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It’s Net Production, Stupid
I recently posted part of an essay by Stuart Staniford of The Oil Drum regarding all liquids production. A commentary on this essay is one of the most brilliant contributions to understanding oil production that I can remember. The author, an anonymous person who calls himself "netfind" reminds us all that increasingly these days it takes oil to make oil.
As (s)he says, the result of this phenomenon may well be higher oil prices in the face of increasing all liquids supplies. Sound like anything you’ve noticed recently?
Here is the full commentary:
"As CTL, biofuels, tar sands, and the rest of the "manufactured" oil production is ramped up, there will probably be a growing disconnect between the oil price behavior and the supply charts. We may see a nicely climbing total liquids curve maybe even surpassing the demand curve climb, yet see the oil price continue to climb. The real net energy supply curve is actually something resembling the C+C curve in the 3rd figure above with the higher EROEI add-ons like NGL added. The whole array of current alternative oil in the total liquids curve is running EROEI estimated at around 3-4 or much less and as such displaces very little "real" (meaning conventional) oil. Because all this oil uses nearly as much conventional oil to make as it replaces on the market, the price of oil will seek out the net energy supply curve as it’s supply/demand balancer. It would be constructive to develope and watch a net energy supply curve for plateau behavior since this is what is determining real supply/demand."
Tags: energy investments
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8 responses so far ↓
1 paul r tautvaisas // Feb 26, 2008 at 10:48 pm
All expansion requires energy. Expansion of oil supply means squat if the means to ship it from the supply area to the needed areas has not expanded accordingly. All current infrastucture is running at full capacity. Even oil discoveries on the coasts or in the ocean will suffer under tremendous energy usage constraints. Ports accross the world are suffering from congestion. What will the energy costs be to increase port capacities to access the newly shipped oil. What will it cost in energy to build new pipelines to transport it?
Everything involves increased energy usage BEFORE a single new drop of oil can be used.
2 Bruce Randall Miller // Feb 27, 2008 at 3:05 am
Plateau Oil Behavior!
I like that much more so then Peak Oil. We may find that electrical energy from wind, wave and nuclear sources will level the mountain peak out. This also includes better useages of oil itself. And lends to not such a dead end street kind of thinking.
3 invstinenrgy // Feb 27, 2008 at 6:58 am
In 70’s oil crisis, there was so much emphasis on improved efficiencies and conservation. Now, everybody lines up to pay! Yes, there is an argument that easy efficiency stuff is done. However, what we have not explored is alternative life-style and decetralized working environments… The problem is so much of the economy is based on wasting energy that it is hard to refocus.
4 Poul Andreasen // Feb 27, 2008 at 1:25 pm
Bruce Randall Miller, above:
“This also includes better useages of oil itself. And lends to not such a dead end street kind of thinking.”
Totally agree. We should focus on strategies for the best use of remaining petrochemicals. But then again, peak oils still needs to get established as a (legitimate) public agenda.
5 Michael Mills // Feb 29, 2008 at 11:06 am
>>
It would be constructive to develope and watch a net energy supply curve for plateau behavior since this is what is determining real supply/demand.
>>
Yes, yes it would. We really need a graph like this. Anyone up to the task? Has anyone already done it?
6 K. Vora // Mar 2, 2008 at 9:07 am
This does not bode well for ethonol and oil sands as they are both barely energy positive, and energy negative if we account for the environmental impact. Jathrpa seeds as bio-diesel seems attractive, as it contains 40% oil, grows in fairly bad lands, plant lives for 50+ years so you are not constantly turning the earth over, and if proper drip irrigation were to be practiced, the harvest would be much more reliable. This is before genetic engineering to increase yield and oil content of the seeds. Finally, after oil extraction, seed-cakes are great fertilizer for other crops.
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