140. HENRY GROPPE DOESN'T BUY SIMMONS' SAUDI COLLAPSE THEORY
Henry Groppe is a highly regarded oil forecaster who is famous for making a number contrarian predictions about oil and gas markets which later proved true. Groppe is also in the camp which disagrees with Matt Simmons' overheated collapse rhetoric. From the Resource Investor:
Groppe finds himself sort of in the middle in terms of the prevailing views on the future, both optimistic and pessimistic. He stated that, "Matt Simmon's view is that we're just on the verge of seeing very significant depletion decline rates and total world oil production will then decline precipitously and were approaching the end of the world economy as we've known it. Major oil companies take the view that it will be relatively easy to continually expand oil production, specifically, they all agree that world oil production can be expanded 50% in the next 25 years and we disagree very strongly with both of those viewpoints. We think there will be a flattening of total oil supply and the high prices needed to constrain consumption to match that available supply."Source
-- by JD (Thanks to popmonkey for the link.)
posted by JD @ 7:21 PM
14 comments
14 Comments:
"This or next year might very well be the all time peak year in world liquid petroleum production."
Groppe is predicting PO right now!! If he is correct that $50-$60 is a ceiling for oil prices and that these prices will hold production levels constant, then if oil wouldn't have peaked until APSO's predicted 2010 we'll have 80 mbpd at $60/bbl for a long long time. How's that for a best case PO scenario? PO would then mean "plateau oil."
The article doesn't come out and say it outright. But if you read between the lines, the 50% rise in oil supplies will have to come from tar sands.
Unfortunately tar sands can't be extracted in any way that makes economic sense without natural gas.
Counting tar sand as oil reserves makes as much sense as counting the asphalt in our roads.
I keep hearing this natural gas/tar sands thing over and over. Natural gas at Athabasca is used to produce electricity. The electricity is used to produce steam. Any source of electricity would work. Right now they use natural gas. A nuclear power plant would be ideal, but if worse comes to worse, they can use the bitumen itself to produce steam. Even using this method, the tar sands will be profitable. You can argue that the tar sands won't make up the difference, but production in Athabasca will rise to 4 or 5 mbpd over the next decade and continue at that rate for the forseeable future. The tar sands are profitable with or without natural gas.
If you were to use the bitumen itself to cover all your energy needs (mining, transport, steam, pumping). Then the eroei would have to be bigger than one.
Jeez! I knew someone would respond with this old saw. That's not true. Just as there are coal mines that run solely from electricity from the on site coal, the tar sands could run nicely on the bitumen. The tar sands have a pretty darn good energy balance, which has become more and more favorable over time. I would favor a nuclear reactor just because the bitumen can meet the needs of the transportation sector and nukes can't, but the eroei will still work in the tar sand's favor regardless of how they produce electricity. I think the doomer sites attack the tar sands with such vehemence precicely because they are increasingly successful, and are virtually inexhaustable. You can argue that Athabasca is an environmental disaster, but you can't argue that the tar sands aren't going to be profitable for a long time to come.
"you can't argue that the tar sands aren't going to be profitable"
We can't know that until they try and produce it without using natural gas.
To waste naturas gas like this is completely idiotic. Its like you had a pound of gold and traded it to optain a pound of iron.
But of course in your flat earthers mind, all we have to do is to snap our fingers, and a nuclear power plant will suddenly materialice itself. And obviously the value of the oil produced will be enough cover all the expenses including the electricity bill.
I mean surely there are millions of people just waiting to fill their cars at 100 bucks a gallon.
Umm... nuclear power is cheap, tar sand oil is competitively priced (otherwise it wouldn't be being produced already), and there is nothing aside from economics that would prevent it from being produced by any heat source (gas, nuke, oil, even coal or solar).
Hmm... solar. Focusing light on the tar sands with big mirrors. There's an idea...
I'm hardly a flat earther. The opposition to nuclear power in Athabasca has nothing to do with economics. It is political. Currently natural gas is cheaper than using the bitumen or coal fired plants to produce steam, but Alberta is awash in money, and almost all informed observers accept that Athabasca would remain quite profitable running on the bitumen from the tar sands, despite the fact that this is probably the most expensive option.
Regardless of whether oil will peak or not, we are ruining our planet by burning up oil, polluting our water with mercury from coal power plants, creating nuclear waste that will take millions of years to decay into a harmless state. If anything the collapse or peak of oil will be beneficial to our planet. The free market and modern society will ruin our planet if the supply of oil proves to be inexhaustable. If oil doesn't peak out we will just have unbreathable air, crazy super storms, extinction of many different animals. Society will never wean itself from oil if it remains affordable. And in the process we will kill the planet on which we live on. If peak oil doesn't bring our polluted and overpopulated world down, something else will. It is only a matter of time.
This is a good illustration of why economists when confronted with the concept of eroei will either.
1: Ignore it.
2: Riducule it.
3: Say it doesn't matter.
No matter how awash in money Alberta is, if the eroei is low you got a problem.
If you use the bitumen as your pover supply, and the tar sands have an eroei of 4 (its probably less). Then you'll loose a quarter of the bitumen.
If the eroei is reduced you do have a problem. Instead of making obscene shitloads of money off the tar sands, you just make regular shitloads. As I said before, and as anyone who looks into the matter knows, tar sand production has become increasingly efficient. It was profitable in 2000 when crude and natural gas prices were much lower than they are now. It is MORE profitable now that they are higher. Will using the bitumen to power the operations cut into the profits compared to a nuclear reactor? Yes. Will that keep the tar sands from being rediculously profitable? No one except recalcitrant doomers think so.
Plateau oil seems the most likely path (punctuated by short term ups and downs) with rising prices bringing poorer quality or more expensive oil to market, while also reducing quantity demanded.
Oh man, anonymous @ 16:44 -- you're exactly the sort of crazy guy that this blog is supposed to thwart. Why do you think that it's a GOOD thing that thousands die. I got some news for you, if we change the atmosphere too much for our own existance.. sucks to be us. If we figure out how to keep the Earth how we like it, more power to us. But saying that we 'should' do this because we are 'polluting' the earth? Nobody told the original organisms that radically altered our atmosphere that they were 'wrong'. Sure, what we do is toxic to humans, but there are tons of forms of life who will love the world, even if we wreck it for ourselves.
I think you're just mad at capitalism because you suck at it, and refuse to believe that maybe it's a good system, and you just aren't very good at getting ahead. Doesn't sound like pollution is what you care about at all.
Oil is currently $77 a barrel and climbing with demand also climbing with no end in site. China and the emerging markets are consuming more and more while the US shows a slight increase.
There are a number of companies who have alternative methods of extracting the oil from the tar sands which appear to be successful with less cost and better environmental footprint. Bringing one of these on stream is a matter of months and will dramaticaly impact the who tar sands industry.
Will be exciting to see where this leads and I hope profitable.
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