The Oil Drum

In this analysis, Samuel Foucher (“Khebab”) and I (Tony Eriksen or “ace”) present an update of Wikipedia Megaprojects data. We also provide forecasts of future oil production, reflecting the Megaprojects data. The IEA uses megaprojects in its analysis and we reconcile our Megaprojects information to the data they provide in their report.

A wide variety of methods can be used to forecast future oil production. Each will provide different indications. Sam and I each make projections with megaprojects data, using somewhat different methods. Sam’s projections are shown in Figure 6. My forecasts are shown in Figures 8, 9, and 10. Despite our differing methods, the indications we produce are all substantially lower than the indications of the IEA.

Until quality data about production history, reserves and future development plans including capacities are obtained for fields in secretive OPEC countries, forecasts beyond 2012 are highly uncertain, regardless of the source. While quality data remain unavailable, the world's future energy security, in particular liquid fuels supply security, remains an extremely high risk.

This chart shows the IEA WEO 2008 forecast together with Sam's forecast derived from using Megaprojects sanctioned capacities and yet to be sanctioned capacities (including yet to find oil - YTF). By 2020, the IEA's forecast is significantly greater than Sam's forecast.

I recently looked through news articles to see which energy sectors were being affected by the credit crisis. I was amazed at how widespread and how devastating the impact is.

There are really two closely related problems. One is reduced access to credit, making new borrowing difficult for nearly every business that requires debt. Prices for all commodities have been dropping as well. At least part of the reason for this price decline is the lack of availability of credit—many of the less credit-worth buyers drop out of the market. This leaves fewer buyers and almost the same number of sellers, so the price drops.

Hard times here to stay: With peak oil past, our civilisation could be in for a long, slow decline - and that we should plan for a permanent recession

French President Nicolas Sarkozy calls for a new Bretton Woods, and rightly so, for without doubt one is needed.

In the same breath though, he calls for renewed growth, and in doing so epitomises the endemic dissonance which may be the downfall of our current civilisation.

If he had bothered to work out why the current system failed (extended leverage is a symptom, not a cause) he would not be making the second call.

Make no bones about it, every past civilisation has decayed into the dry leaves of history - why should this one be different?

Oil majors eye $5-billion ships to cut costs

London — Oil and gas companies are racing to develop a new type of vessel they hope will revolutionize offshore gas production but even if the untested technology works, its deployment could be blocked by resource holders who fear it will undermine development goals.

The industry hopes to build a fleet of ships or barges that can sail or be towed to offshore gas discoveries, extract gas, freeze it to liquefied natural gas (LNG) and offload the LNG to tankers for shipping to lucrative Western and Asian markets.

The ABC recently had a report on plans to power north-west Queensland with low temperature geothermal power using hot water from the Great Artesian Basin.

A Brisbane-based company says it could supply geothermal power to all of north-west Queensland. Clean Energy Australasia wants to build a $50 million geothermal power station near Longreach. But it has now also revealed plans to build a pilot geothermal project near BHP's Cannington mine at McKinlay, south of Cloncurry. The company's Joe Reichman says the Mount Isa region needs about 500 megawatts of power a year and geothermal resources could easily provide that. "It'll change the region into a powerhouse," he said. Mr Reichman says the company has applied for federal and state government grants and has support from the major mining companies in the region. If the projects proceed they would be the first geothermal power plants in Australia.

Low temperature geothermal power is a relatively new (and very low profile) form of extracting energy from geothermal sources that provides yet another option for meeting our energy needs cleanly and sustainably.

OPEC freezes crude output quota

CAIRO (AFP) – OPEC decided on Saturday to leave its oil output quota unchanged and vowed to take any action necessary to balance the market next month, the cartel's president said after a consultative meet in Cairo.

"Ministers agreed to take any additional action on December 17th (in Oran, Algeria) to balance oil supply and demand and achieve market stability," said Chakib Khelil, who is also Algeria's energy minister.

The widely expected decision comes as oil prices are trading at lows not seen in nearly four years, sparking alarm among the cartel's members about plunging revenues.

Well they say that “the Times they are a changin’ ” and with the impending change in the Administration and its approach to energy , and the change in the leadership of the Energy and Commerce Committee in the House, I suspect that change is what we are going to get. One indicator of a possible path forward comes from the U. S. Chamber of Commerce, where General James Jones, anticipated to be the next National Security Advisor, has been heading a panel that has just issued A Transition Plan for Securing America’s Energy Future. So I thought we might take a quick look at what it says. To quote the preamble

Global demand (for energy) will increase by more than 50% between now and 2030 – and perhaps by as much as 30% here in the United States. We must develop new, affordable, diverse, and clean sources of energy that will underpin our nation’s economy and keep us strong both at home and abroad. Our energy future must address growing shortfalls in infrastructure capacity and emerging environmental issues. . . . .And looking ahead, even the most optimistic among us must conclude that we are not well positioned to anticipate nor prepared to meet tomorrow’s energy needs.

David Strahan: Whatever happened to the hydrogen economy?

WHATEVER happened to the hydrogen economy? At the turn of the century it was the next big thing, promising a future of infinite clean energy and deliverance from climate change. Generate enough hydrogen, so the claim went, and we could use it to transform the entire energy infrastructure - it could supply power for cars, planes and boats, buildings and even portable gadgets, all without the need for dirty fossil fuels. Enthusiasts confidently predicted the breakthrough was just five to 10 years away. But today, despite ever-worsening news on global warming and with peak oil looming, the hydrogen economy seems as distant as ever.

Even in Iceland, whose grand ambitions for a renewable hydrogen economy once earned it the title Bahrain of the north, visible progress has been modest. After years of research, the country now boasts one hydrogen filling station, a handful of hydrogen cars, and one whale-watching boat with a fuel cell for auxiliary power. A trial of three hydrogen-powered buses ended in 2007, when two were scrapped and the third was consigned to a transport museum. More trials are planned, but that was before the meltdown of the country's banking system. In California, where governor Arnold Schwarzenegger promised a "hydrogen highway" with 200 hydrogen filling stations by 2010, there are just five open to the public. Ten hydrogen-fuelled buses are due to come into service in London by 2010, but a plan for 60 smaller hydrogen vehicles was recently scrapped.

I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil - Alan Greenspan (2007)

The Guardian had an interesting article recently on discussions about exploiting 40 billion barrels of Iraqi oil reserves.

The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London. BP, Shell and ExxonMobil are all expected to attend a meeting at the Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.

Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces. Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.

The subject of Iraqi oil is one which has fascinated me for a number of years, so in this post I'll outline why I believe that Iraq probably has the world's largest oil reserves - or, as Daniel Yergin once said of the middle east, it is "the greatest single prize in all history" (echoing a similar statement by George Kennan at the end of world war 2).

OPEC to Consider Another Round of Cuts: Meeting Saturday, Cartel Will Again Try to Stem Oil-Price Fall

Having failed twice in two months to calm plunging oil markets, OPEC ministers are set to weigh another round of steep production cuts as the world's economic travails continue to drive crude prices to levels not seen in years.

The Organization of Petroleum Exporting Countries has scrambled since September to stem the fall in oil prices, which is now putting pressure on OPEC budgets from Ecuador to Kuwait. Ineffective in blunting the price spike earlier this year, the cartel is proving similarly hapless in putting a floor under collapsing prices.