User:RandomP/Hubbert 1

This is a draft article containing those bits of the Hubbert peak theory pertaining to Hubbert's use of a logistic curve in predicting future oil production only. It is not an official Wikipedia article.

The geophysicist Marion King Hubbert proposed (implicitly?) to use the derivative of the logistic curve, the Hubbert curve, to predict future oil production based on past empirical data. This results in a bell-shaped production curve. Early in the curve (pre-peak), production increases quickly. At some point, a single production peak is reached, after which production decreases.

While Hubbert proposed similar-looking production curves as early as a paper he presented to the American Petroleum Institute in 1956 [2], the Hubbert curve was not introduced by him until much later (when?).

Hubbert's theory

The standard Hubbert curve. For applications, the x and y scales are replaced by time and production scales.

In 1956, Hubbert proposed that crude oil production in a given region over time would follow a bell-shaped curve without giving a precise formula; he later used the Hubbert curve, the derivative of the logistic curve, for estimating future production.

Hubbert assumed that after oil reserves are discovered, oil production at first increases approximately exponentially, as wells are drilled and more efficient facilities are installed. At some point, a peak output is reached, and oil production begins declining until it approximates an exponential decline.

The Hubbert curve satisfies these constraints. Furthermore, it is symmetrical, with the peak of production reached when half of the oil that will ultimately be produced has been. It also has a single peak.

Given past oil production data, a Hubbert curve may be constructed that attempts to approximate past data, and used to provide estimates for future production. In particular, the date of peak oil production and the total amount of oil ultimately produced can be estimated that way.

The standard Hubbert curve is a real-valued function of one real variable; in order to apply it to the real world, scales have to be chosen, one for time and one for oil production, based on the observed data. They are usually given implicitly by specifying the integral of the Hubbert curve, the ultimate total oil production Q_∞, with a unit of billions of barrels, and the initial growth rate asymptotically reached for very early times, a, often expressed in percent per year.

Hubbert also proposed a method for determining the values for Q_∞ and a based on empirical data, by considering the ratio of production at a given time and cumulative production to that point as a function not of time but of the cumulative production itself; if production followed a Hubbert curve, this function would have the form $a-{\frac {Q}{Q_{\infty }}}a$ , a straight line. Thus, by considering the best linear fit to the function actually observed, estimates for a and Q_∞ can be obtained.

Peak prediction

File:ASPO 2004.png

In 2004, ASPO predicted that conventional plus unconventional oil production would peak around 2007.

In 1974, Hubbert projected that global oil production would peak in 1995 "if current trends continue" [3]. However, in the late 1970s and early 1980s, global oil consumption actually dropped, then rebounded at a lower level of growth in the mid-1980s (see graphics on right). The projection assumptions were not realized and oil production did not peak in 1995.

Using the Hubbert curve (or Hubbert linearisation? what have they been doing?), the Association for the Study of Peak Oil and Gas (ASPO) has calculated that the production peak of conventional crude oil was in early 2004. During 2004, approximately 24 billion barrels of conventional oil was produced out of the total of 30 billion barrels of oil; the remaining 6 billion barrels coming from heavy oil and tar sands, deep water oil fields, and natural gas liquids (see adjacent ASPO graph). In 2005, the ASPO revised its prediction for the peak in world oil production, from both conventional and nonconventional sources, to the year 2010[4] (based on what? This also belongs in main article.).

In 2004, 30 billion barrels of oil were consumed worldwide, while only eight billion barrels of new oil reserves were discovered. In August 2005, the International Energy Agency reported annual global demand at 84.9 million barrels per day (mbd) which means over 31 billion barrels annually. This means consumption is now within 2 mbd of production.

Professor Kenneth S. Deffeyes, author of "Hubbert's Peak" (ISBN 0-691-11625-3) and "Beyond Oil" (ISBN 0-8090-2956-1), asserts (based on what? As Deffeyes is bad with mathematics, who checked it?) that the peak was passed on Dec 16, 2005 [5]. He also asserts that the total of world oil is 2.013 trillion barrels.

Current events

Oil production - Has it happened already?

World Oil Supply 2002-2006 Q2. Source: Multiple tables from IEA

World oil production growth trends, in the short term, have been decreasing (whoa, we're talking about the third derivative here? Or the second one? Fix main article.) over the last 18 months. Average yearly gains in world oil production from 1987 to 2005 were 1.2MB/day (1.7%). Global production averaged 84.4 MB/day in 2005, up only 0.2 MB/day (0.2%) from 84.2MB/day in Q4 2004 (see figure at right). Production in Q2 2006 was 85.1MB/day, up 0.4MB/day (0.47%) from the same period a year earlier [6]. Yearly gains in the last 8 years ranged from -1.4MB/day (-1.9%; 1998-1999) to 3.3MB/day (4.1%; 2003-2004)[7].

Colin Campbell of the Association for the Study of Peak Oil & Gas (ASPO) has suggested that the global production of conventional oil peaked in the spring of 2004 albeit at a rate of 23-GB/yr, not Hubbert's 13-GB/yr. Another peak oil proponent Kenneth S. Deffeyes predicted in his book Beyond Oil - The View From Hubbert's Peak that global oil production would hit a peak on Thanksgiving Day 2005 (Deffeyes has since revised his claim, and now argues that world oil production peaked on December 16 2005[8]). Texas oilman T. Boone Pickens has stated that worldwide conventional oil production will top out at 84MB/day[9].

Mexico announced that its giant Cantarell Field entered depletion in March, 2006 [10], as did the huge Burgan field in Kuwait in November, 2005 [11]. Due to past overproduction, Cantarell is now declining rapidly, at a rate of -13% year over year. [12] In April, 2006, a Saudi Aramco spokesman admitted that its mature fields are now declining at a rate of 8% per year, and its composite decline rate of producing fields is about 2%[13], thus implying that Ghawar, the largest oil field in the world, may have peaked [14].

Oil price

Main article: Oil price increases of 2004 and later.

In late 2005 as oil prices rose, greater attention was focused on Hubbert's theory and its potential implications. While Hubbert himself is still not widely known, debates and discussions about rising fuel prices have become commonplace in the media and elsewhere almost everywhere in the world. However, oil and gas prices are notoriously volatile and price increases have been caused by numerous other factors, though there is a general agreement that increased demand has been the major factor, with such increased demand bringing the Hubbert peak closer than would have been predicted otherwise. In June 2005, OPEC admitted that they would 'struggle' to pump enough oil to meet pricing pressures for the fourth quarter of that year. 2005 brought oil prices to a new high (not adjusted for inflation) and the largest increase in inflation rates in 15 years (Sept. 2005), due mostly to higher energy costs. This may be signs of increasing demand having started to outstrip supply or it may just be that the various geopolitical forces in the regions where oil is produced are limiting the available supply. One other explanation for the rising oil prices is that it has been a sign of too much paper money and not too little oil. In this view, dramatically higher prices of all commodities and real estate indicates rising inflation.

Other oil related

Chevron has launched the Will You Join Us? [15] campaign, seeking to alert the public to the possibility of petroleum depletion and encourage discussion. The campaign's website notes findings from the International Energy Agency's (IEA) World Energy Outlook 2004: "Fossil fuels currently supply most of the world’s energy, and are expected to continue to do so for the foreseeable future. While supplies are currently abundant, they won’t last forever."

As awareness of Peak Oil increases, there are also a number of events being organized to allow for further education and discussion. For example, the Third U.S. Conference on Peak Oil and Community Solution [16] was announced for September 2006 in Yellow Springs, Ohio.

Alternative sources for oil

Alternatives are energy sources other than conventional oil and natural gas which can be used instead in one or more applications, such as:

a prime energy source to generate electricity
a transportation fuel
for space heating
for water heating
an ingredient in plastics, pesticides, pharmaceuticals, semiconductors, and fertilizers
a lubricant in industrial machinery and manufacturing.

Popular alternatives include

ethanol fuel
biodiesel
tar sands
oil shale
coal liquefaction
gasification
renewable energy sources (solar, wind, hydro, tidal, geothermal, wave, ocean thermal)
nuclear energy (fission or fusion).

One near-term alternative source of liquid fuel is the Athabasca Tar Sands in Alberta, Canada. Production from this source is around 1 million bbl/day as of 2006, and is expected to build up to 3.2 million bbl/day by 2015. Higher oil prices have overcome the high costs of extracting heavy oil from this source. The current extraction process, however, requires large inputs of scarce natural gas and fresh water[17]. The figure for recoverable reserves from this source is currently (mid 2006) around 180 billion barrels^{[This quote needs a citation]} (cf. the Saudi Arabian reserve of about 260 billion barrels of conventional oil). A similar field, the Orinoco tar sands in Venezuela, is also being exploited. These two are the largest known fields of tar (i.e., bitumen) sands.

Synthetic fuel, created via coal liquefaction, requires no engine modifications for use in standard automobiles. As a byproduct of oil embargos during Apartheid in South Africa, Sasol, using the Fischer-Tropsch process, developed relatively low-cost coal-based fuel. Currently, over 50% of fuel (mostly diesel) used by automobiles in South Africa is produced from coal. With crude-oil prices currently around $75 per barrel, this process is now cost-effective; however the process emits large amounts of carbon dioxide, thus contributing substantially to global warming.

Implications of a world peak

Gas coupon printed but not used in 1979's oil crisis

According to the Hirsch report prepared for the U.S. Dept. of Energy, a global decline in oil production will have serious social and economic implications without due preparation. Peak Oil theorists argue that global economic growth relies on cheap energy[18], and oil contributes significantly to the worldwide energy pool, particularly for transportation. Brief oil interruptions in 1973 and 1979 caused sharp declines in world GDP[19] growth rate.

Initially a peak in oil production would manifest itself as rapidly escalating prices and a worldwide oil shortage. This shortage would differ from shortages of the past because the fundamental cause would be geological, not political. While past shortages stemmed from a temporary insufficiency of supply, crossing Hubbert's Peak means that the production of oil continues to decline, so demand must be reduced to meet supply. The effects of such a shortage depend on the rate of decline and the development and adoption of alternatives.

The possible impacts of peaking oil, exacerbated by global competition over scarce remaining oil supplies, have led some analysts to predict dire consequences for conventional oil-dependent economies. According to oil industry analyst Jan Lundberg, "Based on today's intensifying trends, warning signs and an understanding of history, one must be ready to see the fossil-fueled phase come to an end most abruptly. When common practices cannot be maintained and too many people suddenly begin hoarding scant supplies, the desired resource dries up. This causes ramifications that quickly compound whatever triggered the crisis." This scenario is referred to by Lundberg as Petrocollapse. Contrasting views note that most uses of oil, from plastics to transportation fuels, have substitutes, blunting the impact of declining petroleum supplies.

Critiques of Peak Oil Theory

Economist Michael Lynch[20] argues that the theory behind the Hubbert curve is overly simplistic, and that available evidence contradicts some of the more specific predictions.[21]

Critics such as Leonardo Maugeri, vice president for the Italian energy company ENI, point out that Hubbert peak supporters such as Campbell previously predicted a peak in global oil production in both 1989 and 1995[22], based on oil production data available at that time. Maugeri claims that nearly all of the estimates do not take into account non-conventional oil even though the availability of these resources is (supposedly) huge and the costs of extraction and processing, while still very high, are falling due to improved technology. Furthermore, he notes that the recovery rate from existing world oil fields has increased from about 22% in 1980 to 35% today due to new technology and predicts this trend will continue. The ratio between proven oil reserves and current production has constantly improved, passing from 20 years in 1948 to 35 years in 1972 and reaching about 40 years in 2003.^{[This quote needs a citation]} These improvements occurred even with low investment in new exploration and upgrading technology due to the low oil prices during the last 20 years.

More generally, the supply of oil may be somewhat elastic in both the short term and the long term. Higher prices may encourage greater production and the use of more expensive extraction approaches. Over time, the current higher oil prices may well cause increased investment. However, absent added reserves or alternative sources, this may only delay the peak, rather than eliminating the peak altogether, and accelerate the depletion of reserves.

Proponents of "abiotic oil", often referred to or dismissed as a "fringe theory" believed by virtually no notable U.S. geologists, are skeptical of any statistical analyses containing as a given the nonrenewable "fossil" origin theories of petroleum. This Abiogenic Theory, also called the Abiotic Theory, or the Russian-Ukrainian Theory--that not all oil is fossilized bio matter, but occurs through other geologic processes, and thus is not so severely limited in supply--is believed to be true by many geologists in Russia and the Ukraine.

Part of the current debate revolves around energy policy, and whether to shift funding to increasing energy conservation, fuel efficiency, and alternative energy sources like solar or nuclear power. Campbell's critics, such as Michael Lynch and Freddy Hutter, claim that his research data is sloppy. They point to the date of the coming peak, which was initially projected to occur by 2000, but has now been pushed back to 2010, and note that Campbell's predictions for world oil production are strongly biased towards underestimates[23]. However, Campbell and his supporters insist that when the peak occurs is not as important as the realization that the peak is coming. Throughout 2001-2003, in his monthly newsletters, Campbell maintained that his 1996 prediction of a peak in 2000 was unchallenged, despite Hutter's alerts of increasing production levels. Finally in his April 2004 Newsletter, Campbell relented and shifted the peak to 2010. Later this was brought forward to 2007 but in October 2005, was shifted back to 2010. These shifts between predicted dates occur because of the systemic lack of accurate oil reserve data--with no truly accurate data we will not know when the peak occurs.

Another controversy was the status of the Hubbert Peak of conventional oil. Hutter claimed throughout 2004 that Campbell's own data illustrated that the Peak had passed unceremoniously in the Spring of 2004. The ASPO Newsletter continued to show the extraction peak in 2005 and/or 2006. Finally in August of 2005, Campbell again relented and began publishing that indeed the Peak had passed in 2004.

Further, the scenarios constructed by peak oil proponents are said to fail to consider the potential of backstop technologies such as ethanol-based fuels, coal liquefaction, gas-to-liquids (GTL) and other substitutes for crude oil. Coal liquefaction in particular becomes economically feasible, according to some estimates, at a sustained oil price of $32/barrel[24]—a price less than half the market price as of March 2006. Peak oil proponents argue that such technologies are much more costly and polluting than conventional oil and that they cannot be produced in sufficient quantity to replace rapidly declining post-peak supplies of conventional oil.

References

"Feature on United States oil production." (November, 2002) ASPO Newsletter #23.

Bentley, R.W. (2002). Global oil & gas depletion: an overview. Energy Policy 30, 189–205

Greene, D.L. & J.L. Hopson. (2003). Running Out of and Into Oil: Analyzing Global Depletion and Transition Through 2050 ORNL/TM-2003/259, Oak Ridge National Laboratory, Oak Ridge, Tennessee, October

Economists Challenge Causal Link Between Oil Shocks And Recessions (August 30, 2004). Middle East Economic Survey VOL. XLVII No 35

Hubbert, M.K. (1956). Nuclear Energy and the Fossil Fuels. Presented before the Spring Meeting of the Southern District, American Petroleum Institute, Plaza Hotel, San Antonio, Texas, March 7-8-9, 1956, text version.

Hubbert, M.K. (1982). Techniques of Prediction as Applied to Production of Oil and Gas, US Department of Commerce, NBS Special Publication 631, May 1982

Maugeri, L. (2004). Oil: Never Cry Wolf--Why the Petroleum Age Is Far from over. Science 304, 1114-1115