Welcome to the age of diminishing returns

Saturday, August 31, 2013

Norilsk by chance: did someone say "anthropocene"?



I don't know if you have the same hobby; but sometimes I go looking places at random using "Google Maps". At times, it is remarkable what you can find. For instance, here is a picture of the town of Norilsk, in Northern Siberia, that I had no idea existed; I just landed there by chance. Look at the smoke: what the hell are they doing there? (they also seem to have a nuclear plant, look at the upper right of the figure).

Searching in Wikipedia, I discovered a number of interesting things: Norilsk is a metal mining town in the Northern area of the Krasnoyarsk region. Probably, the smoke is the result of smelting something. Apparently, pollution generating by smelting is a disaster, there. Wikipedia says that acidic pollution is so bad that there is not a single tree left standing for 50 km around town: I can barely imagine what this kind of pollution does to people's lungs. I also learned that Norilsk is the only major city completely built on permafrost. Well, they are going to have big problems because of that!
 
And, a few km South of Norilsk, look at this!


 
It is a gigantic open pit mine that most likely feeds the smelters in town. The buildings look abandoned, but the mine looks still active: look at the excavators, down in the pit.


So, did someone say Anthropocene? Yeah......

Thursday, August 29, 2013

Peak Oil: a fertile concept



This article is a reflection originated by the recent demise of the "Oil Drum" website. Some people have taken this event as a demonstration that the concept of peak oil is dead and buried. But the situation is much more complex: peak oil is a fertile concept; it provides a complete worldview that sheds plenty of light on everything that's happening in the world. Those who don't understand the bell curve are condemned to follow it.



We live in a world where scientific evidence is trashed by ideological opinion, where people who learn from experience are accused of being flip-floppers, where changing one's mind on the basis of new data is seen as admitting one's lack of moral fiber. The debate on peak oil is no exception and the recent demise of "The Oil Drum" site has been often seen as an admission that the whole idea of peak oil was wrong from the beginning.

But what is happening exactly with peak oil and why so much fuss about it? The problem may be  simply that the idea had too much success. Let's go back to 1998, when Colin Campbell and Jean Laherrere raised up again a problem that had been first noticed by Marion King Hubbert, in 1956. Oil depletion, Campbell and Laherrere surmised, will be gradual: production will go through a symmetric “bell shaped” curve that will show a peak when, approximately, half of the available resources will have been used up. According to this study, the peak, that Campbell later dubbed “peak oil,” would have occurred around 2005.

The pioneering work by Cambell and Laherrere gave rise to a whole scientific field that used similar methods to study oil depletion. Most of these these studies arrived to the conclusion that troubles with oil would start within the first decade of the 21st century, or perhaps a little later. It was a view of the future in stark contrast with the generally optimistic attitude of the oil industry up to recent times. Just as an example, in 1999 "The Economist" published an article titled "Drowning in Oil" predicting oil at under 10 dollars per barrel.

But the predictions based on the peak oil concept turned out to be spectacularly successful, at least within the unavoidable uncertainties involved. Oil production stopped its growth in 2004 and oil prices spiked up to almost 150 dollars per barrel in 2008; about a factor of 5 higher than the price that was considered normal in the early years of the decade (and more than 15 times higher than the 1999 predictions of “The Economist”). Today, oil prices remain high; in the range of 100 dollars per barrel. We aren't seeing a production decline, but certainly we are seeing evidence of serious problems for the oil industry to maintain production at constant levels. As things stand, it seems impossible that we could return to the stable growth trends and the relatively low prices that were the rule until about 10 years ago.

So, “peakers” won their bet with cornucopians. The predicted troubles have materialized and peakers were also able to approximately identify the timing of the crisis. But, not everything is well in the world of peak oil. The elegant and symmetric “bell shaped” curve at the basis of most peak oil models did not appear for the global production data. What we are seeing, instead, is a plateau or, at most, a slow increase, in large part generated by the use of the so-called “non-conventional resources”, from biofuels to shale oil. The expected decline is not appearing; at least for the time being. 

What happened? For one thing, models are never universal and the peak oil one is no exception.  The symmetric production curve has been observed in many historical cases where a declining resource was smoothly replaced by a different, and more abundant one, as in the case of the switch from whale oil to crude oil as lamp fuel in 19th century. Hubbert had predicted something similar in 1956 for global oil production assuming that nuclear energy would smoothly replace crude oil as the world's main energy source. In that case, the oil production curve would have been probably symmetric but, obviously, that didn't happen. Substitution of crude oil with different resources was far from being smooth; actually it was strongly resisted in all sectors of society. What happened, instead, was that large amounts of financial resources were invested into the exploitation of everything that could possibly be drilled, fracked, smashed, squeezed, boiled, or otherwise processed in order to get a few drops of precious, combustible liquids, and that is what has avoided decline, up to now.

But this result has come at a high price; higher than anyone could have imagined. One problem is that all this tremendous effort is simply postponing the unavoidable. When decline will start, it may well be much faster than its “natural” rate along the bell shaped curve. This faster decline can be termed the “Seneca effect,” from the name of an ancient Roman philosopher who noted that all things tend to grow slowly, but to decline rapidly.

The Seneca effect is far from being the main problem generated by oil depletion. The real trouble is rapidly emerging in terms of accelerating climate change, with all the costs and dangers involved. We are seeing today the conclusion of a debate that had started with the beginning of the peak oil movement. Is peak oil more important than climate change? And, is peak oil going to save us from catastrophic climate change by forcing us to burn less fuels? Initially, the hope was that, yes, peak oil would have saved us willy-nilly from destroying our own planet. Unfortunately, however, it is starting to appear clear that this hope was misplaced. The impending peak is actually worsening the climate problem because it has led the industry to exploit less efficient, and hence more polluting, resources.

Given this situation, peak oil is starting to appear more and more just as a blip in the path to the climate catastrophe. No wonder that people are losing interest in the concept! Curiously, it seems that peakers were not doomerish enough in their views of the future!

So, is peak oil dead? Well, no. For one thing, peak oil never was just a doomer's game where players tried to guess the exact day for the end of the world. No; it was – and it still is - a fertile concept; a way of seeing the world. It taught us a lot, and it is still teaching us a lot.

Peaking in the exploitation of non renewable (or slowly renewable) resources is a necessary consequence of the way the human economy works in the real world. It occurs with all kinds of mineral resources and with biological ones as well, as in fisheries. It is also the essential feature of the “tragedy of the commons” proposed by Garrett Hardin in 1966. It is an integral part of the dynamic world models that generated the “The Limits to Growth” study that, in 1972, changed the way we see the world.

In the end, it turns out that our planet is not an abandoned coffer out of which we can plunder treasures at will. The mineral resources we found in it should rather be seen as a gift that we should have managed much more carefully. Now, we are facing a difficult situation, squeezed in between resource depletion and catastrophic climate change. But the concept of “peak” can still help us to be prepared for the future. Remember that those who don't understand the bell shaped curve are condemned to follow it.






Image: cover of "The Limits to Growth" - 2004 edition











Wednesday, August 28, 2013

A list of organizations that give some hope for the future



A list of assorted Cassandras prepared by Mike Haywood




"Hope for the future" organizations and groups.

GROUPS WHO THINK CHANGE WILL BE SLOW AND CONTROLLED
Post carbon Institute http://www.postcarbon.org/
Transition movement http://www.transitionnetwork.org/
Zeitgeist movement…. http://www.thezeitgeistmovement.com
Initiatives of change International http://www.iofc.org/
Earth Future http://www.earthfuture.com/
Ethical Markets http://www.ethicalmarkets.com/
Peoples’ Sustainability Treaties http://sustainabilitytreaties.org/
Four Worlds International Institute http://www.fwii.net/

Groups who think the change will be fast and uncontrolled
Chris Martenson’s crash course for building resilience http://www.peakprosperity.com/crashcourse
Videos about building resilience http://www.nextworldtv.com
Survival blog http://www.survivalblog.com/
Homesteading and survivalism store http://homesteadingsurvivalism.myshopify.com/
Apollo-Gaia project http://www.apollo-gaia.org/
Automatic Earth http://theautomaticearth.com/

Groups that believe advanced technology is the answer to all the problems
The Venus Project http://www.thevenusproject.com
Buckminster Fuller institute http://bfi.org/
Smart Planet http://www.smartplanet.com/
New America Foundation http://www.newamerica.net

POPULATION AWARENESS GROUPS (Links provided by Luca Pardi)

Miscellaneous groups
People and Planet http://peopleandplanet.org
United Nations Development Program http://www.undp.org
Collaborative consumption hub http://www.collaborativeconsumption.com/
People’s World http://peoplesworld.org
Sum of us http://sumofus.org
350.org http://www.350.org
CHANGE.ORG http://www.change.org
Globalisation Research http://www.globalresearch.ca
Fellowship for International Community http://www.ic.org/
Fantsuam Foundation http://www.fantsuam.org/
Free World Charter http://www.freeworldcharter.org
Clinton Global Initiative http://www.clintonglobalinitiative.org/
Common Dreams http://www.commondreams.org/
One Earth Org http://www.oneearth.org/
Community• Planet Foundation http://www.communityplanet.org/index.php
David Suzuki Foundation http://www.davidsuzuki.org/
Chopra Foundation http://itakethevow.ning.com/
Intent www.intent.com
Wiser.org www.wiser.org
Todd Landman's Institutue of Democracy and Conflict Resolution http://www.idcr.org.uk/about/director
David Fynch Foundation http://www.davidlynchfoundation.org.uk/

Groups wanting to change the Economic system
New Economics Foundation http://www.neweconomics.org/
Foundation for the economics of sustainability http://www.feasta.org/

Educational
Global Education Conference Network http://www.globaleducationconference.com/

Promoting sustainable business
Tomorrow’s Company http://www.tomorrowscompany.com/
Ellen Macarthur's Foundation http://www.ellenmacarthurfoundation.org/
Association of Sustainability Practitioners http://www.asp-online.org/
Global Association of Chief Sustainability Officers http://www.gacso.org/Discovery

Campaigning

Independent journalism
Blazing Kat Productions http://www.blazingkatproductions.com/


Sunday, August 25, 2013

Who said that peak oil models were wrong?


An impressive graphic (click to enlarge) from a recent presentation by Jean Laherrere. The text is partly in French, but it is easy to understand the main results of the study. In the figure above, we see how well the world's oil production has followed the models over nine years. On this point, Laherrere says "There is little difference between the forecasts of 2004 and those of 2013. The difference is smaller than the precision of the measurements" A remarkable result that vindicates the soundness of the "peak oil" theory. 

The main difference between today and nine years ago is the appearance in the picture of the "non conventional" resources. With these new resources, we may be able to stretch the availability of liquid fuels for some more years, as long as we'll be able to pay their high costs. But we keep following the expected path and the news about the death of peak oil truly seem to be a bit exaggerated.



Saturday, August 24, 2013

Peak oil is dead: long live peak oil!



Perhaps the news of the death of Peak Oil have been a bit exaggerated. Despite the tsunami of hype related to the new dreams of abundance, the concept of peak oil remains entrenched simply because it makes sense.

Some economists have been arguing for decades that depletion was not an urgent problem and sometimes that it wasn't a problem at all. Among them, Julian Simon attained worldwide fame for stating that mineral resources would last "billions of years" (or perhaps forever) on the basis of the price trends of five mineral commodities over a few decades. Subtle arguing that plays on our tendency of preferring good news; however it is not possible to completely dispel this simple nagging idea that when you are using something that can't be replaced, eventually you'll run out of it.

As witness of the penetration of the peak oil concept, you can give a look to the recent book by Vladimir Lopez Arismendi, "The End of the Oil Age" (which, unfortunately, I think exists only in Spanish for the time being). It is a review of everything we know about peak oil, seen in the correct sense, that is as the result of dynamic force that are created from the gradually declining EROEI of the source.

For Lopez-Arismendi, peak oil is something obvious, part of his world view. So much that he explores its consequences for his own country, Venezuela. In his opinion, Venezuelan oil resources could outlive the world peak of at least a few decades and give to the country a chance for investing into sustainable infrastructures and move smoothly into the post-oil world.

You see? Peak-thinking generates similar thoughts. After all, that's what most of us have been thinking: that the peak was not only a problem, but also an opportunity to take humankind into a cleaner and better world. It didn't happen: we couldn't imagine the rabid reaction of society. We couldn't think that humans would decide to sacrifice literally everything they have in order to squeeze out the last drops of combustible liquids out of an exhausted planet.

Can Venezuela do better than that? If history is a guide, I'd say no. But, the future always surprises us. So, who knows?











Monday, August 19, 2013

Argentina: energy boom or energy cliff?



In this post, Pedro Prieto describes how South America, and in particular Argentina, is affected by oil and gas depletion. A subject almost never mentioned in the international press. Also in this case, it is amazing to see the growing gap between perception and reality: on the side of perception, wild enthusiasm and reports about "the death of peak oil", on the side of reality, a situation of shortages and difficulties, as Prieto describes to us in detail for Argentina.



Guest post by Pedro Prieto





Argentina has been a gas exporter until 2007-2008 (Mainly to Chile) and now is an importer (mainly from Bolivia and a regasification plants in Bahía Blanca and recently in Escobar)

Source: Energy Export Data Browser



At the end of the 20th century, Argentina started exporting gas to Chile. Both Argentina and Chile believed that the supply was going to be increasing forever, but it was just a mirage. I visited Chile invited by Compañía de Petróleos de Chile (COPEC) in 2011. I also had the opportunity to meet with top officials of the energy sector and academic experts in energy. They all believed that Argentinean supplies would last for decades. I could not understand why very professional people had such a belief, when data on reserves and possible flows of their neighbor country was probably available to them.

In fact, they embarked in an ambitious plan to develop pipelines across the Andes to supply Chile from the Argentinean network and ordered a number of gas fired power plants, trying to avoid or minimize, for instance, the heavy smog of Santiago, and for other economic reasons. However, and without previous warning, Argentina reduced shipments to less than half. The obvious reason, as seen in the figures above, was the depletion pattern of the Argentinean gas and the need to prioritize their own domestic consumption. This left overnight the Chileans with big, recently erected infrastructures idle and difficult problems to attend their growing internal energy demand, especially in electricity production for the extractive industries that they had expected to satisfy with the gas fired power plants.

They had to move fast to build a regasification plant in Quintero and later another in Mejillones. They did it in a record time, but certainly at a cost they had not imagined. This coincided with the sharp increase of fuel consumption that had started at the end of the past century. They needed to sign urgent contracts with LNG tankers and suppliers (i.e. Qatar), something that created for them what they called the perfect storm. Chile was in 2011 paying one of the most expensive electricity tariffs in the continent, partly due to this important bad planning.

Argentina started to import gas also at the end of last decade. Fortunately for them, they had pipeline connections from Bolivia, an important regional and neighboring gas exporter. There were attempts from the Chilean side to get some Bolivian gas from the Argentinean network, but Bolivians were very clear in this respect: they have a long standing dispute on their outlet to the Pacific Ocean when coastal Bolivian territory was taken by Chileans in 1883 in the so called Pacific war, leaving Bolivia without access to the Pacific. So Bolivians are very sensitive in this respect; they still keep sueing Chile in International Courts and therefore told Argentineans that not a single m3 of Bolivian gas sent to them should end in Chile if they wanted to be supplied.

Argentina is producing today (2012) 102 Mm3/day and consumes 130 Mm3/day, importing 28 Mm3/day (1 Bcf/day). The imports will necessarily grow every year, as conventional gas is clearly in depletion; unless unconventional gas can replace the disappearing volumes of conventional.

Again, the costs of the infrastructure for such long distances, the purchasing power of the citizens and the volumes required will be a challenge. Gas prices in Argentina are heavily subsidized, but any attempt to put them at market levels could lead to internal revolts. These big countries in Latin America have a problem to create infrastructures: although almost half of the Argentinean population is concentrated in Buenos Aires and its Province, many other cities are very distant from the capital city and from the gas deposits. Creating pipelines is very costly and not always (as we have seen before in the case of Chile) rewarding, unless there is a total security that the fuel is going to flow in volume and quality for much more time than that needed to amortize these costly infrastructures. What is valid for natural gas is an anticipated warning of what will happen with the Argentinean oil. This year will probably see the end of the oil exports for Argentina. Then, the problems will multiply exponentially if no alternative resources are found (and fast).




 Source: Energy Export Data Browser


The crisis we are now suffering in some developed countries in Southern Europe pales with respect to what these and many other countries have been suffering for decades. Recently, the Argentinean government has banned wheat exports, to prioritize production for their own population and to avoid rising in the price of bread. For a Spaniard, whose links with this Spanish speaking country are so close, this is something unbelievable. In the forties of last century, Argentina was one of the five most developed countries in the world and a net creditor country to the United States and United Kingdom (by the way, a debt that was never paid back by Great Britain or the USA). Argentina was considered for decades an important world breadbasket. It alleviated quite a lot of hunger, for instance, in Spain, after our Civil War, when in 1937 and 1988 shipped to our then blockaded country almost a million tons of grain to the then starving Spanish people.

The present situation in Argentina cannot be understood just in light of the artificially mounted financial debt or the internal corruption, but also from the interests of powers allied to internal corruption and promoting it to weaken this country and to spoil easier its vast natural and mineral resources, being the last one the fossil fuel ones. The problem comes together with intensive on extensive mechanized farming and cattle, which is heavily dependent of a permanent flow of fossil fuels. Cereal production (mainly wheat and corn) is being replaced by soya and other plants for biofuel production.

What follows is a recent article in an Argentinean newspaper on the situation in the country, that shows the close interrelation of energy supply stability and the functioning of many sectors of a modern society which depend on energy. An anticipated experience on how fast things will degrade, where priorities will have to be allocated, if rationing or restrictions are imposed, how unexpected feedbacks may distort productions, etc., when countries won’t be able to satisfy some energy supply minimums. This, for the time being, appears to be temporarily, but there are growing signs that could expand and become permanent. The cold wave has prompted an almost complete gas shortage in the biggest industries The factories were forced by the Government to slow down their production to secure the supply to the residential sector.

Problems with the Compressed Natural Gas Plants
(GNC in Spanish) 23.07.2013 | 07:18 hs. · Source: La Nación

With the low temperatures a classic situation returned in the Argentinean winter: As the heat stoves increased their consumption, the main factories were forced to reduce the consumption to avoid problems in homes. The residential demand ramped up to about 95 Million cubic meters (3,354 Mcf) yesterday, a historical record figure as per the experts. The government ordered to reduce the gas supply to a minimum in the manufacturing sector; in some cases, it was a complete stop. This situation will last at least until tomorrow. The gas restrictions to industries affected all types of companies: iron, steel and aluminum (Siderar, Siderca, Aluar and Acindar), petrochemical (Profertil, Dow and Mega), automotive (Ford, Volkswagen and General Motors), food, cement and mining companies among others At least 300 industries suffered important restrictions at national level. The shortages did not only affect the factories. Metrogas reported by mail early in the morning to the responsible of the commercial center of Village Caballito, whose contract establishes interruptibility measures, to restrict the consumption to attend the higher domestic demand. In Bariloche, low pressure affected the GNC service. Fernando Sammarco, responsible of the largest gas station in the city, in Beschtedt y Brown, said that he was warned one month ago from the Camuzzi center on the “possibility to have supply problems in winter”.

Yesterday, at 12.30, when the wind chill factor created a temperature of at -14.4ºC (6.8ºF), a company representative went to the three GNC stations in the city with a notification to close down the stations for an “indeterminate period.” There were also cuts in La Pampa due to the cold wave. The Industrial Union of Cordoba (UIC) was quoted as saying that in Cordoba there were restrictions to more than 20 companies The economic impact of the gas shortages is difficult to assess, but it may range in millions of dollars, according to sector experts. As an example of the shortages, there was the stop of the petrochemical complex of Bahia Blanca, one of the main factory areas of the country. Dow, the polyethylene industry, stop operating. Not only gas was lacking, but also ethylene, a byproduct served by Mega, that also suffered a compete shortage.

Other raw material manufacturers, such as Cerri (TGS) and Refinor were also forced to stop consuming. Enargas (the regulatory body in the gas sector) instructed transporters to prioritize the supply to the priority demand. Natural gas consumption authorized for the referenced day was 0 (zero) m3, “due to the (lack of) gas natural injection available and climatic harshness. The email received by an industry from the Camuzzi distributor, attending the Central and Southern part of the country indicated “9,300 kcal” Similar messages were sent by Gas Natural Fenosa and Metrogas to their industrial customers. At least half of “firm customers” (paying more for the supply to avoid shortages) suffered supply shortages. Gasnor, a distributor, ordered a strong consumption reduction, which prompted anger of the sugar processing mills in Tucuman and Jujuy. The shortages ranged from companies suffering total cuts to others that could maintain only the “technical minimum.” The natural gas sector has not been publishing daily statistics for several years. According to some sources from the sector, knowing the system daily operation, the average shortage to the industry was 50 percent. “The factories use to demand 40 million m3 and yesterday they received about 20 million m3”, said an executive, on the condition of anonymity. The government also paid part of the energy costs. At 17.00 hours, the consumption reached a 19,998 MW peak a huge figure. The generating companies, which are covering the demand, had to replace gas they use and prefer to produce electricity by liquid fuels. The reason is that only 18 million m3 of gas were available, only 60% percent of the volume they use to produce electricity. The rest was covered with the more expensive liquid fuels, paid by the State.


Now we can understand how desperation can make virtue out of necessity and the interest to develop any unconventional possibility. The Vaca Muerta shale deposit in the Neuquen Basin in Patagonia, some 1,200 km from Buenos Aires and about 500 km. from the nearest port in the Atlantic, is the last hope. Repsol-YPF started exploring this area in 2010 and it had drilled and completed about 30 wells producing some 5,000 barrels/day. In may 2012 YPF was expropriated (nationalized) again by the Argentinean government.

It is not clear if the official announcement of the discovery made by Repsol, of this huge deposits (November 2011) shortly before the expropriation/nationalization of YPF, was an aseptic notification of a reservoir or if it was more due to the need to raise their then decayed stocks. These days, the hype of the shale gas and oil in the United States had a growing number of believers and potential investors. The values for the reserves in these deposits declared by Repsol/YPF and then by the media vary in a wide range. It is probably due to the big and frequently interested confusion between reserves and resources and also to the declared types of shale (or marl), the depths and the carbon content. The “technically recoverable” gas and oil is another name of the game. They are being hyped as the third largest deposits of shale oil in the world.

Originally evaluated as close to 1 billion barrels of proven reserves, have been since then increased to 12 Bb in prospective oil resources  and 21 Bboe of gas. In any case, on the first press releases of Repsol-YPF on the big potential of Vaca Muerta, the Argentinean government “bought” the argument of gigantic reserves and proceeded to the expropriation/renationalization of YPF, more likely also for political or financial reasons and trying to gain popularity, than for a reasonable replacement plant in time of their dwindling conventional reserves.

More than one year after the expropriation/renationalization, the Argentinean government is still struggling with the claims of Repsol in the national and international courts and also for lack of adequate financing. It may appear that one year is nothing (in fact it isn’t!) for developing oil or gas fields, but for Argentina it may represent the year in which the changed from exporting to importing oil, which may bring political, economic and social upheavals as it is happening right now in Egypt.

Another problem for shale deposits is that the demand for financing grows at a much higher pace than the oil or gas flow from shales. Repsol-YPF did the announcement and, immediately afterward, they evaluated their investment needs to develop Vaca Muerta in about 25 Billion dollars per year in the first 10 years. Negotiations were held with Chinese investors, but apparently without results. It may have happened that Chinese did not buy the miracle of shales and perhaps their required collaterals were more in line with the need to secure huge productions of soya in huge single crop farming in the fertile lands they are lacking in China, than to accept being paid back with a portion of the oil and gas extracted.

Today, the development of Vaca Muerta is still stagnant. Many big energy corporations appear and disappear to negotiate with YPF and the desperate Argentinean government behind it. It is easy to sense that many will be offering sophisticated horizontal drilling equipment, sophisticated compressors and pumping systems, autonomous generator equipment, consulting services, know-how or sophisticated (and poisonous) chemical cocktails under copyright. Of course, like in most of the shale businesses these actors do not wait for oil and gas to exctracted and sold to have their money back.

Repsol is still looking to defend its expropriated interests there and threatens not only the Argentinean government, but also to any other corporation daring to enter in business with its expropriated, now national company YPF. Of course, the size and lobbying capacity of Repsol in front of international courts or instances (i.e. IMF), is of no big concern for much bigger energy corporations. Additionally, Vaca Muerta has no infrastructure whatsoever. Pipes for water, pipes for gas and oil will have to be built from scratch and cover long distances in many cases and have pump stations in the way. Refineries and processing units will be needed. Even the roads in the area, if existing (very, very few) are made of “ripio” (compressed gravel) and will be destroyed quickly by the huge amounts of heavy trucks following the mobile circus that the exploitation of shale plays represents, moving ahead, well after well each few months.

In May 2013, YPF and Chevron announced an agreement to start exploiting Vaca Muerta. The latter has been sued in Washington by Repsol. In any case, we are already in 2013, the key year for Argentina to change from exporter to importer of oil and what they have signed is to invest 1.2 billion dollars that could eventually increase to 12 billion $ by 2015. Other licenses are given in the area to companies like Pluspetrol, PAE, Exxon, Apache and Shell, but the total rig count in the area is of only a few tens. The oil production in the region, three years after having started exploitation is of few thousand barrels a day.

For a country that consumed 612 kb/d and produced 664 kb/d in 2012, but that was producing 900 kb/d of basically conventional oil in 2003 (thus decaying at a 3%/year), they desperately need a miracle. The foreign investors, if any, will first look how to recover their investment and then they may attend the internal demand of oil and gas. Given the financial structure of the main investors in the “successful” shale plays in the very developed US, it may take many, many years to see the second covered. It must be very interesting to analyze the fine print of the contracts for the collaterals demanded to Argentina by the foreign investor. Probably nothing new: more debt against not only future oil and gas, but also other valuable natural assets, like agriculture, minerals or fisheries. Business as usual.

Sunday, August 11, 2013

Friday, August 9, 2013

Dead cat bouncing

On the concept of "dead cat bouncing", see also the Doomstead Diner



Result of a "google trends" search of the terms "Rossi" and "e-cat"


I said in a previous post that I have lost all interest in the "E-Cat", purported desktop nuclear device invented by Mr. Andrea Rossi. Although initially I had found it intriguing, and even fun (also here), it had become a never ending story, eventually boring.

However, if the e-cat is not interesting as an energy producing device, it is still an interesting case-study of information diffusion over the web. In the figure above, you see the results given by a "google trends" search that measures the number of times that a certain term is typed in the Google search engine. Looking for "e-cat", together with "Rossi" the result is that many people agree with me: the e-cat story was interesting at the beginning, now not so much any more.

Note, indeed, how the recent attempts by Andrea Rossi and his followers to revive interest in the device have had little success. The most recent interest peak is related to the so called "hot cat" that was supposed to be an improved version of the old ones. It did produce a little "bump" in the curve, but nothing more. The cat still bounces a little, but it is basically dead.

Of course, the fact that people are losing interest in the e-cat device doesn't necessarily mean that the device doesn't work. However, if we compare with a device that really works, we see the difference. See, for instance, a comparison of the search volume for the e-cat and the ipad (the ipad is the red line)


As you see, the difference is gigantic. The ipad works and can be bought, so lots of people are looking for the term. Instead, there is no evidence that the e-cat works and surely it cannot be bought anywhere. Hence, it is is popular only with a tiny group of believers and, it appears, with a just as tiny group of unbelievers who still find the story interesting.

But who is interested in the e-cat? Google trends is a fascinating site because it also provides you with geographical information.


By far, the E-Cat is an Italian phenomenon, although, for some reason, it has followers also in the Czech Republic. Sweden comes third, mainly because some faculty members of the University of Uppsala had the misfortune of getting involved in this story. But the E-Cat is not just nationally localized. It is also city localized and Google Trends can tell you that the highest search volume in the world is in Bologna, where another university had the misfortune of getting involved with this story.

Italy seems to be especially interested in dubious nuclear devices. Let's give a look to another term, "Keshe", the name of an Iranian gentleman who claims to have developed remarkable technologies able to provide solutions for climate change, many kinds of diseases, space travel and mass transport employing Magnetic and Gravitational interacting fields.

Let's see first the geographical distribution of the interest for the keyword "keshe":




The result is that Mr. Keshe is way more popular in Bulgaria than in his country of origin, Iran. But, again, Italy shows a remarkably high interest in pseudo-scientific miracle devices, coming second.

Finally, let's compare the two terms: "keshe" and "e-cat" (e-cat is red, keshe is blue)


It seems that, for a brief moment, the Keshe device was more popular than the e-cat. But the public seems to be rapidly losing interest in both. The interest, however, is not going to zero or, at least, not so rapidly. Apparently, there exists a "pool" of people who are especially interested in these matters and they are mainly located in Italy, possibly as a legacy of Mr. Rossi's work (and also, for truly unfathomable reasons, in Bulgaria and in the Czech Republic).

Let me repeat that the result of this search provides no direct indication of whether these devices are doing anything like what they are said to be doing by their inventors. It is, however, an interesting example of how information diffuses over the web and how the public tends to lose interest in claims that are not later substantiated by proof or that lead to something worth of more interest.




Thursday, August 1, 2013

Peak shale oil? What peak?


A graphic contributed by Jean Laherrere indicating that shale oil production in North Dakota may soon peak and start declining.


This figure, made by Jean Laherrere, deals with oil production from the "Bakken Shale," a geological formation existing in large part in North Dakota. Shales may contain oil deposits, in most cases in the form of "tight oil." This is oil is trapped in a porous matrix which cannot flow to the surface without the help of sophisticated fracking technologies (you can find a nice illustration of the process here). The recent revival of oil production in the United States, which gave rise to so much optimism on the future of oil production, is almost solely related to use of these technologies for the exploitation of the Bakken Shale. 

The problem is, of course, for how long it will be possible to maintain the rapidly growing production trend from the Bakken deposits. In the figure, Laherrere shows the oil production in North Dakota (ND prod) in thousands of barrels per day (kb/d) as well as the number of exploration rigs (nb rigs). Laherrere has also shifted the rigs curve forward of about one year, in order to match the production curve.

Now, it is clear that you cannot produce anything that you haven't previously found. So, it is well known that production in a certain area mirrors exploration, but it is shifted forward in time. With conventional oil, the time lag between discoveries and production is of the order of 30-40 years. With oil from shales, it seems to be much faster: wells are rapidly put into production but also have a short lifetime.

In the figure, Laherrere finds a time lag of just around one year. And, since we see a drop in the number of exploration rigs in 2012, it seems likely that production will start declining soon, perhaps during the present year.

This is a conclusion that has to be taken with caution since the drop in the number of exploration rigs could be just a temporary phenomenon. But it is also true that the exploitation of shale oil is expensive in terms of resources and energy required. In the end, as always, it is a question of EROEI: we can only have the oil we can afford to extract.


On this subject, see also a post by Stuart Staniford on the Bakken Shale production that arrives to conclusions similar to those of Laherrere. See also a post of mine which examines shale gas production using the same method. See also an extensive article by Jean Laherrere on the recent trends of oil production.

Also, I am adding a second graph, kindly provided by Jean Laherrere, that examines production in Montana using the same method. It shows that it makes sense to shift the number of rigs of one year forward to match the production curve.





Who

Ugo Bardi is a member of the Club of Rome and the author of "Extracted: how the quest for mineral resources is plundering the Planet" (Chelsea Green 2014)