From "The Global Energy Outlook
for the 21st Century," a lecture delivered on
May 21, 2003 by Peter R. Odell, Professor Emeritus
at the Erasmus University in Rotterdam, where he
was the Director of the Center for International
Energy Studies:
Finally, a word of caution on
the essential fragility of a study on the very
long-term future for the world's energy supply
which accepts without question the validity
of the original 18th century hypothesis that
all oil and gas resources have been generated
from biological matter in the chemical and
thermodynamic environments of the earth's crust.
There is an alternative theory - already 50
years old - which suggests an inorganic origin
for additional oil and gas. This alternative
view is widely accepted in the countries of
the former Soviet Union where, it is claimed, "large
volumes of hydrocarbons are being produced
from the pre-Cambrian crystalline basement".
Recent applications of the inorganic theory
have, however, also led to claims for the possibility
of the Middle East fields being able to produce
oil "forever" and to the concept
of repleting oil and gas fields in the gulf
of Mexico. More generally, it is argued, "all
giant fields are most logically explained by
inorganic theory because simple calculations
of potential hydrocarbon contents in sediments
shows that organic materials are too few to
supply the volumes of petroleum involved."
The significance of the alternative
theory of the origin of additional oil and
gas potential is self evident for the issue
of the longevity of hydrocarbons' production
potential and production costs in the 21st
century. Instead of having to consider a
stock reserve already accumulated in a finite
number of so-called oil and gas plays, the
possibility emerges of evaluating hydrocarbons
as essentially renewable resources in the
context of whatever demand developments may
emerge. If fields do replete because
the oil and gas extracted from them is abyssal
and abiotic (based on chemical reactions
under specific thermodynamic conditions deep
in the earth's mantle), then extraction costs
should not rise as production from such fields
continues for an indefinite period. Neither
do estimates of reserves, reserves-to-production
ratios and annual rates of discovery and
additions to reserves have any of the importance
correctly attributed to them in evaluating
the future supply prospects under the organic
theory of oil and gas' derivation. In essence,
the "ball park" in which consideration
of the issues relating to the future of oil
and gas has hitherto been made would no longer
remain relevant.
[more: http://www.clingendael.nl/ciep/pdf/Odell_2003_05_21_lecture.pdf]
From "The New Pessimism about Petroleum Resources:
Debunking the Hubbert Model (and Hubbert Modelers)," by
Michael C. Lynch, president of Strategic Energy and
Economic Research, Inc. and research affiliate at the
Center for International Studies, Massachusetts Institute
of Technology:
Recently, numerous publications have appeared
warning that oil production is near an unavoidable,
geologically-determined peak that could have consequences
up to and including "war, starvation, economic
recession, possibly even the extinction of homo sapiens" (Campbell
in Ruppert). The current series of alarmist articles
could be said to be merely reincarnations of earlier
work which proved fallacious, but the authors insist
that they have made significant advances in their
analyses, overcoming earlier errors. For a number
of reasons, this work has been nearly impenetrable
to many observers, which seems to have lent it an
added cachet. However, careful examination
of the data and methods, as well as extensive perusal
of the writings, suggests that the opacity of the
work is - at best - obscuring the inconclusive nature
of their research.
Some of the arguments about resource scarcity resemble
those made in the 1970s. They have noted that discoveries
are low (as did Wilson (1977) and that estimates
of ultimately recoverable resources (URR) are in
the range of 2 trillion barrels, approximately twice
production to date. But beyond that, Campbell and
Leherrere in particular claim that they have developed
accurate estimates of URR, and thus, this time the
wolf is really here. But careful examination of their
work reveals instead a pattern of errors and mistaken
assumptions presented as conclusive research results.
The Hubbert Curve
The initial theory behind what is now known as the
Hubbert curve was very simplistic. Hubbert was simply
trying to estimate approximate resource levels, and
for the lower-48 US, he thought a bell-curve would
be the most appropriate form. It was only later that
the Hubbert curve came to be seen as explanatory
in and of itself, that is, geology requires that
production should follow such a curve [editor's
note: if, that is, petroleum is organic in origin].
Indeed, for many years, Hubbert himself published
no equations for deriving the curve, and it appears
that he only used a rough estimation initially. In
his 1956 paper, in fact, he noted that production
often did not follow a bell curve. In later
years, however, he seems to have accepted the curve
as explanatory.
[...]
Revival of the Hubbert Method
The recent authors, notably Campbell and Leherrere
have apparently rediscovered the Hubbert curve, but
without understanding it, at least initially. Campbell
and Leherrere initially argued that production should
follow a bell curve, at least in an unconstrained
province. But this is demonstrably not the case in
practice: most nations' production does not
follow a Hubbert curve. In fact, Campbell (2003)
shows production curves (historical and forecast)
for 51 non-OPEC countries, and only 8 of them could
be said to resemble a Hubbert curve even approximately.
The authors initially responded to this weakness
by arguing the Hubbert curve could have multiple
peaks, which of course means it would not follow
a bell curve at all, and destroys the explanatory
value of the bell curve. As the alleged value of
the Hubbert curve lies partly in demonstrating the
production decline post-peak, not knowing whether
any given peak is the final one renders this useless,
nor would the peak imply that midpoint production
had been reached (indicating URR).
Recognizing this, the theory has been modified again,
to "The important message from Hubbert's work,
which is often forgotten by economists, is that oil
has to be found before it can be produced." (Laherrere
2001b, p.4) In other words, the Hubbert curve,
originally held as scientific and inviolable, is
of no particular value. Yet the authors
have not only mistakenly believed in its properties,
they have not been forthcoming about their own errors.
[...]
Opaque Work, Unproven Assertions
The lack of rigor in many of the Hubbert modelers'
arguments makes them hard to refute. The huge amount
of writing, along with undocumented quotes and vague
remarks, necessitates exhaustive review and response
...
Perhaps because they are not academics, the
primary authors have a tendency to publish results
but not research. In fact, by relying heavily on
a proprietary database, Campbell and Leherrere have
generated a strong shield against criticism of their
work, making it nearly impossible to reproduce or
check. Similarly, there is little or no research
published, merely the assertion that the results
are good.
[much more at: http://www.energyseer.com/NewPessimism.pdf]
From James Bernstein's "Oil Giants Taking Heat," Newsday, March
31, 2004:
Worried about a downward slide in oil prices later
this year, OPEC is expected today to announce a cut
in production, which will likely result in higher
pump prices. But consumer groups are charging that
big oil companies are largely responsible for the
current upward spiral in gasoline costs, saying they
have deliberately withheld supplies and reduced storage
capacity.
[...]
But in the United States, consumer groups say the
blame for higher pump prices lies not so much with
OPEC as with the huge oil companies. Public Citizen,
a Washington, D.C.-based watchdog organization, is
preparing to release a report later this week charging
that the oil industry deliberately consolidated in
the 1990s so that it could withhold supplies and
reduce storage capacity.
[...]
The Consumer Federation of America said in a recent
report that in the past 15 years, more than 70 refineries
in the United States were closed. Additionally, its
report said, the nation's storage facilities were
reduced by nearly 15 percent. Mark Cooper, the organization's
research director, said an updated report is expected
soon.
"The problem is not crude oil," Cooper
said. "It's inadequate refinery capacity and
inadequate stockpiles, all of which are the result
of decisions made by the oil companies to tighten
the market."
[more: http://www.nynewsday.com/business/local/newyork/ny-bzoil313730511mar31,0,4111615.story]
From "Mergers, Manipulation and Mirages: How
Oil Companies Keep Gasoline Prices High, and Why the
Energy Bill Doesn't Help" (March 2004), the Public
Citizen report referenced in the Newsday article:
The United States has allowed multiple large,
vertically integrated oil companies to merge over
the last five years, placing control of the market
in too few hands. The result: uncompetitive domestic
gasoline markets. Large oil companies can more easily
control domestic gasoline prices by exploiting their
ever-greater market share, keeping prices artificially
high long enough to rake in easy profits but not
so long that consumers reduce their dependence on
oil ...
The largest five companies operating in the United
States (ExxonMobil, Chevron Texaco, ConocoPhillips,
BP and Royal Dutch Shell) now control:
- 14.2% of global oil production (nearly as much
as the entire Middle East members of the OPEC
cartel).
- 48% of domestic oil production (which is significant
given the fact that the U.S. is the 3rd largest
oil producer in the world).
- 50.3% of domestic refinery capacity.
- 61.8% of the retail gas market.
- These same five companies also control 21.3%
of domestic natural gas production.
It is therefore little wonder why these
top companies enjoyed after-tax profits of $60
billion in 2003 alone.
These figures are in stark contrast to just a decade
ago, when the top five oil companies controlled
only:
- 7.7% of global crude oil production.
- 33.7% of domestic crude production
- 33.4% of domestic refinery capacity.
- 27% of the retail market.
- In addition, in 1993, the top five U.S. companies
controlled only 12.7% of domestic natural gas
production.
The major difference between 1993 and 2003 is
that the largest oil companies have merged with
one another, creating just a handful of oil monopolies
that control significant chunks of the American
oil and gas markets. Armed with significant market
share, companies can more easily pursue uncompetitive
activities that result in price-gouging ...
Gasoline prices are rising because of uncompetitive
actions by this handful of new mega-companies,
not because of environmental regulations ...
The U.S. Federal Trade Commission (FTC)
concluded in March 2001 that oil companies had
intentionally withheld supplies of gasoline from
the market as a tactic to drive up prices -- all
as a "profit-maximizing strategy." These
actions, while costing consumers billions of dollars
in overcharges, have not been investigated by the
U.S. government.
... Since 2001, President Bush has been removing
more than 100,000 barrels of oil a day from the
market to stock the SPR [Strategic Petroleum Reserve],
filling it by more than 100 million barrels since
he's been in office to over 640 million barrels
-- well more than 90% capacity. President Bush's
actions, while providing more than enough protection
against external supply shocks, severely strains
domestic supplies for the market.
[...]
Companies have exploited [their] strong market
position to intentionally restrict refining capacity
by driving smaller, independent refiners out of
business. A congressional investigation
uncovered internal memos written by the major oil
companies operating in the U.S. discussing their
successful strategies to maximize profits by forcing
independent refiners out of business, resulting
in tighter refinery capacity. From 1995-2002, 97%
of the more than 920,000 barrels of oil per day
capacity that have been shut down were owned and
operated by smaller, independent refiners.
[...]
If these allegations of price gouging sound too
conspiratorial for some to accept, examples in
related industries demonstrate that price-fixing,
collusion and price-gouging are regular occurrences
in today's economy, as large corporations routinely
abuse their market power to engage in anti-competitive
behavior.
[...]
Contracts representing hundreds of millions of
barrels of oil are traded every day on the London,
New York and other energy trading exchanges. An
increased share of this trading, however, has been
moved off regulated exchanges such as the New York
Mercantile Exchange (NYMEX) and into unregulated
Over-the-Counter (OTC) exchanges. Traders operating
on exchanges like NYMEX are required to disclose
significant detail of their trades to federal regulators.
But traders in OTC exchanges are not required to
disclose such information allowing companies like
Enron, ExxonMobil, and Goldman Sachs to escape
federal oversight and more easily engage in manipulation
strategies.
The growth of these OTC exchanges exploded
in 2000 when Congress passed the Commodity Futures
Modernization Act. The Act, among other things,
punched a large loophole in government of energy
trading by greatly expanding the ability of traders
to operate in unregulated over-the-counter exchanges.
These OTC markets do not feature the tighter regulation
that typically applies to traders engaged in regulated
exchanges, such as the New York Mercantile Exchange
(NYMEX). Since this deregulation law took
effect, the industry - led by Enron - has been
plagued by dozens of high-profile scandals attributed
to the lack of adequate regulatory oversight over
traders' operations. Free from government
transparency regulations, energy traders have demonstrated
an ability to manipulate prices more easily.
[...]
The fuel economy average for passenger vehicles
in the U.S. peaked in 1988. Due to the changing
mix of vehicles on the road and the absence of
meaningful government action, the average is currently
lower today than it was a decade ago. This fuel
economy is stagnating because no new significant
car or truck fuel economy standards have taken
effect for 15 years, and SUVs and pickups are subject
to lower standards than regular autos.
[full report: http://www.citizen.org/documents/oilmergers.pdf]
From a press release for the Consumer Federation
of America report (July 2001) referenced in
the Newsday Article:
Gas price increases are not mainly the result
of any change in crude oil prices. Instead, they
have been caused principally by growing industry
concentration that has allowed refiners and marketers
to reduce refining and storage capacity and withhold
supplies in individual markets. Between 1994 and
1999:
- Over ten percent of the nation's refineries
and branded gasoline stations were closed. In
the past 15 years, more than 70 refineries were
closed.
- The nation's petroleum storage facilities were
reduced by nearly fifteen percent.
- The industry systematically lowered stocks
on hand to the point where only a one or two-day
supply above minimum levels was available to
keep the country's gasoline distribution running
(compared to a supply of a bout a week in the
1980s)
This consolidation and concentration has been
permitted by mergers that allowed the industry
to manipulate prices. By standards of the Reagan
Administration's Justice Department, four-fifths
of the national refinery and gasoline markets now
are considered to be dangerously concentrated.
"A concentrated, vertically integrated industry
has responded slowly to price shocks and has even
acted to keep supplies off the market," noted
Cooper. "While the industry complains that
clean air standards requiring different additives
in different markets restrict region-to-region
flows of gasoline, these requirements actually
give individual suppliers greater market power,
aggravating the concentration problem," added
Cooper.
Over the past two years, the refiner/marketer
share of the pump price has more than doubled,
escalating industry profits. Compared to 1999,
in 2000 net income from refining and marketing
doubled. In the first quarter of 2001, profits
increased by nearly 75 percent.
[full report: http://www.consumerfed.org/gaspricespiral.pdf]
Lastly, these interesting comments from some correspondence
by the late Colonel L. Fletcher Prouty:
Oil is often called a 'fossil' fuel; the idea
being that it comes from formerly living organisms.
This may have been plausible back when oil wells
were drilled into the fossil layers of the earth's
crust; but today, great quantities of oil are found
in deeper wells that are found below the level
of any fossils. How could then oil have come from
fossils, or decomposed former living matter, if
it exists in rock formations far below layers of
fossils - the evidence of formerly living organisms?
It must not come from living matter at all!
[...]
This response is for Daniel E. Reynolds, 29
July 1996 on the subject of "Oil - A renewable
and abiotic Fuel?"
Dan, your use of the word "abiotic" is
good. As a non-fossil fuel, petroleum has no living
antecedent. It contains chemical elements found
in living matter; but it is not "formerly
living matter." There has not been enough
true "formerly living matter" through
all of creation to account for the volume of petroleum
that has been consumed to date.
My background in this subject goes back to 1943.
I was the pilot who flew a U.S. Geological Survey
Team from Casablanca to Dhahran, Saudi Arabia.
We met the Cal. Standard Oil team holding down
that lease. Then we went back to Cairo to meet
President Roosevelt during the Nov. 1943 "Cairo
Conference" with Churchill and Chiang Kai
Shek. FDR ordered the immediate construction of
an oil refinery there for WW II use. This led to
ARAMCO.
During the "Energy Crisis" of the 1970's
I was detailed to represent the U.S. Railroad industry
as a member of the "Federal Staff Energy Seminar" program
started by the Center for Strategic and International
Studies, sponsored by Georgetown University. That
began in Jan 1974 and continued for four years.
It was designed to discuss "the working of
the United States national energy system, and new
horizons of energy research." Among the regular
attendees were such men as Henry Kissinger and
James Schlesinger...most valuable meetings.
During one meeting we took a "Buffet Break" and
I was seated with Arthur Kantrowitz of the AVCO
Company..."Kantrowitz Labs" near Boston.
At the table with us were four young geologists
busily talking about Petroleum. At one point one
of them made reference to "Petroleum as organic
matter, and a fossil fuel." Right
out of the Rockefeller bible.
Kantrowitz turned to the geologist beside him and
asked, "Do you really believe that petroleum
is a fossil fuel?" The man said, "Certainly" and
all four of them joined in. Kantrowitz listened
quietly and then said, "The deepest fossil
ever found has been at about 16,000 feet below
sea level; yet we are getting oil from wells drilled
to 30,000 and more. How could fossil fuel get down
there? If it was once living matter, it had to
be on the surface. If it did turn into petroleum,
at or near the surface, how could it ever get to
such depths? What is heavier Oil or Water?" Water:
so it would go down, not oil. Oil would be on top,
if it were "organic" and "lighter."
"Oil is neither."
They all agreed water was heavier, and therefore
if there was some crack or other open area for
this "Organic matter" to go deep into
the magma of Earth, water would have to go first
and oil would be left nearer the surface. This
is reasonable. Even if we do agree that "magma" is
a "crude mixture of minerals or organic matters,
in a thin pasty state" this does not make
it petroleum, and if it were petroleum it would
have stayed near the surface as heavier items,
i.e. water seeped below.
My D. Van Nostrand "Scientific Encyclopedia" says "Magma
is the term for molten material. A natural, complex,
liquid, high temperature, silicate solution ancestral
to all igneous rocks, both intrusive and effusive.
The origin of Magma is not known." My "Oxford
English Dictionary" does not even have the
word "Magma."
Some years ago I wrote two or three pages that
appeared in the McGraw Hill Yearbook of Science
and Technology, i.e. "Railroad Engineering." Even
that source is a bit uncertain about the "origin
of petroleum" to wit:
"Less than 1% of the organic matter that originates
in or is transported to the marine environment
is eventually incorporated into ocean sediment," and
"Most petroleum is formed during catagenesis
(undefined anywhere). If sufficient organic matter
is present oceanic sediments that undergo this
process are potential petroleum sources. Deeply
buried marine organic matter yields mainly oil,
whereas land plant material yields mainly gas." (Their
idea of "deeply buried" is the "out.")
All this leaves us no where. I still go with Kantrowitz.
Since oil is lighter than water, everywhere on
Earth, there is no way that petroleum could be
an organic, fossil fuel that is created on or near
the surface, and penetrate Earth ahead of water.
Oil must originate far below and gradually work
its way up into well-depth areas accessable to
surface drilling. It comes from far below. Therefore,
petroleum is not a "Fossil" fuel with
a surface or near surface origin.
It was made to be thought a "Fossil" fuel
by the Nineteenth [sic] oil producers to create
the concept that it was of limited supply and
therefore extremely valuable. This fits with
the "Depletion" allowance philosophical
scam.
During one of our C.S.I.S. "International
Nights" (1978) the Common Market Energy boss,
M. Montibrial of France, told us that while petroleum
was being marketed then for $20.00 per barrel or
more, it cost no more than 25 cents per barrel
at the well-head. There is our petroleum problem!
We were paying more than
$1.50-$1.60 per gallon, one 42nd of a barrel, at
that time. Interested folks need to learn more
about the Chartered Institute of Transport, and
not waste their time with OPEC, the "Cover" story.
Those who pumped the Pennsylvania wells "dry" during
the late eighteen hundreds saved what they had
for those better days.
L. Fletcher Prouty
[http://www.prouty.org/oil.html]
Originally published at: http://www.davesweb.cnchost.com/nwsltr59.html
More research that punches a big
hole in the Peak Oil hysteria
Paper
Sold To Pools Of Liquidity Lindsey Williams,
who has been an ordained Baptist minister for
28 years, went to Alaska in 1971 as a missionary. The
Transalaska oil pipeline began its construction
phase in 1974, and because of his concern for
the spiritual welfare of the "pipeliners," Mr.
Williams volunteered to serve as Chaplain on
the pipeline, with the subsequent full support
of the Alyeska Pipeline Company. Because
of the executive status accorded to him as Chaplain,
he was given access to the information that is
documented in his book, "The Energy Non-Crisis," which
shows that peak oil is a scam because our domestic
reserves in the North Slope of Alaska alone are
at least as large as those in Saudi Arabia and
are potentially large enough to power the US
with domestic oil for two centuries. Recently
this year, due to the sensitive nature of his
book, Mr. Willians' life was threatened and he
was forced to shut down his web-site and stop
selling his books and CDs. At the urging
of Dr. Stanley Monteith of Radio Liberty, he
called back the same oil executive who had warned
him about the danger he would be in if he continued
to disseminate certain information to ask if
in fact there was any information that he could
in fact convey to the public without upsetting
the powers that be. The oil executive,
who Mr. Williams had known for years, gave Mr.
Williams some startling revelations which he
could safely reveal to the general public
This material is copyrighted
by its original publishers.
It is reprinted by The Seventh Fire News without
permission, solely for purposes of criticism, comment,
and news reporting, in accordance with the Fair
Use Guidelines of copyright material under § 107
of U.S.C. Title 17.
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