A few days ago, a friend asked for my opinion on the article http://www.commondreams.org/view/2014/01/09-7. My reply is below.

Some number of commentators have declared that “the peak oil theory” is dead. The peak oil dogma that died is the vulgar, or grossly oversimplified version. We might even call it the straw man version.

Let’s take one paragraph of the article, and dissect it a bit:

“From this perspective, the world supply of petroleum is essentially boundless. In addition to “conventional” oil — the sort that comes gushing out of the ground — the IEA identifies six other potential streams of petroleum liquids: natural gas liquids; tar sands and extra-heavy oil; kerogen oil (petroleum solids derived from shale that must be melted to become usable); shale oil; coal-to-liquids (CTL); and gas-to-liquids (GTL). Together, these “unconventional” streams could theoretically add several trillion barrels of potentially recoverable petroleum to the global supply, conceivably extending the Oil Age hundreds of years into the future (and in the process, via climate change, turning the planet into an uninhabitable desert).”

Even if all these “potential streams of petroleum liquids” become actual streams of petroleum liquids, it does not mean the supply is “essentially boundless.” If the entire volume of the earth could potentially be turned into oil, the whole earth is a finite volume. All potential sources of oil are some tiny fraction of the earth’s crust, which is itself a small fraction of the earth.

There is in fact some upper limit to how much material can be turned into liquid fuel. If conventional petroleum deposits are the only source, then the limit is less than if other mineral deposits can also be used, but a larger limit is not boundless. A serious approach would then try to determine what the practical limit is.

There are many other flaws just in the one quoted paragraph. For instance, if all the natural gas is to be turned into liquid fuel, then we had better stop heating our buildings with it immediately. Looking at it from the other end, if natural gas is most useful as a heating fuel without the expense of turning it into a liquid fuel, then why would it ever be turned into a liquid fuel? The real answer is, on occasion, sources of gas isolated from the gas pipeline system by hundreds of miles have been turned into liquid fuels so they could be transported by ship or rail.

The point is, any estimate of resources that assumes all natural gas, coal, kerogen, bitumen, etc. will be turned into liquid fuels is making a giant overestimate. There is some limit, and that limit is much closer to Marion King Hubbert’s original estimate of 0.8 – 1.2 trillion barrels than “several trillion [additional] barrels. And if so, then Hubbert’s prediction of the time of the peak [first decade of the 21st century] might be a bit early, but there will still be a definite peak.

Remember that the limit for an individual well is reached, not when it is not technically possible to extract more oil, but when it is no longer profitable to extract oil. The kerogen deposits of the Green River formation in Colorado and Wyoming have been known for more than a century. It has never been economical to extract the kerogen and turn it into liquid fuel. If it never does become economical, then a couple of trillion barrels of speculatively potential oil should disappear from the estimates.

What this article leaves out entirely is any explanation of net energy. Now, net energy is not any harder to understand than net profit. In fact they are entirely parallel concepts. In financial terms, it is more desirable to run a business with a high rate of net profit than a low rate. If the business has a very low rate of profit, or a negative one, then that business should simply close.

Net profit counts the initial investment and the amount returned for that investment. Net energy for the oil business counts the amount of energy it takes to create a saleable fuel, and the amount of energy that fuel, when burned, produces.

Technology to turn kerogen into liguid fuel has been known for many decades. Occasionally, someone or some company believes they have come up with some new wrinkle to makle it cheaper and more efficient. The reason kerogen has never been used to produce liquid fuels on any commercial scale is that the net energy of the produced fuel has so far always been negative. It has literally been a waste of energy, and consequently a waste of money, to turn kerogen into liquid fuel. For instance, you can read about the “Colony Shale Oil Project” in Wikipedia.

About the same time as nuclear-powered submarines were being developed, nuclear-powered airplanes were also thought to have numerous practical advantages over conventional military aircraft. The technologists of the time were very enthusiastic and hopeful. No nuclear-power aircraft were ever flown.

It’s not possible to prove that kerogen will never be a practical source of liquid fuel. What is certain is that nobody today know how to do it. There are tremendous problems in separating kerogen form inert rock, in disposing of the rock if it is dug up or leaving 90% of the kerogen in the ground if it is heated in situ, and so on. I believe it is reasonable to suppose that a hundred year track record means it is never going to be economical.

There’s a good explanation of net energy, along with a chart of the “net energy cliff,” at http://cassandralegacy.blogspot.com/2013/10/plundering-planet-report-to-club-of-rome.html.

In short, the proliferation of energy-intensive and therefore very expensive ways to make liquid fues that we see today is a symptom of peak oil, not a refutation of it. Like any actual scientific idea, while there are people with various degrees of expertise, nobody owns the idea and no person or institution is an authority on it. As I see it, the desperate attempts to find new sources of oil or oil-like substances and to develop them at a very high financial, environmental and political cost is a very big clue that world peak oil is approaching. The political and social consequences are beginning to show in Alberta, in North Dakota, in unwinnable wars in the Middle East, and so on.

Art Myatt

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