Welcome to the age of diminishing returns

Monday, July 30, 2012

Oil revolution? Really? Strahan demolishes Maugeri

Image above from University of Minnesota.

David Strahan is a British journalist, known among peak-oilers for his book "The Last Oil Shock". He doesn't mince words in his attack to Leonardo Maugeri's recent, very optimistic report titled "Oil: the next revolution."

Whereas most commenters have criticized the report for its general approach and conclusions, Strahan has been more aggressive and has looked for the details, finding a true mathematical howler in it. At first, I didn't want to believe it, but I went to check and Strahan is right. At page 20 of the report, you can read:

From 2000 on, for example, crude oil depletion rates gauged by most forecasters have ranged between 6 and 10 percent: yet even the lower end of this range would involve the almost complete loss of the world’s “old” production in 10 years (2000 crude production capacity = about 70 mbd). By converse, crude oil production capacity in 2010 was more than 80 mbd. To make up for that figure, a new production of 80 mbd or so would have come on-stream over that decade. This is clearly untrue: in 2010, 70 percent of crude oil production came from oilfields that have been producing oil for

Nearly unbelievable: Maugeri tries to demonstrate that most forecasters have been wrong in the past by noting that a 6% depletion rate would lead to the complete loss of the world's production in 10 years. How can that be? As Strahan correctly says, the loss would be 46%, definitely not "nearly complete" as Maugeri says. Even with a 10% yearly decline, after ten years you would still have more than 30% of the original production.

Strahan then rubs salt into the wound by reporting that:

When I put this to him, Mr Maugeri seemed genuinely confused, and tried briefly to persuade me the loss was much larger. “If you have a 6% decline each year over a 10 year period, the loss of production is close to 80%”, he said, but then the penny dropped. It looks to me as if he compounded 6% in the wrong direction – for growth, not decline. “Maybe on this you are right”, he conceded sheepishly. 

Strahan's post highlights how vulnerable most people are to fell victim of their own entrenched beliefs. It is called "confirmation bias", it is what happens when people gather or remember information selectively, or when they interpret it accordingly to their biased view. Here, Maugeri clearly fell for the idea that "past forecaster have always been wrong," something deeply entrenched within most cornucopian views of the future.

Of course, it is not a single mistake that can demolish a study and, apart from this misinterpretation of the decline rates, Maugeri's report contains valid data and valuable insights. However, it is also true that there exists something that I call the "Bailey Effect" which consists in destroying a whole study by finding a single mistake in it, no matter how minor or marginal it may be. It is because of this effect that "The Limits to Growth" 1972 study was demolished, as I described here.

Will Maugeri's study survive Strahan's demolition? Probably not, but it is what it deserves for plenty of other reasons (see e.g. here, here, and here,).


Here are some excerpts from Strahan's article

Monbiot peak oil u-turn based on bad science, worse maths
Posted on Monday, July 30th, 2012


Plenty of ink has already been spilled by oil depletion experts exposing some of the wildly optimistic assumptions contained in Maugeri’s report. More damning is that the work is shot through with crass mistakes that render its forecast worthless.

When I interviewed him, Mr Maugeri was forced to admit a mathematical howler that would disgrace the back of an envelope, and it also became clear he did not understand the work of the other forecasters he attacks. It also looks as if he has double or even triple counted a vital component of his predicted oil glut.
Maugeri claims this looming glut has three legs: booming upstream investment by the oil industry; the rise and rise of unconventional production such as US shale oil; and a tendency among forecasters to over-estimate massively the rate at which production from existing oil fields declines. The first point is uncontroversial, the second is moot, but the third is the most important; without it, Maugeri’s glut evaporates.
Maugeri cherrypicks numbers from the IEA study and misrepresents them to claim that “most forecasters” work on decline rates of 6 to 10 percent. He then argues this is incompatible with the observed growth of the oil supply over the last decade – and therefore must be wrong – and uses this conclusion to justify his inflated oil production forecast. But the whole thing is a straw man; an email he sent me revealed he simply doesn’t understand the IEA numbers. The IEA’s global decline rate is actually 4.1%, and CERA’s broadly agrees, at 4.5% (see here for more detail).
Even if we were to accept his 6 to 10 percent range, Maugeri has got his sums horribly wrong. In the key section of the report, he claims that even the lower end of the range “would involve the almost complete loss of the world’s “old” production in 10 years”. But this is laughable. A 6% annual decline over 10 years leaves you with 54% of your original production, because each year’s 6% decline is smaller volumetrically than the previous one. So over a decade the decline is 46% – and very far from an “almost complete loss”.

When I put this to him, Mr Maugeri seemed genuinely confused, and tried briefly to persuade me the loss was much larger. “If you have a 6% decline each year over a 10 year period, the loss of production is close to 80%”, he said, but then the penny dropped. It looks to me as if he compounded 6% in the wrong direction – for growth, not decline. “Maybe on this you are right”, he conceded sheepishly.


Saturday, July 21, 2012

Five times as much oil and coal and gas as climate scientists think is safe to burn

Burning everything that we can possibly burn is not unavoidable, it is a choice (the wrong one). Unfortunately, we seem to have made it. (Image: burning of oil shale from Wikipedia)

It is remarkable how much the Internet discussion has been affected by the recent report by Leonardo Maugeri on the availability of huge reserves of unconventional oil. Maugeri is off by a huge factor in his estimations, nevertheless he has hit the crucial spot in the debate.

There is nothing in the geology of a hydrocarbon containing formation that defines it as a "resource" in human terms. The definition is all in economic terms; and economy is all about choice. Extracting or not extracting from a certain formation is a choice we make. The point of Maugeri's report is that a choice has been made. That nebulous entity we call "the market" has decided that we'll try to extract as much as we possibly can from everything that contain hydrocarbons that can be crushed, squeezed, boiled, distilled, treated, or whatever else we can do to get even a few drop of those liquid fuels that we see as so precious. For that, the industry has poured in enormous investments to build the necessary technology and infrastructure. It was a choice we made. The wrong one.

It is certain that we'll never be able to approach Maugeri's numbers in terms of what we can actually extract from unconventional resources. But just the attempt of doing so may be more than sufficient to ensure our destruction as a civilization and perhaps also as a species.

It is no surprise, then, that the discussion has taken a dramatic tone. In a previous post, I commented on a piece by George Mombiot titled "Enough fossil fuels to fry us all". In the following, an excerpt from the recent Bill McKibben's piece "Global Warming Terrifying new Math" on "RollingStone"


Global Warming Terrifying New Math
 Bill McKibben
July 19, 2012 9:35 AM ET


Scientists estimate that humans can pour roughly 565 more gigatons of carbon dioxide into the atmosphere by midcentury and still have some reasonable hope of staying below two degrees. ("Reasonable," in this case, means four chances in five, or somewhat worse odds than playing Russian roulette with a six-shooter.)


We have five times as much oil and coal and gas on the books as climate scientists think is safe to burn. We’d have to keep 80 percent of those reserves locked away underground to avoid that fate. Before we knew those numbers, our fate had been likely. Now, barring some massive intervention, it seems certain. Yes, this coal and gas and oil is still technically in the soil. But it’s already economically aboveground – it’s figured into share prices, companies are borrowing money against it, nations are basing their budgets on the presumed returns from their patrimony. It explains why the big fossil-fuel companies have fought so hard to prevent the regulation of carbon dioxide – those reserves are their primary asset, the holding that gives their companies their value. It’s why they’ve worked so hard these past years to figure out how to unlock the oil in Canada’s tar sands, or how to drill miles beneath the sea, or how to frack the Appalachians.

If you told Exxon or Lukoil that, in order to avoid wrecking the climate, they couldn’t pump out their reserves, the value of their companies would plummet. John Fullerton, a former managing director at JP Morgan who now runs the Capital Institute, calculates that at today’s market value, those 2,795 gigatons of carbon emissions are worth about $27 trillion. Which is to say, if you paid attention to the scientists and kept 80 percent of it underground, you’d be writing off $20 trillion in assets. The numbers aren’t exact, of course, but that carbon bubble makes the housing bubble look small by comparison. It won’t necessarily burst – we might well burn all that carbon, in which case investors will do fine. But if we do, the planet will crater.

Monday, July 16, 2012

Peak oil debunked? The mechanisms of denial at work

The publication of the report titled "Oil: the next revolution" by Leonardo Maugeri has gone viral and generated a wave of responses all centered around the theme "peak oil has been debunked". We may be seeing a repeat of the denial campaign that, in the 1990s, consigned "The Limits to Growth" to the dustbin of wrong scientific theories. 

In 1989, Ronald Bailey published an article in "Forbes" where he attacked the 1972 "Limits to Growth" study by saying that:
Limits to Growth” predicted that at 1972 rates of growth the world would run out of gold by 1981, mercury by 1985, tin by 1987, zinc by 1990, petroleum by 1992, copper, lead and natural gas by 1993."
No such statement existed in the "Limits" book, nevertheless Bailey's attack had an incredible success. It went viral and was repeated over and over by people who never worried about checking it. Eventually, it generated the legend of the "mistakes of the Club of Rome", still alive and well today and still at the basis of the widespread negative opinion of the "Limits" study. (this story is described here, as well as in my book "The Limits to Growth Revisited.")

The demolition of the "Limits" study remains today a classic example of the mechanisms of denial in scientific communication, as described, for instance, by Naomi Oreskes and Eric Conway in "Merchants of Doubt." Similar mechanisms have been at work against climate science, studies on the health effects of smoking, pollution studies and more. However, the idea that we are close to the peak of the world's oil production ("Peak Oil") had remained so far relatively immune to this kind of denial.

That may be changing with the publication of Leonardo Maugeri's recent study titled "Oil: the next revolution" which has generated a true tsunami of posts and articles all based on the concept that "Peak Oil has been debunked." We may be seeing a snowballing effect similar to the one caused by Bailey's 1989 article that destroyed the credibility of "The Limits to Growth."

To make my point clear, let me state that Maugeri's work is a serious study. Surely, it can be criticized (e.g. here, here, and here), but it is far better than Bailey's piece of pure slander and other propaganda pieces aimed, for instance, against climate science. But that has little to do with the mechanisms of denial. The problem is that most people - including decision makers - have no time, no inclination, and no expertise to go in depth in issues such as resource depletion. So, when facing a complex and nuanced issue they tend to choose the interpretation that they like best - it is called "confirmation bias." Now, surely good news are better than bad news and for most people an apparently authoritative study that says that we are not running out of oil is preferable to the gloom and doom of most depletion studies.

The problem is that Maugeri's thesis is based on preciously little: mainly on a new assessment of the oil reserves that takes into account the so called "unconventional" resources. Lately, the growth in this sector has been remarkable, true, but all what this "oil revolution" could do so far is to stave off the decline that would have occurred if we were relying only on conventional oil. Still, the fact that we haven't seen a well defined peak in the world's oil production is sufficient to give weight to Maugeri's ideas. Paradoxically, the numerous attempts of criticizing the study may have been counterproductive in giving it a visibility that it hardly deserves.

A couple of decades ago people started referring to the "Limits to Growth" study as "Club of Rome's mistake". Are we going to see Peak Oil described as "ASPO's mistake"? It is too early to tell, but we can't rule out this possibility. Especially if oil prices were to collapse in the near future - as they did in 2008 - most people would take that as a vindication of Maugeri's thesis. Never mind that the price collapse would also cause a decline in production - as Maugeri himself clearly states in his study. Most people perceive the problems with oil only in terms of prices, not of production. If we are going to see this kind of events unfolding, it will take a lot of time and effort to redress the public perception on Peak Oil, just as it is taking a lot of time and effort to fight the perception that the "Limits" study had been "wrong".

On the other hand, Maugeri's work may simply be forgotten when it will be clear that the "oil revolution" he predicts is not materializing. Communication is a field where prediction is always very difficult, even more than with oil production. The only thing we can say for sure is that we are sensible to the viral diffusion of legends. It is the way our mind works; it has not evolved for long range planning.

Sunday, July 8, 2012

Are humans too insignificant to affect climate?

Are humans really so tiny and insignificant that their activity makes no difference on climate? Some people say so but, if you are of this opinion, you might change your mind once you read how much human activities affect the Earth's crust. For instance, the amount of rock and soil we move every year would fill the whole Grand Canyon in about 50 years.

An excerpt from Ugo Bardi's "Depleting the Earth," a book being prepared in collaboration with the Club of Rome.  

The amounts of minerals extracted nowadays is immense and it becomes even larger if consider as “mining” the use of fertile soil in agriculture which is consumed by the process called erosion. It is estimated that about 4 billion tons of agricultural soil are eroded in the United States alone and dumped into the oceans every year (1). In the whole world, the total amount has been estimated as 75 billion tons per year by Pimentel et al. (2) and as 120 billion tons per year by Hooke (3). These amounts dwarf those created by natural erosion, at least one order of magnitude smaller. 

To this amount related to agriculture we must add the amount of rock and sand moved by the construction industry. From the USGS data, we find that the worldwide production of sand and gravel may exceed 15 billion tons per year. The total world production of concrete in 2008 has been of 2,8 billion tons. China, alone, produces more than a billion tons per year, that is about 450 kg per person on the average. 

According to Bruce Wilkinson (4) we can visualize the total amount of rock and soil yearly moved by humans considering that these amounts are “ca. 18,000 times that of the 1883 Krakatoa eruption in Indonesia, ca. 500 times the volume of the Bishop Tuff in California and about 2 times the volume of Mount Fuji in Japan. At these rates, this amount of material would fill the Grand Canyon of Arizona in ca. 50 years.

1 Azimut, 29 Jun 2011, John Baez http://johncarlosbaez.wordpress.com/2011/06/27/this-weeks-finds-week-315/ (Accessed 12 Aug 2011)
2 David Pimentel; C. Harvey; P. Resosudarmo; K. Sinclair; D. Kurz; M. McNair; S. Crist;. L. Shpritz; L. Fitton; R. Saffouri; R. Blair. 1995, Science, New Series, Vol. 267, p. 1117-1123
3 Hooke, R.L.B., 2000, On the history of humans as geomorphic agents, Geology, v. 28 p 843-846
4 Wilkinson, Bruce, 2005, “Humans as geologic agents: a deep-time perspective”, Geolog, 22 pp 161-164

Wednesday, July 4, 2012

Enough fossil fuels to fry us all

George Monbiot said in a recent article that "We were wrong about peak oil. There is enough to fry us all". He is wrong on peak oil, but right with his general conclusion. There are enough fossil fuels to fry us all.

Will peak oil save us from global warming? Can it be that the decline of oil production caused by scarcity will be more effective than the (feeble) attempts made by governments to reduce greenhouse gas emissions?

This point was debated briefly this year the conference of the Association for the Study of Peak Oil (ASPO) in Vienna. It is a typical controversy of ASPO conferences: some people seem to be so oil centered that they think that the climate models of the International Panel on Climate Change (IPCC) are all wrong because they don't take into account the ASPO data. The latest manifestation of this peculiar delusion comes from George Monbiot who decided that peak oil is not coming so soon, after all, and so concluded that "We were wrong about peak oil, there is enough to fry us all."

Now, we can say that Monbiot is wrong: first of all because he gives too much credit to an optimistic recent study on oil production (and even misinterpreting it - if you read it carefully, the data of the study are not so optimistic. See here and here for a critical assessment)

But the real mistake made by Monbiot is to over-emphasize the importance of peak oil for climate change. So far, the vagaries of oil production haven't affected so much the trend of the emissions of greenhouse gases. Today, even though crude oil production has been flat for several years, carbon dioxide emissions keep increasing.

That's what you'd expect: oil is just one of the sources of extra CO2 in the atmosphere and the increasing costs of extraction are pushing the industry to use dirtier fuels. In other words, we are seeing a trend towards using fuels which release more CO2 for the same amount of energy generated. In this sense, tar sands, heavy oil, oil shales, and the like are all dirtier than oil. Coal is even worse and it is also the fastest growing energy source in the world. To say nothing of the emissions of methane by fracking, (methane is a much more powerful greenhouse gas than carbon dioxide).

So, why should we expect peak oil to make a difference? Paradoxically, if peak oil were to come tomorrow, we might see CO2 emissions increase even more as that would cause an even more massive use of coal, tar sands, and other dirty sources. It is true that, eventually, the declining energy yield (EROEI) of fossil fuels will cause a general decline of greenhouse gas emissions; but we shouldn't expect that to be very soon and it won't be the immediate consequence of peak oil.

If we continue with the present trends of fossil fuel production, we risk to make climate change irreversible if we pass the "tipping point", the point of non return, which we may well have passed already. If peak oil had to have an effect on climate (maybe), it should have come at least 20 years ago when CO2 concentrations were still around 350 ppm, said to be the upper limit to avoid irreversible climate change. Now, at 400 ppm and growing, peak oil is not enough to stop global warming.

So, in the end George Monbiot is wrong on peak oil, but right on his general conclusion. We only have to modify it a little, as "Peak oil or no peak oil, there are enough fossil fuels to fry us all".