Lethal Trajectories - Michael Conley [202]
Peak oil production: Oil production, from all sources, has flattened out in the 85–87 MB/D range over the past few years, despite price spikes of as high as $147 per barrel in 2008. With rising demand, crude oil shortfalls have been made up with unconventional fuels such as tar-sand oil, liquid fuels from natural gas and coal, and ethanol and other biofuels, but there are practical limits to what can be produced from these sources. Global oil production today is generated from approximately seventy thousand fields. Of these, 507 fields produce 60 percent of all conventional oil; 110 fields produce 50 percent of global supply; and 20 of these fields produce 27 percent of total supply. Sixteen of the twenty fields are now in decline, and the number of new—and smaller—discoveries required to offset diminished production from even one giant field is significant.
Declines, depletions, and discoveries: The problem is this: a large number of giant oil fields are now in decline, and we are not finding the new giants needed to replace them. With global depletion rates from existing fields in the 5 to 7 percent range, the loss of 6 percent of the current supply of 86 MB/D each year, for example, means we have to find more than 5 MB/D of new oil just to make good the oil that has been depleted. Put another way, we have to find a source equivalent to one new Saudi Arabia every two years just to cover depletion rates; the amount of new oil now being discovered is nowhere near meeting this requirement. To increase net new production by 1 MB/D, we will need to find 6 MB/D of new oil: 5 MB/D to make up for depletion and 1 MB/D to provide a net increase. These numbers are not being reached. In fact, we now consume about four barrels of oil for every new barrel of oil we find. In essence, we are digging into our oil savings account future to meet current needs—an unsustainable practice.
Two key metrics: In considering future oil supply there are at least two important metrics to keep in mind:
1.Oil flow rates: The old saying, “It’s not the size of the tank but the size of the tap that counts” says it all: we can’t afford to be mesmerized by sensational reports of giant new oil discoveries because what really counts is how much of that reserve can eventually be extracted daily at a commercially viable price once the field is fully operational. In the Arctic National Wildlife Refuge, for instance, the recoverable reserve is estimated at over ten billion barrels of oil, but the maximum flow rate might top out at about one million barrels per day after several years. Not a paltry sum, but only about 6 percent of America’s daily consumption.
2. Energy received over energy invested: The “easy” oil has already been consumed, and new oil is far costlier to extract, refine, and use. As one measure of cost, the energy required to commercialize new oil—as well as other energy forms—has to be factored against the energy it produces, or net energy. An energy received over energy invested (EROEI) ratio is applied as a measure of net energy. A higher EROEI ratio equates to a favorable net energy production rate, and a lower ratio to a less favorable rate. Using this metric, oil recovered in the United States in 1930 produced EROEI ratios as high as 100:1. That ratio is more like 14:1 today. The ratio will decline further as we go into deeper and costlier waters for new oil finds. (The cost of drilling a new well in 10,000 feet of water can be $100 million or more, and one can only imagine the amount of energy required to get there.) Eventually the costs of finding and extracting new oil will exceed the commercial market value of the oil and drilling will be discontinued, not because we ran out of oil, but because it became unaffordable. This threshold is referred to as peak production.
The prognosis: