial point — there is no single “before and after”; global warming, resource depletion, the destruction of the biosphere — they are all processes not one-time events.

So, in response to the question at the head of this section, there is no answer. Global warming is not a single point memorable event such as the attack on the World Trade Center.

Speed of Decline

The book that I am working on has the title The New City of God. I chose that title because Augustine of Hippo wrote his book, The City of God, at a time when the western Roman Empire was visibly declining. (He was living when the City of Rome itself was sacked in the year 410 CE.) Augustine recognized that all human societies and nations collapse sooner or later. For example, the Hebrew Bible is full of “failed states” such as Assyria, Babylon and Ancient Egypt. His insight was that only the City of God is permanent. From this insight, he and other church leaders of his time developed a theology that provided the foundation for the church for the next 900 years.

City of God by Augustine of Hippo

But nations and societies do not all fail in the same way or the same rate. Indeed, it could be argued that the Roman Empire never completely failed. The eastern part of the Empire survived for a thousand years after the time of Augustine. Even the western part did not disappear completely. The City of Rome became site of the headquarters of the Roman Catholic church, the Latin language became the basis for many modern languages such as Italian, Spanish and French, and the Roman legal system is still in use in many parts of Europe.

Other civilizations, however, have completely disappeared, leaving hardly a trace of their existence, except maybe in the ruins of monumental structures such as pyramids and buildings. Here is an artist’s impression as to what the fabled Hanging Gardens of Babylon looked like in Biblical times.

Babylon hanging gardens

And here is a picture of what they looked like when being excavated.

Babylon hanging gardens

Global Collapse

There is, however, one huge difference between Augustine’s time and ours. The Roman Empire, was large, but it did not encompass the whole world. There were societies and nations in Persia, Africa and northern Europe that may have influenced the Romans, but that were not part of the Empire. There were also whole societies in Asia and Latin America about which the Romans knew nothing.

Such is not the case in our time. The issues to do with climate change, resource depletion and all the rest are global — there are no parts of the world that are not affected. Which means that, as the protestors say, “There is no Planet B”.

How severe our collapse will be, what it will look like and how quickly events will unfold remain to be seen. In the words of the Apostle Paul, we can only see through a glass darkly. Two of the people that I follow on the Internet are Ugo Bardi at Cassandra’s Legacy and John Michael Greer at Ecosophia. They tend to see the future differently. Bardi talks about a fairly quick collapse using a model that he refers to as the Seneca Cliff. Greer sees a future of a ragged, gradual descent. But neither of these two writers anticipates a moment in time when everything will come to an end.

Ugo Bardi Seneca Cliff

Theology

In the book that I am writing, and at this blog site, I am attempting to work out a theology that is appropriate for our time. It is based on the following three points:

  1. Understand and tell the truth.
  2. Accept and adapt.
  3. Live within the biosphere both material and spiritually.

I have highlighted the second of these three points — Accept and Adapt — as the theme of this week’s blog. As the Gospel reading tells us, we need to be dressed for action and to have our lamps lit. But we need to be ready for a process of change, not for a one-time event.


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