A discussion about finite oil
A commenter on my blog has asked a few questions. We have a pleasant discussion running.
Yesterday he asked if the amount of oil is finite.
As I started to reply, I just kept writing and writing. Decided to move my comment to a separate post so the conversation is more visible.
On December 9, Stig Helmer (self-identification) said:
There is oil in North America.
There is continually efficient ways to access oil in North America, break evens are between 40 dollars and 65 dollars a barrel in most places.
Fine. All points known and agreed upon by anyone observing the oil industry.
Every two seconds a human being is born.
Even, if oil is so abundant that it is 40 dollars a barrel (which by the way, would not be a painless transition – drastic commodity prices have widespread economic and market impacts), the rate at which oil is being discovered, the rate at which oil is being discovered (and I should mention created) does not outrun population growth.
Supply growth does not change the fact that it is a finite resource. I had asked this question on your prior post and you directed me to this post.
What is not answered, and cannot be refuted is that it is a finite resource. It may be a multi peak curve, but the principle is unchallenged – this fact does not qualify as “idiocy”, especially when there are so many religious people running around that deserve that distinction.
Thanks for taking the time to comment.
Yes, the amount of oil under the ground is finite. So is the amount of gold, silver, platinum, diamonds, tin, and palladium.
That is the wrong question. A better question is how much is there? Another good question: how much is there we don’t even know about? Or, how much is there that we will be able to get out economically when some engineering whiz comes up with the next mind-boggling technique to pull out oil that we can’t touch today?
As the WSJ editorial mentioned in this post points out, we’ve been told we were going to run out of lots of different things for over 200 years. Yet we’ve not run out.
The same editorial cites Mr. Yergin pointing out a great quote from 1885 that all the oil on the planet would be gone in a generation.
A hundred thirty years later we can pull all the oil we need out of the ground, and the amount is a huge multiple of production back in the 1880s. In fact, we currently have a glut – the petroleum wizards are producing more oil than we can use.
(Production in the U.S. during 2013 was 7 times the amount produced from 1859 through 1889. From the same table, I calculated production in the U.S. from 1890 through 2013 is 511 times the production for 1859 to 1889. I’d say he was off a tiny, little bit on his prediction.)
If I had time and interest, I’d pull a detailed comparison of the area under the Hubert curve to the total production to date worldwide and in the U.S. As a hypothesis to test, I wonder if we have already produced more oil that the total amount he calculated existed anywhere on the entire planet. My working, preliminary hypothesis: yes for U.S. production; getting close for world-wide. Preliminary WAGs on the analysis: Hubert curve 1,250B world-wide, 150B-200B U.S. / to date: around 1 trillion world-wide, 209B US through 2013.
There are so many reasons why asking if oil is finite is the wrong question. Off the top of my head here is an unorganized, incomplete, and hastily accumulated list.
At expected ultimate recovery rates of 5% or 10% in Bakken, there is a huge amount of known oil, just in North Dakota. Oil still in the ground is a vast multiple of what will ultimately be produced from currently operating wells. It isn’t economically and technological feasible to get most of it today.
There are new fields discovered often.
There is more oil realized to be present as fields are explored.
Secondary and tertiary recovery methods yet to be used (or perhaps yet to be invented) in fracked wells will increase recovery rates.
First few tests described by Million Dollar Way hint that refracking a previously fracked well can produce new-well levels of production.
The upper bench of Three Forks is just now being explored. Second and third benches, as I understand, have barely been touched. No telling how much will be found there.
There is probably more oil still in the ground than we have yet used in all of history (Just saw a Chevron page that estimated 1T barrels produced to date and another 2T will be produced in next century). Only question is the multiple. Is there 5, 10, or 30 times more oil in the ground that the total amount we have used in the last 160 years?
I won’t go into the substitution effect or the impact of higher prices on motivation for research and innovation.
Human ingenuity will make more and more oil recoverable.
Even more important: Human ingenuity will ultimately be the reason we stop using fossil fuels.
See my comments on this blog, along with a lot of posts over at Carpe Diem and elsewhere around the ‘net regarding the idea that we won’t ever use the last drop of oil. Substitution effect and new technologies neither you nor I can even imagine will eventually replace fossil fuels before we come close to running out. But that is an additional discussion.
I’ll place my bets on the side of human ingenuity.
P.S. What does “multi peak curve” mean? Please enlighten me.