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Shell exec says world not running out of oil

 
Jesus N Pals
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03/22/2008 05:25 PM
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Shell exec says world not running out of oil
Shell exec says world not running out of oil

President of U.S. operations questions predictions of peak theorists

Posted: March 20, 2008
By Jerome R. Corsi
[link to www.worldnetdaily.com]


John Hofmeister, the Houston-based president of Shell Oil's U.S. operations, expressed doubt about the validity of peak oil theory in an appearance on CNBC's Squawk Box show.

"The peak oil theory has really swamped the world. God bless Matt Simmons," Hofmeister told CNBC anchor Carl Quintanilla, according to a transcript provided to WND by CNBC. "His assumptions are correct based on his hypotheses, but his hypotheses are too narrow."

Matt Simmons, a Houston-based investment banker who specializes in the energy industry, is widely known for his 2005 book, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," in which he analyzed oil depletion data from Saudi Arabian wells.

The peak oil theory argues the world's oil resources are finite and will be completely exhausted at a future date.

Simmons, one of the most vocal and visible of the peak oil advocates in the industry today, has also been a frequent television guest arguing that the world is running out of oil.

In a recent YouTube.com-archived appearance on Bloomberg TV, Simmons argued the world has hit peak oil now, predicting prices as high as $300 a barrel

The peak oil theory, first espoused by Shell Oil geoscientist M. King Hubbert in 1956, has come under increasing criticism in recent years, as repeated predictions of world oil depletion have failed to match empirical data documenting increasing reserves.

For instance, data produced by the U.S. Department of Energy's Energy Information Administration currently shows 1.3 trillion barrels of proven oil reserves worldwide, more than ever in recorded history, despite a doubling in world oil consumption since the 1970s.

In what has become a contentious worldwide debate over whether peak oil is fact or fiction, Simmons dismisses statistics that are not consistent with his depletion models.

The Energy Information Administration "has been as inept at forecasting oil outlook in both production and prices as anyone," Simmons told WND in an e-mail, "yet so few ever remember their awful forecasts."

Hofmeister explained to the CNBC audience why he believed Simmons' hypotheses were too narrow.

"In other words, Simmons is looking at conventional oil only," Hofmeister said. "In the industry, we look at unconventional oil as well."

Unconventional oil is a reference to oil that is not found as crude oil in reservoirs contained in sedimentary rock layers just below the surface of the earth.

An example of unconventional oil is the oil sands in Alberta, Canada, from which oil is produced.

When President Bush took office on Jan. 20, 2001, the price of oil was approximately $24 a barrel, too low for the oil sands to be converted to oil economically.

But now, with the price of oil hovering near $100 a barrel, conversion of the oil sands has become economically feasible. Canada has become the largest supplier of foreign oil to the U.S., supplying the U.S. with more than 70 million barrels of oil a month, according to current EIA statistics.

Hofmeister also questioned whether Simmons' models accurately estimated the probability of new discoveries of previously unknown oil reserves.

"Simmons is also basing his conclusions on a particular study of one country, Saudi Arabia, while there are a whole lot of other reservoirs around the world we're still discovering," Hofmeister continued. "Some day we will peak, but not because we don't have enough oil."

For instance, WND recently reported Brazil's announcement of the discovery of a new ultra-deep offshore oil field in the Atlantic Ocean, containing an estimated 5 to 8 billion barrels of oil, enough to expand the country's proven reserves by 40 to 50 percent.

Again, Simmons is dismissive.

"The great Brazil find, as best laid out in the February issue of World Oil, is a great example of a handful of extremely expensive, rank wildcat wells finding at least traces of hydrocarbons," he said.

"But until scores of other wells are both flow-tested and also cored, there is no solid idea of how much oil might ever be recovered," he continued. "Given the severe deepwater rig shortage, it might take a decade or more to genuinely test the Santos Basin."

"I would be delighted to be wrong on all this," Simmons wrote, "but too much hard data is too specific, and the optimist case is all faith-based theories."

Brazil disagrees with Simmons' pessimistic outlook.

Sergio Gabrielli, the chief executive officer of the state-run oil firm Petroleo Brasileiro SA claims the new find off the coast of Brazil may contain as much as 80 billions barrels in oil reserves which Brazil is moving to commercially exploit and further explore right now.

Simmons' pessimistic focus on oil depletion statistics are today being contested, even by traditional oil industry experts such as Daniel Yergin and his Cambridge Energy Research Associates, or CERA, in Cambridge, Mass.

"This is the fifth time that the world is said to be running out of oil," Yergin says in industry speeches. "Each time, technology and the opening of new frontier areas has banished the specter of decline. There's no reason to think that technology is finished this time."

Yergin came to world fame in the oil industry with the publication in 1991 of his now-classic book, "The Prize: The Epic Quest for Oil, Money & Power."

A Jan 18 press release on the CERA website presents additional data questioning one of Simmons' key assumptions.

In a study that examined oil depletion data from 811 separate oil fields accounting for about two-thirds of current global production and half of the total proved and probable conventional oil reserve base, CERA concluded the aggregate global decline rate is 4.5 percent, not the 8 percent cited in many studies.

The study, drawing from a source CERA described as "the most extensive field production database in the world," demonstrated lower decline rates in recent years due to better reservoir management practices and the impact of new technology.

CERA concluded the new data means "no near-term peak oil" is likely, directly countering the predictions of peak oil advocates such as Simmons.

Finally, as WND recently reported, new scientific discoveries have produced important evidence supporting the abiotic theory of the origin of oil.

Scientists have recently reported abiotic liquid hydrocarbons exuding from the mantle of the earth in fissures such as the Lost City Hydrothermal Field on the bottom of the Atlantic Ocean and abundant abiotic liquid methane found on Titan, the giant moon of Saturn, as found by the Cassini-Huygens mission jointly launched by NASA, the European Space Agency and the Italian Space Agency.

Traditional petro-geologists have maintained that oil is biological in origin, arising from organic material deposited in sedimentary soil.

The organic theory of the origin of oil has served as a logical underpinning of the tautology at the heart of the peak oil theory.

Only a finite amount of biological material was deposited in sedimentary soil capable of forming oil, so there has to be a finite amount of oil.

The abiotic theory suggests oil is formed naturally in the mantle of the earth by chemical reactions such as are described in the Fisher-Tropsch equations the Nazis developed to make synthetic oil from coal prior to World War II.

The abiotic theory would suggest more deep-earth discoveries of oil should be forthcoming, especially with new technology to find and recover cost-effectively offshore oil.

With more than 70 percent of the earth covered by water, much previously unexplored territory remains to be explored for oil, as ultra-deep drilling technology continues to progress
Omega

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03/22/2008 05:27 PM
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Re: Shell exec says world not running out of oil
It's not about Peak Oil per se, it's about peak demand. With China and India's oil needs coming online fast the days of cheap oil are over.
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Anonymous Coward (OP)
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03/22/2008 05:28 PM
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Re: Shell exec says world not running out of oil
[link to www.amazon.com]


It is estimated that Americans consume more than 25 percent of the world's oil but have control over less than 3 percent of its proven supply. This extremely unbalanced pattern of consumption makes it possible for foreign governments, corrupt political leaders, terrorist organizations, and oil conglomerates to place the citizens of the United States in a stranglehold of supply and demand. There is no greater proof of this than the direct relationship between skyrocketing gas prices and the exploding wealth of those who control the supply of oil.

In Black Gold Stranglehold, Jerome R. Corsi and Craig R. Smith expose the fraudulent science that has been sold to the American people in order to enslave them: the belief that oil is a fossil fuel and a finite resource. On the contrary, this book presents authoritative research, currently known mostly in the scientific community, that oil is not a product of decaying dinosaurs and prehistoric forests. Rather, it is a natural product of the earth. The scientific evidence cited by Corsi and Smith suggests that oil is constantly being produced by the earth, far below the planet's surface, and that it is brought to attainable depths by the centrifugal forces of the earth's rotation.

In great detail Corsi and Smith explore the international and domestic politics of oil production and consumption. This includes the wealth and power of major oil conglomerates, the manipulation of world economies by oil-producing states and rogue terrorist regimes, and the political agenda of radical environmentalists and conservationists who obstruct the use of oil reserves currently controlled by the U.S. government. The authors offer an understanding of the dangerous situation America faces because its currency is no longer tied to any precious and truly scarce metals such as gold, as it was until 1973. This situation could easily lead to the devastation of the U.S. economy if Middle Eastern countries are able to enact current plans to accept only the Euro or gold-backed currencies such as the Gold Dinar instead of the U.S. dollar as the standard currency for oil.

Black Gold Stranglehold will dramatically change the debate about oil. The significance of its message is sure to cause thoughtful people to reconsider the current dependence of the U.S. economy on imported oil.
Anonymous Coward (OP)
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03/22/2008 09:57 PM
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Re: Shell exec says world not running out of oil
bump
Anonymous Coward
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03/22/2008 10:02 PM
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Re: Shell exec says world not running out of oil
Of course not.

What the world is running out of is honesty, reality, and accountability..
Anonymous Coward
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03/22/2008 10:03 PM
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Re: Shell exec says world not running out of oil
well the worlds running out of money i hope he likes his f'n billions.
Anonymous Coward
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03/22/2008 10:38 PM
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Re: Shell exec says world not running out of oil
"Unconventional" oil has a very poor return of energy compared to the liquid fields - wich are mostly past or at their peak worldwide. And they can never be scaled up to meet the ever increasing demands.

The world gets almost 10% of it's oil from 3-4 very old giant fields - and discoveries peaked in the sixties... Nowadays a 500 million barrel field is rare and considered a big find - and it'll last for under a week of global consumption.

80 billion barrels sounds nice for the find in Brazil, but as we use 1 billion barrels worldwide every twelfth day or so - it takes us give or take three years to burn through this amount of oil.

Because regardless of it's size, a field has a max output rate, as the oil slowly seeps through the porous rock and into the pipes. So no matter how big the field or urgent the demand - the field must produce according to it's physical limitations.

We're at the plateau of peak production today.

Watch Ghawar in SA, Burgan in Kuwait, and Cantarell in Mexico. 8-10% of world supply right there, from very old fields in terminal decline.

It's gonna hurt.

Oh, and btw...

It's not the execs job to talk down their stocks by telling us that their supplies is running out...





GLP