Doug Henwood wrote:
>
> I went to the trouble of seeing how long it
> would take to run down existing reserves as present rates of
> consumption growth. (It amazes me sometimes how left discourse so
> frequently requires one to rehearse, even pay ritual homage to, the
> obvious.) I've also said several times that it's more likely we'll
> choke before we burn all the oil that's in the ground. But the point
> I was making about reserves is that it's highly likely that new
> discoveries will continue expand our inventory of known reserves.
>
> On the other hand, maybe oil isn't the nonrenewable resource we
> always think of it as. To avoid giving Don Roper intellectual
> property fits, I'm just posting the beginning of this article.
>
> Doug
>
> ----
>
> >Wall Street Journal - April 16, 1999
> >
> >Odd Reservoir Off Louisiana Prods
> >Oil Experts to Seek a Deeper Meaning
> >
> >By CHRISTOPHER COOPER
> >Staff Reporter of THE WALL STREET JOURNAL
> >
> >HOUSTON -- Something mysterious is going on at Eugene Island 330.
> >Production at the oil field, deep in the Gulf of Mexico off the coast of
> >Louisiana,
What is it with you guys and the Wall Street Journal?
First off, Doug, it isn't much use credulously repeating snippets from DoE
websites about production or reserves growth, down to the last 0.9 of a
point; I'd hate to think this is how you always work. You ought at least to
call one of the lying bureacrats at the EIA and ask them to justify their
own figures, given that a child of 6 with his/her wits about them could spot
a few obvious howlers:
For instance, when I said p.a. production is "+- 30bn bbls" you quickly
corrected me. But why do you suppose that annual production is 27 or 28
(latest stab in the DoE dark) bn bbls? The DoE figures themselves include an
amount for "above-quota" exports by Opec countries. Today the FT Lex column
blithely says this amount is currently 600 000 bbls a day. How do they know?
How does anyone know how much oil is smuggled out of Iraq, Venezuela etc?
The answer is, they don't; even Opec smugglers themselves don't know the
full total of illegal, above quota exports. But I can tell you this much: to
my own knowledge, an awful lot of so-called 'Urals crude' which finds its
way allegedly from Novorossysk is actually Iraqi spec oil. The unknown
quantity is *at least* +- 2bn bbls p.a. which is why world production is *at
least* 30bn bbls. And don't tell me they work it out from final demand
because they don't know that, either.
2nd off, you still haven't quite got the hang of this: demand cannot
increase when supply is falling exponentially.
3rd, no-one any more takes seriously this kind of talk: "it's highly likely
that new > discoveries will continue expand our inventory of known
reserves." Even in the Admiral Duncan they know better by now.
4th, don't get too carried away by Daniel Yergin's private ontic jokes about
deep secrets under the ocean floor.
I'll tell you another secret: what's happening or not happening in the Gulf
of Mexico isn't the sensational news the WSJ thinks it is. There are 2
theories about it (summarising): either older deposits of oil are brought by
subduction into existing reservoirs. If this is happening in the Gulf it
does not seem to be happening anywhere else. There are various theories
about why the Gulf of Mexico is a unique, planetary one-off, but the main
thing they have in common is that they ALL agree that the oil is of
biological origin:
"Petroleum is derived from organic material under conditions that were met
only rarely in the Earth's long history and then only in a few places. Oil
comes primarily from algal material, and gas comes from vegetal remains.
Such organic debris settled to the floor of the lake or sea in which it
lived, and in most cases was oxidized by bottom dwelling organisms or
currents, but in certain stagnant environments has been preserved and buried
beneath other sediments. On deeper burial, it was heated by the Earth's heat
flow, and chemical reactions converted it into petroleum. Oil on very deep
burial is cracked into gas. Once formed oil and gas migrate upwards through
minute fractures and pores in the rocks, until they find a porous and
permeable layer through which they can move. They then flow through this
conduit until they are trapped in a fold, against a fault or where the
conduit pinches out. Much is dissipated or held in the many constrictions
encountered during its migration, so that only about one percent of what was
formed is trapped in accumulations large enough to be exploited." [Colin
Campbell]
This is important. If oil is of biological origin then much can be said ab
initio about where it is likely to be found on the Earth, and where not, and
in what quantities; it is enough to know the history of the planet's
geology. And the predictions flowing from the theory have proved remarkably
accurate and are still the only real guide to where oil corps put their
exploration money.
OR there is an alternative theory which says that NO oil is of biological
origin. According to this theory, crude is being formed all the the time by
geological processes deep within the earth's magma; thus we shall never run
out of oil. This is what the WSJ is coyly hinting at.
This theory was invented by a *Soviet* geologist just at the time when it
became obvious to the Soviet oil industry panjandrums that the Motherland's
oil production was about to fall off a cliff.
This theory (apart from a few cooks around the WSJ, and possibly, altho I
don't believe it, Daniel Yergin - oh, and any number of credulous
economists) has no supporters, especially among trained geologists. It no
longer has any supporters in the fSU, that's for sure.
It is just whistling in the dark.
Like I say, next thing you'll be telling us the latest news about cold
fusion.
The Saudis yesterday announced they plan another increase of 500 000
bbls/day, and they hope to bring the average price of crude back below $28
bbl. If they can do this, and supply can still meet rising demand this year,
in 2 years, 5 years, then you;re right and I'm wrong. If they can't, then it
means world oil has reached its peak and is in terminal decline.
I already said here and elsewhere that it's entirely possible that Shaikh
Yamani is right, and most of the oil will never be pumped; and it can also
happen that the price may never rise much above $50 bbl, because above that,
economies will founder and demand will collapse. This has nothing to do with
the central issue, which is what happens next? You haven't answered that,
and nor has any other bourgeois economist or corporate spokesman or energy
scientist of repute, because you can't. There is still no substitute.
Mark
