Dear Piquet, I really appreciate BMA's articles and yours. This one on crude oil - I look forward to the next ones! - is very interesting indeed. I very much agree with your analysis of the price cap: I wrote an article about it a few months ago, when it was beginning to look like the sanctions were not working at all, looking at the issue from a Marxist perspective. I'll put the link here (https://www.assaltoalcielo.it/2023/02/26/price-cap-sorpresa/). The text is in Italian, but if you are interested, there is a translator on the site that published it. Congratulations again! Valerio
Thank you Valerio! You called it correctly a long time ago in your article. I wanted to show the results now that the price cap has had time to work its wonders(!), and to emphasize the idiocy of the self-satisfied elites who dreamed up this nonsense. Even today, some of them are still crowing about how great a success the price cap has been.
Too bad for the cretin in the U.S. white house: he expected lower oil prices in order to win re-election in 2024, and also allow him to re-fill the Strategic Petroleum Reserve with cheap crude. Haha, they don't understand that the counterparties have a say in things (e.g., OPEC+ production cuts).
Setting explosives at the well bore is called "perforation", not fracking, and is done with all oil & gas wells, regardless of the type of geology. This is to create a flow path first and foremost, as the well is initially encased in cement, as well as shattering the rock at the well bore. The perforations are shaped explosives themselves, forming (ideally) circular holes in the well casing. Fracking is an exclusively hydraulic process, where fluid with varying levels of natural and synthetic sand and/or acid are forced at high pressure into the rock formation to maximize the well production. The sand holds the 'fracture' open.
As industrial process feedstock and bulk heat source, natural gas looms large. Worth mentioning, natgas has fundamentally different economics. Unlike crude where the cost of extraction drives market price, for natgas the extraction cost for the big producers is negligible, and transport drives the market price (either pipeline or liquefaction). And natgas is comparatively hard to store. Finally, in terms of money spent, natgas is actually a small fraction of what is spent on crude (and looking at it another way, crude costs more per unit energy), but it has a big impact on the industries that are disrupted.
Good points, thank you! I wrote about nat gas a few months ago, see https://bmanalysis.substack.com/p/natural-gas. For some reason that I cannot fathom, EU leaders, particularly Germany, think that they can replace all of the lost pipeline gas with LNG. Auf Wiedersehen Deutschland.
Thank you for bringing such analysis - shedding light on topics - to man and woman like me... and thereby initiating interest in fields that are laying bare so far!
" For some reason that I cannot fathom, EU leaders, particularly Germany, think that they can replace all of the lost pipeline gas with LNG. "
The reason being that "BRD" is a vassal of the self-proclaimed highpriests of THE SYNAGOGUE OF SATAN on the other side of the Atlantic. ANYONE who believes that ANY politician is acting rationally has to get an mental examination by an engineer as medical doctors are nothing short of politicians in disguise. The road to HELL is paved with good intentions or well meant doesn't equate correctly done.
It has been like this since EVE in THE GARDEN OF EDEN and it will continue till GOD ALMIGHTY puts an end to it according to HIS WISDOM MIGHT GRACE AND PURPOSE!
THE WAY THE TRUTH AND THE LIFE ONLY - THE ONE AND ONLY SHEPHERD AND SAVIOUR THE LORD JESUS CHRIST - AMEN HALLELU-YAH!
Thank you and am looking forward to your following articles.
Imagine a world where there were no fossil fuels, like back in ~1759, when there were ~ 0.7 billion humans and Watt's steam engine was first being developed to kick start the global industrial revolution.
On the back of coal and steam, it took a century for populations to double to ~1.3 billion, when in 1859 the first modern commercial oil well was drilled by Edwin L. Drake in Titusville, Pennsylvania. A century and a half later there are nearly 8 billion of us, with 84% of primary energy consumption in the world and 64% of its electricity was from fossil fuels in 2019.
Q: How do campaigning outfits like 'Just Stop Oil' propose to dump ~7 billion humans over night?
The usual answer is a "renewable" electricity utopia where by 'low energy density solar energy harvesting infrastructure' will be built. But how do they propose to build such an otherwise well meaning utopia with out fossil fuels when NONE of the necessary manufacturing and mining and refining processes can be done with electricity beyond a few demonstration efforts that CAN NOT scale up much beyond a few % of global energy supply the currently supply (Solar ~2%; Wind ~ 3%; other renewables ~ 2%; traditional biomass ~ 6%; Oil ~30%; Coal ~ 25%; Gas ~22%; Nuclear ~4%; Hydro ~6%) ?
In 2019 Big Oil like Shell and BP told us their supply will decrease by 1 - 2% per year, which means that in about 70 years it will 25% of what it was in 2019.
In March this year they are now revising their targeting to a reduction of 25% by the end of the decade.
A 25% decline over 7 years is a 5% decline per year, which means in 28 years time oil production by Shell and BP by about 2050 will be 25% of what it was in 2023.
Very likely the same rough story from all the big oil, gas and coal firms. As such, global warming is a self limiting distraction from the symptoms of overshoot: the correct question for 'Just Stop Oil' etc. is since access to fossil fuel supply is crashing anyway, how do we deal with populations crashing back to where they were ~250 years but in ~50 or ~70 years or so?
Q: Mommy, what did people use for lighting at night before candles?
A: Electricity.
The oil companies are toeing the political line. In the real world, the decline in fossil fuels that you quoted will not be that significant. Solar has already proven to be incapable of reliable production of energy, and wind farms are already getting major pushback.
I'll leave it there for now. Stay tuned for the rest of this (short) series.
Yes really looking forwards to the rest of your series :-) I agree, the oil companies are toeing a political line. But geologists such as Michaux and actuaries such as Tverberg are predicting only a slightly less aggressive decline and they have little political clout or widespread influence. One of my aims is to get a better grip of extraction rate / quality predictions.... to enable more concrete policy suggestions to better inform people about how and over what time period 'we' are going to be forced by biophysical reality to 'manage' the decline in the most equitable way back to candles!
I tend to lean more toward Simon when it comes to discussions about resource depletion. Further, I question whether Michaux is a disinterested observer, since he works for a company (Mintec) that benefits financially if customers believe in resource depletion, and need to improve mining efficiency to recover more from the base material. Regarding Tverberg, she is out of her expertise when discussing crude oil as a resource. In her last article, she focused on the coming scarcity of economically feasible "heavy" crude, and she made the claim that, while it was possible to crack heavy oil into lighter products, one cannot feasibly go in the other direction (from light- to heavier hydrocarbons). Oligomerization, gas-to-olefins, and alcohol-to-jet are processes that are commercially developed and will improve over time. She made other claims in that article that are not correct.
Thirty years ago, if I had told you that sand from the beach could replace copper, you would have called me crazy. Well, I may be crazy, but fiber optics cable has been replacing copper wire for more than a decade now.
There are vast deposits of "fossil" fuel that are currently uneconomical, but will likely be recovered in the future.
Hi Piquet, Thanks for your insights, and engagement - much appreciated. Copper carries power, whereas optical fibres don't carry power and need better quality Si raw material inputs than boring old "beach sand". It's an interesting input as concrete too can't be made from rounded "beach sand" - building sand needs rough surfaces, as such it appears to also be on the list of limited resources.
See PoF, or Power over Fiber. Already in commercial use.
"...optical fibres...need better quality Si raw material inputs than boring old "beach sand"...
Beach sand from the panhandle of Florida is of very high purity, and it can be used for fiber production. It is actually alluvial sediment washed down from the Appalachian mountains, which happen to be a major current source of silica used in commercial fiber production.
Finally, "...building sand needs...as such it appears to also be on the list of limited resources..."
As your reference article points out, the sand is in abundance. It is government regulation that imposes limitation on extraction. Big difference.
My point is not to say that the alternatives are better, or even as good as the methods in use today. My point is that we don't even know what we don't know about the future. If we assume that everything will go downhill, then we will see the results of a self-fulfilling prophecy. I prefer to look for solutions rather than impediments.
The article is about half-way down the page, after a post about Texas grid issues.
My money is on the OPEC prediction: Oil is their life, their bread and butter. They make predictions based on realistic assessment of the facts, not political posturing.
Thank you Piquet, I agree with your main point that we ought to be focussed upon looking for solutions rather than impediments. But in order to conduct the process of looking, we must also accept the limits bio-physical reality imposes upon solution options. In any project management process, its best to try and focus first on the issues that are the biggest impediments to the project's success, and try to analyse those limits honestly. Given the reality of fossil fuel decline (over whatever time frame), its seem expedient to me to focus on the impacts of it's decline first, whatever solutions the future may or may not bring.
For example, I realise beams of light carry "power" but physics suggests that a hand full of Watts is the maximum that PoF can ever achieve: "Invented by Sandia's Titus Appel and Steve Sanderson, PoF is currently limited to a fairly low capacity, so don't expect it to be delivering power to your house any time soon. It could, however, supply power to small electrical devices such as sensors, for which it would also be providing data transfer."
PoF is simply not scalable (given the physics we know today) to the orders of magnitude “powering a home” would require. PoF will very likely remain a microscopic fraction of the power that copper, (or even inferior but much touted aluminium), can deliver (both reliant on fossil fuels for production, and neither's production really particularly close to electrifiable) without the unlikely outcome that laws of physics we know today will be overturned.
Building sand supply is limited by politics, but only in as much as environmental issues are political, according to the article I gave as reference, which is only about Germany, where it states that: "Some 99% of all sand and gravel deposits in the country are not where the building material can be easily accessed, because the land above it is used differently [...] you cannot excavate anything in the country's large nature reserves and wetland protection areas. Nor can you use the areas that have already been developed."
The point I am making is that building sand has to be transported huge distances because : "While sand can be found in almost all countries, there is a specific type of sand that’s most in demand—sand with an irregular shape. This kind of sand enables products to be stronger than smooth and symmetrical grains of sand, but it’s only found in certain environments, like the bottom of rivers and streams."
Due to low energy density of batteries, mining and heavy transport of bulk raw materials from remote locations is nearly impossible to do with electricity. Despite electric motors drive chains being several times more efficient, diesel is about ~20 to 40 times more energy dense, and is easy to transport and quick to refuel, compared to charging batteries via grids that will never exist thousand of miles from cities. At the scale of mining equipment, batteries would have to be more than half of the total equipment's weight. This means that, due to the increasingly remote locations of suitable rivers and streams, as more local supplies are depleted, building sand's supply depletion will closely follow the fossil fuel depletion curve, whatever and wherever the total amounts of other various grades still waiting in the ground to be extracted are.
Political and environmental issue ride upon this underlying fossil fuel depletion curve factor. So for example the 99% of all sand and gravel deposits being on land used by other purposes in Germany, simply compounds the biophysical limits of availability of sand with an irregular shape as a yet smaller fraction of the 1% remaining sites available for extraction in any given country, and so on across all countries.
Thank you for this layman friendly peek into the world of oil. It helps to bring some context into oil and geopolitics. I am looking forward to reading future installments.
Thank you Ismaele. That section should be gone now. The reader "Bash" pointed out an error in my description, and I edited out the error, along with that link. It should not be showing now.
Great Piquet, thanks.
In the old The Saker site, Jorge Vilches wrote a lot about the subject. Maybe some of his elements can help you in the next installments.
Dear Piquet, I really appreciate BMA's articles and yours. This one on crude oil - I look forward to the next ones! - is very interesting indeed. I very much agree with your analysis of the price cap: I wrote an article about it a few months ago, when it was beginning to look like the sanctions were not working at all, looking at the issue from a Marxist perspective. I'll put the link here (https://www.assaltoalcielo.it/2023/02/26/price-cap-sorpresa/). The text is in Italian, but if you are interested, there is a translator on the site that published it. Congratulations again! Valerio
Thank you Valerio! You called it correctly a long time ago in your article. I wanted to show the results now that the price cap has had time to work its wonders(!), and to emphasize the idiocy of the self-satisfied elites who dreamed up this nonsense. Even today, some of them are still crowing about how great a success the price cap has been.
Too bad for the cretin in the U.S. white house: he expected lower oil prices in order to win re-election in 2024, and also allow him to re-fill the Strategic Petroleum Reserve with cheap crude. Haha, they don't understand that the counterparties have a say in things (e.g., OPEC+ production cuts).
Russia gets a vote too, ha ha
Minor correction:
Setting explosives at the well bore is called "perforation", not fracking, and is done with all oil & gas wells, regardless of the type of geology. This is to create a flow path first and foremost, as the well is initially encased in cement, as well as shattering the rock at the well bore. The perforations are shaped explosives themselves, forming (ideally) circular holes in the well casing. Fracking is an exclusively hydraulic process, where fluid with varying levels of natural and synthetic sand and/or acid are forced at high pressure into the rock formation to maximize the well production. The sand holds the 'fracture' open.
Thanks Bash. I have corrected the description - with attribution.
Thank you very much Piquet!
Very informative.
I had to dig deep into my organic chemistry and industrial processes schooling to get a full picture and it was all worth it!
🙏
Nice review!
As industrial process feedstock and bulk heat source, natural gas looms large. Worth mentioning, natgas has fundamentally different economics. Unlike crude where the cost of extraction drives market price, for natgas the extraction cost for the big producers is negligible, and transport drives the market price (either pipeline or liquefaction). And natgas is comparatively hard to store. Finally, in terms of money spent, natgas is actually a small fraction of what is spent on crude (and looking at it another way, crude costs more per unit energy), but it has a big impact on the industries that are disrupted.
Good points, thank you! I wrote about nat gas a few months ago, see https://bmanalysis.substack.com/p/natural-gas. For some reason that I cannot fathom, EU leaders, particularly Germany, think that they can replace all of the lost pipeline gas with LNG. Auf Wiedersehen Deutschland.
Thank you for bringing such analysis - shedding light on topics - to man and woman like me... and thereby initiating interest in fields that are laying bare so far!
" For some reason that I cannot fathom, EU leaders, particularly Germany, think that they can replace all of the lost pipeline gas with LNG. "
The reason being that "BRD" is a vassal of the self-proclaimed highpriests of THE SYNAGOGUE OF SATAN on the other side of the Atlantic. ANYONE who believes that ANY politician is acting rationally has to get an mental examination by an engineer as medical doctors are nothing short of politicians in disguise. The road to HELL is paved with good intentions or well meant doesn't equate correctly done.
It has been like this since EVE in THE GARDEN OF EDEN and it will continue till GOD ALMIGHTY puts an end to it according to HIS WISDOM MIGHT GRACE AND PURPOSE!
THE WAY THE TRUTH AND THE LIFE ONLY - THE ONE AND ONLY SHEPHERD AND SAVIOUR THE LORD JESUS CHRIST - AMEN HALLELU-YAH!
Thank you and am looking forward to your following articles.
Imagine a world where there were no fossil fuels, like back in ~1759, when there were ~ 0.7 billion humans and Watt's steam engine was first being developed to kick start the global industrial revolution.
On the back of coal and steam, it took a century for populations to double to ~1.3 billion, when in 1859 the first modern commercial oil well was drilled by Edwin L. Drake in Titusville, Pennsylvania. A century and a half later there are nearly 8 billion of us, with 84% of primary energy consumption in the world and 64% of its electricity was from fossil fuels in 2019.
Q: How do campaigning outfits like 'Just Stop Oil' propose to dump ~7 billion humans over night?
The usual answer is a "renewable" electricity utopia where by 'low energy density solar energy harvesting infrastructure' will be built. But how do they propose to build such an otherwise well meaning utopia with out fossil fuels when NONE of the necessary manufacturing and mining and refining processes can be done with electricity beyond a few demonstration efforts that CAN NOT scale up much beyond a few % of global energy supply the currently supply (Solar ~2%; Wind ~ 3%; other renewables ~ 2%; traditional biomass ~ 6%; Oil ~30%; Coal ~ 25%; Gas ~22%; Nuclear ~4%; Hydro ~6%) ?
In 2019 Big Oil like Shell and BP told us their supply will decrease by 1 - 2% per year, which means that in about 70 years it will 25% of what it was in 2019.
In March this year they are now revising their targeting to a reduction of 25% by the end of the decade.
https://www.reuters.com/markets/commodities/shell-reviewing-oil-gas-output-reduction-targets-ceo-tells-times-2023-03-03/
A 25% decline over 7 years is a 5% decline per year, which means in 28 years time oil production by Shell and BP by about 2050 will be 25% of what it was in 2023.
https://goodcalculators.com/percentage-depreciation-calculator/
Very likely the same rough story from all the big oil, gas and coal firms. As such, global warming is a self limiting distraction from the symptoms of overshoot: the correct question for 'Just Stop Oil' etc. is since access to fossil fuel supply is crashing anyway, how do we deal with populations crashing back to where they were ~250 years but in ~50 or ~70 years or so?
Good analysis Natasha! Leads me to write this:
Q: Mommy, what did people use for lighting at night before candles?
A: Electricity.
The oil companies are toeing the political line. In the real world, the decline in fossil fuels that you quoted will not be that significant. Solar has already proven to be incapable of reliable production of energy, and wind farms are already getting major pushback.
I'll leave it there for now. Stay tuned for the rest of this (short) series.
Yes really looking forwards to the rest of your series :-) I agree, the oil companies are toeing a political line. But geologists such as Michaux and actuaries such as Tverberg are predicting only a slightly less aggressive decline and they have little political clout or widespread influence. One of my aims is to get a better grip of extraction rate / quality predictions.... to enable more concrete policy suggestions to better inform people about how and over what time period 'we' are going to be forced by biophysical reality to 'manage' the decline in the most equitable way back to candles!
Hi Natasha,
I tend to lean more toward Simon when it comes to discussions about resource depletion. Further, I question whether Michaux is a disinterested observer, since he works for a company (Mintec) that benefits financially if customers believe in resource depletion, and need to improve mining efficiency to recover more from the base material. Regarding Tverberg, she is out of her expertise when discussing crude oil as a resource. In her last article, she focused on the coming scarcity of economically feasible "heavy" crude, and she made the claim that, while it was possible to crack heavy oil into lighter products, one cannot feasibly go in the other direction (from light- to heavier hydrocarbons). Oligomerization, gas-to-olefins, and alcohol-to-jet are processes that are commercially developed and will improve over time. She made other claims in that article that are not correct.
Thirty years ago, if I had told you that sand from the beach could replace copper, you would have called me crazy. Well, I may be crazy, but fiber optics cable has been replacing copper wire for more than a decade now.
There are vast deposits of "fossil" fuel that are currently uneconomical, but will likely be recovered in the future.
I am optimistic!
Hi Piquet, Thanks for your insights, and engagement - much appreciated. Copper carries power, whereas optical fibres don't carry power and need better quality Si raw material inputs than boring old "beach sand". It's an interesting input as concrete too can't be made from rounded "beach sand" - building sand needs rough surfaces, as such it appears to also be on the list of limited resources.
https://www.dw.com/en/not-enough-sand-for-construction-industry-despite-abundance/a-49342942
Point(s) of clarification:
"...Copper carries power, whereas optical fibres don't carry power..."
See PoF, or Power over Fiber. Already in commercial use.
"...optical fibres...need better quality Si raw material inputs than boring old "beach sand"...
Beach sand from the panhandle of Florida is of very high purity, and it can be used for fiber production. It is actually alluvial sediment washed down from the Appalachian mountains, which happen to be a major current source of silica used in commercial fiber production.
Finally, "...building sand needs...as such it appears to also be on the list of limited resources..."
As your reference article points out, the sand is in abundance. It is government regulation that imposes limitation on extraction. Big difference.
My point is not to say that the alternatives are better, or even as good as the methods in use today. My point is that we don't even know what we don't know about the future. If we assume that everything will go downhill, then we will see the results of a self-fulfilling prophecy. I prefer to look for solutions rather than impediments.
Not to pile on (too much); I just received this:
"OPEC Strikes Back at IEA with Oil Demand Growth Forecast"
OPEC has forecast oil demand will rise to 116 million barrels daily by 2045.
You can read all about it in this daily email to which I subscribe:
https://www.theoilpatch.co/p/texas-braces-eclipsecaused-drop-solar-power. (subscribe if interested, it's free).
The article is about half-way down the page, after a post about Texas grid issues.
My money is on the OPEC prediction: Oil is their life, their bread and butter. They make predictions based on realistic assessment of the facts, not political posturing.
Thank you Piquet, I agree with your main point that we ought to be focussed upon looking for solutions rather than impediments. But in order to conduct the process of looking, we must also accept the limits bio-physical reality imposes upon solution options. In any project management process, its best to try and focus first on the issues that are the biggest impediments to the project's success, and try to analyse those limits honestly. Given the reality of fossil fuel decline (over whatever time frame), its seem expedient to me to focus on the impacts of it's decline first, whatever solutions the future may or may not bring.
For example, I realise beams of light carry "power" but physics suggests that a hand full of Watts is the maximum that PoF can ever achieve: "Invented by Sandia's Titus Appel and Steve Sanderson, PoF is currently limited to a fairly low capacity, so don't expect it to be delivering power to your house any time soon. It could, however, supply power to small electrical devices such as sensors, for which it would also be providing data transfer."
https://newatlas.com/hybrid-data-power-optical-cable/21335/
PoF is simply not scalable (given the physics we know today) to the orders of magnitude “powering a home” would require. PoF will very likely remain a microscopic fraction of the power that copper, (or even inferior but much touted aluminium), can deliver (both reliant on fossil fuels for production, and neither's production really particularly close to electrifiable) without the unlikely outcome that laws of physics we know today will be overturned.
Building sand supply is limited by politics, but only in as much as environmental issues are political, according to the article I gave as reference, which is only about Germany, where it states that: "Some 99% of all sand and gravel deposits in the country are not where the building material can be easily accessed, because the land above it is used differently [...] you cannot excavate anything in the country's large nature reserves and wetland protection areas. Nor can you use the areas that have already been developed."
The point I am making is that building sand has to be transported huge distances because : "While sand can be found in almost all countries, there is a specific type of sand that’s most in demand—sand with an irregular shape. This kind of sand enables products to be stronger than smooth and symmetrical grains of sand, but it’s only found in certain environments, like the bottom of rivers and streams."
Due to low energy density of batteries, mining and heavy transport of bulk raw materials from remote locations is nearly impossible to do with electricity. Despite electric motors drive chains being several times more efficient, diesel is about ~20 to 40 times more energy dense, and is easy to transport and quick to refuel, compared to charging batteries via grids that will never exist thousand of miles from cities. At the scale of mining equipment, batteries would have to be more than half of the total equipment's weight. This means that, due to the increasingly remote locations of suitable rivers and streams, as more local supplies are depleted, building sand's supply depletion will closely follow the fossil fuel depletion curve, whatever and wherever the total amounts of other various grades still waiting in the ground to be extracted are.
https://www.researchgate.net/figure/Specific-energy-versus-energy-density-for-different-energy-carriers-Sources-58_fig4_348679510
Political and environmental issue ride upon this underlying fossil fuel depletion curve factor. So for example the 99% of all sand and gravel deposits being on land used by other purposes in Germany, simply compounds the biophysical limits of availability of sand with an irregular shape as a yet smaller fraction of the 1% remaining sites available for extraction in any given country, and so on across all countries.
https://www.futurity.org/sand-shortage-2774122-2/
Thank you for this layman friendly peek into the world of oil. It helps to bring some context into oil and geopolitics. I am looking forward to reading future installments.
Nice article.
Only one minor observation:
The link in "See here for details on such explosives" redirects to a private page in your subStack, apparently.
Thank you Ismaele. That section should be gone now. The reader "Bash" pointed out an error in my description, and I edited out the error, along with that link. It should not be showing now.