free html hit counter Peak Oil Debunked: 224. THE USGS PERSPECTIVE

Thursday, January 26, 2006

224. THE USGS PERSPECTIVE

In my opinion, the USGS is unfairly and glibly denigrated in peak oil circles. In response to the criticisms of peak oilers, Ronald R. Charpentier of the USGS has written a presentation entitled The Future of Petroleum: Optimism, Pessimism or Something Else defending the USGS methodology.

This bit is particularly interesting:
Perhaps a more fundamental difference among resource assessors, however, is what can be termed the non-trendologists versus the trendologists. “Trendology” is here considered to be the use of fairly simple statistical extrapolation without consideration of many complicating factors. Many prominent pessimists are trendologists, but that approach is by no means confined to pessimists. The use of simple statistical extrapolation methods has the advantages of being easy, fast, and cheap. These extrapolation methods generally have modest data requirements and can be performed quickly by one or a few persons. More detailed geological assessments, on the other hand, have much larger data and effort requirements. The 1995 USGS assessment of U.S. petroleum resources (Gautier and others, 1995) and the 2000 USGS assessment of non-U.S. petroleum resources (U.S. Geological Survey World Energy Assessment Team, 2000) each required about 100 person-years of work over several years to complete. As many of the prominent trendologists are retired from industry or academia or both, these levels of effort are just not available to them.
He refutes the peak oiler dogma that large fields are found and developed first:
The finding of larger fields early in exploration is not necessarily true at scales other than the play level because larger plays are not necessarily developed earlier. The factors that tend to make larger fields within a play be found earlier do not make the larger plays be developed first. On the contrary, plays tend to be developed in order of ease of exploration and development— often those with shallow reservoirs or easily detectable structural traps are developed first. Some large plays may not be developed until technologic improvements can make them viable.
This is also a very important point:
The potential for new plays cannot be evaluated by statistics alone, but requires more detailed geologic evaluation, which requires considerably more effort. New plays, if they exist, may or may not be of large size. This cannot be evaluated from the basin’s exploration history because, as the previous figure shows, the plays were not developed in order of size.
The above highlights a very weak point in the imminent peak argument. Statistics and trends alone cannot tell you how much oil remains to be discovered. The imminent peaker argument always relies on the unproven and shaky assumption that "the world (or region X) has been thoroughly explored and not much oil is likely to be found." This is just hand-waving, with nothing to back it up. It seems clear to me that the question "How much new oil is likely to be discovered in region X?" should be decided by a detailed survey of the geology of region X, not by past trends in discovery which are influenced by economics. And that is exactly what the USGS has tried to do. Consider, for example, this exhaustive survey of the geology of Saudi Arabia, Kuwait and the surrounding on- and off-shore zones: Total Petroleum Systems of the Paleozoic and Jurassic, Greater Ghawar Uplift and Adjoining Provinces of Central Saudi Arabia and Northern Arabian-Persian Gulf. (I encourage you to thumb through this pdf page by page. You'll find that the USGS knows an astounding amount about the geology and potential of these regions.) Why should we trust Matt Simmons facile comments about Saudi Arabia being all played out, when the USGS has looked at the subsurface geological structures in painstaking detail, and come to a different conclusion? It would be nice if somebody had an answer to that question better than the standard peak oiler response that the USGS is an organization of idiots.
-- by JD

23 Comments:

At Thursday, January 26, 2006 at 7:48:00 PM PST, Blogger popmonkey said...

good post. i have to say i still think the usgs is very optimistic and unrealistically so, but that doesn't mean they are 100% wrong either.

we'll find out soon enough...

in the meantime tho, i think it's important to continue the attitude of "lets deal with peak oil" as opposed to "lets ignore peak oil".

i know you're not advocating the latter, JD, but as many have pointed out before, sometimes it looks like you are (starting with the name of the blog, which, i realize, has been beaten to death already).

cue lemming: USGS IS RIGHT!!! WE'RE SAVED!!!!11

 
At Friday, January 27, 2006 at 4:05:00 AM PST, Blogger Roland said...

Go away.

I mean, GO AWAY!!!!!!!! :-)

Who was it a few posts ago who said we need to go beyond a simple optimist vs. pessimist debate. Well, that's pretty much what the report is saying, isn't it? Both extremes (Marshall Brain/Richard Duncan) are not quite right, but both have good points (OK, Duncan doesn't have any good points, but whatever).

Even if that 2050 peak estimate is a bit of a laugh, I agree that just writing off the USGS is premature. They're a big, accountable organization. Sure they're biased, but who's to say they're more reliable than some guy eating chinese takeaway in his bedroom?

 
At Friday, January 27, 2006 at 5:02:00 AM PST, Blogger levsen said...

If the USGS is an accountable organization as another commenter said, and if they spent 100 taxpayer-funded man-years, where is the resulting 1000-page PDF for my perusal? Link??

 
At Friday, January 27, 2006 at 10:45:00 AM PST, Blogger Chris Vernon said...

Their past performance in this area isn't great.

See this discovery prediction from the USGS 1995 report: Graph 1

Then see this discovery data from 1995 to 2005: Graph 2

 
At Friday, January 27, 2006 at 1:49:00 PM PST, Blogger Roland said...

Their past performance in this area isn't great.

Campbell's isn't that good either. He's predicted a peak every year since 1989.

I think they're probably both wrong, and the answer is somewhere in between.

 
At Friday, January 27, 2006 at 5:38:00 PM PST, Blogger JD said...

chris,
Thanks for the substantive comment.
Where did your graph 1 come from? It didn't come from the USGS. Can you please provide substantiation, from the USGS, proving that the USGS made the predictions you claim it did? When did they make those predictions, and where? It's fishy. The USGS World Survey was done in 2000, so why do the alleged "USGS predictions" begin prior to 2000. Can you explain that? For that matter, where did the discovery data for that chart come from?

For graph 2, where did the discovery data come from? It's all fine and good to show a graph, but I would like to know where the numbers came from so I can see them myself.

 
At Friday, January 27, 2006 at 5:41:00 PM PST, Blogger JD said...

levsen wrote:
If the USGS is an accountable organization as another commenter said, and if they spent 100 taxpayer-funded man-years, where is the resulting 1000-page PDF for my perusal? Link??

The title of the report is given in the #224. Why don't you get off your fat ass and find it yourself?

 
At Friday, January 27, 2006 at 5:44:00 PM PST, Blogger JD said...

BTW, apologies for the lemming infestation. In the future, please don't respond to the lemming. I will delete its comments as soon as possible. Also, I have deleted lemming-related comments from this thread. Thanx for your cooperation.

Let's try to stay focused on the USGS.
JD

 
At Saturday, January 28, 2006 at 1:11:00 AM PST, Blogger Chris Vernon said...

The first graph came from a presentation that Campbell gave in 1999 (or there abouts) apparently the USGS did a study in 1995 similar to the one they did in 2000 - although I can't find a reference to that...

The second graph is just lifted from the latest ASPO report available here.

 
At Saturday, January 28, 2006 at 2:25:00 AM PST, Blogger JD said...

Thanks chris,
This is a fishy issue, and I'm going to look into it more carefully. At this point, I'd have to say we have no evidence that the USGS actually made the predictions Campbell says they did.

As for the second graph, I know where it comes from. In fact, I posted it in this very blog at one point. The question I'm wondering about it is where the numbers underlying the graph come from.

 
At Saturday, January 28, 2006 at 2:27:00 AM PST, Blogger JD said...

popmonkey, you wrote:
i have to say i still think the usgs is very optimistic and unrealistically so...

Just curious, but why do you believe the usgs is unrealistically optimistic? What evidence makes you feel that way?

 
At Saturday, January 28, 2006 at 3:08:00 AM PST, Blogger popmonkey said...

Just curious, but why do you believe the usgs is unrealistically optimistic? What evidence makes you feel that way?

i'll be perfectly honest. i don't have hard evidence (does anyone?). it's just a gut feel. so much information out there and yet no one has corroborated the usgs data.

i suppose you could say that about every study on peak oil because we simply don't know enough and there have been so many different techniques attempted. nothing in th e usgs report convinces me that their technique is truly the best one. the techniques used in rembrandt's report are the ones i'm closest to agreeing with.

also, i guess i'd rather be more pessimistic than unpleasantly surprised..

 
At Saturday, January 28, 2006 at 9:34:00 AM PST, Blogger dub_scratch said...

I think it is safe to assume that government agencies are biased in order not to spook the markets. They are pressured to put-out news and analysis that favorable to vested interests. In the US, sprawl and car dependency is the major vested interest in our economy. What kind of conclusions would these people like to see from the USGS? It probably looks like the one the USGS put out in 2000.

My non-expert opinion is that the USGS operated in a mode of rigorous optimism. That is: they rigorously gathered and analyzed as much geological data and then they assumed as much oil as they could wherever they could. They took every opportunity to inflate their estimate for URR. The rigor aspect helps build credibility in the eyes of many while the optimism about supply neatly finds a home in the data. No wonder it took them 100 man-years to produce this. I think the criticism by Peakers is valid when they point out how the USGS assumed 50 billion of barrels URR for Greenland. This is a good example of problem for the credibility of that study, and it shows me that they were careless in their assessment-- not conservative.

By that they are irresponsible as a public agency by projecting a oil peak that is much more likely to be later than reality. We as a society will be unprepared if we are so willing to be optimistic about oil supply as the USGS. Highways, subdivisions, airport expansions and parking garages are now built blindly on the assumptions behind the USGS's rigorous optimism. IMO, Non-doomers should be just as critical of the USGS study as the imminent Peakers because non-doomerism is predicated on our ability to prepare. If peak oil comes in 2020 and we all have built our expectations on the USGS date of 2034, how in the hell are the doomers not going to be correct?

I'd like to ask everybody on this forum who they think will be the closest PO date, Ken Deffeyes with his last Thanksgiving date or the USGS with their 2034 estimate? And then I'd like to ask who's assumptions of PO is more conducive to preparation?

 
At Saturday, January 28, 2006 at 11:31:00 AM PST, Blogger James said...

My peak prediction: 2012, 2020 if a global recession occurs between now and then.

Even after a peak occurs, the decay in available oil production will be analogous to a Hurricane Katrina per year (2-3 million barrels). Tough stuff, but adjustments were made when that amount of oil was shut in almost instantaneously.

Society will not collapse, but it will be an interesting time to say the least...

 
At Saturday, January 28, 2006 at 11:35:00 AM PST, Blogger Rembrandt said...

Typical response of people who have not studied the USGS report in detail.

The 2000 study provides data from the period of 1996 to 2025. That is what explains the graph starting in 1996. Secondly, this 100 man hour personel stuff is nonsense. They are using a method which is Computer intensive (Monte Carlo) and has nothing to do with geology.

 
At Saturday, January 28, 2006 at 2:15:00 PM PST, Blogger JD said...

rembrandt, can you point me to the USGS document/page which forecasts discovery, as indicated by "graph 1" referenced by chris vernon above? I searched and read a fair amount on the USGS yesterday, and have yet to find any document by the USGS which forecasts discovery or production.

Also, can you provide references to back up your statement that the USGS 2000 report is based only on computer modeling without any reference to geology?

 
At Saturday, January 28, 2006 at 2:29:00 PM PST, Blogger JD said...

chris l wrote:
I think the criticism by Peakers is valid when they point out how the USGS assumed 50 billion of barrels URR for Greenland.

Here's Colin Campbell on the subject of Greenland: "In, for example, the famous case of little known NE Greenland, the study states with a straight face that there is a 95% subjective probability of more than zero, namely at least one barrel, and a 5% probability of more than 111.815 Gb (billion barrels). A Mean value of 47.148 Gb is then computed from this range, being incorporated in the global assessment. Can we really give much credence to the suggestion that this remote place, that has so far failed to attract the interest of the industry, holds almost as much, or more, than the North Sea, the largest new province to be found since the Second World War?"
Source

Isn't this just hand waving? Some searching reveals that approximately 10 holes have been drilled in all of Greenland to date, and I haven't found a reference to even a single hole which has been drilled in NE Greenland. So how does Campbell *know* how much oil is there? The remoteness isn't an argument against it having oil. Neither is the lack of interest: that could be explained by the harshness of the climate, the difficulty of exploration, the fact that leases haven't been offered etc. Why doesn't Campbell prove to us, on geological grounds, that oil in large quantities cannot be there? The same goes for you too, chris; why are you so sure that there is no oil in Greenland? What do you actually know about its geology?

 
At Saturday, January 28, 2006 at 2:34:00 PM PST, Blogger JD said...

This is also interesting. Campbell has consistently and harshly attacked the probabilistic estimates of oil resources by the USGS, but he himself admits that he doesn't understand their methodology:

*******
"Aaron asked:

The methodology for estimating potential discoveries of oil is expressed by the USGS in F5, F50, & F95 probabilities. Given the decline in significant new discoveries of oil in recent history, is averaging F5 & F95 predictions still a valid approach for determining the mean estimate?

Dr. Colin J. Campbell:

I am not expert in Probability Theory. They plot amount up the Y axis and assessed probability along the X axis. The area under the curve is the Mean value. There are also Mode and Median values. The system probably has merit in assessing an individual prospect where there are actual parameters of thickness, porosity etc to compare, but I am sceptical when guessing the number and size of fields to be found, especially in little known areas. A better approach is to extrapolate past discovery trends."
*******
Source

 
At Saturday, January 28, 2006 at 8:25:00 PM PST, Blogger dub_scratch said...

Why doesn't Campbell prove to us, on geological grounds, that oil in large quantities cannot be there? The same goes for you too, chris; why are you so sure that there is no oil in Greenland? What do you actually know about its geology?


I never said Greenland has no oil at all. But I certainly don't think it is prudent to turn it into one of the worlds great oil provinces until someone drills a few holes and proves that to be the case.

How does the USGS and JD know there is 47 Gb of oil in Greenland? Why not 470 Gb? Hell, nobody has drilled there to find out that it does not have 4,700 Gb. Let's assume that.

And shit, nobody has proved that space aliens are not among us. Therefore, there has to be aliens, here on Earth too.

JD are you a space alien with access to 4,700 gb of Greenland oil? I don't think anybody has proven that NOT to be the case.

 
At Saturday, January 28, 2006 at 10:19:00 PM PST, Blogger JD said...

But I certainly don't think it is prudent to turn it into one of the worlds great oil provinces until someone drills a few holes and proves that to be the case.

I agree. Likewise, I don't think its scientific to rule out the possibility that there is significant oil there, until they drill more holes, or otherwise demonstrate the impossibility of oil being there. If Colin Campbell wants to show that there is no significant oil in NE Greenland, it should be a straightforward matter to produce geological arguments, i.e.: no sedimentary basin, lack of source rocks, lack of reservoir rocks, lack of trapping structures/materials etc. The fact that it is remote and nobody is currently interested is not a geological argument. They may not be interested at the moment because they still have easier plays elsewhere to invest their money in.

How does the USGS and JD know there is 47 Gb of oil in Greenland?

I DON'T know that, or claim to know that, and neither does the USGS. Personally, I'm an agnostic. There could be hardly any oil there for all I know. Or there could be a hell of a lot. To the degree I understand it so far, it appears that the USGS regards the oil resource there as a random variable. The possibility of there being some oil there is 100% (there are oil seeps in Greenland). Amounts greater than that are associated with decreasing probabilities. So it would appear that the USGS is agnostic as well. They aren't making any definitive statements about how much oil is there. They are estimating how much oil is likely to be there, given their knowledge of the geology. The next step is obviously to look at the USGS's data on the geology of NE Greenland, to see why they think it is promising. At the moment, no one seems to have the answer to this question: Why does the USGS think that NE Greenland has good potential? (Could you help us out on that one, rembrandt?)

 
At Sunday, January 29, 2006 at 1:59:00 AM PST, Blogger JD said...

rembrandt, according to the USGS itself, the study is based primarily on geological characteristics:

"Critical Decisions: A series of critical decisions went into planning and producing the World Petroleum Assessment 2000. These decisions, summarized below, were made early in the assessment process and directly affected the results shown on the CD-ROMs. (1) We would consider geologic characteristics to be the primary criteria for resource assessment (AK). Rationale: The world has many socio-economic parameters than can affect an assessment based solely on statistics, such as exclusion of areas for development, interruptions by regional or world conflicts, or technology limitations. Geologically defined and analyzed Total Petroleum Systems (TPS) are independent of such socio-economic factors. Additionally, statistics cannot capture ideas and concepts for future exploration. We have documented the geology of the various regions and their provinces throughout the world in a series of CD-ROM’s that serve as a foundation for the assessment (AK) and will provide a basis for future research work."
Source

 
At Monday, January 30, 2006 at 5:05:00 PM PST, Blogger Quantoken said...

Aaron asked:
"The methodology for estimating potential discoveries of oil is expressed by the USGS in F5, F50, & F95 probabilities. Given the decline in significant new discoveries of oil in recent history, is averaging F5 & F95 predictions still a valid approach for determining the mean estimate?"

No it is NOT. Arithmetically averaging the F5 (5% propability) and F95 (95 percent probability), is NOT the correct approach!

Let see how it works. Let use P to stand for the probability, and Q to stand for reserves.

Assuming that we already know as a fact that Q > Q0, now what is the probability that Q is actually twice as big, i.e., Q > 2*Q0? Let say that probability is p.

So, if there is a P0 possibility of finding Q > Q0, then there is a P = P0*p possibility of finding Q > 2*Q0.

Now, if we indeed find Q > 2*Q0, as a fact, we can further ask what is the possibility of finding Q > 4*Q0. Again, the possibility is p, assuming we already know Q > 2*Q0. Therefore, if we are not sure about that, we only know P = P0*p for Q> 2*Q0, then we have P = (P0*p)*p possibility of finding Q > 4*Q0.

To generalize it, start with P = P0 for Q > Q0, we have:

P = P0 * p^n, for Q > Q0 * 2^n

Therefore the relationship between P and Q can be written as:

ln (P/P0) = alpha * ln (Q/Q0)

The value P0, Q0 will be decided by actual discovery. Of course when it is ddiscovered, P0 is 100% and Q0 is the actually discovered quantity. And alpha is determined by the geological likelyhood of future discoveries.


In the case of Iceland, let say 1 million barrel reserve is already discovered, so Q0 = 1,000,000, and P0 = 100%. And let's say GSGS is correct in their assessment that there is 5% chance of discovering 111.815 Gb, or Q = 111,815,000,000 at P = 5%. Let's figure out alpha:

ln(Q/Q0) = alpha * ln(P/P0)

ln(111.815gb/1mb) = alpha * ln(5%/100%)

11.625 = alpha * (-2.996)
alpha = -3.88

Now knowing alpha, let's say, at 50% probability, what kind of reserve figure can we expect:

ln(Q/Q0) = -3.88 * ln(P/P0)

ln(Q/1mb) = -3.88 * ln(50%/100%) = 2.6894

Q = e^2.6894 * 1mb = 14.7 mb

So if they already discovered 1 mb, and they expect a 5% possibility of finding 111.815 gb, then you can expect to find just 14.7 million barrel at possibility of exactly 50/50, not the 47.148 gb the USGS calculated.

I think my calculation is much more reasonable, in any case, when you already have one million barrel, you expect something more, but definitely NOT something 47148 times more adundant!

Quantoken

 
At Monday, March 6, 2006 at 3:31:00 PM PST, Blogger aceditor said...

I would suggest that the USGS got it seriously wrong. Look at http://www.peakoil.ie/newsletters/743 this shows that their discovery predictions have been incredibly wrong. The problem is that both OPEC http://www.opec.org/home/PowerPoint/Reserves/Conventional.htm and the EIA use the http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/worldoilsupply/oilsupply04.html USGS numbers. Political decisions of most of the world are based on their estimates. However, neither undiscovered or reserve growth will save us http://www.energybulletin.net/2544.html

 

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