Sunday, October 26, 2008

Technosanity #13: Peter Wells at ASPO-USA 2008

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Peter Wells.. Neftex Petroleum Consultants, Ltd
bio: http://www.aspo-usa.org/aspousa4/ConfirmedSpeakers.cfm?bid=510
slides: http://www.aspo-usa.org/aspousa4/proceedings/Wells_Peter_OPEC_ASPOUSA2008.pdf

Oil geologist and other work in the oil industry in the Middle East, former Soviet Union, West Aftrica, etc. Currently working as a consultant with one contract being Toyota. Toyota had studied and internalized Peak Oil long ago, and 6 yrs later developed the Prius.

OPEC countries are the major oil producers. They produce 43% of world oil, and this is growing. They have a dilemna about investing in more production capacity. They are being asked to make more investment but they did so in the 1980's only to see demand dry up. They are reluctant to make more investments which will sit idle.
Venezuela & Iran & Iraq are a bloc of OPEC which want high prices. Many countries, especially middle east, see their oil as a National Heritage which they can leave to their grand-children. If they use it all up doing production at the highest rate possible then their National Heritage will be gone. Hence the middle east countries are likely to limit oil production for this reason.

OPEC exploration success peaked 40 years ago. In general there has been little success with oil exploration for a very very very long time (40 years). The argument is there are no major oil fields left to find.

He showed several charts of all the liquid fuels. The "liquids model" includes all forms of liquid fuels, including liquified natural gas, biofuels, tar sands, etc. Everything but crude oil is a miniscule slice compared to what crude oil supplies. For these other sources to replace crude oil is a huge leap to accomplish.

There was a price floor of $20/bbl which is the amount Saudi Arabia required to run their country. In 2002 the oil prices began to rise. Around that time the 'spare capacity' started peaking (production infrastructure was running full bore). This year more investment in Saudi Arabia infrastructure meant there's now more capacity and the price began to drop.

"Spare Capacity" is the amount of production capacity your infrastructure can do at maximum above what the current production rate is. That is, it's the amount that production can be increased. Too much spare capacity and prices are low, whereas too little spare capacity leads to high oil prices and demand destruction. "Demand destruction" means people being priced out of the market and looking for alternatives.

Components of future crude oil production:- 1 trillion barrels claimed in IHS databases, 445 billion barrels in Tar Sands, unknown further amounts from future exploration and enhanced oil recovery

The USGS has estimates which indicate there are future large discoveries to be made. A big question about the future of oil is the amount of future oil field discoveries. Will there be few discoveries or large discoveries? If there are large discoveries then the oil peak is pushed into the future, but if there are few discoveries then the oil peak is closer at hand.

His organization believes the USGS is incorrect and that there will be few new discoveries and no large new discoveries.

Technosanity #13: Peter Wells at ASPO-USA 2008

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