No Act II for oil. Some very unpleasant information about peak oil comes via Just a Bump in the Beltway: the source is old, from last August, but I hadn't seen it cited before now. Matt Simmons, founder of one of the world's largest energy investment groups and with thirty years of experience in the field (and author of the forthcoming Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy), has analyzed Saudi oil production and is convinced that it's near or even likely past its peak. Particularly ugly is what Simmons has to say about the way the Saudis have historically managed extraction:

Normally, ... Saudi fields would be subject to the same decline curves as those experienced by any of the world’s oil fields, once reservoir pressure begins to dwindle. The difference is, he said, Saudi Aramco doubled up to catch up, almost from the start, by keeping reservoir pressures — and individual well flow rates — as high as possible, seemingly for as long as possible.

In simple terms, says Simmons, the Saudis have produced their fields under simultaneous primary and secondary recovery, having instituted huge waterflooding programs relatively soon after completing field development.

"All of these fields are old," he pointed out, "but Saudi Aramco has managed them in a 'gold standard' fashion by instituting careful and rigorous water injection to maintain very high reservoir pressures. They’re effectively sweeping the reservoirs until the easily recoverable oil is gone. In so doing, they have defied the standard decline curves. With water injection, they’ve maintained reservoir pressures above the bubble point. The trouble is, once they finally finish the sweep, they’ve done both primary and secondary depletion. There isn’t any Act 2." ...

"If I’m correct about my concerns, Saudi Arabia is now producing more than they should to sustain their oil output," he deadpanned. "The harder you pull a field in its production, the faster you bring on the end of its reservoir pressure. So, I could argue that for the well-being of the world, Saudi Arabia probably ought to back off and start producing 3 to 4 million bpd so that their oil might last another 30 to 50 years. However, they may already have peaked in their ability to grow oil production, and if that’s so, the world has peaked, as well."

[Go here for a full transcript of the Hudson Institute presentation on which this article is based.]

In other words: rather than pursue an extraction policy that would mitigate the post-peak falloff, Saudi Aramco has actually managed its fields in a way that will steepen the falloff once it begins to happen. Given how much of world demand is met by Saudi oil, and given that the world oil production system is essentially maxed out already to meet demand, this opens the really terrifying possibility of major, sharp energy and economic dislocations in the very near future.

To the extent that Simmons can offer a "solution," he suggests that greater transparency in reserve estimates ("greater" in this context would seem to mean, any) might encourage a sane (but shocking) upward revision of oil prices, say in the neighborhood of $200 per barrel—and that we might thus buy some time to adjust to the oil-decline regime now looming, and bridge to a sustainable energy economy.

Nice try. But let's face it, it's too late. A general, irreversible, steep decline in the entire world's productive base is not something you prepare for in two or three years, or even in a decade or two (and it seems increasingly certain that we don't have a clear, i.e. non-decline, decade or two left anyway). Maybe, if Americans had begun planning after the U.S. peak and after the (artificial) oil shocks of the '70s—if we'd even managed to moderate our irrational over-consumption—we'd be better able to manage the systemic shocks that are coming. But we squandered the opportunity provided by that epoch's very clear warning, and having sown the wind we can expect to reap the whirlwind.

Think the Republican crypto-fascism of the moment is bad enough? Imagine the full-on variety we're likely to get with a sudden slide into (long-term) economic depression. (And by long-term, I mean, for the remainder of my life, as a man in his mid-forties, at the very least.) No combination of policies or technical or organizational innovations can do much, at this late date, even to mitigate the disaster. Get ready, folks: the long night approaches.

posted by michael  11:39:58 AM  
tell me about it []