The Depletion of Fossil Fuels
Here’s a question that I just fielded on Quora.com (which is a very cool website, btw). When will fossil fuels be depleted?
Never. Yes, there is a finite amount of coal, oil, and natural gas beneath the Earth’s surface, and so it’s easy to divide our annual consumption into that number and produce the number of years we have left.
But there are several important issues that render this model of no real value.
Many decades ago, it became obvious that all the fossil resources that were readily accessible to us by truck or train that required very little excavation had already disappeared. The game then became developing technology that would facilitate our locating and pulling out resources that pose greater challenges: deeper wells, more difficult drilling conditions, greater probability of environmental destruction, longer distances from refineries, and poorer quality of the fuels themselves.
Depending on how one does the accounting, we’re already at a point at which fossil fuel extraction is becoming unattractive. Sure, as long as we don’t put a price on the environmental destruction, the pipelines through sacred Native American land, the climate change, ocean acidification, loss of biodiversity, worsening outcomes for human health (and the rise in concomitant costs), fossil fuels will remain viable for at least the next 20 years. But the moment we decide that we care enough about our planet to stand up to the oil companies, all this changes in an instant.
I liken this to a huge differential calculus problem, i.e., one that comes up with the optimum circumstances given a range of variables that are all changing with respect to one another.
Let’s take a moment and look at this huge set of variables. The most important is the advent of competitive energy sources, i.e., nuclear and renewables. Of course, that itself is a complicated mass of unknowns, principally:
• The progress of advanced nuclear and its capacity to deliver power safely and inexpensively
• Rate of decline in price per Watt of PV and wind
• Development of energy storage
• Build-out of long-distance power transmission
• The adoption curve of electric vehicles
• The development of efficiency solutions for residential, commercial and industrial facilities
• Our ability to shift loads to correspond better to the availability of solar and wind
And here’s another one that few people consider: war. The U.S. involvement in the Middle East (and many other regions of the globe) is all about access to oil. What happens when Americans get sick of our endless wars? What happens, God forbid, if the opposing forces there prove to be unbeatable? This will create a situation where the oil companies can no longer function under the protection of an $800 billion/year U.S. military budget. It’s hard to predict what would happen at that point, but it won’t be pretty for the fossil fuel industry.
So, again, the answer to the question is that fossil fuels will never be completely depleted. Even if we don’t care a whit about our environment and the quality of life we’re leaving for future generations, fossil fuels will become impractical and noncompetitive at a certain point.
OK, you ask, what is that point? I have no idea. When I speak in public on this subject, I make it quite clear that I’m good at identifying the issues, but not so strong at providing specific answers. I’m not afraid to say, “Don’t ask me,” which is why I sometimes close my talks by reciting this charming poem by Allan Ahlberg:
Please Mrs Butler
This boy Derek Drew
Keeps copying my work, Miss.
What shall I do?
Go and sit in the hall, dear.
Go and sit in the sink.
Take your books on the roof, my lamb.
Do whatever you think.
Please Mrs Butler
This boy Derek Drew
Keeps taking my rubber, Miss.
What shall I do?
Keep it in your hand, dear.
Hide it up your vest.
Swallow it if you like, love.
Do what you think best.
Please Mrs Butler
This boy Derek Drew
Keeps calling me rude names, Miss.
What shall I do?
Lock yourself in the cupboard, dear.
Run away to sea.
Do whatever you can, my flower.
But don’t ask me!
You could have simply said that there are enough fossil fuels to last until we are all extinct due to their use. It has a catch your attention sort of emphisis that you could follow up with clarification.
On questions like these I sometimes get into the history of the question with peak oil theory. Most are pushing the idea that it has been thoroughly debunked. I have read some articles that suggest technology is allowing oil companies to pump more oil but also existing oil faster which could skew the curve into a sharp decline. … But it hasn’t seemed to have happened. Instead oil seems to be getting a lower and lower EROEI. This would seem to suggest some validity to peak oil.
BTW Quora does seem to be a far more professional site than another site where I have a long history and some status for answering questions. Unfortunately they also have a policy of “using your real name.” So I could make up a “real sounding name” and it would be fine but if I use a pseudonym, used for all writing on the web, it is rejected with no recourse. By that standard there are an awful lot of people with unusual sounding native names who would not be allowed to contribute. So it may have a touch of an “only our kind of people” club.
The gist of the writing is accurate – the World will not run out of all the oil – there will always be the Uneconomical reserves that will not get tapped due to all the variables.
Primarily it will be the higher and higher cost of extracting difficult to extract new oil. At various prices economic substitution and utilization for oil as a fuel will change downwards.
The only reason for the uptick in gas demand in America is that unfortunately the majority of American are enmeshed deep into their Illusionary love affair with bigger cars and trucks SUVs. Gas prices have suckered many back in as they don’t think of the LONG Term they live in the immediate personal gratification consumption cycle. Cultural Limitations at work.
They will be complaining in 5 years or so.
The variables of higher fuel efficiency standards are going to create a further glut of domestic oil so that takes off some of the price pressure. More Electric Cars as their price comes down will cause those environmental and economic wiser consumers to switch.
Same downward pressure on gas prices as oil consumption goes down.
The over arching reality is that most Oil Co. can’t really make the needed profits they require to make new investments and do the Exploration etc. required to keep the industry viable.
Most observers of the industry say that they need $65 per barrel price to have a viable industry etc.
And this is a floating number as already some Baaken Oil costs $ 85 per barrel in 2006 for cost break even point. The Oil co do blending of resource inventory so they cost average down their barrel prices to meet the lower world market prices. The Peak Oil in this is that the old reserves with the cheaper domestic reserves are running out. So cost blending becomes more difficult going forward.
The other side of the Coin is that our economy ( whose infrastructure and distribution systems, etc. was built on much cheaper oil) can’t function very well at $ 65 per barrel.
There seems to be the need for a balance point some where close to
$ 65 per barrel where things can work out. But that is too low for some new shale oil plays.
. High oil prices over $125 per barrel in 2007 was the precursor of the Great Recession, this detail gets overlooked with our obsession with inflated house prices, the speculation, the mortgage meltdown Wall St greed etc., But high energy prices had already set off a economic tsunami through out our domestic economy.
This detail Gets little discussion while it Merits greater.
So we are in a situation where only a handful of oil co can make a profit with oil below $35 per barrel. These co can get by but little is left for exploration and related costs of a viable industry.
AT low prices The industry will lose structural capacity and that will be lets call it a derivative form of Peak OIl.
Peak Oil is complicated and is more about Pricing and Economically Viable recoverable reserves. That is what the discussion on a deeper level was really all about.
The cheap oil the 80 to 100 dollars per 1 dollar invested EROEI reserves are gone except in Middle East.
The hyped up Shale Oil and Shale Gas reserves tend to range in the 25 to 35 to 1 ratio EROEI so cost curve is eating away at the fat profits and returns that oil was built on. Those good ratios are Gone W the Wind as they Say!
Breath On Wind sorta touched on a point concerning reserves rapidly be used up or something.
Well the depletion rates for Shale resources tend to be 65 % depletion rates on shale wells within 5 years or less. This contrasts greatly with conventional wells that last 25 to 35 years.
So because Shale depletes in 5 years by close to 80 % and then tapers off over some time the energy co must continue a torrid pace of new drilling to replace the depletion rate lost production. The Baaken field in ND is experiencing a high level of this now as are other fields and plays in Colorado, TX and Ark where Shale has been extensively worked.
So if the price is not high enough the company’s will not have the cash reserves to continue rapid drilling operations. Higher cost becomes a limiting factor on the growth of the industry. Shale Gas is losing favor in the Investment community due to the rapid well depletion so funding will get more expensive thus driving up prices due to costs.
So the Laws of Diminishing Returns have set upon the oil sector and the view that in 20 years it will be less important is not a far fetched economic theory. I would Bet on it.
Peak OIL was about many things. Structural Industry capacity, Peak Production Prices that are higher than what the market will pay so substitution sets in.
The people who think they have debunked the peak oil theory have not taken a Holistic view of all the Variables and Price for Oil and Cost increases are components of Peak OIL.
Its about lower EROEI rates as well. Their assessment is too shallow and does not reflect critical inter related variables many of which there is little control over.
The Party is over cheap oil is gone for the long term even if the price stays relatively low now. The industry will contract as it is now and the reduced capacity will drive up prices again.
Wild card Variable- Holy hell WAR break outs out in Middle East and oil production is disrupted and damaged etc. Global shortage.
Then the US can export more oil and make money as can some of the countries that are currently hurting with low oil prices like Nigeria, Angola, Venezuela and Russia too. They will enjoy a Boom etc. cash will flow for awhile!
But what will rising global Energy prices do to our Economy and Global Economy ??? Looks like a Peak Oil Induced Crash!
The Best way going forward is more EV’s, More Mass Transit and higher fuel efficiency for the fleets. Reduce transportation sector consumption level and use Oil for all the other higher value products like Marco P said in another Posting. That is the Way Forward.
Fascinating area the impact of Oil Prices on Economy etc.