Wake-Up Call for the World’s Biggest Oil Junkie
Posted: Mon May 31, 2010 2:13 pm
America Still Doesn’t Get It
By Chris Nelder, GetRealList
May 4, 2010
OK, America, it’s time to get real about energy.
The explosion and destruction of the Horizon deepwater rig and the subsequent oil spill disaster are only the latest in a series of wake-up calls you’ve received. Are you listening now?
Your first warning came in 1956, with the publication of M. King Hubbert’s model of US oil production, which correctly predicted its peak in 1970. When Hubbert updated his model on camera in 1976, he also nailed the peak of worldwide conventional oil production in 2005.
Since then, production has remained flat at roughly 74 million barrels per day (mbpd), despite prices gyrating wildly from $40 to $147 to $33 and back to $86 today. High prices did not deliver more oil to market.
Very simply, the cheap and easy oil is gone. What’s left is smaller, harder to find, of lesser quality, and in much more challenging places–under a mile of water and another five miles of rock, for example. It’s expensive, risky, and yes, dangerous.
American domestic oil production peaked in October, 1970 at just over 10 mbpd. It has been in a steadily declining trend ever since, and now stands at 5.5 mpbd.
Over 30 percent of domestic production is from offshore drilling, of which about three-quarters comes from the Gulf of Mexico. Deepwater oil production has only become possible in recent years with the development of cutting-edge technology. We do it not because it’s without risk, but because we need the oil–badly. Only offshore is it still possible to find a field in North America that can deliver over 100,000 bpd. Just two of the Gulf fields, Thunder Horse and Atlantis, produce a combined 350,000 bpd.
By comparison, the remaining onshore resources in North America are now decidedly marginal. The days of gusher strikes onshore in the U.S. are long gone. About 1.2 mbpd, or over 20 percent of domestic production, comes from thousands of small “stripper wells” producing under 15 (yes, 15) barrels per day. Low-quality resources like tar sands and shale oil are vast but expensive, and so difficult to scale that they can’t reverse the long-term decline.
The U.S now imports 9.4 mbpd of crude. At $85 a barrel, that’s an $800 million-a-day hole in our pocket, or $292 billion a year. And our import dependency is only getting worse.
An oil export crisis has been developing for years, as oil producers consume more of their own output and Asia outbids the West for declining global exports.
Even so, as the world’s most dependent oil junkie, our demand for oil has held firm. The decline in U.S. oil demand from 21 mpbd in 2007 to 18.6 mbpd today was almost entirely due to lost industrial demand; gasoline demand remained virtually flat throughout the entire oil price spike and recession.
For every finger pointed at an oil company, three point back at us.
Read the rest here
One more excellent excerpt:
"One more tool in the deepwater toolbox, be it an acoustic shutoff device or something not even invented yet, will not solve our problems. Scapegoating drillers while we continue to pump gasoline into our tanks is unproductive and hypocritical. Hyping the size of marginal resources like shale without acknowledging their low flow rates is disingenuous. And championing alternatives that can’t even meet half a percent of our needs, like non-food biofuels, while trying to shut down the 10 percent of our supply that deepwater production provides, betrays a suicidal ignorance of our reality."
By Chris Nelder, GetRealList
May 4, 2010
OK, America, it’s time to get real about energy.
The explosion and destruction of the Horizon deepwater rig and the subsequent oil spill disaster are only the latest in a series of wake-up calls you’ve received. Are you listening now?
Your first warning came in 1956, with the publication of M. King Hubbert’s model of US oil production, which correctly predicted its peak in 1970. When Hubbert updated his model on camera in 1976, he also nailed the peak of worldwide conventional oil production in 2005.
Since then, production has remained flat at roughly 74 million barrels per day (mbpd), despite prices gyrating wildly from $40 to $147 to $33 and back to $86 today. High prices did not deliver more oil to market.
Very simply, the cheap and easy oil is gone. What’s left is smaller, harder to find, of lesser quality, and in much more challenging places–under a mile of water and another five miles of rock, for example. It’s expensive, risky, and yes, dangerous.
American domestic oil production peaked in October, 1970 at just over 10 mbpd. It has been in a steadily declining trend ever since, and now stands at 5.5 mpbd.
Over 30 percent of domestic production is from offshore drilling, of which about three-quarters comes from the Gulf of Mexico. Deepwater oil production has only become possible in recent years with the development of cutting-edge technology. We do it not because it’s without risk, but because we need the oil–badly. Only offshore is it still possible to find a field in North America that can deliver over 100,000 bpd. Just two of the Gulf fields, Thunder Horse and Atlantis, produce a combined 350,000 bpd.
By comparison, the remaining onshore resources in North America are now decidedly marginal. The days of gusher strikes onshore in the U.S. are long gone. About 1.2 mbpd, or over 20 percent of domestic production, comes from thousands of small “stripper wells” producing under 15 (yes, 15) barrels per day. Low-quality resources like tar sands and shale oil are vast but expensive, and so difficult to scale that they can’t reverse the long-term decline.
The U.S now imports 9.4 mbpd of crude. At $85 a barrel, that’s an $800 million-a-day hole in our pocket, or $292 billion a year. And our import dependency is only getting worse.
An oil export crisis has been developing for years, as oil producers consume more of their own output and Asia outbids the West for declining global exports.
Even so, as the world’s most dependent oil junkie, our demand for oil has held firm. The decline in U.S. oil demand from 21 mpbd in 2007 to 18.6 mbpd today was almost entirely due to lost industrial demand; gasoline demand remained virtually flat throughout the entire oil price spike and recession.
For every finger pointed at an oil company, three point back at us.
Read the rest here
One more excellent excerpt:
"One more tool in the deepwater toolbox, be it an acoustic shutoff device or something not even invented yet, will not solve our problems. Scapegoating drillers while we continue to pump gasoline into our tanks is unproductive and hypocritical. Hyping the size of marginal resources like shale without acknowledging their low flow rates is disingenuous. And championing alternatives that can’t even meet half a percent of our needs, like non-food biofuels, while trying to shut down the 10 percent of our supply that deepwater production provides, betrays a suicidal ignorance of our reality."